214 Petter and Harris v Secretary of State for the Environment, Transport and The Regions and Another Court of Appeal 15 March 1999 (2000) 79 P. & C.R. 214 ( Nourse , Buxton and Sedley L.JJ. ): March 15, 1999 Town and country planning—Agricultural dwelling—Agricultural holding not run on commercial basis—Planning permission lfor siting of mobile home in countryside refused—PPG 7 Annex I, agricultural and forestry dwellings—Temporary planning permission sought a second time—Application of financial viability test—Consideration to be given to individual circumstances when determining applications In 1992, temporary planning permission for a period of three years was granted on appeal for the stationing of a residential mobile home on an agricultural holding of 17 acres. In the appeal decision the first respondent’s inspector considered that, after a period of three years, the functional need for a residential unit at the holding and the financial viability of the enterprise should be reassessed. In 1996 the first applicant, who had been living full-time in the mobile home and running the agricultural operation, applied for a renewal of the permission. He was an elderly gentleman and it was not his wish to obtain a planning permission which endured after his own occupation of the holding had ceased. He therefore, sought temporary permission only. The local planning authority refused the permission. They also served an enforcement notice on him and on the second applicant, who also resided in the mobile home. The applicants appealed against the refusal of permission and against the enforcement notice. In
October 1997, the appeals were dismissed by another inspector. That inspector concluded that there was a functional need for a worker to live on-site but he considered that the economic viability of the enterprise had not been established. He had had regard to the advice in paragraph I5(c) of Annex I of PPG 7 which specified that new permanent dwellings should be on a unit which had been established for at least three years, had been profitable for at least one year and had a clear prospect of remaining financially sound. He considered that the profit and loss accounts could not be relied upon because they had not made any allowance for such items as council tax, veterinary treatment or unpaid labour. The applicants appealed to the High Court on the basis, inter alia , that the inspector had not given sufficient weight to the personal circumstances of the applicants and had assessed the application against the criteria for permanent permission and therefore wrongly applied PPG 7. That appeal failed and the applicants appealed to the Court of Appeal. Held, allowing the appeal, that an application of the bare wording of Annex I of PPG 7 is not always sufficient. A practical adaptation of the criteria in paragraph 15(c) to secure the underlying purposes of the policy may be required rather than a rigid application of criteria designed for commercial agriculture. A decision-maker must apply the underlying policy of preventing non-agricultural residential occupation arising in a case where a proposed agricultural occupation fails. In determining a planning application, the personal circumstances of an applicant cannot be of overriding importance in the context of proper and regulated land use planning. The financial viability test is only relevant in the determination of whether the grant of permission, in whatever terms it might be granted would, because of the uncertain future of the agricultural activity, threaten to produce, in the future, a non-conforming residential use that would pass with the land; a use that had lost its agricultural justification. Here, an unexpected but genuine application by somebody living by subsistence farming did not require a rigid application of criteria designed for commercial agriculture but a practical adaption of those criteria to secure the underlying *215 purposes of the policy. Profitability was no guide to its genuiness and a poor guide to its probable continuation. The true question should have been whether the unit was sustainable in the hands of the first applicant and in that sense viable and likely to continue so, which would have probably been answered affirmatively had it been addressed by the inspector. Cases referred to: R. v. Derbyshire County Council, ex p. Woods [1997] J.P.L. 958 . Appeal by Arthur Sidney Petter and Monica Mary Harris against the decision of Mr George Bartlett, Q.C. sitting as a Deputy High Court Judge of the Queen’s Bench Division dated May 15, 1998 whereby, he dismissed applications under section 288 and section 289 of the Town and Country Planning Act 1990 to quash the decision of the first respondent’s inspector dated October 24, 1997 to uphold an enforcement notice and dismiss an appeal against the refusal of planning permission. Planning permission for the stationing of a mobile home on an agricultural holding at Little Slifehurst Wood had been refused by the second respondent, Chichester District Council. They had subsequently issued an enforcement notice for its removal. The facts are set out in the judgment of Buxton L.J. below. Representation Jonathan Clay for the appellants. Natalie Lieven for the first respondent. The second respondents did not appear and were not represented. Nourse L.J.: Lord Justice Buxton will deliver the first judgment. Buxton L.J.: This is an appeal from a decision of Mr George Bartlett, Q.C. , sitting as a deputy judge of the Queen’s Bench Division, in a planning matter that was before him on