It might be thought prudent - and no more than common sense - that local authorities, as custodians of the public purse, should have regard to the financial consequences of their administrative decisions when they make them, particularly in a resource constrained world. Indeed, the Supreme Court has observed that general principles would normally dictate that a public authority should take into account the financial consequences for the public purse of its decisions (HSE v Wolverhampton CC  1 WLR 2264, per Lord Carnwath at para. 48, in a case concerning the revocation provisions under s.97 of the TCPA 1990).
However, some care needs to be taken in advising a Planning Committee of the risk of costs associated with defending its decision on a planning application, whether on appeal (and potentially through a costs award), or if its decision is challenged in the High Court. That is because the exercise of planning judgment under s.70 TCPA 1990 must be limited to considerations of the land use planning merits of the proposal. It would be unlawful for that planning judgment, and so the decision itself, to be influenced or distorted by consideration of extraneous resource implications for the local authority.
In R v RBKC, ex parte Stoop  1 PLR 58, the High Court upheld the officers' approach to advising its members of the costs implications of its intended decision. A majority of the Planning Committee had indicated that it was minded to refuse planning permission contrary to officer recommendation, at which point legal advice was given in closed session on the prospects on appeal if the decision were refused, and the possibility of an award of costs. This resulted in what the court described as a 'volte-face', with the majority deciding to grant permission. A judicial review was then brought by an aggrieved neighbour. Otton J (as he then was) held that there was nothing wrong with the procedure or the advice that was given or the consequences that flowed from the acceptance of that advice. However, none of the grounds argued in Stoop concerned the question of whether advice on the risk of costs was an immaterial consideration when making a planning decision. All parties appear to have proceeded on the basis that the advice on the financial consequences for the Council of not having sound and clear cut reasons for refusal was something they were entitled to consider when making the decision.
The Court of Appeal recently considered the issue in R (East Bergholt PC) v Babergh DC  EWCA Civ 2200. It was held that there was no evidence in the Officer Reports (or minutes) which dealt with the disputed planning applications, or in the relevant Annual Monitoring Report which set out the 5yr HLS position, of an approach to the assessment of 5yr HLS whose aim was to avoid the financial burden and risk of appeals, rather than one which would produce a 'robust' assessment in accordance with national policy and guidance. On the strength of that assessment the Council concluded it could no longer demonstrate a 5yr HLS and this tipped the balance in favour of the application proposals. Observations made by officers in a subsequent report to the Council's Overview and Scrutiny Committee, to the effect that a failure to produce a 'robust' HLS assessment might expose the district council to an award of costs on appeal, were made well after the grant of each planning permission. Similarly, comments made in a witness statement by an officer who had compiled the 5yr HLS assessment, that the context for wanting to ensure a 'robust' supply included the avoidance of unjustified appeals and their associated costs, played no part in the assessment itself or in which sites were included in the 5yr HLS. In any event, a policy compliant 'robust' assessment was, by its nature, an assessment likely to reduce the district council's financial burden and risk, and the requirement in national policy for such an assessment was effectively reinforced by the guidance on awards of costs in the PPG (per Lindblom LJ at paras. 71, 72, and 78).
The Court did emphasise the importance of planning authorities not allowing the potential consequences of a decision for their own resources to influence their exercise of planning judgment (per Lindblom LJ at para. 82). The Court also distinguished between the risk of costs encouraging planning authorities to think carefully about any refusal decision (which was permissible), and allowing the risk of the costs associated with defending an adverse decision on appeal to influence them in the exercise of their planning judgment (which was impermissible). There was a risk of the distinction being blurred where express reference was made in officer advice to the likely costs consequent on a refusal (per Underhill LJ at para. 87).
Most recently, the issue was considered in R (Miles) v Tonbridge & Malling BC et al.  EWHC 1608 (Admin), in which it was argued that immaterial considerations were taken into account, namely the prospects of an appeal against refusal and the risks of a costs award (with consequential reputational harm to the Council). Pursuant to the Council's Constitution, where the Area Planning Committee was minded to overturn its officer recommendation and there was a significant risk of costs being awarded on appeal, the application would be referred to Full Council. Advice on cost risks was given in closed session. This advice was referenced in the Report to Full Council in a separate section on financial considerations, and the Report itself referred back to the previous Reports which contained the planning assessment. The Court confirmed that, whilst costs risks and reputational harm were not material planning considerations, there was nothing wrong with officers giving members advice on the potential cost and reputational implications of refusing permission. As a matter of fact, these risks were not taken into account as material considerations in the planning analysis or in the exercise of planning judgment (per Neil Cameron QC, Deputy HCJ, at para. 100).
On 30 June 2020, the Supreme Court refused to grant permission to appeal the East Bergholt decision on the costs risk ground, which may be said to have put the issue to bed for now.
It is clearly sensible for decision makers to be given advice by officers on the costs consequences of their decisions. Indeed, in the planning context, the advice in the Planning Practice Guidance on the role and purpose of the costs regime would serve little purpose if decision makers could never properly consider the costs consequences of their decisions. That advice includes the following (at ID16-028-20140306):
"The aim of the costs regime is to: [...] encourage local planning authorities to properly exercise their development management responsibilities, to rely only on reasons for refusal which stand up to scrutiny on the planning merits of the case, not to add to development costs through avoidable delay".
However, in the light of the case law, the conundrum is what the decision maker is expected or entitled to do with information or advice that they are given about costs risks. If the decision maker takes the information as a reason to think long and hard before making a decision which might expose the Council to a risk of costs, that would seem to be fair enough. However, if a decision maker uses the information to make a different decision to the one that would have otherwise been made, that would be to infect the decision with an immaterial consideration. Articulating the distinction between the permissible and the impermissible in a way which will be meaningful to councillors could prove to be challenging. In the planning context, caution should be exercised before making express reference to costs consequences in an officer report which also undertakes the planning balance. Where it is felt appropriate to provide such advice, it should be distinct from the planning assessment. It should be made clear that it does not constitute a material planning consideration and that it should not be relied on as a factor in making the decision itself. An alternative approach could be to remind the decision maker of the importance of having reasons for refusal that can stand up to scrutiny on the planning merits, supported by robust evidence, rather than opening up potential avenues for legal challenge by overt reference to the risk of costs.
Michael Bedford QC appeared on behalf of Babergh BC (instructed by Jo Hooley, Business Partner (Planning), Shared Legal Services) in East Bergholt.
Asitha Ranatunga appeared on behalf of Tonbridge & Malling BC (instructed by Kevin Toogood, Principal Solicitor (Litigation)) in Miles.