Galliard Hotels Ltd & Anor v London Borough of Lambeth

A planning obligation under section 106 must be construed objectively by the court. Where its wording permits revisions or amendments without an express limit, an alternative scheme may be approved if it satisfies the obligation as properly construed. Subsequent events do not retrospectively invalidate planning permission. A condition or planning obligation is not unlawful merely because implementation may appear uncertain. A financial contribution may be taken into account where it has more than a de minimis connection with the development and the permission is not simply bought.

The claimants, owners of neighbouring hotel sites, sought judicial review of Lambeth’s grant of planning permission for a 234-room hotel. They challenged the section 106 agreement’s Coach and Taxi Drop-Off Strategy, contending that it depended on their consent to use adjoining land and was therefore unattainable. They also challenged a £32,669 contribution towards local libraries, alleging that it was excessive and unrelated to the development.

The court also considered a later strategy approved by Lambeth, whether the matter required referral back to the Planning Committee or the Mayor, and whether the library contribution was an immaterial planning consideration.

1. The application was dismissed. Permission to advance the supplementary ground was granted. The claimants were ordered to pay the defendant’s costs of £5,950, and permission to appeal was refused.
2. Schedule 8 of the section 106 agreement was a matter of contractual construction for the court. Its obligations also had to be objectively determinable because they were enforceable as planning obligations under the Town and Country Planning Act 1990.
3. Properly construed, Schedule 8 was not inflexible. Paragraphs 4 and 6 contemplated revisions and amendments, and imposed no limit preventing changes to the elements identified in paragraph 3. The initial strategy could therefore include alternative arrangements, provided Lambeth approved it in consultation with TfL.
4. The later change in TfL’s view, based on evidence of limited coach use at comparable hotels, did not require reconsideration by the Planning Committee or the Mayor. The approval of the strategy was a matter of planning judgment. Subsequent events could not retrospectively invalidate the original planning permission.
5. Following British Railways Board v Secretary of State for the Environment [1993] 3 PLR 125, planning permission could not be attacked as Wednesbury unreasonable merely because a condition appeared to have no reasonable prospect of implementation. The same principle applied to the section 106 undertaking.
6. The library contribution was lawfully considered. Applying Tesco Stores Ltd v Secretary of State for the Environment [1995] 2 All ER 636, the connection between the hotel development and local libraries was more than de minimis, and the permission had not been bought. The amount was a matter for negotiation and planning judgment.