Having regard to the current economic climate, planning authorities may scale back what they seek by way of developer contributions or alternatively become more realistic about the timescale for payment. Contributions from developers are however still a significant part of the planning system in Scotland where of course they can be properly justified. The current justification can be found in Circular 01/2010 (Click here to view). Since that Circular came in the changes made to the Town & Country Planning (Scotland) Act 1997 by the Planning Etc (Scotland) Act have become effective and we now have a new Section 75 in place (Click here to view our article on Section 75 and other Planning Agreements).

The revised Section 75 makes provision for a new type of planning agreement (a good neighbour agreement), for unilateral planning obligations and for the modification of planning agreements/obligations. While it still early days this last provision is somewhat controversial. There are apparently different views amongst planning authorities about whether or not the section applies retrospectively to old style Section 75 Agreements which were put in place some time ago. There is also some doubt about whether or not variation/modification in terms of the Act replaces all other means of modification/variation with the consequence that formal application must (and can only) be made in terms of the Act.

The law in England is slightly different but unilateral undertakings are already in use – indeed unilateral undertakings have been available in England for some considerable time. Three recent English cases illustrate points which might be relevant in Scotland to unilateral undertakings and planning obligations more generally.

The first case concerns a unilateral undertaking dated 22 March 2007. It was made in relation to an application for planning permission which itself was made in 2006 and refused that year. An appeal was made successfully – the decision letter from the appeal being dated 9 May 2007. It appears therefore the undertaking was granted in anticipation of the appeal being considered.

In the decision letter on the appeal the Inspector (equivalent of the Reporter) came to the view that while the Council had sought contributions for certain infrastructure issues which had been addressed by the applicant/appellant (by way of undertakings) the Council did nothing to show that these contributions were required to satisfy any policy requirements. Accordingly the Inspector concluded that little weight should be given to the various undertakings in determining the appeal.

The undertaking document which was the subject of the court action covered a number of different heads of infrastructure provision. The undertaking in itself made clear that it would not take effect unless planning permission was granted and commencement of the development had taken place. Planning permission was granted and the development did commence.

Given the view expressed by the Inspector the solicitors acting for the applicant/appellant (the party bringing these proceedings) sought confirmation that the undertaking (together with another undertaking granted on a similar basis) would not be enforced and would be removed from the appropriate register. Clearly the applicant realised the grant of planning permission was not dependent on these offers so thought there was no need to fulfil them. The planning authority declined to do so.

The court action (The Queen on the Application of Millgate Developments v Wokingham Borough Council – 2011 WL1581) concerned whether or not the position of the Council was justifiable. The court concluded that the planning authority was entitled to enforce the undertakings. The application to the court proceeded on a number of grounds including arguments to the effect that the Council in deciding to enforce the undertakings were not giving proper consideration to the matter, that in seeking to enforce the undertakings the Council was acting in a way which was not supported by appropriate planning considerations and that the approach of the Council was unreasonable. The court without much difficulty rejected all these grounds.

While it is not clear that the Scottish Courts would necessarily reach the same conclusions, this case illustrates the care which needs to be taken in deciding whether or not to offer a unilateral undertaking. Here the applicant had issued undertakings with a view to securing planning permission. They had secured planning permission although the Inspector placed little weight upon the undertakings. The court was clearly of the view the undertakings were enforceable however. It might be argued that the result is fair in the sense that had a Section 75 Agreement been entered into with a view to securing planning permission that probably would have been capable of being enforced. On the other hand it might equally be argued that the need for developer contributions which the undertaking secured had not been made out (and may not even have been justifiable in policy terms) and it was therefore unfair that the applicant in this case had to make these payments.

Whatever view you take the case shows that it is necessary to be careful when deciding to grant a unilateral undertaking.

The next case (R on the Application of Renaissance Habitat Limited v West Berkshire District Council – 2011 WL441805) concerns an agreement under Section 106 of the Town & Country Planning Act 1990 (the equivalent of Section 75 in Scotland).

