Case No: C/2002/0541
 Neutral Citation No: [2002] EWCA Civ 1737
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN’S BENCH DIVISION
ADMINISTRATIVE COURT
(Mr Justice OUSELEY)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27th November 2002

Before :

LORD JUSTICE BROOKE
LORD JUSTICE KAY
and 
LORD JUSTICE DYSON
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Between :

	LINDEN DEVELOPMENTS LIMITED	Claimant/
Respondent	
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	SECRETARY of STATE for TRANSPORT, LOCAL GOVERNMENT and the REGIONS 	Appellant/Defendant	

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Mr Richard Phillips QC and Mr Hereward Phillpot (instructed by Messrs Pitmans) for the Respondent
Mr Michael Bedford (instructed by the Treasury Solicitor) for the Appellant 

Hearing dates: 11th and 12th November 2002
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JUDGMENT : APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)

Lord Justice Dyson :
 
1.	This is an appeal from the decision of Ouseley J who on 1 February 2002 allowed an appeal by the developer, Linden Developments Ltd (“Linden”), from the decision of an inspector appointed by the Secretary of State for Transport, Local Government and the Regions, who had on 26 June 2001 dismissed Linden’s appeal against a refusal to grant planning permission.  The site at issue is known as Clark’s Farm, Darby Green, and is situated in a gap (known as “the strategic gap”) between the towns of Blackwater and Yateley, Hampshire. A small part of it also lies in the Darby Green Conservation Area.  The site, which is some 15 hectares in area, is currently occupied by mushroom composting buildings. Linden applied to the local planning authority, Hart District Council, for outline planning permission to demolish the existing buildings, and inter alia to erect 15250 sq m of B1 office floorspace, internal roads, and carparking for 610 cars.  In support of its application, Linden relied in particular on a policy, DEV 17, which lies at the heart of this appeal.  The council refused the application.  In his detailed decision letter dated 26 June 2001, the inspector dismissed Linden’s appeal.  It will be necessary to consider the decision in some detail.  But I need first to set out the relevant passages of DEV 17.
DEV 17
2.	The adopted development plan policies for the strategic gap were policies G1 of the Hampshire County Council Structure Plan, and ENV 14 of the Hart District Local Plan 1993.  It is not necessary to refer to the detail of these plans.  Suffice it to say that they were designed to preserve the strategic gap as land with a predominantly open and rural appearance.  Policy DEV 17 came into existence in the emerging Hart District Local Plan.  It was promoted by Linden and accepted by the council as a pre-inquiry change, PIC 24, to the deposit draft of the local plan.  It was considered by the inspector at the Local Plan Inquiry.  Policy DEV 17 in the form in which it was recommended by the Local Plan inspector provided so far as material:
“The site known as Clark’s Farm, Darby Green is considered suitable for redevelopment for employment uses (B1 and B2) in a landscaped parkland setting, subject to removal of the existing uses together with the following criteria:
i) New Development should not exceed the bulk and volume of existing buildings on site, which are to be removed;
ii) New development should be located in a way which physically widens the narrow gap between the south-eastern tip of Yateley and the western edge of Darby Green and which generally enhances the perception of this area as a strategic gap between settlements; ...
vi) The capacity of the highway network must not be exceeded as a result of development of this site; ...
viii) A commuter plan will be prepared and car parking controlled to encourage journeys to work by means other than the private car."
3.	The proposed reasoned justification, so far as material, was in these terms:
“There is a serious imbalance between housing and employment in this area that the local plan must address in accordance with PPG13. For that reason, the local planning authority does not consider this site suitable for housing but as an opportunity to increase employment here. The local planning authority acknowledges that the existing composting use falls within the B2 use class. However, because the operational buildings are visually intrusive and the smell has recently been enforced against as a statutory nuisance, it would prefer to see the site used for employment uses that have less impact in terms of smell and adverse visual impact.
The site is in a very narrow part of the “Blackwater Valley Towns (Aldershot to Yateley) to County Boundary (The Blackwater Gap)” Strategic Gap under Policy G1 of the adopted Hampshire County Structure Plan (Review). The Local Planning Authority is particularly concerned to maintain a sense of separation between Yateley and Blackwater and to maintain a sense of separation between the urban areas on either side of the River Blackwater in this location.
If a sense of separation between Yateley and Blackwater is to be maintained, domestic housing of any kind should not be permitted because it could appear to run the two settlements together without any form of visual relief or distinctiveness. Employment development on the other hand, on a larger scale but set in spacious open grounds, would act as a “full stop” to development and reinforcing the open but fragile nature of the strategic gap between the two settlements. Contrasting with housing on the edges of Yateley and Darby Green it would make a visual statement that this is a very distinct and separate area from Yateley. There is such a contrast already, which is provided by the operational buildings for the compost plant (although they are visually intrusive). Redevelopment could enable new buildings to be located further away from the south-eastern edge of Yateley, towards the lake (and the lake could provide a visual backdrop for the development and so add to the sense of quality development)....
In the light of policies EC1 and EC2 of the adopted Hampshire County Structure Plan (Review), the County Planning Officer has indicated that a floorspace not exceeding 15,250 square metres may be acceptable in terms of its impact on the local economy. However, the scale of development will also be subject to further limitations placed on it by the detailed criteria of the policy.
The Local Planning Authority is particularly concerned about the highway capacity of roads in the area and will require a company transport plan.
