Earlier today, the Supreme Court unanimously endorsed an earlier Court of Session decision quashing supplementary guidance issued by the Aberdeen City and Shire Strategic Development Planning Authority which set up a strategic transport fund (STF).
The principle of the STF was established in the Aberdeen City and Shire Strategic Development Plan (2014), approved by Scottish ministers in March 2014. The guidance, formally adopted in June 2015, required new developments in the Aberdeen housing market area to make pooled contributions to the fund.
The proceeds were to be used for transport schemes designed to relieve pressure on public transport services and roads resulting from significant levels of planned development in four strategic growth areas.
But imposition of the fund was challenged by the Stonehaven-based Elsick Development Company, which is promoting a new community at Chapelton, five miles south of Aberdeen. In 2013, the company entered into a section 75 agreement to contribute to the fund, on the proviso that no sums need be paid if the guidance was ultimately found invalid.
In the court proceedings, the company argued that the impact of its development on many of the proposed interventions to be funded by the STF was either zero or minimal. It maintained that the supplementary guidance was unlawful and contrary to national planning policy because it required contributions that would be used to support interventions unrelated to its particular development.
In April last year, the Inner House of the Court of Session quashed the supplementary guidance on the basis that the obligation to contribute to the pooled fund breached Scottish Government Circular 3/2012, which stipulates that any developer contribution under a section 75 planning obligation must fairly and reasonably relate directly to the development proposed.
The Supreme Court confirmed today that the supplementary guidance was unlawful. It said that use of the company’s contribution towards infrastructure with which its development has no more than a "trivial" connection meant that the planning obligation was not imposed for a purpose related to the development and use of its site, as required by section 75.
It also found that the planning obligation entered into by Elsick was an "irrelevant consideration" for planning purposes because there was only a trivial connection between the development and the infrastructure interventions it would help fund.
The court made clear that the scheme was not unlawful merely because it did not comply with the circular. The circular was simply a material consideration to be taken into account but not necessarily followed, it held.
Commenting on the ruling, Aberdeenshire Council head of planning Robert Gray said the authority will be looking in detail at the implications for its area. "We will continue to seek to mitigate the impact arising from development for delivery of infrastructure through our developer obligations process," he said.
Gray added: "The STF was an innovative mechanism to ensure developers made appropriate contributions to improvements to infrastructure, in particular road and rail. It had at its heart the principle that genuinely joined-up developments were in the interests of the entire region and promoted a more sustainable approach to planning policy."
Aberdeen City and Shire Strategic Development Planning Authority v Elsick Development Company Ltd
Ref:  UKSC 66