Judge rejects call by developer for summary judgment in dispute over s106 agreement and second planning permission

A High Court judge has rejected a developer’s application for summary judgment of its claim for a declaration that residential development of land in Holt, Norfolk was not bound by obligations contained in a section 106 agreement.

North Norfolk District Council, the local planning authority, had resisted the application.

In Norfolk Homes Ltd v North Norfolk District Council & Anor (Rev 1) [2020] EWHC 504 North Norfolk had, on 26 June 2012, granted outline planning permission for 85 dwellings on land off Cley Road and Woodfield Road, Holt ("outline planning permission").

A few days earlier on 22 June 2012, the then owner of the development site and the council entered into a section 106 Agreement providing for an affordable housing scheme and financial contributions to a local recreation ground; car parking; community centre and nature conservation.

In 2013, by a decision notice dated 19 September 2013, conditions 3 and 7 of the outline planning permission were varied to allow 15 dwellings to be served from vehicular access off Cley Road instead of the 12 previously allowed.

In 2015, by a decision notice issued on 2 September 2015, conditions 19 (rating for sustainable homes) and 20 (green energy) of the outline planning permission were replaced to reflect policy developments. The reference number was PF/15/0074. The permission was granted pursuant to section 73 TCPA.

By a decision notice dated 19 August 2016 the council approved the reserved matters. Reference was made in the notes to applicants to the outline planning permission. The application site was said to be subject to a section 106 agreement.

Planning consultants for Norfolk Homes made payments under the section 106 Agreement on the 15 December 2016; 24 January 2017 and 17 February 2017 although the parties disputed the significance of the payments.

On behalf of Norfolk Homes it was contended that the payments were made without prejudice and were legally irrelevant to the claim. On behalf of the council they were said to be consistent with the council's understanding that the section 106 agreement continued to apply to the varied permissions.

By a decision notice dated 30 May 2018 the council gave notice that the information supplied on behalf of Norfolk Homes had satisfactorily discharged various pre commencement conditions.

It was common ground that Norfolk Homes commenced development under the second section 73 planning permission and the development began within the statutory time limit through the excavation and laying of foundations to one of the dwellings.

On 15 August 2019, representatives of Norfolk Homes wrote to the council seeking confirmation that the development was not bound by the terms of any planning obligation and requiring the council remove reference to the s106 agreement from the Land Charges Register.

By a decision dated 23 August 2019 the council refused a certificate of lawfulness for implementation of planning application ref PF/15/0774 without triggering the requirements of the s106 agreement dated 22 June 2012 stating:

"The Council is satisfied on the balance of probabilities the planning permission which Norfolk Homes has implemented (ref PF/15/0774) a variation granted under s73 TCPA on 2 Sep 2015 cannot lawfully be implemented without triggering the obligations imposed by a section 106 agreement made in connection with the original planning permission (PO/11/0978) granted on 26 June 2012."

On 3 October 2019 Norfolk Homes issued a Part 8 claim form seeking a declaration that the development was not bound by any of the obligations contained in the section 106 agreement and an order requiring the council to remove reference to the section 106 agreement from the Land Charges register.

Before Mrs Justice Thornton, counsel for Norfolk Homes submitted that the claim raised a short point of law about the construction of the section 106 agreement which, in his words, was as 'plain as a pikestaff'. He said the obligations in the section 106 agreement were expressly tied to the implementation of the outline planning permission, as was readily apparent from the definitions of Application, Development and Planning Permission. The development was being implemented under the separate and independent planning permission (PF/15/0774), as to which the parties chose not to include the increasingly standard clause to the effect that the s106 obligations were to remain binding.

On behalf of North Norfolk, it was submitted that the claim raised a cogent and novel point of law which was not apt for summary judgment. It was said that the Supreme Court decision in Lambeth v Secretary of State for Housing Community and Local Government [2019] 1 WLR 4317 made clear that a planning document, which included a section 106 agreement, must be interpreted according to the natural and ordinary meaning of the words in their surrounding context, which includes the planning context. Accordingly, the section 106 agreement was to be construed as applying to the outline planning permission as varied. Failing that, these words were to be implied.

It was argued that the available evidence, namely the council's approval of reserved matters and the payments made under the section 106 agreement, was consistent with the council's understanding that the s106 agreement continued to apply to the varied planning permissions.

Rejecting Norfolk Homes’ application, Mrs Justice Thornton said she was not persuaded that the claim gave rise to a short point of law.

The judge said that some, but not all, of the issues that arose from the claim seemed to me to be as follows:

a. To what extent are the legal principles for interpreting a section 106 agreement the same as those for interpreting any other planning document?

b. Should the section 106 agreement be construed in accordance with its ordinary and natural meaning; the statutory and planning context (including the subsequent section 73 permissions) (Lambeth paragraph 19) or should it be construed according to the principles of contractual interpretation set out in Arnold v Brittan (in particular principle iv) that the contract should be construed according to the facts and circumstances at the time of the contract)?

c. To what extent is the case of Lambeth v Secretary of State relevant to the present case?

d. Can the council be said to have fallen into a 'technical trap' of the sort envisaged by Court in Lambeth v Secretary of State? To what extent, if at all, should the Courts intervene to protect the council from any 'technical trap'?

e. Can the case of Lambeth be said to establish the principle that developers should not be able to evade obligations by relying on technical traps.

f. The legal relevance, if any, of the payments made under the section 106 agreement in 2016/2017.

g. The legal relevance, if any, of the implications of the developer's case being inconsistent with a key planning priority for the council (the provision of affordable housing).

Mrs Justice Thornton said she was not persuaded that the council had no real prospect of successfully defending the claim given the wording of the relevant s73 permission and wider planning context and given the absence of authority directly on point in relation to some of the issues raised.

She declined a request from Norfolk Homes’ QC urging her to grasp the nettle and determine the claim given there was no evidential complexity and the parties had had an adequate opportunity to address the legal points raised. The judge said the nature of the application meant there was insufficient opportunity to consider the above-mentioned issues.