Patel and Others v London Borough of Brent
| Jurisdiction | England & Wales |
| Judge | Lord Justice Latham,Lord Justice Jacob,Lord Justice Auld |
| Judgment Date | 25 May 2005 |
| Neutral Citation | [2005] EWCA Civ 644 |
| Docket Number | Case No: A3/2004/1836 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 May 2005 |
[2005] EWCA Civ 644
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
Mr Justice Hart
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Auld
Lord Justice Latham and
Lord Justice Jacob
Case No: A3/2004/1836
Jonathan Small (instructed by Hugh Cartwright & Amin) for the Appellant
Edwin Johnson (instructed by CMS Cameron McKenna LLP) for the Respondent
The appellants are trustees of a religious charity, the Swaminarayan Hindu Mission who, in 1990, purchased from the respondent the site of the former Neasden High School ("The Site") with a view to developing it as a temple, for the purpose of which they obtained planning permission. They subsequently changed their minds and entered into an agreement for the sale of the site to Fairclough Homes Ltd ("Fairclough") who had obtained planning permission for a housing development on the site on the 17 th December 1992. A condition of that permission was that the appellants should enter into an agreement pursuant to Section 106 of the Town and County Planning Act 1990 ("the Act"). The agreement, also dated the 17 th December 1992, provided by Clause 5 for what was described as a "Highway Improvements Payment". I will return to the detail of the clause later. But essentially this required the appellants to deposit with the respondent the sum of £550,000 which was to be held by the respondent in a designated interest bearing account from which it would be entitled to draw down the sums necessary to carry out certain highway improvements. The unexpended balance in the account was to be returned to the appellants.
The appellants duly deposited £550,000 with the respondent. Fairclough proceeded to implement the planning permission; and the development was completed in or about September 1994. The respondent provided a certificate on the 21 st October 1994 that the highway works on the site itself had been substantially completed. These were not the highway works envisaged in Clause 5 of the agreement; but the certificate was important for the purposes of identifying the respondent's obligations under Clause 5. No highway improvements as envisaged by that Clause had been commenced by August 1999. The lamentable history is fully set out in the judgment of Hart J [2004] EWHC 763(Ch) from whose order this appeal is brought. By letter dated the 17 th August 1999, solicitors acting on behalf of the appellants accordingly wrote requesting the return of the deposited sum and the interest that had accrued upon it. There was no response. It was only when these proceedings were threatened in 2000 and the respondent was confronted with the proposed claim that any steps were taken to carry out works envisaged by that Clause.
In the first instance the draft claim, and the claim as issued and served simply asked for the return of the money, plus interest. Events, however, overtook the litigation. The respondent carried out works which it asserted were covered by the provisions of the Clause, and drew down from the account the monies necessary to complete them; the relatively small balance has been returned to the appellants. The claim was accordingly amended to reflect the changed position.
In its amended form it essentially claimed relief under three heads.
i) It claimed a declaration that the appellants were entitled to the return of the whole of the deposited sum, together with interest, on the grounds that the delay in the carrying out of the works amounted to a repudiation of the respondent's contractual obligations which had been accepted by the letter of the 17 th August 1999, thereby bringing the agreement to an end;
alternatively,
ii) a declaration that none or only part of the work carried out was work for which, pursuant to the agreement, the respondent was entitled to payment out of the deposited sum, and if only part, an inquiry into the extent of the work which did qualify and its cost and a consequential order for the repayment of such sums as the inquiry showed had been wrongly appropriated by the respondent, and interest; and
iii) in any event, damages for the delay.
The judge concluded that the appellants were not entitled to the return of the deposited sum on the grounds of repudiation; he held that the statutory scheme under which the agreement had been entered into was one which provided its own mechanism for the variation or discharge of obligations under the agreement, which had not been invoked by the appellants. He further held that all the work which the respondent had carried out was work the cost of which it was entitled to recover from the deposited sum. But he held that the respondent was in breach of contract in relation to the delay which entitled the appellants to damages. The appellants appeal against the first two findings of the judge; there is no cross-appeal by the respondent against the award of damages.
The statutory scheme pursuant to which the agreement was made is contained in Part III of the Town and Country Planning Act 1990. Sections 106, 106A and 106B, which were substituted for the original section 106 by the Planning and Compensation Act 1991, provide, so far as relevant, as follows:
"106. Planning obligations.
(1) Any person interested in land in the area of a local planning authority may, by agreement or otherwise, enter into an obligation (referred to in this section and sections 106A and 106B as "a planning obligation"), enforceable to the extent mentioned in sub-section (3) –
….
(d) requiring a sum or sums to be paid to the authority on a specified date or dates or periodically.
(2) A planning obligation may –
(a) be unconditional or subject to conditions;
……….
(c) if it requires a sum or sums to be paid, require the payment to be of a specified amount or an amount determined in accordance with the instrument by which the obligation was entered into and, if it requires the payment of periodical sums, require them to be paid indefinitely or for a specified period.
(3) Subject to subsection (4) a planning obligation is enforceable by the authority identified in accordance with sub-section (9)(d) –
(a) against the person entering into the obligation; and
(b) against any person deriving title from that person.
…….
(9) A planning obligation may not be entered into except by an instrument executed as a deed which –
(a) states that the obligation is a planning obligation for the purposes of this section;
……"
106A. Modification and discharge of planning obligations
(1) A planning obligation may not be modified or discharged except –
(a) by agreement between the authority by whom the obligation is enforceable and the person or persons against whom the obligation is enforceable; or
(b) In accordance with this section and section 106B.
….
(3) A person against whom a planning obligation is enforceable may, at any time after the expiry of the relevant period, apply to the local planning authority by whom the obligation is enforceable for the obligation –
(a) to have effect subject to such modifications as may be specified in the application; or
(b) to be discharged.
(4) In sub-section (3) "the relevant period" means –
(a) such a period as may be prescribed;
(b) if no period is prescribed, the period of five years beginning on the date on which the obligation is entered into.
…..
(7) The authority shall give notice of their determination to the applicant within such a period as may be prescribed.
…
(10) Section 84 of the Law of Property Act 1925 (power to discharge or modify restrictive covenants affecting land) does not apply to a planning obligation.
106B Appeals
(1) Where a local planning authority –
(a) fail to give notice as mentioned in section 106A(7); or
(b) determine that a planning obligation shall continue to have effect without modification,
the applicant may appeal to the Secretary of State.
….."
The effect of these provisions is that any agreement which is a planning obligation entered into pursuant to these provisions is a covenant which runs with the land, by virtue of section 106(3); but unlike ordinary restrictive covenants, it is excluded from the regime of discharge or modification by the Lands Tribunal pursuant to the provisions of the Law of Property Act, by virtue of Section 106A(10). Instead, those powers are to be exercised in the same way as any other form of planning control by the relevant authority, subject to appeal to the Secretary of State. And by section 106A(1) that is the only method by which a planning obligation may be modified or...
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