The structure of new housing development in a large part of West Sussex may be transformed by a judge's ruling in a dispute between developers and Chichester District Council.

Cala Homes (South) Ltd is accusing the council of acting with "a firmly closed mind" and "ignoring" a Government planning inspector's recommendations on housing land allocation in its area.

The company is asking Deputy High Court Judge Robin Purchas QC to quash substantial parts of the Chichestar Local Plan and, if its challenge succeeds, the council will have to fundamentally re-think its policy on housing land allocation.

At the centre of the case is the council's refusal to follow the inspector's recommendation after a public inquiry that there should be a 10 per cent flexibilIty allowance in its housing land supply table.

The developers are also attacking council decisions not to allocate a site at Southboume for housing and to retain other sites at Silver Way and a former Pontins holiday camp for development, contrary to the inspector's recommendations.

Cala Homes is also arguing that the council's allocation of sites at Bracklesham Lane, East Wittering and Lumley Road, Hermitage, for housing development was also unlawful.

Mr Mark Lowe QC, for Cala Homes, told the judge: "It is plain that the council had a mind that was firmly closed."

The council, he argued, was merely persisting in arguments which had earlier been rejected by the planning inspector. Its stance was that many housing allocation issues had been debated months and years before and should not now be brought back into consideration.

"This was in plain breach of their powers and the principles of fairness," Mr Lowe told the court.

Chichester, Mr Lowe said, had supported West Sussex County Council in its earlier High Court fight to overturn a direction by Environment Secretary John Prescott that more housing land be made available in the county.

Although the county council's challenge had been dismissed by a judge, Chichester had "continued nevertheless to reaffirm its support for the stance of the county council," said Mr Lowe.

But Mr Russell Harris, for Chichester, said the absence of the 10 per cent allowance was "not, in itself, unlawful."

In reachIng its decision, the council had taken into accounts 1997 housing land supply monitoring study which post-dated the inspector's report.

"The local authority were entitled, in the circumstances of this case, not to follow the Inspector's recommendation to apply such a flexibility allowance."

The council had decided that a 10 per cent flexibility allowance would be "undesirable, unnecessary and unprecedented In West Sussex" and might lead to "unnecessary take up of greenfield sites."

After a two-and-a-half day hearing, Deputy Judge Purchas reserved his decision in the case. He is expected to give his ruling in September.