B e f o r e: MR JUSTICE DOVE Between: THE QUEEN ON THE APPLICATION OF SAINSBURY'S SUPERMARKETS LTD Claimant v

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1 Neutral Citation Number: [2015] EWHC 2571 (Admin) IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION THE ADMINISTRATIVE COURT CO/521/2015 Royal Courts of Justice Strand London WC2A 2LL B e f o r e: Wednesday 22 July 2015 MR JUSTICE DOVE Between: THE QUEEN ON THE APPLICATION OF SAINSBURY'S SUPERMARKETS LTD Claimant v LONDON BOROUGH OF HILLINGDON Defendant ALBEMARLE DEVELOPMENTS LTD First Interested Party ARLA FOODS UK PROPERTY COMPANY LTD Second Interested Party Computer Aided Transcript of the Stenograph Notes of WordWave International Limited A Merrill Communications Company 165 Fleet Street London EC4A 2DY Tel No: Fax No: (Official Shorthand Writers to the Court) Mr David Forsdick QC (instructed by Dentons) appeared on behalf of the Claimant Mr Admas Hablelasie appeared for judgment only Mr Craig Howell-Williams QC and Miss Melissa Murphy (instructed by Legal Department, London Borough of Hillingdon) appeared on behalf of the Defendant Mr Charles Streeton appeared for judgment only Mr Patrick Clarkson QC and Mr Simon Pickle (instructed by Shoosmiths) appeared on behalf of the First Interested Party - Mr Alistair Mills appeared for the judgment only The Second Interested Party was not represented

2 J U D G M E N T

3 1. MR JUSTICE DOVE: 2. Factual Background 3. The interested party owns land at South Ruislip which was formerly a dairy and which has been vacant and unused since It lies beyond the boundary designated for the South Ruislip local centre. Sited within the centre and anchoring it is the claimant's store. The claimant's store trades exceedingly well and they have plans to redevelop and expand it. The defendants are the Local Planning Authority. They produced a local plan, the Hillingdon Local Plan Part 1 November 2012, containing the designated boundaries of the local centre. 4. Part of the supporting evidence for the Local Plan was the Hillingdon Convenience Goods Retail Study Up date It was noted in the Local Plan that: i. " This [the Study] concludes that there is no capacity for additional convenience goods retailing in the years up to 2016, and that from 2016 through to 2021 capacity grows to 2,709 square metres. The Study notes that there could be a qualitative argument to support the provision of convenience goods floorspace in the northern half of the borough. This need will be taken into account on a case by case basis in the assessment of individual planning applications and as part of the Hillingdon Local Plan: Part 2 Site Specific Allocations Local Development Document." 5. The policy for town and local centres within the Local Plan is contained within Policy E5 as follows: i. "Policy E5: Town and Local Centres ii. The Council will accommodate additional retail growth in established centres, in accordance with the conclusions of the latest evidence base. Growth for comparison goods will be primarily accommodated in District Centres as set out in Table 5.5. If appropriate, specific locations for growth in convenience goods will be determined through the production of the Hillingdon Local Plan: Part 2 Site Specific Allocations Local Development Document. iii. Planning decisions will be taken in accordance with the provisions of national guidance particularly the sequential and impact tests. Further, more detailed policies will be outlined in the forthcoming Hillingdon Local Plan: Part 2 Development Management

4 Policies Local Development Document." 6. It is to be noted that the Policy incorporated national guidance from the National Planning Policy Framework ("the Framework"), in particular in relation to the sequential and impact tests. 7. The Framework provides as follows in respect of these issues: i. "24 Local planning authorities should apply a sequential test to planning applications for main town centre uses that are not in an existing centre and are not in accordance with an up to date Local Plan. They should require applications for main town centre uses to be located in town centres, then in edge of centre locations and only if suitable sites are not available should out of centre sites be considered. When considering edge of centre and out of centre proposals, preference should be given to accessible sites that are well connected to the town centre. Applicants and local planning authorities should demonstrate flexibility on issues such as format and scale. ii.... iii. 26 When assessing applications for retail, leisure and office development outside of town centres, which are not in accordance with an up to date Local Plan local planning authorities should require an impact assessment if the development is over a proportionate, locally set floorspace threshold (if there is no locally set threshold, the default threshold is 2,500 sq m). This should include assessment of: the impact of the proposal on existing, committed and planned public and private investment in a centre or centres in the catchment area of the proposal; and. the impact of the proposal on town centre vitality and viability, including local consumer choice and trade in the town centre and wider area, up to five years from the time the application is made. For major schemes where the full impact will not be realised in five years, the impact should also be assessed up to ten years from the time the application is made. i. 27 Where an application fails to satisfy the sequential test or is likely to have significant adverse impact on one or more of the above factors, it should be refused." 8. Consent for an extension of the claimant's store was granted in The consent was implemented but not completed. On 22 April 2013, following consideration at the defendant's planning committee on 7 March 2013, the claimant was granted permission