Visual impact on the strategic gap and impact on listed buildings will be assessed having regard to the impact of what is currently on site and the opportunities for improvements to the environment.”
The issues before the Inspector
4.	The inspector defined the issues accurately at paragraph 20 of his decision letter in the following terms:
“On all the evidence, I consider I have mainly to decide whether development of the scale proposed might be accommodated without causing undue harm in certain material respects. The interests which give rise to my concerns are:
a) the objectives of the strategic gap designation,
b) the possible impact on the conservation area and nearby listed buildings, in terms of character, appearance and setting, and
c) the traffic generation implications.”
The strategic gap issue
5.	The inspector considered this issue between paragraphs 21 and 65. The way in which he dealt with it is of some relevance to this appeal.  This is because the submission made to the judge in relation to the strategic gap issue on behalf of Linden (which the judge rejected) was similar to that made in relation to the traffic issue (which succeeded before the judge), and which lies at the heart of the present appeal.  The judge referred to it as the “wider or thematic submission”.  He explained it in these terms at paragraph 87:
“The theme was that the Inspector’s conclusions were wholly inconsistent with the objectives and assumptions which underlay DEV 17 in the first place, and that his conclusions were the outcome of a chain of reasoning which, in substance, would prevent any development being permitted under DEV 17. The Inspector was not rejecting this application because of its scale, but rejecting it because employment development of any scale, and obviously therefore of this scale, would be objectionable in strategic gap and transportation terms. In so doing the Inspector had either misunderstood or misinterpreted policy DEV 17 or had ignored its objectives, and at the very least had failed to take into account the true impact of his reasoning, and if he had, he had failed to give any adequate reasons for taking such an approach to DEV 17.”
6.	In dealing with the strategic gap issue, the inspector held that the redevelopment as proposed would “result in buildings and activity which would be seen as replacing the present largely undisturbed character of the designated land north of Reading Road with an urban use” and that the new office complex would “in effect fill the gap” (paragraph 50).  At paragraph 52 he said: “in terms of adopted development plan policy objectives, this part of the gap would no longer comprise land with a mainly open and rural appearance, and neighbouring urban areas would have merged”.  He emphasised (paragraph 53) that the judgement that he had made was “of course in relation to development in the form put before me”.  At paragraph 54 he said:
“I have to add that I cannot express any satisfaction that this DEV 17 proposed floorspace limit, or indeed any figure approaching that order, would actually be attainable by development of any other feasible layout and design, without materially adverse impact on the strategic gap.”
7.	A little later he said:
“61. I think that would be the likely outcome, judging from the evidence put before me. Limiting an approval of details to a much smaller scheme would mean, formally, that the DEV 17 commitment to allocate the site would have been honoured; but the purpose of the allocation would have been frustrated. Implementation of such a scheme would be highly unlikely, especially in view of the economics of relocation and redevelopment as stressed by the appellant to me.
62. If this casts doubt on the feasibility of realising the aims of DEV 17, then so be it. I have of course not actually excluded the possibility that another, acceptable, scheme of significant size might come forward, but, rather, expressed a view, on the available evidence, of the unlikely nature of that contingency.
63. At any rate, I am satisfied that the need to protect the strategic gap must be regarded as paramount, because that concept is enshrined in the development plan. Although DEV 17 has emerged a considerable way towards adoption, it has not yet achieved that status, and its precise eventual form, specifically in relation to the floorspace limit, is not free from doubt.
64. I also take into account that the Policy quite deliberately has a ‘speculative’ aspect. It takes the form, in effect, of an invitation to developers to put forward prospective schemes so that the Council have the opportunity to consider a variety of different ideas. It does not purport to give a simple and unqualified sanction for redevelopment.
65. My conclusion, on the material before me, is that the appellant has not adequately shown how the strategic gap constraint imposed by the development plan and the relevant criterion of Policy DEV 17 can be satisfactorily overcome. Hence I find a considerable obstacle in the way of granting the permission sought, on that account.”
8.	The judge rejected the thematic submission in relation to the strategic gap issue at paragraphs 98-102 of his judgment.  In short, the judge said that the inspector did not rule out a lesser development which would satisfy the strategic gap related criteria.  At paragraph 99, the judge said:
“Moreover, it was not necessary for the Inspector to weigh a conflict between the criteria in DEV 17 and the potential for redevelopment in DEV 17 because that is not the structure of policy DEV 17 nor indeed the basis of the case that had been put to him. DEV 17, seen in the context of policy G1 and ENV 14 only permits new building in the strategic gap, provided certain criteria are met, as an exception to the normal approach, which would be to prohibit it. If they are not met because, for example, the strategic gap would be adversely harmed, even if by the only form of development feasible to this occupier in financial terms, policy DEV 17 does not require, or even suggest, that development should be nonetheless permitted, following a balancing exercise between the advantages of development and the disadvantages of non-compliance with the criteria. The objectives to be achieved by redevelopment were not to be weighed against the harm, but were reasons for the site specific policy, as an exception to the development plan approach, being promoted in the first place and being structured as it was.”
9.	He summarised the matter at paragraph 102:
“He has not reached a conclusion in relation to the existence or degree of harm from other lesser proposals. It is not inevitable from his conclusion that all other proposals would be refused. His conclusion does not undermine DEV 17 in this respect, even though the particular circumstances of the occupier and the costs of removal which he may face may mean in fact that the potential of DEV 17 is never exploited.”
The conservation issue
10.	The inspector dealt with this issue at paragraphs 66-71 of his decision letter.  At paragraph 69, he said:
“69. I apply to that possibility the conclusions I have already formed in respect of the strategic gap issue. Effectively, I shall exclude from my consideration any redevelopment scheme which while of possibly assimilable size would be unlikely to be feasible for the developer. In other words, I shall regard development at about the scale proposed as essentially what is in issue.” 
11.	At paragraph 71, he said that “the likely adverse consequences for the character, appearance and setting of the Darby Green Conservation Area presented a further substantive objection to granting permission”. 
The traffic generation issue
12.	The judge found that the inspector applied the thematic approach in relation to the traffic generation issue.  Mr Bedford challenges this part of the judgment.  It is necessary to consider the relevant part of the decision letter in some detail.  The inspector dealt with it at paragraphs 76-118.  
13.	At paragraph 76, he correctly identified the relevant traffic generation criteria of Policy DEV 17 as:
“....that the capacity of the highway network should not be exceeded as a result of development of the site, that specified footpath and cycleway links should be provided, and that a commuter plan should be prepared and car parking controlled to encourage journeys to work by means other than the private car.”
14.	At paragraph 105 of his judgment, the judge said:
“I consider that the Inspector’s conclusions are to the effect that this site should not be developed for employment purposes because of the traffic implications, unless perhaps the level of generation was so small as to be insignificant. The Inspector is clearly not contemplating what DEV 17, the Council and the local plan Inspector plainly must have envisaged.”
15.	He helpfully identified three strands of the inspector’s reasoning as supporting this conclusion.  The first appears at paragraphs 90-101 of the decision letter, and is encapsulated at paragraph 93, where he said:
“These observations give weight to the evidence put to me that current traffic conditions are already so critical that traffic movement can cease, or congestion turn into ‘gridlock’, at times over a significant area. Dr Johnston gave an analytical justification for what seems to me an uncontroversial and sound impression from general experience that traffic conditions become more sensitive as saturation gets nearer. Small additions and interruptions have increasingly critical impacts.”
16.	The inspector then referred to the Traffic Impact Assessment put forward on behalf of Linden, and found it wanting in a number of respects.  At paragraph 100, he said:
“100. These are examples of potentially adverse consequences, unmeasured, which I consider in fact support the conclusion that further traffic generating development of the kind proposed should be restricted in the area, where possible. I find merit in the simplest way of putting the proposition – that the extent of peak time congestion is such that in this sense it matters not where the extra traffic would go and whether particular junctions would be further loaded by more than a prescribed amount. The traffic would go somewhere and would add to the existing problems.”
17.	Of this first strand of the inspector’s reasoning, the judge said at paragraph 111 of his judgment: 
“I am driven to the conclusion that the inspector really is taking issue with the whole basis of DEV 17.” 
18.	The second strand of the inspector’s reasoning is to be found at paragraphs 102-106 of the decision letter where the inspector turned to consider the proposed development as a source of employment.  He said: 
“103.  The aim of creating employment locally is intrinsic to the proposed Local Plan designation for the site, in circumstances where Hart has the further statistical distinction, based on the 1991 census, of a very high rate of out-commuting. But, as Dr Johnston indicates, more recently, and since the 1996 Local Plan inquiry, commercial and industrial development has expanded at a very rapid rate within a few miles of the appeal site, as I observed for myself. Also, the out-commuting has to be seen in the context of a still largely residential District immediately and closely surrounded by strong employment centres within neighbouring administrative areas.
104. These factors lessen the present importance of providing further local employment, but in any event my judgment is that office development of the scale proposed would have only the most limited impact in this respect. The description ‘prestige headquarters offices’ reflects the appellant’s intentions for the site, and it seems to me unarguable that an enterprise of that kind, in south east England, would attract its employees over a wide catchment. Indeed, the TIA’s predictions are based on that assumption.”
19.	Of this the judge said at paragraph 112:
“The same is true of the second strand of reasoning which I identify in paragraphs 102 to 104 of the decision letter. Of course redressing the imbalance between housing and employment levels was a major objective of DEV 17. The Inspector concludes that it is of less importance in circumstances of which the Council and the local plan Inspector would have been well aware when promoting the policy. The Inspector, I appreciate, refers to the scale of development and to a prestige HQ development. It is however difficult, on his reasoning, to see why what he says could not be said of any development contemplated by DEV 17. At any rate, the Inspector does not deal with the reconciliation of the local planning authority’s expectation underlying DEV 17 and his approach.”
20.	The final strand of reasoning is at paragraphs 107-117, where the inspector discussed the role of public transport and other mitigating measures which might restrict the generation of traffic by the proposed development.  At paragraph 107, he said: 
“I have considerable reservations about the likely accuracy of any claim made for the efficacy of a green transport plan before the development is in operation, and a detailed assessment has been made of what the barriers are to use of non-car modes and how they might be addressed. However, the point may not be of decisive significance for the case. What is clear is that even on the most optimistic forecast development as proposed would generate considerable traffic movements. That reflects, to a large extent, the fact that the site is not located at a good public transport node, and there is only a limited prospect of any improvement in the position.”
