Shakespeare’s decadent, drunken and corpulently challenged knight, Falstaff, when pressed to give reasons to verify an obvious lie, robustly declined. He declared that if ‘… reasons were as plentiful as blackberries, I would give no man a reason upon compulsion’.

But although Falstaff as a private individual was presumably within his rights to deny reasons, public authorities cannot be so cavalier. This is especially so where (as Lewison LJ recently observed in the Court of Appeal) ‘the decision-maker is disagreeing with a considered and reasoned recommendation’.

The case in question was Horada & Others v Secretary of State for Communities and Local Government & Others [2016] EWCA Civ 169, judgment in which was given on 18 March 2016. Lewison LJ gave the lead judgment, with which Longmore LJ and Lord Thomas of Cwmgiedd agreed – the lord chief justice adding a short, three-paragraph judgment of his own.

The case concerned the proposed regeneration of Shepherd’s Bush Market. As Lewison LJ noted, the market’s character is ‘one of small independent traders providing a diverse mix of products in food, fashion and household, mainly to the local population’.

The market ‘provides a social function to the local community’, is ethnically diverse ‘and offers the opportunity for independent businesses to trade in an affordable environment not found elsewhere in the area’. The market contains ‘137 separate retail pitches, some housed in railway arches, some in shops and others in stalls occupying the central spine and eastern side of the market’.

The relevant planning policy of Hammersmith and Fulham LBC proposed ‘regeneration of the market and other adjacent land to create a vibrant mixed-use town centre development of small shops, market stalls, leisure uses, residential and possibly office’. However, the development ‘should encourage small independent retailers and accommodate existing market traders’.

The accompanying planning framework (in addition to repairing and improving the market’s physical fabric and expanding the diversity of retail) ‘crucially’ should maintain existing traders and provide them ‘with the security to ensure that the market can continue to operate without interruption and serve existing customers and communities’. The council accordingly granted outline planning permission for the phased redevelopment of the market as part of a mixed-use scheme.

The developer in question (Orion Shepherds Bush Limited) entered into a section 106 agreement with the council which (among other things) required Orion to consult traders, have regard to their views and for there to be a rent freeze during the works. Rent and service charge levels should be affordable for small local, entry-level businesses.

The council made a compulsory purchase order (CPO) under section 226(1)(a) of the Town and Country Planning Act 1990 to facilitate the development, and following over 200 objections there was a 10-day public inquiry. Under section 226(1A), the CPO must not be exercised unless the development is likely to promote or improve the economic, social or environmental well-being of the area.

Lewison LJ also noted the long-standing policy that ‘a compulsory purchase order should only be made where there is a compelling case in the public interest’. Therefore, the overall question for the inspector (and for the secretary of state as decision-maker) was whether that compelling case had been made out.

The inquiry inspector concluded (among other things) that ‘the scheme did not provide adequate mechanisms for retaining the number, mix and diversity of traders, with the consequence that the scheme would not fully achieve the economic, social or environmental well-being sought’.

In addition, ‘the guarantees and safeguards are not sufficiently robust to be assured that genuine opportunities exist for current traders or shopkeepers (or similarly diverse businesses) to continue trading in the market…’ and without such assurances there is a real risk that the proposals would not provide the requisite ethnic diversity, independent or small-scale retailing central to the appeal of this locality.

Consequently, while ‘such uncertainties exist, the personal losses and widespread interference of private interests arising from confirmation of the order cannot be justified’. The inspector therefore recommended that the CPO should not be confirmed.

The secretary of state (Eric Pickles at the time) took a different view, saying that he was ‘satisfied that sufficient safeguards are in place to protect traders and shopkeepers through a series of planning conditions requiring the review and approval of the council and through the section 106 agreement which can be enforced by the council to ensure that a development in line with the relevant planning framework can be delivered’.

Public authorities have a duty to give adequate reasons for relevant decisions, for example where statute requires or when determining matters involving competing interests. In the instant case, rule 19 of the Compulsory Purchase (Inquiries Procedure) Rules 2007 required the secretary of state to give ‘notice of [his] decision and the reasons for it in writing’.

As outlined by Lord Brown in South Bucks District Council and another v Porter (No 2) [2004] UKHL 33, reasons should be intelligible and adequate and must (among other things) ‘enable the reader to understand why the matter was decided as it was and what conclusions were reached on the “principal important controversial issues”, disclosing how any issue of law or fact was resolved’.

Reasons may be brief, ‘the degree of particularity required depending entirely on the nature of the issues falling for decision’ and need refer only to the main issues, not to every material consideration. However, a ‘reasons challenge will only succeed if the party aggrieved can satisfy the court that he has genuinely been substantially prejudiced by the failure to provide an adequately reasoned decision’.

Lewison LJ did, however, note ‘a corpus of authority suggesting that fuller reasons are required where the decision-maker is disagreeing with a considered and reasoned recommendation’. And while ‘a duty to give reasons does not entail a duty to give reasons for reasons… nevertheless if disagreeing with an inspector’s recommendation the secretary of state is, in my judgment, required to explain why he rejects the inspector’s view.’

In present circumstances, the inspector’s attention was ‘squarely focused on the adequacies of the “guarantees and safeguards”’. Consequently, the principal controversial issue was ‘whether the guarantees and safeguards were adequate’. In the view of Lewison LJ, although it was clear that the secretary of state disagreed with the inspector’s view about the inadequacy of the guarantees and safeguards, he failed to explain why he came to that conclusion.

And while neither reasons for reasons, nor a paragraph-by-paragraph rebuttal is required, the secretary of state nevertheless needed to explain why he disagreed with the inspector, beyond merely stating that he did. In the circumstances, Lewison LJ considered that the traders had been ‘substantially prejudiced by a failure to comply with a relevant requirement’. The appeal was therefore allowed.

As indicated, Longmore LJ agreed and so did Lord Thomas CJ who added (among other things) that ‘it was particularly important that a proper and easy to understand explanation be given by the secretary of state for rejecting the inspector’s recommendation’. For the traders’ livelihoods ‘are put at risk by the proposed development’.

The inspector gave her reasons in a way that could readily be understood by the traders and it was for the secretary of state to explain his decision in the same ‘readily understandable way’.

Nicholas Dobson, Freeths

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