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Health warning (for occupiers of land adjoining a development site)
Jul 8, 2010
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A recent High Court decision has confirmed that owners or occupiers of
land adjoining a development site cannot enforce the provisions of a
section
106 agreement between a local authority and a developer, even if the
developer’s planning obligations will affect their adjacent land.
Partner Susie Wynne reports.
The case (Milebush Properties Limited v Tameside
Metropolitan Borough Council) concerned a section 106 agreement, entered into between
Tameside Council and a developer.
It granted the claimant, Milebush Properties,
a right of way over part of the developer’s land. The developer’s successor
refused to abide by the terms (which were set out in the section 106 agreement)
and instead, tried to impose new conditions over Milebush’s right of way.
Milebush objected and asked the court for the right of way to be granted in
accordance with the provisions of the section 106 agreement.
Unfortunately for Milebush, the High Court said that, although they were
classed as the beneficiary of the right of way provisions, they were not a party
to the 106 agreement itself and so had no right to enforce its terms.
This
decision upholds the general principle of privity of contract in that only
parties to a contract can enforce it.
What Milebush should have done was to insist that a directly enforceable
contract be put in place with the developer at the outset, setting out the
exact terms of the grant of the right of way. If that had been done, the
contract with Milebush would have been binding on the developer’s successor and
any breach would have afforded Milebush the opportunity to take action to
enforce their rights.
Anyone who owns or occupies land adjoining a development site has the potential
to run into similar circumstances. A directly enforceable contract binding on
the developer assures land owners or occupiers that their interests have been
accounted for and that they will have the option to take legal action at a
later stage if the worst happens.