21.	He explained this conclusion by pointing out that rail access and rail service were not good (paragraphs 108-112); possible measures of contributing to the provision of a combined footway and cycleway alongside Reading Road might be of general benefit, but were “likely to be of limited impact in reducing car dependence in connection with the development” (paragraph 113).  At paragraph 114, he said that “the site is not well located for major office development in the light of present transport policies, which presuppose at least a real choice of accessible transport modes, and sufficient prospect of the use of non car alternatives”.  He concluded the third strand of reasoning at paragraph 117 in these terms:
“That outcome is not even reflected by the appellant’s most optimistic predictions, and in essence I consider the deficiency stems from the site location. In the context of a prestige headquarters office development in the south east, it seems to me that the degree of weighting of the modal split away from car usage sought by current policy presupposes most obviously direct accessibility by a good rail connection, or some other specific and fully justified arrangement, which the proposal before me does not offer.”
22.	The inspector then summarised his conclusion on the traffic generation issue at paragraph 118 in these terms:
“In all, the result, in my judgment, is that to approve the scheme at issue would lead to development unnecessarily and inappropriately producing further congestion, in an area where conditions already dictate that traffic growth should be inhibited. This likely consequence also puts a major obstacle in the way of granting an approval.”
23.	The judge held that the conclusions that the inspector reached on the third strand of reasoning were “of general application” (paragraph 116 of the judgment).  At paragraph 118, he said:
“The rejection of the mitigation measures does not, in my judgment, leave scope for any proposal to come forward in the future. The Inspector’s conclusions in relation to the bus, pedestrian improvements, cycleway and footway, for the reasons which I have already given, are only legally sensible if they are treated as general reasons. I entirely accept that it is not necessary for the Inspector to provide a solution to the problems which he identifies and to suggest what package of improvements might suffice, but I do consider that if there was anything which he had referred to which would have sufficed, he would not have used the empty language which he did of seeking some other fully justified package. He would have referred to its components if they were amongst those which he was already considering. Again that supports my conclusion that his approach is one which is entirely general and good for any development unless it is development which generates but a negligible amount of traffic. But such a development is not that which DEV 17 had in mind.”
24.	At paragraph 119, he adverted to the fact that in paragraph 114 of the decision letter, the inspector referred to “major” development.  The judge said, however, that he saw this as “taking issue with the potential for development of anything that could be described as major.”  He went on: 
“The very existence of a site specific employment related policy suggests that minor office development is not what the policy envisaged, particularly when it would have to come about following the removal of business premises of some approximately 15,000 square metres of floorspace.”
25.	At paragraph 126, the judge repeated that DEV 17 explicitly envisaged buildings of a scale that would be visible in the strategic gap, and would contribute to redressing the imbalance between employment and housing: “It cannot rationally have been thought to be the case that a site specific Local Plan Policy had been promoted and accepted in the interests of a few hundred square metres of employment development, or that there would be simply insignificant traffic generated from it”.  
26.	At paragraph 127, he said:
“Accordingly, in my judgment, in view of the conclusions which I have reached as to the basis of the Inspector’s reasoning, he has erred in law. He has ignored or misunderstood the objectives of DEV 17, or has misunderstood the policy or his reasoning is inadequate. Whilst the achievement of the objectives of DEV 17 was not to be at the expense of harm to the strategic gap, the Inspector himself identified the issue in relation to criterion (vi), which dealt with transportation matters, as being whether there would be undue harm. What would or would not comply with criterion (vi) or would or would not constitute undue harm would have to be judged in the context of what DEV 17 contemplated and why it had been proposed as a policy in the first place. It could not be approached on the basis that any traffic generation, beyond the negligible, would cause undue harm, without ignoring the nature or objective of  DEV 17 and instead erroneously treating it as a general development control policy. Criterion (vi) cannot be judged in that context; it must be judged in the specific context of DEV 17.”
27.	At paragraphs 129 and 130, the judge criticised the inspector’s reasoning in these terms:
“129. The Inspector’s approach in effect ignores the site specific nature of the policy and its objectives and what was obviously in the Council’s and the Local Plan Inspector’s mind, when he assessed what would be undue harm. His approach would be unobjectionable in the context of a general development control policy but that was not the context. His reasoning at least fails to deal with the implications for DEV 17 of the reasons which he has adopted. If he is of the view that DEV 17 is, in truth, an inappropriate policy, he should say so, notwithstanding the local plan Inspector’s conclusions, so that the local planning authority and the developer know where they stand. If that is not his view, then he should explain why the reasoning is expressed in the way in which it has been, and why such reasoning does not undermine, or in effect take issue, with the thinking and objectives underlying policy DEV 17. It is difficult to see how any developer, faced with that decision letter, could devise any development within the contemplation of DEV 17, without falling foul of this Inspector’s reasoning on transportation issues.