5 for a redevelopment of their existing store and a replacement with a store of 6,563 sq metres net floorspace. This was a development designed to address deficiencies in the extant store and the fact that it was over trading. In that latter respect it was designed to meet qualitative need in the centre, that is to provide a more satisfactory and attractive shopping environment. 9. On 3 June 2013 the first interested party made an application for a mixed use development at the former dairy site. The proposal was for a 4,554 sq metre net floorspace food store, a cinema, five restaurants and four unit shops which totalled 365 sq metres in all together with 104 dwellings. In the course of these proceedings that proposal became known as ARLA 1. The application was supported by a Retail and Leisure Report ("RLR") which addressed the claimant's site and the sequential test as follows: i. "5.73 In addition RPS has also considered Sainsbury's South Ruislip. This site is not available to the applicant and indeed Sainsbury's are progressing their own proposals for a replacement store. The site is not physically large enough to accommodate the proposed food store together with restaurant units and cinema. Furthermore, it would not succeed in regenerating the application site and all the important economic benefits that would stem from the application proposals. In this respect, the Sainsbury's site cannot be considered sequentially preferable. It is not available. Only the application proposals will introduce a choice of main food operators into this part of the borough." 10. The RLR analysed capacity for additional retail expenditure as follows: i. "5.39 In relation to the proposed Asda store as previously discussed, there is a need to increase choice of competition for the benefit of South Ruislip residents. Turley Associates' assessment of retail capacity... shows that there is sufficient expenditure for growth (including service expenditure) within the Study area to support the proposed replacement Sainsbury's store. In respect of convenience goods, in a large part this is due to a number of existing stores within the Study area being shown to trade in excess of company average sales densities. In particular, the existing Sainsbury's store is shown to be trading at 56 per cent above the benchmark. Even after the replacement Sainsbury's store becomes operational, Turley's assessment shows that the store is expected to continue to over trade compared to benchmark, albeit at a lower rate. The proposed Asda store will

6 assist by addressing its own trading." 11. The proposed turnover of the new food store was assessed along with from whence its trading would be drawn, so as to assess the impact on the existing retail facilities within the catchment, including the claimant's proposed redeveloped store. 12. As a consequence of the retail economic model which was undertaken, it was concluded that million would be diverted from the claimant's expanded store to the ARLA 1 food store proposed to be operated by Asda, leaving a residual turnover for the claimant's store of million, representing an 18.4 per cent impact on their trade. The point which was emphasised was that this left the claimant's store trading above benchmark or the national average turnover for the claimant's stores as advised for the purposes of, amongst other things, this kind of analysis in published data. 13. Officers addressed the retail planning issues in their report for a meeting of 11 February In relation to Need and Trade Draw, they observed as follows: i. "The council's retail evidence base does identify retail capacity for additional floorspace. Whilst it did identify a qualitative need for further convenience floorspace, this should only be for new development that would 'anchor' and 'complement' the role of existing centres. It is considered that the design and location of the proposal will not strengthen an in centre anchor facility. By likely drawing trade from Sainsbury's and other facilities in the local centre, the proposal will draw significant trade from in centre facilities which is considered to be contrary to planning policy. The existing Sainsbury's store within the local centre plays an important role in anchoring the local centre. Therefore any adverse impact on this store is an important consideration in determining this application. ii. In addition, the assessment of capacity undertaken in support of the Sainsbury's proposal (which has been relied upon by the applicant) identified convenience capacity of approximately 14 million. Much of this capacity ( 10 million or 74%) will be met by the Sainsbury's development. Consequently, there is limited capacity to support further convenience floorspace within the catchment area (approximately 3 million). Importantly, this 'capacity' is for the catchment area as a whole (which includes higher order centres such as Ruislip district centre) and not just South Ruislip. iii....

7 iv. The assessment undertaken by the applicant assumes that almost 34 million of additional retail expenditure will be attracted to South Ruislip as a consequence of the proposal at the ARLA site. By also taking into account the Sainsbury's extension the additional retail turnover directed to South Ruislip local centre increases to approximately 60 million ( 29 million convenience goods and 31 million comparison goods). This equates to an approximate doubling of the retail turnover of South Ruislip local centre. v. This further demonstrates that the scale of the proposal is inappropriate to the role and function of the local centre and the concerns raised by the Council/GLA of new development altering the role and function of South Ruislip local centre will clearly be realised should the ARLA site proposal come forward. vi. In addition, should the high levels of clawback not be achieved, the effect on existing centres within South Ruislip will be much higher than that estimated by the applicant. We consider this issue later. vii. The applicant also places significant emphasis on there being a qualitative need for improved provision in order to address overtrading of the existing Sainsbury's store in South Ruislip. Whilst we acknowledge that the existing Sainsbury's store is overtrading, as noted by the applicant, planning permission exists to redevelop this store and address the overtrading. Therefore, the overtrading of this in centre store will be addressed without the need to permit a new store outside the local centre (as proposed), that will have adverse impacts on future investment and the vitality and viability of neighbouring centres. viii. Whilst Sainsbury's anticipate that this store will continue to trade above company average level, the store is located in London where typically expenditure per capita and population density is greater than other parts of the UK. Furthermore, it is too simplistic to state that because a store is trading above company average level that it is overtrading. As acknowledged by the Practice Guidance, claims on overtrading should be backed up by corroborating evidence such as overcrowding and congestion rather than simply a comparison with a retailer's company average turnover. No such evidence has been presented. ix. In this context, the redevelopment of the existing Sainsbury's store within the local centre will address the qualitative issues highlighted by the applicant. There will be no need for further provision to address overtrading as suggested by the applicant and therefore this issue has clearly been overstated and should not be used to justify the proposal.

