Appeal against refusal to grant judicial review — Draft local plan policy for developers’ contributions to infrastructure costs — Whether authority given for pre-deposit consultation — Whether policy lawful — Whether implementation of policy involved levy of unauthorised local development land tax — Whether section 106 permitted creation of planning obligation involving transfer of land — Whether applications for judicial review out of time
During 1989 it
was recognised that a proposed alteration to the Northamptonshire structure
plan would mean that the town of Towcester would be expected to accommodate a
good deal of the growth in residential development which was to be allocated to
the district of South Northamptonshire. Various schemes were discussed by South
Northamptonshire District Council (‘the council’) for the development of
Towcester. Ultimately one scheme was selected as the basis for a new Towcester
local plan, which identified a number of sites for residential development and
envisaged a new A5 bypass to the west of the town. The appellants, Crest Homes
plc (‘Crest Homes’), had an option in respect of a site at Red House Farm,
Towcester, which was within the scheme.
Meetings were
held by the council with the relevant landowners at which the necessary common
infrastructure and facilities were identified and agreed, as was the principle
that a reasonable contribution from development profits should go towards
paying for them. (The proposed enactment of the Planning and Compensation Act
1991 prompted the preparation of a new local plan for the whole of South
Northamptonshire and the council resolved to extend the scheme so that it
applied also to the remainder of the district.)
In July 1992
the council resolved to approve the pre-deposit draft South Northamptonshire
local plan (‘the local plan’) for consultation purposes, subject to prior
completion of the necessary legal agreements. These were intended to be
agreements under section 106 of the Town and Country Planning Act 1990 with the
relevant landowners providing for set contributions calculated on enhanced land
values and for the transfer of land for specific community purposes. Only one
of those agreements was completed before the commencement of the consultation
period. In January 1993 the council granted outline planning permission for the
development of certain of the sites.
At the end of
September 1992 Crest Homes, who had not entered into a section 106 agreement,
applied for planning permission for residential development at Red House Farm.
That application was refused by the council in December 1992 and a public
inquiry was later opened into
An application
for leave to apply for judicial review was lodged by Crest Homes with the High
Court in March 1993 and leave was subsequently granted. The two applications
for judicial review which were made sought to impugn the legal validity of
various decisions of the council. Those applications were dismissed by Brooke J
on the basis that they were out of time: see [1993] 3 PLR 75. The appellants
appealed contending that:
(a) no proper authority had been given by the
council to permit the pre-deposit consultation to take place;
(b) the council’s policy of requiring the
provision of infrastructure and community facilities at the cost of the
landowner or developer was unlawful;
(c) in implementation of that policy, the
council were imposing an unauthorised local development land tax; and
(d) there was no provision in section 106 which specifically
provided for the creation of a planning obligation involving the transfer of
land.
Given the
fundamental nature of the applications for judicial review and the fact that
the delay was not obviously so inordinate as to be necessarily fatal to the
applications, it was proper to decide the substantive points before considering
whether to refuse relief because of the delay. The nature and importance of the
flaw in the challenged decision was a major factor in the exercise of
discretion involved in the grant of relief: see pp51H-52B.
(a) There was nothing to suggest that there had
been any prejudice to any objecting party caused by the irregular (because
premature) pre-deposit consultation. The judge would have been correct in
refusing to grant relief on this basis: see p52G-H.
(b) The council’s policy was both lawful and paid
due regard to PPG 12 — Development Plans and Regional Planning Guidance
— and Circular 16/91 — Planning Obligations. Where residential development
made additional infrastructure necessary or desirable, there was nothing wrong
in having a policy that required major developers to contribute to the costs of
infrastructure related to their development: see p58A-B.
(c) The formula (based on the enhanced value of
the land) was not bad in law as insufficiently connecting the individual
development with its associated infrastructure. The unified approach was
legitimate. There was no suggestion that the formula would raise an amount
disproportionate to what the expansion of Towcester (or the separate major
developments comprising that expansion) required: see p60B-D.
(d) The land transfer obligations were validly
created under section 106(1)(a). Each such obligation could equally have been
lawfully assumed under section 106(1)(c): see p64E-H.
Accordingly,
it was not necessary to go into the question of delay: see p62H.
to in the judgements
Bradford
City Metropolitan Council v Secretary of State
for the Environment (1986) 53 P&CR 55; [1986] 1 EGLR 199; [1986] 278 EG
1473; [1986] JPL 598, CA
Good v Epping Forest District Council [1994] 1 WLR 376; [1993] 3
PLR 135, CA
Hall
& Co Ltd v Shoreham-by-Sea Urban District
Council [1964] 1 WLR 240; [1964] 1 All ER 1; (1963) 62 LGR 206; 15 P&CR
119; [1963] EGD 638; 188 EG 873; [1964] JPL 316, CA
Kruse v Johnson [1898] 2 QB 91
Newbury
District Council v Secretary of State for the
Environment [1981] AC 578; [1980] 2 WLR 379; [1980] 1 All ER 731; (1980) 78
LGR 306; 40 P&CR 148; [1980] JPL 325, HL
Nichol v Gateshead Metropolitan Borough Council (1989) 87 LGR 435
R v Canterbury City Council, ex parte Springimage Ltd [1993] 3
PLR 58; [1994] JPL 427
R v Plymouth City Council, ex parte Plymouth & South Devon
Co-operative Society Ltd (1993) 67 P&CR 78; [1993] 2 EGLR 206; [1993]
36 EG 135; [1993] 2 PLR 75
R v Richmond upon Thames London Borough Council, ex parte McCarthy
& Stone (Developments) Ltd [1992] 2 AC 48; [1991] 3 WLR 941; [1991] 4
All ER 897; (1991) 90 LGR 1; 63 P&CR 234; [1992] 1 PLR 131; [1992] JPL 467,
HL
R v Westminster City Council, ex parte Monahan [1990] 1 QB 87;
[1989] 3 WLR 408; [1989] 2 All ER 74; (1988) 58 P&CR 92; [1989] 1 PLR 36;
[1989] JPL 107, CA
Safeway
Properties Ltd v Secretary of State for the
Environment (1991) 63 P&CR 73; [1991] 3 PLR 91; [1991] JPL 966, CA
Tesco
Stores Ltd v Secretary of State for the
Environment [1994] 1 PLR 97
Wimpey
Homes (Holdings) Ltd v Secretary of State for
the Environment [1993] 2 PLR 54
Appeal against
decision of Brooke J
This was an
appeal by Crest Homes plc against the decision of Brooke J: see [1993] 3 PLR 75
on August 6 1993, whereby he dismissed applications by Crest Homes plc for the
judicial review of certain decisions of the first respondents, South
Northamptonshire District Council, arising out of actions taken by the council
in relation to a new draft local plan.
Barnes QC and Jonathan Karas (instructed by Davies Arnold & Cooper)
appeared for the appellants, Crest Homes plc.
Porten QC and Graham Stoker (instructed by the solicitor to South
Northamptonshire District Council) appeared for the first respondents.
Harris (instructed by Chandler Ray) appeared for the second respondents, David
Wilson Homes Ltd.
Harper QC (instructed by Fennemores, of Northampton) appeared for the third
respondent, Thomas Alexander Baron Hesketh, and for the fourth respondents,
Persimmon Homes (Midlands) Ltd.
following judgments were delivered.
