Until recently, the acceptability of particular planning obligations was purely a matter of policy. However, the Community Infrastructure Levy Regulations 2010 (CIL Regulations) altered that position by turning the policy test into a legal one. Consequently, all planning obligations have to meet the legal tests of necessity. However, as a recent case illustrates, assessing acceptability is not necessarily a straightforward exercise.
In Oxfordshire County Council v Secretary of State for Communities and Local Government and others [2015] EWHC 186 (Admin); [2015] PLSCS 43 the High Court was called on to decide whether or not a planning inspector had been right to rule that a monitoring fee payable to a county council under a planning obligation was not CIL-compliant. The decision provides some useful guidance to those negotiating and drafting planning obligations.
The Oxfordshire appeal
The appeal concerned a development of 26 homes. The planning authority, Cherwell District Council, had refused planning permission on six grounds, the last of which asserted that there was no satisfactory planning obligation in place to secure payments towards certain infrastructure requirements. In all, it totalled £283,000 plus a monitoring fee of £3,750. However, it was agreed at the inquiry that this could be overcome if the appellant entered into a planning agreement to this effect.
The agreement before the inspector included a “blue pencil clause”, which enabled the inspector to strike out contributions that did not meet the tests for planning obligations set out at regulation 122 of the CIL Regulations. The clause read as follows:
“If the planning inspector, in this decision letter, concludes that any of the planning obligations set out in the deed are incompatible with any one of the tests for planning obligations set out at Regulation 122 of the CIL Regulations, and accordingly attached no weight to that obligation in determining the appeal then the relevant obligation shall, from the date of the decision letter, cease to have effect and the owner and the developer shall be under no obligation to comply with them.”
The nature of these contributions are relatively routine. In practice, even though some developers may baulk at the size of the contribution, they tend to be paid without a fight. In this appeal they added around £10,000 to the cost of each new home constructed. However, in his decision letter, the inspector found that the contributions to adult learning, waste, museums, day care and refuse bins were not CIL-compliant. Nor were monitoring fees. He stated that “With regard to… the payment of monitoring fees… the payment of a monitoring/administration fee [is] not necessary to make the development acceptable in planning terms.” As a consequence of the “blue pencil clause” the council would be unable to enforce those aspects of the agreement.
The council challenged the inspector’s decision under section 288 of the Town and Country Planning Act 1990 (the 1990 Act). It submitted that the inspector had erred in his approach to regulation 122 by misinterpreting the “necessity” test and he made an irrational decision in finding that, although the obligations were necessary, monitoring of the obligations was not. He also took into account an immaterial consideration, namely, whether the administration and monitoring of the planning obligations was one of the normal functions of the claimant. Finally, he did not comply with the duty to give adequate reasons. The emphasis therefore was on the monitoring fees, but the decision of Lang J in dismissing the council’s claim is more wide-reaching and instructive.
Planning obligations are governed by section 106 of the 1990 Act and sub-section (1) defines the purposes for which obligations may be offered or sought. The CIL Regulations were made under section 205(1) of the Planning Act 2008 (the 2008 Act). Regulation 122 introduced a limitation on the use of planning obligations. In effect, the old policy tests were transformed into a legal test. A planning obligation may only constitute a reason for granting planning permission if the obligation is: (a) necessary to make the development acceptable in planning terms; (b) directly related to the development; and (c) fairly and reasonably related in scale and kind to the development. Guidance can also be found in paragraphs 203-206 of the National Planning Policy Framework (NPPF).
Ruling and its implications
Lang J then reviewed the relevant case law on the CIL Regulations. In particular, she noted Bean J’s ruling in R (on the application of Welcome Break Group Ltd) v Stroud District Council [2012] EWHC 140 (Admin) to the effect that regulation 122 was not novel and that Lord Hoffman’s speech in Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759 remains good law. As Richards LJ said in R (on the application of Hampton Bishop PC) v Herefordshire Council [2014] EWCA Civ 878; [2014] PLSCS 198, Regulation 122 “can be seen as part of a codification of principles developed in the case law.” In that case the Court of Appeal upheld Hickinbottom J’s judgment where he had observed that what is acceptable in planning terms is dependent on a complex web of policies and other material considerations and a series of planning judgments.
The judge concluded that there was nothing in the 1990 Act, the 2008 Act, the CIL Regulations, the NPPF or the Planning Practice Guidance which suggests that authorities could or should claim monitoring fees as part of planning obligations, although the secretary of state acknowledged that it was possible that an inspector, in the exercise of his planning judgment, might conclude that, in an exceptional case, monitoring fees might satisfy the necessity tests.
It is notable that the secretary of state opposed the challenge. Thus the approach adopted in this case suggests a more principled objection by central government and will have resource implications for local authorities. It may make them more cautious in what contributions they seek.
John Martin is a planning law consultant and Martin Edwards is a specialist planning barrister: martinedwardsplanninglaw.com
