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It’s just a phase… isn’t it?

The recent judgment of the High Court in the Oval Estates case has highlighted the importance to developers in settling CIL phasing strategies early on in the planning process and not relying on retrospective action.

The community infrastructure levy (“CIL”) is payable on chargeable developments.  Where a planning permission is expressly stated to be phased, each phase of the development is treated as a separate chargeable development for CIL purposes, meaning the CIL bill can be broken down into smaller payments.

In this case, on 2 March 2016, the charging authority granted outline permission for a residential development.  The planning permission wasn’t phased.

The reserved matters consent, granted on 6 April 2017, approved a drawing which identified three phases of development.

The following week Oval, the developer, submitted to the authority an assumption of CIL liability form and told the charging authority that the development would be carried out in phases.  This kicked off a lengthy exchange of correspondence throughout which Oval asserted that the development was a phased development for CIL purposes (meaning the staggered payment provisions kicked in) and the authority disagreed.

On 15 October 2018, under pressure to keep its development finance in place, Oval commenced the development.

A couple of days before commencing, Oval  applied for a non-material amendment to the outline permission under Section 96A of the 1990 Act to add the phasing drawing to the list of approved plans.  That non-material amendment was approved on 8 February 2019, with the development then well underway.

Oval then argued that the authority had specified the wrong amounts in its liability and demand notices.  It submitted that the amount due ought to have been calculated on the basis that the permission was phased – with each phase a separate chargeable development – and the only CIL due at the time the notices were issued being that for the first phase of development.

The High Court dismissed Oval’s challenge and held that:

  • on 15 October 2018, when Oval commenced development, the chargeable development was the development permitted by the March 2016 permission.  At that stage, the permission was not phased;
  • although the non-material amendment did eventually change the permission to a phased permission, that amendment came too late – “months after the commencement of work”, in February 2019 – to alter the position.

The judgment makes clear that non-material amendments made under Section 96A can change the basis on which CIL liability is calculated – but only where those amendments are made in good time.  The retrospective nature of Oval’s non-material amendment meant that it wasn’t effective.

Oval’s experience serves as a timely reminder of the importance to developers of settling phasing strategies early on in the planning process and tailoring both the resultant permission and development programme to accommodate those strategies.  Critically, where CIL payments are to be phased, the permission must make plain on its face that the development is a phased one.  Failure to meet the strict requirements of the CIL Regulations could be costly.

R (Oval Estates (St Peter’s) Ltd) v Bath & North East Somerset Council [2020] EWHC 457 (Admin) – 28 February 2020