HENRY LJ: The first respondents to this appeal are a local planning authority,
South Northamptonshire District Council (‘the council’). Their area comprises
the small towns of Towcester (6,000 inhabitants) and Brackley (9,000
inhabitants) and the so-called rural areas. This appeal concerns the
residential growth planned for those areas, and the legality of the council’s
efforts to ensure that the cost of the provision of the
word ‘infrastructure’ in its widest sense to cover both) made necessary or
desirable by that development is contributed to by the land-owners and
developers (who I will call ‘the developers’), who obtain the planning
permissions to undertake that development.
The story
starts in 1989 by when three things were clear. First, that under alteration 1
to the county structure plan, Towcester would be expected to accommodate much
of the residential development that was being allocated to the district.
Second, that the town’s existing infrastructure was fully stretched and could
not properly cope with that or any further expansion. Among other things, an A5
bypass for the town was essential. Third, that public finance alone would not
be adequate to remedy the situation. So during 1989 the council took steps to
interest land owners and developers in contributing to the provision of the
necessary common infrastructure and facilities. Originally it was hoped that
the whole planned expansion could be achieved by one agreement with a
consortium made up of the loose group of developers with whom the council were
consulting and negotiating, who were known as the Towcester Development Group
(‘the group’). The appellants, Crest Homes plc were one of the group, as were
the second, third and fourth respondents. The consortium idea proved to be
impracticable, but over three years there was the closest consultation with the
group as to the proposed development, what infrastructure should be provided
and at what cost.
Over that
period three events must be noted in this brief summary. First, when it proved
impracticable to proceed with the consortium under a single agreement, it was
decided that there should be individual legally binding planning agreements
imposing ‘section 106 planning obligations’ on each developer, with his basic
financial provision towards the cost of the infrastructure being set at a
percentage (20% for residential, 17.5% for commercial) of the ‘enhanced land
value’, being the value added to the land by the grant of the planning
permission, namely the market value of the land after grant of planning
permission, less its previous value at that date. Such section 106 planning
obligations are the creature of section 106 of the Town and Country Planning
Act 1990, as amended by section 12 of the Planning and Compensation Act 1991.
Before, developers could enter into planning agreements with the local planning
authority under section 52 of the Town and Country Planning Act 1971. The new
planning instrument differs in that the obligation may be assumed either by
agreement or by unilateral offer by the developer, the powers for the creation
of such obligations were more widely drawn, the formalities were more clearly
spelt out and sections 106A and 106B provided for their modification and
discharge. Subsections 106 (1)(d) and (2)(c) provide for a developer to make
financial contributions to the local planning authority without any express
statutory limitation on the purpose for which such sum may be required.
Second, in
1991 new legislation made it necessary for the council to prepare a
district-wide local plan and so the Towcester scheme was extended so that it
applied, mutatis mutandis, to Brackley and the rural
Third, by
early in 1992 residential land values had fallen to the extent that all the
infrastructure and service improvements would only be achieved if most of the
development were advanced to take place prior to the building of the bypass.
This required a modified approach and the council resolved to split the
proposed growth into pre- and post-bypass phases based on the site’s location —
‘the second phase to be entirely dependent upon the prior provision of the
bypass, whether from the public or the private purse, or from a combination of
both.’
The
postponement of the post-bypass phase of development was accepted by two out of
the three group members affected — but not by the appellants. They were and are
interested in a Towcester site, Red House Farm. They withdrew from the group
and have not entered into a section 106 obligation to contribute towards the
cost of provision of any related infrastructure, neither by agreement nor
unilaterally. Since then they have been refused planning permission for the
site by the council and we are told have appealed unsuccessfully against that
refusal. We have not been given further details of that application and appeal.
Now they mount
a comprehensive challenge to the legality of the council’s actions. By
application to the court dated March 29 and June 2 1993 the appellants sought
judicial review of the council’s various decisions in this matter. In different
ways they sought to impugn the legality of the council’s policy expressed in
the draft local plan, the decision recommending the approval of the draft local
plan for pre-deposit consultation, the consultation concerning this plan, the
six section 106 agreements made with the developers, who had been their fellow
members of the group and of any planning permissions which took account of such
agreements. The challenge is thus a fundamental root and branch challenge which
goes to the implementation of the council’s planning policy over the last four
years. The central allegation is that the council were selling planning
permissions or to put it another way, had illegitimately introduced their own
local development land tax or levy and were only prepared to grant planning
permissions to those prepared to pay that levy. They contend that any planning
permissions granted which took account of the agreements to make such payments
should be set aside. Additionally, they raise two subsidiary technical points —
first, that the council gave no proper authority to permit the pre-deposit
consultation to take place and, second, that a section 106 agreement can not
lawfully contain an obligation on the developer to transfer land to the
council.
The matter was
heard before Brooke J. He considered first the council’s submission that he
should not grant relief on these applications because they were made out of
time. He found that they were made out of time, that they were not made
promptly, that if relief was given it would be likely to cause hardship to and
substantially prejudice the rights of the developer respondents and that that
relief would be detrimental to good administration. Accordingly, in the
exercise of his discretion he concluded that he should not in any event grant
the applicants the relief they sought. Only then did he proceed to consider the
merits of the applications and found against the appellants on them also. For
our part,
given the fact that the delay here was not obviously so inordinate as to be
necessarily fatal to the applications, we should reverse that order and decide
the substantive points before considering whether to refuse relief because of
the delay. Clearly, the nature and importance of the flaw in the challenged
decision must be a major factor in the exercise of discretion involved in the
grant of relief: see eg Nichol v Gateshead Metropolitan Borough
Council (1989) 87 LGR 435 at p460. It is unsatisfactory to consider a
possible exercise of discretion in the abstract and so it seemed sensible to us
to consider breach first.
In so far as
it is necessary to examine the facts in any detail, I annexe with gratitude
Brooke J’s valuable distillation of the basic facts (pp1-15E of his judgment
[see pp65-72]) as an appendix to this judgment and in my text simply deal with
such of the facts as are necessary for purposes of comprehension.
Chronologically,
the first ground of challenge is as to the procedural regularity of the
pre-deposit consultation as to the draft local plan required by section 40(1)
of the Town and Country Planning Act 1990. It is a free-standing ground of
appeal. The basic facts are set out at pp8G to 10B of the judgment below.
That there was
an irregularity is without doubt. The council only gave authority for the use
of the draft local plan for pre-deposit consultation purposes after the
completion of the section 106 agreements with the developers concerned. Yet
only one such agreement had been completed before the commencement of the
period and the other five were only completed after its conclusion. The
council’s requirement was imposed for good reason: namely to ensure that the
developers who had said that they would enter into such agreements could not
renege on them, thus enabling the council legitimately to put forward the local
plan as one where the major developers were bound to make proper provision for
the infrastructure related to the development. And that commitment and the
nature of it would or at least might also have been of potential interest to
the statutory consultees, who included the Secretary of State.
But in the
event, though five of the agreements were not signed before the consultation,
none of the developers went back on what they had informally agreed. Nor did
any consultee ask either for a copy of any of the agreements, or for
confirmation that they had been completed. Further, the pre-deposit
consultation is a very early step in plan preparation procedure. It is not the
last chance for consultation. Since then, in more significant later steps, the
draft local plan has been placed on deposit for public inspection (and
objection) in accordance with the statutory requirements (section 40(2)), and
there is nothing to suggest that there has been any prejudice to any objecting
party caused by the irregular (because premature) pre-deposit consultation. The
judge made it clear that he would not have exercised his discretion to grant
any relief based on this irregularity. He was clearly right.