8 x. Overall, reflecting the findings of the Council's evidence base, there is no capacity to support the application proposal (over and above the Sainsbury's redevelopment) and the qualitative need identified has been significantly overstated. Whilst the Council's Retail Study identified some qualitative need to improve existing provision this should be focused in improving 'in centre' anchor facilities rather than permitting schemes outside defined centres (as proposed on the ARLA site) that will have the effect of drawing significant trade from the defined centre." 14. In respect of the application of a sequential test contained within the Framework, the officers observed as follows: i. "As we have demonstrated, we do not believe that a need for the scale of retail floorspace proposed has been demonstrated. The Council has accepted that there is a need to address overtrading. However, the Practice Guidance (paragraph 6.5) confirms that a key part of positive planning is: 'to identify those sites to be most appropriate to meet any identified need.'. ii. It is our view that the redevelopment of the 'in centre' Sainsbury's store will satisfactorily meet the need identified in a sequentially preferable location. This means that the development of an edge of/out of centre site (as proposed) is not necessary. There is no pressing need in South Ruislip that justifies the application proposal on the ARLA site. iii.... iv. The limited need identified by the application (which focusses on the overtrading of Sainsbury's) will be met by the proposed redevelopment of the existing Sainsbury's store in South Ruislip." 15. The officers' report went on to consider the assessment of retail impact, again pursuant to the policies contained within the Framework. They observed as follows: i. "The applicant has failed to assess the potential impact of the unit shops and therefore the full turnover of the retail element of the proposal has not been considered. ii. The anticipated trade draw of the proposal is unrealistic and seeks to underestimate the potential turnover from the existing Sainsbury's and subsequently on the long term vitality and viability of South Ruislip local centre. For example, the applicant has assumed that the bulk of the proposals turnover will be derived from facilities further afield and outside South Ruislip. iii. Whilst it is accepted that there is some scope to claw back

9 expenditure from further afield, the scale of clawback identified to support both the Sainsbury's redevelopment and the new Asda is unrealistic. There is a limit to the level of retail expenditure that can be attracted to South Ruislip local centre (reflecting its role and position as a local centre in the hierarchy). The applicant has assumed that the proposal and the redeveloped Sainsbury's will draw approximately 50 million of additional expenditure to the local centre. Such a level of expenditure is considered unrealistic and inappropriate for a local centre. This includes the application proposal drawing almost 17 million of retail expenditure from outside the Study Area in addition to identifying that the Sainsbury's extension will draw 10 million from outside the Study Area. Not only is such a collective level of trade draw inappropriate for a local centre, it is unlikely that this level of expenditure from outside the Study Area will be achieved given the strength and proximity of competing provision. This includes new stores in Harrow (now open), Hayes (to be operated by Asda) and two new food stores are proposed in North Hillingdon. Should this level of expenditure derived from the Study Area not be achieved, the effect will be that a greater level of trade diversion will be derived from local facilities (namely the Sainsbury's at South Ruislip) than identified by the applicant. iv. The applicant recognises that the application proposal will compete with the Sainsbury's store. However this is not reflected in the anticipated trade draw. For example, whilst the application has assumed that 45% of the convenience goods turnover of the proposal will be derived from the extended Sainsbury's, only 8% of the comparison goods turnover is identified to be derived from the extended Sainsbury's store. This level of trade diversion is identified to be comparable to the Argos store on Victoria Road Retail Park (7%). This is despite the fact that a number of comparison purchases from the Asda store will be ancillary to a food shop, the comparison goods turnover of the Asda ( 17 million) will be comparable to the extended Sainsbury's store ( 20 million), and that the comparison turnover of the Sainsbury's store (as extended) is identified by the applicant to be almost three times greater than Argos. Against this background it is considered inappropriate to assume that the proposal will draw such a low turnover from Sainsbury's when compared to that identified for Argos. v. The above factors have the effect o[f] underestimating the impact on South Ruislip and importantly on the existing supermarket that anchors the local centre." 16. The report went on to consider the impact on existing permitted and planning investment. It concluded as follows:

10 i. "... Despite this, the applicant has failed to assess the implications of the proposal on future investment as part of their assessment (ie the effect of the application on Sainsbury's commitment to extend the existing in centre store). ii. If permitted, the proposal at the Arla store is likely to undermine Sainsbury's planned investment for the existing store. Based on the applicant's trade draw figures, the effect of the proposal is for the turnover of the convenience goods element of the Sainsbury's store by 2017 to be less than currently achieved. Whilst it is accepted that the comparison goods offer of the Sainsbury's store will be improved, this element of the store relies on the footfall created by the convenience goods element in order for it to be successful. Furthermore, it is anticipated that the comparison goods element of the extended Sainsbury's store will trade at a much lower level than that identified by the applicant for the reasons outlined above. iii. As a consequence of the proposal at the ARLA site, the proposed investment by Sainsbury's to strengthen an important anchor in South Ruislip local centre will be significantly undermined. It is likely that this significant and costly investment to redevelop the existing store will not arise if the outcome is that the store will trade at a comparable (or lower) level to that which they currently achieve." 17. Following this, the report then went on to consider the impact on town centre vitality and viability and observed as follows: i. "It is estimated that the proposal will have an impact on South Ruislip local centre of 17.5%. The applicant themselves suggest that this level of impact as being 'high'. Furthermore, should the redevelopment of the existing Sainsbury's store not come forward (due to the significant implications of the proposal) the impact on South Ruislip local centre is even higher at 21.2%. The impact figure identified by the applicant of 16.4% is incorrect and has been miscalculated. In this context, the applicant themselves identify that the retail turnover of South Ruislip local centre will reduce by over a fifth should the ARLA site come forward. ii. The applicant seeks to justify that the proposal will have no adverse impact on the centre as a whole due to the Sainsbury's store (post Asda) continuing to trade at above benchmark levels. It is not considered that due to a store continuing to trade above expected levels that new development outside a centre would mean that the proposal will not have a significant adverse impact, as suggested by the applicant. The application proposal is likely to draw significant trade from in centre facilities to a destination outside the local centre where the propensity for linked trips is

11 much less. The ARLA site proposal includes small unit shops and A3 uses. Consequently, the reason to visit the local centre may be lost. This reduction in trade will have knock on effect in terms of reduced footfall and spin off benefits for existing businesses that over time will undermine the long term vitality and viability of the centre, which is contrary to planning policy." 18. Overall, the officers' conclusions on retail matters were drawn together as follows: i. "There are a number of concerns with the retail impact assessment which undermine its reliability. Officers consider that the Retail Impact Assessment would underestimate the impact. Given the potential harm to in centre committed development and disruption to the hierarchy of centres an underestimate of impacts is particularly problematic and little weight can be placed on the retail impact assessment." 19. The recommendation placed before the members was that the proposal should be refused. They acceded to that recommendation. On 4 April 2014 permission was refused for four reasons, two of which were related to retail planning policy. The first reason for refusal was the failure of the proposals to meet the sequential test and the adverse retail impacts which had been identified. The second retail related reason for refusal was that the proposal would result in a development which was out of scale with the position of the South Ruislip local centre in the retail hierarchy. 20. On 8 May 2014 the interested party re applied. This time the foodstore was some 3,717 sq metres, or 837 sq metres smaller than the previous ARLA 1 proposal. The unit shops had been removed from the proposal and the amount of floor space devoted to restaurants and cinema had been reduced. The residential element of the proposal had increased to 132 units. 21. Another RLR was produced in support of this application. It continued to argue that the extent of the claimant's store's turnover above the benchmark figure should be considered to be available to support other floorspace. In relation to the extent of available retail expenditure capacity and the sequential test, the RLR observed as follows: i. "5.91 Turley's assessment of the existing Sainsbury's store concludes having regard to the survey data that the store has a convenience sales density of 18,467 per sqm in 2012 rising to

12 19,924 per sqm in 2017 (well in excess of the benchmark sales density for Sainsbury's as stated in Turley's assessment 11,818 per sqm in 2012 and 11,907 [per sqm] by 2017). The existing Sainsbury's store is shown to trade at 60.17M at 2017 (survey based turnover) compared to a benchmark turnover of 35.96M. All the other major stores within the study area are also considered to be trading well in excess of benchmarks albeit to a much lesser extent. Even so, if the existing Sainsbury's store were to trade at around benchmark sales densities then this would have the potential of releasing an additional surplus capacity of 16.8M in 2017 (assuming market share of 69.3% from the study area) which could be taken up by the new retail floorspace. In this way total surplus convenience goods capacity in 2017 would amount to 20.5M which is comparable 72% of the total convenience turnover of the proposed Asda store ( 28M) of which 75% is expected to be derived from retail facilities located within the adopted study area consistent with the assumption made by Turley's in respect of the replacement Sainsbury's store (Table 10, Appendix 6 of the Planning and Retail Statement, December 2012). This serves to demonstrate that there is almost available expenditure to support the proposed Asda store in ii It is quite normal for retail studies prepared as the evidence base for Local Plans to seek to redistribute such expenditure particularly where such stores are trading at levels which is making them congested etc. However consultants may be reluctant to do this in the absence of any hard evidence relating to the trading performance of individual stores. In this case however Sainsbury's has publicly confirmed that extent to which their existing store is performing. iii In relation to comparison goods floorspace need, Turley Associates' assessment demonstrates that there remains a significant growing and unmet need ( 25.45M) within the study area for additional comparison goods floorspace even with a replacement Sainsbury's store. The proposed Asda store will have a comparison goods turnover of 13.08M in 2017 of which 50% is expected to be drawn from existing retail facilities located within the study area consistent with the assumption made by Turley Associates (Table 11, Appendix 6, Planning and Retail Statement, December 2012). It is clear that in terms of quantitative need there is sufficient comparison goods capacity to accommodate the proposed turnover of Asda. iv.... v In addition RPS has also considered Sainsbury's South Ruislip. This site is not available to the applicant and indeed Sainsbury's are progressing their own proposals for a replacement store. Furthermore, it would not succeed in regenerating the

