Stonewater (2) Ltd v Wealden District Council
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Thornton DBE |
| Judgment Date | 15 October 2021 |
| Neutral Citation | [2021] EWHC 2750 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/1014/2021 |
[2021] EWHC 2750 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
(PLANNING COURT)
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HON. Mrs Justice Thornton DBE
Case No: CO/1014/2021
and
Charles Banner QC (instructed by Clarke Willmott LLP) for the Claimant
Tim Buley QC (instructed by Legal Services Department, Wealden District Council) for the Defendant
Ben Du Feu (instructed by Government Legal Department) for the Interested Party (written submissions)
Hearing dates: 09/09/2021
Approved Judgment
Introduction
The Claimant, one of the UK's leading providers of social housing, challenges the decision by the Defendant Council to refuse its application for social housing relief under the Community Infrastructure Levy Regulations 2010 (SI2010/948) (“the CIL Regulations”), in relation to a residential development scheme of 169 houses. The effect of the decision is to make the Claimant liable for a levy in excess of £3 million which, it is said, renders the development scheme unviable.
The grounds of challenge are that:
(a) the Council erred in law by requiring a planning obligation as a pre-requisite to the grant of social housing relief under conditions 2 and 3 of Regulation 49(1) CIL Regulations. A planning obligation is a legal obligation entered into for the purpose of mitigating the impacts of a development proposal. In this case the obligation was entered into pursuant to section 106 Town and Country Planning Act 1990 (TCPA);
(b) the Council erred in law by treating the terms of the planning obligation between the Claimant and Council as relevant to whether or not social housing relief should be granted and/or by concluding that the agreement limited the amount of affordable housing which could be provided; and
(c) the Council took into account an immaterial consideration by having regard to the extent to which the refusal of social housing relief would allow it to collect more of the levy and/or the Council took its decision for an improper purpose, namely to obtain additional money under the levy.
The Council's case is that it was entirely rational and wholly unsurprising for it to reject the Claimant's application for relief. Insufficient evidence had been provided that all the dwellings in the proposed development qualified for relief in circumstances where the planning permission and section 106 agreement only permitted 35% of the dwellings as affordable housing. The Council had received no submissions in favour of exercising its planning judgment as to the pre-cursor question of whether to permit more affordable housing and was therefore not satisfied that it should do so. Unless and until the Council decided to approve 100% affordable housing, it could not be satisfied that all of the dwellings would qualify for relief.
In its early stages, the claim appeared to raise the following issues:
(a) Construction of the CIL Regulations; in particular;
i) whether the provision of social housing relief is mandatory or discretionary under the CIL Regulations; and
ii) whether a section 106 agreement is a pre-requisite to the grant of social housing relief under conditions 2 and 3 in Regulation 49(1) of the CIL Regulations.
(b) Construction of the section 106 agreement between the Council and Claimant. In particular, does it control the amount of affordable housing that can come forward pursuant to the planning permission and cap the amount at 35% of the dwellings in the development.
(c) The proper reading of the Council's decision letter dated 5 February 2021.
In light of the issue of interpretation of the CIL Regulations, the Secretary of State for Housing, Communities and Local Government was joined as an Interested Party at the Court's request and directed to produce written submissions to assist the Court. The Secretary of State's submissions were limited to the interpretation of the Regulations and did not extend to the facts and circumstances of this claim.
By the time of the hearing, construction of the CIL Regulations was, in all material respects, common ground. The Claimant and Defendant agreed that construction of the section 106 agreement was the key issue in the claim. The Council accepted that its decision should be quashed if the Court found against it on construction of the section 106 agreement. The Claimant contended that, it was apparent the Council had proceeded on a flawed understanding that a section 106 agreement was a threshold requirement for the grant of social housing relief. This remained as a freestanding ground of claim, even if the Court finds against it on the proper interpretation of the section 106 agreement.
