Barry Denyer-Green
Planning agreements are widely used in the control of development. They contain a variety of obligations, of both a positive and restrictive nature, which cannot usually be achieved through ordinary planning controls. Timing and phasing of development, landscaping and other obligations to do work, ordinary restrictions on further building, and the imposition of restrictions regulating the development and use of land that cannot be lawfully imposed by planning conditions, these and many other examples are all common.
A planning agreement is normally executed as a deed, and the parties to it are bound under the ordinary principles of privity of contract. If a breach of the agreement occurs, the local planning authority, as a party to the agreement, is entitled to seek the private law remedies for breach of contract, and is under no obligation to exercise any alternative powers of enforcement under planning law.(1) However, the efficacy of a planning agreement depends upon the right of the local planning authority to enforce the obligations against the owner of the affected land and his successors in title. In equity, restrictive covenants are enforceable against successors in title to burdened land so long as the party seeking to enforce the covenant has an interest in land capable of being benefited.(2) In the case of a planning agreement, statute deems the local planning authority as possessing adjacent land and “as if the agreement had been expressed to be made for the benefit of such land”.(3)
By deeming the local planning authority possessor of adjacent land, benefited by the agreement, covenants of both a restrictive and positive nature can be enforced against successors in title. One important consequence is that the owner of the affected land can apply to the Lands Tribunal to seek the exercise of its power to discharge or modify restrictions. The tribunal’s power is limited to restrictive covenants, and the exercise of its power is an uneasy one in relation to planning agreements.(4)
The nature of planning agreements
There are two principal responsibilities placed on local planning authorities: the preparation of development plans and development control. These, and the many other functions of a consequential nature, are carried out with a view of achieving planning objectives within criteria set by the local planning authority. Guidance is provided by ministerial circulars, and powers must be exercised in accordance with the law.(5) The use of the power to make planning agreements, or any power to enforce the same, must therefore be within the contextual framework of planning and planning law. Although the powers of development control could be, and are, used in relation to a particular site for the protection and benefit of adjacent land, for example to prevent an out-of-scale building overlooking neighbouring properties in pursuit of a policy to that effect, it would probably be wrong to use a power for the purpose of protecting a particular owner or a particular property as such.(6)
The use of planning agreements is incidental to the primary responsibilities of planning authorities. It follows that the benefit sought from the use of planning agreements should be within the broad scope of the benefit to be derived from the whole system of planning and planning control.
Jurisdiction of the Lands Tribunal
The purpose of section 52(2) of the Town and Country Planning Act 1971 (re-enacting section 37 of the 1962 Act) in deeming covenants in planning agreements as if they were expressed for the benefit of adjacent land owned by the local planning authority is a technical device to enable the agreement to be enforced against successors in title.(7) A planning agreement may contain covenants of a restrictive nature, and it is accepted that the Lands Tribunal may exercise its jurisdiction under section 84(1) of the Law of Property Act 1925 to discharge or modify such covenants.(8) However, section 84(1) of the 1925 Act is drafted to meet the normal circumstances of private restrictive covenants that are taken to benefit land held by the covenantee or his assigns; covenants in planning agreements will not usually have that narrow purpose. The Lands Tribunal has had to try to reconcile this dissonance.
The tribunal has power under section 84(1) to order the discharge or modification of any restrictive covenant on being satisfied of the following grounds:
(a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Lands Tribunal may deem material, the restriction ought to be deemed obsolete; or
(aa) that … the continued [restriction] would impede some reasonable user of the land for public or private purposes or, as the case may be, would unless modified so impede such user; or
(b) that the persons … entitled to the benefit of the restriction … have agreed, either expressly or by implication;
(c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction.
Ground (aa) applies only where:
the Lands Tribunal is satisfied that the restriction, in impeding that user, either —
(a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them; or
(b) is contrary to the public interest; and that money will be an adequate compensation for loss or disadvantage (if any) which any such person will suffer from the discharge or modification.
There have now been a number of reported and unreported cases that illustrate the exercise of the tribunal’s power to order the discharge or modification of restrictions in planning agreements. In Re Beecham Group Ltd’s Application, the first such case before the tribunal, the planning agreement contained restrictions on further building at the site in question. The Beecham Group were party to the original planning agreement, made 10 years earlier, and applied to have the restrictions removed to permit a building for which the company had obtained planning permission on appeal. The grounds relied on were (a), (aa) and (c) of section 84(1).