130. The least that can be said is that the reasoning is entirely unclear as to whether in effect, intentionally or otherwise, the Inspector has taken issue with DEV 17 because he considered that he should do so, or whether he has concluded that policy DEV 17 was never intended  to apply to anything more than a development which produced but an insignificant level of traffic. Again, if that is his view, in the light of the purpose of DEV 17, in my judgment he should have said so and explained how he arrived at that conclusion, a conclusion which I consider would cry out for explicit reasoning. His failure to do so leaves it at least unclear as to what approach he in fact adopted to DEV 17.” 

The issues on appeal

28.	On behalf of the Secretary of State, Mr Bedford submits that the judge was in error in concluding that the inspector (a) applied a thematic approach to the traffic generation issue; (b) ignored the objectives of DEV17; (c) misunderstood the objectives of DEV 17; and (d) failed to give adequate reasons for his decision on the traffic generation issue. Mr Phillips QC submits that the judge reached the right conclusion on all four issues, but in the alternative, he seeks to support the judgment by two alternative grounds to which I shall refer later.  Underpinning the judge’s conclusions was his understanding of what constitutes development for the purposes of, or as envisaged by, DEV 17.  I need to start, therefore, by considering whether his understanding was correct.

What constitutes development for the purposes of DEV 17?

29.	It is common ground that the policy should be construed as a whole, including both the body of the text and the reasoned justification.  The judge said that DEV 17 “contemplated” (paragraphs 104, 112 and 127) or “envisaged” (paragraphs 105, 119 and 126) a development of “some scale”.  It was “not a policy devised to cater for insignificant development generating negligible traffic” (paragraph 125).  “It cannot rationally have been thought to be the case that a site specific Local Plan Policy had been promoted and accepted in the interests of a few hundred metres of employment development, or that there would be simply insignificant traffic generated from it” (paragraph 126).  

30.	It is clear that the objective of the policy was to address the serious imbalance between housing and employment, and to do so by permitting employment development “on a larger scale, but set in spacious open grounds” which would act as a “full stop” to development (see the reasoned justification).   But the terms of the policy also made it quite clear that development would not be permitted so as to achieve this objective unless certain criteria were met.  The language is clear and emphatic.  The body of the text of DEV 17 itself stated that the site was suitable for redevelopment for employment “subject to the following criteria”.  Moreover, after stating that the County Planning Officer had indicated that a floorspace not exceeding 15,250 sq m “may be acceptable”, the reasoned justification added: “however, the scale of development will also be subject to further limitations placed on it by the detailed criteria of the policy”.  It continued: “the Local Planning Authority is particularly concerned about the highway capacity of roads in the area and will require a company transport plan”.  

31.	In my view, the judge’s interpretation of the policy ignored these qualifications to the achievability of the main objective of the policy.  DEV 17 did not say that employment development on “some” scale would necessarily be permitted.  Rather that the site was suitable for employment development with a floorspace not exceeding 15,250 sq m, and then only if the criteria were satisfied.   This figure was a ceiling, not a target, and crucially, the scale of any development contemplated by the policy was dependent on the criteria being met.  In my view, this conclusion is dictated by the clear language of DEV 17 itself.  

32.	The inspector’s understanding of the policy was most clearly articulated at paragraphs 61 and 63 of the decision letter when he was discussing the strategic gap issue.  As he said, limiting an approval of details to a much smaller scheme would mean, formally, that the DEV 17 commitment to allocate the site would have been honoured; but “the purpose of the allocation would have been frustrated”. However, the need to protect the strategic gap “must be regarded as paramount, because that concept was enshrined in the development plan”.  That understanding was in my view correct.  In other words, the policy must be read as a whole, and if it was impossible to meet the criteria by means of an employment development of 15,250 sq m, then such a development was not permitted, still less required, by the policy.   In my view, therefore, the judge was wrong to say that DEV 17 contemplated or envisaged a development of “some scale” without more.  It contemplated such a development only if the criteria were met. 

Did the inspector apply the thematic approach to the traffic issue?

33.	There is no doubt that the inspector said that he was considering the traffic issue by reference to the proposed development, and not by reference to any other development that might be proposed for the site.  I have already referred to paragraph  20 (“I have to decide whether development of the scale proposed might be accommodated without causing undue harm in certain material respects.  The interests which give rise to my concerns are….(c) the traffic generation implications”).  He followed this approach consistently in identifying objections to the proposed development.  This is clear from his conclusions on the strategic gap issue (paragraphs 50-53), and on the conservation issue (paragraphs 69-71).   As for his discussion of the traffic issue itself, there are several references which indicate that he was not applying the thematic approach.  At paragraph 77, he referred to “the proposed maximum car parking provision”.  At paragraph 100, he referred to potentially adverse consequences which supported the conclusion that “further traffic generating development of the kind proposed should be restricted in the area where possible”.  At paragraph 104, he said that “office development of the scale proposed would have only the most limited effect” in providing further local employment.  At paragraph 107, he said that “development as proposed would generate considerable traffic movements”.  At paragraph 114, he said that the site was not well located “for major office development”.   Finally, at paragraph 118 when he summarised his view on the traffic issue, he said that “to approve the scheme at issue would lead to development unnecessarily and inappropriately producing further congestion”.  

