Supreme Court decision: Hillside Parks Ltd v Snowdonia National Park Authority

In this article, we look in detail at the main principles established in the recent Supreme Court case and consider the practical implications for developers.

Introduction and case summary

In Hillside Parks Ltd v Snowdonia National Park Authority [2022] UKSC 30, the Supreme Court clarified how to approach successive grants of planning permission within the same red line boundary and in particular, the effect of implementing a subsequent planning permission which overlaps and is inconsistent with an earlier planning permission relating to the same site. Known as “drop-in” permissions, this approach has been common, particularly in large-scale, long-term developments, where over time there is a need for substantial changes to, for example, the mix and type of uses.

In Hillside, planning permission had been granted in 1967 for 401 dwellings at Balkan Hill, near Aberdyfil in the Snowdonia National Park. Development was to be in accordance with a detailed “master plan” showing the proposed location of each house and the layout of a road system for the housing estate. Several subsequent full planning permissions were granted in respect of different parts of the site, all but two of which were implemented. The Supreme Court had to consider whether, in light of these subsequent permissions, the 1967 permission was still capable of lawful implementation.

The Supreme Court concluded that both the Court of Appeal and the High Court had correctly interpreted the historical planning permission in the case as a permission to carry out a single scheme of housing development and agreed with the local planning authority, the Snowdonia National Park Authority, that the houses and estate roads built on the site to date were inconsistent with the historical planning permission.

As a result, the Supreme Court held, it was now physically impossible to develop the site in accordance with that permission. The Supreme Court concluded that development pursuant to the 1967 permission could not lawfully be continued because the subsequent permissions departed too significantly from the 1967 permission master plan so that it was now physically impossible to build out the development in a way which was consistent with the original approved development. This meant that the 1967 permission was no longer valid for the development to be carried out to completion.

Hillside Principle 1: Approval of the Pilkington principle

“In essence, the principle illustrated by the Pilkington case [[1973] 1 WLR 1527, Divisional Court] is that a planning permission does not authorise development if and when, as a result of physical alteration of the land to which the permission relates, it becomes physically impossible to carry out the development for which the permission was granted (without a further grant of planning permission)…Where the test of physical impossibility is met, the reason why further development carried out in reliance on the permission is unlawful is simply that the development is not authorised by the terms of the permission, with the result that it does not comply with section 57(1).” (paragraph 45).

When considering what is “physically impossible” the correct approach is to consider the whole site, not just undeveloped parts of the site that are still available for development under the original permission.

So, where Permission A is granted for development of a whole site (the original permission) and Permission B (the “drop in” permission) is subsequently granted and implemented within the same red line boundary, with the result that it becomes “physically impossible” to comply with Permission A, a developer can no longer rely on Permission A to build out any further development under Permission A.

This has a number of important consequences. First, a relatively modest “drop in” permission on a larger site might mean that Permission A can no longer be relied on to build out the rest of the scheme. Where there are multiple developers building out a site pursuant to an overarching single planning permission, who might be considering the prospect of “drop in” permissions for their development parcels, this represents a real and significant risk.

Second, although a developer can, in principle, lawfully build out Permission B, caution should be exercised if a developer is relying on any part of the development authorised by Permission A e.g. access to or from the development permitted under Permission B. If Permission A is deemed to have lapsed then it may not be possible to build out or operate Permission B in accordance with the terms of that subsequent consent.

Hillside Caveat 1: Precise compliance with the earlier permission is not required – for physical impossibility to occur, there must be a material departure from the earlier planning permission

“The Pilkington principle should not be pressed too far. Rightly in our view, the Authority has not argued on this appeal that the continuing authority of a planning permission is dependent on exact compliance with the permission such that any departure from the permitted scheme, however minor, has the result that no further development is authorised unless and until exact compliance is achieved or the permission is varied. That would be an unduly rigid and unrealistic approach to adopt and, for that reason, would generally be an unreasonable construction to put on the document recording the grant of planning permission – all the more so where the permission is for a large multi-unit development. The ordinary presumption must be that a departure will have this effect only if it is material in the context of the scheme as a whole: see Lever Finance Ltd v Westminster (City) London Borough Council [1971] 1 QB 222, 230. What is or is not material is plainly a matter of fact and degree” (paragraph 69).

How to assess whether a particular change or variation is “material in the context of the scheme as a whole” is likely to become a matter of some debate for schemes that are already underway.

The Supreme Court drew an analogy with s96A of the Town and Country Planning Act 1990 which authorises non-material amendments to planning permissions. It can be inferred from the judgment that if a physical difference between the two developments under Permission A and Permission B is something that could ordinarily be consented as a s96A change, then this will not render development pursuant to Permission A unlawful.

This means that if, for example, there was a minor difference between the way the proposed development aligns with the highway, or a small difference in the orientation of the building then development should be able to continue under Permission A.

However, careful consideration should be given to the effects of a change when deciding whether it is non-material. So, if a small change to the orientation of a building has a significant impact on the privacy of residents on adjoining land through e.g. overlooking then this may too be material. In this case, the change could render it impossible to continue with development under Permission A.

The construction of each of Permission A and B (conditions, approved plans and supporting information) will be key to assessing whether the change or variation is material.

Hillside Caveat 2 – “Mere incompatibility” between planning permissions, by which the Court means where there is no physical conflict, does not cause a problem

For example, the fact that a condition attached to Permission A cannot be complied with as a result of Permission B, does not result in the loss of the benefit of Permission A.

