The High Court’s decision in the Fry case holds that habitats regulations assessment required at discharge of planning condition state

Introduction

The recent High Court judgment in C G Fry & Son Ltd v Secretary of State for Levelling Up Housing and Communities [2023] EWHC 1622 (“Fry”) has once again placed nutrient neutrality into the legal spotlight, highlighting the limiting effect which the problem of diffuse water pollution is having on housebuilding in large parts of the country. As we have reported in previous articles, new development which is capable of contributing additional nitrates and phosphates to the already high levels of diffuse water pollution ecologically harming the protected interest features of riverine and coastal European sites must conform with the requirement for appropriate assessment under the Conservation of Habitats and Species Regulations 2017 (“the Habitats Regulations”). Planning authorities must refuse permission for these new developments unless they can be certain beyond all reasonable scientific doubt that the new development will not adversely affect those European sites.[1] In this article we consider the facts of the Fry case and the legal arguments which persuaded the judge that the claimant’s grounds of legal challenge were unsuccessful.

Background

In 2015 Somerset Council (“the Council”) granted outline planning permission to the claimant for a mixed-use development which included up to 650 houses to take place in eight phases. Whilst the first two phases were completed under separate reserved matters approvals, the Council refused to discharge the pre-commencement conditions attached to the reserved matters approval for phase three, relating to 190 dwellings, subject to conditions. The Council maintained that an appropriate assessment under the Habitats Regulations must be completed before these conditions could be discharged. The Council’s decision was influenced by the Natural England Advice Note published in August 2020 (“the Natural England Advice Note”) to Somerset’s local authorities on development relating to the Somerset Levels and Moors Ramsar Site. The Natural England Advice Note was written in light of the Dutch Nitrogen Case,[2] a 2018 ruling from the Court of Justice of the European Union (“CJEU”). In the wake of the Dutch Nitrogen Case, the Natural England Advice Note read that greater scrutiny was required of plans and projects that will result in increased nutrient loads which may have an effect on Special Protection Areas ("SPAs”) and Special Areas of Conservation (“SACs”). Whilst in this case the impacts of diffuse water pollution would be on a “Ramsar site” (sites designated in accordance with the UK’s obligations under the 1971 Ramsar Convention on wetlands), as a matter of national planning policy Ramsar sites are afforded the same protection as if they were European sites.[3]  While Natural England was satisfied that the effects of additional nutrients on the Somerset Levels and Moors SPA could be screened out and so not require appropriate assessment under the Habitats Regulations, the Somerset Levels and Moors Ramsar site had been designated for different natural features which are vulnerable to the harmful effects of diffuse water pollution. Accordingly, Natural England advised that competent authorities should undertake an appropriate assessment under the Habitats Regulation on plans and projects likely to have a significant effect on the Ramsar site, and only grant consent if they could ascertain that the development “will not have an adverse effect on the integrity of the site”. Due to the fact that Natural England’s advice was issued after outline planning permission was given, the Council decided that in order to comply with the Natural England Advice Note it would need to apply the Habitats Regulations Assessment process to the final discharge of conditions stage. The claimant appealed this decision by the Council.

The Council's decision was upheld by PINS on appeal, prompting the claimant to  challenge that decision by way of judicial review. The claimant’s case in general terms is that the effect of additional phosphate loading resulting from its proposed development was not a material consideration to the determination of the conditions at issue. It was legally irrelevant because it fell outside the specific parameters of outline planning permission and reserved matters approval. The claimant’s grounds of challenge included that the planning inspector wrongly construed the Habitats Regulations.

The Judgment

The claimant’s case was dismissed by the High Court by the judge, Sir Ross Cranston.The judgment acknowledges that on a strict reading of the Habitats Regulations, the assessment provisions of regulation 63 do not cover the discharge of conditions, however the regime does apply as a result of firstly, the continued “direct effect” of Article 6(3) of the Habitats Directive, secondly, a purposive interpretation of the Habitats Regulations and thirdly, binding case law.[4] We will consider each of these arguments in turn.