13 application site and all the important economic benefits that would stem from the application proposals. In this respect, the Sainsbury's site cannot be considered sequentially preferable it is not available." 22. A revised economic model was produced to evaluate the trade draw and impact of the new proposal. The output of that model was that million of trade would be diverted by the ARLA 2 food store from the claimant's expanded store, leaving a residual turnover at the claimant's store of million representing a 16.2% impact. 23. The RLR observed as follows: i. "5.190 In conclusion these levels of impact, having regard to the health of town centres, would not be significantly adverse. Indeed the proposals will have positive benefits for the vitality and viability of South Ruislip local centre and the wider local economy. ii In order to maintain and increase market share, Sainsbury's are more not less likely to build out its replacement store in the event that planning permission is granted for the proposed Asda store. iii.... iv Even after the effect of the proposed Asda store, Sainsbury's replacement store would continue to trade at around the benchmark. Given the anticipated growth in expenditure and the improving economy in general it would not be unreasonable to expect large stores to benefit from some of this additional growth in expenditure because it is where the majority of convenience goods expenditure is spent. This would increase the turnover in line with the growth in expenditure i.e. any impact felt from the proposed Asda store would be very short lived and in any event a modern store such as that planned by Sainsbury's for South Ruislip would be more than capable of accommodating the predicted levels of impact. Consequently there would be a negligible effect upon South Ruislip local centre as a whole. v Finally, Sainsbury's existing store in South Ruislip would continue to trade at the convenience benchmark in 2017 even if up to 86% ( 24M) of the total convenience turnover of the proposed Asda store ( 28M) were to be diverted from Sainsbury's. This is a very significant conclusion which serves to demonstrate that any perceived impact on the existing Sainsbury's store would effectively be absorbed by current levels of reported exceptional trading (i.e. the existing Sainsbury's store trades at 24.2M above the benchmark of 35.96M in 2017). Even under this extreme

14 scenario this shows that the effect of the proposed Asda store would not render the Sainsbury's store unviable. It would continue to trade at acceptable levels. vi Similarly, in relation to the proposed replacement Sainsbury's store, the convenience trade diversion to Asda could increase to 61% (from 45%) before the proposed replacement store would trade below the reported Sainsbury's benchmark in 2017 for this store ( 50M). Nevertheless, having regard to the retail offer of the proposed Asda store, the study area and comparable convenience provision we consider that our assumed 45% trade diversion to be robust. If that diversion were to increase it is clear that Sainsbury's would continue to trade well in comparison to the benchmark. Furthermore, increased trade diversion from Sainsbury's (for either the existing or proposed replacement store) would mean that the trade draw of the proposed Asda store upon other convenience facilities would reduce meaning that impacts upon other local centres/facilities would reduce accordingly. vii Benchmark sales densities as reported in company accounts are an average of a retailer's store portfolio. Accordingly they are not the lowest or highest rate but somewhere in the middle. It does not mean that a store would become unviable where it trades below the benchmark much will depend upon the composition of the local catchment area. In this case the South Ruislip catchment area is affluent and the introduction of healthy competition can benefit such stores particularly where they are located, as in this case, within an easy walking distance of each other as price conscious consumers will seek to compare goods. viii In summary, our impact assessment demonstrates that there would be no significant adverse impact arising from the application proposals upon town centres or committed development. In particular the proposed Asda store would not jeopardise Sainsbury's investment in a new store at South Ruislip. the replacement Sainsbury's store would have a competitive edge compared to the proposed Asda store. The replacement Sainsbury's store would comprise a sales area of 6,563 sqm compared to a sales area of 3,717 sqm for the proposed Asda store. In this respect Sainsbury's should reasonably have little to fear in terms of the retail offer of their replacement store being undermined by a competing smaller Asda store in South Ruislip." 24. This new proposal supported by a new RLR was known within these proceedings as ARLA 2. In order to assist the defendants in assessing the application and in particular to provide an independent review of the retail material which had been furnished to them,

