Feel the force

John Pugh-Smith examines a recent Court of Appeal ruling on the enforceability of section 106 undertakings.

The recent Court of Appeal decision in Millgate Developments Ltd v Wokingham BC [2011] EWCA Civ 1062 raises some interesting points on the enforceability of a s.106 unilateral undertaking within the first five years of its making.

Millgate’s written representations appeal for a small residential development had been allowed but with the Inspector finding that as the council’s requested contributions for off-site leisure, library, education and highways did not meet the test of necessity, he attached little weight to Millgate’s submitted undertakings. It should be noted that the council had simply not submitted evidence in support. Furthermore, the undertakings had not been made conditional upon the Inspector’s findings.

Following Millgate’s request for the undertakings to be discharged the council decided to enforce full compliance. Following the issue of judicial review proceedings it emerged from the council’s evidence that it could no longer justify all the contributions sought as being “necessary” despite a requirement so to do under the relevant development plan policies. However, the council belatedly asserted that it would make a refund of any overpayments.

Holding that the exercise under s.106A(1)(a) of the Town & Country Planning Act 1990 did not engage the statutory presumption under s.38(6) of the Planning and Compulsory Purchase Act 2004, the Court of Appeal agreed with the first instance judge ([2011] EWHC 6 (Admin)) that the council had needed only to show “a useful planning purpose” for the contributions. As it still could, that was sufficient and no more rigorous exercise was required. However, it would be open to Millgate, nonetheless, to raise whether the sum claimed under each head came within the terms of the undertaking as a partial defence in subsequent civil enforcement proceedings.

Though hypothetical, as no sums had actually been paid, the Court also acknowledged that the council’s legal ability to refund any overpaid contributions and that this arose as a subsidiary power under section 111(1) of the Local Government Act 1972.

John Pugh-Smith is a barrister at 39 Essex Street. He represented Millgate Developments in this case.