2012 Legal Review

Susanna Millar and Jamie Carpenter highlight six legal issues that hit the headlines in the past year. And planning lawyers give their predictions for the year ahead.

Last year, communities secretary Eric Pickles attacked the planning system for helping silks to buy sports cars and spend more time relaxing in their holiday villas. But despite his stated desire to reduce the role of lawyers in development management, 2012 saw the introduction of legislation and guidance which, while intended to speed up the system, seem set to keep barristers gainfully employed for a while yet.

The National Planning Policy Framework, introduced in March, and the Growth and Infrastructure Bill, currently passing through Parliament, are among several developments this year that are likely to provide fertile territory for legal challenges in order to establish case law. We spoke to top planning lawyers about the biggest legal developments of 2012 and heard their predictions for 2013.

Issue: The Community Infrastructure Levy

Who it affects and how: Councils must have their proposals for the Community Infrastructure Levy (CIL), which sets a tariff for developer contributions to infrastructure costs according to the type and size of development, approved by an examiner before they can start charging. Developers are required to pay CIL when building starts. "Anybody developing in areas with CILs is now affected," says SNR Denton consultant Stephen Ashworth. He says the charge will also affect self-builders, "who wouldn't have had a charge of that sort before".

Communities are also affected, says Hogan Lovells International partner Michael Gallimore. "Increasingly, they will look to councils to be accountable over how CIL is spent," he says.

How its importance was underlined in 2012: A handful of councils introduced levies during 2012, with around 50 more consulting on proposals.

Gallimore says April saw a "huge rush" of permissions as developers sought to avoid the incoming mayoral CIL, aimed at providing funds for Crossrail.

In October, ministers published draft amendments to the CIL regulations. The aim was to avoid hitting developers with unexpected costs when seeking to change conditions on schemes approved before a CIL was introduced. But legal experts say the changes do not go far enough. "A whole host of issues remain unresolved," says Ashworth.

Meanwhile, some of the first councils to draw up CILs have dropped proposals which charge developers of large retail developments while exempting smaller retail schemes - in some cases after objections from supermarket chains. "At some point someone will take this through the courts," Ashworth predicts. Approved schedules with differential rates could be thrown into doubt by a single successful challenge, he warns.

How to respond: Landmark Chambers QC Paul Brown says developers seeking to object to charging schedules have their "work cut out" because they have to prove viability would be put at risk across the whole local authority area. A challenge on the basis that a charging schedule will make a single site unviable would be likely to fail, he says.

Bircham Dyson Bell partner Mark Challis advises councils to avoid too much complexity. He says: "There will often be a case for different CIL rates for different zones, but delineating them can be complex and the more rates the more difficult the job of preparing the evidence to justify them."

Issue: Viability

Who it affects and how: "In every single application we have worked on in 2012 viability has been used as one of the negotiating tools," says Winckworth Sherwood head of planning Karen Cooksley. She says "lots of time and money" is being spent on viability disputes. "It's not that we don't know what viability means, it's how we measure it," she says.

Eversheds head of planning Stuart Andrews says local communities are "significantly impacted" by viability issues. Reductions in community benefits can be "quite difficult for local communities to accept", he says. Registered social landlords are also affected, he adds, as they may "see affordable housing provision on schemes substantially reduced".

How its importance was underlined in 2012: According to our legal experts, viability issues came into sharper focus with the publication of the National Planning Policy Framework (NPPF), the Growth and Infrastructure Bill, and growing numbers of Community Infrastructure Levy (CIL) proposals.

The NPPF says development schemes identified in local plans "should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened".

Stephen Ashworth, consultant at SNR Denton, says: "The NPPF is much briefer than the guidance it replaces and gives more emphasis to viability. The language in the NPPF is more commercial than previously." He adds that CIL is forcing local planning authorities to be "far more serious" about viability. CIL has "moved planners out of their comfort zone" and given viability issues "a far greater starkness," he adds.

Meanwhile, the bill proposes allowing the modification or removal of affordable housing elements of section 106 agreements to make schemes viable.Jeremy Cahill QC, head of No5 Chambers' planning group, says: "Central government is very interested in avoiding section 106 constituting a block to development."

How to respond: Ashworth says councils need to be better informed about the mechanics of viability and developers need to disclose figures that they "might not want to see in public". Cahill agrees with the need for this "open book approach", saying: "You can't just wander up and say: 'I don't fancy paying a 40 per cent affordable housing contribution'."

Issue: Registration of village greens

Who it affects and how: Pinsent Masons legal director Rebecca Warren says that for pro-growth local authorities, town or village green (TVG) applications can "stop development in its tracks completely, or slow things down" while claims are dealt with.

St Johns Chambers QC Leslie Blohm says that village green applications have become a "nuclear bomb" used against developers. "The rate of litigation doesn't appear to be slowing," he says.

