UKHL 22
ON 11 MAY 1995
LORD KEITH OF KINKEL
"a question of unusual public importance bearing on the conditions which can be imposed, and the obligations which can be accepted, on the grant of planning permission and the point at which the imposition of conditions, and the acceptance of obligations, overlaps into the buying and selling of planning permission, which are always agreed to be unacceptable."
"7.2 ... It is clear that a new foodstore would result in additional traffic on the local road network, and Bridge Street in particular. However, whilst a store would generate more traffic at peak times, particularly the Friday evening and Saturday morning peaks, even the worst estimates indicate the increase in traffic at Bridge Street would be well below 10% over and above that which would be generated by Bl office development, for which planning permission exists. ..."
"7.4 . . . In this case there is some relationship between the funding of the WEL and a proposed store in that a store would slightly worsen traffic conditions in the town over and above the existing planning permission. The relationship is however tenuous. Any superstore site would be a considerable distance from the WEL and Bridge Street and the development proposed would not generate a great deal more traffic than the other permitted uses of the sites. ..."
"7.5 . . . In the case of Witney, the WEL is necessary to ameliorate existing traffic conditions and to assist in bringing forward the development of Policy Areas 1-3, I take the view therefore that the full funding of the road is not fairly and reasonably related in scale to this proposed development. ..."
"7.6 However, no such requirement is being made by the Council. The Proposed Modifications of the Local Plan Alterations provide an upper case policy relating to the provision of the WEL and a lower case statement to the effect that it will be the Council's intention to negotiate funding or a major contribution to funding the WEL. The Local Plan Inspector also stated that the superstore may contribute 'all or most' of this funding. If the Council negotiations result in the offer of a full contribution to the cost of the WEL from the developer of a site preferred by the Council following a lengthy Local Plan inquiry, then it would be perverse to turn away the offer. The Council therefore finds itself in the somewhat surprising but felicitous position of the first major developer since the Local Plan inquiry responding to the Council's offer to negotiate on WEL funding by a full funding proposal. This seems to me to be a perfectly proper outcome of negotiations provided that the agreement entered into is sufficiently robust to achieve the benefits promised."
"(1) Where an application is made to a local planning authority for planning permission:
(a) subject to sections 91 and 92, they may grant planning permission, either unconditionally or subject to such conditions as they think fit, or
(b) they may refuse planning permission.
(2) In dealing with such an application the authority shall have regard to the provisions of the development plan, so far as material to the application, and to any other material considerations. ..."
"(1) Any person interested in land in the area of a local planning authority may, by agreement or otherwise, enter into an obligation (referred to in this section and sections 106A and 106B as 'a planning obligation'), enforceable to the extent mentioned in subsection (3) -
(a) restricting the development or use of the land in any specified way;
(b) requiring specified operations or activities to be carried out in, on, under or over the land;
(c) requiring the land to be used in any specified way; or
(d) requiring a sum or sums to be paid to the authority on a specified date or dates or periodically.
"(2) A planning obligation may -
(a) be unconditional or subject to conditions;
(b) impose any restriction or requirement mentioned in subsection (l)(a) to (c) either indefinitely or for such period or periods as may be specified; and
(c) if it requires a sum or sums to be paid, require the payment of a specified amount or an amount determined in accordance with the instrument by which the obligation is entered into and, if it requires the payment of periodical sums, require them to be paid indefinitely or for a specified period.
"(3) Subject to subsection (4) a planning obligation is enforceable by the authority identified in accordance with subsection (9)(d) -
(a) against the person entering into the obligation; and
(b) against any person deriving title from that person."
"B5. The following paragraphs set out the circumstances in which certain types of benefit can reasonably be sought in connection with a grant of planning permission. They are the circumstances to which the Secretary of State and his inspectors will have regard in determining applications or appeals. They may be briefly stated as those circumstances where the benefit sought is related to the development and necessary to the grant of permission. Local planning authorities should ensure that the presence or absence of extraneous inducements or benefits does not influence their decision on the planning application. Authorities should bear in mind that their decision may be challenged in the courts if it is suspected of having been improperly influenced.
