The High Court has ruled that the widespread local planning authority practice of charging for monitoring compliance with a section 106 agreement is, in most cases, unlawful. Mrs Justice Lang DBE, in the case of Oxfordshire County Council v Secretary of State for Communities and Local Government and others  EWHC 186 (Admin), upheld a decision by a planning inspector that a provision in a section 106 agreement requiring such payments failed the necessity test in Reg. 122 of the Community Infrastructure Levy Regulations as it was not "necessary to make the development acceptable in planning terms". The court acknowledged that there may be exceptional cases where such charges would be justified, but, for “routine” cases for “relatively small development” the monitoring of compliance with s106 obligations is a normal part of the local planning authority’s functions for which it cannot justify charging.
The judgment could have wide ramifications for local planning authorities, many of whom use monitoring contributions to fund specific posts dedicated to the task of ensuring that the money secured by s106 agreements is collected. The same reasoning may well also apply to the requirement to pay the authority’s legal “costs”, especially where the work is done in-house by legal staff whose salaries have to be paid regardless. The loss of these income streams would be so serious we expect Oxfordshire to appeal the decision. Watch this space!
From a developer perspective, if you are presented with heads of terms for a s106 agreement, our advice is always to go through them with your legal adviser applying the tests in Reg. 122 to each one and argue against the inclusion of any that fail the tests. In the light of the Oxfordshire judgment, it is certainly now worth pushing back on any requirement for administration and monitoring fees to be paid. Of course, the Council may not readily agree to drop the requirement, but the applicant has the right to appeal against non-determination and the cost of having to go to appeal solely on that point would greatly exceed any monitoring fee – especially if, as seems likely, pushing it to appeal were ruled to be unreasonable behaviour on the part of the local planning authority, resulting in it having to pay the appellant’s costs as well as its own. The threat of appeal might well, therefore, cause the authority to back down.