Why developer CG Fry’s nutrient neutrality challenge is unlikely to succeed on appeal - for now

Earlier this month the High Court dismissed a claim previously branded as having “considerable importance” to how Natural England’s nutrient neutrality advice is applied by local councils. While its chances of success at appeal are limited, writes Ned Westaway, the passing of the Retained EU Law Act could make future such cases harder to predict.

Ned Westaway is a barrister at Francis Taylor Building

Nutrient neutrality has been a thorny issue for (now retained) EU habitats law in England since the Court of European Justice’s decision in Case C-293/17 Cooperatie Mobilisation - better known as the Dutch Nitrogen case. 

That case indicated that appropriate assessment could not be avoided for individual projects through the use of a programmatic approach.  Cooperatie concerned nitrogen deposition from farming projects, however one of the main implications for it on this side of the Channel was that housing projects liable to introduce phosphates into protected areas required individual assessment demonstrating no negative impact on those areas through eutrophication.  Given the existing pressures on some protected habitats, that has proved extremely challenging.

The most recent case to raise these issues before the courts – CG Fry & Sons Ltd v SSLUHC [2023] EWHC 1622 (Admin) – was a bold challenge questioning the application of habitats law at all; it is now set to be heard on appeal, either on a direct ‘leap-frog’ to the Supreme Court or, if the Supreme Court declines to entertain it, by the Court of Appeal.

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The factual context for CG Fry is fairly typical: outline permission was granted for phased residential development before anyone thought that appropriate assessment under the Habitats Regulations might be necessary.  The developer subsequently sought to discharge a number of conditions (none of which related to the nearby protected habitat).  Following Natural England’s updated advice and the Secretary of State’s 2022 written statement, the local authority refused to discharge the conditions on the basis that there had been no Habitats Regulations Assessment.  

It appears that it may have been difficult for the developer to overcome that hurdle, at least in the short term.  Natural England’s advice on the Somerset Levels and Moors Ramsar Site indicated that “[t]he scope for permitting further development that would add additional phosphate either directly or indirectly to the site … is necessarily limited”.

The developer appealed and an inspector upheld the decision.  The challenge was to the inspector’s decision.

It may be noted that because the affected area was a Ramsar Site (under the 1979 Ramsar Convention) rather than an EU protected site, the legal obligation to assess did not flow directly from the Habitats Regulations, but from national policy (in NPPF para.81) that Ramsar Sites should be treated the same.  The inspector’s ultimate conclusion therefore was that the need to protect the Ramsar Site outweighed the delay to the delivery of housing.  However that reasoning was informed by his interpretation of the Habitats Regulations.

The main ground of challenge was that the Inspector had misconstrued the Conservation of Habitats and Species Regulations 2017.  This was because Reg.62 prescribes the matters to which the requirement for assessment in Reg.63 applies by reference to Chapters 2-7 of Part 6.  Planning decisions are addressed in Chapter 2 and Reg.70 states that the assessment provisions apply in relation to “granting planning permission” – not the discharge of conditions or the approval of reserved matters.  

The judge – Sir Ross Cranston – accepted the argument that the assessment provisions in the Regulations are confined to the planning permission stage and do not extend to the discharge of conditions.  While Reg.62(1)(b) states that Reg.63 applies “in relation to all other plans and projects not relating to matters specified in Chapters 2 to 9” – development requiring planning permission is a matter specified in Chapter 2.

However, the judge held that the assessment provisions must be capable of applying to the discharge of conditions for three reasons.

The first reason was because Art.6(3) of the EU Habitats Directive is directly effective pursuant to pre-2021 CJEU case law.  That is the effect of s.4(2)(b) of the EU (Withdrawal) Act 2018.  Art.6(3) requires that a competent authority should not “agree” to a project until an appropriate assessment has been undertaken demonstrating no adverse effect on integrity.  The local authority could therefore not discharge the final conditions for the project in this case.

The second reason was because the Habitats Regulations 2017 demand a purposive interpretation.  The judge reasoned:

“Adopting [the claimant’s] submissions would open up a lacuna in habitats assessment leading to the possibility that, as here, development would proceed without an assessment being undertaken” (para.55).

The third reason was that recent domestic case law has held that it is possible to carry out appropriate assessment at the reserved matters or discharge of condition stage even if there has been a grant of outline planning permission.

There is justice in the outcome.  The claimant was not arguing that the development should not have been subject to Habitats Regulations Assessment, simply that it was too late now because one had not been done earlier.  It is a classic case where a purposive reading is appropriate to remedy deficiencies in drafting.  The regulations were designed not to have lacuna.  For that reason, Reg.62(1)(b) was added in 2017.  The result, were the claim successful, would be that a scheme that previously escaped assessment could be built out and have impacts on protected sites.  However, the law required assessment.  Such a permission in that sense is unlawful – and may even be vulnerable to third party challenge.

The most interesting part of the judgment may be the upholding of the supremacy of EU law.  Among other things the claimant pointed to domestic case law, based on the Town and Country Planning Act 1990, that the matters that may be considered when discharging conditions are limited.  The judge, emphasised that any conflict between the Habitats Directive/Regulations 2017 on the one hand and rights recognised under the 1990 Act have to be reconciled in accordance with the principle of supremacy that still applies by virtue of s.5(2) of the EU (Withdrawal) Act 2018 (para.62).

That was not the sole reason for rejecting the appeal, but it is a reason that is soon to be removed as a result of the Retained EU Law (Revocation and Reform) Act 2023, that became law on 29 June 2023, the day before judgment in CG Fry was handed down.

Section 2 of the REUL Act repeals s.4 of the 2018 Act relied upon by the judge and s.3 removes (and in some respects reverses) the principle of supremacy of EU law.  

There are many areas where domestic rights rub up against habitats protections.  CG Fry provides an example of the kind of case where EU habitats law may come into conflict with domestic law and to which the outcome of that conflict will soon no longer be automatically prescribed by law.  

I would not predict that the claim in CG Fry is likely to succeed on appeal, but the REUL Act provides scope for more genuine uncertainty ahead.

Ned Westaway is a barrister at Francis Taylor Building