"B6. Planning applications should be considered on their merits and determined in accordance with the provisions of the development plan unless material considerations indicate otherwise. It may be reasonable, depending on the circumstances, either to impose conditions on the grant of planning permission, or (where the planning objection to a development proposal cannot be overcome by means of a condition) to seek to enter into a planning obligation by agreement with the applicant which would be associated with any permission granted. If there is a choice between imposing conditions and entering into a planning obligation, the imposition of a condition is preferable because it enables a developer to appeal to the Secretary of State. The terms of conditions imposed on a planning permission should not be re-stated in a planning obligation, because that would entail nugatory duplication and frustrate a developer's right of appeal.
"B7. As with conditions (see DoE Circular 1/85, Welsh Office Circular 1/85), planning obligations should only be sought where they are necessary to the granting of permission, relevant to planning, and relevant to the development to be permitted. Unacceptable development should never be permitted because of unrelated benefits offered by the applicant, nor should an acceptable development be refused permission simply because the applicant is unable or unwilling to offer such unrelated benefits.
"B8. The test of the reasonableness of seeking a planning obligation from an applicant for planning permission depends on whether what is required:
(1) is needed to enable the development to go ahead, for example the provision of adequate access or car parking; or
(2) in the case of financial payment, will contribute to meeting the cost of providing such facilities in the near future; or
(3) is otherwise so directly related to the proposed development and to the use of the land after its completion, that the development ought not to be permitted without it, e.g. the provision, whether by the applicant or by the authority at the applicant's expense of car parking in or near the development of reasonable amounts of open space related to the development, or of social, educational, recreational, sporting or other community provision the need for which arises from the development; or
(4) is designed in the case of mixed development to secure an acceptable balance of uses; or to secure the implementation of local plan policies for a particular area, or type of development (e.g. the inclusion of an element of affordable housing in a larger residential development) or
(5) is intended to offset the loss of or impact on any amenity or resource present on the site prior to development, for example in the interests of nature conservation. The Department welcomes the initiatives taken by some developers in creating nature reserves, planting tress, establishing wildlife ponds and providing other nature conservation benefits. This echoes the Government's view in 'This Common Inheritance' (Cmnd. 1200) that local authorities and developers should work together in the interest of preserving the natural environment. Planning obligations can therefore relate to land, roads or buildings other than those covered by the planning permission, provided that there is a direct relationship between the two. But they should not be sought where this connection does not exist or is too remote to be considered reasonable.
"B9. If what is required passes one of the test set out in the preceding paragraph, a further test has to be applied. This is whether the extent of what is required is fairly and reasonably related in scale and kind to the proposed development. Thus a developer may reasonably be expected to pay for or contribute to the cost of infrastructure which would not have been necessary but for his development, but his payments should be directly related in scale to the benefit which the proposed development will derive from the facilities to be provided. So, for example, a developer may reach agreement with an infrastructure undertaker to bring forward in time a project which is already programmed but is some years from implementation."
Paragraph B12, under the heading "Unilateral Obligations" stated:
"The use of unilateral undertakings is expected to be principally at appeal, where there are planning objections which only a planning obligation can resolve, but the parties cannot reach agreement. Where a developer offers an undertaking at appeal, it will be referred to the local planning authority to seek their views. Such an undertaking should be in accordance with the general policy in this guidance. It should be relevant to planning and should resolve the planning objections to the development proposal concerned. Otherwise it would not be a material consideration and will not be taken into account. If the undertaking would resolve an identified planning objection to a development proposal but also contains unrelated benefits, it should only be taken into account to the extent that it resolves the objection. Developers should not promise to do what they cannot perform. Attention is drawn to the statutory requirement that a developer must have an interest in the land before he can enter into a planning obligation. At appeal the Inspector may seek evidence of title if it has not been demonstrated that the developer has the requisite interest. Where a trunk road is involved the developer will also need the agreement of the relevant highway authorities and any necessary highway orders."
