The UK Supreme Court held that a Scottish planning authority could not lawfully require developers, through supplementary guidance and planning obligations, to pay into a pooled transport fund where a development’s connection with some of the works was only trivial. Such a payment did not restrict or regulate the development of the payer’s land, as section 75 of the Town and Country Planning (Scotland) Act 1997 requires, and it could not be treated as relevant to the grant of planning permission. The Court dismissed the authority’s appeal, so the quashing of the guidance stands.
The proposed fund
The Aberdeen City and Shire Strategic Development Planning Authority anticipated substantial development and major extra transport investment to deal with its combined effects. A cumulative transport appraisal put that additional cost at £86.6 million, above public schemes already committed. The authority proposed a Strategic Transport Fund. Statutory supplementary guidance, forming part of the development plan, would require developers in strategic growth areas to pay fixed sums into a pool. For housing, the sums ran from £1,350 for a one-bedroom unit to £3,148 for a unit of five bedrooms or more. The money would be spent only on listed interventions.
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Elsick Development Company Limited proposed about 4,000 houses and other facilities near Stonehaven. It objected that the expected contribution was out of all proportion to the demands its development would make, and contrary to Circular 3/2012. That Circular advised authorities to seek planning obligations only where stated tests were met, including that an obligation fairly and reasonably related in scale and kind to the development and related to it directly or through cumulative impact. Elsick nevertheless entered a section 75 obligation with Aberdeenshire Council, agreeing to contribute if the guidance was valid. Outline permission was granted.
A reporter had warned that the relationship between contributing developments and the infrastructure was not sufficiently clear and direct. The plan was amended to say that contributions would support only related projects necessary to make the developments acceptable. The authority adopted the guidance after adding, at the Scottish Ministers’ request, a statement that planning obligations would follow the Circular.
The scale of the connection
The guidance treated the fund as addressing cumulative impacts at identified hotspots, while each developer still had to mitigate impacts specific to its own development. It said a developer could assess and mitigate cumulative impact outside the fund. Lord Hodge rejected the argument that this made payment voluntary. The guidance said the alternative would require a much more comprehensive assessment and would definitely be more time-consuming and almost certainly more expensive, if achievable at all. Unless the developer could do that work and persuade the authority that it was robust, the scheme envisaged that permission would be refused.
The traffic evidence showed why pooling mattered here. The Elsick development would generate much of the traffic on one proposed link. On several other routes its contribution was negligible. Yet its payment could be spent on the whole list. The Supreme Court accepted the Inner House’s finding that some connections were absent or trivial.
The Court of Session
The Inner House quashed the guidance. It distinguished sharing the cost of infrastructure that several developments together made necessary from requiring them to fund a list of projects irrespective of whether their development contributed to the need.
The limits on planning obligations
Lord Hodge, with whom Lord Neuberger, Lady Hale, Lord Mance and Lord Reed agreed, treated the lawfulness of the required obligation as the central issue. A planning condition must be imposed for a planning purpose, must fairly and reasonably relate to the permitted development, and must not be unreasonable in the Wednesbury sense. A planning obligation is not confined to what could be imposed as a condition. Under section 75, a person may agree, or undertake unilaterally, to restrict or regulate the development or use of land, including by paying money. Beyond those words, the power must be used for a planning purpose and must not be Wednesbury unreasonable.
A payment obligation under section 75 must restrict or regulate the use or development of the burdened land. Several developers can share the cost of infrastructure where each contributes to the cumulative need. Making the start of construction conditional on paying for an unrelated improvement cannot supply the missing link. Otherwise an authority could extract benefits unrelated to the planning merits of the site.
Whether an obligation is relevant to the grant of permission is a separate question. Section 37(2) requires regard to the development plan so far as material to the application and to other material considerations. In Tesco Stores Ltd v Secretary of State for the Environment, the House of Lords held that an offered obligation is material only if its connection with the development is more than trivial. An unconnected offer is an attempt to buy permission. A development-plan policy cannot make an irrelevant obligation relevant. The Circular is national guidance and must be considered, but departing from it after considering it is a matter of planning judgement, not in itself an error of law.
Why this scheme was unlawful
The scheme was not unlawful merely because it departed from the Circular. It was unlawful for two reasons. First, fixed pooled contributions would be spent on infrastructure with which a development had no more than a trivial connection. The payment was therefore not imposed for a purpose relating to the development and use of the burdened site. In Elsick’s case there was a further defect: the obligation did not itself postpone development until payment. The council resolved to grant permission but to issue it only once the obligation had been entered. The obligation neither restricted nor regulated the development and was outside section 75.
Secondly, a trivial connection meant that the obligation could not be a material consideration. The authority could not require a developer to enter an irrelevant obligation as a precondition of permission. The statement that obligations would follow the Circular was inconsistent with the scheme and provided no safeguard. Lord Hodge accepted that the fund had practical advantages and noted that England and Wales had legislated for a community infrastructure levy, but held that the 1997 Act does not authorise this scheme. A local development land levy would require legislation.
Verdict: The Court unanimously dismissed the authority’s appeal. The order quashing the guidance stood. Section 75 permitted contributions for infrastructure connected to the developments that created the need, but did not authorise this transport fund.
