Planning & Local Government
Issues for Wales 2009
PLANNING OBLIGATIONS:
Practical Enforcement in a Falling
Market
Michael Bedford
THE STATUTORY FRAMEWORK
1

Under s.106 of the Town & Country Planning Act 1990 (as
amended by the Planning & Compensation Act 1991) a Planning
Obligation is a deed which imposes positive requirements and/or
negative restrictions on persons interested in land (see s. 106(1)).

Those requirements can include the payment of money to the
local planning authority: s.106(1)(d).

The Planning Obligation binds the land and is enforceable by
one or more identified enforcing local planning authorities (see
s.106(3) and s.106(9)).
THE STATUTORY FRAMEWORK
2

The deed may be a bilateral agreement or a unilateral
obligation (see s.106(1)).

The deed may contain its own provisions for variation
but otherwise binds the land until it is discharged by
performance, varied by subsequent agreement, or
varied by statutory modification or discharge under
s.106A and s.106B TCPA 1990.
THE STATUTORY FRAMEWORK
3
S.106A(1) TCPA 1990 provides:
“A planning obligation may not be modified or discharged except(a) by agreement between the authority by whom the obligation is
enforceable and the person or persons against whom the
obligation is enforceable; or
(b) in accordance with this section and s.106B.”
S106A(3) provides:
“A person against whom a planning obligation is enforceable may, at any time
after the expiry of the relevant period, apply to the local planning authority
by whom the obligation is enforceable for the obligation(a) to have effect subject to such modifications as may be specified in the
application; or
(b) to be discharged.”
THE STATUTORY FRAMEWORK
4

S106A(4) sets out the “relevant period” as currently 5 years from the date that the
obligation was entered into.

S.106A(6) provides:
“Where an application is made to an authority under subsection (3), the authority
may determine(a) that the planning obligation shall continue to have effect without
modification;
(b) if the obligation no longer serves a useful purpose, that it shall be
discharged; or
(c) if the obligation continues to serve a useful purpose, but would serve that
purpose equally well if it had effect subject to the modifications specified in
the application, that it shall have effect subject to those modifications.”

S.106A(10) provides that s.84 of the LPA 1925 (Lands Tribunal power to modify etc
restrictive covenants) shall no longer apply to planning obligations.
THE STATUTORY FRAMEWORK
5

S.106B sets out a right of appeal to the Assembly.
 An appeal can be made if the application is not
determined in time (8 weeks unless extended by
agreement) or if the authority refuse to modify the
obligation (see s106B(1)).
 In dealing with the appeal the Assembly is subject to
the same requirements as set out in s.106A(6):
s.106B(4).
THE STATUTORY FRAMEWORK
6



Thus the Assembly can only discharge the obligation if satisfied
it “no longer serves a useful purpose” or modify it as sought by
the applicant if it still serves a useful purpose but will do so
“equally well” in modified form, or leave the obligation
unchanged.
The expression “no longer serves a useful purpose” should be
understood in land use planning terms (WO Circular 13/97
Annex C, para C6). Thus the fact that an obligation may serve a
non-planning purpose which is of benefit to the local authority is
not a good reason for its retention.
The Assembly’s decision is final (subject to the usual grounds of
a legal challenge on a point of law).
STATUTORY MODIFICATIONS 1



Applications under s.106A(3) cannot be made until 5 years after
the date of the obligation. Any relevant planning permission will
usually be granted on the same date.
Whilst some 5 year old planning permissions may be part way
through implementation (e.g. on larger sites) most residential
schemes will have been built out or will have lapsed before the
option of a statutory modification under s.106A(3) becomes
available.
Where the option does apply it should be noted that the LPA
cannot unilaterally impose different modifications to those
sought by the applicant: R(Garden & Leisure Group) v North
Somerset Council [2003] EWHC 1605 (Admin).
STATUTORY MODIFICATIONS 2


Also, the limitations in s.106A(6) on the conditions for an
obligation to be modified or discharged mean that a statutory
modification is not available where the LPA considers that the
planning obligation still serves “a useful purpose” (e.g. secures
an important planning benefit) and would not do so “equally
well” if it was watered down (e.g. if the size of a contribution
was reduced or if the time for payment was delayed).
Thus the statutory modification route is unlikely to be much used
by developers seeking relief from current planning obligations
prior to building out their development proposals.
NON-STATUTORY
MODIFICATIONS 1

