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Don't be presumptuous

Don't be presumptuous


Natasha Rees, Lauren Archer, and Miri Stickland consider the lack of clarity on sustainable developments, cautionary drafting tales, and precarious rights over communal areas

Mr Justice Green’s decision in East Staffordshire Borough Council v Secretary of State for Communities and Local Government [2016] EWHC 2973 (Admin) continues to cause confusion as to the correct interpretation of paragraph 14 of the National Planning Policy Framework, which states that ‘at the heart of the [NPPF] is a presumption in favour of sustainable development, which should be seen as a golden thread, running through both plan-making and decision-taking’.

Planning practitioners hoping for certainty following conflicting decisions of the High Court in Wychavon District Council v SSCLG [2016] EWHC 592 (Admin) and Richborough Estates Partnership v Cheshire East Borough Council [2016] EWCA Civ 168, both handed down in March 2016, continue to be left somewhat in the dark as to how the presumption in favour of sustainable development should be applied, at least for the time being.

The East Staffordshire case concerned an inspector’s decision to approve development of up to 150 dwellings on land just outside Burton-on-Trent. The local planning authority had previously refused the application on the basis that it conflicted with a number of strategic policies within its local plan. It should be noted that the LPA was able to demonstrate a five-year housing land supply.

The inspector approved the application on the basis that he could apply a broad presumption in favour of sustainable development, even where there was conflict with an up-to-date local plan.

Green J, upholding Jay J’s decision in Cheshire East, disagreed. A local plan should form the basis of what development would be considered sustainable development within an LPA’s area. Working through the methodology set out in paragraph 14 of the NPPF, if a development conflicted with an up-to-date local plan, it should not be considered to be sustainable development. The starting point, and correct presumption to be applied, should be as per paragraph 12 – that proposed development which conflicts with an up-to-date local plan should be refused, unless other material considerations indicate otherwise.

Green J acknowledged that, on the terms of section 38(6) of the Planning and Compulsory Purchase Act 2004, there still had to be scope for discretion to approve developments which fell foul of an up-to-date local plan, although this should only be in exceptional circumstances. Unfortunately, Green J declined to comment further on what might be considered ‘exceptional’, stating that a case which turned on this point would be better placed to address this.

The court granted the interested party developer permission to appeal to the Court of Appeal, recognising that there had previously been conflicting case law on this point, with a recommendation that the case should be expedited.

If this decision is upheld, developers hoping to obtain permission for developments which do not accord with an up-to-date local plan will have to ensure that they can demonstrate ‘exceptional’ reasons why their application should be approved. Just exactly what those reasons might be, however, remains to be seen.

Say what you mean and mean what you say

Another cautionary drafting tale came out of the courts in the case of Dooba Developments Limited v McLagan Investments Limited [2016] EWHC 151 (Ch). The parties had entered into a conditional sale and purchase agreement in respect of a development site in Worksop owned by Dooba. The agreement provided that Dooba was to obtain planning permission to build a retail superstore on the site which would be sold on to McLagan (also known as Asda).

Dooba had four conditions to fulfil under the agreement – namely, the obtaining of satisfactory planning permission for the scheme; the entering into of any associated planning agreement; a condition relating to establishing access from the superstore to and from the public highway; and the discharge of any pre-commencement conditions to the outline planning permission which needed be satisfied before other works could be started.

The agreement had a longstop date of 23 July 2014. On the following day, Asda’s solicitors served notice to rescind the agreement, which Dooba challenged. The key issue before the High Court was the construction of the rescission clause, which stated that the parties had a mutual right to rescind ‘if all of the Conditions have not been discharged […] by the Longstop Date’.

Fundamentally, whether or not Asda’s right to rescind had arisen turned on the meaning of the word ‘all’. Dooba contended that the literal meaning should be applied (i.e. that the power to rescind arises only if none of the conditions have been discharged by the longstop date). Conversely, Asda submitted that the correct interpretation of the clause was that the power arises if any of the conditions have not been satisfied by that date.

While the outcome was finely balanced, the court decided in favour of Dooba and concluded that all of the conditions must have remained undischarged for the right to arise. Although it was established that the highway condition had not been discharged, there is likely to be further litigation as to the status of the other conditions on the date the rescission notice was served. It should be noted that the agreement did also contain other provisions for rescission relating to the specific individual conditions.

As ever, practitioners will be concerned to avoid ambiguous drafting. Blind spots can easily develop where complex provisions have been ferociously negotiated. To mitigate this, employing a second pair of eyes to check your drafting can often bring a new, more objective, perspective.

When precarious rights become permanent

The recent Upper Tribunal (UT) decision in 4-6 Trinity Church Square Freehold Limited v The Corporation of Trinity House [2016] UKUT 484 (LC) highlights a problem concerning precarious rights over communal areas and how these should be dealt with in collective enfranchisement claims.

The provisions that govern what can be acquired in a collective claim are found in section 1 of the Leasehold Reform, Housing and Urban Development Act 1993. They allow tenants to acquire property which is not included in the relevant premises in two situations. Either it is appurtenant property demised under the leases, or it is property that a tenant is entitled under its lease to use in common with other tenants. In the latter case, the landlord has the option of offering equivalent rights in lieu of the freehold. A freeholder can only avoid transferring the freehold if it offers rights that satisfy this ‘equivalence test’ (section 1(4)(a)).

Section 1(4)(a) refers to the tenants being granted ‘such permanent rights as will ensure that thereafter the occupier of the flat… has as nearly as maybe the same rights as those enjoyed in relation to that property on the relevant date by the qualifying tenant under the terms of his lease’. It has been established in previous cases that it is necessary to consider what right the tenants enjoy at the date of the initial notice, and that a precarious right will qualify provided that it exists at that date.

It is less clear how the equivalence test should be applied to these precarious rights. If a landlord offers rights to the tenants, do they have to be the same rights enjoyed under the leases or is it necessary to offer something more permanent? This is the question that came before the UT in the Trinity Square case.

The tenants of 4-6 Trinity Church Square served a notice to acquire, among other things, the freehold of the garden. The tenants had a revocable licence to use the garden within their leases. After service of the claim the freeholder revoked that licence. In its counter-notice the freeholder offered a revocable licence to use the garden or such rights as were required to satisfy the equivalence test. The UT had to decide whether precarious rights would satisfy the equivalence test.

The UT concluded that the freeholder must grant the tenants a permanent right to use the garden in order to comply. They felt that this was consistent with the underlying rationale of the enfranchisement process. The freeholder has been granted leave to appeal the decision.

Natasha Rees, pictured, is a partner, Lauren Archer is a chartered legal executive, and Miri Stickland is a property business support lawyer at Forsters