Re: Repayment of Unspent S106 Monies - Public forum - Planning Advisory Service (PAS)

We do not include a time limit unless requested by the developer. 5 years is the time to spend the monies in that instance unless there is a special reason for expenditure within a shorter timeframe.

If you include a timeframe then you are obligated to spend within this time. As I understand it the developer is able to challenge the terms of a S106 Agreement after 5 years if they feel it is no longer reasonable / applicable. Even if you have no formal timescale to spend by you may be challenged by developers who might question the need for a contribution in the first place, if the purpose for which it was agreed has not been provided. Best to firmly encourage delivery within 5 years, or as a Plan B have clear and demonstrable justification for delays (if there are any!)

On a related matter, a well-known Solicitor (using FOI) seeks repayment of an unspent S106 sum paid 5.5 yrs ago. It was secured /paid under the terms of a Unilateral S106 Undertaking (not an Agreement) relating to pp granted on appeal. There is a clause in the UU the Solicitor is relying on which, in summary, says if not used for purpose within 5 yrs, the unused sum to be repaid with interest. Of course, being a unilateral undertaking the Council did not sign up to this. Has anyone come across this UU repayment situation & repaid/withheld? & does anyone agree the LPA is liable/obliged to repay?

That is a rather interesting point. The unilateral undertaking was a promise by the Developer to pay the monies and he has complied with that promise presumably. However there was no promise by the LPA to repay, so from a purely legal point of view there would appear to be no obligation upon the LPA to repay it. The LPA has not promised to do so, legislation does not deal with repayment (these provisions have been driven by practice) so it is arguable the LPA could say the provision was not enforceable against it. The UU was for one purpose only, to allow the grant of a planning permission that would not have been granted otherwise. Following on from that given that the planning permission has probably now been implemented it is hard to see how it could be justified that the thing to make the planning permission acceptable is no longer required. Whether to pay of not will probably depend on the amount and the possible risks of litigation. However, it may be preferable not to put the LPA is a position where a precedent was set requiring repayment as a general rule rather than on a case by case basis.

I would agree that the monies shouldn't be repaid, however we paid back one such sum a couple of years ago as our solicitor told us that it would not be reasonable to withhold it if repayment was requested.

On the issue of the UU, if one was submitted with a 5 year clawback clause and accepted by an LPA in granting planning permission then they would be deemed to have accepted it. Surely the inspector is acting in the same way when allowing an appeal. It may be harsh, but if the LPA isn't happy with a 5 years clawback clause in a UU then they need to contest this at the appeal. In general terms, longer term projects may justify longer clawback periods. If you are collecting for a leisure centre that you think may take 7 or 8 years to deliver then say a 10 year clawback may be appropriate. I would suggest however that a committed project is needed, rather than an aspiration to provide a facility, if this is to be justified. Ultimately CIL or its replacement can be calculated on the basis of the whole life of a plan - up to 20 years - and so will take infrastructure planning into a whole new timescale, currently without clawback provision.

It all comes down to a mixture of planning law, contract law and planning policy. Each case will be different, and there have been legal cases on this general area. You need to look at the specific terms of the s106 itself to decide how and for what purpose monies can be applied. The recent investigation at Reading BC, and this debate, shows that misappropriation of s106 monies could be widespread. In some cases developers may be able to reclaim their monies back. Since 6th April 2010 Regulation 122 CIL has limited the circumstances in which a s106 agreement can be taken into account when a planning authority is deciding whether to grant planning permission (and procedural failures may lead to judicial review), but it does not mean that such a document which has been entered into is not legally binding as a matter of basic contract law. The general legal requirements are governed by section 106 TCPA 1990. As far as the specific content of s106 contributions is concerned, there is a noticeable policy difference between what developers can voluntarily offer, what matters can be taken into account on a planning application, and what can be legally demanded of applicants to provide.