Undertaking too much too soon?
Under Section 106 of the Town and Country Planning Act 1990, a person with an interest in land can enter into a planning obligation either with the agreement of the relevant local authority or through a unilateral undertaking.
It is common for a developer to submit a unilateral undertaking to the local authority as part of a planning application. These secure obligations from the developer, often in the form of financial contributions, towards local facilities and infrastructure. The local authority is not a party to the agreement so is not providing any assurances.
Two recent cases highlight the difficulty of challenging such undertakings.
The decision in R (on the application of Renaissance Habitat Ltd) and West Berkshire District Council [2011] EWHC 242 (Admin) demonstrates that even where there has been a material change in circumstances, it may be extremely difficult to challenge the decision of the local planning authority not to agree a modification or discharge.
In that case, the claimant had freely entered into a planning obligation in 2005, on the grant of planning permission for residential development, under which it agreed to make defined contributions towards infrastructure costs. The basis upon which the sums were calculated was set out in Supplementary Planning Guidance (SPG), adopted shortly before by the local planning authority. Later, the authority revised the SPG with the result that the amount of contributions payable were reduced. The High Court dismissed the developer’s application for judicial review on the grounds that the defendant local planning authority had acted unlawfully, holding that the local authority was seeking to enforce an obligation which was valid when it was entered into.
The case of Millgate Developments Limited, Rv Wokingham Borough Council [2011] EWHC6 (Admin) shows that there can be some unintended consequences of a S106 undertaking. Permission having been refused for the building of 14 houses, the developer appealed and provided a unilateral undertaking to pay approximately £170,500 to overcome one of the Council’s reasons for refusal, being that there would be adverse impact on surrounding facilities and infrastructure. The appeal was allowed but the inspector indicated that the contribution provided in the undertaking was unnecessary and that he would have allowed the appeal even if the undertaking had not been provided. Not unexpectedly, the developer challenged the council’s subsequent refusal to discharge the undertaking by judicial review proceedings but the High Court held that enforcement was not unreasonable.
It is therefore worth considering negotiating terms in the S106 Agreement to stipulate what would happen if the SPG is revised within the period allowed for development and to include a pre-condition that the undertaking should only take effect if a planning inspector decides that the undertaking is necessary to make the development acceptable . It may even be worth submitting a draft undertaking that is only executed following the request of an inspector.
This article contains information of general interest about current legal issues. It does not give legal advice and specific advice should always be sought about your particular circumstances. We will be happy to assist.
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Celia Watts
Solicitor
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