- This is the third article in a series being published by a group of Landmark barristers over the coming weeks on the subject of the variation and enforcement of s. 106 obligations.
- This article considers the relationship between s. 73 of the Town and Country Planning Act 1990 (“TCPA 1990”) and s. 106 obligations, in particular how far planning obligations contained in a s. 106 obligation relating to an initial grant of planning permission pursuant to s. 70 TCPA 1990 (“the s. 70 Permission”) may be enforced in respect of a later grant of planning permission pursuant to s. 73 TCPA 1990 (“the s. 73 Permission”).
Section 73 TCPA 1990
- The important starting point is to recognise the nature of a grant of planning permission pursuant to s. 73 TCPA 1990:
- Whilst applications pursuant to s. 73 are commonly referred to as applications to “amend” the conditions attached to a planning permission, this is legally inaccurate. Rather, a planning permission under section 73(2) leaves the original planning permission intact and unamended, and can only take effect as an independent permission to carry out the same development as previously permitted, but subject to the new or amended conditions. See: Pye v Secretary of State for the Environment, Transport and the Regions  PLCR 28 per Sullivan J (as he then was) at 44, approved by the Court of Appeal in Powergen United Kingdom plc v Leicester City Council  JPL 1037 per Schiemann LJ at . See also: Lambeth London Borough Council v Secretary of State for Housing, Communities and Local Government  UKSC 33;  1 WLR 4317 per Lord Carnwath at  – .
- The consequence of this is that the applicant may choose whether to implement the original planning permission, the s. 70 Permission, or the new planning permission, the s. 73 Permission: see Pye per Sullivan J at 45, approved in Powergen per Schiemann LJ at . (Note that this may need to be approach cautiously in some circumstances if the permissions are inconsistent and one has been commenced, following Pilkington v Secretary of State for the Environment  1 WLR 1527; but difficulties of inconsistency will not arise where the development permitted under both permissions is identical – in such circumstances the developer may switch between permissions, even if one has been commenced, see (Robert Hitchins Limited) v Worcestershire County Council  EWCA Civ 1060 per Richards LJ at .)
Relationship with s. 106 obligations
- In light of the fact that the s. 73 Permission is an independent, free-standing, planning permission, the question arises as to whether the planning obligations in the s. 106 obligation are enforceable where development proceeds pursuant to the s. 73 Permission but the s. 106 obligation was entered into in respect of the s. 70 Permission only. Ultimately, there is no single answer to this question: it is a matter of interpreting the particular s. 106 obligation and considering the relevant factual circumstances. Nevertheless, the following general points can be made:
- A s. 106 obligation may expressly cover the situation: for example, the s. 106 obligation, whilst entered into in respect of the s. 70 Permission, may expressly state that it will continue to apply in respect of any s. 73 Permission which is subsequently granted. For a local planning authority, this represents the safest approach as it provides a safety net in the event that a new s. 106 obligation is not entered into inadvertently in respect of the s. 73 Permission. Equally, such an approach does not bind the hands of the local planning authority: the s. 106 obligation can be varied and/or a new s. 106 obligation can be entered into if necessary in respect of the s. 73 Permission (for example, if policy or viability matters change).
- If the s. 106 obligation does not cover the situation, it is necessary to focus on whether or not the obligation in question is conditional and, if it is conditional (as is very often the case), whether the condition in question has been satisfied: for example, whether the trigger for the payment of a monetary contribution has occurred. The fact that a s. 73 Permission is an independent planning permission is relevant here because if, as is usually the case, the condition is specific to the s. 70 Permission (for example, the commencement of the development permitted by the s. 70 Permission) then the development may be able to commence (or continue) under the s. 73 Permission without satisfying the condition (because the development is not proceeding under the s. 70 Permission) and thus without engaging the obligation.
- The most common example of this is whether or not the payment of a monetary contribution has been triggered. This was the case in Robert Hitchins where development commenced under a s. 70 Permission and thereby satisfied the condition (the commencement of development described in the s. 70 Permission) for payment of the first instalment of a monetary contribution towards transport infrastructure costs in the s.106 obligation. However, before the condition for the second instalment had been satisfied (namely the occupation of 50% of the dwellings permitted by the s. 70 Permission), the developer obtained a s. 73 Permission for an identical development and continued to develop the dwellings pursuant to the s. 73 Permission. The s. 106 obligation related only to the s. 70 Permission and not the s. 73 Permission. The High Court (Hickinbottom J, as he then was) and the Court of Appeal (Richards, Floyd and Sales LJJ) granted the developer a declaration that it was not required to pay further instalments of the monetary contribution because the conditions for subsequent payment were all linked to the s. 70 Permission and the development had switched to the s. 73 Permission before the conditions for the subsequent payment had been satisfied.
A different approach?
