CG Fry [2024] EWCA Civ 730: habitats assessment…

The Court of Appeal’s long-awaited decision in CG Fry concerned the nutrient neutrality approach developed by Natural England, to meet the requirements contained within the Conservation of Habitats and Species Regulations 2017. It determined the question of whether the Regulations required an “appropriate assessment” before a local planning authority decided whether to discharge conditions on the approval of reserved matters, having previously granted outline planning permission without such an assessment. The Court of Appeal has dismissed the appeal on all grounds and concluded that the Regulations could require an appropriate assessment at discharge of conditions stage, both directly as a matter of law in the case of SACs and SPAs, and indirectly as a matter of national policy the case of Ramsar sites.

David Elvin KC, Richard Moules KC, Dr Ashley Bowes, Luke Wilcox, and Nick Grant explore the implications of the case for local authorities and developers and discuss the broader relationship with Environmental Impact Assessments (EIA).

Background issues in the case

The principal issue in the appeal concerned nutrient neutrality, which requires that new developments make no net contribution to the nitrogen or phosphorus loads in protected wetland habitats. The principle has become controversial because of its impact on housing development: almost any new residential scheme will involve an increase in nutrient deposition into the receiving catchment, mainly through waste water, but also through surface water runoff. If the receiving catchment is a protected site, then the nutrient neutrality approach prevents the housing from proceeding unless suitable mitigation is provided (which can be very costly).

A Natural England advice note (August 2020) called for greater scrutiny for developments involving nutrient deposition into protected habitats. Its recommendations stated that to pass its AA, a developer must show the development will not have an adverse effect on the protected site’s integrity. The recommended methodology for assessing this was nutrient neutrality: any nutrient generated by the development had to be counterbalanced by the removal of some other nutrient source. This led the way for the introduction of nutrient neutrality as a popular methodology for local authorities in the UK to use when carrying out appropriate assessments of housing schemes in the catchments of protected sites.

The site at the centre of the case is Jurston Farm, for which outline permission was granted in December 2015 for 8 phases of residential development in the catchment of Somerset Levels and Moors Ramsar Site. In June 2020, reserved matters conditional approval was granted for phase 3 (190 dwellings) including pre-commencement conditions. CG Fry first applied to discharge the conditions in June 2021, after the publication of the aforementioned Natural England advice note. In July 2022 the LPA produced a shadow appropriate assessment, which showed that phase 3 would have an impact on the Moors Ramsar site (but not the SPA). The result was that, as a matter of national policy, the only way the development could proceed was if CG Fry offered extensive offsite mitigation. No such mitigation was offered by C G Fry, and there was no dispute about the substance of the shadow AA. This resulted in an impasse between the LPA and the developer, and the developer made a non-determination appeal to the Secretary of State. That appeal was dismissed by the inspector, who held that an appropriate assessment was required at the conditions discharge stage. The Planning Court (Sir Ross Cranston) agreed, dismissing C G Fry’s s. 288 challenge against the inspector’s decision.

The legislative starting point is Article 6(3) of the EU Habitats Directive. This states that an authority cannot agree to a project that has a likely significant effect on a protected site, unless an appropriate assessment confirms that there is no risk of an adverse impact on the integrity of the site. Importantly, the approach is a strict precautionary one: the assessment can only be passed if no reasonable doubt about the absence of adverse impacts on the site’s integrity exists. The Habitats Directive was transposed into UK law via the 2017 Conservation of Habitats and Species Regulations and retained after the UK left the EU.

The regulations of significance in the case are:

i) Reg 62, which is the implementing provision for the assessment regime, and which gives effect to a number of bespoke regulatory codes for certain decisions.

ii) Reg 63, which transposes Article 6(3) of the Directive, and which includes a requirement that any consent or authorisation for a relevant project should take account of any conditions or restrictions to which the authorisation is subject.

iii) Reg 70, which creates a bespoke regime for considering appropriate assessments when dealing with a grant of planning permission, including outline permission. Reg 70(3) in particular requires the carrying out of an appropriate assessment at the outline stage where outline planning permission is sought.

Two important precedents provide the legal background to the case. The first was R (Wingfield) v Canterbury CC [2019] EWHC 1975 Admin. Wingfield applied the EIA approach to multi-stage consents to hold that AA at the RM stage was lawful where circumstances had changed between the outline grant and the RM application. The second was the more recent case of R (Swire) v Canterbury City Council [2022] EWHC 390 (Admin). In Swire, Holgate J applied Wingfield, stating that for the purposes of the Habitats Regulations, it was possible to have AA at the reserved matters stage as unlike in the EIA Regulations, there is no objective requiring HRA (Habitats Regulations assessments) to be carried out at the earliest possible stage.

The grounds of appeal in the case were as follows:

Whether the judge was wrong to hold that regulation 63 of the Habitats Regulation applied at the discharge of conditions stage
Whether the judge erred in holding that the policy in paragraph 181 of the National Policy Framework (NPPF) that applied equivalent protection to Ramsar sites was a material consideration
If in in any event the judge was wrong to hold that the scope of an appropriate assessment in these circumstances was limited to the matters affected by the conditions for discharge, rather than the development itself

Why was it contended that HRA not apply to subsequent approvals?

