IESC 59 · Supreme Court

THE SUPREME COURT

2001 No 193

Denham J.

Murray J.

Fennelly J.

BETWEEN

Ballymac Designer Village LIMITED

Applicant/Respondent

THE COUNTY COUNCIL OF THE COUNTY OF LOUTH

Respondent/Appellant

JUDGMENT delivered the 31st day of July, 2002 by FENNELLY J.

It is part of the scheme of the planning acts that owners of interests in land can obtain compensation for the refusal of

planning permission. When, for the benefit of the common good, the owner of land is refused the right to develop it, it is

considered just that the public should compensate him. Justice does not, however, require that compensation be paid in all

situations and some large compensation claims have attracted public controversy. The scheme of compensation has been

modified and, in some respects, restricted over the years. The Local Government (Planning and Development) Act, 1990 (“the

act of 1990”) replaced the original scheme contained in the Local Government (Planning and Development) Act, 1963 (“the act

of 1963”).

The present appeal concerns a particular point of interpretation of the act of 1990. It is an appeal from a judgment of Kelly J in

the High Court. He, in turn, followed the earlier judgment of Geoghegan J in the case of Browne v Cashel Urban District Council

(Unreported, 26th March 1993). The point is whether a planning authority can, in response to a claim for compensation, rely on

a statutory notice of its opinion that planning permission ought to be given for an alternative development, when that

development would involve a material contravention of the development plan for the area.

THE FACTS

The respondent in this appeal is Ballymac Designer Village Limited, a company incorporated in England (“the claimant”). It is the

purchaser, under two contracts, for a total sum of £1,075,000, of about 11.6 hectares of land at Ballymascanlon Roundabout,

Aghaboys, Dundalk, Co Louth about 3 kilometres north of Dundalk Town Centre (“the site”).

On 14th July 1998, the claimant applied to the appellant, Louth Council, the planning authority for County Louth, for planning

permission for a development consisting of a factory outlet village, covering 19,045 metres, with over 100 shop units, three

fast-food restaurants and 1,600 car-parking spaces. The development would adjoin Ballymascanlon Roundabout. The planning

authority refused the application on 21st April 1999 and there was an appeal to An Bórd Pleanála (“the Board”). The Board on

18th November 1999 made a decision to refuse the appeal for two reasons. The material reason is as follows:

“The proposed development would contravene materially the provisions of the current Louth County Development Plan in

relation to “protected routes” as set out in paragraph 7.27.”

The development plan has as one of its objectives the restricting of new accesses or intensification of existing accesses onto

the county road network, subject to certain designated criteria. The claimant accepts that access to the site and thus to the

proposed development can be gained only from two roads designated in the development plan as protected routes. It is obvious

that the development would involve new or intensified access to those roads and that this would entail a material contravention

of the development plan.

The claimant, having an interest in the site pursuant to the two contracts of purchase, submitted a claim for £21.6 million

compensation to the planning authority on 16th May 2000, arising from the decision of the Board. It stated that neither of the

two reasons for refusal of planning permission given by the Board came within the reasons which would have precluded the

payment of compensation which reasons are set out in the third schedule to the act of 1990.

On 9th August 2000, the planning authority gave notice to the claimant of a formal document expressing its opinion, pursuant

to section 13 of the act of 1990 that the site was “capable of other development for which permission under Part IV of the Act

of 1963 ought to be granted.” In the schedule to that document it specified the development in question as:

“A hotel with a capacity of approximately 100 bedrooms and conference facilities for approximately 500 people together

with the normal ancillary facilities for such a development.”

It is common case that this proposed alternative development would also generate the sort of traffic movements which it was

the objective of provision 7.27 of the development plan to avoid and that consequently any planning permission for such a

development would involve a material contravention of that plan. This is what gives rise to the issue in the case. There is no

question as to the bona fides of the decision to give the notice.

The claimant successfully brought judicial review proceedings in the High Court (Kelly J) for an order of certiorari, quashing the

notice. The present appeal is taken from that order.

