Summary

A claim for the return of a deposit paid to the local authority pursuant to an agreement under the Town and Country Planning Act 1990 s.106 amounted to seeking a modification or discharge of a planning obligation within the meaning of s.106, so that return of the deposit could only be claimed by using the statutory procedure set out in s.106A and not by claiming that the local authority had repudiated the agreement.

Facts

The appellant charitable trustees (C) appealed against the decision ((2004) EWHC 763 (Ch)) that they were not entitled to the return of a "highways improvement payment" deposited under an agreement pursuant to the Town and Country Planning Act 1990 s.106 . C had purchased the site of a former school from the respondent local authority with a view to developing it as a temple for which planning permission had been obtained. C had later agreed to sell the site to a developer which had obtained planning permission for residential development. A condition of that permission was that C should enter into an agreement pursuant to the Town and Country Planning Act 1990 s.106 which provided in clause 5 for a "highways improvement payment". That required C to deposit with the local authority the sum of £550,000 which was to be held in a designated interest bearing account and was to be used to carry out the necessary highway improvements. The unexpended balance in the account was to be returned to C. The development had been carried out but the highway improvements had not. After five years C had asked for the return of the deposit. The local authority then carried out certain highway works which it claimed were covered by the provisions of the clause and returned a small balance of the deposit to C. C submitted that (1) they were entitled to the return of the whole deposit on the ground that the delay in carrying out the works amounted to a repudiation of the agreement which C had accepted; (2) none or only part of the work carried out was work for which the local authority was entitled to payment out of the deposited sum pursuant to the agreement.

Held

(1) C's claim that the local authority was in breach of clause 5 amounted to seeking a modification or discharge of a planning obligation within the meaning of s.106 and the only method by which they could achieve that objective was by using the statutory procedure set out in s.106A. C's argument that its only planning obligation under clause 5 was to deposit the required sum and that payment of that sum discharged their obligations was far too simplistic. The planning obligation created by clause 5 was more complex; the deposit created a sort of trust and the obligation was not merely to deposit the money but to permit the local authority to use it for the purposes of the trust. It was accordingly an extant planning obligation at all relevant times and s.106A(1) of the 1990 Act precluded C from seeking the discharge of that obligation under the guise of their claim that the local authority had repudiated the agreement. (2) The judge was wrong to conclude that all the work done was work for which the local authority was entitled to draw on the deposited sum. Under the agreement the works had to comprise alterations to a particular junction and "comprising" was a word of limitation. Work which did not relate to that junction would not be within the clause even if there was a highway engineering justification for making that work part of the overall scheme. An inquiry was necessary as to the extent of the work which qualified.