The tribunal took into account the fact that the local planning authority did not own any land capable of being benefited by the restriction; there was no objection on aesthetic grounds; some development had taken place in the 10 years since the agreement was made; and that planning permission had been granted on appeal. Although the tribunal was not satisfied that ground (a) was made out, namely that the restriction should be deemed obsolete, it was persuaded that grounds (aa) — impeding reasonable user — or (c) — no injury to the persons entitled to the benefit — were satisfied. Presumably it could not have been ground (aa) as the tribunal did not consider the question of practical benefits, or whether the restriction was contrary to public interest, or whether there was any loss or disadvantage for which money would be adequate compensation.
Grant has already observed that these are curious grounds to justify the discharge or a modification of restrictions in a planning agreement as the purpose is not to benefit the planning authority as a party as such, nor any land it might own.(9) The tribunal modified the restriction to allow the building for which planning permission had been granted.
The tribunal discharged a planning agreement restriction in Re Cox’s Application, partly on the ground that the restriction had become obsolete and partly, once more, on the ground that the planning authority would not be injured.(10) The purpose of the restriction, imposed in an agreement in 1969 with a predecessor in title, was to prevent certain staff accommodation from being let or sold off from the principal house. The applicant had let the accommodation in breach of the agreement and sought to regularise the situation and sell off the principal house. The tribunal was clearly influenced by the change of circumstances and took into account the planning background.
As the principal house was occupied separately and was no longer staff accommodation, this amounted to a change of circumstances; the restriction was discharged on ground (a) as it was obsolete. In deciding that ground (c) had also been satisfied, the tribunal took into account the planning interest of the local authority in protecting the countryside and found that there would be no injury if the accommodation remained occupied by someone employed in agriculture. The tribunal exercised its jurisdiction under section 84(1C) of the 1925 Act to order the imposition of a new restriction tying the accommodation to persons solely or mainly employed in agriculture. The exercise of this power must always be a consideration for practitioners advising on a possible application to the tribunal.
In Re Martins’ Application, where a 1967 planning agreement was in issue, the tribunal clearly acknowledged that in planning agreement cases the local planning authority could not be treated as if it were merely the deemed owner of adjacent land; it had a wider role and was the custodian of the public interest in planning matters.(11) The agreement contained a restriction preventing any building on a plot of land, and the applicants sought the removal of the restriction to allow a building for which outline planning permission had been granted.
In this case the member said that a landowner must comply with both the requirements of any restrictions regarded as restrictive covenants and with planning law. He added that it should not follow that decisions of the Secretary of State on planning questions determine whether a restriction ought to be deemed obsolete or whether, in impeding reasonable user, it is of practical benefit to the local planning authority or is contrary to the public interest: these questions have to be determined on their merits.
The member accepted that the purpose of the planning agreement restriction was to prevent excessive density on the site. He found that this purpose could still be achieved, and it followed that the restriction could not be deemed obsolete on ground (a).
Ground (aa) was not satisfied because although the grant of planning permission suggests that the construction of a building would be in the public interest, that does not determine that the restriction, in impeding reasonable user, would be contrary to the public interest. The member made the important point that in the circumstances, impeding reasonable user did secure practical benefits to the authority, “the benefit of being able to prevent detriment to the visual amenity of part of its area”. Money was not regarded as adequate compensation in this situation.
The tribunal was not satisfied on ground (c) either, as the visual detriment of the proposed building “would constitute an injury to the [authority] in its capacity as custodian of the public interest”. Another recognition that the local planning authority cannot be treated merely as owner of adjoining land.
Where an application is made to the Lands Tribunal, for the discharge or modification of a covenant, it is accepted that it has an overriding discretion in the exercise of its powers.(12) In Re Kentwood Properties Ltd’s Application, the application was dismissed, inter alia, on the ground that the applicant was “in flagrant, cynical and continuing breach of the restrictions” not to use certain retail accommodation for other uses.(13) The restrictions were imposed in a 1982 planning agreement and, on the facts, the tribunal was not persuaded that the restriction to retail use was obsolete: there was no evidence to show that the property could not be let as shops.
