Workshop: Public: Enforcing planning obligations

Rising numbers of developers are failing to meet their obligations under section 106 of the Town and Country Planning Act 1990 as a result of ?the recession. These obligations usually ?take the form of agreements or undertakings between the local authority and a developer, and are a condition on the grant of the planning permission. Adverse economic circumstances can also lead to attempts to negotiate and reduce liability. Where negotiations fail, planning authorities are increasingly taking action to enforce obligations.

What are the principles which the courts will apply and what are the procedures for bringing the matter before the court?

The High Court established in Southampton CC v Hallyard Ltd [2008] EWHC 916 the importance of ensuring that the obligation complies with the statutory requirements of section 106(9), that the execution must be by deed, stating the obligation is a planning obligation, identifying the land.

The agreement in Hallyard failed to state what the interest of the person entering the agreement was. It was not therefore a planning obligation for the purposes of the section and so section 106(3) did not operate so that the agreement could be enforced against “any person deriving title” from the original covenantee.

So compliance with the formalities of section 106(9) should be checked at the outset of any debate about the enforceability of an obligation.

The following year, the High Court reached a similar conclusion in Waltham Forest LBC v Oakmesh [2009] EWHC 1688 (Ch) and ordered the construction of a foot bridge. In this case, the court ruled that the developers were estopped from denying validity of the agreement because, among other things, they appealed against it under section 106A. This was even though the agreement did not properly identify the land and so the agreement did not comply with section 106.

Avoiding expenditure

A developer tried to limit or avoid financial expenditure in Hampshire CC v Beazer Homes Ltd [2010] EWHC 3095 (QB), which involved an action for a declaration by the claimant highway authority on the construction of a section 106 agreement. The agreement required the payment of contributions in respect of traffic management (“and for no other purpose”) and for a relief road, with provision for refunding of any sums not “expended” once the development was fully occupied.

Beazer argued that a term should be implied that expenditure must be “reasonably and properly incurred” but the court rejected the argument, saying that terms should be implied into section 106 only in very limited circumstances.
The court also rejected the company’s argument that the section 106 agreement created a trust, that a term should be implied requiring unexpended traffic management money to be refunded, and that “expended” in the relief road clause referred only to payments actually made when the development was fully occupied.

It is also noteworthy that the procedure used was a Part 8 declaration claim but with defence and counterclaim.

The later case of R (Millgate Developments Ltd) v Wokingham BC [2011] EWCA Civ ?1062 related to a unilateral undertaking (under section 106) proposed by Millgate on appeal against refusal of its planning application.
The undertaking provided for payment of contributions as required by Wokingham, with the obligation to pay triggered by commencement of development. A planning inspector allowed the appeal but did not regard the undertaking as necessary and gave it “little weight”.

Nevertheless, Wokingham requested payment of the contributions. Millgate sought a declaration in judicial review proceedings that enforcement of the undertaking by the council would be unlawful.
The Court of Appeal held that the undertaking was lawful, unconditional and enforceable: it did not matter that the inspector might have granted Millgate planning permission without the undertaking. In its judgment, the court acknowledged there might be further disputes in private law enforcement proceedings. The result, though, is that appellants who put forward unilateral undertakings are likely to specify that the triggering of obligations is conditional on a finding that they meet the requirements of policy or the CIL regulations.

Government proposals

Similar issues came up in R (Renaissance Habitat Ltd) v West Berks DC [2011] EWHC 242 (Admin), where a developer was granted planning permission subject to section 106 for payment of infrastructure costs. By the time the council sought payment, the supplementary planning guidance (SPG) on which calculations were based had changed. The developer’s judicial review was dismissed, with the court finding that it was not unlawful or unreasonable to enforce an agreement which had been lawfully made and which was based on an SPG which was not itself unlawful.

It remains to be seen how the above trends will play out in future cases, as more and more authorities take steps to enforce section 106 planning obligations.

Much could depend on how the government takes forward its proposals to allow renegotiation of section 106 agreements or appeals against them by developers, as unveiled by Eric Pickles’ statement on Housing and Growth on 6 September 2012.