2. Overview
• This talk will cover the following topics:
– Formalities and requirements
– Regulation 122
– Affordable Housing obligation appeal decisions under
section 106BC TCPA 1990.
– Enforcement
4. Westminster City Council -v- SSCLG
[2013] EWHC 690 (Admin)
• Unilateral Undertaking not to apply for a parking permit
• Held: UU did not meet the requirements of s.106(1)(a)-(d)
(a) Restricting the development or use of the land in any specified
way,
(b) Requiring specified operations or activities to be carried out in, on,
under or over the land’;
(c) Requiring the land to be used in any specified way; or
(d) Requiring a sum or sums to be paid to the authority ... on a
specified date or dates periodically.
• Therefore UU not capable of being registered as a local land charge, and did
not run with the land. Only a personal undertaking and not enforceable
against successors in title or as provided by ss.106(5)-(6).
5. Lessons
• Important to check that obligations actually fall within section 106,
before going on to apply the tests in regulation 122 of the CIL
Regulations 2010 etc.
• Wording that would comply? “The Owner hereby covenants that the
Property shall not be occupied for so long as the Owner or occupier of
the Property has made an application to X Authority for a parking
permit which has not been decided or is in possession of such a
parking permit“ Clearly not practical.
• Section 16 of the Greater London Council (General Powers) Act 1974.
• Other local acts?
6. Importance of complying with statutory formalities
Southampton City Council v Hallyard Ltd [2008] EWHC 916 (Ch):
Agreement failed to state interest of the person entering into it, as
required by section 106(9)(c). Strict requirement – therefore not a
planning obligation.
However….
Does subsequent conduct show acceptance that obligation falls within
section 106? See London Borough of Waltham Forest v Oakmesh
[2010] J.P.L. 249
8. Regulation 122
Regulation 122 — Limitation on use of planning obligations
(1) This regulation applies where a relevant determination is made which results in planning permission
being granted for development.
(2) A planning obligation may only constitute a reason for granting planning permission for the
development if the obligation is—
(a) necessary to make the development acceptable in planning terms;
(b) directly related to the development; and
(c) fairly and reasonably related in scale and kind to the development.
(3) In this regulation—
“planning obligation” means a planning obligation under section 106 of TCPA 1990 and includes a
proposed planning obligation; and
“relevant determination” means a determination made on or after 6th April 2010—
(a) under section 70, 73, 76A or 77 of TCPA 1990 of an application for planning permission; or
(b) under section 79 of TCPA 1990 of an appeal.”
9. Necessary to make acceptable in planning terms:
Derwent Holdings v Trafford Borough Council & others [2011]
EWCA Civ 832.
-Concerned the validity of a planning permission granted in
two parts, firstly a large superstore and secondly the
redevelopment of the Old Trafford Cricket Ground.
-Held:
“Nothing objectionable in principle to a local authority and a developer
entering into an agreement to secure desirable objectives, whether or not they
are necessary to strengthen the planning case for a particular development.”
10. Necessary to make acceptable in planning terms:
Persimmon Homes North Midlands v SSCLG [2011] EWHC
3931:
-High Court upheld the decision of an Inspector who dismissed an
application for planning permission for 200 dwellings on the basis
that it was not possible to determine whether the section 106
obligations complied with the CIL Regulations.
-“It seems to me that those requirements could properly be said to
be directly attributable to, though not exclusively so, to amongst
other factors the proposed development by this developer, and
that some contribution to those requirements was therefore
necessary to make the development acceptable in planning
terms.”
11. Necessary to make acceptable in planning terms:
R (Hampton Bishop PC) v Herefordshire Council [2013]
EWHC 3947:
-Concerned a permission for a new rugby ground and 250 houses.
Section 106 agreement transferred old ground to the Council for £1.
-Parish Council challenged on the basis that transfer did not meet legal
test of necessity.
-”what is “necessary” for the purposes of regulation 122 is defined in
terms of what is required “to make the development acceptable in
planning terms”; and, therefore, a simple “but for” test is inadequate…
what is acceptable in planning terms is dependent upon a complex web
of policies and other material considerations, and a series of planning
judgments.”
12. Overall
- Test is not whether planning permission would be refused
for the development, “but for” the obligation in question.
Instead, an obligation will be necessary to make the
development acceptable in planning terms if it makes
“some contribution” to a planning impact that is “directly
attributable” to the development.
- N.b. not possible for parties to override regulation 122 by
agreement (see Telford & Wrekin Borough Council
(and others) v Secretary of State for Communities and
Local Government (and others) [2013] EWHC 1638
(Admin))
13. Telford & Wrekin BC -v- SSCLG [2013] EWHC 1638 (Admin)
• Application of reg. 122 to off-site highway works contribution.
• Costs pooled on the basis that all proposed developments would be
completed.
• Condition in s.106 cancelling obligation if Inspector found non-
compliance (now common).
• Held that whilst the method of apportioning pooled costs between
proposed developments could in principle satisfy the requirements of
Regulation 122(a), in this case the Inspector was entitled to find that
pooled costs apportioned did not reflect the reality of future
development.
• Upheld by COA: [2014] EWCA Civ 507
15. THREE ROUTES TO VARIATION/DISCHARGE:
•s.106A(1)(a) – by agreement through deed.
