Legal Viewpoint: To be bound or not to be bound? by Mark Child

Last month, the High Court granted Norfolk Homes a declaration confirming that planning permission granted for a development of up to 85 homes in the village of Holt was not bound by a section 106 agreement requiring affordable provision. How did the developers escape this obligation?

The scheme had been granted outline permission by North Norfolk District Council in June 2012, subject to a section 106 agreement requiring provision of 45 per cent affordable housing and a number of financial contributions. Importantly, the defined terms of the agreement did not refer to any subsequent permissions arising from the outline permission.

In 2013 and 2015, Norfolk Homes was granted two new permissions through variations of conditions on the outline permission under section 73 of the Town and Country Planning Act 1990. These new permissions were not made contingent upon the prior execution of a further section 106 agreement.

The company submitted a lawful development certificate application under section 192 to confirm that the 2015 permission could be lawfully implemented without triggering obligations under the section 106 agreement, which the council refused. As a result, Norfolk Homes made an application for a declaration under part 8 of the Civil Procedure Rules that the permission was not subject to the section 106 agreement and to remove it from the local land charges register.

The High Court accepted that section 192 is limited in scope and does not permit an appeal to test the legal effect of non-compliance with a planning agreement. Instead, it held, the council was limited to determining whether operations would be lawful and whether "any other matter constituting a failure to comply with any condition or limitation subject to which planning permission has been granted is lawful".

The court refused to accept the council's argument that the definitions of "development" and "planning permission" in the section 106 agreement should essentially be read as including "any subsequent section 73 permissions". In its view, the language of the section 106 agreement was clear and unambiguous in that the obligations it contained were not triggered by the 2015 permission.

Mr Justice Holgate referred to the Supreme Court case of Trump International Golf Club Ltd v Scottish Ministers [2016] and found nothing to indicate that any broader approach to the interpretation of planning agreements is required, particularly when such obligations run with the land and may affect the interests of future parties that were not originally involved.

The judge made clear that where a section 73 permission is granted, there is to be no assumption that any pre-existing planning obligation should apply. Instead, as with an application under section 70, it is for the parties to address any such requirement prior to permission being granted or, failing such agreement, for an inspector on appeal. There is no "trap" that a local planning authority may fall into; rather, it needs to make a conscious decision as to whether a planning agreement is required to mitigate the impacts of the development.

A section 73 application creates a new and independent permission without complying with one or more conditions of the original permission. Regardless of the outcome of a section 73 application, the original permission remains intact and subject to any planning agreement attached to it. If the parties wish the original permission's planning agreement to bind subsequent section 73 permissions, they should state so clearly within the agreement. If they choose not to do so, the local planning authority needs to consider in the usual way whether the section 73 development requires mitigation through a subsequent planning agreement. If so, it should require the applicant to enter into a new agreement.

There is no "right" or "wrong" way in deciding whether to bind subsequent section 73 applications to an original planning agreement. However, prior to granting a section 73 permission, local planning authorities should check whether there is a need in the particular circumstances of the case to require the applicant to enter into a new planning agreement.

Case: Norfolk Homes Ltd v North Norfolk District Council and Norfolk County Council; Date: 20 August 2020; Ref: [2020] EWHC 2265 (QB)

Mark Child is an associate at Dentons UK and Middle East LLP

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