Section 106 contribution obligations ousted by later planning permission and agreement

The High Court case of Robert Hitchins Ltd, R (on the Application of) v Worcestershire County Council & Ors [2014] concerned the Claimant’s obligation under section 106 of the Town and Country Planning Act 1990 (“section 106”), to pay a contribution per dwelling in its proposed development towards the Worcester Transport Strategy.

The Claimant had made a second application. The second application was identical to the first, except that that particular section 106 obligation to make the transport contribution was omitted.

The issue was whether the obligation to contribute that arose from the first application had survived:

1. the Secretary of State’s grant of planning permission on the second application; and,

2. the steps that had been taken to implement that second permission.

The court held that where two planning permissions exist in relation to the same land, a developer may chose between them.

When the grant of the second planning permission had been completed by the grant of reserved matters approval, the developer had two extant planning permissions in respect of the site.

Nothing had been done under the first planning permission that precluded the second planning permission being implemented or the carrying out of the development under that second planning permission.

So, as a matter of law, the developer was entitled to chose which permission it wished to proceed under.

Furthermore in the Section 106 Agreement, which imposed the transport contribution obligation in relation to the first planning permission, the Claimant had reserved the right to apply for further planning permissions for the same development, but without the transport contribution.

This was because the first Section 106 Agreement expressly provided that nothing in that Agreement prohibited or limited any right to develop the site in accordance with another planning permission.

The scheme envisaged that, if and when planning permission were granted without the transport contribution obligation, the developer would take effective steps to ditch the first planning permission in favour of the second planning permission.

Indeed, recital (G) of the Section 106 Agreement entered into in relation to the second planning application said:

“[the developer] intends to implement the Second Planning Permission and the Reserved Matters Approval. [the developer] enters into this Undertaking in order to dispense with the implementation of the First Planning Permission and to dispense with the discharge of the obligations under the First Section 106 Agreement and to implement the Second Planning Permission and the reserved Matters Approval and comply with the terms of the Second Section 106 Agreement.”

Paragraph 1.2 of Schedule 1 to the Section 106 Agreement entered into for the second planning permission made it clear that the developer “intend[ed] to implement the second planning permission…” and since implementation of the second planning permission excluded any possibility of also implementing the first planning permission in relation to the same site, the developer was undertaking to “dispense with the implementation of the first planning permission” as well.

Looked at objectively against the relevant background, those words were intended to mean that, as soon as the second Section 106 Agreement took effect on 18 September 2014, reliance on the first planning permission would be given up, and any material operations thereafter to implement a planning permission could only have been carried out under, and implement, the second planning permission.

So the trigger for payment of the second and third instalments of the transport contributions under the first Section 106 Agreement never arrived, before the developer started to rely on the second planning permission instead, and that second planning permission was not accompanied by any such contribution obligation.

So, on the evidence, from 18 September 2014, the developer elected to continue and complete the development under the second planning permission and therefore had no further obligation to make the transport contributions.

The High Court’s decision here was upheld, by the Court of Appeal, when unsuccessfully appealed against in Robert Hitchins Ltd, R (on the application of) v Worcestershire County Council & Anor [2015].

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