•ss.106A(1)(b) - by expiry of relevant period (5 years). Right of
appeal under s.106B (test is whether obligation still serves a
“useful purpose” – difficult to meet).
– N.b. 2013 Amendment Regs: 5 year period removed for pre-6th
April
2010 developments until April 2015.
•New route for affordable housing obligations (section 106BA):
obligation must be removed/modified to make development
economically viable. Right of appeal under s. 106BC.
16. KEY LESSONS FROM CURRENT APPEAL DECISIONS – 1/4
Burden is on the developer to show that the scheme is not
viable.
–Land between Lydney Bypass and Highfield Road (known as
Lydney A and Lydney B), Lydney, Gloucestershire. (appeal ref:
2215840).
–Uncertainty often resolved against developer.
–Compare with Vannes KFT v. R B Kensington & Chelsea [2010]
EWCA Civ 1466, where qualitative considerations can prevail where
quantitative uncertainty.
17. KEY LESSONS FROM CURRENT APPEAL DECISIONS – 2/4
Starting point is the assumptions used during initial appraisal –
including profit margin.
-Former Holsworthy Showground, Trewyn Road, Holsworthy (appeal ref:
2207402)
-18% developer profit accepted, rather than 20% proposed by applicant.
Inspector noted that lower rate of 18% used in initial appraisal submitted
with planning application.
-Inspector adopted this figure.
-Lesson: adopting low developer profit margins at application stage and
then making a s. 106BA application seeking a higher margin will not
work.
18. KEY LESSONS FROM CURRENT APPEAL DECISIONS – 3/4
What happens if development is still unviable once contribution removed?
-Land off Marsh Lane (appeal ref: 2217720): development still unviable if no
contribution. Purpose of s. 106BA to promote viability to enable development to
come forward. Granting application would not allow this.
Vs
-Tamewater Court, Dobcross (appeal ref: 2213720): AH requirement removed,
“this scheme is not economically viable… the removal of the remaining
contributions to affordable housing provision is necessary to move it towards
viability.” and
-Mast Pond Wharf (appeal ref: 2207402): “there is therefore a prospect that the
development, without the provision of affordable housing, could be viable and the
discharge of the requirement would incentivise a start of development as sought
by the guidance.”
19. KEY LESSONS FROM CURRENT APPEAL DECISIONS – 4/4
Not possible to increase developer profit after the event
-Montague Close, Walton on Thames (appeal ref: 2212449)
-Inspector rejected an attempt to reduce an AH contribution after the
development had actually been brought forward and sold.
-Agreed that the profit achieved was 10.77% and reduced to approx. 8%
upon payment of the commuted sum.
-Retrospective attempt to increase margin rejected. 8% profit margin
reasonable in any event.
21. Overall approach
•Stroude v Beazer Homes [2006] 2 E.G.L.R. 115:
“... first and foremost, the section 106 Agreement is a contract between the
parties to it which, in my judgment, falls to be construed according to ordinary
principles of construction. The fact that the section 106 Agreement is made in
the context of the statutory provisions is, no doubt, part of the factual matrix
against which it has to be construed; accordingly, it should be construed, so
far as possible, in a way which enables the statutory provisions to operate.
But I do not consider that there are otherwise any special canons of
construction which apply to a section 106/section 38 agreement.”
•Tesco v SSE [1995] 1 WLR 759: enforceability of a s. 106 agreement does not
depend on its nexus to the development, but on the terms of the contract.
•Clear willingness of Courts to enforce section 106 obligations. Beyond statutory
provisions for modification/discharge, scope for argument on enforceability
limited.
22. R(Renaissance Habitat Ltd) v West Berkshire DC [2011] EWHC
242 (Admin)
• Section 106 agreement based on SPD – revised by time payment
required. Quantum of contributions reduced under revised SPD.
• Not unlawful/unreasonable to enforce agreement. Parties could have
agreed provisions which enabled obligations to be adjusted with
changes to SPG or in specified circumstances, but did not do so.
• If agreement requires contributions to be paid in changed
circumstances the developer is simply being held to his agreement.
• See also: Hertsmere BC v Brent Walker Group [1994] 1 PLR 1
23. R(Millgate Devs Ltd) v Wokingham BC [2011] EWCA Civ 1062
• S. 78 appeal. UU submitted. Inspector found that unnecessary
and gave it “little weight”.
• Developer sought declaration that s. 106 obligations
unenforceable.
• Court of Appeal held that obligation enforceable. Developer
could not challenge the agreement on the basis that it lacked
sufficient nexus (see Tesco).
• Nevertheless, scope in future to argue that obligations not
“reasonably required” given wording of the agreement.
24. Newham London Borough Council v Ali and others [2014] EWCA Civ 676
• Enforcement of UU– required trust to submit policy compliant planning
application within 12 months or carry out removal works.
• Failure to comply. LPA applied to the court for an injunction requiring the trust
to carry out the removal works specified in the undertaking.
• High Court – granted injunction with immediate effect.
• COA: “In my judgement, where there has been a substantial breach of a
planning obligation under section 106 of the 1990, an injunction will normally
be granted unless the local planning authority has acted in a way which
justifies withholding relief on ordinary equitable principles.”
• Contractual nature of a s106 agreement means enforcement different from
proportionate approach required under s. 187B injunction application.
However, COA suspended injunction.