The Legal Framework
The Community Infrastructure Regulations 2010
The Community Infrastructure Levy (referred to as ‘CIL’) is a levy, the purpose of which is to ensure that the costs incurred by public authorities in supporting the development of an area can be funded by the owners or developers of land without rendering development of the area unviable. It is intended to be fairer, quicker, more certain and more transparent than the previous system of contributions collected via planning obligations under section 106 of the Town and Country Planning Act 1990. More development now contributes to infrastructure. It is a set charge payable at a defined point. It aims to minimise the administrative burden on collecting authorities.
CIL is provided for by section 205 of the Planning Act 2008 and the CIL Regulations. The description of the CIL scheme that follows is non-exhaustive, including only matters that are material to determination of the issues in this case.
Each local planning authority is a charging authority for the purpose of CIL. Charging authorities may charge CIL in respect of development of land in their area. A charging authority is also the Collecting Authority for its area (section 206 of the Act and Regulation 10).
CIL is payable on “chargeable developments”, which means a development for which planning permission has been granted (Regulation 9). CIL is payable either by a person who has assumed liability to pay, or if no one has assumed liability, by either the owner or developer of land (see section 208 of the Act; and Regulations 31 and 33).
Where a person has assumed liability to pay CIL, that person becomes liable to pay the levy on ‘commencement of the chargeable development’ (Regulation 31(3)). A chargeable development is to be treated as commencing on the earliest date on which any material operation begins to be carried out on the relevant land (Regulation 7).
The Collecting Authority must calculate the amount of CIL payable in respect of a chargeable development in accordance with a formula set out in Schedule 1 of the Regulations. The amount is determined on the basis of charging schedules issued by charging authorities (Section 211 of the Act; Regulation 40).
The Regulations provide for a series of notices to be served:
(a) Liability Notice: As soon as practicable after the day on which planning permission first permits development, a charging authority must issue and serve a Liability Notice on a person who has assumed liability to pay CIL (Regulation 65(1)). The Liability Notice is required, amongst other matters, to describe the chargeable development (65(2)(b)) and state the chargeable amount (65(2)(d)).
(b) Commencement Notice: After the Liability Notice has been issued, any person intending to commence work on a chargeable development must submit a Commencement Notice to the charging authority. This notice is required, amongst other matters, to identify the relevant Liability Notice and the intended commencement date of the chargeable development (Regulation 67).
(c) Demand Notice: Following receipt of a Commencement Notice the charging authority must serve a Demand Notice “on each person liable to pay an amount of CIL in respect of a chargeable development”. The Demand Notice must state the intended commencement date; the amount payable and the day on which payment of the amount is due. (Regulation 69(1)).
Regulation 70 provides for the payment periods for CIL. The consequences of non-payment are explained in Regulation 70(8).
Social housing relief
Part 6 of the Regulations makes provisions for a number of exemptions and reliefs which may be applied to reduce or extinguish the chargeable amount. Some of these exemptions and reliefs are mandatory, others are discretionary. Pursuant to Regulations 49; 49C and 50 – 54, provision is made for relief from the levy, for the provision of social housing.
Eligibility for social housing relief is dependent on the chargeable development satisfying Regulation 49(1) which provides:
(1) A chargeable development which comprises or is to comprise qualifying dwellings or qualifying communal development (in whole or in part) is eligible for relief from liability to CIL.
(underlining is the Court's emphasis).
Pursuant to Regulation 49(2), a “ qualifying dwelling” is a dwelling which satisfies at least one of six specified conditions (contained in reg. 49(3) – (7B)). The Claimant's application relied on the second and third conditions, contained in reg. 49(4) – (6) as follows:
(4) Condition 2 is that all of the following criteria are met—
(a) the dwelling is occupied in accordance with shared ownership arrangements within the meaning of section 70(4) of the Housing and Regeneration Act 2008;
(b) the percentage of the value of the dwelling paid as a premium on the day on which a lease is granted under the shared ownership arrangement does not exceed 75 per cent of the market value (where the market value at...
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