Planning obligations – Section 106 of the Town and Country Planning Act 1990 – Local authority advancing sum to person interested in land – Agreement providing for repayment of sum if condition not met – Whether provision for repayment falling within meaning of “to pay” – Whether statute requiring definition of interest in land – Claim allowed
This case concerned the interpretation of three agreements that the claimant council entered into with developers. These concerned the grant of planning permission for the residential development of three separate sites to include blocks of flats, a percentage of which had to be designated as affordable housing.
The agreements were written on the claimants’ standard form under section 106 of the Town and Country Planning Act 1990. Under the first, C was the freeholder of the land in question and the claimants had agreed to pay a sum to the developer to be applied only for the purposes of affordable housing. Any failure to apply the money for that purpose by a certain date would result in the claimants recovering that sum. The second agreement concerned the proposed development of a site that would include affordable housing. The third related to an increase in the number of flats that were to be built and the consequential increase in units to be assigned for affordable housing.
The proceedings raised questions as to the interpretation and application of section 106 of the 1990 Act, which provided for a party interested in land situated in the area of a local planning authority to enter into a planning obligation that was registerable as a local land charge for the purposes of the Local Land Charges Act 1975.
The defendant was the only other party to the action, but took no part in the proceedings. On its application, the interested party was joined on the basis that it had advanced money to the defendant to purchase one of the sites and had obtained a charge over the site in order to secure its payment.
The questions for the court included, inter alia, whether: (i) anything in the circumstances of this case prevented section 106 applying as a matter of principle; and (ii) the formal requirements of section 106 were complied with in respect of the first agreement in that it did not comply with section 106(9)(c) because it did not state what C’s interest was in the site.
Held: The claim was allowed.
(1) For section 106 to apply to an obligation and thereby make it a planning obligation, the circumstances set out in section 106(1)(a) to (d) had to be satisfied. In the present case, C was interested in land in the claimants’ area as freeholder and the words in section 106(1)(d) “to be paid” naturally covered the obligation on C to repay sums advanced by a council for a purpose that had not been fulfilled since they fell within the definition of “requiring a sum or sums to be paid to the authority” in section 106(1)(d). It was immaterial, if it were the case, that the money was originally paid by the claimants to C and that the obligation on C was to pay or repay that sum or a part of it to the claimants.
(2) However, the claimants were not entitled to the benefits otherwise conferred by section 106 since the first agreement did not comply with section 106(9)(c) because it did not specify C’s interest in the site. Section 106 required that the covenantor in respect of the planning obligation had a proprietary interest in the land. It followed that the obligations placed on C were not planning obligations and the claimants could not rely upon section 106(3), which made a planning obligation enforceable against parties deriving title from the obligor, to say that C’s obligations were binding on the defendant or on the interested party: Pennine Raceway Ltd v Kirklees Metropolitan Borough Council [1982] 2 EGLR 158; (1982) 263 EG 721considered.
James Ramsden (instructed by the legal department of Southampton City Council) appeared for the claimants; Clive Newberry QC and Juan Lopez (instructed by Kennedys) appeared for the interested party; the defendant did not appear and was not represented.
Eileen O’Grady, barrister
