Crest Nicholson Operations Ltd v Secretary of State for Housing, Communities and Local Government & Horsham District Council [2025] EWHC 2194 (Admin)

Crest Nicholson is an important Planning Court judgment on water neutrality and the Habitats Regulations. The court upheld a condition preventing occupation of 280 homes at Kilnwood Vale until an approved water-neutrality mitigation scheme had been secured. The key point was not that other regulators could not be trusted. It was that their unspecified future action did not provide the project-specific scientific certainty required before the Secretary of State could conclude that the development would not adversely affect the integrity of the Arun Valley protected sites.

Neutral citation

[2025] EWHC 2194 (Admin)

Court

High Court of Justice, King's Bench Division, Planning Court

Judgment date

22nd August 2025

Judge

Mrs Justice Lang DBE

Case number

AC-2024-LON-004013

What Crest Nicholson decided

The case concerned reserved matters for 280 homes at Kilnwood Vale near Crawley. The wider development already had outline planning permission.

The site lies within Southern Water’s Sussex North Water Resource Zone. Part of that water supply came from groundwater abstraction at Hardham near the Arun Valley SPA, SAC and Ramsar site. Natural England had advised that the existing abstraction could not be ruled out as harming the protected sites and that new development should not add to the problem.

The Secretary of State approved the reserved matters but imposed Condition 6. No dwelling could be occupied until either Horsham’s water offsetting scheme or an equivalent site-specific water-neutrality scheme had been secured.

Crest Nicholson challenged that condition. Mrs Justice Lang dismissed both grounds.

The Habitats Regulations require project-specific certainty

Regulation 63 requires the competent authority to ascertain that a project will not adversely affect the integrity of the protected site. Absolute certainty is not required, but the assessment must remove reasonable scientific doubt.

The court stressed that this is a demanding, precautionary test. The appropriate assessment must be based on the best available scientific knowledge and contain sufficiently complete, precise and definitive findings.

Our main guide explains the wider Habitats Regulations Assessment process.

Other regulatory regimes can be relevant, but the assumption is rebuttable

A planning decision-maker can generally proceed on the basis that other regulatory regimes will operate effectively. That principle can avoid the planning system trying to duplicate the work of specialist regulators.

Crest Nicholson confirms an important limit. The assumption is not an inflexible legal command. It is a rebuttable presumption and the decision-maker has to make an informed judgment on the evidence in the particular case.

Here Natural England, the Environment Agency and Southern Water all accepted that important scientific work remained unfinished and that there was no known safe level of groundwater abstraction at Hardham which could yet be ruled out as having a significant effect on the protected sites.

Unspecified future action was not enough

The developer argued that the Environment Agency and Southern Water were themselves bound by the Habitats Regulations. Whatever precise route they eventually took, they would have to act lawfully and protect the sites.

The Inspector accepted that those bodies could be expected to fulfil their legal obligations. But he also found that the crucial questions of how and when they would act remained uncertain.

The court upheld that approach. General confidence that another regulator will obey the law did not provide the specific evidence needed to conclude, for this development, that there would be no adverse effect on site integrity.

The evidence was still evolving

The Environment Agency and Southern Water were still investigating the relationship between Hardham groundwater abstraction and the Arun Valley sites. Southern Water had voluntarily reduced abstraction, but that was a short-term measure and did not itself discharge the Environment Agency’s Habitats Regulations duties.

The draft Water Resources Management Plan and its HRA were also still subject to change. Possible alternative water sources existed, but the evidence did not establish with the necessary certainty which supplies would actually be available, on what terms or when.

That uncertainty was a legitimate reason not to rely on the future regulatory process as the mitigation for the 280 homes.

The condition supplied the missing certainty

The Secretary of State did not refuse the reserved matters. Instead, Condition 6 prevented first occupation until a water-neutrality mitigation scheme had been secured through Horsham’s offsetting scheme or an agreed equivalent.

The court upheld the condition. It enabled the Secretary of State to conclude that the homes could not begin adding water demand until the necessary mitigation was actually in place.

This is a useful example of a condition dealing with a future environmental constraint without simply assuming that an unspecified solution will emerge later.

See our wider guide to water neutrality and planning.

The IROPI ground also failed

Crest Nicholson argued that the Inspector had wrongly assumed Southern Water’s future Water Resources Management Plan could rely on imperative reasons of overriding public interest, or IROPI, even where alternative sources of water existed.

The court rejected that challenge. The reserved matters decision itself was not made on an IROPI basis. The Inspector had expressly advised that IROPI should not be used for the planning appeal because feasible alternatives appeared capable of being secured through conditions.

His separate observation that a future water resources plan could in principle use the regulation 64 route if its statutory tests were met was not an error of law.

Reserved matters did not avoid the Habitats Regulations issue

The proposal already benefited from outline permission, but the later reserved matters decision was still an authorisation stage at which the Habitats Regulations had to be complied with.

That fits with the broader principle confirmed in later-stage Habitats Regulations cases: where a further decision authorises development to proceed, the competent authority may still need to be satisfied that the protected site will not be adversely affected.

For the planning process itself, see our guide to reserved matters.

The judgment does not make water neutrality the only lawful solution

Natural England itself described water neutrality as a tool for satisfying the Habitats Regulations rather than a statutory concept that must be used in every case.

The legal requirement is the regulation 63 outcome. Another mitigation method can in principle be used if it provides the necessary scientific and practical certainty.

In Crest Nicholson, the Secretary of State was entitled to conclude that the alternatives advanced by the developer did not yet meet that standard, while the occupation condition did.

Read the full Crest Nicholson judgment

The approved Planning Court judgment is held in the Planning Geek case law library. Gold Members can open the protected PDF below.

Related Planning Geek guidance

See Habitats Regulations Assessment, water neutrality and planning, planning conditions and reserved matters.

Crest Nicholson Case Law Page Updated: 9th September 2026