A big thank you to all those who attended our s106 webinar last Thursday – for those you missed it or would like a re-cap, the recording will be going live on our website today.
The webinar tells the story of a s106 from start to finish focussing on recent case law and practical tips from our experience working for a variety of different parties. I have set out below a summary and key takeaways of three recent cases we covered. We will be posting quarterly focus blogs on s106s so please follow if these are of interest to you – the next one will be in December.
R (Flynn) v London Borough of Southwark Council and another  EWCA Civ 827
This challenge focussed on how affordable housing provisions were secured in a s106 and whether the drafting was within the scope of the planning officer’s delegation, following the committee resolution to grant planning permission subject to the developer entering into "an appropriate legal agreement. Sir Keith Lindblom submitted that the committee’s resolution, together with the planning report, provided a clear delegation to the officers to negotiate “an appropriate legal agreement” and so the s106 was not ultra vires.
The takeaway from this case is that it is important to check what a committee’s resolution to grant provides scope to include in a s106 agreement. It is often the case that as negotiations progress between the parties relating to the drafting of obligations, the substance of them can change from the contents of a committee report. If that is the case, the parties need to consider whether the scope of the delegation allows for any changes to take place or if the application would need to be referred back to the committee with an update on the terms of the s106. This often causes delay so it is important to ensure the wording of committee reports is sufficiently clear but is also wide enough so as not to restrict any variations to the drafting.
Norfolk Homes Ltd v North Norfolk District Council  EWHC 2265 (QB)
The facts of this case are that in 2012, the Council granted outline permission for up to 85 homes subject to a s106 agreement requiring provision of 45% affordable housing and other financial contributions. Subsequently in 2013 and 2015, it granted new permissions which varied the 2012 permission under s73. The Council contended that the 2012 agreement should be interpreted as also covering development under the new 2015 permission. However, the Court decided that the new s73 permission was not bound by the original s106.
Parties to a s106 may choose to explicitly agree that obligations apply to a permission and any subsequent s73. But, in the absence of that wording, the gap can’t be addressed by implied language. The parties must therefore decide at the outset if subsequent s73 permissions should be covered, or if this would need to be dealt with by a new s.106 or a variation to the original s106.
Morris Homes Ltd v Cheshire West and Chester Council  EWCA Civ 1516
In this case, the developers argued that certain profits should be left out of the calculation of an overage payment mechanism requiring a portion of profits to be paid to the Council for affordable housing, including revenue from ground rents and from selling freehold reversions, as well as the capitalised value of retained freehold reversions. The parties had previously submitted their dispute on the interpretation of the provision to an adjudication by an independent expert, who had found in favour of the Council. The developers commenced a claim in the High Court, seeking a declaration that the expert’s decision was not binding. The High Court, accepted the local authority’s case on contractual interpretation, and found that the disputed sums should be included in the overage calculation.
The Court reiterated the natural meaning of the words should be taken into account and that it is important to keep in mind the underlying purpose of what the provisions are trying to achieve.
In this webinar, we will be looking at the detailed story of a s106, from heads of terms in the officer’s report, the extent of land and parties being bound and use of conditions to the detail of obligations and interaction with other agreements. We will also cover post completion issues of interpretation, disputes and modification and potential reform.