So I turn to
the major ground of challenge. There was a dispute before us as to whether, as
the appellants contended, we should start by examining the planning permissions
granted with the local planning authority having taken account (as I am
prepared to assume they did) of
policy expressed in the plan, or whether, as the respondents contended, we
should start by examining the legality of that policy before going on to
consider its implementation. I am firmly of the opinion that we should start
with consideration of the legality of the policy. This is because if we were to
find that the policy as expressed (and its genuineness has not been challenged)
was lawful, then the wording of the section 106 agreements implementing that
policy should be benevolently construed in the sense that the court should be
anxious to hold them good if possible: see Kruse v Johnson [1898]
2 QB 91 at p98, followed in Hall & Co Ltd v Shoreham-by-Sea Urban
District Council [1964] 1 WLR 240 at pp245, 255 and 258-9. On the other
hand, if the policy was unlawful, then different considerations might apply. So
I turn to that question.
The council’s
policy as expressed in their draft local plan is as follows:
Chapter 9
Implementation
Planning
Obligations
9.1 It is now commonly accepted that the
provision of infrastructure and community facilities at the cost of the
landowner or developer, is a material consideration in the determination of a
planning application for development of a substantial nature.
9.2 The Planning and Compensation Act 1991 and
Circular 16/91 expand upon the role of planning obligations and unilateral
undertakings (matters previously referred to as ‘planning gain’). Landowners
and developers will be required to make provision for improvements to
infrastructure, services, social and community facilities and amenities made
necessary by their development, as opposed to such costs being found from the
public purse.
9.3 Such improvements have often failed to keep
pace with new development in the District, and the Council will now expect
major planning submissions to be accompanied by the offer to secure
modifications or improvements to infrastructure and community facilities for
the public good. Agreements will be sought with applicants regarding the use or
development of the land concerned or of other land or buildings.
Policy IMP1
The local
planning authority will expect planning submissions for major development,
whether or not specifically referred to in this plan, to make provision for
related infrastructure and community facilities such matters will form the
basis of legal agreements which will be finalised prior to the issue of any
permission.
Such
provision will normally take the form of contributions from developers and may
include:
(i) The provision of facilities within the site
that are necessary in the interests of comprehensive planning
and/or
(ii) the provision of off-site facilities where
the development would put additional strain on existing resources.
That was and
is the council’s policy. Its emphasis was on major developments and related
infrastructure. There never was any doubt or secret either about what they were
trying to do, nor about why they
to expand massively (on the latest figures before us by 1,850-1,950 houses,
which at three persons per house would nearly double its population). Its
existing infrastructure could not cope and public money was not likely to be
available to fund all the infrastructure that that residential development
required. So as early as April 1990 they had accepted the principle recommended
by their officers that, ‘it is only right that those landowners who benefit
from development should bear the cost of relieving any strain that that
development might bring’.
Their officers
advised them that this was an approach increasingly being adopted elsewhere and
in this it seems they were right. The Encyclopedia of Planning, vol 2 at
P106.09 quotes the minister as saying in April 1991:
there is no
reason why the public sector should provide all the schools, community centres
and infrastructure.
And academic
research sponsored and published by the Department of the Environment shows
that many of the old section 52 (of the 1971 Act) planning agreements made
between 1987 and 1990 related to infrastructure, while recording that ‘only a
handful specified off-site requirements such as commuted car parking
contributions, or contributions to park-and-ride schemes’: see vol 2 of the Encyclopedia,
P106-33. Judicial recognition of these realities can be found in the judgment
of Evans LJ in R v Plymouth City Council, ex parte Plymouth &
South Devon Co-operative Society Ltd (1993) 67 P&CR 78 at p84:1
The statutory
provisions now reflect the political object of permitting the greater use of
private capital for what are described as ‘off-site infrastructure costs,’
which were formerly borne by the public sector alone.
1 Also reported at [1993] 2 PLR 75.
Accordingly,
it was on that basis that the council approached would be developers when it
came to the preparation of their local plan. But the approach has brought its
own problems. The same note in the Encyclopedia reads:
There is,
however, concern about the difficulty in establishing clear lines of
responsibility. Once developers’ contributions go beyond that which is
necessary to meet the external costs imposed on the community by the
development, the arrangements turn into a system of local taxation of
development profits.
The council’s
case is that their draft plan quoted above, restricted as it is to ‘related’
infrastructure and the provision of off-site facilities ‘where the development
would put additional strain on existing facilities’ complies both with the law
and with the relevant ministerial policy guidance to be found in PPG 12 — Development
Plans and Regional Planning Guidance — and Circular 16/91 Annex B — Planning
Obligations.
The basic
legal principle at the heart of this case is that planning permissions cannot
be bought and sold: see Bradford City Metropolitan Council v Secretary
of State for the Environment (1986) 53 P&CR 55. This principle has
never been challenged, though it is fair to say, first, that it is more often
declared than defined and, second, that as the use of private or developers’
money to provide off-site infrastructure has increased, so concerns have been
expressed that the principle is being seriously eroded — first by academic
commentators and judicially by Steyn LJ in Tesco Stores Ltd v Secretary
of State for the Environment unreported May 25 19941.
1Reported at [1994] 1 PLR 97.
In so far as
that principle has been judicially explored, it has been considered in the
following contexts:
(i) the use of the power to impose planning
conditions to avoid the payment of statutory compensation: see Hall v Shoreham
(supra) and Bradford City Metropolitan Council v Secretary of
State for the Environment (supra).
(ii) attempts to charge for planning services
without statutory authority for such charges: see R v Richmond upon
Thames London Borough Council, ex parte McCarthy & Stone (Developments) Ltd
[1992] 2 AC 482.
(iii) permissions for ‘undesirable development A as
a means of securing desirable development B’: R v Westminster City
Council, ex parte Monahan [1990] 1 QB 873 at p121.
(iv) where a developer seeking permission for a
specific development (typically a supermarket) is alleged to be buying that
permission by offering to provide planning benefits unrelated to the
development or disproportionate to its planning impact: see eg Safeway
Properties Ltd v Secretary of State for the Environment [1991] 3 PLR
91; R v Plymouth City Council, ex parte Plymouth & South Devon
Co-operative Society Ltd (1993) 67 P&CR 78 and Tesco Stores Ltd
v Secretary of State for the Environment (supra).
2Reported at [1992] 1 PLR 131.
3Reported at [1989] 1 PLR 36.
This case does
not seem to me to fall into any of those categories. (i) Does not apply because
there is no statutory requirement that all or any given percentage of the
infrastructure related to a development must be provided by public money. (ii)
Does not apply because section 106 expressly gives power for sums to be
required as a planning obligation. (iii) Does not apply because the council do
not, in all the circumstances, regard the expansion of Towcester by major
developers on the sites in question as undesirable provided that proper
contribution to the related infrastructure is made. And on the facts (which I
will have to examine in more detail), this is not a case under (iv). Accordingly,
this case must be approached as a matter of first principle.
The law is
clear so far as the imposition of conditions on the grant of planning
permissions is concerned. Such conditions must satisfy the three
v Secretary of State for the Environment [1981] AC 578 at p599, namely
that to be valid, such conditions:
(1) must be for a planning purpose and not
imposed for any ulterior purpose,
(2) must fairly and reasonably relate to the
development permitted, and
(3) they must not be so unreasonable that no
reasonable planning authority could have imposed them.
Additionally,
though it may be regarded as a subhead of test (2), there is authority for
suggesting that where the element of planning gain offered ‘would not merely
overcome the objection [to grant of the planning permission sought] but would
confer a significant additional benefit, then the size of the contribution
which it was legitimate to impose or accept might have to be reduced’: Safeway
Properties Ltd v Secretary of State for the Environment [1991] 3 PLR
91 at p96D per Parker LJ. A benefit disproportionate to the adverse
planning impact of the development to which it was linked would not fairly and
reasonably relate to that development.
