Dear s106 TCPA – Happy 30th Birthday!

Wed, 09 Sep 2020

Hitting the statute books at the very start of the now seemingly distant nineties (think dissolution of the USSR / Madonna - Vogue / Die Hard 2) s106 of the Town and Country Planning Act 1990 has enjoyed headlines, notoriety, praise and many a bun fight in the intervening three decades. It shares many of these with its predecessor: s52 of the TCPA 1971, before being re-badged in 1990 and given a wider makeover in 1991.

s106 is not some shy, retiring piece of legislation with little bearing upon the real world to be brought out only on special occasions. No, s106 is fought over in local planning authority offices across the country week in, week out.

s106 is a shorthand term familiar to every planning officer, lawyer, consultant, developer, investor, financier and planning committee member. At any one time countless planning permissions, achingly close to being issued, hang by the glittering thread of the telling resolution: “Subject to satisfactory s106 agreement”.

Agreements entered into under the provisions of s106 can run from the very modest through to obligations requiring a development to make payments totalling millions of pounds in both financial and non-pecuniary contributions.

It doesn’t end there. s106 caters not only for contributions but can be used to frame and control how land is used, when it can be so used, who can use it and for what purpose.

A most flexible tool, the application of s106 is almost endless. And that is its purpose – it is designed to be flexible in order that it can meet the needs of almost any conceivable form of development and ensure (when used properly) that the impacts from such development can be properly addressed.

Without s106 nearly all planning applications (or at least ‘major’ applications) would, on balance, be unacceptable. s106, whilst much derided (in this author’s view unfairly), is the grease that keeps the cogs of development moving

To mark such an important anniversary it was only fitting that s106 should be treated to a day out in the High Court for judicial consideration by Mr Justice Holgate (who is both the Planning Liaison Judge for the Planning Court and the President of the Upper Tribunal (Lands Chamber))

The case

In Norfolk Homes Limited v (1) North Norfolk DC (2) Norfolk CC [2020] EWHC 2265 (QB) the claimant developer sought a declaration that a s106 agreement executed in 2012 did not bind the development of the land in question pursuant to later permissions granted following applications made under s73 TCPA

The reader may wonder how can such an obligation be escaped. In this case by virtue of the operation of s73 TCPA (an application to vary the condition(s) attached to an existing planning permission). The grant of an application under s73 TCPA creates a new, standalone planning permission and leaves the original permission intact. The s106 in Norfolk was drafted in such terms as to apply to the planning application made in 2011 (which became the 2012 planning permission).

The Council approved two separate s73 applications in 2013 and 2015. In neither case was the grant made contingent upon entering into a further obligation or Deed of Variation. The developer applied for a Certificate of Lawfulness (under s192 TCPA) seeking confirmation that the implementation of the 2015 s73 permission would not trigger the obligations under the 2012 agreement. The Council refused to issue a certificate hence the developer’s application for a declaration in similar terms in the High Court.

Surely, the keen observer might ask, this is not an uncommon situation and given the regular use of s106 this must be a matter already well settled?

A not unreasonable observation. However, the Council creatively sought to rely upon two (relatively) recent decisions of the Supreme Court in relation to the interpretation of planning conditions and planning permissions (Trump[1] and Lambeth[2]) to breathe new life into an argument that might otherwise have been considered untenable.

The Council contended that:

(1) on a proper interpretation the 2012 agreement and the subsequent ‘variations’ to the 2012 permission should be given their plain and ordinary meaning such that the Developer was bound by the 2012 obligation regardless of which of the permissions was implemented;

(2) additional wording should be implied into the 2012 agreement to bind any subsequent s73 permissions.

Holgate J considered that there was no reason why the conclusions reached by the Supreme Court on the interpretation of documents in Trump and Lambeth (of finding the natural and ordinary meaning of the words used) could not apply equally to s106 agreements.

However, having reviewed the various leading cases concerned with the interpretation of legal documents (a s106 agreement being a Deed), Holgate J concluded on Ground 1 that “The authority has the means available to it to secure any appropriate planning obligation... The omission of that step in the present case is not a sound reason for modifying, or indeed distorting, sound principles for the interpretation of legal documents”.

As to Ground 2 it was observed that the Council’s argument faced “…a series of insuperable problems”, not least that if a new (rather than a s73) application had been submitted then the Council would have had to secure a new s106 agreement and at that time take into account the relevant policy considerations as they then stood. The Council could not rely upon the 2012 agreement in such circumstances (though of course, it could seek a new agreement in the same or substantially same form if appropriate). Nor would the Council necessarily wish to be bound by a previous s106 agreement – policy may have changed such that a greater proportion of affordable housing or other contributions could be requested.

In simple terms, the Council could not have its cake and eat it. In any event, Holgate J further considered that the ‘reasonableness criterion’ which must be satisfied for adding words,  by way of implication, was not met in this case.

Why does this matter?

If nothing more, Norfolk serves to (again) remind us that making variations to existing planning permissions presents particular legal problems that both councils and applicants need to be cognisant of. It also serves to warn councils that they will not be ‘bailed out’ where they have been left in an uncomfortable position.

s106 agreements are complicated, both in terms of content (so often the subject of months of negotiation) and the drafting itself. They also have a life of their own – too often they are the focus of attention until agreed and then forgotten. As Norfolk shows, to forget about existing agreements (or to fail to properly understand them) can be a costly mistake.

So Happy Birthday s106, you continue to keep us on our toes. Perhaps most importantly, however, you continue to provide a mechanism for the securing of many millions of pounds of necessary contributions along with appropriately controlling the uses to which land and buildings can be put.

Let’s hope the latest rumours of your imminent demise prove to be just that. Here’s to another 30 years!

 

[1] Trump International Golf Club Scotland Limited & Ano v The Scottish Ministers [2015] UKSC 74

[2] London Borough of Lambeth v Secretary of State for Housing, Communities and Local Government & Others [2019] UKSC 33

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