34.	Conversely, the inspector did not expressly say that any development for the purposes of DEV 17 would be objectionable for traffic or highway reasons.  Nevertheless, the judge was of the opinion that this is what in substance the inspector was saying, presumably because he thought that it was implicit in the inspector’s reasoning.  As the judge put it at paragraph 112 of his judgment: “it is, however, difficult on his reasoning to see why what he said could not be said of any development contemplated by DEV 17” (my emphasis). 

35.	I do not accept that it is implicit in the reasoning of the inspector that his highway objections meant that he was, in effect, saying that there could be no development of the site at all.   As Mr Bedford points out, the inspector did not say that a single extra traffic movement was objectionable because of the critical condition of the highway network.  It is unwarranted to extrapolate from the inspector’s actual objections and apply them to any scale of development.   The inspector’s concerns were expressly linked to the proposal that was before him.  Thus, for example, his criticism of rail access (paragraph 108) was based on the fact that the proposed development would attract large numbers of employees from a “wide catchment”.  It does not follow that the inspector would have made the same criticism if what was being proposed was a smaller scale development rather than “prestige headquarters offices” of the scale that Linden was proposing.

36.	In any event, (as the words that I have emphasised at paragraph 34 above show), the premise on which the judge’s criticism at paragraph 112 of the judgment is based is that, on the true interpretation of DEV 17, development “contemplated” by the policy was development “of some scale” that would generate traffic which was more than “simply insignificant” (paragraph 126).  For the reasons that I have given, I think this is a false premise. Accordingly, the criticism is ill-founded.  I have no doubt that the inspector would have relied on the same traffic objections in relation to any proposed development of the site which was similar in scale to the one with which he was dealing.  He was not required to say what was the maximum scale of development that would have met his traffic objections.  He was only required to deal with the proposed development that was before him, and that is what he did.  

37.	I should add that I find it difficult to see why the judge did not also impugn the inspector’s reasoning in relation to the strategic gap issue, and perhaps the Conservation Area issue as well.  It seems to me that the criticisms that he made of the inspector’s approach to the traffic issue applied with equal force to his approach to those issues too.  The inspector said (paragraph 54) that he could not “express any satisfaction that this DEV 17 proposed floorspace limit, or indeed any figure approaching that order, would actually be attainable by development of any other feasible layout and design, without materially adverse impact on the strategic gap” (emphasis added).   And yet the judge did not say that it was difficult to see why, on the inspector’s reasoning, what he said in the context of the strategic gap issue could not also have been said of any development contemplated by DEV 17.

Did the inspector ignore or misunderstand the objectives of DEV 17?

38.	I can take these two questions together.  Basing himself on the interpretation of the policy which I have rejected, the judge said (paragraphs 127-129) that the inspector ignored or misunderstood the objectives because what would or would not comply with criterion (vi) would have to be judged in the context of what DEV 17 contemplated and why it had been proposed as a policy in the first place: “it could not be approached on the basis that any traffic generation, beyond the negligible, would cause undue harm, without ignoring the nature or objective of DEV 17” (paragraph  127).  Since the judge’s criticism depended on the correctness of his interpretation of the policy, and because this interpretation should in my view be rejected, it follows that I consider that the criticism must also be rejected.  In my view, there is no warrant for saying that the inspector either ignored or misunderstood the objectives of the policy.  He made it quite clear when discussing the strategic gap issue, especially at paragraphs 54, 55 and 61-65, that he understood the objectives of the policy.  Mr Phillips does not criticise the reasoning in any of these paragraphs.  I see no reason to suppose that the inspector did not have (and apply) that understanding of the policy when he came to deal with the traffic issue. 

Reasons

39.	The judge criticised the decision for lack of reasons.  He said (paragraph 130) that it was unclear whether the inspector had “taken issue” with DEV 17 because he considered that he should do so (ie because he disagreed with its objectives), or whether he concluded that DEV 17 was never intended to apply to anything more than a development which produced “but an insignificant level of traffic”.   

40.	We were referred to the well known passage in the speech of Lord Bridge in Save Britain’s Heritage v Number 1 Poultry Ltd [1991] 1 WLR 153, 167C-167H.  When it comes to deciding in any particular case whether the reasons given by a planning inspector for his decision on a planning appeal are deficient, the alleged deficiency will afford a ground for quashing the decision only if the court is satisfied that the interests of the applicant have been substantially prejudiced by it.  Normally, such prejudice will arise from one of three causes.  Lord Bridge identified the first two of these in the following terms: 
“First, there will be substantial prejudice to a developer whose application for permission has been refused or to an opponent of development when permission has been granted where the reasons for doing so are so inadequately or obscurely expressed as to raise a substantial doubt whether the decision was taken within the powers of the Act.  Secondly, a developer whose application for permission is refuse may be substantially prejudiced where the planning considerations on which the decision is based are not explained sufficiently clearly to enable him reasonably to assess the prospects of succeeding in an application for some alternative form of development”.