THE STATUTORY PROVISIONS

By virtue of section 11 of the act of 1990, whenever it can be shown that, following a refusal of planning permission, “the value

of an interest of any person existing in the land to which the decision relates at the time of the decision is reduced, subject to

the provisions of this Part, be entitled to be paid by the planning authority by way of compensation....”

In the absence of agreement, the amount of compensation is determined in accordance with the rules contained in the First

Schedule to the act. The matter is to be determined, by virtue of section 5 of the act of 1990, by one of the property

arbitrators appointed pursuant to the Acquisition of Land (Assessment of Compensation) Act, 1919.

Section 12 restricts the types of refusal of planning permission which may give rise to a compensation claim and provides that

compensation will not be payable where the refusal is for one of the reasons set out in the Third Schedule, as already

mentioned.

The present appeal, however, turns exclusively on the provisions of section 13. It is necessary to set it out in full, even though

subsection one alone is relevant to the present appeal:

"13(1) Where a claim for compensation is made under section 11, the planning authority concerned may, not later than

three months after the claim is received and having regard to all the circumstances of the case, serve a notice in such

form as may be prescribed on the person by whom or on behalf of whom the claim has been made stating that,

notwithstanding the refusal of permission to develop land or the grant of such permission subject to conditions, the land

in question is in their opinion capable of other developments for which permission under Part IV of the Principal Act ought

to be granted.

(2) For the purpose of subsection (1), other development means development of residential, commercial or industrial

character, consisting wholly or mainly of the construction of houses, flats, shops or office premises, hotels, garages and

petrol filling stations, theatres or structures for the purpose of entertainment, or industrial buildings (including

warehouses), or any combination thereof.

(3) A notice under subsection (1) shall continue in force for a period of five years commencing on the day of service of

the notice unless before the expiration of that period.

(a) the notice is withdrawn by the planning authority, or

(b) a permission is granted under Part IV of the Principal Act to develop the land to which the notice relates in a

manner consistent with the other development specified in the notice, subject to no conditions or to conditions of

a class or description set out in the Fourth Schedule, or(c) the notice is annulled by virtue of subsection (5).

(4) Compensation shall not be payable on a claim made under section 11 where -

(a) a notice under subsection (1) is in force in relation to that claim, or

(b) a notice under subsection (1) was in force in relation to that claim but has ceased to be in force by reason of

the expiration of the period mentioned in subsection (3) and an application for permission under Part IV of the

Principal Act to develop the land to which the notice relates in a manner consistent with the other development

specified in the notice has not been made within the said period, or

(c) a notice under subsection (1) was in force in relation to the claim but has ceased to be in force by virtue of

paragraph (b) of subsection (3).

(5) A notice under subsection (1) shall be annulled where, upon an application for permission under Part IV of the

Principal Act to develop the land to which the notice relates in a manner consistent with the other development specified

in the notice, such permission is refused or is granted subject to conditions other than conditions of a class or

description set out in the Fourth Schedule.

(6) No claim for compensation under section 11 shall lie in relation to a decision under Part IV of the Principal Act

referred to in subsection (5)."

It will also be necessary to refer, however, to section 26(3)(a) of the act of 1963 as inserted by section 39 of the Local

Government ( Planning and Development) Act, 1976. That section provides an elaborate machinery which permits a planning

authority to consider an application for planning permission which involves a material contravention of a development plan and,

following compliance with that machinery to grant the permission. It reads:

"26(3)(a) In a case in which the development concerned would contravene materially the development plan or any

special amenity area order, a planning authority may, notwithstanding any other provision of this Act, decide to grant

permission under this section, provided that the following requirements are complied with before the decision is made,

namely,

(i) notice in the prescribed form of the intention of the planning authority to consider deciding to grant the

permission shall be published in at least one daily newspaper circulating in their area,

(ii) copies of the notices shall be given to the applicant and to any person who has submitted an objection in

writing to the development to which the application relates,

(iii) any objection or representation as regards the making of a decision to grant permission and which is received

by the planning authority not later than twenty-one days after the first publication of the notice shall be duly

considered by the authority, and

(iv) a resolution shall be passed by the authority requiring that a decision to grant permission be made.

