Flynn, R (On the Application Of) v The London Borough of Southwark Council & Anor

The Court of Appeal dismissed the challenge to the grant of planning permission for the Elephant and Castle redevelopment. The court held that the Planning Committee's resolution to grant permission subject to "an appropriate legal agreement" under section 106 of the Town and Country Planning Act 1990 authorised officers to negotiate the form of the obligation and that the ultimately agreed section 106 obligation was within that delegation. The court accepted that officers could adopt flexible mechanisms (including land transfers and valuation of non-residential floorspace) to secure delivery of 116 social rented units and that those mechanisms were consistent with the committee report, legitimate planning and valuation judgment and not ultra vires.

The court also held that the viability review mechanism and the post-implementation adjustment for the "build to sell" fall-back on the west site were lawful, that the calculation giving rise to 15 additional "social rent equivalent" habitable rooms was rational, and that differences between "social rented" and "social rent equivalent" accommodation were not material in the case's circumstances. Finally, members were not materially misled about the GLA position on grant funding; the developer had committed to deliver the 116 social rented units in any event, and the omission was not such as to require quashing under section 31(2A) of the Senior Courts Act 1981.

This was an appeal from Dove J.'s dismissal of a judicial review challenge to planning permission granted by the London Borough of Southwark for a large mixed-use redevelopment at Elephant and Castle. The appellant, a campaigner for 35% affordable housing, challenged the lawfulness of the section 106 agreement and the associated affordable housing arrangements on three principal grounds: (1) that the section 106 agreement went beyond the Planning Committee's delegation and was therefore ultra vires; (2) that the viability review and "build to sell" fall-back arrangements unlawfully permitted a reduction or substitution of social rented housing and treated "social rent equivalent" as materially the same as "social rented" housing; and (3) that the committee had been materially misled about the availability of GLA grant funding and that the judge had misapplied his discretion under section 31(2A).

Procedural posture: The appeal to the Court of Appeal followed the Planning Court judgment of Dove J. ([2019] EWHC 3575 (Admin)).

Nature of relief sought: Quashing of the planning permission and/or declaration that the section 106 agreement was unlawful.

Issues framed by the court:

• Scope of the committee's delegation to officers to conclude "an appropriate legal agreement" and whether the section 106 agreement was within that scope (vires);
• Lawfulness of the section 106 provisions securing delivery of the social rented housing, including the second and third option mechanisms for transfer/compensation and the viability review mechanism for the "build to sell" fall-back;
• Whether "social rent equivalent" was materially different from conventional "social rented" housing in a way that mattered to the delegation and obligations;
• Whether members were materially misled as to GLA grant funding and, if so, whether quashing relief should be declined under s.31(2A).

Reasoning and conclusions: The court applied conventional objective construction principles to the committee resolution and the officer's report, concluding the instrument of delegation was the committee resolution itself and that the report provided guidance but was not incorporated as a binding template. The flexible mechanisms in the section 106 agreement (including long lease options, transfer at nil value of non-residential floorspace to reflect funding, and a nominal payment) were held to give effect to the committee's objective in the report to secure delivery of the 116 social rented units without exceeding delegated authority. The viability review provisions and the arithmetic that produced a maximum of 15 additional social rent-equivalent habitable rooms on a build-to-sell scenario were found to be rational and within officers' discretion. Differences between "social rented" and "social rent equivalent" were characterised as nuanced and not material in the context of a very small number of units. On the alleged error about GLA funding, the court concluded there was no material mistake of fact because the developer had committed to delivering the 116 social rented units irrespective of grant and the materials read as a whole did not state that grant was secured.

The court therefore dismissed the appeal and refused relief.

Appeal dismissed. The Court of Appeal upheld Dove J.'s conclusion that the Planning Committee’s resolution authorised officers to negotiate and conclude an "appropriate" section 106 agreement; the mechanisms in the agreement (including land transfer options, valuation-based funding and a viability review for the build-to-sell fall-back) were within that delegation and were lawful, not ultra vires. The viability review and the calculation giving rise to up to 15 additional social rent-equivalent habitable rooms were rational and lawful. Differences between "social rented" and "social rent equivalent" accommodation were not material in the circumstances. Members were not materially misled about GLA grant funding and, in any event, the decision would at least highly likely have been the same.

Appeal from the Planning Court (Dove J.) decision in R. (on the application of Flynn) v London Borough of Southwark [2019] EWHC 3575 (Admin) to the Court of Appeal, which delivered judgment in [2021] EWCA Civ 827.