The Supreme Court provided an example of what might constitute “mere incompatibility” (or as they also put it, “mere inconsistency”). They refer to the Prestige Homes case (Prestige Homes (Southern) Ltd v Secretary of State for the Environment and Shepway DC (1992) 64 PCR 502), in which a house was built under a planning permission which included a condition to retain some trees. The Court had to consider whether development under a separate planning permission for a second house was lawful, even though it required removal of the trees. The Court decided that it was not physically impossible to carry out the development authorised by the second permission, therefore, the second house could be built.

“Mere incompatibility” would, however, continue to give rise to an enforcement risk for breach of condition of Permission A and should, therefore, be regularised by way of a variation under Section 96A or Section 73 of the 1990 Act.

Hillside Caveat 3 – It may be possible to construe a planning permission as authorising a series of independent acts, but this will need to be very clear on the face of the planning permission

“In the absence of clear express provision making it severable a planning permission is not to be construed as authorising further development if any stage compliance with the permission becomes physically impossible.” (paragraph 68).

In relation to multi-phased planning permissions, this may already be the case. If it is not, it may be useful in the future for this approach to be introduced (see further below).

Hillside Principle 2: The whole development is not unlawful if a proposed development cannot be completed fully in accordance with the planning permission

The Supreme Court concluded that failure to complete a building operation for which planning permission has been granted does not render the whole operation including any development carried out unlawful. Anything built in accordance with Permission A before Permission B is implemented remains lawful.

This is particularly helpful for multi-unit developments; a failure to build out all of the units permitted under the permission does not endanger those already constructed.

The “Hillside” solution – how to lawfully vary a multi-unit strategic planning consent

“Despite the limited power to amend an existing planning permission, there is no reason why an approved development scheme cannot be modified by an appropriately framed additional planning permission which covers the whole site and includes the necessary modifications. The position then would be that the developer has two permissions in relation to the whole site, with different terms, and is entitled to proceed under the second” (paragraph 74).

Drop-in permissions are usually used where they exceed the thresholds for non-material or minor material changes to a planning permission. So, in a situation where:

(a) the Pilkington principle would bite; and
(b) Permission B cannot be shown to be clearly severable from Permission A; and
(c) because of development constructed under Permission B, it would now be physically impossible to complete Permission A in accordance with its terms

the correct procedure following Hillside is to apply for a separate, replacement permission, covering the whole site, which sets out the modifications being sought, and which includes a series of plans showing how the two developments fit together.

This would result in a part retrospective second planning permission relating to the whole site, as Permission C.

Careful consideration will need to be given in relation to the relevant planning policy and the political framework for resubmission. Developers will need to be mindful of any amended requirements in relation to planning conditions/obligations and obligations to update reports (such as ecological surveys), and any changes which may require Environmental Impact Assessment or an “appropriate assessment” pursuant to the Habitats Regulations. This has obvious financial and practical consequences for developers.

Careful thought should also be given to the Community Infrastructure Levy (CIL) implications of amending by way of a new planning permission. Such a permission will result in a separate chargeable development. In particular, developers will need to consider whether any “in lawful use” discount will be available and whether the replacement permission will qualify for relief if the new permission is partly retrospective; there is no mechanism in the CIL Regulations for transferring a relief granted for one permission across to a later one. The abatement provisions in the CIL Regulations may enable developers to credit any CIL payments made under the original permission against the liability of the new permission, however the abatement provisions only apply to CIL payments that have already been made and is not automatic.

A full analysis of the potential implications for CIL liability is beyond the scope of this note, however we would be happy to advise on a case specific basis.

Outline or phased planning permissions

It is unclear as to the extent to which the principles set out in Hillside apply to outline planning permissions, given passages such as paragraph 20: “In this case, we are concerned with grants of full planning permission, in relation to which it is to be expected that a reasonable reader would understand that the detailed plans submitted with the application have particular significance.”

It may be that deliberate phasing of a development would be sufficient to constitute “clear express provision making it severable” but the position is more complicated when looking at a hybrid scheme where some phases have a full planning permission and later phases are outline only.

In relation to outline planning permissions, the risk of unforeseen Hillside consequences may be reduced if each phase is brought forward with a series of full applications (each following a master plan) rather than having different parties pursue reserved matters applications on different areas (although in doing so the points made above in relation to changing policy requirements will need to be kept in mind as will the complexities brought about by the need for shared infrastructure).

Conclusion

While Hillside provides some clarity, it also raises a number of questions and practical implications for developers wishing to amend multi-unit permissions.

It is now more important than ever to assess and (if possible) include various options at the outset of a planning application to minimise the need for future drop-in permissions. Developers should consider including express wording in a description of development to identify that individual components of the development are to be phased and are severable.

If changes to permissions are required, developers should consider carefully how a proposed scheme interacts with an existing master plan, whether the proposed amendments are “material” and/or capable of being determined via 96A of the 1990 Act (in which case the drop in permission route may be available but may also be unnecessary). An application for a Certificate of Lawful Development may be a sensible option to pursue if there is any doubt. Otherwise, there could be a risk of enforcement action further down the line if the local planning authority disagrees with the developer and considers any changes to be material. If a new, replacement permission is required and progressed, careful consideration should be given to submission requirements, planning policy, and any CIL implications.

There are a number of ways to avoid or de-risk these type of situations and we are happy to advise further on a case specific basis.

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