Wednesday, 2 March 2011

Unilateral undertakings – Developers beware!


As I have observed before, the significance of a judgment is not always obvious on first reading, and it is only on coming back to it at a later date that the importance of the point it establishes becomes clear. A recent example of this was the judgment in R (Millgate Developments Ltd) v. Wokingham BC [2011] EWHC 6 (Admin) in which judgment was given on 14 January. I read the judgment shortly after it was delivered, but failed to appreciate its importance until I was reminded of it again by my colleague Ben Garbett.

This case arose from an appeal against the refusal of planning permission which had been based on the absence of a Section 106 agreement to secure financial contributions towards local facilities. In the course of the appeal, the appellant had delivered an executed planning obligation to the Inspector, in the form of a unilateral undertaking, which was intended to meet the objection raised by the Council. As is usual in such cases, the deed was expressed to be conditional upon the grant of planning permission by the Inspector and upon the subsequent implementation of that planning permission.

The Inspector allowed the appeal, but in doing so he decided that the Council’s demand for financial contributions was unjustified and that they were unnecessary. The Inspector made it clear that he therefore placed little weight on the planning obligation.

However, the joy of the appellant was short-lived. Although the planning obligation was conditional upon the grant of planning permission by the Inspector and upon the subsequent implementation of that planning permission, it was not expressed to be conditional on the Inspector’s finding that it was a necessary prerequisite to the grant of planning permission. The appellant had clearly not foreseen the possibility that the Inspector would decide that the financial contributions were not needed. The Council metaphorically rubbed their hands, and made it clear that they intended to enforce the planning obligation by requiring the payment of the financial contributions which the appellant had covenanted to pay in their unilateral undertaking. It was this decision which the developer sought to challenge by way of an application for judicial review.

The developers relied on several grounds of challenge but all were dismissed, and so they are going to have to look big and pay up. The moral of this sorry tale is that in an appeal in which the appellant disputes the requirement for a planning obligation, or may wish to do so, they should make any unilateral undertaking which is proffered in the course of the appeal conditional not only upon the usual requirement that planning permission should both be granted and implemented but also upon the Inspector’s clearly stating that the planning obligation is required as a prerequisite to the grant of planning permission. In fact, it might be advisable to include such a proviso in any unilateral obligation put forward in an appeal, even if the developer does not dispute the requirement for it.

© MARTIN H GOODALL

3 comments:

  1. Millgate took the case on to the Court of Appeal, where judgment was given on 6 July 2011, but they were unsuccessful in their attempt to overturn the first instance decision.

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  2. Martin,

    I have been reading you blog for some time to understand more about the planning. This particular post has resonated with a scenario that I have recently found myself in having just had an appeal refused (for a rear extension in the green belt) that relied upon a fallback.

    The inspectors concluded it was possible to build my fallback, that it was likely that I would build it, and that the fallback was more harmful than the original application. However, my proposal hinged upon using a planning condition used to secure that I would not building an extant side extension (in addition to the rear extension in the application). The Inspector has rejected the use of a planning condition as not sufficiently robust, but implied that a 'binding obligation' could be suitable.

    It appears that most obligations/undertakings are done as a compromise between developer & LBC and are therefore 'agreed' in advance.

    Is it common for a unilateral undertaking put in place by a householder/developer (without LBC consent) in order to strengthen their application?

    Thanks for your time; and Happy New Year
    Regards, Richard

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  3. In answer to Richard Allen, it appears that the proposed development would be acceptable provided that a legally watertight means can be found of ensuring that PD rights to erect another extension can be precluded. I can see why the Inspector had reservations about a planning condition being used for this purpose, for reasons that were recently discussed in comments on another blog post in this blog. It couldn’t cater for a situation in which the existing PD rights might first be exercised prior to the planning permission being implemented.

    A planning obligation under section 106 might well be a practical way around this problem, although expert legal advice should be taken on its terms, as planning obligations can often prove to be a trap for the unwary. A unilateral deed is perfectly feasible, and is not infrequently utilised in order to strengthen the applicant’s position in putting forward their application. However, as I have just said, such a unilateral deed will need careful drafting in order to give the protection against a ‘double dose’ of development which the inspector wanted to avoid, whilst at the same time avoiding creating an obligation which could prevent an extension under PD even if the planning permission is never implemented. It really does need someone who is thoroughly familiar with section 106 agreements to draft it for you. (So don’t rely on your local conveyancing solicitor to do the job!)

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