The key elements of the Appellant developer’s argument were as follows. Regulation 61 defines “assessment provisions” as regulation 63 and 64. Regulation 62 tells us that the assessment provisions apply “subject to and in accordance with” Chapters 2 to 7. Chapter 2, Regulation 70 is headed ‘Grant of Planning Permission’ and regulation 86 tells us that terms within Regulation 70 are to be construed within the Town and Country Planning Act 1990. The granting of planning permission is notably distinct from the approval of a reserved matter or the discharge of conditions. Finally, Regulations 70(3) and (4) make express provision for assessment at the permission stage.

Accordingly, the argument under Ground 1 was that an appropriate assessment could not be required at subsequent states after the grant of consent (i.e. approval of reserved matters of discharge of conditions) because that was outside the scope of Regulation 70.

Ground 2 was in the alternative, namely that the policy at paragraph 181 of the National Planning Policy Framework could not make material what would otherwise be immaterial. That was because the site in question was not directly protected by the Habitat Regulations (but instead the Ramsar Convention) and therefore the requirement to have regard to the effect on the site only arose via policy (i.e. para.181 NPPF). As nutrient loading was not material to the matters covered by the conditions, it was argued that the NPPF could not legally make a consideration (i.e. the effect of the development on the nutrient levels at the Ramsar site) relevant which was otherwise irrelevant to the subject matter of the conditions under considerations.

There was also a point on scope raised in the alternative to the first two grounds. This claimed that if an assessment did apply, the scope was limited to the subject matter of the condition under consideration.

Court of Appeal’s decision and its implications

Ground 1

On the first ground, the Court concluded that on their true interpretation applying domestic principles of statutory construction, regulations 63 and reg.70 allowed for an appropriate assessment to be undertaken when the discharge of conditions was being considered in a multi-stage process. Indeed, where the provisions for appropriate assessment were engaged, regulations 63 and reg.70 had the effect of requiring such an assessment to be carried out before development was authorised to proceed by the implementing decision. The Court held that the ‘strict precautionary approach’ underpinning the Regulations would be undermined if the assessment provisions were limited to the initial permission stage of a multi-stage process.

The Court held that the legislation had to be construed in line with its purpose, therefore interpretation was not a process requiring a linguistic exercise performed in isolation from its context. Nothing in the Regulations excluded a requirement for AA at the conditions discharge stage if approval under the condition is necessary lawfully to implement the planning permission. Regulation 70 read together with 63 also allows AA to be undertaken when the authority makes the final decision and includes when deciding to discharge pre commencement conditions.

While ideally an AA will be undertaken at first opportunity, it does not follow that it cannot be done when making an implementing decision. This approach does not take away private rights: failing an AA at the condition discharge stage doesn’t mean the planning permission is invalid. The stringent approach is because the Habitats Regulations are about preventing harm from occurring. Statutory provisions for revocation of planning permissions and the payment of compensation are not proper alternatives.

Regarding the relationship between domestic and EU law, the Court held that there is no conflict between domestic planning legislation and the Habitats Directive/ the EU-derived Habitats Regulations. If there had been, EU law would have prevailed in accordance with the principle of supremacy.

This decision provides a clear indication that the courts will readily interpret EU-derived domestic legislation purposively in accordance with domestic principles of statutory construction regardless of the position applying the EU Withdrawal Act 2018 and the Retained EU Law (Revocation and Reform) Act 2023. The decision also leaves open the question of which conditions constitute implementing decisions capable of triggering a need for AA/further AA. For example, does that concept extend to pre-occupation conditions or more?

Ground 3

Ground 3 was dismissed on the grounds that regulation 63 requires an appropriate assessment to consider the implications of the project, not the implications of the part of the project to which the consent relates.

Dissecting the assessment over ‘parts’ of a project was held to be inconsistent with the fundamental objective of the legislation, which is a “comprehensive scheme for the protection of important habitats”. Such an approach would depart from the precautionary approach in the legislation. In practice, this means that one could have a pre-commencement condition to do with the design of the scheme which has no effect on the impact on protected sites, but one would still be required to do an AA at that stage. The Court highlights that the Regulations set out a holistic process: there no reason why it cannot bite in relation to subject matter not directly concerned to ecology.

Ground 2

This ground was dismissed. It was held that the policy in paragraph 181 was engaged because of the connection between the consequence of discharging the conditions (authorising Phase 3 of the development) and the object of the policy, which was to prevent harm to relevant protected sites, including Ramsar sites.

Paragraph 181 establishes that Ramsar sites have the same “practical level of protection in planning decision-making” as habitats sites. Once harmful effects were a likely effect of the development and the effects depended on the decision over whether to discharge the conditions, paragraph 181 became a material consideration. The consequences of the decision were thus relevant to the materiality of the consideration itself.

This case was distinguished from Elsick where the SPG in that case required contributions for highway improvements lacking any connection to the development. Such policies are unlawful regardless of the stage of decision-making. In this case, the policy was not tainted by unlawful consideration: nothing was amiss in policy being produced to safeguard wetlands protected under international law and applying precautionary principles to internationally important habitats. It was therefore lawful for an inspector to take such policy into account when deciding whether to discharge conditions for development likely to cause harm to the Ramsar site.

This blog was written by David Elvin KC, Richard Moules KC, Dr Ashley Bowes, Luke Wilcox, and Nick Grant.