Use Restrictions – Planning Loophole Closed By Court Of Appeal

Peel Land And Property Investments Plc v Hyndburn Borough Council

Summary and implications

The Court of Appeal has held that Peel could not rely on a series of individual planning permissions for physical adjustments to its retail units to override section 106 planning restrictions. This was the case even though the section 106 restrictions would not prohibit or limit development of the retail park in accordance with a later planning permission.

The court held that the later permissions were for operational (building) development only and did not involve a material change of use (from restricted, to open A1).

The court acknowledged that its decision would be of "vital interest" to out-of-town retail park developers, local authorities and town centre occupiers. This is principally because it closes a loophole, preventing developers from circumventing the town-centre-first policy.

The facts

Peel owns an out of-town retail park in Lancashire. Section 106 agreements only allow the sale of bulky goods.

These section 106 restrictions were qualified by standard section 106 provisos which did not prohibit or limit Peel's "right to develop" the park in accordance with later planning permissions.

The Council granted a series of planning permissions for building works to alter units (the Later Permissions). The Later Permissions did not restrict the kinds of goods that could be sold retail from the altered units by condition.

In 2011, Peel applied to the Council for certificates of lawful development contending that, because the Later Permissions were not restricted by condition, the lawful use of the units was unrestricted A1 retail use. When the Council refused, Peel appealed. In October 2012, the High Court found in favour of the Council and the Court of Appeal has now upheld the decision.

Key aspects of the case

Sir John Mummery singled out six key aspects of the case:

1. The goods restrictions accepted by Peel in the Section 106 Agreements were consistent with the Council's planning policy of maintaining a balance between the development of out-of-town retail parks and conserving town centres.

2. The case advanced by Peel would, if correct, involve a departure by the Council from that policy.

3. The changes to the units permitted by the Council are those which Peel asked for i.e. the physical alterations to the units by building operations only.

4. In its applications for the Later Permissions Peel made no specific request to make a material change...