622 Lomas & Lomas v Secretary of State for the Environment and Wyre Forest District Council
Queen's Bench Division
15 November 1994
(1995) 69 P. & C.R. 622
(Mr Jeremy Sullivan, Q.C., sitting as deputy judge):
November 15, 1994
Town and Country Planning—Installation of mobile home on open agricultural land without planning permission—Enforcement notice issued—Appeal on the grounds that planning permission ought to be granted on the merits—Local plan policy supported the grant of temporary permission for a caravan in order to enable agricultural enterprise to become viable—Whether the enterprise was or could become viable—Application of test of whether the enterprise could support a full—time agricultural worker—Whether Inspector applied correct test of viability—Whether Inspector confused viability with the extent of profitability—Whether the appellants were under a burden of proof to demonstrate viability—Whether net profit figures correctly included appellants' substantial debt burden
Mr and Mrs Lomas, the appellants, ran an agricultural business on land to the east of Lancaster Avenue, Great Eccleston. The site was formerly part of a larger 52 acre holding known as Raikes Hall Farm, but various parts of the land had been sold off, and the appellants only retained five-and-a-half acres of land together with a steel framed barn in open countryside. In 1988 the appellants started a calf-rearing business in the barn. The calves required substantial supervision and in August 1991 the appellants applied for planning permission for a mobile home on the site in order to look after the calves. At some time during 1992 they installed a mobile home. No planning permission had been obtained. On July 22, 1992 the Wyre Forest District Council, the second respondents, issued an enforcement notice against the siting of the mobile home without planning permission. The emerging local plan policy was that residential development would not normally be permitted outside rural settlements except for the essential requirements of agriculture, which could be demonstrated by, inter alia, the economic viability of the enterprise. The reasoned justification for the policy provided that temporary permission for a residential caravan might be granted where occupancy of the site was necessary to enable viability to be achieved.
The appellants appealed to the Secretary of State for the Environment, the first respondent, on the grounds that the permission ought to be granted on its merits. The Inspector appointed by the Secretary of State sought to determine the viability and sustainability of the enterprise and applied the test whether in the foreseeable future the enterprise would achieve the viability adequate to support a full-time agricultural worker. On reviewing the appellants' business plan, and after taking into account financial charges, he determined that the holding would only produce a net profit amounting to half the minimum agricultural wage. The financial charges concerned were the result of an inherited debt and were being discharged by the earnings of Mr Lomas as a taxi driver. The Inspector concluded that the enterprise would not be sustainable and rejected the appeal by decision letter dated March 10, 1993. The appellants appealed against the Inspector's decision to the High Court under section 289 of the Town and Country Planning Act 1990. The appellants argued that the Inspector confused the question of viability with the extent of profitability, which is not a proper concern of the planning system, and that the Inspector had wrongly placed an onus of proof of demonstrating viability and sustainability on the appellants.
Held, remitting the matter to the Secretary of State, that the calculation of the net profit of the enterprise showed an apparent misunderstanding of the financial *623 evidence which was sufficient to flaw the subsequent reasoning of the Inspector. The onus of persuading the Inspector of the viability and sustainability of the enterprise was in reality on the appellants, and the Inspector was justified in using the full-time worker test to make his decision, because he was using it to determine whether the enterprise was likely to be sustainable. However, it was then of critical importance that the profit figures, which were required to be sufficient to support a full-time worker, were properly understood and applied. It was only the deduction of financial charges personal to the appellants that had reduced the net profits below the figure sufficient to support a full-time worker. On the face of it these financial charges should not have been taken into account, and if and in so far as the Inspector did take them into account, he should have given reasons for so doing.
Cases referred to:
(1) Christchurch Borough Council v. Secretary of State for the Environment (1993) 68 P. & C.R. 116.
Appeal by Mr and Mrs Lomas, under section 289 of the Town and Country Planning Act 1990, from a decision of the Inspector appointed by the Secretary of State for the Environment, the first respondent, by decision letter dated March 10, 1993, in which he rejected an appeal against an enforcement notice dated July 22, 1992 issued by the second respondents, the Wyre Borough Council, in respect of the installation of a mobile home on open agricultural land at Lancaster Avenue, Great Eccleston, without planning permission. Local plan policies supported temporary occupancy of open land in order to enable agricultural viability to be achieved,, but the Inspector had concluded that the enterprise would not become viable because the business plan showed that it would not produce sufficient profit to support a full-time agricultural worker. The facts are stated in the judgment of Mr Jeremy Sullivan, Q.C. sitting as a deputy judge.
Timothy Straker for the appellants.
Mary Macpherson for the first respondents.
The second respondents did not appear and were not represented.
Mr Jeremy Sullivan Q.C.