May 15, 1998. The appeal arose under both sections 288 and 289 of the Town and Country Planning Act 1990 , but in the event it has proved sensible to deal with the matter as a single application, in circumstances that I shall shortly describe. Mr Bartlett’s decision was itself an appeal against a decision of a planning inspector, Mr Rusdale, delivered on October 24, 1997. I think it is fair, both to the learned deputy judge and to the inspector, to say at the outset that the appeal before us may have taken a somewhat different shape and has certainly led to the emphasis of certain different matters from those that were necessarily ventilated before either of them. The background facts are as follows: The two applicants for planning permission were Mr Petter and Miss Williams. The application concerns a smallholding in an agricultural area in Sussex, which was originally started by Mr Petter in 1981. At that time it was apparently a part-time occupation on his part, he being permanently employed as a farmworker on another farm. In 1988 the holding was extended, by the purchase of some further land, to its present size of 17 acres. There was set out in the evidence, and not challenged, the extensive variety of livestock and other farming activities that Mr Petter engages in on that property. He explained to the inspector that it had been throughout his life his ambition to own and run his own holding, and he had only lately achieved that with the acquisition of the present holding. Mr Petter, I should say, is a gentleman of fairly advanced years, being now, I think, 67 years of age. During the time that he has been concerned with the holding, various improvements have taken place by way of building, including the installation *216 of a septic tank and, more particularly, the matter with which the planning appeal was concerned, a mobile home with brick standing has been stationed on the smallholding. Mr Petter eventually went to live there, in circumstances I shall describe, being subsequently joined by Miss Harris. The history of the building was that planning consent was properly sought in 1988 for the stationing of that mobile home on the property, the reason for it being that Mr Petter wished to live there so that he could more easily supervise the activities on the farm. Planning permission having been originally refused for the mobile home, on appeal such permission was granted in October 1992. The permission was granted with a condition that it should be for three years only and the mobile home removed at the end of that term. That temporary permission was all that Mr Petter sought in 1992; that was realistically in accordance with the then planning policy operating with regard to residential structures in agricultural areas. It is accepted that the area with which we are concerned is one devoted to agriculture, and there is a well recognised national policy strongly discouraging the creation of further residential accommodation in such areas. The only type of residential accommodation that is normally contemplated under the current policy is where the residential accommodation is required for the proper operation of a farm or smallholding. That means, in the first instance, that it should be demonstrated that the agricultural activity requires the presence on the site 24 hours a day of a worker to look after the farm, the animals, and so forth. It has never been in dispute in this case, as I understand it, that Mr Petter’s smallholding fulfils that requirement; that is to say, that it is sufficiently extensive and, in particular, has sufficient requirements by way of looking after the animals for it to be necessary for there to be somebody present all the time. The second aspect of the planning policy is, however, this: those responsible for protecting rural agricultural areas against the incursion of inappropriate and inapposite residential accommodation are understandably concerned that residential accommodation should not be created (that is, have permission given for it) under the purported excuse or reason of agricultural need of the sort that I have just outlined, when that need in fact cannot be demonstrated. In order to seek to avoid that, there is a further aspect of the planning policy, which is that the applicant must demonstrate the viability of the agricultural activity in respect of which he says he needs residential accommodation. It was that aspect of the case that concerned the inspector in the 1992 application. He clearly had in mind the guidance in what was then Annex E to PPG 7, paragraph E.9 of which reads, in part: “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 or the size of dwelling which the unit can sustain. 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”. It was those considerations that were in the mind of the inspector when in 1992 he imposed the condition that the planning permission should be for *217 three years only. He said this in paragraph 13 of his decision letter (p. 54 of our bundle): “Whether your client’s intentions are capable of being maintained over a reasonable period of time, however, I regard as uncertain in view of recent profits and the size of the holding. I therefore consider that any permission granted should be a temporary one to allow time for such prospects to be clarified. In view of the history of the enterprise I consider a period of three years would be appropriate at which time both the functional need and viability should be reassessed. You indeed argued the case on the basis that a temporary permission be appropriate