November 1, 2020

S106 obligations receive Court of Appeal endorsement in recent case

Jo Lilliott, Planning Law solicitor at Holmes & Hills and Section 106 specialist, discusses the recent Court of Appeal case of DP Symmetry and Swindon Borough Council and Secretary of State for Housing Communities and Local Government [2020] EWCA Civ 1331. The case relates, in the main, to the interpretation of planning conditions. There is, however, a secondary point to be taken from the case and that is the commentary on the relationship between planning conditions and planning obligations, especially given the doubt raised by the latest government consultation “Planning for the Future” over the continued use of Section 106 Obligations in planning.

Facts of the DP Symmetry case:

The case considers the important distinction between what can be imposed by planning conditions to make a development acceptable and what can be agreed between the Local Planning Authority and the developer or offered by the developer as a planning obligation.

The facts of DP Symmetry revolve around a condition on a planning permission: -

“the proposed access roads, including turning spaces and all other areas that serve a necessary highway purpose, shall be constructed in such a manner as to ensure that each unit is served by fully functional highway, the hard surfaces of which are constructed to at least basecourse level, prior to occupation and bringing into use”. 

With the reason for the condition stating:-

“to ensure that the development is served by an adequate means of access to the public highway in the interests of highway safety”

The dispute was as to whether the condition required the developer to dedicate the access roads as public highway (the Council’s view) or whether it merely regulated the physical attributes of the road (the developer and the Secretary of State’s view).

The Court of Appeal, with leading speech from Lord Justice Lewison, and following the 1964 case of Hall & Co Limited v Shoreham by Sea UDC [1964] 1WLR240, held that a condition that required the dedication of land as public highway without compensation would be unlawful.

Comment from a Planning Law and S106 specialist:

As an aside I would suggest that had the condition been in negative form, requiring for instance:

“No occupation of a dwelling unless and until X Road has been constructed and agreements entered into for the adoption as public highway”

the outcome may well have been different.

There was a S106 Agreement relating to this development and it covered a number of highway issues, including the developer agreeing to transfer certain land to the Council for the Council to carry out highway improvements – but this S106 Agreement did not relate to the access roads within the site.  

The Hall decision indicates – as set out in the Encyclopaedia of Planning Law and Practice – that:

“a condition will be invalid if the effect is to destroy private proprietary rights, such as to require the construction of a road on a site and to make it available for use by owners of adjoining properties, effectively requiring its dedication as a highway without compensation”. 

Hall has been followed in a number of cases and has never been overruled.   An example of this with a different subject matter is the case of MJ Shanely v Secretary of State for Environment [1982] JPL 380 where the condition required a developer to provide 40 acres of land for public open space.   It was held: -

“that condition…. is undoubtedly one which is invalid and unenforceable……. It falls… four square within the situation considered in Hall…”

In Tesco Stores Limited v Secretary of State for the Environment [1995] 1LR759 Lord Hoffman (not the leading speech) referred to Hall as “a landmark case” and noted that one result of Hall was that planning authorities use different methods to achieve the result that the imposition of conditions could not achieve – namely, the use of planning obligations.   

He commented that Circular 16/91:-

“sanctioned the use of planning obligations to require developers to cede land… it authorised the use of planning obligations in a way which the Court in Hall would regard as Wednesbury unreasonable in a (planning) condition”

He continued:-

“it does not follow that because a planning condition imposing a certain requirement,  such as to cede land or pay money would be regarded as Wednesbury unreasonable, the same would be true of a refusal of planning permission on the ground that the developer was unwilling to undertake a similar obligation under a Section 106 (Agreement). I say this because the test of Wednesbury unreasonableness applied in Hall to conditions, is quite inconsistent with the modern practice in relation to planning obligations, which have been encouraged by the Secretary of State …….”

Lord Hoffman clearly recognises the difference between what can be achieved by conditions and planning obligations.  

Lord Justice Lewison in DP Symmetry indicates that planning legislation encourages the wider use of planning agreements and obligations. He goes on to refer to comments made by Lord Hodge in the case of Aberdeen City and Shire Strategic Development Planning Authority v Elsick Development Co Limited [2017] UKSC66:-

“… that planning obligations enable a Planning Authority to control matters which it may otherwise have no power to control by planning conditions”.  

This is a clear endorsement that the power to impose conditions on the grant of planning permission is narrower than the power to enter into planning agreements or accept planning obligations. This could be said to stem from the fact that a planning obligation cannot be imposed – it can only be the result of an agreement or form a unilateral undertaking offered by the developer – in the knowledge that, if no such satisfactory agreement or undertaking is achieved then the Local Planning Authority may refuse to grant planning permission.

Lately, the Newbury Criteria have been imported into the consideration of planning obligations (Regulation 122 CIL Regulations 2010) when they “constitute a reason for granting planning permission” but these regulations have not in any way changed the scope for imposing conditions on a planning permission.

Lord Justice Lewison concludes and confirms that a condition that requires a developer to dedicate land which he owns as a public highway without compensation would be an unlawful condition.  

This would clearly also be the case if, for example, a condition required land to be provided as public open space or as a school site or as affordable housing. The place for these matters to be regulated and secured is as a planning obligation either in a S106 Agreement or in a unilateral undertaking.  

The test for the imposition of a planning condition and what can be achieved as in a S106 obligation/agreement, is not the same.  S106 Agreements and unilateral undertakings are an extremely useful tool in securing physical matters that are required in relation to a development

It is therefore to be hoped that S106 Agreements and unilateral undertakings survive the “Planning for the Future” consultation.   Otherwise, it will be extremely difficult to secure infrastructure that is necessary and required to make a development acceptable.   

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Jo Lilliott

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