Pye (Oxford) Ltd v South Gloucestershire District Council

A planning agreement under Town and Country Planning Act 1971, section 52, need not relate to a particular development. It must, however, be entered into for the planning purpose of restricting or regulating the development or use of land. That requirement differs from the test for a condition attached to planning permission. An agreement entered into for an improper purpose may be unenforceable by the authority. Whether that occurred was sufficiently arguable to justify permission to appeal.

Pye had obtained planning permission for development subject to a condition requiring construction of a link road. Under a 1979 agreement, made purportedly under section 52 of the Town and Country Planning Act 1971, Pye agreed to reimburse the highway authority for land acquired for the road. The Vice Chancellor upheld the agreement’s validity on a preliminary issue, relying on Good v Epping Forest District Council [1994] 1 WLR 376 and Tesco Stores v Secretary of State [1995] 1 WLR 759.

Pye renewed its application for permission to appeal. The principal issue was whether an agreement unconnected with the permitted development amounted to an improper attempt to purchase planning permission.

1. Permission granted in part. The renewed application was allowed, with permission restricted to the issue whether the reimbursement obligation was entered into for an improper purpose. Costs were costs in the appeal.
2. The contention that a section 52 planning agreement had to relate to the particular development permitted was unarguable. The authorities established that such an agreement need not have that connection, unlike a condition imposed on a planning permission.
3. The statutory test was whether the agreement was entered into for the purpose of restricting or regulating the development or use of land in the local planning authority’s area. Clause 6, which restricted development until the link road had been built and dedicated, indicated a planning purpose. The Vice Chancellor was therefore right on that ground.
4. The court nevertheless regarded the second ground as arguable. If an authority entered into an agreement for an improper purpose, the resulting obligation might be one which the authority could not enforce. The relevant assumption was that the authority knew that improper purpose was the objective for which the agreement had been concluded.
5. The court did not determine the ultimate validity of the agreement. It held only that the improper-purpose issue had sufficient significance and prospect of success to proceed to appeal.

• Chancery Division: The Vice Chancellor, on 19 October 2000, upheld the validity of the 1979 planning agreement on a preliminary issue.
• Court of Appeal (Civil Division): The renewed application for permission to appeal was allowed, limited to the improper-purpose issue. Costs were costs in the appeal.