HILLSIDE – WHAT DOES THIS MEAN FOR THE REAL ESTATE INDUSTRY?

The much-awaited judgment from the Supreme Court on Hillside Parks Limited v Snowdonia National Park Authority was delivered last Wednesday (2nd November 2022). The Court unanimously dismissed the developer’s claim that full planning permission issued in 1967 could continue lawfully.

This judgment clearly has significant practical and financial ramifications for bringing forward sites of all sizes. Developers will need to proceed with caution when seeking to submit ‘drop-in’ applications concerning a site which has the benefit of broader planning permission.

Below, Associate David Mabb and Emma Barkas of Clyde & Co share their initial thoughts on the verdict and its implications.

Background 

In 1967, full planning permission was granted for the development of 401 dwellings in Snowdonia in accordance with a master plan for the whole site. Between 1967 and 1973, seven subsequent full planning permissions were granted in respect of different parts of the site. In 1987, the High Court ruled that the 1967 permission remained valid on the basis that each subsequent grant was ‘merely a variation’ of it. There have since been eight further full planning permissions granted in respect of other parts of the site, all but two of which have been implemented.

The Supreme Court had to consider whether, in light of these subsequent permissions, the 1967 permission is still capable of implementation (a proposition which had been dismissed by the High Court and Court of Appeal).

The Judgment 

Agreeing with the local planning authority, the Supreme Court upheld the well-known Pilkington principle and determined that where development carried out according to subsequent planning permission makes it ‘physically impossible’ to carry out development pursuant to an earlier permission in accordance with its terms, then that earlier permission can no longer be relied upon. The Court added the following important observations:

• ‘Physical impossibility’ is not the same as ‘mere incompatibility’ (the latter of which would not be fatal to an earlier permission);
• This does not require ‘exact compliance,’ i.e. departures from previous permission which are not material in the context of the development as a whole would not be fatal to pursuing development pursuant to that permission. Whilst the Court acknowledged there is no definition of ‘material’, it appeared to deal with this by analogy with section 96A of the 1990 Act in determining whether a proposed amendment to permission would be non-material;
• Development carried out under later permission does not affect the legality of works already completed pursuant to (and in accordance with) previous permission.

The Court also rejected the developer’s submission that the 1967 permission should be interpreted as authorising independent development acts into a broader consent. Instead, it held that planning permission for a multi-unit development (as here) is granted for the development ‘as an integrated whole’.

In addition, the Court was not satisfied that the post-1987 permissions comprised variations of the 1967 permission. Whilst it accepted that a later consent might be deemed to vary previous authorisation, the Court indicated this would require details which show how the new proposal forms part of a coherent design for the whole site as authorised by the previous permission.

Implications 

So what does this judgement mean in practice?

In terms of variations of consents, the Court confirmed that there was no reason that earlier permission could not be modified in principle but expressed some caveats, including that it should relate to the whole of the original site. In these circumstances, the variation permission would be an alternative to the existing consent because the developer could then choose between them (rather than work alongside it, in the way a drop in condition would). In addition, there was a clear suggestion that such an approach may include (re)submission of the documents relevant to the whole site, including a complete ES. This has obvious financial and practical consequences for developers.

Quite apart from the above, going forward developers will need to consider:

(a) the need to include express wording in a description of development to identify that individual component of the development is to be phased and are severable;

(b) the need to include (and assess) various options at the outset so as to minimise the possibility of a future drop-in permission;

(c) the extent to which a scheme interacts with an existing masterplan for a wider site and, if so, whether additional documentation is needed to evidence compatibility;

(d) whether the proposed amendments are ‘material’. If considered ‘non-material’ and/or capable of being determined via section 96A of the 1990 Act, a ‘drop in’ application route may be available;

(e) the potential to modify the description of the development of extant permission via a section 96A application to include explicit reference to severability (e.g. phased development) and the inclusion of a phasing plan. This may provide an opportunity to submit amendments to a specific phase;

(f) whether (if the original consent can no longer be relied upon) the planning benefits secured (and built out) as part of an earlier phase can be taken into account in the planning balance of the requisite later phases that are the subject of a subsequent application or are they ‘lost’;

(g) the changes to planning policy/political make-up of the local planning authority that may influence a future decision, regardless of the presence of extant permission (albeit, bearing in mind the utility of a fall-back position);

(h) when to propose amendments given that the greater the number of phases remaining to be built out, the greater the level of planning risk because they may all need to be the subject of a future application;

(i) whether there is an opportunity to agree on bespoke approaches to large schemes with local planning authorities e.g. it might be beneficial to bring forward a masterplan with a series of full applications rather than having different parties undertake reserved matters applications on different areas.

(j) whether section 73 is even an option in the light of the Finney judgment, which cast a ‘web of restriction’ over large schemes for even desirable changes to be brought forward without a fresh application.

Above all, developers must seek to protect existing strategic consents by ensuring that any subsequent planning applications for part of the site do not contain material changes to the consented scheme, which would render that scheme physically impossible to develop.