(b) It shall be necessary for the passing of a resolution referred to in paragraph (a) of this subsection that the number

of the members of the planning authority voting in favour of the resolution exceeds one-third of the total number of the

members of the planning authority, and the requirements of this paragraph is in addition to and not in substitution for

any other requirement applying in relation to such a resolution.

(c) Where notice is given pursuant to section 4 of the City and County Management (Amendment) Act, 1955, No. 12, of

intention to propose a resolution which, if passed, would require the manager to decide to grant a permission under this

section, then if the manager is of opinion that the development concerned would contravene materially the development

plan or any special amenity area order, he shall within seven days of the receipt by him of the notice make an order (a

copy of which shall be furnished by him to each of the signatories to the notice) requiring that the provisions of sub-

paragraphs (i), (ii) and (iii) of paragraph (a) of this subsection shall be complied with in the particular case and the

order, when made shall operate to cause the relevant notice given pursuant to the said section 4 to be of not further

effect

(d) If a resolution referred to in paragraph (a) (iv) of this subsection is duly passed, the manager shall decide to grant

the relevant permission."

THE HIGH COURT DECISION

Kelly J attached decisive importance to the accepted fact that the development proposed in the Notice served by the planning

authority would necessitate a material contravention of the development plan. He said:

“Clearly on the evidence the Section 13 notice is bad in law. Pursuant to the judgment of Mr Justice Geoghegan delivered

on 26th March 1993 in Annette Browne v Cashel Urban District Council the Section 13 notice is bad in law if the

permission envisaged in that notice cannot lawfully be granted at the time the notice is served and in this instance and

in that case that would apply where the permission offered is a material contravention of the development plan for the

local authority.”

Kelly J made an order quashing the notice of the planning authority dated 9th August 2000.

The earlier case was decided by Geoghegan J in answer to a question put in the form of a Special Case by Mr Sean McDermott,

Property Arbitrator. A section 13 notice had been contested also on the ground that the development permission proposed

would materially contravene a development plan. The material part of the judgment of Geoghegan J is as follows:

"If the permission suggested in the Notice is clearly one which at the time of the service of the Notice could not lawfully

be granted then the Notice is invalid. The permission suggested in this Notice would have contravened the development

plan and therefore quite obviously 'permission under part IV of the principal Act' ought not to be granted. In my view the

Council cannot get around the difficulty by purporting to make the effectiveness of the Notice conditional on a resolution

being passed by the members of the Council altering the development plan. The opinion referred to in the Section 13

Notice must obviously be an opinion formed before the service of the Notice. If at the date of the service of the Notice

the permission could not be lawfully granted than an opinion that it ought to be granted could not be said to have been

properly formed by the Council. The service of the Section 13 Notice containing such an opinion was ultra vires the

Council and the Notice itself must be deemed to be invalid. I am reinforced in this view by the terms of the Local

Government (Planning and Development) Act 1963. Under that section it is the duty of a planning authority to take such

steps as may be necessary for securing the objectives which are contained in the provisions of the development plan.

Section 39 of the same Act provides that the Council of an urban district shall not effect any development in such

district which contravenes materially the development plan. Section 26(3) of the 1963 Act provides that a planning

authority shall not in a case in which the development concerned would contravene materially the development decided

to grant permission under the section save with the consent of the Minister (now Bord Pleanala). The scheme of the

1963 is to make the planning authority bound by the development plan. It is perfectly clear that as of the date the

Notice was served the permission suggested in the Notice could not have been granted by the planning authority. That

being so, it cannot be a permission of the kind which can be included in a Notice under Section 13. I therefore answer

the question which has been referred to this Court by the Property Arbitrator in the negative."