Although it was accepted that the restrictions did impede a reasonable user, the tribunal did not accept that this was against the public interest. On the question of the practical benefits to the planning authority, the member thought the restriction was on the borderline, but did not accept that ground (aa) was satisfied as money would not have been adequate compensation to the authority.
If these cases disclose a trend towards a recognition of the position of the local planning authority as representing the public interest, rather than as deemed landowners, the case of Re Groves’s Application appears to reverse this.(14) Strictly, it did not involve a planning agreement but a restrictive covenant in a conveyance, the benefit of which the local authority was entitled to enforce as a restrictive covenant under what is now section 609 of the Housing Act 1985. The covenant was imposed to benefit adjoining properties, and to support policies regarding planning and environmental matters. The president of the tribunal modified the covenant to allow the erection of a house in accordance with a granted planning permission. Although he was persuaded that the reasons for imposing the restriction, which must have been to preserve the character of the village concerned, still held good, ground (aa) was satisfied as the restrictions impeded the reasonable user of the land.
The president ordered that money would be adequate compensation and accepted that the proper sum payable was the difference in the price of the affected property, with and without the restriction at the time of its sale in 1962, adjusted for inflation.
Points of law
Although these cases largely turn on questions of fact, there are two points of law not so far touched on. The Court of Appeal decided in Gilbert v Spoor(15) that where ground (aa) is being relied on, it is open to the Lands Tribunal to find that “benefits” can be wide and do not have to “touch and concern” the land of the objectors as such: a view can be a benefit even though the view could not be seen from the land benefited by the covenant. A covenant intended to preserve the amenity or standard of the neighbourhood generally is therefore capable of being a benefit for the purposes of ground (aa).
This first point helps a planning authority objecting to an application to discharge or modify a restriction. The next point may be helpful to owners. Section 84(1B) of the Law of Property Act 1925 provides that in every case the tribunal “shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and other material considerations …”
Although this means that the tribunal is not bound by the planning background, it is required to consider it and must have reasons for not following the implications of the development plan or the pattern of grants or refusals of planning permission.
Where the Lands Tribunal exercises its powers, its decision may be appealed by way of a case stated to the Court of Appeal. Although most cases before the tribunal turn on the merits of the evidence drawing the wrong conclusions, drawing conclusions not supported by the evidence or misinterpreting the law in its application to any case are grounds for appeal. In Abbey Homesteads (Developments) Ltd v Northamptonshire County Council the tribunal decided that a restriction in a planning agreement to reserve certain land for educational purposes was rendered obsolete when the land was compulsorily acquired by the education authority.(16) An appeal against that decision was allowed on the basis that the land in issue was still required for educational purposes and that bodies other than the local educational authority can provide schools.(17)
According to section 84(1)(a) of the 1925 Act, a restriction only becomes obsolete “by reason of changes in the character of the property or the neighbourhood or other circumstances … which the Lands Tribunal may deem material”. Applying the ejusdem generis rule of construction, Nourse LJ in the Court of Appeal said that the matters relied on by the tribunal came nowhere near the meaning of the particular words. There were no changes that rendered the restriction obsolete.
The developer in the Abbey Homesteads case also sought to have the restriction discharged on ground (c) on the basis that the district council, the other party to the planning agreement, would not be injured by its discharge. Nourse LJ recognised the obvious difficulty in fitting section 52(2) of the Town and Country Planning Act 1971 and ground (c) together. He said that the persons who benefit must be taken to be those who benefit from the permitted use of the land which is subject to the restriction (purchasers and their families of houses on the surrounding residential development to which the planning agreement was tied). The children and generations to come would be injured if the affected land had no school. He made the additional point that ground (c) is only a long-stop against vexatious objections to extended user (Ridley v Taylor(18)).
Practical points and summary
(1) An application can be made to the Lands Tribunal to have discharged or modified any restriction in a planning agreement, and it matters not that the applicant is the original party or the agreement is relatively recent: Re Beecham Group’s Application, but see the inconsistent views of the Court of Appeal in Ridley v Taylor on this point.(19)
(2) Where appropriate it is advisable to obtain planning permission for the activity the subject of the restriction: this may mean an appeal if the other party to the agreement is the district planning authority. It does not follow that the existence of planning permission is proof that a restriction impeding reasonable user is contrary to the public interest: Re Martins’ Application. But in none of the cases was a restriction relaxed for an activity that had no planning permission where permission was required.