1.  With regards the continued direct effect of Article 6(3) of the Habitats Directive, the High Court’s decision in Fry is in large part due to Freeths LLP’s 2022 case of Harris[5]. You can read more about that case here. In Harris, the High Court concluded that Article 6(2) of the Habitats Directive, which requires competent authorities to take steps to protect European sites, continued to have direct effect in domestic law because this legal obligation had been recognised in cases prior to Brexit. The legal basis for this decision is section 4 of the European Union (Withdrawal) Act 2018 (“the Withdrawal Act”), which says that any “rights, powers, liabilities, obligations, restrictions, remedies and procedures” under European law which, immediately before Brexit are “recognised and available in domestic law and are enforced, allowed and followed accordingly”, continue on and after Brexit to be recognised and available in domestic law. In Harris, the continued direct effect of Article 6(2) meant that the Environment Agency had acted unlawfully by limiting its investigation into the impact of water abstraction on just a selection rather than all European sites potentially affected by those activities.In Fry, it was held that Article 6(3) of the Habitats Directive also continues to have effect in domestic law. This is because under section 4(2)(b) of the Withdrawal Act, direct effect does not apply to “…any rights, powers, liabilities, obligations, restrictions, remedies or procedures so far as they…(b) arise under an EU directive… and are not of a kind recognised by the European Court or any court or tribunal in the United Kingdom in a case decided before” Brexit  (whether or not as an essential part of the decision in the case). However, in this case, Sir Ross Cranston was satisfied that the requirements of Article 6(3) were accepted as binding by the CJEU in the leading Habitats Directive case Waddenzee[6] and that because Articles 6(2) and 6(3) of the Habitats Directive are closely related, they can be treated as being “of a kind” with one another for the purposes of section 4 of the Withdrawal Act.[7] This meant that the requirements of Article 6(3) of the Habitats Directive remain part of UK law by virtue of this provision continuing to have direct effect.[8]  Accordingly, Sir Ross Cranston was satisfied that the planning inspector had acted lawfully in determining that they could not discharge the conditions without an appropriate assessment being undertaken (because to do so would mean that Article 6(3) of the Habitats Directive would not be applied to this development).
2. Consistent with this approach, Sir Ross Cranston also concluded that a purposive approach should be taken to the interpretation of the Habitats Regulations and that in these circumstances this would require the application of an appropriate assessment prior to the discharge of conditions. Only by doing this would it be possible to ensure that the strict precautionary approach required by the Habitats Directive / Habitats Regulations would not be undermined.
3. This approach was also consistent with previous case law, namely R (Wingfield) v Canterbury City Council [2019] EWHC 1974 (Admin) and  R (Swire) v Canterbury City Council [2022] EWHC 390 (Admin) which also concluded that the Habitats Regulations Assessment procedure should be applied after outline planning permission had been granted and before reserved matters were dealt with in circumstances where, for various reasons, the procedure had not been carried out at the earlier stage.

The judgment in Fry and the potential implications of the Retained EU Law (Revocation and Reform) Act 2023

Given that the ruling in Fry was rooted in the provisions of the Withdrawal Act and based upon the continued direct effect of Article 6(3) of the Habitats Directive in domestic law, a key consideration going forward is whether the position will be changed now that the Retained EU Law (Revocation and Reform) Act 2023 (“the REUL Act”) has become law.

Section 2(1) of the REUL Act will repeal and thereby remove the effect of section 4 of the Withdrawal Act from the end of 2023. Under section 2(2) of the REUL Act, anything which, immediately before the end of 2023 is retained EU law by virtue of section 4 of the Withdrawal Act, will not be “recognised or available in domestic law at or after that time (and, accordingly, will not be enforced, allowed or followed)”. The only exception to this is if regulations are made by Ministers which, on a case-by-case basis, restate the direct effect of EU law (see sections 11 and 12 of the REUL Act).

