Lidl Great Britain Limited vs East Lindsey District Council and Aldi Stores Limited

Both Aldi and Lidl applied for planning permission for a supermarket on different parcels of land outside the town centre of Horncastle. The applications essentially competed with each other. The question was, on the specific facts, should those applications be determined together/at the same Planning Committee or not?

The facts of the case are that Aldi applied for a new out-of-town supermarket in march and Lidl the following month (April). Both Lidl’s and Aldi’s applications were originally due to go before the same committee meeting for discussion. However Lidl’s application was held up and only Aldi’s went to the committee and obtained planning permission.

So Aldi “got there first”, a point of considerable frustration for Lidl, given the applicable planning policies.

Lidl complained that East Lindsey District Council did not properly consider the cumulative retail impact on Horncastle town centre lawfully when granting Aldi planning permission. The essential complaint was, in circumstances where there is only sufficient capacity for one new food store in an out of centre location, did the Council act unlawfully in granting permission without comparing the two proposals together. Namely, if there was only capacity for one new food store was it fair and lawful for Aldi’s application to be heard first and with little weight given to any cumulative impact, a finding of considerable detriment to Lidl’s pending application.

The Judge sitting in the High Court on 15^th December 2023 granted permission for the claim on  ground 1 (failure to consider the merits of Lidl’s proposal) and ground 2 (it was unfair to determine the Aldi application until the outcome of the Lidl assessment was known and the schemes could be considered together). At the permission stage it was stated that “it is arguable that if both schemes were considered together, there is a real possibility that the outcome may have been different”, and granted permission to proceed with the claim for judicial review. Those comments were a forecast of the final outcome when the Court gave its Judgment on 15 May 2024 following a full hearing.

A central issue was the terms of planning policy SP14 (retail development) which, in the first instance, directed sites to the Town Centre but thereafter prescribed three components for the purpose of considering out of centre proposals.

1. Firstly, a requirement to consider the sequential test which focuses on whether the floorspace proposed could be accommodated in a preferable location such as the town centre.
2. Secondly, retail policy focuses on whether there would be an adverse impact on the investment in the town centre.
3. Third, retail policy examines the impact of the proposal on the vitality and viability of the town centre.

The focus of attention was upon the third limb (‘3’ above). To assess the Lidl and Aldi applications Nexus was appointed as consultant by the Council. Nexus advised the key tests of retail impact is whether the proposal would have:

• A significant impact on the centre as a whole;
• Would it lead to the closure of an existing facility. If so;
• What would be the wider implications of that be for the town centre.

One of the key concerns is that the smaller stores (Tescos and Co-Op) are associated with linked trips to the town centre and would this be reduced as a result of the proposed development. Nexus did not consider whether the impacts on these stores would lead to a significant adverse impact on the vitality and viability of the centre when considering the introduction of one superstore. However, Nexus considered that the introduction of two supermarkets would have a significant harmful impact on both Tescos and Co-Op, which would lead to a significant adverse impact on the vitality and viability of the town centre. One supermarket on its own would not have the same impact.

For this reason the Court found that:

“96. In the circumstances of …the uncontentious factual basis of the present case. The critical points are:-

1. The cumulative impact evidence is clear. Two out of centre supermarkets would risk a significant adverse impact on Horncastle town centre
2. There are two applications before the Council each seeking to address the available capacity without causing a significant adverse impact on Horncastle town centre.
3. On any realistic view of the retail evidence (as analysed by the [The Council] based on Nexus' analysis) this a situation where two stores are competing for one planning permission. This is because the retail evidence is that more than one store will cause significant harm to Horncastle town centre.

97. These uncontested facts make the comparison between the rival candidates obviously material in my judgment.”

The Judge went on to add: “Here, the critical facts are that the evidence identifies the reality that there are two proposals before the authority to address the finite available capacity for a single out of centre supermarket without having an adverse impact on Horncastle town centre. This essential position is established and uncontentious… Both proposals are before the Defendant... In this specific context, I consider that it was not lawful to omit a comparative assessment.”

So in cases where there are rival applications to meet the same need and/or for are what in practice will only be a single planning permission (i.e. one of the rival applications will fail) then the comparative merits will be a material consideration. In this case that mandatory material consideration had not been considered, unlawfully so, by the Defendant Council. Result; permission quashed.

However, the Court stopped short of saying that the two competing applications should be considered together at the same Committee meeting. Whilst it would be “plainly easier” to undertake a comparative assessment of the competing application at the same meeting, the Court commented that the “key point is the need to undertake a comparison where the evidence is so clear that they are alternate propositions for addressing the finite retail capacity to trade in an out of centre format without causing significant harm to the vitality and viability of Horncastle town centre.”

So, whilst it was not for the Court to impart its own planning judgement as to the comparative merits of the schemes the Council was obliged to do so and, having failed to undertake that exercise, Aldi’s planning permission was required to be quashed.