Parking permits prohibited by 106 agreements

On 31 March 2016, I reported on the High Court judgment in R (Khodari) v. Kensington and Chelsea RLBC [2015] EWHC 4084, where it was held (following an earlier judgment Westminster City Council v. SSCLG [2013] EWHC 690 (Admin)) that a covenant in a section 106 agreement that purported to prohibit tenants of a residential development from applying to the council for residents’ parking permits was outside the scope of that section, so that matters of this nature cannot be governed or controlled by this means.

Mr and Mrs Khodari were challenging two different planning permissions for alternative redevelopment schemes affecting the block of flats where they live. They succeeded in one case (because of the section 106 point) but failed in the other, where there was no section 106 agreement. Both parties cross-appealed to the Court of Appeal, with the LPA seeking to overturn the quashing of one permission, while Mr and Mrs Khodari sought to reverse the High Court’s refusal to quash the other permission.

In a decision on 11 May ([2017] EWCA Civ 333), the Court of Appeal dismissed Mr and Mrs Khodari’s challenge to the ‘non-section 106’ permission, but the appeal by the LPA [“RBKC”] against the quashing of the permission that had been dependent on the section 106 agreement was allowed, so that this planning permission has also been allowed to stand.

It is the latter appeal that is of real interest in the legal context. The requirements in the 106 that were in contention were (a) a covenant not to apply for parking permits for the three additional residential units authorised by the planning permission, nor knowingly to permit any owner or occupier of the permit free units to do so; and to surrender any permit issued in respect of those units; (b) to notify prospective owners or occupiers of the additional units that they would not be entitled to apply for parking permits and (c) to include a covenant in any lease of the additional units preventing the lessee from applying for a parking permit and entitling RBKC to enforce that obligation as a third party. In addition, there was an obligation to pay a one-off “monitoring fee” of £500 on execution of the agreement.

Lewison LJ (with whom the other two Lord Justices agreed without comment) did not disagree either with the judgment in the Westminster case or with the judgment at first instance in the present case, so far as section 106 itself is concerned, and held that the judge at first instance was right to reject reliance on section 106 to validate the obligations dealing with parking permits. Those obligations were not capable of being planning obligations under this section.

However, the planning agreement in this case had been made not only under section 106 of the 1990 Act, but also under section 111 of the Local Government Act 1972, section 16 of the Greater London Council (General Powers) Act 1974, section 2 of the Local Government Act 2000 “and all other powers so enabling”. Lewison LJ therefore went on to consider section16 of the Greater London Council (General Powers) Act 1974, on which the judge at first instance had not commented (because this section had not been drawn to his attention).

This section provides that :

“(1) Every undertaking given to a local authority by the owner of any legal estate in land and every agreement made between a local authority and any such owner being an undertaking or agreement—

(a) given or made under seal in connection with the land; and

(b) expressed to be given or made in pursuance of this section;

shall be enforceable not only against the owner joining in the undertaking or agreement but also against the successors in title of any owner so joining and any person claiming through or under them.”

In Lewison LJ’s judgment, if the obligations about parking permits fell within section 16 they would be legally valid. The requirement of section 16 is that the agreement must be made “in connection with the land”. Thus it is not a requirement of section 16 that the agreement regulates the use of the land itself. The phrase “in connection with” is one of wide meaning. There was, in his judgment, a “connection” between use of the three additional units for residential purposes and the potential for the grant of additional parking permits, not least because a qualification for a parking permit is residence within the borough. Accordingly, he considered that there was a sufficient connection between the requirements imposed by the deed and the proposed development.

There was, however, also the question of the “monitoring fee”. In this case, the monitoring fee was held to be lawful. Whilst the covenant against applying for parking permits fell outside the scope of section 106, the obligation to pay the monitoring fee, which was ancillary to those obligations, could not survive as a free-standing obligation under section 106. There could be no question of its being enforced against successors in title of the original parties to the deed. In a sense, therefore, section 106 was irrelevant here. However, since section 106(1)(d) expressly authorises an obligation to pay money, the obligation to pay the monitoring fee fell within the literal scope of the section. But because there was no need to enforce it against successors in title to the original parties, its validity depended simply on RBKC’s power to contract for its payment. As the LPA submitted, the original parties to the deed were bound by it as a matter of contract. RBKC’s power to enter into such a contract was validated either by section 111 of the Local Government Act 1972 (“a local authority shall have power to do any thing ……… which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions”) or by section 1(1) of the Localism Act 2011 (“a local authority has power to do anything that individuals generally may do”).

There are several points to be derived from this judgment. The first and most important point is that the validity and enforceability of a planning agreement depends entirely on the powers under which it is made. The agreement in this case was only saved by the fact that it was not solely dependent on section 106, but was also made under section 16 of the Greater London Council (General Powers) Act 1974 (which enabled the prohibition against applying for parking permits to be made) and section 111 of the Local Government Act 1972 (which saved the monitoring charge from being held to be ultra vires).

It is clear from this judgment that, outside Greater London, a covenant cannot be inserted in a planning obligation that seeks to prevent residents from applying for residents’ parking permits, but this can be done within Greater London if (but only if) the agreement is also made under section 16 of the Greater London Council (General Powers) Act 1974.

Secondly, a monitoring charge or other charges (including liability to pay the council’s costs of preparing the agreement) can be included in the agreement, subject to Regulation 122 of the Community Infrastructure Regulations 2010 not being infringed; but reliance would have to be placed on other legislation, such as section 111 of the 1972 Act or perhaps section 1(1) of the Localism Act 2011, and the agreement should be expressed to be made under one or other of these sections.

Counsel for RKBC told the Court of Appeal that this leaves local authorities outside Greater London without the ability to permit the creation of new residential units on terms that no residents’ parking permits will be issued in relation to those units. Leaving aside the possibility that such powers might perhaps exist under other statutes in some cases, Lewison LJ observed in his judgment that in R (AS Property Investments Ltd) v Hounslow LBC [2008] EWHC 1631 (Admin), where a developer was unwilling to enter into a planning obligation preventing the grant of parking permits to residents of new flats, the solution was found by the exclusion of each new flat from the schedule of streets in the statutory instrument that created the Controlled Parking Zone. That alone would preclude the residents, not being within the CPZ, from applying for parking permits within the CPZ. Sullivan J upheld that solution.

© MARTIN H GOODALL