Section 106 Obligations –when are they caught?

Robert PalmerBarrister

Anatomy of a section 106 planning obligation

• Agreement or unilateral undertaking• Entered into by deed• Enforceable by injunction• Against the person entering into the

obligation or anyone deriving title• Local land charge• May be conditional or unconditional• May be indefinite or limited in duration

Anatomy of a section 106 planning obligation

• The obligation may:

(a) restrict the development or use of land in any specified way;

(b) require specified operations or activities to be carried out in, on, under or over the land;

(c) require the land to be used in a specified way; or

(d) require a sum or sums to be paid to the authority.

Section 106 and the planning balance

• Section 38(6) Planning and Compulsory Purchase Act 2004

• Role of section 106 obligation as a material consideration in the planning balance

• Can be used to make development accord with development plan

• Can be used to outweigh conflict with the development plan

Section 106 and the planning balance

• Law v policy• Tesco Stores - materiality• ODPM Circular 05/2005: must be

Relevant to planning; Necessary to make the proposed development

acceptable in planning terms; Directly related to the proposed development; Fairly and reasonably related in scale and kind

to the proposed development; and Reasonable in all other respects.

• Designed to ensure planning permission not “for sale”

A public works contract?

• Capable of amounting to a contract concluded in writing?

• Capable of being for a work corresponding to the requirements specified by the contracting authority?

• For pecuniary interest?

Nature of obligations in a section 106 agreement

• Wide range of types of obligation in a section 106 agreement Quality control Affordable housing Integral parts of a development scheme

• Extent of specification• Contrast development brief/planning

policy• Flensburg “urban development needs”?

A contract for pecuniary interest/consideration?

• Taken in isolation, may not be: gratuitous benefit not normally amount to a pecuniary advantage

conferred by the authority exercise of [permissive] public law function

• The contrary view: parallel with La Scala• Contrast:

waiver of a charge for provision of building grant of planning permission for the benefit

accruing to the authority through a s.106

• Is planning authority trading down or up? Provision of economic gain for developer?

A contract for pecuniary interest/consideration?

• But over-recovery by planning authority – has authority procured the additional element? Where is line drawn?

• More complex scenarios: development agreements

• One mechanism for delivering part of a wider set of arrangements falling within procurement regime

• No artificial separation of individual components

A safe haven

• Financial contributions Compare also section 278

agreements

Thank You

For more information

rpalmer@monckton.comwww.monckton.com