Hi Liam,
Yes they can. The Planning Act tells us that the council must make their decision in line with the policies in the development plan, unless material considerations indicagte otherwise. The decision should make it clear that it is contrary to whichever policies it contradicts, and give the material planning reasons why in this case the policy should be over-ridden.
If this is a common occurence with certain policies, then it is a sure sign they are not working as they should and probably need to be reviewed. If it's a one-off, then be very clear about the reasoning, as otherwise other applicants may try to use this decision in gaining their own permission on an application which may not have the same material reasons for departing from policy. Well, they may do this anyway, but the decision doesn't have to set a precedent that those policies can always be ignored as each application starts by being considered alongside the policies in the development plan.
I hope this helps
Adam
