Court of Appeal Bans Car Capping Under Section 106


THE QUEEN (on the application of KHODARI)
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        1. 31 Egerton Gardens, in the Royal Borough of Kensington and Chelsea (“RBKC”), was built in the late 1880s in the red-brick Queen Anne Revival style. It was converted into three flats and two maisonettes in 1948 under a temporary planning permission, which was made permanent in 1962. Mr and Mrs Khodari are the leaseholders of Flat 4. On 23 March 2015 RBKC granted planning permission for the conversion of the building from 5 flats to 8. The approved conversion consists of internal works only. There is considerable pressure on parking in the borough, and RBKC required the additional three units to be “permit free”; that is to say that it required the developer to enter into an obligation that no one who occupied the additional units would apply for a resident’s parking permit. It also required the developer to agree to pay a one-off monitoring fee designed to enable RBKC to police the “no permit” obligations. A second and alternative application was made for planning permission for the reconfiguration of the building from 5 flats in their existing form to 5 flats of different sizes. Permission for that development was granted on 5 June 2016. Since there was no increase in the number of dwellings no obligations about parking were involved. If either development goes ahead, Mr and Mrs Khodari’s lease is liable to be terminated under a redevelopment break clause and they will lose their home. Understandably, therefore, they object to both developments.
        2. They challenge the grant of the planning permissions on …

      ii) In the case of the first planning permission the purported imposition of the obligation not to apply for resident’s parking permits was outside RBKC’s statutory powers.

      One of the characteristics of a covenant that could be enforced through this mechanism was that the covenant had to control the use of the land itself and not simply control a party to the agreement, even if that control indirectly restricted the use of the land: Gray and Gray on Land Law (5th ed) para 3.4.21, Re Nisbet and Potts’ Contract [1903] 1 Ch 391. The current formulation originates with the Planning and Compensation Act 1991. It appears that no substantial change to the nature of the obligations was intended when the formulation was changed: see Jeremy Rowan-Robinson Planning decisions and planning agreements [1994] Conv 31, quoting the Minister in the House of Lords. Because the remodelled section 106 encompasses positive obligations and the payment of money, the incorporation of the rules for the enforcement of restrictive covenants was no longer appropriate. This is borne out by the statutory wording. Although the statutory fiction that the planning authority owns adjacent land has disappeared from the legislation, it still requires the obligation to restrict the use of the land itself.

    1. In my judgment, therefore, the judge was right to reject reliance on section 106 to validate the obligations dealing with parking permits. Since I have concluded that those obligations were not capable of being planning obligations, it also follows that they were not required to comply with regulation 122 of the Community Infrastructure Regulations 2010.

    2. If, as I think, section 106 is not the answer to the obligations about parking permits, what about section 16? As I have said the judge did not consider this section. This may well be because it did not feature in RBKC’s grounds of resistance, although it was drawn to his attention in oral argument. Mr Lewis had two principal arguments against the application of section 16. First, he said that section 106 is the “governing” or “overarching” provision for the imposition of planning obligations. The planning legislation is intended to be a complete code, and it is wrong to allow other statutory powers to be invoked in order to repair perceived defects in that code. Although Mr Lewis referred to the decision of the House of Lords in Pioneer Aggregates (UK) Ltd v Secretary of State for the Environment [1985] AC 132, 140H-141C in support of his submission, in my judgment that case is dealing with a different point. What it says is that the court should not introduce principles of private law into the planning code unless it is necessary to do so. In the overall context of planning I can see no objection to a local authority invoking other statutory powers to supplement those given by the Town and Country Planning Act 1990 itself. An agreement made under section 278 of the Highways Act 1980 is the most obvious and familiar example. The long title of the Greater London Council (General Powers) Act 1974 says in terms that its purpose is to confer “further powers” on certain authorities, and the preamble records that one of the purposes for which those powers are conferred is “traffic management”. Mr Lewis’ second objection was that section 16 only applied to Greater London. The planning system is a national system and it would be wrong for different powers to exist in different parts of England and Wales. However, there is no doubt that different planning provisions do apply to Greater London of which the best-known example is the use of residential premises as temporary sleeping accommodation which, subject to certain conditions, is deemed to be a material change of use: Greater London Council (General Powers) Act 1973 s 25. I do not therefore accept this argument either. In my judgment if the obligations about parking permits fall within section 16 they will be legally valid.

    3. Mr Wills may or may not be right that this leaves local authorities outside Greater London without the ability to permit the creation of new residential units on terms that no residents’ parking permits will be issued in relation to those units. Whether powers exist under other statutes was not explored during the hearing. However, I observe that in R (AS Property Investments Ltd) v Hounslow LBC [2008] EWHC 1631 (Admin) the developer was unwilling to enter into a planning obligation preventing the grant of parking permits to residents of new flats; but the solution was found by the exclusion of each new flat from the schedule of streets in the statutory instrument that created the Controlled Parking Zone. Sullivan J upheld that solution.

    4. The requirement of section 16 is that the agreement must be made “in connection with the land”. Thus it is not a requirement of section 16 that the agreement regulates the use of the land itself. The phrase “in connection with” is one of wide meaning. There is, in my judgment, a “connection” between use of the three additional units for residential purposes and the potential for the grant of additional parking permits, not least because a qualification for a parking permit is residence within the borough. Accordingly I consider that there is a sufficient connection between the requirements imposed by the deed and the proposed development. Mr Lewis did not argue the contrary.

    5. That leaves the obligation to pay a monitoring fee. Since this was a one-off payment to be made on execution of the deed (and it was in fact paid) there can be no question of its being enforced against successors in title of the original parties to the deed. In a sense, therefore, section 106 is irrelevant. However, since section 106 (1) (d) expressly authorises an obligation to pay money, the obligation to pay the monitoring fee falls within the literal scope of the section. This potentially brings into play regulation 122. But that regulation, as Mr Wills submitted, does not prescribe what may or may not be included in a section 106 agreement. Rather, it says that a planning obligation may “only constitute a reason for granting planning permission” if it satisfies certain tests. So the first question must be: was an agreement to pay the monitoring fee a reason for granting permission?

    6. The officer’s report to the committee referred to the need for “a legal agreement preventing future residents from applying for parking permits.” It said nothing about a monitoring fee. The formal recommendation to the committee was:

“To grant planning permission on the satisfactory completion of an agreement to secure the additional units are parking permit free and with the conditions listed in Section 8 of this report.”

  1. The listed conditions are not relevant to this point. Thus the formal recommendation also said nothing about a monitoring fee. Nor was it mentioned in the committee debate at the end of which the committee resolved to adopt the recommendation. I do not think it is possible to infer from this material that the payment of a monitoring fee was “a reason for granting planning permission”. It follows that regulation 122 presents no obstacle to the monitoring fee.

  2. It may be said that if the “permit free” obligations fall outside the scope of section 106 (as in my judgment they do) the obligation to pay the monitoring fee, which is ancillary to those obligations, cannot survive as a free-standing obligation under section 106. But if that objection is a good one (and Mr Lewis did not argue that it was) then because there is no need to enforce it against successors in title to the original parties, its validity depends simply on RBKC’s power to contract for its payment. As Mr Wills submitted, the original parties to the deed are bound by it as a matter of contract. RBKC’s power to enter into such a contract is validated either by section 111 of the Local Government Act 1972 (“a local authority shall have power to do any thing … which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions”) or by section 1 (1) of the Localism Act 2011 (“a local authority has power to do anything that individuals generally may do”).

  3. I would therefore allow RBKC’s cross-appeal.

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