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This document is from our archive and no action should be taken in reliance on it without specific legal advice.

Property development in a cold climate

In these somewhat tricky financial times, it is unsurprising that the Government is keen to persuade property developers to do their bit to kick-start the ailing economy by dusting off chunks of their carefully land-banked acreage and getting on with long-shelved construction projects. However, many things have changed in this post-banking-apocalypse world, and it is unlikely that developers will be in a position simply to take up projects exactly where they left off a few years ago.  In addition to the obvious funding difficulties they now face, developers large and small will need to be alert to changes in planning policy and local needs since they put their projects on hold. These will be particularly relevant where the developer requires an extension of time on the original planning permission or where he wishes to escape from or mitigate the burden of an obligation previously accepted in order to obtain that permission or to deal with reserved matters.

The first key difference in the planning landscape confronting developers as we head into 2013 is that the National Planning Policy Framework is now in place, and many aspects of a Local Planning Authority’s consideration of developments within its purview will be governed by the redirected approach required by the Localism Act 2011. Regional Strategies no longer exist, and LPAs are thus no longer obliged to conform to them when preparing their Development Plan Documents. Further procedural and conceptual changes are likely to be forthcoming in the near future, with drafting and consultation underway at present on various possibilities.  These fundamental shifts will mean that a developer bringing his proposals back before an LPA after a gap of several years may find a radical change in the authority’s attitude towards those plans.

Where a developer had previously entered into a lawful s.106 Agreement or given unilateral undertakings relating to the development, the fact that circumstances have since changed significantly making the obligations in that Agreement or undertaking more onerous for the developer will not necessarily mean that those obligations can be escaped or even modified. If the developer had the foresight to include (and the LPA accepted) provision for review of its obligations in the original Agreement or undertaking, then the political desire to see construction underway may enable it to push for a suitable amendment. However, absent such a clause or other agreement, the only real option is an application to discharge or modify under s.106A of the Town and Country Planning Act 1990, provided that at least 5 years has elapsed since the obligation was entered into or the LPA is persuaded to exercise its discretion to consider such an application sooner.  As both R (Renaissance Habitat Ltd) v West Berkshire District Council and R (Millgate Development Ltd) v Wokingham Borough Council reminded us last year, if the obligation still serves a useful planning purpose then the LPA will be within its rights to refuse to modify or discharge it, regardless of the developer’s pleas.

Another potentially significant difficulty faced by a developer holding and wishing to act upon an historic planning consent obtained at a cost of promises which, whilst reasonable when given, now seem extremely onerous, is that third parties may well claim to have relied on those promises and seek to prevent any retreat from them. The Court of Appeal in Joyce v Epsom and Ewell Borough Council [2012] EWCA Civ 1398 was concerned with just that issue, albeit in a slightly different context. Mr Joyce had bought a bungalow in 2007. At that time, the bungalow had access to East Street at the front but it also had a garage and driveway leading to a gate onto a private service road at the rear.

The private road, gate and access point had been constructed as a result of obligations imposed on Sainsbury’s in a package of agreements in 1992-3 relating to a proposed supermarket development nearby. Those obligations were, effectively, the price Sainsbury’s paid to silence the opposition of residents including Mr Holborn, who was one of Mr Joyce’s predecessors in title as owner of the bungalow. Mr Holborn had then sited his garage and constructed a driveway to use the new access point and road. The private road was never adopted, but remained legally vested in the Respondent Council. Mr Joyce is a property developer, and acquired the bungalow in 2007 with ambitions to develop the land at the rear. In correspondence with the Council as LPA, it indicated that it would require payment of a premium for the grant of a right of way over the private road. Mr Joyce maintained that he already had such a right as successor to Mr Holborn.

The trial judge at first instance concluded that the Council, as owner of the land, had clearly encouraged and allowed Mr Holborn to believe that he had acquired a right of access over the private road, and that there was ample evidence of reliance and detriment. However, the claim in proprietary estoppel failed because the judge was not satisfied that the Council had sufficient knowledge of exactly what works Mr Holborn was doing in reliance upon the existence of a right of way, and did not consider that the Council was acting unconscionably in refusing to grant the type of access Mr Joyce required for his development.

The Court of Appeal disagreed with the judge’s inference about lack of specific knowledge, but held in any event that for an estoppel to run the person encouraging would not necessarily need to know precisely what the person encouraged was actually doing in reliance upon that encouragement. Viewed in the round, it would be unconscionable for the Council to resile from its encouragement to Mr Holborn upon which he had relied to his detriment. Equity demanded the grant of a right of way over the service road, albeit limited to serving a single house on the property.

The identities and roles of the parties in Joyce take it slightly outside the ordinary Developer-LPA-Local Resident triangle, but the potential impact on property developers generally is clear. If in its efforts to allay local concerns and placate objectors to an historic planning application a developer entered into obligations upon which residents have acted to their detriment in the intervening period (and possibly even if all they had done was to cease objecting, as this point was left open in Joyce), then there may be scope for claims to be brought along similar lines against a developer who, in looking to start up the project again, proposes amendments to the scheme which fail to meet those original obligations.