Hillside Parks Ltd v Snowdonia National Park Authority explained

In a highly anticipated judgment, the Supreme Court has confirmed that where there are successive planning permissions relating to the same site, development carried out under a later "drop-in" permission, which makes the development under the earlier permission 'physically impossible' to complete, will render further development under the earlier permission unlawful.

What is a 'drop-in' permission?

Development is often "varied" either by applying for a non-material amendment under Section 96A of the Town and Country Planning Act 1990 (TCPA); or a minor material amendment under Section 73 of the TCPA. There can be legal and practical difficulties with these options, which has led to the use of so-called "drop-in" permissions.

A drop-in permission is granted following a standalone planning application to alter a discrete part of a wider development that has already been approved under an earlier permission. This option was previously attractive to developers, as it appeared to allow a small area of a wider development to be altered more easily, without requiring updated reports etc. to be prepared in relation to the site as a whole. Drop-in permissions appeared to provide a level of flexibility for developers, especially on larger schemes where development will be built out over several years.

How did we get here?

The Hillside case concerned a site within Snowdonia National Park. A planning permission, granted in 1967, authorised the development of 401 dwellings on the site. The 1967 planning permission was implemented and was subsequently varied a number of times. However, between 1996 and 2011 several drop-in permissions were granted, a number of which were described as varying the 1967 permission. The developer sought a declaration from the Court, confirming that the 1967 planning permission remained valid and the development could be completed. The developer lost in the High Court and the Court of Appeal. Both found that the 1967 planning permission could not be lawfully completed because the subsequent drop-in permissions were inconsistent with it.

Hillside appealed to the Supreme Court.

What did the Supreme Court say?

The Supreme Court unanimously upheld the judgment of the Court of Appeal. In dismissing Hillside's appeal the Supreme Court considered that where development is carried out on land that is inconsistent with an existing planning permission (under which the development authorised is not complete), if the development carried out makes it physically impossible to carry out the development under the existing permission, then no further development under the existing permission can be carried out.

In Hillside, the Supreme Court found that, as a result of the drop-in permissions it was now "physically impossible" to carry out the development authorised by the 1967 planning permission. Consequently, the development under the 1967 permission could no longer be completed.

The Supreme Court distinguished between physical impossibility and "mere incompatibility". A later drop-in permission that is merely incompatible with an earlier permission will not render unlawful further development under the earlier permission.

For developers, deciding whether a later permission is physically impossible or merely incompatible with earlier development will often be an impossible task. While this part of the judgment may leave some very much reduced scope for drop-in permissions, it is not difficult to envisage that there will be circumstances where it will be very difficult to come to a firm view as to the effect of a subsequent proposal on an extant permission, which the Supreme Court held, will in each case be a question of fact and degree.

Why is this judgment so important?

This decision confirms that planning permissions must be viewed 'holistically'. Developers must treat overlapping planning permission with caution.

The judgment raises many interesting points, but we think the following points are the key takeaways:

The key test is physical impossibility. It may be possible to continue development under an earlier planning permission where a later permission is merely inconsistent. It is likely that developers and lenders will treat successive planning permissions with caution.

Implementation of a drop-in permission will not render development already carried out under an earlier planning permission unlawful. The Supreme Court helpfully clarified a question left open by the Court of Appeal. It was clear that, following implementation of a drop-in permission, the failure or inability to complete development authorised under an earlier permission did not make the development already carried out under that permission unlawful and vulnerable to enforcement action.

For developers wishing to vary a planning permission (and assuming the variation cannot be achieved through a non-material or minor material amendment) there are three main options:

Option 1: Make a second application for the whole site. 

The Supreme Court suggested an additional planning permission covering the whole site could operate to modify an earlier permission. The application should be accompanied by plan showing how the new permission incorporates the changes into a coherent design for the whole site. Whilst the option works well in theory, in practice there may be difficulties. The Court noted that, where the variation is minor or circumstances have not changed, it may be possible that documents submitted in connection with the earlier permission can be re-used or updated. This will require careful consideration, particularly where an environmental impact assessment or Habitats Regulations assessment was required in connection with the earlier permission.  Another impact would be the added financial burden on developers. Planning application fees are assessed by reference to site area, so will accordingly be much higher for a site-wide application than a drop-in.

Option 2: Severability may be possible with express wording. 

The Court confirmed that a clear express provision could be included in a planning permission to make the development authorised 'severable'. This would allow drop-in permissions to be granted that, if implemented, would still permit development under the earlier permission to be completed. Whilst this may appear to offer a lifeline to developers, the Supreme Court did not provide any examples of any wording that would be sufficient to make a development severable. Until such wording is tested in the Courts, it is likely that developers and lenders will continue to take a cautious approach to drop-in permissions.

Option 3: Complete the development before switching. 

It is likely that developers and lenders will treat successive planning permissions with caution. The safest option is likely to be to complete as much of the development as required under the earlier permission before implementing any drop-in permission.