High Court declines to strike out ordinary claim based on the construction of TCPA 1990, s 106 agreement (Aspire Luxury Homes (Eversley) Ltd v Hart District Council)

Fri, 22 Jan 2021

This article was first published by Lexis®PSL on 11/01/2021.

Planning analysis: The High Court held that it was not an abuse of process to bring an ordinary civil claim concerning the construction of an agreement under section 106 of the Town and Country Planning Act 1990 (TCPA 1990) (a section 106 agreement). The judge said that, while the validity of a section 106 agreement is highly likely to be a question of public law, suitable only for judicial review (except where it is raised as a defence to an ordinary claim by a local planning authority to enforce an agreement), the construction of TCPA 1990, s 106 agreement was not different in principle to the construction of any contract. 

Aspire Luxury Homes (Eversley) Ltd v Hart District Council [2020] EWHC 3529 (QB)

What are the practical implications of this case?
This case will prompt developers and others to consider bringing an ordinary claim against a local planning authority where there is a dispute concerning the construction of a section 106 agreement to which they are subject. In deciding whether to bring an ordinary claim instead of, or in addition to, a planning appeal, potential claimants should consider various factors, including the particular issues in dispute, the relevant time scales, whether it would be preferable for a judge or a planning inspector (or the Secretary of State) to determine the matter, whether damages are sought, and the costs risk.

What was the background?
In 2018, the claimant developer acquired land that benefitted from a 2015 planning permission (the planning permission) for the construction of six houses granted by the defendant local planning authority (the council). The planning permission was subject to a section 106 agreement, which bound the owner and any successors in title. When a further planning permission was granted in 2019, the claimant entered into a variation of the section 106 agreement.

The section 106 agreement included obligations concerning affordable housing. In outline, it required that two of the dwellings permitted had to be units of affordable housing and that these had to be provided before more than two other new dwellings could be sold on the open market.

While the requirement to provide affordable housing was not in dispute, the parties did not agree on the interpretation of the relevant clause of the agreement, clause 14. In 2019, the claimant applied to the council for a variation of the agreement under TCPA 1990, s 106A and in June 2020 appealed to the Secretary of State against the council’s non-determination of the application. In August 2020, the claimant further issued a claim (the claim), in which it argued that it had complied with the requirements of clause 14 and that it was free to sell dwellings on the open market without any obligation to provide affordable housing. The remedies sought were a declaration to that effect and damages.

The council applied for the claim to be struck out under CPR 3.4(2). It argued that (i) the dispute concerning the meaning of the agreement was an issue of public law, that it therefore should have been raised by a claim for judicial review, and that the matter should either be struck out or transferred to the Planning Court under CPR 54, (ii) the claim was an abuse of process as it was being brought at the same time as the planning appeal, and (iii) alternatively, there were no reasonable grounds for bringing the claim.

What did the court decide?
The court declined to strike out the claim or transfer it to the Planning Court under CPR 54. The judge said that it was important to distinguish between the construction of a section 106 agreement and its validity. Acknowledging the danger of generalising, the judge said that the validity of a section 106 agreement is highly likely to be a question of public law, suitable only for judicial review (except where it is raised as a defence to an ordinary claim by a local planning authority to enforce an agreement). However, he said that the construction of a section 106 agreement was not different in principle to the construction of any contract (Stroude v Beazer Homes Ltd [2005] EWHC 2686 (Ch)).

As to whether the claim amounted to an abuse of process, the judge held that it did not. He said that while it had been asserted in the appeal that the effects of clause 14 had been exhausted, the direct relevance of the assertion to the appeal was doubtful and the main thrust of the appeal was the different contention that the development subject to the agreement was not viable.

Finally, the judge said that while the claim might face formidable difficulties, he was not persuaded that it disclosed no reasonable grounds so that it should be struck out.

Case details
• Court: Queen’s Bench Division, High Court
• Judge: Mr Justice Bourne
• Date of judgment: 21 December 2020

Written by Howard Leithead, barrister, at No5 Barrister's Chambers.

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