Town and country planning – Community infrastructure levy (CIL) – Deduction – Appellant obtaining planning permission for change of use of building from commercial to residential – Works commencing but building not capable of residential occupation – Respondent local authority granting planning permission for different residential development in same building – Respondent issuing notice of liability to CIL in respect of proposed development – Court refusing appellant’s application for judicial review – Appellant appealing – Whether CIL payable – Whether appellant entitled to statutory deduction where residential use already permitted – Appeal allowed
The appellant developer owned a six-storey building at 38/40 Windmill Street, London W1 which had been used as warehouse and office space. In 2011, it obtained planning permission for a change of use to residential to create six two-bedroom flats. The appellant commenced the works within the prescribed period. However, before those works were completed, it applied for planning permission to convert the property to three larger flats instead. At that stage, the first three floors of the building were not capable of use for residential purposes and the building was vacant.
In 2017, the respondent local planning authority granted permission for the revised development but decided, as collecting authority under the Community Infrastructure Levy Regulations 2010, that the appellant was liable to pay a community infrastructure levy (CIL). The respondent issued a liability notice and confirmed that the appellant was not eligible for any deduction from the chargeable amount under regulation 40(7)(ii) of the 2010 Regulations under which no CIL was payable for retained parts of the building for which the intended use following completion of the chargeable development could be carried on “lawfully and permanently without further planning permission in that part on the day before planning permission first permits the chargeable development”.
The appellant applied for judicial review contending that the respondent had wrongly interpreted regulation 40(7)(ii) as including a requirement that the floorspace be capable of the intended use under the chargeable development without the need for further physical adaptation. The appellant argued that it met the conditions of the regulation because it already had planning permission for residential use in the retained parts of the building, and the intended use of the proposed development was also residential. The High Court dismissed the application: [2018] EWHC 3417 (Admin). The appellant appealed.
Held: The appeal was allowed.
(1) Regulation 40(7) contained two distinct and different concepts. The concept in sub-para (7)(i) was the “retained parts” of “in-use buildings”, as defined in regulation 40(11). The concept in sub-para (7)(ii) was the retained parts of “other relevant buildings”. No definition of “other relevant buildings” was necessary, because that expression, in context, could only mean relevant buildings that were not “in-use buildings”. The distinction was between a “relevant building” at least part of which had been “in lawful use” for the requisite continuous six-month period (sub-para (7)(i)), and a “relevant building” that was not required to have been “in lawful use” for any specified minimum period, but in which the intended use was “able to be carried on …” (sub-para (7)(ii)).
In construing regulation 40(7)(ii), “the intended use following completion of the chargeable development” was the use to which the retained parts of the building might be put in accordance with the planning permission approving the chargeable development. The identity of that use would be apparent from the planning permission. The reference in sub-para (7)(ii) to “the day before the planning permission first permits the chargeable development” fixed a single point in time at which the equivalence of use was to be tested. That was “the day before planning permission first permits the chargeable development”. The status of the use in question on that day had to be established.
(2) The equivalence of use required was between “the intended use” and “a use that is able to be carried on lawfully and permanently without further planning permission”. In the present context, the natural and ordinary meaning of the expression “a use that is able to be carried on lawfully permanently without further planning permission , when construed as a whole, was clear: on the relevant day, without any further planning permission having to be obtained, the use in question, together with any necessary physical works to the building, would be lawful, and not merely a temporary use. The word “able” had to be read together with the words that followed. The ability to carry on the use in question rested on the lawfulness of doing so, without any further planning permission having to be granted either for the use itself or for any necessary operational development. It entailed the possibility of the use being lawfully and permanently carried on. The requirement in regulation 40(7)(ii) was that the intended use of the retained parts of the building had on the relevant day, been authorised or would in any event be lawful. That would include an extant lawful use and also embraced, as in this case, a use that could lawfully be carried on in the retained parts of the building under an implementable planning permission granted before, or on, the relevant day, or with the benefit of “permitted development” rights.
(3) The “statutory deduction” under regulation 40(7)(ii) had a sound legislative purpose, congruent with the CIL regime as a whole, including the provisions for abatement, and in particular, with the principle that the funding of necessary infrastructure would be fairly borne. Its effect was to achieve a “neutral” position. It excluded a liability to pay CIL under a newly granted planning permission where the landowner was already lawfully entitled to use the same floorspace in the same way, and presumptively with the same burden on local infrastructure and, in a case such as the present, without paying CIL. It achieved that without obliging the owner of the premises, before it could avail itself of the statutory deduction, to have carried out all the works required to adapt or convert the building for the use in question under a prior planning permission, and to incur the cost and delay in doing so, only to have to undo those works after the new permission had been granted. Accordingly, the respondent’s decision to refuse the “statutory deduction” from CIL under regulation 40(7)(ii) was based on a misunderstanding of that provision. The matter would be remitted to the respondent for redetermination.
Tim Buley QC (instructed by Duncan Lewis Solicitors) appeared for the appellant; Simon Bird QC (instructed by Camden London Borough Council) appeared for the respondent.
Eileen O’Grady, barrister