with viability to be examined at its expiry. An occupancy condition should also be imposed to prevent abuse of the concession in favour of agricultural dwellings”. It is clear from those extracts, both from the policy guidance and from the inspector’s report in 1992, that the purpose of looking at the viability or finances of the agricultural enterprise is to seek assurance, not only that the agricultural activity is a genuine one (a matter that has never been in doubt in this case), but also that it is not being put forward on an over-optimistic basis. Mr Clay, who has appeared in this case for Mr Petter, agreed that the latter aspect of the matter was one of the grounds for this planning policy. It follows from that that, although the viability of the farming operation is not in itself a relevant consideration, it is open to the planning authorities (indeed it is, in terms of the guidance, incumbent on them) to look at whether the farming operation can reasonably be expected to continue over the period of time to which the planning permission relates. As Miss Lieven, for the Secretary of State (in her very clear submissions) reminded us, that has at least two good reasons behind it. The first is that in normal circumstances, absent conditions, a planning permission runs with the land. Therefore, if an unconditional planning permission is granted for a residential building, that will continue even though the present occupiers no longer occupy it. Secondly, if the farming operation turns out to be unviable and the farming ceases, it is in practical terms likely to be extremely difficult to enforce any agricultural occupancy condition, such as is regularly imposed and such as was imposed in this case, when faced with the alternative of putting the resident out of the house and the house remaining vacant, a condition that no planning authority is likely to welcome. It is therefore important that the planning authority should be satisfied that there is some reasonable or firm prospect that the activity for the purposes of which a residential permission has been granted will indeed continue. That was the background of the 1992 application. I have gone into it in some detail because it is of equal relevance to the matter directly before us. When the 1992 permission was granted, the appellant was living in local authority accommodation in a nearby town. Very unfortunately, at that time his wife was seriously ill and, sadly, she died not long after that planning appeal had been allowed. On the grant of the temporary planning consent for the mobile home, Mr Petter then gave up his council house in order to reside full-time on the site in the mobile home. There is no suggestion that he did that for any reason other than to be able to operate the smallholding in the way that it needed to be operated. Some time after that he was joined there by Miss Harris, who is his cousin, who equally has, shortly before, lost *218 the parents with whom she had previously been residing. She now also lives in the mobile home and assists Mr Petter in his work on the smallholding. When the time came for the 1992 planning permission to expire, Mr Petter applied for what was described on the application as a renewal of the temporary permission. That was refused by the second respondent, the Chichester District Council, in January 1996. In June 1996 they served an enforcement notice under the 1992 planning permission requiring the removal of the mobile home.
The appeal before the inspector was in respect of both the enforcement notice and the refusal of further temporary planning permission. As I have said, both matters raised the same issues. That appeal was the subject of a hearing in September 1997 and was dismissed by the inspector, in the decision letter to which I have already referred, on October 24, 1997. The inspector recognised that the question before him was whether there was sufficient what I will call “agricultural justification”, in the terms I have already indicated of the planning policy, for the retention of the mobile home. That was against the background that such residential development infringes the general policy of limiting development in an area such as we are concerned with, except for the provision of agricultural workers’ dwellings where there is an actual agricultural need for the worker to live on the farm or smallholding. Both parties agreed that the question of agricultural need should be assessed in the context of the advice and guidance given in Annex I of the then revised version of PPG 7, the earlier edition of which I have already referred to in the context of the 1992 planning application. It will be convenient to set out first of all what the inspector said, although I will have to return to it. In paragraph 9 the inspector said as follows: “You claim that the circumstances of the holding at Little Slifehurst Wood justify a permanent dwelling, never mind a temporary one. However, I consider that your clients’ case does not meet at least one of the criteria in paragraph I5 of Annex I for assessing proposals for permanent dwellings, namely, the third criterion relating to the economic viability of the farming enterprise. In this respect, the agricultural unit and activity have been established for more than three years and the profit and loss accounts for the year ending 31 May 1996 indicate a net profit which exceeded the minimum agricultural wage for that year. However, the accounts are for tax purposes only and they do not include any allowance for such items as council tax, veterinary treatment or unpaid labour. If such allowances are taken into account, the net profits do not exceed the minimum agricultural wage for any of the last three years. Indeed, they do not exceed this level for any of the years since the last appeal decision. In these circumstances, and as the accounts for the year ending 31 May 1997 indicate that the net profits for the last year do not meet the minimum agricultural wage, I am not convinced that the unit is currently financially sound. 