High Court judge Patterson J ruled in R (on the application of Orbital Shopping Park Swindon Ltd) v Swindon Borough Council and another [2016] EWHC 448 (Admin); [2016] PLSCS 71 that Swindon Borough Council had acted unlawfully in requesting the CIL payment from shopping centre operator Orbital Shopping Park in relation to its mezzanine proposals.
In January 2015, the shopping centre operator submitted two separate planning applications to the council: one for the installation of a mezzanine floor at unit C3/4; and the other for external works to the same unit. The external alterations application created no additional floor space. The installation of the mezzanine floor would have resulted in a net increase in floor space of 1,709 sq m to be used for retail purposes.
The shopping centre operator contended that the mezzanine proposals were not be treated as development for the purposes of the CIL regime as they came within the exemption created by regulation 6(1)(c) of the CIL Regulations whereby applications that affect only the interior of a building are not liable for CIL. The council argued that it was entitled to treat the two planning permissions as one and levy CIL, and relied on cases relating to tax avoidance claiming that the shopping centre operator was pursuing a deliberate strategy to avoid CIL. As such, the council demanded a CIL payment of £170,900.
The council’s arguments were rejected. The High Court held that the council had acted unlawfully in demanding CIL under its liability and demand notices by interpreting the two separate planning permissions as one. The shopping centre operator was entitled to take advantage of the legislative system which permitted it to submit two separate planning applications for each act of operational development. As the shopping centre operator’s planning consultant explained in his witness statement, the strategy to submit two separate planning applications was deliberate. It was undertaken to avoid the possibility of later incurring liability to CIL in respect of the increase in floor space in the unit as a result of the mezzanine application. Although the two applications were linked as they sought alterations to the same unit to meet the operational requirements of Next PLC, the mezzanine application related only to the interior works of the unit. It would be entirely possible to implement the mezzanine permission and install and operate the mezzanine floor without implementing the external alterations planning permission or otherwise affecting the exterior of the unit.
It will be interesting to see whether the legislation will be changed to stop people submitting two separate planning applications for each act of operational development, thereby avoiding the liability for CIL through such a split.
Martha Grekos is partner and head of planning at Irwin Mitchell