15 the defendants commissioned Chase & Partners to provide a review of the retail work. Chase & Partners provided a report to the defendants dated 3 October They concluded that the sequential test analysis which had been undertaken in the ARLA 2 RLR was robust. But within Chase & Partners' report there is no specific mention made about the comments set out above in respect of the claimant's site and their proposals. Chase & Partners reviewed the reliability of the data which had been put into the model and the trade draw assumptions for the proportions of trade drawn from the different existing shops to the ARLA 2 foodstore. The report noted that in common with the work which had been done on behalf of the claimant to support their redevelopment application, the larger trade draw percentages were drawn from similar scales of shop on the basis that like competes with like. 25. The following conclusions were drawn by Chase & Partners in their report: i. "The cumulative impact of both the new Sainsbury's and Asda on convenience retailing (individual stores and centres) is shown in table 13A [of the RLR]. When compared against table 7, it can be seen from table 13A that in stores where the cumulative impact results in them under trading that they were already trading below their benchmark turnover prior to either the Sainsbury's or Asda. Notwithstanding, the levels of cumulative impact are not considered significant enough to undermine the future trading capability of these stores. ii. It should also be noted that where the largest cumulative impacts fell on existing stores that these were already trading above company levels and most would continue to do so. iii.... iv. The highest impact arising from the proposed Asda is on the Sainsbury's, South Ruislip (45%) which is a projected 12.60m. It is recognised that the Sainsbury's is significantly overtrading by 56% ( 19m) and that the store has trading difficulties as a consequence. Since 2006 the company has had a series of planning consents to extend and rebuild the store but none have been implemented. The most recent permission was granted in April 2013, but no works started. However, it is acknowledged that they have recently submitted an application for a temporary store to facilitate them to maintain trading should they choose to close the existing for redevelopment.

16 v. Given the history of the Sainsbury's site and in light of it as a commitment it is considered that two scenarios exist for South Ruislip: (1) implementation of Sainsbury's consent; and (2) no development/change. There are a number of issues to consider in this respect and Chase & Partners have also requested RPS to provide some sensitivity testing to their predicted trade draw to the store. vi.... vii. It can be seen from table 13A that the projected turnover of Sainsbury's at 2017 would be 67.68m compared to a benchmark of 36.24m ( 35.96m at 2012). Therefore if the store maintained market share (69%) and continued to trade at its benchmark sales density then there will continue to be a surplus. In this scenario the applicants state that there would be an additional surplus of 16.8m at 2017 (paragraph 5.91 RLR). It appears that the applicants have then included the additional expenditure arising from the development of the residential at the Arla Dairy site of 3.12m (table 11) to give a potential surplus of 20.5m at This would amount to 72% available expenditure of the total turnover of the proposed Asda, of which it is assumed 75% would be derived from the study area. This suggests that there would be sufficient surplus expenditure at 2017 to support both schemes. viii. Notwithstanding the above, it is considered that if the Sainsbury's permission was implemented that the level of trade draw to the Asda would not necessarily be as high. RPS have undertaken a sensitivity analysis of this and considered lower levels of trade draw to establish what the potential retail impacts would be... This exercise considers a 5% reduction in the potential trade draw from the Sainsbury's (40%), which would amount to 1.4m (a 10% reduction in the total trade draw from the Sainsbury's). In terms of convenience the retail impacts are shown to fall on stores within the study area, most of which are shown to keep trading above market share. This does demonstrate that even if the proposals did not achieve the full level of trade draw from the Sainsbury's (45%) as predicted that this would not result in a significant adverse impact elsewhere in the catchment. Other stores are trading at a level that means they can absorb the levels of impact projected. ix.... x. To fully understand the extent of retail impact the combined level of convenience and comparison trade draw on centres must be considered. Table 15A shows the combined levels of impact on stores and centres. The highest impacts are identified to be in Ruislip (8.4%), Pinner (7.4%), South Harrow (7.6%) and South Ruislip (15.3%). Table 15A shows that with the exception of

17 xi.... Ruislip, that the residual turnover within these centres of 2017 would exceed the benchmark turnover of them. This suggests that the impact arises as a consequence of overtrading within them. xii. Although the level of impact on South Ruislip is high it has been demonstrated that this would be as a consequence of the trade draw from the Sainsbury's. The applicants have looked at the designated centre in isolation and state that it would continue to trade above benchmark sales densities by 4.18m. Table 15A shows that the Sainsbury's would also continue to trade above benchmark by 3.13m. Whilst it has been demonstrated that the proposed Asda would draw trade from like for like stores it must be recognised that the Sainsbury's is an 'in centre' store. It is, however, considered that the trading aspects of the store are different to others in the catchment given its level of overtrading. The applicants have assessed the potential trade draw from the store and demonstrated that it would not undermine its ability to continue to perform at company levels. xiii.... xiv. The RLR provides a detailed assessment of all town centres in the catchment and their audits show them to be healthy and demonstrating good indicators of their vitality and viability. The applicants have presented a comprehensive assessment of projected trade diversion from centres/stores within the catchment and Chase & Partners are satisfied that there would be no significant adverse impacts arising from the retail element of the scheme. Nor is it considered that the proposals would undermine the commitments identified." 26. Officers prepared a report for the members considering the ARLA 2 application for a committee meeting on 21 November That report found its way into the public domain on 13 October The officers' report noted the previous refusal of planning permission and set out the reasons for refusal. The requirements of the Framework and in particular those at paragraph 27 of the Framework were also set out. In terms of the retail policy analysis, the report observed as follows, firstly, in relation to the sequential test: i. "SEQUENTIAL TEST: ii. In terms of sequential testing, the RLR identifies 23 potential alternative sites. The applicants have assessed the availability, suitability and viability of the sites identified. They have

