The importance of ensuring an original S106 planning obligation is tied to a new section 73 permission

Specialist Planning Law solicitor, Sarah Cook outlines the importance of ensuring a S106 planning obligation is tied to a new section 73 permission.

A recent High Court judgment has resulted in a developer being released from planning obligations that they originally covenanted to perform, after the local planning authority failed to tie the original S106 to two subsequent S73 permissions. Emphasising the importance of local authorities and developers checking that existing S106 planning obligations are still secured following the grant of new S73 permissions.

Norfolk Homes Limited (“Norfolk Homes”) originally sought outline planning permission for a development of up to 85 dwellings in the village of Holt, Norfolk. The local planning authority, North Norfolk District Council resolved to grant permission subject to an agreement pursuant to section 106 of the Town and County Planning Act 1990 (as amended) (“TCPA 1990”) being entered into with Norfolk Homes. Accordingly, a s106 agreement was completed to ensure that 45% of the dwellings on the site were provided as affordable housing and several financial contributions were secured. Planning permission was subsequently issued.

A year after outline planning permission was granted for the development, Norfolk Homes applied to vary the original permission by way of an application under section 73 of the TCPA 1990 to vary two of the conditions imposed by the original permission. The LPA resolved to grant permission without any reference to the original s106 agreement.

In 2015, Norfolk Homes made a second s73 application, to vary two of the conditions of the original permission. Once again, permission was granted without reference to the original s106 planning obligation.

In 2018, Norfolk Homes decided to test the waters regarding the s106 planning obligation and made an application under s192 of the TCPA 1990 for a certificate to lawfully implement the 2015 permission without complying with the original s106 agreement. The Council refused the certificate because the provisions of s192 does not enable the legal effect of non-compliance with a s106 obligation to be tested. This is because an obligation under s106 is a freestanding legal instrument which does not form part of the grant of any planning permission and its conditions. This refusal prompted the developer to proceed with the successful legal challenge in the High Court.

Norfolk Homes’ claim was that they were free to implement the 2015 permission, which had been granted pursuant to section 73 of the TCPA 1990, free of the obligations of the original s106. This is because the original s106 did not contain wording that ensured future s73 permissions applied and a subsequent agreement under s106 was not entered into to tie the s73 permissions to the original S106.

North Norfolk District Council’s main defence was based on the case of Lambeth London Borough Council v Secretary of State for Housing, Communities and Local Government [2019] 1WLR 4317  (“Lambeth”) in which it was ruled that a retailer was still bound by a condition in the original decision notice which was not expressly reinstated in a subsequent s73 consent. North Norfolk’s defence hinged on the interpretation of the original s106 and that its ‘plain and natural meaning’ meant that it also applied to the development permitted by the 2015 permission. Furthermore, North Norfolk argued that additional wording should be implied to the definition of “Development,” contained in the original s106, so that the Development would be carried out in line with the ‘Planning Permission granted in accordance with the [a]pplication… or any variation under section 73 of the [TCPA 1990].’ The text in bold was merely inferred by the Council and was not actually present in the s106.

The Hon. Mr Justice Holgate dismissed both limbs of the Council’s defence explaining that:

“Lambeth was simply concerned with the construction of a fresh permission granted under s73… the language of which was clear and unambiguous. It did not involve the interpretation of an earlier document, to see whether the language used in the document could be treated as referring to subsequent grants of permission or other documents.”

LJ Holgate went on to explain that:

“Section 106 obligations remain freestanding legal instruments in this context, just as much as when permission is granted under s70 [of the TCPA 1990]. Section 73 requires the authority to consider whether existing conditions on a planning permission should remain exactly the same, or should be varied or substituted or entirely discharged. But if a s73 permission is granted, there is no assumption in the legislation that any pre-existing planning obligation will apply to that permission, or to development carried out under that permission. Instead, that is a matter left to be addressed by the parties before the s73 permission is granted…”

Consequently, LJ Holgate ruled that Norfolk Homes were allowed to develop under the 2015 permission and not be bound by the original s106. Resulting in the s106 planning obligation being removed from the local land charges register and the developer being free to build up to 85 market dwellings without having to provide any affordable housing or financial contributions.

The Norfolk Homes case serves as a reminder that section 73 permissions are fresh permissions and, in the presence of an existing s106 planning obligation, the s73 application must be tied to the original S106 planning obligation either by way of inclusive wording in the original s106, or via a supplementary s106 to confirm that the original s106 applies to the new permission.