- The High Court is currently considering this issue in Norfolk Homes Ltd v North Norfolk DC  EWHC 504 (QB). The facts of the case are generally unremarkable: outline planning permission was granted and a s. 106 obligation was entered into in respect of that permission, subsequently planning permission was granted pursuant to s. 73 TCPA 1990 without an accompanying planning obligation. Development commenced pursuant to s. 73 TCPA 1990. However, some payments had been made by the developer pursuant to the s. 106 obligation. The claimant is seeking a declaration that the development is not bound by any of the obligations contained in the s. 106 agreement. Thornton J refused the developer’s application for summary judgment. Thornton J’s judgment is noteworthy because of her consideration of Lambeth.
- Thornton J summarised the parties’ submissions at  – :
“[The developer] submitted that the claim raises a short point of law about the construction of the section 106 agreement … The obligations in the section 106 agreement are expressly tied to the implementation of the Outline Planning Permission … The development is being implemented under the separate and independent [s.73] planning permission, as to which the parties chose not to include the increasingly standard clause to the effect that the s 106 obligations were to remain binding.
[The Council] submitted that the claim raises a cogent and novel point of law which is not apt for summary judgment. The Supreme Court decision in Lambeth makes clear that a planning document, which includes a section 106 agreement, must be interpreted according to the natural and ordinary meaning of the words in their surrounding context, which includes the planning context. Accordingly, the section 106 agreement is to be construed as applying to the outline planning permission as varied. Failing that, these words are to be implied. The available evidence, namely the Council’s approval of reserved matters and the payments made under the section 106 agreement, is consistent with the Council’s understanding that the s106 agreement continued to apply to the varied planning permissions.”
- In dismissing the application for summary judgment, Thornton J said at :
“I am not persuaded that the claim gives rise to a short point of law. Some, but not all, of the issues that arise from the claim seem to me to be as follows:
- To what extent are the legal principles for interpreting a section 106 agreement the same as those for interpreting any other planning document?
- Should the section 106 agreement be construed in accordance with its ordinary and natural meaning; the statutory and planning context (including the subsequent section 73 permissions) (Lambeth paragraph 19) or should it be construed according to the principles of contractual interpretation set out in Arnold v Brittan (in particular principle iv) that the contract should be construed according to the facts and circumstances at the time of the contract)?
- To what extent is the case of Lambeth v Secretary of State relevant to the present case?
- Can the Council be said to have fallen into a ‘technical trap’ of the sort envisaged by Court in Lambeth v Secretary of State? To what extent, if at all, should the Courts intervene to protect the Council from any ‘technical trap’?
- Can the case of Lambeth be said to establish the principle that developers should not be able to evade obligations by relying on technical traps.
- The legal relevance, if any, of the payments made under the section 106 agreement in 2016/2017.
- The legal relevance, if any, of the implications of the developer’s case being inconsistent with a key planning priority for the Council (the provision of affordable housing).”
- It is possible to understand why Thornton J considered the matter may not be suitable for summary judgment, but it is not clear how far they will provide a successful defence for the local planning authority, in particular:
- In Lambeth, Lord Carnwath dealt expressly with the question of whether a different approach to interpretation should be adopted to planning documents, holding at  – , by reference to Trump International Gold Club Scotland Ltd v Scottish Ministers  1 WLR 85, that there was no special set of rules for interpreting planning documents (although the fact that a planning document is a public document may be relevant to the extent of background material that may be taken into account).
- Lambeth does not set down any general principle that local planning authorities should be protected from “technical traps”. The term “technical traps” was used by the Court of Appeal, not the Supreme Court, and the Supreme Court concluded that s.73 Permission was subject to the condition in dispute on “an ordinary reading of the decision notice” (see ), as a straightforward matter of interpretation, and not on the basis of any need to protect the local planning authority from a “technical trap”.
- It appears from the limited facts in the judgment of Thornton J, that the local planning authority’s case is based on at least some events which post date the s. 106 obligation (although perhaps not the s. 73 Permission). If this is correct, it is difficult to see how these events can be taken into account in the interpretation of the s. 106 obligation as part of the relevant factual background (and as opposed to the interpretation of the s. 73 Permission). Thornton J at [20(b)] appears to suggest that this it may be permissible to take these later matters into account on the basis of Lambeth at  (“whatever the legal character of the document in question, the starting point – and usually the end point -is to find the natural and ordinary meaning of the words used, viewed in their particular context (statutory or otherwise) and in the light of common sense”). However, Lord Carnwath’s summary at  in Lambeth does not represent a departure from the approach in Arnold v Britton and the interpretation of the decision notice did not take into account events after the date of the decision notice.
- Accordingly, whilst it is understandable that the issues may not have been suitable for summary judgment, nevertheless they do not appear to indicate a firm basis for departing from the approach exemplified by Robert Hitchins.