(3) At this stage the other party to the planning agreement should be approached to see if the agreement can be modified by negotiation. This is covered by ground (b) in section 84(1). There is usually no need to offer any monetary consideration, as it appears that the circumstances where the tribunal is likely to order any compensation are much more limited than with private restrictive covenants.
(4) Proven changes in the character of the property or the neighbourhood are required to justify ground (a), and the evidence of the development plan and the pattern of the grant and refusal of planning permissions is highly relevant. In the light of the recent cases, this ground is the most likely to be successful. Unless this evidence is satisfactory, the tribunal cannot discharge or modify a restriction which has a purpose that can still be fulfilled: Abbey Homesteads (Developments) Ltd v Northamptonshire County Council.
(5) Where ground (aa) is going to be relied on — impeding some reasonable user — the applicant must establish that the persons entitled to the benefit of the restriction do not secure any practical benefits of substantial value or advantage, or that the restriction is contrary to the public interest, and that money will be an adequate compensation.
Apart from the public interest point, this ground raises three matters of difficulty for the applicant. It is clear that the persons entitled to the benefit of a planning restriction are not restricted to the local planning authority but may include the public and landowners in the area: Abbey Homesteads (Developments) Ltd v Northamptonshire County Council. The Re Beecham Group’s Application case on this point must now be doubted. Practical benefits have a wider meaning than benefits that are capable of running with the land and may include rather nebulous things like a view or visual amenities: Gilbert v Spoor. By the nature of the restrictions in a planning agreement, money will rarely be an adequate compensation to the planning authority: see Re Martins’ Application.
(6) Ground (c) must now be regarded as more difficult to establish than the early case of Re Beecham Group’s Application seemed to suggest. Following Abbey Homesteads (Developments) Ltd v Northamptonshire County Council it seems that persons other than the local planning authority may be regarded as having a benefit; certainly it is no longer the case to argue that as the local planning authority own no adjacent land they cannot be harmed.
(7) The possibility of the tribunal offering to discharge or modify a restriction in return for the acceptance of a more appropriate restriction must be appreciated by practitioners: see Re Cox’s Application.
(8) The tribunal has power to order the payment of monetary consideration to the person or persons entitled to the benefit of a covenant. This seems rather unlikely in relation to planning agreement restrictions unless the restriction was originally imposed in a transaction involving the sale or exchange of land, and a payment was made reflecting the restriction: see Re Groves’s Application.
(9) The final point is that even where the tribunal is satisfied on any of the grounds, it retains a discretion and must exercise it properly. In Cresswell v Proctor the Court of Appeal was of the firm view that the discretion would be improperly exercised to discharge or modify a recent restriction and where the applicant was the original covenantor.(20)
References
(1) Avon C C v Millard [5] 1 EGLR 171.
(2) Tulk v Moxhay (1848) 2 Ph 774; Re Union of London & Smith’s Bank’s Conveyance, Miles v Easter [3] Ch 611.
(3) Town and Country Planning Act 1971, s52(2); and the Local Government (Miscellaneous Provisions) Act 1982, s33.
(4) Grant M. Urban Planning Law London (1982), p 372.
(5) Eg Associated Provincial Picture Houses v Wednesbury Corpn [8] 1 KB 223.
(6) Westminster City Council v British Waterways Board [4] 3 All ER 737.
(7) Ransom & Luck Ltd v Surbiton B C [9] 1 All ER 185, 189.
(8) Re Beecham Group’s Application (1980) 256 EG 829 applying Gee v National Trust (1966) 17 P & C R 6.
(9) Grant, see note 4 above.
(10) [5] JPL 564.
(11) (1986) 53 P & C R 146.
(12) Driscoll v Church Commissioners [7] 1 QB 330.
(13) [7] JPL 137.
(14) CSW July 9 1987, p 30; LP/50/1986.
(15) [2] 2 All ER 576.
(16) (1985) 49 P & C R 263.
(17) [6] 1 EGLR 24.
(18) [5] 1 WLR 611, 622.
(19) Ibid.
(20) [8] 1 WLR 906.