10 . The criteria for assessing temporary agricultural dwellings in paragraph I14 of Annex I relate to the provisions of new dwellings to support new farming activities. Consequently, the criteria do not strictly relate to the development subject to appeal, which is for the retention of an existing dwelling to support existing agricultural activities.” Those passages are illuminated by reference to Annex I, which the *219 inspector was directly referring to. If we turn to Annex I of PPG 7, the guidance starts by referring to the strict controls that are imposed so far as residential development in open countryside is concerned. It then says at I2: “There will be some cases, however, in which the demands of the farming or forestry work concerned may make it essential for one or more of the people engaged in this work to live at or very close to the site of their work. Whether this is essential in any particular case will depend on the needs of the farm or forestry enterprise concerned and not on the personal preferences or circumstances of any of the individuals involved”. As I have already said, it is accepted that the criterion is fulfilled in Mr Petter’s case. It is important to note that point because the policy guidance makes it very clear that consideration of this requirement must start from looking at the farm or forestry enterprise and its needs and only accepting that this test, colloquially called the “functional test”, is fulfilled if the needs of that enterprise make it essential for someone to live on the site. A case where a person decided to live in the country and then sought to add a farm or forestry enterprise to his residential accommodation in order to seek to fulfil this criterion would not qualify. The guidance then goes on as follows in paragraph I4: “In particular, it will be important to establish that stated intentions to engage in farming or forestry are genuine, are reasonably likely to materialise and are capable of being sustained for a reasonable period of time …”. So far as permanent agricultural dwellings are concerned, paragraph I5 says: “New permanent dwellings should only be allowed to support existing agricultural activities on well-established agricultural units, providing: (a) there is a clearly established existing functional need … (b) the need relates to a full-time worker … (c) the unit and the agricultural activity concerned have been established for at least three years, have been profitable for at least one of them, are currently financially sound, and have a clear prospect of remaining so.” Paragraph I10 states that: “New permanent accommodation cannot be justified on agricultural grounds unless the farming enterprise is economically viable. A financial test is necessary for this purpose, and to provide evidence of the size of dwelling which the unit can sustain”. Then turning to temporary agricultural dwellings, in paragraph I14 the guidance says: “If a new dwelling is essential to support a new farming activity, whether on a newly created agricultural unit or an established one, it should normally for the first three years be provided by a caravan, a wooden structure which can be easily dismantled, or other temporary accommodation…”. I15 states that: *220 … “It will be unsatisfactory to grant successive extensions to a temporary permission over a period of more than three years. Local planning authorities should not grant temporary permissions in locations where they would not permit a permanent dwelling”. Those advising Mr Petter in 1995 were, as it would appear, conscious that his application was an unusual one, in that it did not easily fit into the structure of policy that I have just outlined with the benefit of the planning guidance note. That was because they were in fact seeking a further temporary permission. Their reason for that was Mr Petter’s personal circumstances. It was not Mr Petter’s wish to obtain a permission that would endure after his own occupation of the holding had ceased. No doubt those who advised him not only thought it right to make that plain to the planning authorities, but also thought it prudent to do so: because if that could be achieved it would potentially remove one aspect of the very legitimate concerns that a planning authority has, that a planning permission, once granted, will enure with the land even after the disappearance of the present occupiers and even after it has passed into other hands which may not operate it in the way that the applicant has assured them he will do. These difficulties were recognised by the planning consultants that Mr Petter employed to advise him on the 1995 appeal. They placed a lengthy report before the inspector, and both the inspector and the judge cited substantial parts of it. On the present issue of whether the permission should be permanent or temporary, the consultants argued that the merits of the case would justify the grant of an application for a permanent home but, because of Mr Petter’s personal circumstances, the limited their application to temporary grounds. They also