Planning & Local Government Issues for Wales 2009 PLANNING OBLIGATIONS: Practical Enforcement in a...

Planning & Local Government Issues for Wales 2009

PLANNING OBLIGATIONS: Practical Enforcement in a Falling

Market

Michael Bedford

THE STATUTORY FRAMEWORK 1

Under s.106 of the Town & Country Planning Act 1990 (as amended by the Planning & Compensation Act 1991) a Planning Obligation is a deed which imposes positive requirements and/or negative restrictions on persons interested in land (see s. 106(1)).

Those requirements can include the payment of money to the local planning authority: s.106(1)(d).

The Planning Obligation binds the land and is enforceable by one or more identified enforcing local planning authorities (see s.106(3) and s.106(9)).


The deed may be a bilateral agreement or a unilateral obligation (see s.106(1)).

The deed may contain its own provisions for variation but otherwise binds the land until it is discharged by performance, varied by subsequent agreement, or varied by statutory modification or discharge under s.106A and s.106B TCPA 1990.


S.106A(1) TCPA 1990 provides: “A planning obligation may not be modified or discharged except- (a) by agreement between the authority by whom the obligation is

enforceable and the person or persons against whom the obligation is enforceable; or(b) in accordance with this section and s.106B.”

S106A(3) provides: “A person against whom a planning obligation is enforceable may, at any

time after the expiry of the relevant period, apply to the local planning authority by whom the obligation is enforceable for the obligation-

(a) to have effect subject to such modifications as may be specified in the application; or

(b) to be discharged.”


S106A(4) sets out the “relevant period” as currently 5 years from the date that the obligation was entered into.

S.106A(6) provides: “Where an application is made to an authority under subsection (3), the authority

may determine- (a) that the planning obligation shall continue to have effect without

modification; (b) if the obligation no longer serves a useful purpose, that it shall be

discharged; or (c) if the obligation continues to serve a useful purpose, but would serve that

purpose equally well if it had effect subject to the modifications specified in the application, that it shall have effect subject to those modifications.”

S.106A(10) provides that s.84 of the LPA 1925 (Lands Tribunal power to modify etc restrictive covenants) shall no longer apply to planning obligations.


S.106B sets out a right of appeal to the Assembly. An appeal can be made if the application is not

determined in time (8 weeks unless extended by agreement) or if the authority refuse to modify the obligation (see s106B(1)).

In dealing with the appeal the Assembly is subject to the same requirements as set out in s.106A(6): s.106B(4).


Thus the Assembly can only discharge the obligation if satisfied it “no longer serves a useful purpose” or modify it as sought by the applicant if it still serves a useful purpose but will do so “equally well” in modified form, or leave the obligation unchanged.

The expression “no longer serves a useful purpose” should be understood in land use planning terms (WO Circular 13/97 Annex C, para C6). Thus the fact that an obligation may serve a non-planning purpose which is of benefit to the local authority is not a good reason for its retention.

The Assembly’s decision is final (subject to the usual grounds of a legal challenge on a point of law).

STATUTORY MODIFICATIONS 1

Applications under s.106A(3) cannot be made until 5 years after the date of the obligation. Any relevant planning permission will usually be granted on the same date.

Whilst some 5 year old planning permissions may be part way through implementation (e.g. on larger sites) most residential schemes will have been built out or will have lapsed before the option of a statutory modification under s.106A(3) becomes available.

Where the option does apply it should be noted that the LPA cannot unilaterally impose different modifications to those sought by the applicant: R(Garden & Leisure Group) v North Somerset Council [2003] EWHC 1605 (Admin).

STATUTORY MODIFICATIONS 2

Also, the limitations in s.106A(6) on the conditions for an obligation to be modified or discharged mean that a statutory modification is not available where the LPA considers that the planning obligation still serves “a useful purpose” (e.g. secures an important planning benefit) and would not do so “equally well” if it was watered down (e.g. if the size of a contribution was reduced or if the time for payment was delayed).