THE ARGUMENTS ON THE APPEAL

The planning authority has appealed the decision of Kelly J. They say that he was in error in holding that a section 13 notice

could be valid only if the planning authority could grant the permission without the necessity for a material contravention

procedure, there being nothing to that effect in the section. The notice merely states that the planning authority has formed

an opinion that planning permission “ought to be granted.” The formation and the expression of such an opinion is not ultra vires

the powers of the authority. The opinion could not per se be invalid. The planning authority does not “undertake” or commit

itself to grant the permission. To do so would infringe the principle that it should adjudicate on the mater independently and

balance the interests of the public, possibly in the form of objections.

The court should distinguish between the expression of an opinion that planning permission ought to be granted and the

carrying out of the procedure for the making and consideration of an application, which may or may not lead to permission being

granted. The opinion is valid, though “inchoate” in the sense that other steps have to be carried out. He referred to the manner

in which Gannon J, in Byrne v Dublin County Council [1983] I.L.R.M. 213, distinguished between the two stages of an

“undertaking” under section 57 of the former compensation provisions in the act of 1963 and the grant of a permission.

It was inherent in the argument of the planning authority that the decision of Geoghegan J in Browne v Cashel U.D.C. was also

incorrect. Mr James Connolly, Senior Counsel, said that Geoghegan J, in referring so specifically to the provisions of the act of

1963, appeared to have overlooked the later amendments to that legislation and, in particular, the significance of the

amendment by the act of 1976 to section 26 of the act of 1963.

The claimant said the Kelly J, and also Geoghegan J in the earlier case, were correct to hold that a planning authority could not

validly express the opinion that a planning permission ought to be granted unless it was in the position, in the sense that it had

the power, at that time, to grant the permission. A planning authority does not have the power to grant planning permission

where a development would materially contravene the development plan.

Until the development plan is varied the planning authority must respect the development plan. The formation of an opinion and

the service of a notice pursuant to section 13 is an executive function, whereas the essence of the decision under the material

contravention procedure is, as demonstrated by the judgement of Finlay C.J. In P & F Sharpe Ltd and another v Dublin City and

County Manager and another [1989] I.R. 701, is a reserved function. The Manager could not validly express an opinion about

what the elected members would decide in the exercise of their reserved function pursuant to section 26(3) of the act of 1963.

Furthermore, the service of a section 13 notice encroached on the prima facie right of a claimant to compensation. Any such

provisions should be strictly construed. Reliance was placed on the dictum of McCarthy J in Grange Developments v Dublin

County Council [1986] I.R. 246 as well as those of Finlay P in Dublin Corporation v Smithwick [1976-7] I.L.R.M. 280, and

Denham J in Hoburn Homes v An Bórd Pleanála [1993] I.L.R.M. 368.

DECISION

The compensation scheme contained in sections 11 to 14 of the act of 1990 give effect to the principle enunciated at the

outset of this judgment. Where the common good requires that the owner of an interest in land suffers loss by reason of a

refusal to him of a permission to develop that land, it reasonable that fair compensation be paid to him. That compensation has

to be paid at the expense of the public purse. Thus, it must be just both to the property-owner and to the public. The

legislation provides that not every refusal of permission will give rise to a claim to compensation. The Second Schedule to the

act of 1990 contains a very limited list of such cases. The Third Schedule contains a longer list of cases which deprive a

disappointed applicant of compensation, where the refusal is for one of a number of specified reasons. These include cases

where the lack of available public services would render the development premature or where it would create a traffic hazard or

obstruction or interfere with a view of special public value.

The main effect of the provisions of section 13 can be summarised as follows:

Compensation should not be paid, if the owner can avail of an alternative possibility of development;

The notice stops the compensation claim from proceeding, subject to the provisions for processing an application for

planning permission within a five year period;

If no application for planning permission is made, compensation is excluded even after the period of five years;

If planning permission is refused or granted subject to certain specified conditions, the notice is deemed to be annulled;

If planning permission is granted, compensation is excluded.