How its importance was underlined in 2012: In March, a High Court judge confirmed that a village green does not have to be in a village or be green. He ruled that a Newhaven beach could not be registered as a village green because doing so would interfere with owner Newhaven Ports' rights to operate it as part of the port. But he rejected the firm's claim that a tidal beach could never qualify as a village green. Warren believes that the verdict has "expanded the normal understanding of what a town or village green should be".

Last month, the Court of Appeal rejected a TVG application under the Commons Act 2006, which requires qualifying land to have been used "as of right" without permission, force or secrecy for more than 20 years. However, the judge ruled the field, in Whitby, had instead been used "by right" because North Yorkshire County Council acquired it for public recreation in 1951.

According to Hill Dickinson head of planning John Holmes, the ruling "is going to be of immense use to councils in defending TVG applications on their land".

The Growth and Infrastructure Bill would ban applications to register land as a TVG if sparked by a "trigger event" such as a planning application. Warren says the bill contains "useful tools by which vexatious claims could be stopped in their tracks".

How to respond: Blohm advises councils to "take better care of land in their control". "Fence your land; stick notices up; prevent its use," he says.Councils have traditionally allowed claims to go to public inquiry, despite weaknesses in applications, Holmes says. He advises councils to be "a bit more aggressive in the early stages of defending claims".

Issue: Prematurity

Who it affects and how: Councils may cite grounds for rejecting planning applications on the basis that approving them would close off options for development strategies in preparation. The issue can threaten to delay developers' schemes, potentially by years, until local plans are agreed.

How its importance was underlined in 2012: Late last year communities secretary Eric Pickles used prematurity as grounds to reject three large housing schemes, most notably CALA Homes' Barton Farm plan in Winchester. But in February this year, Pickles was forced to quash his decision on Barton Farm, marking a move away from the government's use of the prematurity argument.

Jason Towell, partner at Cripps Harries Hall, says Pickles' original stance was based on the government's desire for localism but that is now "withering on the vine". Recent appeal decisions - such as one for 800 homes in Shottery, Stratford-upon-Avon - show Pickles is now more focused on councils' lack of a five-year housing land supply, he says.

Ian Ginbey, partner at Clyde & Co, which acted for CALA Homes, says this reflects pressure on the government to boost economic growth through more housebuilding.

How to respond: John Bosworth, head of planning at Ashfords Solicitors, says that Pickles' U-turn means the prematurity issue is "more or less dead now". According to Towell, the National Planning Policy Framework, which stresses the need for councils to get local plans in place, means that they cannot hide behind the prematurity argument to reject schemes.

Prematurity could still apply if a council is close to adopting its local plan, but Ginbey points out that this requires a subjective judgment. "There is no advice on what the tipping point is and that vexes developers quite a lot," he says.

Bosworth advises that, if councils do try to use prematurity as grounds for refusal and they are not close to adopting a plan, it is worth developers taking them on at appeal.

Issue: Major infrastructure

Who it affects and how: Major infrastructure developers are seeking to use the new "fast-track" consenting regime. Local authorities need to engage with developers when major projects are proposed in their areas and may have to deal with "associated development" proposals that cannot be included in development consent order applications for the actual infrastructure.

How its importance was underlined in 2012: There have been no significant legal cases since the major infrastructure regime was brought in under the Planning Act 2008, but some legal sticking points have emerged over the past 12 months. Scope for the regime's expansion to cover large commercial projects has also been mooted in the Growth and Infrastructure Bill.

The special parliamentary procedure required if a scheme relies on compulsory acquisition of land owned by public authorities or statutory undertakers has delayed the first plan to go through the system, Covanta Energy's Rookery South energy-from-waste scheme in Bedfordshire. Michael Humphries QC of Francis Taylor Building says the special procedure situation is unsatisfactory, but points out that the government has moved to alter the legislation in the growth bill.

Richard Guyatt, head of planning at Bond Pearce, says it can also be very difficult to comply with section 42 of the act, which places a duty on the promoter of major infrastructure to consult interested parties.

Guyatt says: "Finding everyone you need to consult with is hard, particularly on agricultural land. We spend lots of time checking and rechecking information, causing delays. The risk of error is very high and the liabilities are criminal, which is too extreme."

How to respond: Lawyers say it is unclear how much detail should be included in major infrastructure applications and what scope there is for changing details of a proposal after submission. The lack of court cases means there is no case law yet, but additional guidance is expected from the government in December after a "light-touch" review earlier this year.

Matthew White, partner at Herbert Smith Freehills, who is advising EDF Energy on its Hinkley Point C nuclear power station proposal, says flexibility should be worked into applications when they are submitted. For instance this could involve promoters asking for consent for two alternative proposals for part of the project.

