A Costly Mistake – Section 73 Permissions and 106 Agreements

Planning Law expert, examines the implications of a recent High Court decision regarding section 106 Agreements.

There was a High Court decision late last year which may be of importance to those who have entered into a section 106 Agreement to secure a planning permission, which has subsequently been amended by an application under section 73 TCPA 1990 to vary or remove a condition.

It is established law that approval of an application under section 73 acts as the grant of a new planning permission. It is good practice for the decision notice to set out all the conditions attached to the original permission.

The question  the Court had to decide, however, was whether the terms of a planning obligation (entered into by way of section 106 agreement) to enable the grant of the original permission would also bind any new permission granted under section 73.

Norfolk Homes Limited v North Norfolk District Council and Another 

This was the situation which arose in the case Norfolk Homes Limited v North Norfolk District Council and Another (11 November 2020).

In that case outline planning permission had been granted in 2012 subject to a 106 Agreement to secure 45% of the dwellings as affordable housing. Later, the permission was varied by application under section 73, but no further 106 Agreement was required by the Council and none was executed.

The work started on the development. It was not contested that it was the varied permission (i.e. that granted under section 73) that was being implemented. The developer then sought a Certificate under section 192 of the 1990 Act to establish that the implementation of the varied permission did not trigger the landowner’s obligations under the 106 Agreement to build 45% affordable housing.

This was refused by the LPA and the developer challenged the decision.

The Court's Findings

The High Court held that the Section 106 Agreement applied only to the original outline consent as no words were included to ensure that it would also apply to any variation of that consent under section 73. It rejected the LPA’s argument that such words should be implied into the agreement.

The Court held that there was no need to imply any language into the terms of the 106 Agreement to give it efficacy as its terms were ‘unambiguous and clear’. It had been open to the parties expressly to provide that its terms would also relate to any variation of the original permission under section 73, but this had not been done. It therefore did not apply to the development carried out pursuant to the Section 73 permission.

The Result

This decision had significant implications as the developer was no longer required to provide the 34 units of affordable housing originally secured by the 106 Agreement. This is something to look out for as it is likely to affect other permissions granted under section 73. It also underlines the importance of good legal advice at the right time.