Elsick Development Co Ltd v Aberdeen City and Shire Strategic Development Planning Authority (Aberdeen)

The Supreme Court held that a development plan policy and associated supplementary guidance which required developers to make fixed pooled financial contributions to a strategic transport fund was unlawful under the existing statutory framework. The court applied the statutory wording of section 75 of the Town and Country Planning (Scotland) Act 1997 and established that a planning obligation must restrict or regulate the development or use of the burdened land and cannot lawfully be used to extract contributions for infrastructure with which the particular development has only a trivial connection. The court concluded that for a contribution to be a material consideration in granting permission there must be more than a trivial (non-de minimis) connection between the development and the works to be funded (following Tesco). It followed that pooling fixed per-unit contributions to pay for a basket of interventions many of which were unrelated or only trivially related to some developments was outside the statutory power and unlawful.

The appellant Strategic Development Planning Authority adopted supplementary guidance establishing a Strategic Transport Fund to mitigate cumulative transport impacts arising from planned growth in the Aberdeen area. The guidance set fixed per-unit contribution levels, proposed pooling contributions in a ring-fenced fund administered by the regional transport partnership (Nestrans), and envisaged using planning obligations under section 75 of the Town and Country Planning (Scotland) Act 1997 to secure payments. Elsick Development Company Ltd proposed a large housing-led development and challenged the statutory supplementary guidance and the validity of the planning obligation it had entered into, on the ground that the contributions required were out of proportion to the impacts of its development and contrary to Scottish Government guidance in Circular 3/2012.

The statutory plan-making process involved a reporter who recommended amendment to ensure contributions were only used for projects related to the developments concerned and necessary to make individual developments acceptable. The Authority revised the plan and converted non-statutory guidance into statutory supplementary guidance. The Inner House (First Division, [2016] CSIH 28) allowed Elsick’s challenge and quashed the supplementary guidance, holding that the scheme failed to comply with the national policy tests and that many developments had no or only de minimis impact on a number of the listed interventions.

On appeal to the Supreme Court the issues were whether the tests applicable to planning conditions apply to planning obligations; the lawful scope of section 75 obligations; the role of planning obligations as material considerations in deciding planning applications; and the boundary between legality and policy. The court analysed the statutory provisions (notably sections 22, 24, 25 and 37 of the 1997 Act and the substituted section 75) and relevant authorities including Tesco on the relevance of obligations.

The court concluded: (i) a planning obligation must restrict or regulate the development or use of the burdened land; (ii) the law does not permit a negative suspensive planning obligation (or other obligation) that conditions development on payment for infrastructure which has no more than a trivial connection with the burdened land; and (iii) for a contribution to be a material consideration in granting permission there must be more than a trivial connection between the development and the intervention to be funded. Applying those principles, the pooled fixed-contribution Fund and the obligation Elsick entered into were unlawful because they required contributions for infrastructure largely unconnected or only trivially connected to particular developments and the obligation was not itself regulating the development of Elsick’s land within the meaning of section 75. The appeal was dismissed.

The appeal was dismissed. The Supreme Court held that the supplementary guidance and the planning obligation were unlawful because section 75 requires that an obligation restrict or regulate the development or use of the burdened land and the planning obligation here sought to extract pooled contributions for infrastructure with which some developments had only a trivial connection. Further, under Tesco a financial contribution is a material consideration only where there is more than a trivial connection between the development and the works to be funded; the pooled fixed per-unit levy breached those limits and could not lawfully be imposed under the present statutory powers.

Appeal from the Inner House, Court of Session (First Division) which allowed Elsick's appeal and quashed the supplementary guidance: [2016] CSIH 28. The strategic development plan had been examined by a reporter (report dated 21 January 2014) and the Authority's adoption of statutory supplementary guidance was challenged under section 238 of the 1997 Act. Permission to appeal to the Supreme Court was granted and this judgment dismisses the Authority's appeal: [2017] UKSC 66.