This is an appeal under section 289 of the Town and Country Planning Act 1990 against an Inspector's decision to dismiss an appeal against an enforcement notice issued by Wyre Forest District Council. The enforcement notice was dated July 22, 1992, and the breach of planning control it alleged was the siting of a mobile home on the land without planning permission. The land is land to the east of Lancaster Avenue, Great Eccleston. The appeal proceeded on ground (a); that is to say, that planning permission ought to be granted on the merits. The Inspector rejected that contention in his decision letter dated March 10, 1993. The appellants are a Mr and Mrs Lomas. The appeal site was formerly part of a larger holding that was called Raikes Hall Farm. That farm was some 52 acres in extent. Various parts of the farm were sold off, and in about 1983 substantial drainage works by the North West Water Authority had the effect of severing the remaining holding. There were further sales, leaving the appellants with some five-and-a-half acres on which the only building was a steel framed barn. In 1988 they started calf rearing, using the barn on the appeal site. They found it difficult to look after the calves, travelling to and from the site and, so, at some time in 1992, it is not entirely clear from the papers, they installed a mobile home on the land. That is the subject of the enforcement notice.
Having briefly referred to the history, the Inspector noted that the holding was within the open countryside where new residential development should be strictly controlled, although, he said, there is provision of an exception to be made where the accommodation is essential for the needs of agriculture. He then looked at the policy position in more detail in paragraph 10 of his decision letter, referring to Policy 1.9 of the emerging Garstang and Over Wyre Local Plan, and to P.P.G. 7, The Countryside and the Rural Economy. Because the emerging Local Plan was at an advanced stage, he considered it appropriate to accord Policy 1.9 significant weight. As described by the appellants' expert, Mr Ensor, the Local Plan provided in Policy 1.8, which dealt with development outside rural settlements, that development:
will not normally be permitted outside except:
(a) for the essential requirements of agriculture […]
Policy 1.9 then goes on to define the necessary requirements by the Planning Authority to demonstrate that development is essential for agricultural needs as follows:
Various factors are set out. They include at (a): “the economic viability of the enterprise.” Mr Ensor then turned to the reasoned justification underlying the policy and said this:
The council go on to say that consent for permanent residential development in the countryside will not be granted unless viability is proven.
They say however that in circumstances where occupancy of a site is required to enable viability to be achieved the council may be prepared to grant temporary permission for a residential caravan.
He drew attention to paragraph E.13 in P.P.G. 7, saying this:
At paragraph E.13 the Guidance Note suggests that where the evidence supporting an application for an agricultural dwelling is inconclusive, perhaps because there is uncertainty about the sustained ability as to a proposed enterprise, then the Local Planning Authority will wish to consider whether to grant Planning Permission for the provision of a caravan or temporary accommodation on the site to allow time for prospects of the enterprise to be clarified.
He said that because the first sentence of paragraph E.13 of P.P.G. 7 said this:
In cases where there is evidence supporting an application for an agricultural dwelling but it is inconclusive, perhaps because there is uncertainty about the sustainability of a proposed enterprise, the local planning authority will wish to consider whether to grant permission for the provision of a caravan or other temporary accommodation on the site to allow time for such prospects to be clarified.
Against that policy background, Mr Ensor argued that the applicant should be given an opportunity of proving the viability of the enterprise and that in this respect a temporary consent should be granted. He said also on page 24 of his proof that he considered that the application was in line with the Local Plan policies. That was because occupancy of the site is required to enable the viability of the enterprise to be achieved, and under those situations the council may be prepared to grant temporary permission for a residential caravan.
It was against that background that the Inspector said in paragraph 11 of his decision letter that it had been stated that only a temporary planning permission was required for the mobile home, and it is clear, he said:
that the intention is for the period of the temporary permission to be the time necessary to implement the ADAS business plan thereby, in your view [that is the appellants' view] demonstrating that the unit is sustainable.
He continued in paragraph 12:
Accordingly, from my inspection of the site and its surroundings and consideration of the representations made, I find the main issue to be, having regard to the needs of agricultural on the holding, whether or not a temporary planning permission is justified to enable the viability of the holding to be achieved and to demonstrate that the enterprise is capable of being sustained for a reasonable period of time.
In paragraph 13 he considered whether it was essential to have someone permanently resident on the site, and he accepted that was necessary for the animals' well-being in the first sentence of paragraph 14. But he continued:
However, if this is to be a reason for permitting on-site living accommodation, even on a temporary basis, then in my view it needs to be demonstrated that the scale of the enterprise either as existing or proposed is adequate to support one full-time worker.