Thus the statutory modification route is unlikely to be much used by developers seeking relief from current planning obligations prior to building out their development proposals.

NON-STATUTORY MODIFICATIONS 1

Non-statutory modifications are permitted by s.106A(1)(a), provided that there is agreement between all relevant parties.

The Assembly prefers variation of obligations to be by agreement rather than formal application etc (WO C.13/97 Annex C, para C1).


There are no statutory restrictions to limit what can be agreed (provided that if there is variation rather than discharge, the varied obligation still satisfies the requirements for a planning obligation and in either case the agreement itself is made by deed: s.106A(2)).

Thus a developer can seek relief from a planning obligation at any stage after it has been entered into but will only be successful if the enforcing planning authority(ies) agrees.


R (Batchelor Enterprises Ltd ) v North Dorset District Council [2003] EWHC 3006 (Admin) provides guidance on the exercise of the power in s.106A(1)(a).

There is no minimum time period before a variation or discharge can be proposed or agreed and the LPA has a discretion to consider a request or an application that it should agree to a modification of an obligation notwithstanding the fact that the five-year period has not elapsed

This discretion is not unfettered. It must be exercised to further the aims of the statutory scheme, that is to say for planning purposes.

Also if the obligation was recently entered into the LPA would need to consider the effect of variation or discharge on third parties, who may have framed their representations with respect to the associated planning application on the basis of the planning obligation.


It would be unreasonable for a local planning authority to refuse even to consider a request made under section 106A(1)(a) simply because it had been made within the five-year period.

The question to be considered by the local planning authority is whether, looking at all the planning circumstances, there is a justified case for variation or discharge of the obligation.

Any decision is susceptible to JR.

THE TYPICAL CASE FOR MODIFICATION 1

The delivery of housing is a national priority in PPW. The LPA is obliged to demonstrate a minimum 5 year

continuous supply of deliverable land for housing (see para 9.2.3 of PPW, as substituted by MIPPS 01/2006).

Failure to do so can lead to the release of additional sites, potentially in areas where the LPA would not normally wish to see development.

Monitoring shows that completions are down and sites with permission are not coming forward.

THE TYPICAL CASE FOR MODIFICATION 2

Market conditions have changed fundamentally in the last 18 months, with sales prices plummeting and development sites losing much of their value.

The developer’s site has planning permission and could come forward but for the burden of the s.106 obligation which makes the development unviable in current and foreseeable market conditions.

If the planning obligation is not modified the site will not be developed in the foreseeable future, the 5 year supply will be in jeopardy, and other less suitable sites are likely to be released.

THE LPA RESPONSE 1

Clearly the strength or vulnerability of the LPA’s 5 year supply will be an important consideration.

So too will the nature of the modifications sought. Adjusting the timing of the payment of contributions may ease

the developer’s cashflow without materially undermining the delivery of the agreed planning benefits.

Reducing the level of contributions (either across the board or in particular areas) will need a much greater justification because the necessary implication is that some degree of planning benefit will be permanently foregone.

THE LPA RESPONSE 2

Changes to the agreed provision of affordable housing will require particular scrutiny. The amount and nature (e.g. the split between social rented and intermediate) of the affordable housing have a close connection with the viability of a development and so may be an obvious target for a developer looking to revise the planning obligation. Also, unlike many obligations, affordable housing is not directly mitigating against an impact of the development (unlike e.g. an open space payment or an education contribution). Thus it might be argued that the development will still satisfactorily mitigate its own impacts, even with reduced affordable housing.

However, given the scale of need in most LPA areas, and the limited options for non-private sector provision, LPAs will be reluctant to agree changes to affordable housing without the most compelling case being made.

The LPA will also need to bear in mind the implications for negotiations on planning obligations in relation to current planning applications.

THE LPA RESPONSE 3

If the LPA is prepared, at least “in principle”, to consider a modification, what action should be taken?

