Hillside - The Supreme Court has decided02/11/22
The UK Supreme Court has today published its much-anticipated judgment in Hillside Parks Ltd v. Snowdonia National Parks Authority.
A quick re-cap of the case…
The brief background to this case goes all the way back to 1967 and relates to an original permission to deliver 401 homes in North Wales.
Over the years, the landowner obtained multiple planning permissions in respect of the site, with each permission departing from the development approved under the original permission.
In 1987 the local planning authority argued the original 1967 planning permission had lapsed. The case was decided at the High Court where it was stated that the development authorised by the 1967 Permission could still lawfully be completed at any time.
Subsequently a further eight planning permissions were granted in respect of the site during 1996-2011 (by the new local planning authority, Snowdonia National Park Authority).
In 2019 the new landowner (Hillside Parks) wanted to ascertain whether the development authorised by the 1967 permission could still lawfully be completed. The local planning authority argued the 1967 permission could not be, on the basis development carried out pursuant to the additional permissions granted after 1967 was inconsistent with it.
The case was heard in the High Court and the Court of Appeal, both allowed the local planning authority to raise the point and resolved it in the Authority’s favour.
Hillside appealed to the Supreme Court.
The issue before the Supreme Court
Where there are successive planning permissions relating to the same site, and the later permissions are for changes to one part of a wider development approved in the original planning permission, what is the effect?
Is the original permission completely un-implementable? Or, can the original permission still be implemented in relation to areas unaffected by the later permission(s)?
What has the Supreme Court decided?
The Supreme Court dismissed Hillside Parks appeal and unanimously reaffirmed what is widely known as the Pilkington principle of “physical impossibility” stating:
“(…)the test of physical impossibility applies to the whole site covered by the unimplemented planning permission, and not just the part of the site on which the landowner now wishes to build.”
The court interpreted the principle to mean that where a later permission means it is “physically impossible” to implement an earlier permission, the earlier permission can no longer be relied upon (paragraph 45).
Reassuringly the Supreme Court also addressed the judgments of both Sage and Singh where it had been previously held that “if a proposed development is not or cannot be completed fully with any planning permission under which it is carried out, the whole development will be unlawful”.
In considering the point the Supreme Court held that “a failure or inability to complete a project for which planning permission has been granted does not make development carried out pursuant to the permission unlawful…” The Supreme Court went on to say: “But (in the absence of clear express provision making it severable) a planning permission is not to be construed as authorising further development if at any stage compliance with the permission becomes physically impossible.”
How could this impact planning decisions and future development?
Going forward it is clear the old drop-in and slot-in approach will no longer be available in most cases.
In a basic scenario where you have P1 (original permission) and a new permission (P2) the Pilkington principle dictates that where implementing P2 means any of the development authorised by P1 is physically impossible, P1 is incapable of further implementation.
If the amendments (and therefore the incompatibility) is not material in the context of the scheme as a whole then you could still utilise the drop-in/slot-in approach.
If the amendments are material changes then the drop-in/slot-in of old is not suitable, instead the new permission (P2) should be treated as a variation to P1 and should include a plan of the whole site which incorporates the development that can be built out under P1, then once implemented this will be the overarching permission for the site.
Alternatively if the original planning permission is drafted explicitly and carefully (in particular thinking about the description of development) the permission may still be capable of making certain parts of the development severable. It is unlikely that reference to phasing conditions alone would be suitable, and for the foreseeable future be prepared to see creative and lengthy descriptions of development.
It is yet to be seen whether this will impact the CIL regime in particular thinking about the abatement provisions, in-use building credits and the carry-over of relief which only applies to s73 permissions.
When seeking permission for a large multi-unit, development care needs to be given to any future changes to the development that may be required over the lifetime of the development. Consideration should be given to the best way to ensure your site and planning permission is treated in way that allows explicit severability.
Likewise when purchasing s106 units, a thorough inspection of the planning permission history should be carried out to ensure there are no issues, which may be caused by future development of the site (outside of your control), charging, and any CIL reliefs being sought.
In addition, careful thought will need to be given when negotiating development agreements to curtail the ability for developers to apply for subsequent planning permissions for a site or part of it, which if implemented could unwittingly render any further development under the original planning permission unlawful due to it becoming physically impossible to complete the development as envisaged by the original permission.
The same careful thought will need to be considered in relation to any indemnities offered by developers to discharge CIL liability to ensure that the wording of the indemnity captures any liability or loss of relief triggered by a subsequent permission.
How Capsticks can help
Our Housing & Regeneration team, one of the largest in the country, advises on all types of development transactions from forward funded schemes, section 106 developments and stock rationalisations to plot sales and general asset management work. We are experts on all aspects of planning law including s106 agreements, CIL advice, planning appeals, Compulsory Purchase Orders and all general planning law matters.
If you have any queries around what is discussed in this article, and the impact on the affordable housing sector, please speak to Suzanne Smith or Spencer Vella Sultana to find out more about how Capsticks can help.