Monthly Archives: January 2016

Planning condition could require retailers to enter planning agreements to protect neighbouring centre

Skelmersdale Ltd Partnership, R (on the application of) v West Lancashire Borough Council & Anor [2016] concerned a new retail-led development on land measuring approximately 5 hectares in Skelmersdale (“the Site”).

Condition 5 of a planning consent for the Site, required retailers of retail floorspace exceeding 250 sqm (Gross External Area) at the nearby Skelmersdale Concourse Shopping Centre to submit schemes which clearly set out their proposals to continue, or (if they had left within the previous 12 months) return to, at least 5 years’ more occupation of the Concourse Shopping Centre which had suffered from a lack of modernisation and a turnover of retailers.

The writer attended the formal opening of the Skelmersdale Concourse Shopping Centre, by Ken Dodd, one Saturday afternoon in the 1970’s.

The purpose of condition 5 was to minimise the risk of retailers relocating from the Concourse Centre to the Site.

The High Court said the issue was: did condition 5 require (no more) than a non-binding promise or statement of intent on behalf of the retailer, or did it require a legally binding obligation? If the latter, the obligation in question would arise under some form of contractual commitment, probably one underpinned by section 106 of the Town and Country Planning Act 1990.

The court concluded that, since condition 5 contained the transitive form of the verb “commit”, it required the retailer to give a legally binding commitment. The stated reason for condition 5 was “to ensure” that a desired state of affairs was achieved, and nothing short of a legally binding commitment would do that. This was required to uphold the policy in SP2 of the Local Plan which underpinned the future attractiveness of Skelmersdale Town Centre.

If there was a dispute as to the reasonableness of the scheme submitted, then there would have to be an appeal and a Planning Inspector would have to exercise a planning judgment based on considerations such as the nature of the retailer’s business, the nature and extent of current occupation, and likely economic and business trends.

Condition 5 was not too vague to be enforced because an appropriate mechanism existed for reasonable planning judgments to be made and adjudicated on. As retailers’ businesses differ, it would not have been possible to be more prescriptive about these matters in advance.

There was no need for an express implementation clause in condition 5 because retailers must offer the local planning authority legally binding commitments.

There was the possibility of retailers setting up subsidiary companies to circumvent condition 5 but the language of condition 5 was wide enough to cover any companies set up with the sole or main purpose of evading the condition because the term “retailer” in the condition was not linked to any particular corporate incarnation.

In Skelmersdale Ltd Partnership, R (On the Application Of) v West Lancashire Borough Council & Anor [2016] condition 5 was challenged before the Court of Appeal but it was upheld.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Mortgages: later facility letters not caught by restrictions on tacking

Section 48 of the Land Registration Act 2002 provides that charges over registered land rank in the order of their registration. That is subject to the restrictions on tacking contained in sections 49 and 50.

“Tacking” describes the method by which a creditor, with a mortgage securing an original advance, can use that mortgage to secure a further “advance” and so obtain priority for the further advance over sums secured by any second or later mortgage.

As this may prejudice second and later mortgagees, tacking is only allowed in limited cases.

For these purposes an advance is money paid to someone on terms that they will repay it, in other words a loan.

The issue in Urban Ventures Ltd v Thomas & ors [2016] was whether any further advances had been made by the holder of first mortgages on various properties.

Only if further advances had been made, would the restrictions on tacking apply.

The Court of Appeal said the borrowers had entered into a series of further facility letters but essentially all that had happened was that the lender required the borrower to sign up to date versions of their standard terms, and added unpaid interest and fees in respect of the original advances to the account.

No new advances were made.

The facility letter dated 26 March 2009 may have replaced, rather than varied, the previous facility letter as amended, but its purpose was to set out the terms, largely the same as previously applying, to the existing advance.

That facility letter and the subsequent facility letters were restatements, with relatively minor variations, of the original facility letter, rather than the complete extinction of the original facility letter and its replacement with a new contract.

It followed that this was not a case in which tacking arose, and the lender retained its priority as first mortgagee in respect of the advance originally made by it in October 2006.

The unpaid interest was added to the account and capitalised in successive facility letters. In the absence of an express arrangement between the parties to that effect, unpaid interest could hardly be treated as a new or further advance so as to be caught by the restrictions on tracking.