Having posed that as a test, he then went on to consider it in paragraphs 15 and 16 of his decision letter, which it is necessary to set out in full:
15. When planning permission for the mobile home was sought in August 1991 the accompanying letter from the NFU stated that the unit had not yet achieved viability. At the inquiry you accepted that it was still not viable but placed reliance upon the ADAS business plan to show your clients' intentions. However from that plan it is clear that when fully operational the unit would still only be likely to produce for your clients a net profit of about £3,500.
16. Even though Mr Lomas may be an experienced stock man and be willing to put a considerable amount of time and effort into running the unit, if the targets set in the business plan are achieved then he will still only be earning half the minimum agricultural wage when the enterprise is fully established. On this basis I regard it as extremely unlikely that within the foreseeable future the unit would achieve the viability sufficient to support one full time worker. Without this prospect of viability I consider that, on the balance of probability, there is no reasonable prospect of the enterprise being sustained for a reasonable period of time. In those circumstances I am not persuaded that it would be appropriate to grant even a temporary planning permission for the mobile home.
For the appellants, Mr Straker argues that the Inspector confused the question of viability with the extent of profitability. He said that it does not follow that to be viable an agricultural enterprise must produce sufficient profit to support a full-time agricultural worker, because, for example, the person engaged on the enterprise may have private means or he may choose to adopt a particularly frugal lifestyle. He points to paragraph E.9 of P.P.G. 7 which says, in part: *626
In cases where a functional test alone is not conclusive, it may be appropriate also to apply a financial test to provide further evidence of the genuineness of stated intentions to engage in farming or forestry of the size of dwelling which the unit can sustain.
He points to these words:
The purpose of applying such a financial test is not to judge the likely present or future financial viability of the enterprise as such since this is not a proper concern of the planning system, but to consider the land use implications for the site which may include the likelihood of the proposed development being carried into effect and the size of dwelling.
He says in summary that the test in paragraph 14, what I call the “full-time worker test”, simply does not answer the Inspector's question in paragraph 12: Has the viability and sustainability of the enterprise been demonstrated? He says further, but on a narrower ground, that, if it is the answer to the question posed in paragraph 12, then the Inspector has misunderstood the figures, because the Inspector had before him, produced by Mr Ensor, an ADAS report which showed a profit before finance charges of some £12,000. The figure of £3,500 referred to by the Inspector was arrived at only after deducting substantial financial charges which, in ADAS's report, were described as having been inherited by the business and as being a heavy burden upon it. The Inspector was also apparently told by Mr Lomas, who was called as a witness, that he worked full-time as a taxi driver and paid the finance charges out of the profits of that business, and for these reasons the Inspector was urged not to take account of the finance charges. Mr Lomas helped his wife with the calves when he had spare time. The Inspector also had a statement of Mrs Lomas's earnings, which showed that her net income from the calf rearing enterprise was some £8,600.
Mr Straker also argued, but I think as a subsidiary point, that the repeated use of the word “demonstrate” throughout the decision letter suggested that the Inspector was wrongly placing some sort of onus of proof on the appellant. He said that such an approach would be in error and cited the decision of the Court of Appeal, as yet unreported, in Christchurch Borough Council v. Secretary of State for the Environment.1
Miss Macpherson took as her starting point the restrictive policy in the Development Plan, and submitted that against such a policy it was necessary for someone to demonstrate agricultural need, as, indeed, had been accepted by the appellant's own witness. She submitted that it was relevant for the Inspector in considering viability to have regard to the economic return from the enterprise and, since the parties had not suggested any yardstick, the Inspector was entitled to take one of his own choosing, and the choice of a minimum agricultural wage test could not be said to be unreasonable as some measure of the viability and likely sustainability of the enterprise. This was so since it was argued that a full-time worker was required on site. If the business was to be sustainable, it would have to produce the wherewithal to provide for that person. In short, it was not simply a question of achieving viability but whether that viability was likely *627 to be sustained for a reasonable time, and looking at the minimum agricultural wage was a reasonable approach in seeking to answer that question.
So far as the finance charges are concerned, she said that the Inspector could only work on the information before him and on the information before him, the finance charges were attributable to the land, and he was entitled to adopt the net profit of £3,500.
Having summarised counsels' submissions, I now set out my own conclusions. I deal first with the question of onus. In my view, the Inspector was not wrongly placing the onus on the appellants. In saying that viability and sustainability of the enterprise had to be demonstrated, he was doing no more than applying the relevant policies which do require that an agricultural need should be demonstrated in order that an exception can be made to the generally restrictive policy. Of course, the Inspector will have regard to the totality of the evidence. It is not a case, as in normal civil litigation, of one party having an onus placed upon them, but in reality, in an Inquiry such as this where there were in essence two parties, the appellants and the council (although there were representations from a number of interested persons), if the planning authority are disputing agricultural need, it will be up to the appellants to persuade the Inspector that there is such a need. That that is the reality of the position is demonstrated by the fact that this was the way in which Mr Ensor was content to approach the case, saying, as I have mentioned, in paragraph 23 of his proof, that the applicant should be given an opportunity of proving the viability of the enterprise and in this respect a temporary consent should be granted.