Non-statutory modifications are permitted by
s.106A(1)(a), provided that there is agreement
between all relevant parties.
 The Assembly prefers variation of obligations to
be by agreement rather than formal application
etc (WO C.13/97 Annex C, para C1).
NON-STATUTORY
MODIFICATIONS 2

There are no statutory restrictions to limit what can be
agreed (provided that if there is variation rather than
discharge, the varied obligation still satisfies the
requirements for a planning obligation and in either
case the agreement itself is made by deed: s.106A(2)).
 Thus a developer can seek relief from a planning
obligation at any stage after it has been entered into but
will only be successful if the enforcing planning
authority(ies) agrees.
NON-STATUTORY
MODIFICATIONS 3

R (Batchelor Enterprises Ltd ) v North Dorset District Council [2003]
EWHC 3006 (Admin) provides guidance on the exercise of the power in
s.106A(1)(a).

There is no minimum time period before a variation or discharge can be
proposed or agreed and the LPA has a discretion to consider a request or an
application that it should agree to a modification of an obligation
notwithstanding the fact that the five-year period has not elapsed

This discretion is not unfettered. It must be exercised to further the aims of
the statutory scheme, that is to say for planning purposes.

Also if the obligation was recently entered into the LPA would need to
consider the effect of variation or discharge on third parties, who may have
framed their representations with respect to the associated planning
application on the basis of the planning obligation.
NON-STATUTORY
MODIFICATIONS 4

It would be unreasonable for a local planning
authority to refuse even to consider a request
made under section 106A(1)(a) simply because
it had been made within the five-year period.
 The question to be considered by the local
planning authority is whether, looking at all the
planning circumstances, there is a justified case
for variation or discharge of the obligation.
 Any decision is susceptible to JR.
THE TYPICAL CASE FOR
MODIFICATION 1

The delivery of housing is a national priority in PPW.
 The LPA is obliged to demonstrate a minimum 5 year
continuous supply of deliverable land for housing (see
para 9.2.3 of PPW, as substituted by MIPPS 01/2006).
 Failure to do so can lead to the release of additional
sites, potentially in areas where the LPA would not
normally wish to see development.
 Monitoring shows that completions are down and sites
with permission are not coming forward.
THE TYPICAL CASE FOR
MODIFICATION 2



Market conditions have changed fundamentally in the last 18
months, with sales prices plummeting and development sites
losing much of their value.
The developer’s site has planning permission and could come
forward but for the burden of the s.106 obligation which makes
the development unviable in current and foreseeable market
conditions.
If the planning obligation is not modified the site will not be
developed in the foreseeable future, the 5 year supply will be in
jeopardy, and other less suitable sites are likely to be released.
THE LPA RESPONSE 1




Clearly the strength or vulnerability of the LPA’s 5 year supply
will be an important consideration.
So too will the nature of the modifications sought.
Adjusting the timing of the payment of contributions may ease
the developer’s cashflow without materially undermining the
delivery of the agreed planning benefits.
Reducing the level of contributions (either across the board or in
particular areas) will need a much greater justification because
the necessary implication is that some degree of planning benefit
will be permanently foregone.
THE LPA RESPONSE 2



Changes to the agreed provision of affordable housing will require particular
scrutiny. The amount and nature (e.g. the split between social rented and
intermediate) of the affordable housing have a close connection with the
viability of a development and so may be an obvious target for a developer
looking to revise the planning obligation. Also, unlike many obligations,
affordable housing is not directly mitigating against an impact of the
development (unlike e.g. an open space payment or an education
contribution). Thus it might be argued that the development will still
satisfactorily mitigate its own impacts, even with reduced affordable housing.
However, given the scale of need in most LPA areas, and the limited options
for non-private sector provision, LPAs will be reluctant to agree changes to
affordable housing without the most compelling case being made.
The LPA will also need to bear in mind the implications for negotiations on
planning obligations in relation to current planning applications.
THE LPA RESPONSE 3
If the LPA is prepared, at least “in principle”, to consider a
modification, what action should be taken?
 Ensure you have a good understanding of the Planning
Obligation as it stands. What exactly is the LPA entitled to and
when?
 If the Planning Obligation is performed as it stands, is the LPA
actually ready to use the contributions in the near future on
identified off-site improvements?
 Identify what is important to the LPA in the proposed
development (is it the housing numbers, is it as a solution to a
difficult site, or is it a particular environmental improvement
delivered by the development?).