Insofar as fees were payable under the terms of the original facility letter the same would apply to them. However further fees payable on each renewal of the facility, were not payable under the terms of the original facility letter. This was academic because of the substantial shortfall on the sale of the properties. Had it mattered to the outcome of this appeal, it would have been necessary to consider carefully whether, and in what ways, section 49 of the Land Registration Act 2002, and section 94 of the Law of Property Act 1925, applied to the creation of new liabilities which fall within the charging provisions of the first mortgage or charge.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Planning conditions and discharges accommodated changes

In the High Court case of Menston Action Group v City of Bradford Metropolitan District Council [2016] the claimant challenged a planning permission arguing (amongst other things) that planning committee members were significantly misled by the committee report about the extent of the alleged benefits from the surface water drainage provision that was to be made by the development when they were advised that the development proposals would add a storage volume of more than 50% in addition to that presently available at the site.

The claimant said this claim was incorrect.

It omitted the additional requirement for 32.4m³ of storage for surface water discharge arising from the impermeable parts of the site. The claimant said that this amounted to a legal error.

The claimant said condition 5 of the planning permission required that the development be carried out in accordance with the details which were specified in the Flooding and Draining Assessment (“FDA”) which had supported the planning application. In particular the underground storage of 199.2m³ and the discharge flow or pass forward rate of 5 l/sec were required.

Condition 5 required the additional control of runoff or pass forward rates to retain a 50% uplift or increase in flood storage over the existing provision at the site.

The claimant said the details the Council approved to discharge one of the planning conditions changed the pass forward or runoff flow rate and the underground storage volume rendering the discharge unlawful.

The court said it was not possible to interpret condition 5 as requiring identical mitigation measures to those set out in the FDA. It sufficed that the mitigation measures were of the kind, or matched those identified in principle, within the FDA.

Had the conditions required the mitigation proposals to be exactly the same as in the FDA there would have been no need, for example, to provide for further finalising of runoff rates.

Other conditions required further details, calculations and fine tuning in relation to surface water drainage as the project progressed towards implementation.

The drawing mentioned in condition 5 was a “schematic” drawing. It was not intended to be a detailed engineering drawing for actually implementing the consent. “Schematic” laid down the principles but contemplated that:

– further detailed work would be provided, and

– the detail of what was depicted on the drawing would alter prior to the development actually being commenced.

The conditions provided for the Council to vet any further necessary and important detailed work.

The reality was that the details which had been discharged in relation to the conditions ensured that there would be a 50% increase in the site’s storage capacity since the reduction in the pass forward flow ensured that there would be no erosion of the flood storage available to the watercourse.

Condition 6 said:

“No development shall take place until details for proposals for dealing with any existing watercourses, culverts, land drains etc encountered during the works are submitted to and approved in writing by the Local Planning Authority….”

The claimant said the details which had been approved would not provide protection to the existing watercourse from additional discharge of water into it.”

Disagreeing with the claimant, the court said were the works to disclose any unknown watercourse, culvert or land drain which did not accord with the approved details, those details required an amended drainage drawing to be submitted to the Council to get any necessary consent prior to any further drainage work.

This safeguarded against any unknown watercourses being diverted to add to the load of the existing watercourses.

A recent appeal based on Condition 15 of the planning permission has been dismissed by the Court of Appeal (q.v.).

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

5 years’ housing supply: might be relevant consideration for part of an area

Any consideration relating to the use and development of land, or which relates to the character of the use of land, is legally capable of being a relevant planning consideration.

In the High Court case of Edward Ware Homes Ltd v Secretary of State for Communities and Local Government & Anor [2016] the National Planning Policy Framework and the Local Planning Authority’s Core Strategy required the demonstration of a 5 year supply of housing land for the whole of the area of the local planning authority (or the Housing Market Area).

The court said that the distribution of housing land supply across parts or sub-areas of a district, could nevertheless be a legally relevant consideration to be placed into the planning balance when a supply of housing land cannot be identified for the whole district whether over 5 years or the plan period.

This aspect may be relevant to the relative merits of measures for redressing a district-wide shortfall, whether as proposed by a specific developer or by the local authority or others, including the sustainability of those measures.

