Scope of Scottish Planning Obligation Appeals
The Supreme Court decision in Aberdeen City and Shire Strategic Development Planning Authority v Elsick Development Company Limited1 raised a number of issues on scope of planning obligations in terms of section 75 of the Town and Planning (Scotland) Act 1997. Although much of the focus of discussion on the Elsick case has been on the implications which the case has for the competency of seeking financial contributions to cumulative infrastructure, there was a further finding by the Supreme Court that has given rise to difficulties for planning authorities.
Section 75(1) of the 1997 Act provides that a planning obligation may be entered into restricting or regulating the development or use of land. Although section 75(3) allows a planning obligation to require the payment of a financial contribution, for such a payment to be lawful in Scotland, the obligation must still restrict or regulate the development or use of land.
During the last economic recession, many planning authorities sought to assist the cash flow of developers by delaying the payment of financial contributions secured by planning obligations. In the Elsick case, rather than providing for contributions to be paid in advance of development being completed or occupied as had traditionally been the case, the section 75 agreement contained a mechanism whereby payments were to be collected in arrears, based on the number of relevant development units which had been completed in the relevant timeframe.
The Supreme Court in Elsick found, notwithstanding the fact that none of the parties had raised it in their arguments, that a planning obligation requiring the payment of a financial contribution which did not link that payment to the actual development or use of the site would not fall within section 75. This was because, in those circumstances, the obligation would not be “restricting or regulating the development or use of the land” as required in terms of the wording of sub-section (1). This aspect of the Supreme Court judgement has raised doubts over the validity of section 75 obligations which require a financial payment without a consequential restriction or regulation of the development or use of the land in question. This is particularly the case in circumstances where the payment of the financial contribution has been permitted by the planning authority to be made in instalments linked to a specified number of plot sales and paid in arrears.
The potential difficulties caused by this aspect of the Elsick decision have been recognised by the Scottish Government and addressed in the Planning (Scotland) Act 2019. Section 34 allows a planning obligation to be used to require a financial payment without the need for it to also restrict or regulate the development or use of land. Although this provision will in due course permit the introduction of a retrospective payment mechanism into the contract that has no development or land use restriction linked to it, the problem is that section 34 is not yet in force and, as things stand, may not be until some time in 2021.
Meanwhile, a recent decision in a planning obligation appeal for a site at Castle Mills in Edinburgh2 has shown the approach that the Directorate for Planning and Environmental Appeals (the DPEA) intends to take when dealing with applications made under section 75A of the 1997 Act to discharge financial obligations on the basis that the payment is not linked in the contract to a restriction or regulation of the development or use of the land. The appealed planning obligation provided that the financial contribution was to be paid no later than three months after the completion of construction meaning that there was nothing in terms of the development that could be regulated or restricted. One of the arguments put forward by the appellant, therefore, on reliance of Elsick, was that the financial obligation was void as it did not also seek to restrict or regulate the development or use of land.
The reporter dealt with the lawfulness of the planning obligation point as a preliminary matter in his decision letter. He found that he was required to determine the appeal in accordance with section 75B of the 1997 Act. In making this decision he was required to take into consideration the tests in Scottish Government Circular 3/2020.3 However, he also found that there was no provision in the 1997 Act which enabled him to make any form of declaration on whether a planning obligation falls outwith the scope of section 75. The appellant had referred the reporter in its submissions to the approach that the DPEA takes to enforcement notice appeals where it acknowledges and accepts that there are circumstances in which an enforcement notice will be held to be void. However, the reporter found that these were separate provisions which were not applicable to the determination of a planning obligation appeal. In his view it would be for the courts to determine if a planning obligation was invalid.
The scope of a section 75B appeal is set out in section 75B(4) of the 1997 Act, This simply provides that, on such an appeal, Scottish Ministers may determine whether the obligation is (a) to continue without modification; (b) is discharged; or (c) is to have effect subject to the modifications specified in the application. Whilst it is correct that the legislation does not include a mechanism for declaring a planning obligation to be void, the legality of an obligation would seem to be a relevant matter to consider in determining whether an obligation should be discharged. Section 130 of the 1997 Act does not include a mechanism for finding that an enforcement notice is void but this has not prevented reporters from finding that an enforcement notice is a nullity. It is not clear, therefore, why the DPEA considers that a different approach should be taken to the same issue in the context of a planning obligation appeal.
The outcome of the Castle Mills appeal, therefore is that if a developer wishes to challenge the validity of a “pre-section 34” planning obligation, it will have to apply first to the Court to establish whether or not the validity of the obligation has to be determined by means of a Court declarator or potentially through a legal challenge following an unsuccessful section 75B appeal process. It remains to be seen if there is an obligation out there which whilst failing the Elsick criterion and is also of sufficient value to justify the taking of this additional legal hurdle arising from the Castle Mills decision.
1[2017] UKSC 66
2POA-230-2009 (Planning Obligation Appeal)
3Planning Obligations and Good Neighbour Agreements
