Is payment of administration and monitoring fees in section 106 obligations unjustified in some circumstances, and could we achieve faster conclusion of section 106 Agreements through dispute resolution?

The recent case of Oxfordshire County Council v Secretary of State for Communities and Local Government [1] casts doubt on the entitlement of local authorities to seek administration and monitoring fees through section 106 planning obligations.

Regulation 122 of the Community Infrastructure Levy Regulations 2010 requires planning obligations to comply with certain tests in order for them to constitute a reason for granting permission, including that the obligations must be necessary to make the development acceptable in planning terms On appeals, for each planning obligation entered into, Inspectors will scrutinise carefully whether they comply with the tests and therefore whether any weight can be attached to them.

THE FACTS

  • The case involved a planning application and appeal for a relatively small development. The local authority sought an administration and monitoring fee in accordance with a standardised fee scale. 
  • The Inspector decided that certain financial contributions due before commencement of development complied with the Regulation 122 tests. However, it was not necessary for those obligations to be monitored and therefore the monitoring and administration fees did not comply.
  • A (now commonplace) clause in the section 106 agreement provided that, if the Inspector concluded that any obligations did not meet the Regulation 122 tests, those obligations would cease to have effect - the requirement to pay the fees therefore fell away.

The local authority applied to quash the Inspector’s decision.

THE DECISION

  • The High Court noted that there was nothing in the legislation, the National Planning Policy Framework or the Planning Practice Guidance which suggested that local authorities could or should recover administration and monitoring costs as part of planning obligations.
  • Further, it is part of the local authority’s functions as a local planning authority to administer, monitor and enforce planning obligations. In the event of enforcement being required, the obligation provided for those costs to be recouped.
  • The High Court upheld the Inspector’s decision.

WHAT IS THE EFFECT OF THIS CASE?

This judgement will affect local authorities used to routinely recovering the costs of administering and monitoring planning obligations from developers. The judgement does not preclude such fees from being sought in different circumstances, perhaps relating to complex circumstances where monitoring is a reasonable requirement. The onus will be on authorities, however, to justify how any such circumstances comply with Regulation 122 and why the level of fee sought is reasonable.

COULD WE ACHIEVE FASTER CONCLUSION OF SECTION 106 AGREEMENTS THROUGH DISPUTE RESOLUTION?

Section 106 agreement negotiations sometimes lead to a delay in obtaining planning consents. The government has issued a consultation [2] which seeks views on dispute resolution mechanisms to speed up the process and avoid applications ending up at appeal.

The government states that negotiations get “bogged down” because:

  • parties cannot agree on the scale and scope of mitigation necessary to make the development acceptable in planning terms, or
  • the process of completing the necessary agreement drags on beyond statutory or agreed timeframes.

This view may be a little simplistic but certainly many negotiations suffer from these issues.

SHORT TERM CHANGES

Planning guidance is to be revised to deal with issues of delay. Revised guidance will:

  • confirm that section 106 negotiations should be concluded within statutory timescales;
  • encourage earlier engagement at the pre-application stage to front-load discussions about the scope of the section 106 “ask”
  • promote greater use of standardised clauses to minimise the need to draft agreements from scratch, and
  • set expectations for greater transparency about what has been raised through section 106 and what it has been spent on.

LONG TERM CHANGES

  1. The government have requested views on suggested forms of dispute resolution andprocedure: Automatic or deemed solution: A submitted section 106 Agreement could become the deemed planning obligation after statutory or agreed timeframes were breached. The government considers this option to be unworkable in practice.
  2. External dispute resolution: Failure to agree a draft section 106 agreement submitted with the planning application would entitle the matter to be referred to dispute resolution by an external body or suitably qualified individual if statutory or agreed timeframes were breached.

The government has asked for views on various matters including whether the decision should be binding, what external bodies would be suitable to provide the resolution service and the funding of the process.

Any statutory changes will be left to the next Parliament.