It is now common practice for developers to simply cite the Oxfordshire County Council v Secretary of State for Communities and Local Government and others ( EWHC 186 (Admin)) case as providing justification as to why Councils’ / County Councils’ monitoring / administration fees are not justified and, therefore, should not be paid.
However, I believe that this blanket approach is incorrect for the reasons below:
In order to fully appreciate Mrs Justice Lang’s judgment, one has to go to the source document, in this case the S106 Agreement made between Roger William Freeman, Ross William Freeman and Julian James Freeman (1); Cala Management Limited (2); Cherwell District Council (3); and Oxfordshire County Council (4) (the “S106 Agreement”).
- Firstly, in the definitions section of the S106 Agreement, the two pertinent defined terms are “Council Administration / Monitoring Fee” and “County Council Administration Fee” (the “Fees”). The figures are set out of each of the Fees. It is important to note that the definitions for each of these goes on to state that the Fees “shall be adjusted in accordance with the increase in the PUBSEC Index between the first quarter 2012 and the PUBSEC Index published immediately prior to the due date for payment”. This is terminology used exclusively for those planning obligations which are discharged by way of financial contributions (e.g. Education, Transport, Library Contributions). Therefore, it appears as if the Fees are plain financial contributions and not payments akin to legal costs (which are permitted under S106 of the Town and Country Planning Act 1990 (“TCPA 1990”).
- Secondly, clause 2.1 of the S106 Agreement clearly states that the S106 Agreement is made “pursuant to the Act section 106” (sic) (with the Act being defined as the TCPA 1990). Further, clause 2.2 goes on to say “The terms of this Deed create planning obligations binding on the Owner and the Developer pursuant to Section 106 of the Act…” Therefore, it is clear the S106 Agreement was made pursuant solely to S106 of the TCPA 1990 and not, as is common practice (and has been for a number of years) pursuant to, inter alia, S111 of the Local Government Act 1972, S2 Local Government Act 2000 and, more recently, S1 of the Localism Act 2011.
- Thirdly, Schedule 2, Part 3 and Schedule 3 stipulate that the Fees must be paid within a certain number of days of the grant of planning permission (14 days for the Council’s fee and seven days for the County Council’s fee).
On the basis of the three key points set out above, Mrs Justice Lang is quite correct in her conclusion that “the Inspector was entitled to conclude that a contribution to the administration and monitoring costs was not “necessary” to make the development acceptable in planning terms (paragraph 54), i.e. that the administration and monitoring costs were costs which the Inspector had the powers to conclude were not compatible with any one of the tests in Regulation 122 of the Community Infrastructure Levy Regulations 2010 (as per clause 3.2 of the S106 Agreement).
However, the important point to understand is a relatively simple one: monitoring / administration fees are not capable of being planning obligations. Simple. However, nowhere is there a preclusion on these fees being rightly payable by a developer to Councils and County Councils: they just cannot be “held out” to be “planning obligations” per se and will need to be expressed to be payable pursuant to other legislation (i.e. Local Government Acts and Localism Act).