In practice
the chief line of defence against the sale of planning permissions has been
test (2) of the Newbury case, allied with the illegitimacy of accepting
disproportionate planning gains. While there is authority that old section 52
agreements (and so it would follow, also new section 106 agreements) may
legitimately include matters that do not satisfy test (2) in that they need not
fairly and reasonably relate to the development (see Good v Epping
Forest District Council [1994] 1 WLR 3761 at p388), that does
not assist in this case, where the question ultimately resolves into what
matters the planning authority may legitimately take into account in the grant
of planning permission. And if the element of planning gain challenged could
not have been imposed as a condition because it failed test (2), then it cannot
lawfully be taken into account in the grant or refusal of permission, whether
or not the section 106 agreement securing that gain was itself valid. This
recognises the reality that where a planning benefit is secured by a section
106 agreement itself conditional on planning permission being granted, then
that planning benefit is likely to be taken into account in the decision on the
planning permission. And I also accept that an illegitimate planning benefit
(in the words of Circular 16/91, an ‘unrelated’ benefit, failing test (2))
would undermine the validity of a planning permission granted after having
taken it into account, whether or not the section 106 obligation securing it
could itself resist attack.
1Reported at [1993] 3 PLR 135.
It is the
council’s case that their expressed policy complies with both PPG 12 and
Circular 16/91. I consider each in turn. PPG 12 — Development Plans and
Regional Planning Guidance — was issued in February 1992. The need for this
guidance flowed in part from the changes in and increased importance given to
the development plan by the Planning and Compensation Act 1991 and reflected in
the amendments to sections 54A
require the provisions of the plan to be taken into account — with a
presumption in favour of the plan unless material consideration otherwise indicate
— on the application for planning permission), and the importance there given
to a plan led (rather than appeal led) planning system. And the guidance starts
with a reminder of the importance of the market in these matters
1.1 No development takes place unless the market
and other considerations persuade owners and developers to come forward with
proposals.
Paras 3.7, 3.8
and 3.18 of the guidance stress the need for the plan to contain detailed
policies for the development and use of land that are likely to be the basis
for deciding planning permissions (and for controlling development). The
guidance wishes such policies to be set out in the plan to ensure that they are
subject to the statutory procedures and public scrutiny (including the
Secretary of State’s right to object to plan policies — see para 4.16). And
that is just what the council here did, making clear that they expected major
developers to contribute to the provision of infrastructure related to the
residential development indicated.
Paras 5.22 to
5.25 deal with infrastructure provision, para 5.24 stating:
The emphasis
on a plan-led system should ensure that the linkage of infrastructure and
development, properly investigated as the Plan is drawn up, will be reflected
in development control decisions.
It seems to me
that that reflects exactly what the council did here. Before deciding on the
contents of their draft plan, they explored with the group what infrastructure
was needed and the extent of the contribution the developers were prepared to
make. Once agreement had been reached, the council required a legal commitment
in the form of the section 106 agreements. That was a prudent course, because
unless the state of the market was such that developers would commit themselves
to contributions, first, it would be futile to have a policy requiring such
contributions and, second, the timing of the provision of the development might
well have had to be postponed. In my judgment, there is nothing to offend PPG
12 in the course the council took.
PPG 12
crossrefers to Circular 16/91. It was the appellants’ contention in para 9(3)
of their grounds attached to their form 86A that the council failed to have
regard to the ‘tests of reasonableness of seeking a planning obligation’
contained in the circular. In relation to the council’s expressed policy, this
contention is hopeless. Not only do both the policy and the council’s evidence
state that they had regard to the circular in formulating their policy, but the
restriction of contributions to infrastructure ‘related’ to the development,
including off-site facilities ‘where the development would put additional
strain on existing resources’, makes it quite clear that the council had the
tests of reasonableness set out in B8 of the circular well in mind and in that
policy sought to apply them.
In those
circumstances I am satisfied that the council’s policy as set out in the plan
was both lawful and, as it stated, paid due regard to PPG 12 and Circular
16/91. Where residential development makes additional infrastructure necessary
or desirable, there is nothing wrong in having a policy that requires major
developers to contribute to the costs of infrastructure related to their
development. Such a policy is lawful and does not imply or in itself amount to
the imposition of an illegitimate planning levy, nor does it offend against the
principle that planning permissions must not be bought and sold.
I turn then
from the legality of the policy to the legality of the implementation of the
policy. The general ground of attack is that the council are imposing a levy,
an unauthorised local development land tax. Essentially four criticisms are
made:
(i) The formula used for calculation of each
developer’s contribution is not based on the cost of provision of the
infrastructure.
(ii) The formula used makes no sufficient
connection between any individual development and any specific community
benefit.
(iii) In never applying their minds to whether the
contributions were rendered necessary by any specific development, the council
never applied the ‘necessity’ test said to be found in Circular 16/91.
(iv) By their policy of requiring applicants for
planning permission for major developments to make provision for related infrastructure
and by requiring prior section 106 agreements conditional on grant of planning
permission, the council have wrongfully fettered their discretion when it comes
to consideration of the applications for planning permission.
That attack is
initially directed at the formula on which the contributions were assessed. The
point made is that any formula based on the enhanced value of the land is
clearly not a formula based on the cost of provision of the infrastructure for
that development, nor does that formula link the individual development with
any specific community project. On the contrary, it is just the formula a
council might use to claw back for themself part of the added value planning
permission gives to the land in question, ie to exact a development land tax.
This would clearly be the case — at least in relation to the surplus — if the
local planning authority sought to recover more than the cost of the related
infrastructure required. And it might even be the case if the council, without
examination or identification or costing of future infrastructure needs, and
without even considering whether they or any of them were made necessary or
desirable by the developments in question, sought to impose an arbitrary
standard contribution from all developers. Such attempts might be vulnerable to
attack as an unauthorised development land tax: see R v Richmond upon
Thames London Borough Council, ex parte McCarthy & Stone (Developments) Ltd
[1992] 2 AC 48 at pp67-68.
The logic of
that criticism of the formula cannot be faulted. But the scenario assumed is
simply not this case. Here it cannot be suggested that the council’s stated
policy was other than genuine and bona fide and, as I have emphasised, lawful.
The proposed Towcester expansion was a big development in a small place. Given
those factors, the council were entitled within the discretion entrusted to
them as the local
infrastructure required for it as a unity. The evidence shows that, having
recognised that Towcester had reached its ‘environmental threshold’ on its
existing infrastructure, the facilities needed to accommodate that expansion
were identified. Next, the major landowners whose land might be needed for development
were told that no further land would be released for development, ‘until an
accompanying comprehensive programme of provision of these essential community
needs has been compiled, and a legally binding agreement for their funding and
programming entered into’. The existence of those essential community needs has
not been challenged. The group was set up and consulted at every turn as the
plan emerged, including as to what infrastructure was required (and its cost).
Reports to the council listed the items of community benefit associated with
each individual development. The minutes also record discussion as to whether
the provision for substantial individual items of that infrastructure should
come from the general developers’ ‘pot’ or primarily from the individual
development to which they were most closely linked. It was additionally and
sensibly realised that, as the plan covered the period up to 2006, provision
should also be made for facilities and needs not yet identified. Accountants
were engaged to arrive at an equitable contribution scheme for what was hoped
would be the consortium. They used a computer model for this process. The
minutes record them asking developers whether they would:
prefer to see
an agreement which related to facilities rather than a financial contribution.