Ensure you have a good understanding of the Planning Obligation as it stands. What exactly is the LPA entitled to and when?

If the Planning Obligation is performed as it stands, is the LPA actually ready to use the contributions in the near future on identified off-site improvements?

Identify what is important to the LPA in the proposed development (is it the housing numbers, is it as a solution to a difficult site, or is it a particular environmental improvement delivered by the development?).

THE LPA RESPONSE 4

Unless you have the necessary in-house expertise, ask the developer to fund an independent appraisal of the viability of the development, reporting to the LPA. The developer should be asked to disclose its figures on an “open book” basis.

Consider whether the development can be made viable simply by deferring the times for payment rather than by reducing them.

Consider the options for a “clawback” clause if the development economics improve in future before the development is fully built out.

Consider whether any modification should be made conditional on actual delivery of the development or phased elements of it.

ENFORCEMENT 1

There are three routes to enforcement:

StatutoryLand charge – section 106(12) – to recover

sums of money – but no regulations made yet.Contractual

ENFORCEMENT 2

Statutory remedies are twofold: (i) Injunction (to enforce restriction or requirement) –

s.106(5).

(ii) Self-help & recovery of costs in respect of a failure to carry out operations – s.106(6). By ss (7) - 21 days notice is required to be given to any person against whom the planning obligation is enforceable. This overcomes the need to obtain a mandatory injunction. See cases under s.178 TCPA 1990

INJUNCTION 1

Letter before action.Choice of Court.Emergency – interim justifiable? See CPR 25.

INJUNCTION 2

London Borough of Tower Hamlets v. Stanton Rubber & Plastics Ltd. [1990] JPL 512

If there is no doubt that the defendant is in breach of a covenant in a planning agreement, it is arguably irrelevant at the stage of granting an interim injunction, that there will be serious financial implications for the defendants if an injunction is made.

The Stanton Rubber case related to an old s.52 agreement, and the question of whether a developer should be prevented by injunction from continuing a clear breach of the agreement pending the outcome of an appeal to vary the conditions of the related planning permission. The CA held that the prospects of success of the appeal and the financial implications for the developer of upholding the agreement were irrelevant to the merits of an interim injunction.

However, if a developer could show that he simply did not have the financial means to comply with a planning obligation (as opposed to simply showing that compliance would result in him incurring a loss), then it is unlikely that the Court would order performance of the obligation.

CONTRACTUAL CLAIMS

Patel (Arvindkumar Purshottam) & 6 Ors v Mayor & Burgesses of the London Borough of Brent [2004] EWHC 763 (Ch)Hart J, upheld by CA [2005] EWCA Civ 644.

Developer obtained damages in a civil claim from Council for delayed building of

highway, after the Council had accepted s.106 monies from the developer for that purpose.

Potentially the LPA may bring a civil claim against the developer where the developer is in breach but if specific performance is required, a statutory claim for a mandatory injunction would provide a more obvious remedy.

Given that planning obligations are concerned with the delivery of planning benefits or with the imposition of planning restrictions, it is difficult to see much if any scope for the LPA to claim damages consequent upon a breach because the LPA will not normally have suffered any loss.

CONCLUSION 1

No one involved in the development process is immune to the present economic downturn.

Planning obligations that simply sit on the shelf whilst their associated planning permissions languish and then lapse add no value to anyone.

If delivery of particular developments is important, LPAs need to be prepared to contemplate revisiting the scale of agreed planning obligations.

CONCLUSION 2

LPAs need to insist on rigorous testing of any claim that the development can no longer afford agreed benefits.

But if that case is made, LPAs do have the freedom to agree to modifications and to insist on safeguards which best protect the public interest.

A variety of enforcement options exist if developer is refusing to co-operate/comply with its obligations.

This paper draws on a paper presented by James Findlay QC to a Planning Update Seminar in February 2009 and his work in that paper is gratefully acknowledged.

© Michael Bedford

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