Patel & Ors v London Borough of Brent

A planning obligation under the Town and Country Planning Act 1990 may require more than payment of a specified sum. It may require the owner to permit deposited money to be used for defined planning purposes, and that obligation remains extant until modified or discharged under the statutory procedure. A contractual repudiation claim cannot bypass that procedure. The scope of authorised expenditure depends on the agreement’s language. Where a clause requires works necessary for access, highway safety and traffic flow and describes them as alterations to a specified junction, both criteria must be met. Works solely for another junction fall outside the clause, although dual-function works may qualify to the extent of their function for the specified junction.

The appellants, trustees of a religious charity, deposited £550,000 with the respondent under a planning agreement made pursuant to section 106 of the Town and Country Planning Act 1990. The money was to fund specified highway improvements, with any balance repayable after completion. Following substantial delay, the respondent carried out traffic works and drew down funds.

Mr Justice Hart, in the Chancery Division, held that the appellants could not recover the fund by treating the respondent’s delay as repudiation, and that all the works fell within the agreement. He awarded damages for delay. The appeal concerned the first two findings: whether the statutory modification and discharge procedure was exclusive, and whether expenditure on works concerning Braemar Avenue was authorised by clause 5.1.

Lord Justice Latham delivered the judgment. Lord Justice Auld and Lord Justice Jacob agreed. The appeal was allowed in part.

1. Statutory discharge. The planning obligation created by clause 5 was not limited to the appellants’ initial deposit of £550,000. The arrangement required them to permit the respondent to use the money for the purposes of the trust. The appellants remained beneficial owners of the money unless it was drawn down, but their ownership rights were restricted while the trust continued. The obligation therefore remained extant.
2. The contractual concept of discharge by performance was distinct from statutory discharge under section 106A. Under section 106A(1) of the Town and Country Planning Act 1990, the statutory procedure was the only means of modifying or discharging the planning obligation. The appellants could not obtain that result indirectly by alleging repudiation. The judge was therefore correct on the first issue.
3. Construction of clause 5.1. The clause imposed two cumulative criteria. The works had to be necessary to improve access arrangements and necessary in the interests of highway safety and the free flow of traffic, assessed by highway engineering standards. They also had to be properly described as alterations to the junction of Neasden Lane North and Quainton Street. The word comprising limited the clause to work to and for that junction. Work relating solely to the Braemar Avenue junction was outside the clause, even if highway engineering justified including it in the overall scheme. Work serving both junctions could qualify to the extent that it served the Quainton Street junction.
4. The judge had made no findings identifying which works satisfied that interpretation, and the appellate court had not heard the expert evidence. The matter was therefore remitted to a Master for an inquiry into the qualifying work and for consequential orders. The unchallenged award of damages for delay remained unaffected.

• Court of Appeal (Civil Division) — In [2005] EWCA Civ 644, the appeal was allowed in part. The finding on statutory discharge was upheld, but the issue of qualifying highway works was remitted to a Master for inquiry and consequential orders.
• Chancery Division — Mr Justice Hart’s decision, reported at [2004] EWHC 763(Ch), rejected recovery of the fund by repudiation, held that all the works were authorised, and awarded damages for delay.