THE LPA RESPONSE 4

Unless you have the necessary in-house expertise, ask the
developer to fund an independent appraisal of the viability of the
development, reporting to the LPA. The developer should be
asked to disclose its figures on an “open book” basis.
 Consider whether the development can be made viable simply by
deferring the times for payment rather than by reducing them.
 Consider the options for a “clawback” clause if the development
economics improve in future before the development is fully
built out.
 Consider whether any modification should be made conditional
on actual delivery of the development or phased elements of it.
ENFORCEMENT 1
There are three routes to enforcement:

Statutory
 Land charge – section 106(12) – to recover sums
of money – but no regulations made yet.
 Contractual
ENFORCEMENT 2
Statutory remedies are twofold:
 (i) Injunction (to enforce restriction or requirement) –
s.106(5).

(ii) Self-help & recovery of costs in respect of a failure
to carry out operations – s.106(6). By ss (7) - 21 days
notice is required to be given to any person against
whom the planning obligation is enforceable. This
overcomes the need to obtain a mandatory injunction.
See cases under s.178 TCPA 1990
INJUNCTION 1

Letter before action.
 Choice of Court.
 Emergency – interim justifiable? See CPR 25.
INJUNCTION 2




London Borough of Tower Hamlets v. Stanton Rubber & Plastics Ltd.
[1990] JPL 512
If there is no doubt that the defendant is in breach of a covenant in a planning
agreement, it is arguably irrelevant at the stage of granting an interim
injunction, that there will be serious financial implications for the defendants
if an injunction is made.
The Stanton Rubber case related to an old s.52 agreement, and the question
of whether a developer should be prevented by injunction from continuing a
clear breach of the agreement pending the outcome of an appeal to vary the
conditions of the related planning permission. The CA held that the prospects
of success of the appeal and the financial implications for the developer of
upholding the agreement were irrelevant to the merits of an interim injunction.
However, if a developer could show that he simply did not have the financial
means to comply with a planning obligation (as opposed to simply showing
that compliance would result in him incurring a loss), then it is unlikely that
the Court would order performance of the obligation.
CONTRACTUAL CLAIMS

Patel (Arvindkumar Purshottam) & 6 Ors v Mayor & Burgesses of the
London Borough of Brent [2004] EWHC 763 (Ch)
Hart J, upheld by CA [2005] EWCA Civ 644.

Developer obtained damages in a civil claim from Council for delayed
building of highway, after the Council had accepted s.106 monies from the
developer for that purpose.

Potentially the LPA may bring a civil claim against the developer where the
developer is in breach but if specific performance is required, a statutory
claim for a mandatory injunction would provide a more obvious remedy.

Given that planning obligations are concerned with the delivery of planning
benefits or with the imposition of planning restrictions, it is difficult to see
much if any scope for the LPA to claim damages consequent upon a breach
because the LPA will not normally have suffered any loss.
CONCLUSION 1

No one involved in the development process is
immune to the present economic downturn.
 Planning obligations that simply sit on the shelf
whilst their associated planning permissions
languish and then lapse add no value to anyone.
 If delivery of particular developments is
important, LPAs need to be prepared to
contemplate revisiting the scale of agreed
planning obligations.
CONCLUSION 2



LPAs need to insist on rigorous testing of any claim that the
development can no longer afford agreed benefits.
But if that case is made, LPAs do have the freedom to agree to
modifications and to insist on safeguards which best protect the
public interest.
A variety of enforcement options exist if developer is refusing to
co-operate/comply with its obligations.
This paper draws on a paper presented by James Findlay QC to a
Planning Update Seminar in February 2009 and his work in that
paper is gratefully acknowledged.
© Michael Bedford