The High Court case of Norfolk Homes Ltd v North Norfolk District Council [2020] is a useful reminder of the importance of ensuring that when granting a section 73 application, previous section 106 agreements are not to be forgotten. The case suggests that it would be sufficient for the section 106 agreement to state that it would also apply to any subsequent section 73 permissions granted. Deeds of variation are not necessary where appropriate wording has been put in the original section 106 agreement.

The Facts

The Council in 2012 granted outline planning permission for the construction of up to 85 dwellings and related infrastructure. This permission was bound by section 106 agreement, but it made no express reference to it also binding any subsequent planning permissions granted under section 73 of the 1990 Act. In 2013 and 2015 the council granted respective section 73 permissions modifying various planning conditions but without varying the section 106 agreement nor executing a further section 106 agreement. The developer implemented the 2015 planning permission and argued that the section 106 agreement did not bind this permission.

In 2018, the Council issued a decision notice under section 192 of 1990 Act, refusing a certificate that the September 2015 permission could not be lawfully implemented without triggering the section 106 obligations of 2012.

Norfolk Homes, which now owned the land and was subject to the s.106 obligations, sought declarations that: (1) the continuing development of the dwellings under the 2015 permission was not subject to the obligations in the section 106 agreement executed in 2012; and (2) an order requiring the Council to remove reference to the section 106 agreement from the local land charges register within 28 days of the Court’s judgement.

The Council argued that (1) properly interpreting the section 106 agreement and the variations of planning permission, together with the Supreme Court’s decision in Lambeth London Borough Council v Secretary of State for Housing [2019], meant that the obligations applied to the 2015 permission; and (2) additional wording should be implied into the section 106 agreement so that the meaning of ‘Development’ in the agreement would also include any developments carried out under section 73 of the 1990 Act. Wording should also be implied so that the definition of ‘Planning Permission’ would also include planning permission subject to conditions varied under section 73 of the 1990 Act.

The High Court Decision

Mr Justice Holgate rejected the Council’s arguments and found in favour of Norfolk Homes.

Mr Justice Holgate noted that section 106 agreements and unilateral undertakings are freestanding legal instruments which do not form an intrinsic part of a grant of permission. This is why they are signed before grant of permission. The Lambeth case was concerned with the interpretation of the new section 73 permission at the time of grant in the context of the original permission. By comparison, the council’s contended interpretation of the section 106 agreement is on the original document itself which was completed prior to the grant of the section 73 permission. As such, the Lambeth case did not change the principles of interpreting public documents as the Lambeth case did not involve the interpretation of an earlier document.

Mr Justice Holgate also found that the section 106 agreement was unambiguous in its interpretation, and there were no gaps or defects in the agreement needing to be addressed by implied language in order to give effect to the objective purpose of the agreement.

Lessons learnt

This case is a clear reminder that section 73 applications create a new permission and failure to bind the permission to a previous section 106 agreement/unilateral undertaking means that the applicant does not need to comply with the previously agreed obligations.

It is becoming common practice to include reference to section 73 permissions in section 106 agreements and unilateral undertakings. Similarly, many councils as a condition before granting a section 73 permission will require a deed of variation of the original section 106 agreement or unilateral undertakings expressly incorporating such permission into its terms. However, as this case demonstrates such practice is not always taken. So check your precedents.