"7. Turning, therefore to the first main issue, the WEL, the Secretary to State accepts that a new foodstore on any of the three sites would result in additional traffic on the local road network, but he observes that such an increase would be less than 10% in excess of that which would have been generated by the permitted Bl development on the Mount Mills and Henry Box sites. He agrees with the Inspector that this slight worsening of traffic conditions produces some relationship between the funding of WEL and a proposed store, but shares her view that the relationship is tenuous, given the distance of these sites from WEL and the amount of traffic likely to be generated compared to the potential from uses already permitted. Looking at the offer of funding made by Tesco in relation to the tests of reasonableness set out in paragraph B8 of Annex B to Circular 16/91, the Secretary of State does not consider that WEL is needed to enable any of the superstore proposals to go ahead, or is otherwise so directly related to any of the proposed developments and to the use of the land after completion that any of the developments ought not to be permitted without it. He appreciates that provision for the road is made in the Local Plan which is nearing adoption, and that it is the County Council's intention to seek funding or a major contribution. However, having regard to paragraph B9 of the Annex to the Circular, and bearing in mind also that no contributions towards highway improvements were sought when planning permission was granted in 1991 for Bl development on two of the sites, he agrees with the Inspector that the full funding of WEL is not fairly and reasonably related in scale to any of the proposed developments. As to whether it would be appropriate to seek a major contribution from developers before allowing any superstore proposal, he takes the view, given the anticipated traffic levels and the distance between the sites and the route of WEL, that it would be unreasonable to seek even a partial contribution from developers towards the cost of the work in connection with the proposals currently before him. He notes the Inspector's conclusion that it would be 'perverse' to turn away an offer from a developer of a site preferred by the Council after a lengthy Local Plan inquiry but, for the reasons given in paragraphs 5 and 6 above, he thinks that the expressed preference can carry only limited weight. Accordingly, in his view, since the offer of funding fails the tests of Annex B of Circular 16/91, it cannot be treated either as a reason for granting planning permission to Tesco or for dismissing either of the two section 78 appeals.
"8. If the Secretary of State is wrong in his conclusion that it would be unreasonable to seek even a partial contribution towards the funding of WEL, then it would be the case that he would be required to take into account Tesco's offer of funding, albeit not fully but only to the extent of such partial contribution as he considered was reasonable. For the same reasons that led him to his conclusion that not even the seeking of a partial contribution would be reasonable, he considers that the extent to which the funding should be taken into account (assuming, for the purposes of argument, that it has to be taken into account at all) will be of such a limited nature that, even upon taking the benefit into account, the balance of the arguments would not be tipped so as to change his decision."
"It follows that the conditions imposed must be for a planning purpose and not for any ulterior one, and that they must fairly and reasonably relate to the development permitted. Also they must not be so unreasonable that no reasonable planning authority could have imposed them."
The other members of the House spoke to similar effect.
"The fact that the principle of necessity is applied as policy by the Secretary of State does not make it an independent ground for judicial review of a planning decision ... to say that a condition or the requirement of a section 106 agreement would have been discharged on appeal by the Secretary of State, because its imposition did not accord with the policies I have quoted, is not at all the same thing as saying that the planning authority would have been acting beyond its statutory powers."
1. "It should be relevant for planning and should resolve the planning objections to the development proposal concerned. Otherwise, it would not be a material consideration and will not be taken into account . . . ."
LORD LLOYD OF BERWICK
1 External costs
2 Imposing conditions
"Although the planning authorities are given very wide powers to impose 'such conditions as they think fit,' nevertheless the law says that those conditions, to be valid, must fairly and reasonably relate to the permitted development. The planning authority are not at liberty to use their powers for an ulterior object, however desirable that object may seem to them to be in the public interest."
3 The Shoreham case
". . .if what the defendants desire to achieve is the construction of an ancillary road serving all the properties to be developed along the strip of land that is scheduled for development, for the use of all persons proceeding to or from such properties, they could and should have proceeded in a different way. What is suggested is that, in addition to the strip of land already earmarked for the proposed road widening, they could have designated a further strip 26 feet wide immediately to the southward, and could have imposed a condition that no building was to be erected on this additional strip which would in any way interfere with its use hereafter for the building of the proposed ancillary road. . . .
