Section 106 Obligations – when are they caught?

1. Section 106 Obligations –when are they caught? Robert Palmer Barrister

2. 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

3. Anatomy of a section 106 planning obligation • The obligation may: • restrict the development or use of land in any specified way; • require specified operations or activities to be carried out in, on, under or over the land; • require the land to be used in a specified way; or • require a sum or sums to be paid to the authority.

4. 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

5. 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”

6. 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?

7. 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”?

8. 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?

9. 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

10. A safe haven • Financial contributions • Compare also section 278 agreements

11. Thank You For more information rpalmer@monckton.com www.monckton.com