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Derek Ching
Derek Ching,
Council section 106 monitoring fees declared unlawful
16 February 2015

The High Court has handed down judgement in a planning law case which may have significant impact on planning authorities’ conduct of negotiations of planning obligations under section 106 of the Town and Country Planning Act 1990.

The case involved an unsuccessful legal challenge by Oxfordshire County Council to the grant to CALA Homes of planning permission on appeal for 26 houses in Adderbury, Oxfordshire. The inspector’s decision declared as unjustifiable many of the Section 106 contributions which Cherwell District Council and Oxfordshire County Council had sought to impose but the inspector also struck down the requirements for payment of monitoring and administration fees.

The developer was able to take advantage of the inspector’s rejection of the Councils’ demands for these payments only as a result of having inserted into the Section 106 Agreement a clause which cancelled the operation of various planning obligations if an inspector on appeal thought they were in excess of what was properly permitted under the terms of Regulation 122 of the Community Infrastructure Levy Regulations. These regulations set out what criteria have to be satisfied to properly impose a planning obligation. Without such a clause, a local planning authority remains free to enforce what have been ruled to be excessive or improperly given planning obligations, relying on the continuing contractual and statutory enforceability of the covenants given by the owners/developers within s106 Agreements or s106 Unilateral Undertakings (as the case may be).

The decision attacked the imposition of an administration/monitoring fee on the basis that dealing with the monitoring of compliance with Section 106 obligations falls, or ought to fall, within the general administrative duties of the Council which should be funded out of the Councils’ general tax revenues. Such monitoring and administrative charges are however routinely imposed by local authorities on top of other financial contributions and are often seen by developers as an unavoidable price that has to be paid for securing a planning permission, whether or not they seem reasonable or justifiable in any particular case.

It was decided that there was nothing in statute or national planning policy which entitled the Council, and indeed any Council, to levy monitoring and administration charges as a general rule. It was considered that it might be possible for the monitoring and administration fees to be imposed only in exceptional, highly significant, cases but not in most routine cases of development. In this case, the development was a fairly modest housing scheme and not considered out of the ordinary.

It seems therefore that the imposition of administration and monitoring fees will not in most cases be considered to be “necessary” (as required by the CIL Regulations) to make a development acceptable in planning terms, even where the local planning authority has adopted a policy setting up a schedule of monitoring fees. Such charges should therefore not form part of Section 106 obligations except in a small minority of cases.

This is an extremely challenging outcome for local authorities and may indeed be taken further by way of appeal. It begs the question of how local authority planning departments will be able to fund and deliver their supervisory functions going forward. In the meantime those seeking planning permission need to consider their best approach to negotiations with planning authorities over s106 obligation as follow:

  1. Should they routinely insert a “blue pencil” clause allowing planning obligations to be declared void to the extent that an inspector, on appeal, thinks they fall outside the proper scope of such obligations as defined by Regulation 122 of the CIL Regulations?

  2. Should they routinely reject attempts by councils to impose supervision and monitoring charges – this case suggests that planning authorities will have to withdraw such provisions.

Tactically, developers will have to weigh up the risk of delay and obstruction by planning departments if these issues are raised. Some authorities may refuse to agree bilateral s106 Agreements containing such clauses. This forces the developer to decide whether to submit a unilateral undertaking with such a clause and run the risk that it too is rejected by the planning committee.

In the absence of agreement by the planning officers and planning committee, the outcome is likely to be a refusal of the planning application. How many developers will agree to pay simply to secure the planning permission and avoid having the delay and cost of an appeal, even though this decision declares such payments to be improper?

Planning authorities which persist in demanding monitoring fees will be running a risk of other appeal decisions going against them, with potentially painful awards of costs against them.

Case ref: (Oxfordshire County Council v Secretary of State for Communities and Local Government and others [2015] EWHC 186 (Admin).)

For any further questions please contact Derek Ching on [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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