He felt this would be very difficult in practice.
Paras 11 and
12 of Mr Leggett’s (the council’s head of policy and environmental planning)
affidavit summarises the difficulties found in reaching different individual
agreements based on anything other than a percentage and asserts that the whole
fund will go to the provision of essential infrastructure and services. And
there is exhibited to Mr Leggett’s affidavit a breakdown of the estimated
contributions expected from each major developer and how it will be utilised.
I have
summarised the facts as they appear from the contemporary documents.
Additionally it is significant that the appellants’ representatives, as members
of the group, were present at all or most of the meetings where these matters
are discussed. The appellants themselves had confirmed their acceptance in
principle to making contributions to the common infrastructure for Towcester.
There is force in the point made by the deponent, Mr Willcox, for the second respondents
and quoted by the judge:
The [council]
insisted that no planning permission could be given for any development in
Towcester without the infrastructure being provided first. There could be no
growth without it. No-one within the negotiations and meetings leading to the
approval of the draft Local Plan chose to say that the principle of
contributions was unreasonable. The [appellants] could have said this at the
time. They were a party to the negotiations. They chose not to.
There is no
evidence from any source critical of the council’s efforts to identify, cost
and equitably to distribute the cost of the developer’s contribution to the
infrastructure related to the expansion. No evidence casts any doubt on the
council’s bona fides. There is no evidence of any risk of disproportionate gain
— that is to say of the council recovering more than the cost of the
infrastructure properly related to the expansion of Towcester — nor of the
council acting in any way improperly. Against that factual background it seems
to me impossible to contend that in applying the formula based on a percentage
of the value added to the land by the grant of planning permission the council
were either introducing an unauthorised development land tax or trafficking in
planning consents.
Nor, in my
judgment, can it be said that the formula is bad in law as insufficiently
connecting the individual (major) development with its associated
infrastructure. The unified approach was legitimate. Calculations were done as
to what was required and the extent of the developers’ contribution to it,
collectively and individually. There is no suggestion that the formula would
raise an amount disproportionate to what the expansion of Towcester (or the
separate major developments comprising that expansion) required.
Given the
magnitude of the development catered for in the local plan in relation to the
existing size of Towcester, combined with the depth and detail of the
consultative process and negotiations with the major developers, the council were
entitled in law to conclude that the formula whereby the principal provision of
the infrastructure came from a general major developers’ pot (subject to
individual adjustments in special cases) fairly and reasonably related to each
individual major development. This is not a case where there is any evidence to
suggest that any individual developer’s contribution under the formula is
disproportionate to the impact of his development on the need for
infrastructure presently not there. Nor is there evidence to suggest that the
total figure is or might be disproportionate.
I therefore
reach the same conclusion on this part of the case as the judge. But I do have
one reservation on how he put it. The judge said:
Whether or
not a formula which is based on a percentage of enhanced land value . . . is
lawful depends . . . on whether Parliament has given a local planning authority
power to make an agreement for contributions to be paid in accordance with such
a formula and whether it is certain that all the contributions will be
paid for purposes which are material in the sense that they are for a planning
purpose, that they reasonably and fairly relate to the proposed development,
and that they are not disproportionately large.
My problem is
with the requirement of certainty at the time of challenge that all
contributions (which may not fall due for some time in the future) will be paid
in one of the permitted ways. Given the importance rightly attached to a
plan-led development, and the potential for a desirable development being more
acceptable to objectors if the developer is contributing to the associated
infrastructure, and given the difficulty of foreseeing the future, and the
desirability of speed and
decisions, I would set the test at less than certainty. In my judgment, given
the fact that the policy giving rise to the agreements is lawful, the starting
point is a benevolent construction of those agreements. If that construction
shows the agreement to be lawful as made, then, in my judgment, the question
should be whether the contribution agreed or assumed by the developer is one
which can properly be regarded by the planning authority as a genuine
pre-estimate of that developer’s proper contribution to the related
infrastructure. If so the contract and any planning permission which took that
obligation into account should, in my judgment, be valid. If later the money
were not so applied, or proved in the event to be more than was properly
required, then the developer might have other remedies. But I mention my
reservation on this point with some diffidence, as it was not the subject of a
cross-notice, nor was it canvassed in argument before us.
Before leaving
this attack on the formula for contributions, I would re-emphasise the crucial
importance in this case of the facts: the genuineness and lawfulness of the
policy, the legitimate treatment of Towcester as a unity, the identification of
the infrastructure required and the attempts to distribute that cost (or some
of it) equitably among the developers. Those facts are crucial because they
legitimise a formula which if used in other factual contexts could be struck
down as constituting an unauthorised local development land tax.
It is next
contended that the council did not pay proper regard to Circular 16/91 in their
implementation of the policy and in particular ignored the provision in B7 that
‘planning obligations should only be sought where they are necessary’. The
introduction of that test of necessity in this circular and earlier versions of
it has proved to be controversial in that it appears to go further than the law
as set out in the Newbury case (supra): see the Plymouth
decision (supra) and contrast the views of the Master of the Rolls and
Steyn LJ in Tesco (supra).
But I am not
persuaded that it is necessary for us to resolve that issue here. In my
judgment, this is a clear case on any construction of the guidance and whether
it represents the law or not. The guidance sets out to give advice on the
proper use of planning obligations under section 106(B1). B2 states how such
obligations ‘may enhance development proposals’, and gives as an example where
the developer makes provision for off-site infrastructure: ‘planning
obligations . . . regarding the . . . development . . . of other land or
buildings’. B3 deals with payments in cash or kind which are ‘the price of
planning permission’ and which are insufficiently related to the development.
The council are acting well within their discretionary judgment in regarding
the implementation of their policy as in no way infringing that advice, as they
are in not regarding the contributions as being ‘extraneous inducements’. They
were entitled rightly to conclude that their policy as expressed easily
satisfied the test of reasonableness in B8 and that the contributions agreed
were fairly and reasonably related in scale to each major developer’s
contribution to the expansion of Towcester (B9). On the vexed question of
necessity, they were quite entitled to take the unified view that the expansion
of Towcester, even if inevitable, should
infrastructure related to that expansion and to the individual major
developments comprising it. I see no basis for saying that the council took no
proper note of the circular.
As to the last
point on their major head of challenge, the appellants contend that the
council’s policy as implemented unlawfully fettered their discretion both in
the consultation procedures under the plan and in their consideration of the
planning applications as they came before them. The judge dealt with this
shortly and comprehensively. The council’s policy and their section 106
agreements in no way altered their obligation to act fairly and within the law
in both statutory processes. As the judge pointed out:
It is, of
course, a truism that Parliament’s willingness to allow councils to enter into
planning agreements with developers in order to attract private capital into
infrastructure and related works may make it more difficult for councils to
avoid giving the impression that they are favouring one developer over others,
but so long as they comply with the law and take into account only material
considerations when judging the appropriateness of granting a particular
application, the courts will not intervene.
The council’s
evidence recognised the importance of keeping an open mind, and recorded that
there had been no substantial objection to the six development proposals. There
was no evidence to contrary effect. Para 3.8 of PPG 12 advised them that their
local plan should set out their policies for the control of development, should
make proposals for that development and should allocate land for specific
purposes. Para 5.20 enjoined them to be realistic about the availability of
resources, including those produced by ‘the market’. Paras 5.22 to 5.24 stress
the importance of the provision of infrastructure, the link between such
provision and development and the importance of the new legislation’s emphasis
on a plan-led development to ensure that infrastructure provision keeps pace
with the development. All of that the council did, and it is both ironic and
curious that careful observance of that guidance should result in an
allegation, however misconceived, that they had thereby unlawfully fettered
their discretion. They did nothing of the sort.
