In Trent, R (On the Application Of) v Hertsmere Borough Council [2021] EWHC 907 Mrs Justice Lang handed down her decision setting out the consequences of non-compliance of the CIL Regulations by a charging authority.

The Claimant brought proceedings for judicial review in order to quash a CIL demand notice for £16,389.75 that she received from the Defendant Council on 21 April 2020 in relation to the construction of a dwelling. She succeeded.

The Facts

On 10 February 2017, Mrs Trent was granted planning permission to demolish a house and construct a replacement three bedroom dwelling. 

Prior to permission being granted, the Council's planning officer emailed the Claimant advising her that she had to submit a CIL additional information form and recommending that she submit an assumption of liability form and a self build exemption application.  The assumption of liability form was not described as mandatory.

The Claimant submitted the additional information form and a self-build exemption claim form to the Council.  She did not, however, submit an assumption of liability form - and an assumption of liability notice is a pre-requisite for obtaining a self-build exemption. The Claimant was not aware of this and the Council did not make it clear to her. 

On 14 February 2017, the Council started to prepare a draft liability notice but, notwithstanding that there was a draft was on the Council’s computer system, the notice was never sent to the Claimant (“the 2017 liability notice”). Work started on site August 2017 and the new house was completed in early 2019. In June 2019, the Council conducted a site visit and noticed that works had taken place.  

In August 2019, the Council issued a second liability notice (“the 2019 liability notice”), and a demand notice requiring payment of £16,389.75 in CIL and additional surcharges for failing to submit an assumption of liability notice and a commencement notice. The demand notice also included an incorrect deemed commencement date. 

At the Planning Inspectorate

The Claimant successfully appealed to the Planning Inspectorate. The Planning Inspector found that the 2017 liability notice had never been served on the Claimant and that the 2019 liability notice was not served "as soon as practicable after the day on which a planning permission first permits development"; and that the deemed commencement date on the demand notice was incorrect.

Notwithstanding this outcome, the Council on 21 April 2020 served a new (replacement) demand notice on the Claimant, relying on the 2019 liability notice which the Planning Inspector had found to be invalid.

At the High Court

The Claimant challenged the issue of that demand notice by way of judicial review at the High Court, arguing that in light of the Planning Inspector’s finding, the Council’s decision to issue the 2020 demand notice based on an invalid 2019 liability notice was improper, irrational, unfair and unreasonable and was a breach of the Council’s duty under section 6 of the Human Rights Act 1998 in that the Council acted in a manner which was incompatible with her Convention rights under Article 1 of Protocol 1 to the European Convention on Human Rights.

The High Court held that the Council was required to issue and serve statutory notices which complied with the requirements in the CIL Regulations, and to do so in the prescribed sequence. In consequence, the Claimant was not under an obligation to pay the CIL, as required by the 2020 demand notice, unless and until the Defendant had issued and served a valid liability notice, in accordance with Regulation 65 of the CIL Regulations.

The High Court found that as planning permission was granted on 10 February 2017 and the 2019 liability notice was issued 2 years and 6 months (less 5 days) after the grant of planning permission, such a long period of time cannot reasonably be described as “as soon as practicable” and this amounted to a breach of the requirement in Regulation 65(1). Further, Regulation 65(1) imposes a mandatory requirement without any provision for extensions of time, so authorities have to comply with the duty in a timely way.  Also, the failure to issue and serve a valid liability notice on the Claimant within the prescribed time period was prejudicial - it is of fundamental importance to the operation of the statutory scheme that the liability notice is issued and served soon after the grant of planning permission because of the key information it contains about the recipient’s liability to CIL, and the next steps which follow under the scheme.  As such, the liability notice was held to be invalid and there was a breach of Article 1 of Protocol 1 to the European Convention on Human Rights.

The Council could not rely provisions in the CIL Regulations to amend or replace the liability notice, as these all required a valid liability notice to have been issued in the first place. The Council therefore lost its ability to recover CIL from the development.

Consequences

If you are a collecting authority, do not delay in serving a liability notice! Failure to serve a liability notice “as soon as reasonably practicable after a planning permission first permits development” can result in a council being barred from recovering CIL. If you are developer, similar provisions apply in the CIL Regulations when it comes to reliefs (e.g. Regulation 54B(4) in relation to self-build relief: "As soon as practicable after receiving a valid claim the collecting authority must grant the exemption and notify the claimant in writing of the exemption granted (or the amount of relief granted, as the case may be)…”) so make sure you chase the Council to respond to your valid relief claim and respond in writing ASAP.