41.	Mr Phillips submits that, as a result of the inadequacy identified by the judge, Linden has suffered substantial prejudice in both of these respects. It seems to me that the judge’s conclusion on this issue was as affected by his interpretation of DEV 17 as was his conclusion on the other issues.  It is only if the policy is construed as contemplating a development “of some scale” regardless of whether the criteria are met, that the inspector was required to say whether, and if so why, he disagreed with its objectives.  Since the policy should not be so construed, I do not see why the inspector was required to say whether he agreed with its objectives.  He made it clear at paragraphs 61-63 of the decision letter that he understood what the aims of DEV 17 were, and that the criteria of the policy might prevent those aims from being realised.  There is nothing in the decision letter which suggests that he did not carry this understanding forward into the section of the letter where he deals with the traffic issue.   There is no doubt that the inspector understood the policy correctly.  This not a case falling within the first of Lord Bridge’s categories.

42.	The main thrust of Mr Phillips’ submissions under this head was that the reasons in relation to the traffic issue were inadequate because they did not inform Linden what form of alternative development would overcome the shortcomings which had caused the inspector to reject the current proposal.   In my judgment, the inspector gave adequate reasons for rejecting the proposal in relation to the traffic issue.  No doubt, his reasoning would have led to the same conclusion for any proposal for a development on a similar scale.  That was implicit in his decision, although it did not need to be expressly stated because the inspector was only concerned with the current proposal.  The duty to give adequate reasons does not require an inspector to indicate what modifications to a proposal are necessary to overcome his objections.  The judge made this very point when discussing the strategic gap issue.  At paragraph 98, he said:
“The inspector does not rule out lesser development satisfying the strategic gap related criteria.  I accept entirely that the inspector is not obliged to discuss ways of designing or laying out the site or the scale at which a development could be promoted, which could overcome the objections to which he has referred”.
 
43.	But there is a further reason why the reasons challenge should be rejected. As Lord Bridge pointed out, the adequacy of reasons is not to be judged in the abstract.  The question is whether the interests of the applicant in the particular case have been adversely affected by the alleged inadequacy of reasons.  Mr Bedford makes the point that Linden’s case before the inspector was that only a development of the size proposed was financially viable, and that the adequacy of the inspector’s reasons had to be judged against that background.   The inspector recorded at paragraph 36 that:
“The case was also that without the financial return which could be secured only from a scheme of this size [viz 15250 sq m], the present owner would not relocate, and the Council’s aims for the site would be frustrated”.

44.	There has been no challenge to the accuracy of this description of Linden’s case before him.  Its accuracy is borne out by passages in Mr Phillips’ closing submissions to the inspector to which our attention has been drawn: eg paragraph 2.6.  Mr Bedford submits that it was open to the inspector to conclude that he was being invited by Linden to make a decision on the basis that only development of 15,250 sq m as proposed would result in the removal of the existing use and the redevelopment of the site.  I accept this submission.  I also accept the submission that, where a developer has clearly indicated that redevelopment of the site will only be achieved with development on the scale that has been proposed, there is no need for the inspector, if he finds that scale to be objectionable, so to express his reasons that the developer can understand how he might devise a smaller scheme which might be acceptable.  In such circumstances, the developer has suffered no prejudice because he has put his case to the inspector on the basis that he does not intend to seek to develop the site by means of a smaller scheme.  In formulating his reasons, the inspector is entitled to take the developer at his word.  It does not lie in the mouth of the developer subsequently to complain that the inspector did not tell him what form of smaller development would meet his objections.

45.	I conclude, therefore, that the inspector’s reasons were adequate.  I now turn to the two alternative grounds on which Linden seeks to uphold the judge’s decision.

Linden’s first alternative ground

46.	Before the judge, Linden advanced three “detailed” grounds of challenge to the inspector’s decision on the traffic issue.  The third of these has been referred to as the “highway improvements” issue.  This issue arose as a result of a letter dated 9 May 2001 from the Hampshire County Council, the highway authority, (“HCC”) to the inspector.  It was sent after the close of the inquiry, but before the inspector published his decision.  The letter referred to a number of additional measures which had been identified by the Roads and Development Planning Sub-committee of HCC as being “required to overcome the impact of traffic from this development should it be allowed”.  Three measures were described.  The letter continued:
“The provision of these missing footway links will significantly improve the opportunities for walking to/from the station thus providing enhanced choice for employees, thus encouraging alternatives to the motor vehicle”.

The inspector referred to these proposed improvements at paragraphs 85-87 of his decision letter.  He said that HCC had decided that the improvements should be sought and provided as Linden’s responsibility at an estimated cost of £800,000.  He also stated that Linden had not agreed to pay for these improvements, and had indeed criticised them on the basis that they did not arise from the technical discussions conducted with the County Surveyor’s department.  Nevertheless, the inspector said that he recognised that they represented “the formally expressed will of the highway authority”.

