Health warning for occupiers

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.  A Willans Commercial Property Partner reports.

The Facts

• 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.

Comments

• 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.

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