The High Court has given a ruling which confirms how a section 106 agreement binds a planning permission which is varied by either section 73 or section 96A of the Town and Country Planning Act 1990.
In Norfolk Homes Ltd v North Norfolk District Council [2020] EWHC 2265 (QB), there was a successful challenge to the council’s refusal to issue a lawful development certificate to confirm that a section 73 variation of the outline permission could lawfully be implemented without triggering the landowner’s obligations under the 2012 section 106 agreement. This case puts to bed the arguments that were aired in R (on the application of Larkfleet Homes Ltd) v Rutland County Council [2015] EWCA Civ 597; [2015] PLSCS 183.
In Norfolk Homes, the council granted outline permission in 2012 for up to 85 homes subject to a section 106 agreement requiring affordable housing and other contributions. Subsequently, in 2013 and 2015 it granted new permissions which varied the 2012 permission under section 73. Section 73 creates a new distinct planning permission, which presumably could not have been referred to in the section 106 in 2012 as the reference was not known. This case goes on to clarify that this legal point is not relevant to non-material amendments under section 96A as no new permission is created.
The council relied on the Supreme Court case of Lambeth Council v Secretary of State for Housing, Communities and Local Government [2019] UKSC 33; [2019] EGLR 42 – in which it was held that a condition against selling food included in an original permission remained valid even though a variation to the permission failed to include the restriction – to argue that the 2012 agreement should be interpreted as binding the 2015 permission. This was a question of interpretation of the permissions, once varied, not a question of contract and whether the permissions are bound.
The court held that the original section 106 agreement had not been explicitly linked to the later permissions. Parties to a section 106 agreement may choose to agree explicitly that the obligations apply, not only to the permission then being granted, but also to any subsequent section 73 permissions. This type of “future variations” clause is becoming standard in section 106 drafting. However, this agreement did not contain one and neither did the parties agree an express deed of variation.
Norfolk Homes reaffirms the current general practice of either including a future variations clause in the original section 106 agreement or, on each section 73 application, executing an express deed of variation. From a landowner’s or developer’s perspective, the use of the future variations clause saves time; and the dicta in this case will demonstrate to nervous LPAs that this is lawful. There may now be developers who, in these fiscal times, may wish to check their section 73 records as to whether all section 106 liabilities have been bound.
Stuart Tym is a senior associate in the planning team at Irwin Mitchell