said, as a separate point, that there were strongly personal and in effect compassionate reasons for granting the application, quite apart from what were its perceived planning merits. Those passages from their report where the matter was dealt with are set out at pages 4 to 5 of the learned judge’s judgment. I do not think I need repeat them here. The upshot was that the consultants submitted in paragraph 5.6 of their evidence that the wish of the applicants, as they put it, to see the rest of their working lives out on the holding could only be achieved by the renewal of planning consent for the mobile home, albeit on a temporary basis. They added that the local planning authority had nothing to lose from this course of action because in the longer term they would not be accepting any permanent residential development on the site. The inspector applied the criteria to be found in PPG 7, which I have already set out. He found that the functional need for a residential worker had in fact increased since 1992, when it had been found by his predecessor already to exist, and was now well established because of the larger number of stock that were held on the site. He was not, however, able to be satisfied as to the other requirements of the policy guidance. I have already set out what he said in paragraph 9 of his report as to the fact that the economic viability of the enterprise had in his view not been established. A number of complaints as to those conclusions were raised before the learned judge, who rejected all of them. They can be summarised as follows First, the inspector did not give sufficient weight to the personal circumstances of Mr Petter and Miss Harris. Most conspicuously, a decision not to grant permission would deprive two elderly applicants of their livelihood and place of residence or, alternatively, did not give sufficient reasons for not *221 giving weight to personal circumstances. Secondly, the inspector assessed the application, which was an application for temporary permission, against the criteria for permanent permission and therefore wrongly applied PPG 7. Thirdly, the inspector took what was described as an “objective approach” to the viability of the farming operation and therefore did not give sufficient weight to the fact that the operation was able to continue and foreseeably would continue in the hands of Mr Petter and Miss Harris because of their self-sufficiency, the fact that they lived off the land, did not pay wages, grew their own food, used their own timber for kindling, and matters of that sort. Equally, expenses of some categories, such as council tax, were met by Mr Petter out of his savings or pension, not out of the turnover of the business. I turn first to the complaint that the application was assessed according to the criteria for permanent permission. In my judgment the inspector is not to be criticised for taking that approach in itself. As I have already indicated, the case was put for Mr Petter on the basis that he was indeed entitled to permanent permission. The inspector cannot be criticised, therefore, for looking at it on that basis. The fact that it was an application in form for temporary permission was merely a recognition by those advising Mr Petter, as far as I can see, that some means had to be found of achieving the objective that Mr Petter sought, which was, in realistic terms, that he should indeed have permanent permission to reside on the smallholding, but that it should be a permission limited to Mr Petter himself and possibly Miss Harris. It should not enure to the benefit of any future owner of the land or to any successor in title to the present owners. But the inspector, in my view, cannot be criticised for approaching the matter in the form that he did. Secondly, so far as personal circumstances are concerned and the inspector’s approach to them, the judge rejected the criticism of the inspector on that ground, and in my judgment he was right to do so. The inspector was clearly well aware of the personal circumstances of Mr Petter and Miss Harris, as the extracts that the judge cited from other parts of the decision letter clearly show. Although personal circumstances may be a factor that can properly be taken into account, it cannot, in my judgment, be erected (as the argument in this case sought to erect it, I have to say) into something of overriding importance in the context of proper and regulated land use planning. Otherwise there would be a danger of planning permission being granted even in cases that seriously infringe planning policy and the interests of others, solely on the ground that the occupiers had difficulty in finding accommodation elsewhere. Further, as to the way in which the inspector dealt with that matter, the judge said this at page 11D of the judgment: “As to the adequacy of the reasons, Mr Clay argued that the Inspector should have said what the personal consequences of the refusal would have been for the Applicant and should have identified some particular planning harm to be set against them. It is, I think, difficult to see what the Inspector might have said beyond what he did say in paragraphs 14 and 16 on the consequence for these Applicants of the refusal of planning permission; while on planning harm he made clear, in paragraph 13, that there was conflict with the policies contained in the structure and local plans which presumed against residential development in the countryside, particularly those which seek to conserve the distinctive landscape of the north-eastern part of Chichester District. In paragraph 15 he said: *222 ‘Whilst the mobile home is sited to limit its visual impact on the countryside, its presence materially detracts from the rural aspect of the site.’ In my judgment, there is no substance in any part of Mr Clay’s submissions in relation to personal circumstances.” I respectfully agree. I then turn to the main issue in this appeal, some aspects of which have connections with the two matters with which I have already dealt: that is to say, the use made by the inspector of PPG 7 and the interpretation that was put upon it. As I have said, this was an unusual case that does not obviously fit into the assumptions that are clearly to be found behind Annex I of PPG 7. That annex assumes that a planning authority may be faced with an application in respect of a new dwelling supporting a new farming activity, in which case a period of three years would be allowed for temporary accommodation to assess the viability of the business.
That is the burden of paragraph I14 of Annex I. Here the farming activity had been going on for a substantial time. It was not possible to say in respect of this mobile home that it was a new but temporary installation of that sort. Mr Petter’s ambition was that it should stay there in its position permanently. Secondly, the particular sort of permission that, in reality, Mr Petter was seeking (that is to say, a permission limited to himself and Miss Harris and not to extend beyond their own occupation and farming activity) does not fit into the assumption behind the other part of Annex I with regard to permanent agricultural dwellings, which assumes that permission is sought for a residence that will continue, as the farm will continue, after the disappearance of the present occupiers. It was therefore, in my judgment, necessary to approach PPG 7 with some caution. It was also necessary to bear in mind that PPG 7, important though it is, and significant though it was agreed on all sides to be in this case, was at the end of the day only a matter of planning guidance; it is not a statute. We were shown the recent authority in this court of R. v. Derbyshire County Council, ex parte Woods [1997] J.P.L. 958 , which dealt with how this court should treat cases where there have been interpretations of planning guidance by inspectors. The burden of what the court said is set out in the second paragraph of the headnote to the report, which reads as follows: “If there is a dispute about the meaning of the words included in a policy document which a planning authority is bound to take into account, it is for the court to determine as a matter of law what the words are capable of meaning. If in all the circumstances the wording of the relevant policy document is properly capable of more than one meaning, and the planning authority adopts and applies a meaning which it is capable as a matter of law of bearing, then it will not have gone wrong in law. A court will only intervene if the judgment on the meaning was demonstrated to be perverse or otherwise bad in law.” Before reaching that stage, however, it is necessary to stop and ask oneself about the purpose and intention of the particular parts of PPG 7 with which we are concerned; in particular (because, rightly, the inspector thought that he had to be concerned with this), the provisions about permanent dwellings and, more particularly, the need set out in paragraph I5(c) for the agricultural activity concerned to have been profitable for at least one of the last three years and to be currently financially sound. *223 In looking at that criterion, one has to ask why it is there. What is the object of that part of the policy document? Or, as my Lord, Sedley L.J., put it in argument, one has to look at what is the policy. As I have already sought to demonstrate, it is clear, both from the predecessor of PPG 7, that was before the court in 1992, and also from the current document, that the reason why financial viability and the long-term prospects of the farming operation are taken into account is in order to seek to ensure that the residential development that is going to be permitted on the basis of the agricultural activity will indeed remain as a residential development linked to an agricultural activity; that is to say, as indeed paragraph I5(c) of PPG 7 puts it, the agricultural activity concerned has a clear prospect of remaining financially sound and profitable. The simple words of the policy and of the policy document must therefore be interpreted with that overall intention in mind. As is agreed on all sides, the policy is to stop bogus or over-optimistic applications and to ensure that the relevant agricultural activity is likely to continue. Therefore, in looking at the wording of the policy, it is necessary for the inspector to consider what is the root reason why he is looking at financial viability at all. The inspector viewed the question of the financial soundness of the unit and the agricultural activity under paragraph I5(c) on what was called in the court below an “objective basis”, that is to say, was it financially sound as a unit, operated by whomsoever it was run, whether it was run as Mr Petter ran it, as I have described, or whether it was run by a more orthodox farming operation, with hired labour, the sale of produce, and aspects of that sort? In my judgment, looking simply at the bare words of paragraph I5(c), on the basis of the judgment in the Woods case, that test was open to him in law. Once that test had been adopted, can one fault his finding? Clearly, if one is