This, together with the REUL Act’s other changes to the Withdrawal Act (which increase certain higher courts’ powers to depart from pre-Brexit case law), means that the outcome of this case (or a similar case) could have been very different had it been brought after 1 January 2024. This is especially so since Sir Ross Cranston agreed with the claimant in Fry that the requirement for the appropriate assessment of plans and projects at the reserved matters and discharge of conditions stage is not an explicit requirement under the Habitats Regulations, but that instead the approach taken by the Council and PINS relied on the continued direct effect of Article 6(3) of the Habitats Directive. It will be interesting to see whether the Government does pass secondary legislation to preserve the direct effect provisions of the Habitats Directive in order to ensure that European sites receive legal protection despite gaps in our domestic legislation or is content not to do this despite claims by environmental bodies that a failure to do so risks reducing existing environmental standards.

What next?

In early July, Charles Banner KC, lead counsel for CG Fry, announced that a certificate had been granted, allowing CG Fry to apply straight to the Supreme Court, thereby “leapfrogging” the Court of Appeal. This certificate was secured due to the national importance of the case because of the impact diffuse water pollution is having on house building and therefore the public interest in its prompt consideration by the Supreme Court. Writing on LinkedIn, Mr Banner called the grant of a leapfrog certificate ‘truly exceptional’.At Freeths, we have been closely following this case, and advising on the developments with respect to the REUL Act, and issues around nutrient neutrality more generally. We will continue to closely follow this as it heads towards the Supreme Court.It is also worth noting that the Fry judgment refers to the April 2023 statement by the Home Builders Federation (“HBF”), prepared for the court about the claimant’s development. In its statement, the HBF said that the issue of diffuse water pollution was  “delaying an estimated 120,000 homes across the 27 catchments currently affected in England, with some 40 percent having already secured (as in this case) outline or full planning permission”.[9] The only option for developers caught by this problem is to mitigate the impact of new development through “nutrient neutrality” solutions such as the creation of wetlands to naturally filtrate water or take areas of farmland out of production.[10] According to the HBF these mitigation options are “extremely sparse”, causing widespread housing delays. This criticism has led to suggestions that the Government will try to amend the law to remove pressures on house builders or intervene itself in the supply of nutrient neutrality mitigation schemes. Caution should be taken as to how the Government intervenes in this area.

At Freeths we have the privilege of working with developers to help them secure the nutrient credits they need to move forward with their developments as well as acting for clients who are developing and bringing to market innovative nutrient neutrality schemes to help unlock constraints on development.  If there is concern about the pace of supply of such schemes, then options to support such initiatives could include encouraging private investment into these schemes thereby making it easier for entrepreneurial professionals to investigate and implement new schemes.  We are aware of recent Government announcements about potential changes to the law around nutrient neutrality which could have a significant impact on the private sector’s ability to bring forward schemes.  At Freeths we are closely following these developments. It is hoped that by working constructively together, private and public sector actors can find long-term solutions to the problem of diffuse pollution so that protected sites can thrive and new development is no longer constrained by this issue. 

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If you have any queries on the Habitats Regulation, please get in touch with Penny Simpson, Richard Broadbent, Helen Mitcheson, or another member of our Environmental Law Team.

Read other topical articles relating to Environmental Law:

• Nutrient Neutrality: Freeths’ ideas to solve the Habitats Regulations Assessment

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[1] Unless there are no alternatives to development and imperative reasons of overriding public interest, which in the case of regular residential and commercial developments is an exceptionally high bar.[2] Cooperatie Mobilisation for the Environment and Vereniging Leefmilieu. Case C-293/17 and C-294/17 (“the Dutch Nitrogen Case”).[3] See paragraph 181 of the National Planning Policy Framework.[4] Paragraph 48 of Fry.[5] Harris v Environment Agency [2022] EWHC 2264 (Admin)[6] Landelijke Vereniging tot Behoud van de Waddenzee and Nederlandse Vereniging tot Bescherming van Vogels v Staatssecretaris van Landbouw, Natuurbeheer en Visserij. Case C-127/02 (“Waddenzee”)[7] Paragraph 51 of Fry.[8] Paragraph 52 of Fry.[9] See paragraph 18 of the judgment.[10] Nutrient neutrality is defined by Natural England as a means of ensuring that a development plan or project does not add to existing nutrient burdens within catchments, so there is no net increase in nutrients as a result of the plan or project.