St Albans District Council today suffered an expensive defeat over its appeal against a ruling reviving plans for 116 new homes and a 72-bed care home on Green Belt land in the city.

The Court of Appeal in London backed a September High Court ruling in which Judge Pelling QC, sitting in Manchester, gave developer Hunston Properties a second chance at securing planning permission for the development on land at Harpenden Road, Sewell Park, St Albans, near St Albans Girls School.

As a result the Council has been told it must foot the legal costs of the developer and must make an interim payment of £27,500 in the next 21 days. The full amount will be assessed later, but is likely to be even higher, and comes on top of the council’s own lawyers’ bills for bringing the appeal.

First the council and then a Government planning inspector had rejected the proposal as "inappropriate" in the Green Belt, but Sir David Keene today agreed with Judge Pelling that the inspector had based the decision on outdated figures on housing demand for the area.

As a result, the matter will have to be reconsidered by another inspector. The council had hoped to persuade the Court of Appeal to overturn the earlier decision and allow the refusal of permission to stand.

Dismissing the challenge Sir David Keene said that there was no new Local Plan for the area and that in the resulting "policy vacuum" the inspector had applied housing demand figures from the East of England Plan, which was revoked by the Government in January as part of its move away from strategically based figures.

The Plan had a figure of 360 houses per year for the district but the developer claimed that there was actually a need for more than 688 new homes per year.

The council had shown available sites for 2,183 new houses and, while this would be enough to provide a five-year supply on the Plan figures, this would result in a significant shortfall based on the developer’s figures.

Judge Pelling QC had found that the inspector erred in law by failing to identify the full objectively assessed needs for housing in the area as required by the Government’s new National Planning Policy Framework.

And, upholding that decision, Sir David Keene said: "I agree with the judge below that the inspector erred by adopting such a constrained figure for housing need. It led her to find that there was no shortfall in housing land supply in the district.

"She should have concluded, using the correct policy approach, that there was such a shortfall. The supply fell below the objectively assessed five year requirement. Where this inspector went wrong was to use a quantified figure for the five year housing requirement which departed from the approach in the Framework."

But he said that would not be the end of the matter when the application falls to be reconsidered, when the key question would be whether the shortfall provides "very special circumstances" sufficient to justify development in the Green belt.

The scale of the shortfall will have to be considered by the inspector dealing with the matter, against the particular circumstances faced by St Albans, where, the judge said "virtually all the undeveloped land in the district outside the built up areas forms part of the Metropolitan Green Belt".