18 considered sites within and at the edge of higher order centres. The Council engaged an appropriately qualified independent Retail and Leisure expert to examine the sequential test and the expert has concluded that it is robust. Officers from the London Borough of Hillingdon and London Borough of Harrow have also considered the sequential test and consider it to be acceptable. In summary, there has not been another site identified which would be sequentially preferable to the application site." 27. In respect of retail impact, the officers concluded as follows: i. "The Council engaged an appropriately qualified independent Retail and Leisure expert to examine the impact test and the consultant concluded that it is robust. ii. The highest impact arising from the proposed ASDA is on the Sainsbury's, South Ruislip (45%). It is recognised that the Sainsbury's is significantly overtrading by 56% ( 19m) and that the store has trading difficulties as a consequence. Sainsbury's have recently submitted an application for a temporary store to facilitate the redevelopment of the main store. iii. The key concern is whether the proposal would result in unacceptable impacts on the viability of the existing or approved (committed) Sainsbury's store. It is considered by officers that the existing store would continue to be viable and trade (albeit at a lower overall turnover than [it] currently achieves) at a level consistent with the national average for Sainsbury's stores. iv. The analysis shows that the proposals on the Arla Foods site would not necessarily prevent the committed development (expanded Sainsbury's) from coming forward. It is noted that Sainsbury's have lodged an application for a temporary store, which (if approved and implemented) will enable them to decant from the existing store whilst it is redeveloped. v. Notwithstanding this, officers consider that there would be significant costs to Sainsbury's from building the expanded store and given the amount of trade draw to ASDA, officers consider that there is a risk that Sainsbury's find that it is not viable to build the expanded store. In such a scenario, the benefits of the Sainsbury's expansion (one time construction jobs and spending and ongoing jobs in the store etc) would not accrue. vi. Officers have had to make a balanced decision, taking account of the regenerative benefits of redeveloping the Arla Foods site, the jobs in the commercial aspects of the scheme as well as bringing forward housing. It is the officers' view that there are very real material considerations to be taken into account which indicate that even if the committed development (i.e. the expanded Sainsbury's)

19 vii.... does not come forward as a result of the current application (i.e. the Arla development), the benefits from the Arla scheme would outweigh the disbenefits (in terms of impact on committed in centre development). viii. The RLR provides a detailed assessment of all town centres in the catchment and analysis shows them to be healthy and demonstrating good indicators of their vitality and viability. The applicants have presented a comprehensive assessment of projected trade diversion from centres/stores within the catchment and officers (together with the independent retail consultant appointed by the Council to verify the study) are satisfied that there would be no significant adverse impacts arising from the retail element of the scheme. Nor is it considered that the proposals would undermine the commitments identified." 28. On 15 October 2014, after the officers' report had been placed in the public domain, the claimant's agents wrote objecting to the application as follows: i. "Sainsbury's is committed to this investment, as evidenced by the current planning application for a temporary store... but this has always been predicated on the authority resisting a major foodstore on a sequentially inferior site (Arla Foods) that is poorly connected to the Local Centre. ii. Sainsbury's position is that if the planning application at the former Arla Foods site is now granted by the London Borough of Hillingdon, then it will not proceed with the redevelopment above. iii.... iv. In addition, the identified impact of the Asda proposal on the sales turnover of South Ruislip Local Centre as a whole (in the scenario that the Sainsbury's store redevelopment does not take place) amounts to 18.1%. v. This percentage impact figure is not reported in the committee report and is considered to be a major omission. vi.... vii. In light of Sainsbury's position that it would not proceed with its proposals if the Arla development is permitted, committed investment in the centre will also not be delivered. The combined effect of these factors on South Ruislip as an allocated town centre benefitting from full policy protection is a significant adverse impact on the existing and future vitality and viability of the centre. This is notwithstanding the impacts on centres and