Humphries says that local authorities need to engage early in the process. He adds that not being the decision-maker allows councils to raise issues of concern where projects are locally politically sensitive.

Issue: Environmental impact assessment

Who it affects and how: Local authorities have to interpret environmental impact assessment (EIA) regulations to judge when to require developers of major schemes to produce assessments and receive documentation that is of sufficient quality. Applicants have to be aware of the need for EIA and to produce or commission the relevant assessment when required.

How its importance was underlined in 2012: Legal experts say environmental impact assessment cases in the past year have not changed the law significantly. Anne Harrison, associate barrister at DAC Beachcroft, says there have been fewer cases, reflecting the slowdown in major developments as a result of the recession.

This autumn the European Commission announced its intention to carry out a "comprehensive overhaul" of the process to make it less burdensome. But Duncan Field, partner at Wragge and Co, is sceptical. "There is so much established case law that, if anything, the scope of EIA is widening rather than reducing," he says.

Harrison says that to reduce the paperwork for EIA could be seen as a watering down of the regime, where "the devil is in the detail".

How to respond: Field says EIA has become a more familiar path for local authorities but it is still very easy to fall foul of the procedures. Both councils and applicants need to have a reliable checklist of a project's scope and what they need to do to satisfy the strict legal and procedural requirements of EIA, he says.

"You need to keep going back to that to have regular checks against the requirements and invest the time, however rushed and strapped for resources you are," says Field.

Councils and developers should also be alert to the fact that the government is due to introduce cost-capping on environmental judicial reviews in December. According to Field, this could significantly increase the volume of EIA cases because claimants are less likely to be put off by the cost of litigation.

Experts are not expecting legal challenges on the government's strategic environment assessments (SEAs) of regional strategies, but Harrison says that SEA cases could come forward for local plans and even neighbourhood plans if parties wish to resist proposals.

Lawyers' predictions: what new issues might arise in 2013?

Oliver Martin, partner, Irwin Mitchell: Section 33A of the Planning and Compulsory Purchase Act 2004 - inserted into the act via the Localism Act 2011 - imposes a legal requirement on local authorities to co-operate. In addition, the National Planning Policy Framework makes it clear that local plans should be based on effective joint working on cross-boundary strategic priorities.

Many local planning authorities are progressing local plan preparation as a matter of urgency. The question arises as to whether authorities are engaging and co-operating with other authorities adequately.

Inspectors are already grappling with this issue and the duty imposed under section 33A is likely to be tested further by the courts.

Marnix Elsenaar, head of planning, Addleshaw Goddard: Raising local residents' expectations as to the power that neighbourhood planning would give them to control development in their area was always likely to result in conflict.

Residents believe that neighbourhood plans should give them control over what gets built in their local area. Local planning authorities have a different agenda: promoting growth, delivering on housing targets and balancing the views of residents against law and policy.

This tension is likely to see the courts getting involved to determine disputes about the extent of neighbourhood areas, the relationship between the neighbourhood plan and the local plan, and whether a neighbourhood plan can precede a much-delayed local plan.

Tim Pugh, partner, Berwin Leighton Paisner: The government's growth package proposes a fast-track application and appeal process for modifications to affordable housing requirements in section 106 agreements agreed before April 2010. Focused viability analyses by developers will be essential.

Meanwhile, Community Infrastructure Levy (CIL) charging schedules, based on "up-to-date" viability assessments by councils, are being progressed across the country to beat the April 2014 deadline, when the scope of section 106 will be limited.

A time bomb ticks - conflicting local authority and developer viability analyses will be reconciled by the Planning Inspectorate and this might provide an opportunity to reopen ill-considered CIL charging schedules.

Richard Ford, planning partner, Pinsent Masons: I predict a challenge arguing that the operation of the National Planning Policy Framework (NPPF) - in particular the presumption in favour of sustainable development - is unlawful.

I expect that an incompatibility will be alleged between the NPPF and the strategic environmental assessment process which requires consideration of environmental impact in local plan-making. In the application determination process, a breach of the Aarhus Convention for failure to provide access to justice in environmental matters may be cited, alleging that the environment is inadequately protected by the NPPF and that its impact assessment was flawed.

Clare Fielding, real estate partner, Lawrence Graham: Clause 1 of the Growth and Infrastructure Bill would allow developers to bypass underperforming councils and submit major applications directly to the Planning Inspectorate for a speedier decision with no recourse to appeal.

Critics argue that the Inspectorate will have to fulfill a dual role of planning officer and committee, a role which they say it is not suited for.

There is a lot of uncertainty over how councils' performance will be measured, and by whom. Legal challenges around these decisions, and perhaps to permissions granted in consequence of them, seem likely to become a feature of the new landscape.

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