Impact of Supreme Court decision in Miller case on s.106 planning agreements

A ‘planning obligation’ may be made with a local planning authority (‘LPA’) or offered as a unilateral undertaking by a developer as an incident to the grant of planning permission, Town and County Planning Act 1990, s.106.

Any ‘planning obligation’ must be for a ‘planning purpose’, and can be challenged at a public enquiry. A public inspector can then determine whether or not any restriction or regulation of the development or use of land is ‘Wednesbury unreasonable’, e.g. because it is ‘nebulous’.

Each planning obligation contained in a s.106 agreement must serve a specific purpose related to the site and cannot be used for an ulterior purpose, such as to build more schools in order to accommodate the consequential increase in population arising from the development because that would be unlawful.

Therefore, prior to execution of any s.106 agreement, an adjoining owner of land has the standing to invite the LPA to provide:

·      a copy of the terms of each planning obligation contained in the proposed agreement; and

·       a record of the reasons for each contemplated planning obligation.

In Miller, R (on the application of) v The Prime Minister [2019] UKSC 41 (24 September 2019), Lady Hale and Lord Reed giving the unanimous judgment of the Supreme Court stated at paragraph 61,

‘It is impossible for us to conclude, on the evidence which has been put before us, that there was any reasonlet alone a good reason – to advise Her Majesty to prorogue Parliament for five weeks, from 9th or 12th September until 14th October. We cannot speculate, in the absence of further evidence, upon what such reasons might have been. It follows that the decision was unlawful.

In default of disclosure, it may therefore be argued that each and every planning obligation contained in a s.106 planning agreement executed before adequate reasons have been provided, is prima facie unlawful and void.

Furthermore, unless the LPA confirm that any social landlord will be a signatory (i.e. in order to comply with the Law Of Property (Miscellaneous Provisions) Act 1989, s.2), then any s.106 agreement that contains an obligation to transfer land to a social landlord, e.g. a housing association, is technically invalid, and thus unlawful and void.

I refer to the legal principles decided in the following cases:

·      Good Energy Ltd v Secretary of State [2018] EWHC Civ 2102;

·      Aberdeen City and Shire Strategic Development Planning Authority v Elsick Development Co Ltd [2017] UKSC 66;

·      R (Thakenham Village Action Ltd) v Horsham District Council [2014] JPL 772;

·      R (Derwent Holdings Ltd) v Trafford Borough Council [2011] All ER (D) 216;

·      R (Sainsbury’s Supermarkets Ltd) v Wolverhampton City Council [2010] UKSC 20; and

·      Jelson Ltd v Derby City Council [2000] JPL 2013; and

·      Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759 (the ‘governing principles’).

Applying the governing principles, unless the LPA also provide a statement (which may be relied upon as evidence at a public enquiry) specifying:

·      why it is not possible to address any unacceptable impact through a planning ‘condition’ instead of an ‘obligation’ (NPPF, paragraph 203);

·      why each obligation is necessary to make the application acceptable in planning terms (see Jelson);

·      how each obligation is directly related to the development (see Derwent Holdings); and

·      how each obligation is ‘fairly’ and ‘reasonably’ related in ‘scale’ and kind’ to the development,

then it is axiomatic that no clear and adequate reasons have been provided to demonstrate fulfilment of each of the four legal tests enumerated above (the ‘legal tests’).

Therefore, because the legal tests have not been satisfied, any s.106 agreement that is signed before clear and adequate ‘reasons’ are provided is null and void. That is because in a vacuum, no planning obligation can constitute a valid reason for granting planning permission.

Hence, if the LPA elect to be silent, then the public inspector, as a matter of public law, may draw adverse and negative inferences from the failure of the LPA to provide clear and adequate reasons. On that basis alone, it is submitted that the inspector may conclude that in breach of statutory duty, planning permission was unlawful. Paragraph 7-115 of De Smith’s Judicial Review, Eighth Edition, (2018) states that [u]sually, the remedy given in a case of breach of duty to give reasons or adequate reasons is an order quashing the unreasoned decision.’ (Flannery v Halifax Estate Agencies Ltd (T/A Colley’s Professional Services) [2000] 1 WLR 377).

Consequently, following the decision of the Supreme Court in Miller, any vendor of agricultural land, such as a registered Charity, who refuses to provide information about the reasons relied upon in support of a s.106 agreement, and any LPA, who acts in concert in withholding any reasons from local tax-payers, is likely to face a test case in the Supreme Court if they challenge either:

(i)     the jurisdiction of a public inspector to make a finding about whether planning permission for a development linked to a s.106 agreement was lawful; or

(ii)    any finding that it was unlawful, which results in judicial review, and an appeal to the Supreme Court.

It is submitted that following Miller there is a clear evidentiary presumption that where a vendor and/or the LPA remain silent, and refuse to disclose ‘reasons’ either ‘adequately’, or ‘at all’, that the decision about planning permission is prima facie void, unless and until the LPA demonstrate otherwise by satisfying the legal tests set out above, which is impossible if a s.106 agreement has been signed before adequate reasons have been stated.

This is likely to result in a boom in judicial review applications if the Government has made an irrational decision about whether or not the underlying economic rationale for a planning obligation, i.e. based upon need is lawful where it is based upon a demonstrable statistical error. For example where a LPA rely upon a projection about population growth that indicates growth when accurate and up to date data demonstrates that growth is falling (which is a matter of expert evidence and opinion).

Therefore any: (i) vendor (including e.g. a UK registered charity), (ii) purchaser/developer, and (iii) LPA, who does not provide ‘reasons’, is likely to face litigation if they are involved in a land transaction that is contingent or dependent upon any planning obligation contained in a s.106 agreement being lawful.

Because trustees are fiduciaries this may also result in civil litigation in the Chancery Division in parallel with proceedings brought in the administrative court, brought by litigants who have the standing to allege breach of fiduciary duty. That will engage disclosure remedies that are not available in the administrative court, including ‘train of enquiry’ applications under PD 51 U Disclosure Model E and imaginative applications for a Norwich Pharmacal order, which the author has been researching since May in connection with his forthcoming book about trust litigation.