That then
concludes the points made on the major ground of challenge. In my judgment,
that challenge comprehensively fails. I also agree with the judge’s comment
that if the appellants’ submissions were correct they would make it extremely
difficult for local planning authorities ‘to ensure that a mix of private and
public capital is devoted to ensuring that the necessary infrastructure and
community facilities are in place to support any very large new residential
development’, and would to that extent frustrate what I take to be Parliament’s
intention in passing the 1991 Act.
In those
circumstances, I do not think it necessary either to go into the question of
the appellants’ delay, nor the first respondents’ counternotice based on
section 284(1)(a) of the 1990 Act.
The last
ground of appeal arises out of the presence in five out of the six section 106
agreements of an obligation on the developer to transfer certain land to the
council for community purposes (eg as an open space
planning) has deposed that such agreements are ‘perfectly normal’ and ensure
the continued availability of the land. The challenge is put on the basis that
there is no provision in section 106 which specifically provides for the
creation of a planning obligation involving the transfer of land. It is said to
be nothing to the point that under other statutory provisions the council has
power both to ‘acquire [land] by agreement . . . for the purposes of (a) any of
their functions under this or any other enactment, or (b) the benefit,
improvement or development of their area . . .’ (Local Government Act 1972
section 120) and to accept gifts of it made ‘for the purpose of discharging any
of their functions . . .; or (b) for the benefit of inhabitants of their area’
(ibid section 139) — powers which would or might have validated these
transfers in any event had the council thought it necessary to address their
mind to them.
It seems to me
clear that the statutory purpose of this section included what the editor’s
note in the Encyclopedia (vol 2 P106-08) refers to as a ‘streamlining’
of the machinery to facilitate the use of the powers ‘in a positive way to
enhance development proposals’. Under the scheme of the section, what can be
achieved under it is defined by the nature of the planning obligation set out
in subsection (1) at (a) to (d):
Any person
interested in land . . . may, by agreement or otherwise, enter into . . . a
planning obligation . . .
(a) restricting the development or use of land in
any specified way;
(b) requiring specified operations or activities
to be carried out in, on, under or over the land;
(c) requiring the land to be used in any
specified way; or
(d) requiring a sum or sums to be paid to the authority
. . .
The previous
statutory requirement under section 52 of the Town and Country Planning Act
1971 dealt with agreements ‘for the purpose of restricting or regulating the
development or use of land’. Clearly, the introduction of the positive obligation
to pay money widens that definition, as do also the positive obligations, wider
than encompassed by the word ‘regulating’, now found in (b) and (c). The
section was obviously intended to widen what could be achieved by way of
planning obligations.
We have been
referred to two authorities on this point. I get little assistance from the
first, Wimpey Homes (Holdings) Ltd v Secretary of State for the
Environment unreported January 27 19931, before Mr Gerald
Moriarty QC, sitting as a deputy judge. There a developer unilaterally
undertook to transfer certain land (which they had contracted to purchase, but
which they had not purchased) to the council for an open space (to meet a
planning objection) on grant of planning permission. It was held that the unilateral
undertaking to transfer the land was not a unilateral section 106 obligation
because it did not directly impose any restriction on the development and use
of land — that would have needed
would have been only the first step towards such a restriction and therefore
was not within section 106. That is not our case — each of the transfer of land
obligations clearly imposed a restriction of the use of land and the question
is whether it was lawful that they should.
1Reported at [1993] 2 PLR 54.
The second
authority is R v Canterbury City Council, ex parte Springimage Ltd
before Mr Keene QC, July 30 1993 and noted in [1994] JPL at 4271.
There the section 106 agreement included an agreement restricting the
applicants’ freedom to connect to the inadequate sewage system. The agreement
was expressed as ‘the requisition of off-site sewerage for drainage purposes’.
Objection was taken that section 106 did not make provision for requisitioning
sewers. The respondents countered that by submitting that what was contemplated
could be achieved under section 106 by a negative (or Grampian)
condition restricting development on the application site until such proper
sewerage arrangements had been made. The deputy judge upheld the section 106
agreement on the basis that the same result could have been achieved by use of
the powers under subsection (1)(a) containing such a negative condition.
1Reported at [1993] 3 PLR 58.
Here too it is
submitted that under each of these agreements exactly the same planning result
could be achieved either by a suitable worded restriction or requirement under
(a) or (c). Indeed each such agreement contains such a condition under (1)(a) —
see eg the Brackley agreement 4.1:
The Owner . .
. covenants with the Council that:
4.1. He will
not commence any development of the Land whatsoever without taking all necessary
steps including entering into any necessary additional legal agreements and
bonding arrangements to bring all the terms of this Agreement into effect.
In my
judgment, the land transfer obligations here considered were validly created
under section 106(1)(a) applying the test laid down in Good v Epping
Forest District Council (supra), as each of these were:
(1) obligations ‘restricting the development or
use of land in any specified way’;
(2) required for a planning purpose, with due
regard for relevant considerations;
(3) conditions that a local planning authority
could properly find reasonable.
Indeed, each
such obligation could doubtless equally have been lawfully assumed under
subsection (1)(c) — ‘requiring the land to be used in any specified way’. This
subsection also was relied on in the Grange Park agreement — there the
transferred land was to be leased to trustees ‘in order to make suitable
provision for public open space within the development and to provide suitable
amenities for future occupiers of the development’. That formula, suitably
adapted, could equally have been used in any of the other land transfers and
the same result achieved.
But the fact
that the section 106 agreements are valid does not, as I have already held,
necessarily mean that a planning permission granted after having taken them
into account is also valid. That depends on the Newbury tests (including
test (2) — contrast Good’s case) as already analysed. In each case, by
transferring the land in question, the developer was (as the council were
entitled to conclude) lawfully contributing to the provision of the
infrastructure related to his development. All I have said above on the main
point applies equally on this subsidiary point. As the judge pointed out
It would be very
odd if an owner was allowed to create a planning obligation to pay the council
the money required to buy, say, neighbouring land for a necessary car park, but
was not allowed to bind himself to transfer an equivalent plot of his own land
to the council free of charge for that purpose.
It would be
odd, but happily it is not the law. Therefore, in my judgment, this ground of
appeal also fails.
If I were
wrong in so concluding, I would not, in the exercise of my discretion set the
planning permissions aside on a complaint made by a party who is not even in
all cases a disappointed competitor unless it were held to be the case
that under no circumstances could a transfer of land be included in or follow
from a section 106 obligation. And I do not believe that to be the case.
Accordingly, I would dismiss this appeal.
SIMON BROWN
LJ: I agree.
NEILL LJ: I also agree that this appeal should be dismissed for the reasons
set out in the judgment of Henry LJ.
Appeal
dismissed.
Appendix
Below are
pp1-15E of Brooke J’s judgment given on August 6 1993 in the court below as
adopted and appended by Henry LJ.
BROOKE J: There are before the court two applications for judicial review by
Crest Homes plc of certain decisions made by South Northamptonshire District
Council (‘the council’) arising out of actions taken by the council in relation
to a new draft local plan. In different ways the applicants seek to impugn the
legal validity of a decision made on July 6 1992 recommending the approval of
the draft local plan for consultation and adapting it for development control
purposes; the consultation regarding this draft plan which took place in August
and September 1992; six agreements made by the council with local landowners
which contained ‘planning gain’ elements; and two grants of outline planning
permission, made on January 14 and February 11 1993 respectively, to two of
those landowners in relation to developments which form the subject-matter of
two of these agreements.