Although these matters are relevant as a matter of law, the weight to be accorded to them in any particular case is a matter for the planning decision-maker.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Occupancy planning restriction barred VAT refund

Where VAT is incurred “on the construction of a building designed as a dwelling” Section 35 of the Value Added Tax Act 1994 (“the 1994 Act ”) provides for a refund of VAT in certain circumstances. The notes to Group 5 of Schedule 8 to the 1994 Act apply to the interpretation of that section (subsection 35(4)).

Note (2)(c) to Group 5 provides:

“A building is designed as a dwelling ……where in relation to each dwelling the following conditions are satisfied – …………
(c) the separate use or disposal of the dwelling is not prohibited by the term of any covenant, statutory planning consent or similar provision;…..”

In the United Kingdom Upper Tribunal (Tax and Chancery Chamber) case of Revenue & Customs v Burton [2016] a planning consent contained a condition (“Condition 4”) that:

“the occupation of the dwelling shall be limited to a person solely or mainly employed or last employed in Park Hall Lake Fishery or a widow or widower of such a person, or any resident dependants.”

Did that condition prohibit the “separate use or disposal” of that house?

The Tribunal said it clearly did. What was prohibited was the use of the house separate from the fishery at Park Hall. The aim of Condition 4 was to ensure, by means of an occupancy restriction, that the accommodation was retained for the purposes of the Park Hall fishery business. Indeed, the planning consent explained in detail how certain important requirements of the Park Hall fishery business were to be met through the occupation of the Building.

Nor was the condition any the less a prohibition on separate use merely because the class of occupants had been expanded beyond the Park Hall fishery’s workers or retired workers, to include their widows, widowers and resident dependants. Each of those occupants still had to have a specific link to the fishery at Park Hall. It was that link to specific land or premises that was the critical factor.

So there could be no refund of VAT under subsection 35(1).

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Right to Manage Company Articles could only have been referring to the whole building

Where a document, including a company’s articles of association, is ambiguous or reasonably capable of more than one meaning, the document will be given the meaning which is more consistent with the parties’ presumed intention. Where a document contains a clear mistake, and it is obvious what the parties must have intended, the document will be interpreted so as to accord with that intention.

In the Upper Tribunal (Lands Chamber) case of Avon Ground Rents Ltd v 51 Earls Court Square RTM Company Ltd [2016], the Company’s articles of association were in the model form prescribed by the RTM Companies (Model Articles) Regulations 2009. Article 2 recorded that the Company’s name was “51 Earls Court Square, RTM Company Ltd.”

However in the Company’s articles “the Premises” were defined as “Flat 1-13, 51 Earls Court Square, London SW5 9DG”.

The tribunal said the informed reader, might construe the words “Flat 1-13, 51 Earls Court Square” to mean the 13 flats, numbered 1 to 13, in the building known as 51 Earls Court Square, or alternatively to mean the building at 51 Earls Court Square, which comprised those 13 flats.

But the reasonable person would have to ask themselves “whether the object of the Company could sensibly be the acquisition of the statutory right to manage thirteen individual flats (an object which is legally incapable of fulfilment), or whether the parties must have intended that the right would extend to the whole of the Building [which] comprises the thirteen flats.”

The articles could only be interpreted to mean that the parties intended to refer to the whole of the Building, as it was the only unit of property at 51 Earls Court Square which was “a self-contained building or part of a building, with or without appurtenant property” and thereby qualified to be the subject of an application for the acquisition of the right to manage.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Dispensation for restrictive covenants futile: the dispenser had no power to dispense

There is no point negotiating a dispensation for restrictive covenants on land if the dispenser has no powers to dispense.

In the Upper Tribunal (Lands Chamber) case of Derreb Ltd v White & Ors Re The Huntsman [2015] the property was subject to the following covenant in a 1956 Conveyance:

“The property … shall not be used for any purpose other than as a Sports Ground or for the erection of detached houses for use as private residen[ces] only such buildings to be erected in such a position and in accordance with such plans and elevations including general layout and development plans as shall first be submitted to and approved …. by the Vendor’s surveyor …”

However Clause 2 of the 1956 Conveyance contained a power of release (“power of release”):

“… it shall be lawful for the Vendor (which expression shall be taken to include the estate owner or owners for the time being of property for the time being remaining subject to the trusts of the present settlement or any future re-settlement of the Cator Estate at Blackheath) … [within the current time period] to release any property which has already been sold from all or any of the stipulations or regulations to which it is now subject.”

