Patel & Ors v London Borough of Brent

A planning obligation securing money for specified highway works cannot be discharged by accepting a repudiatory breach. The obligation is the landowner’s agreement to permit the authority to use the deposited money, and modification or discharge must be pursued under section 106A of the Town and Country Planning Act 1990.

The contractual question whether works are necessary is ordinarily one for the designated engineer’s judgment. That judgment may be challenged only for bad faith, misconstruction of the contractual criteria, or absence of evidence capable of supporting the opinion. An authority must continue using reasonable endeavours after an express completion date where necessary to give the agreement business efficacy.

The claimants, trustees of a religious charity, sold a development site after entering into a section 106 agreement with the defendant local authority. The agreement required £550,000 to be deposited for highway improvements and traffic-management measures, with any balance repayable after completion.

The authority delayed implementing works, eventually completing signalisation and associated footway works. The claim concerned whether the agreement had been discharged by repudiatory breach, whether the works fell within the contractual description, whether the engineer’s opinion could be challenged, and whether delay caused recoverable loss.

1. Discharge by breach. The relevant planning obligation was the claimants’ agreement to allow the deposited sum to be drawn down for the purposes specified in the agreement. The obligation was therefore not discharged by accepting an alleged repudiatory breach. The statutory routes under section 106A of the Town and Country Planning Act 1990 governed modification or discharge.
2. Planning necessity. The claimants were not contractually precluded from arguing that no works, or particular works, were necessary. Necessity in this context involved planning judgment, rather than an absolute legal standard. The engineer could consider the planning officer’s recommendation and the parties’ willingness to enter the obligation.
3. Engineer’s opinion. The contractual discretion had to be exercised honestly and in good faith, by reference to the correct criteria, and on evidence capable of enabling a competent engineer to reach the opinion formed. The court rejected a broader requirement that every omitted relevant factor or included irrelevant factor automatically invalidated the opinion. The engineer’s opinion was supported by the junction’s substandard condition, the increased use caused by the development, and the improvements achieved by the works.
4. Scope and expenditure. Signalisation of the adjoining Braemar Avenue junction fell within the contractual reference to alterations to the Quainton Street junction because best practice required the two schemes to operate together. The maintenance charge for the traffic lights was a proper cost. The question of a 20 per cent contractor’s overhead was left to an inquiry.
5. Continuing endeavours and delay. The authority was under an implied obligation to continue using reasonable endeavours after 21 October 1994 and to identify the necessary works. Its prolonged, unfocused pursuit of the slip-road proposal breached that obligation. The claimants were entitled to an inquiry into damage caused by the works not being completed by the end of 1996.