Planning obligations entered into under section 106 of the Town and Country Planning Act 1990, whether in the form of a unilateral undertaking or an agreement, are commonly used where a developer is prepared to transfer land to a local planning authority (LPA) or a nominated body. However, the courts have, in the past, identified pitfalls.
For instance, in Wimpey Homes Holdings Ltd v Secretary of State for the Environment [1993] 2 PLR 54, it was held that a unilateral undertaking alone to transfer land is not within section 106(1) of the Act – since it is not in itself an obligation restricting the development or use of the land – and that the statutory provision was not intended to enable a developer to compel an LPA to accept title to land.
Against that, however, in R v South Northamptonshire District Council, ex parte Crest Homes plc [1994] 3 PLR 47, the Court of Appeal held that certain obligations to transfer land contained within agreements entered into under section 106(1) with the LPA were valid, in part because they restricted the development or use of the land.
In Jelson Ltd v Derby City Council [1999] 3 EGLR 91; [1999] 39 EG 149, provisions in an agreement under section 106 for a future transfer of land to a nominated third party were struck down for failing to comply with the requirements of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. This difficulty can be overcome in practice, however, by a negative provision restricting the development or use of the land until specified parts have been transferred to the third party.
Now, in Hertfordshire County Council v Secretary of State for Communities and Local Government [2011] EWHC 1572 (Admin); [2011] PLSCS 165, the court has upheld the validity of a unilateral undertaking entered into under section 106 that provided both for the payment of money by the developer to the LPA to fund infrastructure and for the transfer of land to it in that connection.
In respect of the payment of money in lieu, rather than carrying out the infrastructure works, the judge pointed out that there was no prohibition on this in public law and that section 106 contemplated that money could be paid pursuant to an undertaking. Equally, there was nothing objectionable in a local authority being offered land for infrastructure purposes in this way. The combination of positive and negative covenants was within section 106.
John Martin is a freelance writer
