Court of Appeal confirms position on ‘switching’ planning permissions to avoid S. 106

R (Robert Hitchins Ltd) v Worcestershire County Council [2015] EWCA Civ 1060

The Court of Appeal has outlined the legal position concerning the ability of developers to “switch” between two different planning permissions in order to avoid triggering an obligation under one permission for S. 106 contributions.

The case in question began in 2013, when Robert Hitchins (RHL) secured outline planning permission for up to 200 dwellings on a substantial site in Worcester. The S. 106 agreement, to which permission was attached, required a payment of £1m towards infrastructure for the Worcester Transport Strategy.

In March 2013 RHL sold the site to Barratt Homes and gave an indemnity in respect of the transport contribution. The following month, it re-applied for planning permission and, although permission was at first denied, the Inspector on appeal determined that the transport contribution was unjustified and granted a second permission unencumbered by it.

Following the inspector’s decision, Barratt Homes provided a unilateral undertaking to the local planning authority to depend solely on the second permission – abandoning the first. Despite this, the County Council insisted on further payments, resulting in RHL seeking clarification from the High Court.

The High Court granted that clarification and came down in favour of RHL, resolving that he had no further liability in this regard.

The County Council advanced two main grounds of appeal:

  • The implementation in the undertaking referred to the commencement of development and, since development had already commenced when it was executed, the covenant was of no effect.
  • The judge had been wrong to conclude that subsequent development was being carried pursuant to the second, rather than the first, permission in the absence of any way of physically distinguishing the two sets of works.

Richards LJ dismissed both arguments.

With regards to the first, he stated:

“It is common ground that the term “implementation” in relation to a planning permission is not the subject of statutory definition… It can be used to refer to the beginning of the development authorised by a planning permission… It can also be used to refer more generally to the carrying out or completion of the development authorised by a planning permission…”

With regards to the second, he concluded:

“It does not matter that, as Mr Hobson pointed out, it was impossible to tell from evidence on the ground whether operations were being carried out under the Second Planning Permission rather than the First Planning Permission. One would not expect any difference in the operations themselves, since the terms of the two planning permissions were identical.”

In addition, the County Council also relied on the cases of Pilkington v Secretary of State for the Environment (1973) and Sage v Secretary of State (2003) to argue two further grounds: that the two permissions were inconsistent and therefore only one could be lawfully implemented; and that once development commenced under one permission it had to be completed “fully” in accordance with that permission.

Richards LJ again rejected both arguments, the first on the basis that as the permissions were for the same development they were not inconsistent and the second on the basis that it involved a misreading of Sage.

Following the full rejection of all arguments advanced by the County Council, it may be the case that developers with the benefit of two similar planning permissions will now be able to switch between the two – towards the most commercially attractive permission.

SRJ                                                                                                                              10.12.15