R (Renaissance Habitat Limited) v West Berkshire District Council (2011)

 This is an interesting test case brought by a developer who sought to judicially review West Berkshire District Council's decision to mount a debt action against the developer for an alleged failure to pay an infrastructure contribution required by a s106 agreement. The developer also challenged the council's policy of refusing to agree to vary s106 agreements in light of changed planning policy or circumstances.

The council had granted planning permission to develop land in Thatcham for residential purposes but "desired" a standard s106 to be entered, requiring infrastructure contributions which were calculated in accordance with the council's Supplementary Planning Guidance (SPG) in force at the time. The developer accepted this and entered the s106 agreement.

However, the SPG was subsequently revised which affected the calculation of the infrastructure contributions such that a lower amount would be required. The developer refused to pay the remaining infrastructure contributions on the basis that they could not be required under the amended SPG. The council sought to recover the full contribution.

In dismissing the developer's challenge, Ouseley J held it was not unlawful for the council to enforce the agreement despite subsequent changes to the SPG. The council were simply seeking to enforce an agreement which was lawful when entered. Further, the contributions were stated within the s106 as fixed amounts not by reference to calculations and therefore it was these sums which the developer had agreed to pay when it entered the s106. The developer could have sought to challenge the lawfulness of the s106 given the revised SPG at an earlier stage but failed to do so. Alternatively, the developer could have sought to vary or discharge the s106 but again, no attempt was made to do so. The court also found nothing wrong in the council's policy to refuse to vary the s106.

The lesson here is that if you have already entered a s106 and become aware of favourable policy changes reducing the level of s106 contributions required, it would be wise to enter a dialogue with the relevant planning authority sooner rather than later to seek amendments to the s106 or to challenge the lawfulness of the s106 itself. Note, however, this case dealt with a s106 that was not entered as a reason for granting consent, so there was no need for the s106 to show a planning purpose related to the development.

The debt action continues against the developer and will be heard on 21 March 2011.