Town and country planning – Affordable housing – Economic viability – Property developer applying to claimant local planning authority to modify obligation to pay commuted sum in lieu of affordable housing obligation under temporary legislation in force – Claimant refusing application after legislation repealed – Inspector appointed by defendant secretary of state allowing appeal – Claimant applying for judicial review – Whether repeal extinguishing right to apply to modify payment obligation and appeal against refusal to modify – Application dismissed
In April 2016, the interested party property developer applied to the claimant local planning authority to modify its obligation to pay a commuted sum in lieu of an “affordable housing obligation” in a section 106 agreement. In April 2013, sections 106BA-BCof the Town and Country Planning Act 1990 came into force, added by section 7 of the Growth and Infrastructure Act 2013. A developer could apply to a local planning authority for modification or discharge of an affordable housing obligation in a section 106 agreement on the basis that the development would otherwise be “not economically viable” (section 106BA(3)(a)). An appeal lay to the defendant secretary of state against refusal. A “sunset clause” in section 7(4) of the 2013 Act provided that sections 106BA-BC of the 1990 Act would be repealed at the end of 30 April 2016.
The interested party’s application was made on 29 April 2016 when the development had already been completed. After the repeal had taken effect, the claimant refused the application. An inspector appointed by the defendant allowed an appeal by the interested party on the basis that, as it had made its application before the repeal date, section 16(1) of the Interpretation Act 1978 preserved the efficacy of the temporary provisions in sections 106BA-BC beyond 30 April 2016. The inspector decided that the affordable housing obligation meant that the development was not economically viable, and lowered the amount payable.
The claimant applied for judicial review of that decision contending that the repeal extinguished the interested party’s right to apply to modify its payment obligation and its right to appeal against the claimant’s refusal to modify it; therefore, the claimant’s determination of the application and the subsequent appeal were both invalid. The defendant and the interested party argued that that would be unjust and that section 16 of the 1978 Act provided otherwise.
Held: The application was dismissed.
(1) Where the preservation of rights after repeal was asserted, the right relied on had to be an “acquired” or “accrued” right; a mere hope or expectation of acquiring a right was insufficient. It was artificial and wrong to characterise the pre-repeal “right” of the developer under the repealed provisions as merely a hope of persuading a decision maker to exercise discretion in its favour. Section 106BA(3)(a) mandated an outcome in favour of the developer if the exercise of economic judgment led to the conclusion that the development was not economically viable as it stood. Evaluation and assessment of the factual position and the exercise of judgment on the issue of economic viability was not the same thing as exercising a discretion. The interested party’s right up to 30 April 2016 was an inchoate right to require a statutory interference with its prior contractual obligation, so as to modify or discharge it, contingent upon persuading the local authority (or on appeal, the inspector) that the development would not otherwise be economically viable. The interested party’s right existed before repeal irrespective of whether an application was made by it. The making of an application before repeal was an essential step that had to be taken in order to create and establish the contingent right to modification or discharge of the interested party’s contractual obligation. Once that step was taken, the contingent right existed. At the date of repeal, a further step was required to prove that the right existed and to prove the measure of the obligation incurred: in the present context, the amount by which the affordable housing obligation had to be reduced to make the development economically viable. The wording of section 7 of the 2013 Act did not manifest a “contrary intention” inhibiting the normal operation of section 16(1) of the 1978 Act. The power to postpone the repeal said nothing about the impact of the repeal on pre-existing rights and the fact that the power was not exercised up to April 2016 could not affect its true meaning when it was enacted and came into effect in 2013, at a time when it was not known whether the power to postpone the operation of the sunset provision would be exercised or not: Moray CC, Petitioners1962 S.C. 601 and Director of Public Worksv Ho Po Sang[1961] A.C. 901 applied.
(2) The word “development” was defined, except where the context otherwise required, as the carrying out of the building operations. The meaning of “development”, in context, focused on the activity of the developer. It was the activity of carrying out the development works that had to be economically viable or not, as the case might be. However, economic viability was not necessarily established by successful completion of the physical works. No express words in the statute so provided; nor did the scheme of the provisions require that proposition to be read into them. The words “not economically viable” had to be given their ordinary meaning. The statutory language did not preclude an assessment of economic viability merely because the works had been completed. Furthermore, under section 106BA and, on appeal, section 106BC, the economic viability test had to be applied as at the date of the initial determination or appeal. In the present case, the issue of economic viability was an arithmetical exercise. The development was complete when the appeal was heard; the units had all been sold. The price realised was known and the various expenses to be set against it were quantified and deducted. The market might change over time and had to be assessed as at the date of the decision. In a case where an application to reduce an affordable housing obligation was made after completion of a development, the housing was, in the particular instance, provided; but the developer might recoil from providing further housing in future, if unable to argue for economic non-viability after the building work had been completed at a loss.
Richard Turney (instructed by York City Council) appeared for the claimant; Richard Moules (instructed by the Government Legal Department) appeared for the defendant; Paul Brown QC (instructed by Walker Morris LLP) appeared for the interested party.
Eileen O’Grady, barrister
Click here to read transcript:R (on the application of York City Council) v Secretary of State for Housing, Communities and Local Government