"Under the conditions now sought to be imposed, on the other hand, the plaintiff must construct the ancillary road as and when they may be required to do so over the whole of their frontage entirely at their own expense. . . . The defendants would thus obtain the benefit of having the road constructed for them at the plaintiff's expense, on the plaintiffs' land, and without the necessity for paying any compensation in respect thereof.
"Bearing in mind that another and more regular course is open to the defendants, it seems to me that this result would be utterly unreasonable and such as Parliament cannot possibly have intended."
4 Planning agreements
"No payment of money or other consideration can be required when granting a permission or any other kind of consent required by a statute except where there is specific statutory authority. Conditions requiring, for instance, the cession of land for road improvements or for open space, or requiring the developer to contribute money towards the provision of public car parking facilities, should accordingly not be attached to planning permissions. Similarly, permission cannot be granted subject to a condition that the applicant enters into an agreement under section 52 of the Act [now s.106 of the Act of 1990] or other powers. However, conditions may in some cases reasonably be imposed to oblige developers to carry out works, e.g. provision of an access road, which are directly designed to facilitate the development."
5 Planning gain"(1) A local planning authority may enter into an agreement with any person interested in land in their area for the purpose of restricting or regulating the development or use of the land, either permanently or during such period as may be prescribed by the agreement; and any such agreement may contain such incidental and consequential provisions (including provisions of a financial character) as appear to the local planning authority to be necessary or expedient for the purposes of the agreement."
6 Circular 16/91
"the extent of what is required [must be] fairly and reasonably related in scale and kind to the proposed development." A developer may "reasonably be expected to pay for or contribute to the cost of infrastructure which would not have been necessary but for his development, but his payments should be directly related in scale to the benefit which the proposed development will derive from the facilities to be provided:" para B9.
7 Modern policy on external costs
"Where residential development makes additional infrastructure necessary or desirable, there is nothing wrong in having a policy that requires major developers to contribute to the costs of infrastructure related to their development."
He went on to say that the formula was, in the circumstances of that case, a practical and legitimate way of relating the infrastructure costs to the various developments.8 Legislation in support of the new policy
9 Law and policy in the United Kingdom
"Despite all the land left free
For the first time I feel somehow
That it isn't going to last,
That before I snuff it, the whole
Boiling will be bricked in...
And that will be England gone,
The shadows, the meadows, the lanes,
The guildhalls, the carved choirs."
and promulgate a policy that planning permissions should be granted only for good reason. There is nothing against this in the statute. And among the good reasons could be the willingness of the developer to provide related external benefits.
10 The Plymouth case
11 Planning obligations and the Newbury tests.
"A planning authority may lawfully take into account a developer's offer to provide off-site infrastructure or other benefits whose objective and effect are to render his development acceptable so that it may be granted planning permission under section 70 of the Town and Country Planning Act 1990." (My emphasis).
13 Materiality and planning merits
14 Law and policy in the United States
"The necessity to avoid falling foul of the 'taking' doctrine has meant that United States local governments have always had to be in a position to justify their rules in case of constitutional challenge, and hence to pursue openness and economic transparency. ..."
Purdue. Healey and Ennis add that the rational nexus test "has led some state courts to require sophisticated analysis which goes into questions of past expenditure and double taxation."
15 Buying and selling planning permissions
16 The appeal
"The Department's policy statements cannot make irrelevant any matter which is a material consideration in a particular case. But where such statements indicate the weight that should be given to relevant considerations, decision-makers must have proper regard to them."
"Accordingly, in his view, since the offer of funding fails the tests of Annex B of Circular 16/91, it cannot be treated either as a reason for granting planning permission to Tesco or for dismissing [the appeal by Tarmac]"
he could not have used the word "cannot" to mean that he was legally precluded from doing so. He clearly meant that he could not do so consistently with his stated policy in Circular 16/91.17 Little weight or no weight?