It is clear that the section is designed to enable the planning authority to limit or defeat the possibilities of having to pay

compensation, by offering the developer the possibility of an alternative planning permission to the one he has been refused. If

he does not apply or applies and receives the permission, his claim is excluded. On the other hand, if he is refused the

permission, the notices ceases to have any effect and his claim revives.

Section 13(1) forms part of that scheme. The present appeal focuses on the words: “... the land ... is in their opinion capable

of other development for which permission ..... ought to be granted.” The question is whether the planning authority can

validly express such an opinion, where, as here, the permission envisaged by the notice would involve a material contravention.

Mr Connolly has pointed out that there is nothing in the words which tends to limit the circumstances in which the opinion can

be formed in that way. I think he is right. So far as any issue of strict construction is concerned the plain words used are

capable of being given their full natural meaning even where the envisaged application would involve contravening the plan. The

strict approach to construction advocated by Mr Macken would not justify the introduction into the statutory provision of

additional words.

Mr Macken says, however, that the planning authority cannot lawfully express such an opinion. At the moment of the

expression of the opinion , they have to be endowed with the power, unconditionally, to grant the permission. Although this

argument gains strong support from the judgment of Geoghegan J in Browne v Cashel Urban District Council, I regret cannot

accept that submission. Firstly, there is no case in which the planning authority can instantaneously grant a planning permission

at any point of time in advance of the submission of an application and compliance with all of the statutory and regulatory

mechanisms, public notices and the like. Secondly, and most importantly, the material contravention procedure is there in the

form introduced by the act of 1976 explicitly to deal with a situation where an application implies a contravention of the plan. It

is a recognition that, in spite of the fact that the plan has been fully adopted and is in force, there may be cases where the

planning authority believes that an exception may be justified, in which case a most elaborate procedure has to be followed. I

respectfully disagree with the view of Geoghegan J that a planning authority cannot validly express an opinion to the effect

that a planning permission ought to be granted unless it has at the same time the power to grant it. As was stated by Mr

Macken at the hearing, that procedure is identical with the procedure which has to be followed to effect a variation of the plan.

What is envisaged by section 13 is that the planning authority forms an opinion that an envisaged permission ought to be

granted. I agree with Mr Connolly that there is nothing to prevent the planning authority from forming that opinion, even if the

material contravention procedure has to be followed to give it effect. I do not accept Mr Macken’s argument that it is

impermissible for the person designated to perform the executive function, presumably the Manager, to form the requisite

opinion. He is not predicting what the elected members will in fact do, still less is he imposing any obligation upon them to

decide that the permission should be granted or even to initiate the statutory procedure. He is merely expressing an opinion,

which has the provisional and conditional statutory effect envisaged in relation to the compensation claim.

Even though, his words need much adaptation to make them exactly referable to the provisions of sections 11 and 13 of the

act of 1990, I find the approach of Gannon J to the analogous provisions of sections 55 and 57 of the act of 1963 in the case

of Byrne v Dublin County Council, at page 222 of considerable assistance. He said:

“I do not think that the undertaking to grant planning permission is to be equated to a grant of permission, nor do I think

that it is necessary that they should be equated. It seems to me that the use ........ of the phrase “shall be taken to be

available” is a means of prescribing the nature of information from which a factual circumstance can be inferred. It is a

method of expression used on occasions to give a hypothetical circumstance as a factual circumstance....”

The legislature has, it is true, eschewed the dichotomy of factual and hypothetical circumstance envisaged in that passage.

The nature of the scheme is, however, comparable. The opinion expressed in the section 13 notice acts provisionally on the

hypothesis that planning permission can be granted. If, in the end it is refused, the hypothesis falls. If it is granted or not

applied for, it is fulfilled.

In my opinion, the section 13 notice in this case was not invalidated by reason of the fact that the planning permission it

proposed could be granted only after the pursuit of a material contravention procedure. I would allow the appeal and substitute

an order rejecting the application for judicial review.