Our previous blog covered the need for reform to avoid S106 agreements being held up by lockdown given the need to execute them as deeds.
In the meantime, there are some fixes for local authorities which mean that no grant of permission should be delayed.
Stuck with seals?
Local authorities (LAs) are bodies corporate in aggregate. At common law, they must execute all documents by affixing their common seal in the manner prescribed by their constitution (unless excused by a specific statutory provision):
- LAs are not covered by Section 44(2) of the Companies Act 2006 (which allows companies to execute by a signature)
- The Local Government Act 1972 does not govern the use of a local authority’s seal (other than allowing standing orders to be made regulating its use).
- Section 1 of the Corporate Bodies’ Contracts Act 1960 does modify the position for ‘simple contracts’ (where any person with express or implied authority to do so can sign a contract on behalf of a body corporate). Because Section 106 agreements are deeds, this does not apply.
A local authority should therefore execute a deed under its common seal in accordance with its Constitution. Standing Orders under s.135 LGA 72 often require the use of the seal to be attested by at least one officer (and often by the chairman, vice-chairman or other elected member).
That poses obvious difficulties in the current situation (and looking beyond it, to a more resilient future).
Against that restrictive backdrop, there are some ways to innovate until the Government addresses witnessing requirements:
- Use counterparts: avoiding execution of duplicate sets by all parties will speed up the process and may allow completion without all parties being in possession of each other’s counterparts where solicitors’ certification and undertakings are used.
- Consider whether officers can execute documents under Section 234 of the LGA 1972 (which “allows notices, orders or other documents”) to be signed “on behalf of the authority” by an authorised officer. This may – where Constitutions are amended – allow for a delegated execution, which bypasses the need for the seal itself and the sealing protocol. It would, however, still fall foul of the need for eyeball-to-ink witnessing that our previous blog highlights.
- Use conditions: restrictive conditions can be used to require a planning obligation to be entered into before commencement, as long as the terms are clear. The PPG already acknowledges that. Agreed drafts must already be placed on the planning register and so can be easily cross-referred to for this purpose. So too can a developer’s executed counterpart or duplicate.
- Use Unilateral Undertakings: as long as any reciprocal obligations from the authority (benefitting the developer) are waived by the applicant or there is an undertaking by the LA to abide by them and provide its own undertaking in the future.
- Use a combination: permission could be granted based on a developer’s executed and ‘delivered’ counterpart agreement, expressed to be unilaterally effective until the LA’s part is dated, with a written undertaking by the LA to do so as soon as reasonably practicable.
Where there is a will to grant permission, there will be a way to do so swiftly.