looking at the financial viability of an operation from an accounting point of view, in abstract terms, the fact that in the years in question there were no bills for veterinary services, the fact that Mr Petter pays the council tax out of his own savings and not from the turnover of the farm, and the fact that neither he nor Miss Harris charge for their labour, are all matters that render their accounts, as an objective account of the viability of the business, open to serious question. Indeed, as the inspector rightly found, it renders them something that cannot be relied on. But in approaching the matter on the basis of the bare wording of the paragraph, I have to say that the inspector, in my judgment, overlooked the purpose and objective of the policy that he was applying. As I have already said, the financial viability test is only relevant in the determination of whether the grant of permission, in whatever terms it may be granted, would, because of the uncertain future of the agricultural activity, threaten to produce in the future a non-conforming residential use that would pass with the land—a use that had lost its agricultural justification. In answering that question it is relevant to consider whether this very activity by these applicants is likely to continue over the intended period of the planning permission. To that question, the actual operations and intentions of the present occupants and their disavowal of any wish for permission to continue after they cease to occupy is relevant. An application of the bare wording of PPG 7, in the way in which the inspector applied it, does not meet that case. In my judgment, therefore, the inspector should have considered the matter from that point of view in order to apply here the underlying policy of *224 preventing non-agricultural residential occupation arising in a case where proposed agricultural occupation fails. In saying that, I do not want to be thought to be critical of the inspector. The matter was presented to him in a difficult form. It certainly was not presented to him in the way in which I have just sought to formulate it. It was understandable, in the light of the argument presented, that he should have dealt with it in the way he did. But that said, it was still necessary to consider what the real intent of the policy was, and that was not achieved. If the viability of Mr Petter’s operation from that point of view (that is to say, in terms of the way in which it was actually run) had been considered, the inspector should have reviewed whether the operation, in its own terms, had a proper chance of continuing over the period for which planning permission was sought. If the inspector came to the conclusion that there was a substantial possibility of the operation continuing over the period that Mr Petter wished to operate it, it would then have been incumbent on him to consider whether a continued temporary planning permission would be appropriate in these exceptional circumstances; whether there should be a permission with a condition limited to Mr Petter and Miss Harris; or whether there should be a permission limited to what was foreseeably likely to be the active career of Mr Petter and Miss Harris as farmers (that is to say, to the age, perhaps, of seventy years). Those would all have been matters for the inspector to consider. He cannot be criticised for not considering them because the precondition to their consideration (that is to say, that Mr Petter’s operation should, in the context of this policy, be considered in its own terms and not against abstract financial criteria suitable for a normal determination) was not fulfilled. In saying all of this I am conscious of the danger stressed by Miss Lieven of there being a series of temporary permissions, which may then wrongly tip the scales in planning terms in favour of an eventual permanent permission. But that is not what was before the inspector. In such a case, I would expect a local planning authority to give short shrift to an attempt to achieve a full, permanent, permission by unmeritorious means. In realistic terms, although it was not expressed with the felicity that it might have been, what was before him was an application to permit Mr Petter to continue in residential occupation whilst he was farming the farm. Nor do I think that this approach is excluded merely by the fact that no formal proposal was made to the inspector that he should do other than extend the existing temporary permission. The reality of the matter, as I say is not that a completely unforeseen condition would be imposed in this case but rather that some way would be found, if on planning grounds it was thought right, for that which Mr Petter sought to achieve to be achieved without breach of the policy underlying (I emphasise the word “underlying”) the guidance in PPG 7. For my part, therefore, I would on that ground, and that ground only quash the inspector’s determination and remit the matter to the Secretary of State for reconsideration in the light of the observations that I have sought to make. I should emphasise that that is all I think it right to order. Mr Petter, I think it right to say, must not assume that the eventual outcome will necessarily be that which he seeks. I have said that on the facts of this case, in the light of the underlying policy, it is right to look again at Mr Petter’s arguments based upon the actual operation of his agricultural activity in the context of the continuation of that activity. It does not, of course, follow that *225 those who look at