Enforceability of s106 agreements

Where a Council that has entered into a section 106 agreement as the local planning authority subsequently becomes the sole freehold owner of the land in question, does the section 106 agreement remain valid and its obligations enforceable?

Agreements made under s.106 of the Town and Country Planning Act 1990 (“s.106 agreements”) can be entered into between a landowner and the local planning authority, to enable planning obligations to be given by the landowner to the local planning authority to make the proposed development acceptable in planning terms and enable the grant of planning permission.

If the landowner subsequently sells the land, by virtue of s.106(3)(b) of the Town and Country Planning Act 1990, the obligations contained in the s.106 agreement against the landowner become enforceable against the buyer, as they are deriving title from the landowner. However, what happens if the successor in title to the landowner is the local authority who entered into the s.106 agreement acting as local planning authority?

It is a standard contractual principle that one cannot contract with oneself. As the court stated in The Mayor and Burgesses of the London Borough of Waltham Forest v Oakmesh Limited, Family Mosaic Housing [2009] EWHC 1688 (Ch), the idea of an authority taking enforcement proceedings against itself is a “nonsense”.

Where a Council, as landowner, wishes to enter into a s.106 agreement with itself for the development of its land, the s.106 agreement could be drafted in such a way as would make the obligations contained therein conditional upon the disposal of the land to the ultimate developer. Alternatively, where the relevant land is in an area with two tiers of planning authority (i.e. a local planning authority and a County Council) the local planning authority (as landowner) could enter into covenants with the other tier of local government in order to secure successful enforcement.

However, neither of these solutions can be applied where the local planning authority acquires land that is already subject to a completed s.106 agreement made between the previous landowner and itself (acting as local planning authority). The s.106 agreement remains valid but the obligations cannot be enforced against the local authority in practice. As good practice, the local authority should be discharging the obligations and providing a record of discharge, for transparency. Alternatively, the local authority could vary the s.106 agreement by way of a Deed of Variation, to include a neighbouring local planning authority or the local County Council (if there is one) as the authority responsible for enforcing breaches of the obligations contained in the s.106 agreement.

If the local authority intends to lease out the land that is subject to the s.106 agreement, the lease can contain obligations on the tenant (who will also be bound by the s.106 agreement) to comply with all ongoing obligations contained in the s.106 agreement. This would also be likely to allay concerns regarding the ability of the local planning authority to enforce any breaches of the s.106 agreement.