Derreb relied on a deed dated 27th September 2013 (“the Deed of Release”) whereby the executors of the Vendor described in the 1956 Conveyance tried to release Derreb from the burden of that restriction. The respondents contended that the restriction had not been validly released.

The Tribunal cited the Supreme Court in Arnold v Britton & Others (2015). When interpreting a written contract the court had to infer “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them … to mean” by using that language in the context. The court could only take into account factual circumstances which existed at the time that the contract was made, and which were known or reasonably available to both the parties. The Court must ascertain what a reasonable person, with all the background knowledge then reasonably available to the parties would have understood the parties to have meant. If there are two possible interpretations, the court was entitled favour the interpretation which was consistent with business commonsense.

The key words were those which defined “the Vendor” in the restriction in the 1956 Conveyance. It was an inclusive definition, and not an exhaustive one. In this case, anything falling within the natural meaning of the term “Vendor” in the relevant context could also fall within that definition.

The words “for the time being” in the power of release pointed to the future. The Tribunal interpreted “for the time being” to mean “from time to time”. However the many plot owners deriving title from the Vendor clearly could not exercise the power of release.

“Vendor” did not include the personal representatives who had tried to give the Deed of Release. The express words of the power of release made it clear that the parties to the 1956 Conveyance only intended the power of release to be exerciseable for as long as the trusts of the then current settlement of the Cator Estate (or any successor re-settlement of them) remained in existence. That purpose had ceased to be effective when the Trust ended.

So the restriction remained in place and enforceable by the respondents despite the personal representatives entering into the Deed of Release.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

VAT: DIY Garage part of single continuous building project

In the case of many DIY house building projects, work is not undertaken all day or every day. Work may take place in bursts, with gaps in between. There is no limit to the amount of time that a DIY project can take. However it is not in anyone’s interest to artificially extend the time taken to complete a DIY project. The full nominal amount of the VAT paid can only be claimed at the end of the project, by which time it will be significantly less in real terms than it was at the time the self builder originally paid the invoices.

In the First-tier Tribunal (Tax) case of Bowley v Revenue & Customs [2015] the appellant had built a house, and an associated garage block and other works. The appellant claimed a refund of VAT outlaid on the construction costs under the DIY House Builders Scheme, operated under section 35 of the Value Added Tax Act 1994 (“VATA”). HMRC refused the claim because the claim had not been made within 3 months after construction of the building was complete, as required by s 35(2)(a) VATA and regulation 201 of the VAT Regulations 1995. Site excavation for the separate garage block commenced in April 1993. The dwelling had been completed on 22 June 1994, so the claim should have been submitted by 22 September 1994. A delay in the construction of the garage block was not an acceptable reason for the delay as a garage block could only be included as part of a claim if it was constructed at the same time as the dwelling. In fact the reinforced floor slab for the garage block was not laid until 30 September 1994.

The appellant countered that the dwelling and the garage block were a single project. The claim had been made within 3 months of completion of the garage block and retaining walls to the property, which had completed the whole project.

The Tribunal said it was not fatal to the appellant that the garage was the subject of a separate planning consent. Planning permission for the garage had been applied for almost a year and a half before the house was completed, and had been granted more than 12 months before the house was completed. The plan had originally been for the house to have an attached garage. The decision to have the garage separate from the house instead was a change in plans during the course of construction. It did not mean that the detached garage was necessarily a new project, as opposed to just a change in the original project.

The Tribunal said a dwelling and a garage will be “constructed … at the same time” under Note (3) to Group 5 of Schedule 8 VATA, if they are both built as part of a single continuous building project. If there is a single continuous building project, it should not make any difference in what order work is undertaken on different components of the project. Work on some components may be started or finished in advance of others. It should not matter if one component is built first and then the next component built immediately thereafter, or if there are significant gaps between bursts of activity, provided that the project can overall still be characterised as a single continuous building project.

The appellant conceived the house and the garage as a single project. So the question was whether there was a gap in time between completion of the house and the construction of the garage such that in practice they were not built as a single continuous building project?

Preliminary groundwork for the garage had already been undertaken before the house was completed. The rest of the work on the garage followed on immediately after completion of the work on the house. Both house and garage were constructed as a single continuous building project.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.