The Community Infrastructure Levy Regulations continue to generate a small but steady stream of cases. The outcomes are most often predictable. How they arrived at Court is sometimes a bit of mystery.
Most CIL judgments have tended to reflect a plain reading of the Regulations, throwing up few surprises. Pause for thought, though, because the High Court is clear that “It is no longer appropriate to adopt a literal approach to the construction of revenue statutes” […] “The modern approach is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in the way which best gives effect to that purpose.” R (LB Lambeth v SoS CLG)  EWHC 1459 (Admin)
Two recent cases confirm that plain reading and common sense should do the job.
In R (Heronslea (Bushey 4) Limited) v SoS CLG  EWHC 96 (Admin) the oddity is that the claim was considered arguable and allowed to proceed. It concerned development approved in February 2019 which was stripped of several hundred thousand pounds worth of Social Housing Relief (SHR).
The authority granted SHR in May 2019 and by June it was clear development had commenced without any commencement notice being served. At that time, the CIL Regulations were set up to cause an award of Social Housing Relief to lapse if the development commenced without service of a commencement notice (reg.51(7)(a)). This was one of the punitive elements of the CIL Regulations removed by the reform amendments published in July and effective from 1 September 2019.
The authority was entitled to calculate a deemed commencement date and issue a revised liability notice – reflecting the effect of reg.51 as it then stood – with no SHR. It did so, to the cost of around £300k. The early start was therefore punishing.
The consequence was foreseeable and within the developer’s control. The developer was admittedly unlucky to have breached the Regulations a couple of months before the loss of SHR would have been avoided. It went on to rack up a further £170k of surcharges and late payment interest as it disputed and so delayed payment.
In another recent case, the developer sought to claim SHR for floorspace not bound by any S106 obligation or planning condition to be affordable housing. This was presumably to allow the use of grant funding to acquire the market units for provision as affordable housing, in tandem with debt secured against their ultimately unconstrained private residential use. The developer contested the Council’s refusal to grant SHR and argued that the homes would not have needed to be bound by obligations or conditions to qualify. This did not survive contact with judicial logic – until bound as affordable housing, the Council was entitled to treat the homes as non-qualifying. One oddity is the Judge’s acceptance that the Council would have been lawfully entitled to have regard to the desirability of maximising the CIL return in refusing to enter into a deed of variation, for example, to secure the additional homes as affordable.
This may end up being relevant to the undertow of schemes which have increased their complement of affordable housing over the past few years (i.e. beyond that which the original CIL charge allowed for) in way that is secured by planning obligation. This can generate substantial overpayment (CIL clawback) claims if done properly and be a shock to cash-strapped authorities who will rarely have made provision for it.
The points to draw from this are:
- The Regulations are largely more proportionate than before
- It rarely pays to breach them
- They tend to mean what they say
- The threshold of arguability for CIL challenges is sometimes rather low.