47.	Mr Phillips submits (rightly) that the inspector did not say whether he found that these additional requirements were justified, or whether he accepted Linden’s criticisms of them.  Nor did the inspector give reasons for any conclusion that he might have reached on this issue.  The judge acceded to Mr Bedford’s submission that the inspector did not have to deal with this issue because he “was indeed reaching a conclusion which could not be affected by specific highway measures or packages of improvement” (paragraph 66 of the judgment).  But at paragraph 69, the judge said that it was more surprising that, when criticising pedestrian access to Sandhurst station in paragraphs 109 and 110 of the decision letter, the inspector did not refer to the third item in the package of measures mentioned in HCC’s letter dated 9 May 2001, since it was directly relevant to that point.  The judge said (paragraph 71) that the inspector ignored the point, or, if he took it into account, failed to give reasons for any conclusions which he might have reached on it.  At paragraph 75, he said:
“I consider that the inspector is concluding that the improvement in pedestrian access was irrelevant because, in reality, the problems of access from the station were insuperable.  On that basis, there is no real inadequacy in reasoning nor substantial prejudice to the claimant from any such inadequacy in relation to the pedestrian facilities”.  Of course if I am wrong and it was not the inevitable reasoning of the inspector that the development was inappropriate on highway grounds no matter what pedestrian improvements were made en route to the station, then the reasoning is inadequate and the claimant has indeed suffered substantial prejudice and the decision should be quashed on that ground”.

48.	As Mr Bedford points out, the inspector had three concerns about the value of Sandhurst railway station as a means of reducing traffic on the roads.  These were: (a) Sandhurst is not on the main London line, but is served by a “circuitous branch line which would not suit the needs of most commuters” (paragraph 108); (b) the distance of 1.5 km between the site and the station (paragraph 109); and (c) the lack of a continuous footway between the site and the station (paragraph 109).  The third of the measures mentioned in the letter of 9 May 2001 only dealt with the third of the inspector’s concerns.  In my view, the judge was right to say that the inspector must have been of the opinion that the problems of pedestrian access to the station were insuperable.  It follows that, as the judge said, no inadequacy of reasoning is exposed by the inspector’s failure to say what he thought about the efficacy of the measures proposed by HCC.  Whatever view he had reached about these measures, his conclusion would not have been affected by it.  

Linden’s second alternative ground

49.	Before the judge, Linden sought to have the inspector’s decision quashed on the grounds that it had been made, at least in part, on the basis of a misunderstanding or ignorance of an established and relevant fact.   The relevant material is contained in paragraphs 103 and 104 of the decision letter, which I have already set out at paragraph 18 above.  

50.	Mr Phillips submits that the commercial and industrial developments referred to in paragraph 103 were all ones to which commitment had been made at the time of the 1996 Local Plan Inquiry, and were part of the context in which the emerging Local Plan designation of the appeal site was made.  As he put it: it was not suggested by the inspector or any party to the inquiry that the impact of those developments was different from that which had been foreseen at the time of the Local Plan Inquiry.  Accordingly, the inspector made a material error of fact which led him to regard the fact of subsequent commercial and industrial development as material, when in fact it was immaterial in the context of his reasoning in paragraph 103.  

51.	The judge dismissed this ground of challenge at paragraph 77 of his judgment:
“I accept that, with a degree of benevolence, the decision letter can be read as focusing on the rate of development, the actual experience of development and thus the weight to be given to new employment development, and that the inspector’s reasoning does not impel the inference that the inspector misunderstood the agreed position as to the commitments in 1996 before him”.

52.	Mr Phillips submits that the “benevolent” meaning given by the judge was wrong, since it did not reflect the natural and ordinary meaning of the words used by the inspector.  The plain meaning of paragraph 103 was that the new commercial and industrial development was thought to represent a change in the position as contemplated at the time of the Local Plan Inquiry.  

53.	This ground of challenge is said to be based on a misunderstanding or ignorance of an established and relevant fact, and Mr Phillips relies on the well-known passages in two speeches of Lord Slynn: see R v Criminal Injuries Compensation Board Ex p A [1999] 2 AC 330, 344-345 and R(Alconbury Developments Ltd) v SSETR [2001] UKHL 23, [2001] 2 WLR 1389, 1407D-H.  In my view, he does not need to rely on this doctrine.  If Mr Phillips is right, then the inspector took into account an immaterial consideration when reaching his decision, and that is good enough for the purposes of a Wednesbury challenge.

54.	But in my view, this ground of challenge of the inspector’s decision must be rejected.  I do not find it necessary to decide whether the judge’s “benevolent” interpretation is correct.  The misunderstanding, if that is what it was, did not materially affect the inspector’s decision.  That is made quite clear by paragraph 104 of the decision letter, where, having stated that “these factors lessen the present importance of providing further local employment”, he went on to say “but in any event my judgement is that office development of the scale proposed would have only the most limited impact in this respect” (emphasis added).  He then gave the reason for this conclusion: an enterprise of the kind proposed would attract employees over a wide catchment.  In these circumstances, if there was an error in paragraph 103 of the decision letter, it did not affect the substance of the inspector’s reasoning or his overall conclusion.

Conclusion

55.	I am conscious that the conclusion that I have reached on the issues in this case differs from that of a judge who is extremely experienced in planning law.  I take some comfort from the fact that he did not find it easy to resolve them (paragraph 97), and that he gave permission to appeal.  Nevertheless, for the reasons that I have endeavoured to express, I have reached the clear conclusion that this appeal should be allowed.

Lord Justice Kay:

I agree.

Lord Justice Brooke:

I also agree.