Moving to Mr Straker's first point, whilst viability and profitability are not necessarily the same (see paragraph E.9 of P.P.G. 7) the question posed in paragraph 12 of the decision letter was, in my view, entirely reasonable, having regard to the terms of both Development Plan policy and P.P.G. 7: that is to say, to ask whether a temporary permission was justified to enable the viability of the holding to be achived and to demonstrate that the enterprise was capable of being sustained for a reasonable period of time. If one came to the conclusion that viability was likely to be very short-lived and could not be sustained for a reasonable period of time, it would be entirely reasonable not to grant planning permission having regard to the policies to which I have referred.
How is one to decide whether the enterprise is capable of being sustained? The parties did not suggest any test and, in those circumstances, the Inspector was justified in using as a yardstick the full-time worker approach; that is to say, whether the enterprise, as existing or proposed, would be adequate to support a full-time worker. That he was using the full-time worker test in this way, to see whether the enterprise was sustainable rather than proposing some completely new and different question from that which he had raised in paragraph 12, is, in my view, confirmed in paragraph 16, where, having stated that:
if the targets set in the business plan are achieved then Mr Lomas will still only be earning half the minimum agricultural wage when the enterprise is fully established. On this basis I regard it as extremely unlikely that within the foreseeable future the unit would achieve the viability sufficient to support one full-time worker.
he goes on to say: *628
Without this prospect of viability I consider that, on .the balance of probability, there is no reasonable prospect of the enterprise being sustained for a reasonable period of time.
So that he was using that as a test to see what the answer was to the question which he had quite properly posed in paragraph 12. But, having used this as a measure of sustainability, it was, in my view, of critical importance that the profit figures were properly understood and applied. The ADAS report showed quite clearly that the profit from the enterprise prior to finance charges was some £12,000, and Mrs Lomas's statement of earnings indicated a degree of progress towards that figure, although, no doubt, certain deductions would have to be made to make the ADAS figures and her statement strictly comparable. But it is very striking that what dragged the figure down to £3,500, and therefore less than half the minimum agricultural wage, was the substantial inherited debt burden. The Inspector had been told that that debt burden was in fact being paid from another business; that is to say, the taxi business. One would have thought that, faced with that level of debt, if one looked simply at Mr and Mrs Lomas's position, there would be every reason for them to continue the agricultural enterprise because every little profit would help towards discharging such a substantial burden. But if one was looking at sustainability in a wider sense, it would not at all follow that if they, because of the debt burden, were driven out of business, any new occupier would be similarly burdened. If the criterion of sustainability is the scale of the enterprise adequate to support one full-time worker, then the answer, on the face of the ADAS figures, was plainly yes, unless that full-time worker was burdened with an enormous debt. It is clear, therefore, that the burden imposed by the charges does significantly distort the answer to the Inspector's own question in paragraph 14, and hence the answer to his central question in paragraph 12 of the decision letter.
Since this was of central importance to the Inspector's reasoning, as I have mentioned when looking at paragraph 16, the apparent misunderstanding of the financial evidence is sufficient to flaw the subsequent reasoning. The appellants, in my view, have had no explanation why the apparent agricultural profitability of the enterprise of £12,000 had to be reduced to the figure of £3,500 by reason of the finance charges. Given that the Inspector himself posed the question, was the scale of the enterprise sufficient to support a full-time agricultural worker, to enable him to answer his own question whether the enterprise was capable of being sustained for a reasonable time, it was, in my judgment, vital that the distorting effect of the finance charges was properly addressed and, if they were to be deducted, so significantly reducing the profit to below the level adequate to support one full-time worker, the reason why it was appropriate to deduct them, and so to reduce the eventual figure, should at least have been explained. At first sight, it would appear, upon the information before the inquiry, that they were the result of an inherited debt which was, in any event, being discharged from another source, and it would not be appropriate to deduct them, but, if and in so far as the Inspector felt that for some reason it was appropriate to deduct them, then, in my view, it was incumbent upon him to explain why, given the *629 centrality of his “full-time worker test”. On that very narrow ground I quash the decision and remit the matter to the Secretary of State.
Solicitors—Gregory Rowcliffe and Milners, London, as agents for Napthen Houghton Craven, Preston; Treasury Solicitor.
Decision quashed and remitted to the Secretary of State.