The council’s
area is conveniently divided into three parts, the small towns of Brackley
(9,000 inhabitants) and Towcester (6,000 inhabitants) and what are described as
rural areas. The history which immediately led up to the present dispute
started in 1988. The council realised that before Towcester could be expected
to accommodate any significant further residential growth, money needed to be
spent in upgrading the infrastructure and the facilities it offered to its
inhabitants. The council recognised that Towcester was deficient in many
respects, and that its inadequacies could not be remedied by public finance,
given the current restraints on central government and local authority
expenditure.
Reports placed
before the planning committee in December 1988 and January 189 in the context
of the preparation of a new Towcester local plan showed that the new county
structure plan, together with other factors, had caused a surge of interest in
the town recently from landowners and developers. Different options for a new
bypass road were discussed in these reports, as was the lack of adequate car
parking facilities and the need for a leisure centre, a new primary school and
other new community facilities. In January 1989 a special meeting of the
committee agreed that the town had perhaps reached what was called ‘its
environmental threshold beyond which substantial investment in infrastructure,
services and facilities would be needed’.
During 1989
the council’s chief executive took steps to interest developers and other
interested parties in arrangements by which they might contribute towards the
needs which had been identified. It was recognised that an impending first
alteration to the county structure plan would mean that Towcester would be
expected to accommodate a good deal of the growth in residential development
which was being allocated to the district. A series of meetings were held at
which different ideas were canvassed and a further report by the chief planning
officer in October 1989 canvassed the different options open to the council in
the context of a county structure plan proposal for 5,300 new dwellings in
South Northamptonshire before the year 2006, of which 1,500 would be in
Towcester, 2,000 in Brackley and 1,800 in the rural areas. In April 1990 the
applicants confirmed their agreement in principle to the council’s ideas about
contributions from developers to the facilities which would be needed in
Towcester and the agents for the relevant landowners referred expressly to the
need for the extent of such contributions to be matched against the realisation
of development value.
During the
first part of 1990 six different options for the development of Towcester and
its immediate area were discussed in the context of this need to provide for
1,500 new dwellings in the area and the concurrent need to ensure that the
necessary improvements were provided for the infrastructure and other services
required to support such an expansion of the town. A report by the chief
planning officer in April 1990 showed that it had been made clear to local
landowners, who were interested in developing their land, that no further land
would be released for development until a comprehensive programme of provision
for essential community needs had been compiled and a legally binding agreement
for their funding and programming had been entered into. At that time it was
hoped that a consortium might emerge, with whom a single
funding of a development programme are set out in this report.
In April 1990
the committee selected what was called option 6 as the basis for a new
Towcester local plan. This identified six sites for residential development in
a scheme which would incorporate a new A5 bypass to the west of the town. Three
of these sites feature in the application which came before me. These were a
28-ha site owned by the Hesketh Estate off Northampton Road to the north of the
town, suitable for 450 to 500 new dwellings (‘the Hesketh residential land’), a
smaller, 10-ha site owned by the Lee family, at Belle Baulk Farm to the
north-east of the town, suitable for 85 new dwellings (‘Belle Baulk Farm’) as
the second phase of a development for which permission had already been granted
for the first phase there, and a 16-ha site at Red House Farm in relation to
which the applicants had an option to develop. This site, which was suitable
for 275 to 350 new dwellings, lay to the south-east of the town and, with two
of the other sites which were then earmarked for development at a place called
Wood Burcote, formed a more or less continuous strip of land to the north of
the proposed corridor for the new western bypass.
Outline
planning consents have now been given by the council for the residential
development of the Hesketh residential land and Belle Baulk Farm and the
applicants seek orders quashing these two consents, in addition to the other
relief they seek against the council. In the proceedings before me Mr Graham
Stoker was instructed by the council and by David Wilson Homes Ltd, who held an
option to develop Belle Baulk Farm, and Mr Joseph Harper QC appeared for the
Hesketh Estate as the owners, and also for Persimmon Homes (Midlands) Ltd who
held an option to develop the Hesketh residential and industrial land.
In June 1990
the council organised a public exhibition of their plans for option 6. These
had already included the proposed industrial development of 14 ha of land owned
by the Hesketh Estate at Old Tiffield Road (‘the Hesketh industrial land’) and
they now also embraced plans for a town centre supermarket and public car park
on 4 ha of land also owned by the Hesketh Estate on a meadow near the centre of
the town between the River Tove and the Mill Stream (‘the Hesketh supermarket
land’). In due course, as I will describe, the council entered into planning
agreement with the owners of Belle Baulk Farm and with members of the Hesketh
family as owners of the Hesketh residential, industrial and supermarket land,
and the validity of all four of these planning agreements is in issue in these
proceedings.
In July 1990
the council’s chief executive and chief planning officer reported on the
favourable response to public consultation and they then received authority to
instruct professional advisers and to continue discussions with members of the
proposed consortium, which included the applicants, about how the plans for
mixed public and private participation in the development of Towcester might be
taken forward.
There followed
a series of meetings, from July 1990 to March 1991, between officers of the
council and what came to be known as the Towcester Development Group. This
group included the applicants. At these meetings a list of the improvements in
Towcester which were
agreed, as was the principle that a reasonable contribution from development
profits would go towards paying for them. Because of the size of the consortium
(five different landowners), the different size of the various proposals, the
broad scope of these initial discussions about the phasing of development and
the focusing of the necessary community facilities within a limited number of
ownerships, a percentage contribution was agreed to be the appropriate way
forward. Attempts by a firm of leading accountants to establish some different
formula which would satisfy all the separate owners had ended in failure and
the contributions towards essential infrastructure and services were eventually
agreed at 20% of enhanced land value for residential proposals and 17 1/2% for
industrial/commercial proposals. The town centre supermarket proposal was
considered to be unique and the negotiations with its developers were conducted
without specific reference to any percentage contribution. During the course of
these discussions residential land values were still running quite high.
The proposed
enactment of the Planning and Compensation Act 1991 led to a realisation by the
council that they would now have to prepare a new local plan for their entire
district in conformity with the requirements of this new legislation. At the
same time, the Secretary of State’s proposed modifications to the first
alteration of the county structure plan revealed that the council would have to
accommodate a further 1,000 dwellings during the plan period to meet the needs
of nearby Northampton. The effect of these two developments was that the
council resolved to widen the kind of work they were doing in relation to
development at Towcester to cover both Brackley and the rural areas. They also
resolved to allocate 350 of the required new dwellings to Towcester and the
remaining 650 to a greenfield site known as Grange Park in the north of their
district, close to their boundary with the borough of Northampton. In due
course a planning agreement was made with the owners of the Grange Park site,
which is the fifth of the six agreements whose legal validity is impugned in
these proceedings.
During the
course of 1991 discussions with individual landowners and developers continued
against a background of a continuing severe drop in residential land values. By
the beginning of 1992 it had become clear to the council that it would be very
unlikely that all the infrastructure and community service improvements which
were needed at Towcester could be realised unless most of the proposed
development was started in advance of the building of the new A5 bypass road.
This necessarily led to a reordering of the 1990 option 6 proposals into a
pre-bypass phase and a post-bypass phase. The Hesketh residential land and Belle
Baulk Farm, whose development was not considered to be dependent on the prior
construction of a bypass on the opposite side of the town, would be placed in
the first of these phases and the applicants’ site and four other sites were to
be placed in the post-bypass phase.