that will be persuaded, even on the basis of what Mr Petter says, that that activity will in fact sufficiently continue for the period that he seeks. Also there may be other planning difficulties about the solution that he seeks, even if he satisfies the authorities as to the viability of the business, not least in terms of possible objections to there being temporary structures of this sort in agricultural areas for longer than a period of three years. All that, however, is as to the future. So far as this court is concerned, I would order that the appeal be allowed, the order of the inspector be quashed and the matter be remitted to the Secretary of State for further consideration. Sedley L.J. As the applicants’ own consultants recognised, the application had to be sufficient to justify permanent planning permission or fail, even though the applicants wanted it only for finite purposes. Mr Clay has submitted that the inspector, despite the conscientious approach to the possibility of permanent planning permission in paragraph 9 of the decision letter, applied PPG 7 so rigidly as to exclude relevant and critical features of the applicants’ particular case without proper regard to the policy’s purposes. I agree that this criticism is well founded. It is not the same point as that decided in the case of R. v. Derbyshire County Council, ex parte Woods [1997] J.P.L. 958 , which turned upon the jurisdiction to determine the meaning of words in a policy. This case has to do with what is material to the purposes and application of the policy itself. Annex E (now Annex I), for obvious reasons, treats temporary and permanent planning permissions differently. A temporary permission is ordinarily to be tied to a projected agricultural use which, if it is to prove viable, will require a dwelling on the land. After one such period, it will ordinarily be inappropriate to renew a temporary permission and appropriate to decide between cesser of residential use and permanent permission for it. For the latter, the criteria are naturally different, but, as logic would suggest, they look now to the reality, not just the prospect of the agricultural enterprise. If Annex I were a statute or a statutory instrument, one would be exercised by the differential language used in paragraphs I5(c) (which speaks of profitability) and I10 (which speaks of viability). But this being a policy, as Miss Lieven herself suggests, it can be said without difficulty that profitability is there as an indicator of viability. I would add that viability itself is there for an identifiable purpose; to ensure that any residential planning permission is both ancillary and proportionate to a true agricultural use. In most cases profitability will be a very good indicator of this. If it is an employee who is to live on the land, no employer is likely to keep him or her there if the land is not yielding a profit. If it is the applicant himself, again viability is likely to mean the production of an economic surplus for him of some kind. So an unprofitable holding is likely to be non-viable and therefore not to afford a proper basis for planning permission for a permanent dwelling of and kind on what is ex hypothesi agricultural land. But—and this is precisely the value of policy guidance as against statutory prescription—circumstances will vary infinitely and a margin of flexibility may be needed to accommodate them. So here an unexpected but undoubtedly genuine application, by somebody living by what amounts to subsistence farming, requires not a rigid application of criteria designed for *226 commercial agriculture, but a practical adaption of those criteria to secure the underlying purposes of the policy. I do not accept Miss Lieven’s submission that to do this is to introduce impermissible personal circumstances into the planning judgment. It is to make the best feasible approach to a necessary judgment on the future needs of the agricultural land in question. This is where the key paragraph of the decision letter, paragraph 9, in my view fails. For Mr Petter’s chosen mode of agricultural production, profitability was no guide to its genuineness and a poor guide to its probable continuation. But it is from this test that the inspector derived his conclusion: “I am not convinced that the unit is currently financially sound.” The true and analogous question in relation to Mr Petter was whether the unit was sustainable in his hands and in that sense viable and likely to continue so. It seems very probable that this question, had it been addressed, would have been answered affirmatively. More will have to be decided before the applicants can obtain the restricted planning permission they seek, including, I suspect, a recasting of their application or appeal to combine an express application for permanent planning permission with either a concession or a section 72 condition or a section 106 planning obligation in order to ensure that the grant, if made, is coterminous with Mr Petter’s stewardship of the holding and does not run with the land. But if, as I agree should happen, the Secretary of State’s decision is quashed for error of law under section 288(5) , these matters can be put before the Secretary of State when reconsideration comes to be given to the appeal from the decision of the local planning authority. Nourse L.J. I also agree that the appeal should be allowed and do not wish to add anything of my own. Representation Solicitors— Shuttari Paul & Co. Middlesex; Treasury Solicitor . Reporter —Megan Thomas. Appeals allowed with costs.