20 investments elsewhere within the catchment of the proposed Asda store. viii. This significant adverse impact alone justifies the refusal of the application on the Arla Foods site and Sainsbury's is firmly of the view that this is the only proper outcome of the application in its current form." 29. The existence of this objection and other matters which have arisen since the compilation of the committee report led to an addendum sheet being provided to members to update the committee report. In response to the claimant's objection, the officers observed as follows: i. "The application has been assessed in terms of the regeneration benefits that it would bring about, including the additional housing and the bringing of a derelict site back into use. It is considered that such benefits would outweigh the compromise of committed development within the town centre." 30. At the meeting of the planning committee, Mr Moore spoke on behalf of the claimant. His contribution was in similar terms to the letter of objection which I have quoted above. The proceedings were recorded. Within the papers before the court there is a transcript of Mr Moore's observations and also the responses of planning officers to the discussion. So far as Mr Moore is concerned, the transcript records that he observed as follows: i. "Unfortunately, if planning permission is to be granted for the ARLA scheme this evening, regardless of what the independent retail advisors say that investment will be foregone because it will be no longer commercially viable. I believe we've demonstrated significant commitment to the proposals in the past through securing planning permission. We currently have an application with yourselves for a temporary store that will allow us to undertake these works whilst still maintain a customer presence in South Ruislip. But that unfortunately will not be able to go ahead if the ARLA scheme is permitted here this evening. ii.... iii.... The sequential test: is there a site that is sequentially preferable to the ARLA scheme? I would argue very strongly there is. There is a site with planning permission, that we have been working on for a considerable time, that is in centre as opposed to edge of centre. It is our store and I would suggest that represents a sequentially preferable site.

21 iv. The second test: will the proposed development impact on proposed development on sites which are available, viable and suitable? Again, I believe the ARLA scheme fails this test because there is proposed investment for South Ruislip with regards to our proposed store. v. And finally the third test which looks at impact on existing centres. Please note this is not impact on individual stores which is covered by your officers' report, but impact on the overall centre. Now if there is a significant impact, retail impact, on an existing centre, planning permission, again, should be refused. The proposed the impact that is set out by your own independent retail consultants, which unfortunately does not appear in the report, is 18.1% on South Ruislip centre. I find it very difficult to concede that is not a significant impact and if that is the case, again, planning permission should be refused. vi. So in summary then members, I believe that the current planning application before you will prevent significant investment in South Ruislip. It will prevent Sainsbury's from redeveloping its central store to the great benefit of South Ruislip centre itself and I also believe that the planning application fails the three key test set out in National Planning Policy Framework in relation to the consideration of retail schemes." 31. After various contributions to the debate, the lead officer Mr Duigan advised members as follows orally at the meeting: i. "Just beginning with the sequential test, I think it's fair to say that there'd been a lack of evidence in the first application. What we've ended up with in the second application is actually, I'd say they've fully saturated the sequential testing, both in this borough and surrounding boroughs, looking for sites where even in a disaggregated form, in other words if you split the supermarket and the cinema and tried to find homes for them because it's a lot easy to do in a disaggregated form. ii.... iii. So I do accept... that it's sequentially less preferable than say the Sainsbury's site which is inside the centre but that's again where we're coming back to whilst sequentially it's less preferable you're essentially being asked to balance the disbenefits of potentially not getting an expanded Sainsbury's store or a new Sainsbury's store of a larger size against the benefits that would accrue on the ARLA site which include a supermarket, cinema. And the advantage of the cinema is not only people going to the cinema, jobs and also the night time economy and the residential housing development as well as the regenerative benefits that would come from bringing

22 forward a derelict site. iv. There's no mystery, Chairman, as to what we're balancing here. There's clearly an in centre store which may or may not come forward in an expanded form. If that doesn't that's a disbenefit of this scheme which needs to be weighed against the benefits that come from the scheme. Its officers' view that those benefits accrue on the ARLA site outweigh the disbenefits of not seeing an expanded Sainsbury's store. v.... vi. Now that comes back to the argument of is one site sequentially preferable? Yes it is by about sort of 250/300 metres, at the same time, we're doing that balancing act and planning terms in terms of are there material considerations that will dictate that we don't run strictly in accordance with the development plan. In this case I believe there are. vii. The second point, Chairman, came to the 18.1% impact on South Ruislip center. Just to put that in perspective though, the lions share of around about the 18% is trade drawn from the Sainsbury's store, not drawn from the various other stores that are in the local centre. If I just to understand whether that seems reasonable, the stores which are in South Ruislip simply aren't going to be competing with the Asda." 32. The recommendation of the officers in their report that planning permission should be granted was, after the discussion, accepted by the members. On 24 December 2014 planning permission was granted. 33. The Law 34. In the main, the relevant law in relation to this case is uncontroversial. The power to grant planning permission is created by Section 70 of the Town & Country Planning Act Section 38 (6) of the Planning & Compulsory Purchase Act 2004 requires that decisions about planning permission should be taken in accordance with the development plan unless material considerations indicate otherwise. The Framework is an obvious material consideration in this respect, representing, as it does, national government policy. It is now well settled that the meaning of planning policy is a matter of law (see Tesco Stores Ltd v Dundee City Council [2012] UKSC 13). In R (On Application of