In this case the agreement had been entered into about contributions to be made. Various sums due to made in terms of that planning agreement were not paid and the planning authority took steps to secure payment by raising court proceedings. The decision to raise court proceedings was challenged by way of judicial review – the basis of the challenge being that the Supplementary Planning Guidance which had been relied upon to justify the contributions which were documented in the Section 106 Agreement had changed as a consequence of other unrelated appeal decisions in which Inspectors (Reporters) had rejected the approach of the Council. In reality the level of contribution required had reduced. The argument therefore was that it was unreasonable for the Council to seek to enforce payments in terms of the Section 106 Agreement when the underlying basis or justification for that Agreement had changed, albeit the Agreement remained in place and prima facia effective.

It was accepted the Agreement was prima facia lawful and equally that the fact the Agreement was entered into was material to the grant of planning permission. The granter of the Section 106 Agreement now argued was that it was clear that the charges reflected in the Section 106 Agreement were either wrongful or unreasonable (on the basis they could not have been properly justified at the time had a challenge been brought – though no challenge to the specific requirements of the Section 106 Agreement was brought). Accordingly they argued seeking payment of these amounted to an unlawful demand for payment. It was also argued that seeking to enforce payment would not achieve a proper planning purpose.

The court rejected both of these arguments. As far as the first argument was concerned the court was of the view that the Agreement was lawful when entered into, that it had been voluntarily entered into (the party granting the Agreement had not contested the need for the Agreement before the Inspector) and there was no good reason therefore why the planning agreement should not be enforced. The court also made the point that the Agreement in this case simply recorded sums to be paid and was not specifically dependent upon the provisions of a formula found in other documents (which had been subsequently varied). In any event the court pointed out while the Supplementary Planning Guidance had changed; there had been no challenge to the legality of the Supplementary Planning Guidance as it existed at the time the Agreement was entered into.

The court made the point that in effect what the court was being asked to do was to re-write the Agreement without going through an appropriate process and in a way in which the changes could not be negotiated or considered.

Really the decision is not surprising but what it may suggest is that attempts to vary a planning agreement in terms of the new provisions which came into effect in Scotland in February 2011 may not be straightforward if they represent a commercial agreement (justified in policy terms) which was entered into and which secured planning permission (in the absence of any significant change of circumstance).

The final case (Hampshire County Council v Beazer Homes – 2010 WL 4790861) also concerns a Section 106 Agreement (the equivalent of a Section 75 Agreement), the issue in this case being whether or not certain payments had been properly utilised. The Section 106 Agreement made provision for payment in respect of a relief road in terms which made clear that the Council as roads authority might rather than build the relief road identified use the money for alternative purposes which the Council considered a benefit to the public. There was a repayment provision in the event that the monies paid by the developer were not spent in accordance with the Section 106 Agreement.

In this case the developer challenged whether or not funds had been spent and/or spent as provided for in terms of the Section 106 Agreement.

The court looked at a number of issues. The court in effect interpreted the Section 106 Agreement very much as a commercial agreement carefully negotiated and drawn up on the basis of legal advice as a consequence of which it was not appropriate to lightly imply additional terms. In particular the court did not think it was appropriate to "imply in" concepts from public law.

The Section 106 Agreement made reference to the planning authority "accounting" for the costs received. The court held that did not oblige the local authority to do any more than explain how the monies had been spent rather than explaining why the money had been spent how it had. Given the fact that requirements to account are often included in Section 75 Agreements, it may be necessary to visit such drafting.

Disputes about the interpretation or application of a Section 75 Agreement are rare. The approach of the court in this case (very much look at the document from the standpoint of a commercial agreement) was certainly as interesting one. That approach suggests that if parties to a Section 75 Agreement require specific obligations to be undertaken they need to spell them out rather than seek to argue at a later stage that various provisions fall to be implied.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.