In March 1992
the council’s planning and development committee approved this modified
approach which split the proposed growth of the town into these two distinct
phases. The earlier phase would proceed relatively unhindered, while still contributing
significantly to the
the prior provision of the new bypass, whether from public or private funds, or
from a combination of both.
At their
meeting that month the committee also recommended that before the draft local
plan was presented to them, legal agreements should be sought from the relevant
landowners, without prejudice to the council’s position in respect of their
future determination of the relevant applications. At that time they were
hopeful that the state of the negotiations with landowners might enable the
draft district local plan to be put before a special meeting to be held before
the end of April.
This did not
in fact take place and the necessary legal agreements had not been finalised by
the time the committee met on July 2. A written report on the present state of
play had been circulated with the agenda for that meeting and this was updated
orally at the meeting, whose minutes recorded that ‘the current position on the
completion of the necessary legal agreements was reported’. At that meeting the
committee passed a resolution recommending to the council that
subject to
prior completion of the necessary legal agreements and any detailed comments
from members the draft South Northamptonshire Local Plan be approved for
consultation purposes and adopted as interim development control policy for the
whole of the district.
This
recommendation was approved and adopted by the council when they met four days
later and one of the six agreements, which related to land at Brackley, the
effect of which I will describe later, was executed on July 8. However, none of
the four Towcester agreements nor the Grange Park agreement had been completed
by the time the draft local plan was put out to public consultation on August
10 1992 and adopted, in accordance with the council’s resolution, as interim
development control policy, nor indeed had any of them been completed by the
time the consultation period ended at the end of September. The legal validity
of the consultation process is another of the matters which arise for decision
in these proceedings and the applicants rely in this context on the undoubted
fact that the condition precedent to the approval of the draft plan for
consultation purposes had not been fulfilled.
The public
consultation on the draft plan attracted considerable media coverage. The
council organised several exhibitions in the district and there were various
public meetings and it was not in issue that the consultation process was
considerably wider than the comparatively narrow process of consultation
required at this very early stage of plan preparation by the relevant statutory
instrument.
Chapter 9 of
the draft plan was concerned with implementation, and policy IMP 1 reads:
The local
planning authority will expect planning submissions for major development,
whether or not specifically referred to in this plan, to make provision for
related infrastructure and community facilities. Such matters will form the
basis of legal agreements which will be finalised prior to the issue of any
permission.
Such
permission will normally take the form of contributions from
(i) the provision of facilities within the site
that are necessary in the interests of comprehensive planning and/or
(ii) the provision of off site facilities where
the development would put additional strain on existing resources.
Chapter 10 of
the draft plan, which related to Towcester, explained the council’s thinking about
the pre-bypass and post-bypass development of the town. It was said that the
development of the land for major housing schemes to the south of Towcester was
not considered appropriate until the A5 bypass was under construction and that
any significant residential development in that part of Towcester would put
additional traffic on the A5, through the town centre and the local road
network. The applicants’ Red House Farm site and four other sites (including
land at Wood Burcote) were placed in the post-bypass phase, while the Hesketh
residential land and Belle Baulk Farm were placed in the pre-bypass phase. The
council explained that there was likely to be less impact on the local road
network or on the town centre from development in that area, where the existing
A43 road fulfils the role of a bypass road.
Appendix A to
the draft plan contains detailed descriptions, with accompanying plans, of the
different site development proposals mentioned in the main text. In virtually
every case it was said, under the heading ‘Site Development Principles’, that a
planning brief had been, or would be, prepared for the site and that the
development would be subject to a legal agreement between the landowner and the
local planning authority.
In due course,
after the consultation period ended, legal agreements were executed in relation
to the five other site with which this application is concerned. These were
made on October 21 (Grange Park), October 22 (Hesketh supermarket) and November
25 (Hesketh industrial and residential and Belle Baulk Farm). In every case the
agreement was made with the relevant landowners and Persimmon Homes (Midlands)
Ltd were also parties to the two later Hesketh agreements.
On January 14
1993 the council granted outline planning permission and on March 17 1993
detailed planning permission to David Wilson Homes Ltd to develop the Belle
Baulk Farm site. On February 11 1993 outline planning permission was granted
for the development of the Hesketh residential land and since that time similar
permission has been granted for the development of the Hesketh industrial land,
although the validity of this permission was not expressly challenged before
me, the applicants only having heard of its existence shortly before the
hearing started.
The council had
now considered the results of consultation on the pre-deposit draft plan and
unless this court intervenes, the next stage in the plan process will be the
consideration of objections to the deposit plan, which was placed on deposit on
May 13 1993, leading to a public inquiry in the event that there are objections
to that plan.
I turn now to
the attitude of the applicants. On September 30 1992 they wrote a letter to the
council seeking information on the legal
until these had been completed the information they sought was confidential and
that when they were completed and the planning permission issued they would be
registered at the local land charges register. On October 26 the applicants
wrote to say that they thought that it was highly regrettable that the basis of
the legal agreements was being treated as confidential and that they were
seeking legal advice and also consulting the Department of the Environment.
This led to a further inconclusive exchange of correspondence which was
followed on December 9 by a substantial letter from the applicants’ solicitors.
Since the contents of this letter presaged some of the arguments advanced
before me, I need not refer to them at this stage.
At the same
time as the applicants were demanding a sight of the legal agreements entered
into with the other local landowners they were advancing their own application
for planning permission for residential development of the Red House Farm site.
This application was refused by the council in December 1992, and in inspector
has already opened a public inquiry into the applicants’ appeal against this
refusal. The hearings at this inquiry were then adjourned until August 1993 for
reasons which, I was told, were entirely unconnected with these proceedings.
On February 17
1993 the council gave their first substantive response to the applicants’
solicitors’ request. They told them that the legal agreements and all relevant
committee reports and minutes in connection with the local plan were available
for inspection during normal office hours and they denied there had been any
procedural irregularity on their part. The most important paragraphs of this
letter, which were the precursor of some of the submissions I received, reads:
I agree that
the conclusion of legal agreements prior to the approval of a Local Plan is
unusual, but this innovative approach was pursued in order to safeguard the
position of the authority in the event that any one of a number of interested
parties, particularly those with interests in Towcester, should renege on their
promised contributions towards what was becoming an ambitious, but complicated,
planning package for the benefit of the town. It was considered that without an
approved policy contained in a Local Plan the council would be vulnerable to
rogue applications and ultimately on appeal, through which mechanisms no
community benefits from (sic) the town might be forthcoming. Your own
clients were fully aware of and were party to this approach when the idea of a
development consortium was first suggested some time ago. The fact that legal
agreements have been signed does not undermine the validity of the public
participation phases of the Local Plan. The council would not consider granting
any permission in the face of significant public opposition to any single Local
Plan proposal, and in the event no agreement is active until such time as
planning permission has been granted. I therefore reject your intimation that
proceedings having been held in camera has negated the public’s role in
reaching an acceptable basis for the Local Plan.
The applicants
then obtained copies of the six agreements and the substantive application for
leave to apply for judicial review was lodged with the court on March 29 1993.
I granted leave and directed
validity of the Belle Baulk Farm permission and a second application which was
lodged on June 7 1993 and for which leave was granted on June 21 1993 by
Macpherson J, challenged the validity of the Hesketh residential land
permission. As I have already said, the existence of the Hesketh industrial
land permission was not known to the applicants or their advisers until shortly
before July 7 when the hearing of the two applications started in my court.
