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This is an appeal against a decision of Ward, Mummery and Sullivan LJJ ([2009] EWCA Civ 835) which the Supreme Court will hear on 1 and 2 February 2010.  Although the proceedings have been brought against the Council, the case is really a dispute between two rival developers, Sainsbury’s and Tesco. It is of considerable importance as it concerns the circumstances in which compulsory purchase powers can be used and the factors which local authorities can take into account when justifying the use of such powers.

As is well known, the powers of compulsory acquisition contained in section 226 of the Town and Country Planning Act 1990 are deliberately widely drafted. However, section 226 requires that they are generally only exercised if the compulsory purchase order (“CPO”) will promote the economic, social or environmental well-being of the area.

The key question in the case was whether the Council could take into account benefits to land outside the CPO land as justification for the use of the powers.

In the case, there were two rival schemes and two separate planning applications for mixed use development, one promoted by Sainsbury’s and the other by Tesco. Sainsbury’s owned 86% and Tesco owned 14% of the CPO land. Sainsbury’s planning application was limited to the CPO land but Tesco’s application also encompassed a nearby site owned by it (“the hospital site”) which Tesco intended to redevelop at the same time. Tesco intended its development of the CPO land to cross-subsidise its development of the hospital site.  

Planning permission was granted for both schemes but when deciding which should go forward by the exercise of CPO powers, the Council took the view that the redevelopment of the hospital site gave Tesco’s scheme a “decisive advantage”.

Sainsbury’s challenged that decision on the basis that it was wrong of the Council to consider the regeneration benefits from the development of the hospital site in the context of the compulsory purchase of separate CPO land.

Both the Elias J in the High Court and Court of Appeal ruled in favour of Tesco and the Council – the Council had been entitled to justify the CPO taking account of those benefits. As a general rule, the redevelopment of a site outside of land for which compulsory purchase powers were sought was precisely the sort of wider benefit that the Council was entitled to consider.  

Sainsbury’s appeal is expected to resolve a question of key importance where land assembly is a barrier to development.
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