Trent Won, Cil Nil

The community infrastructure levy system, in its application to lay individuals in particular, is monstrous, absurdly over-engineered, often badly administered and unfairly opaque.

Could anyone disagree after reading Lang J’s judgment handed down yesterday in R (Trent) v Hertsmere Borough Council (16 April 2021)? (Or for another example see my 19 January 2019 blog post CIL The Merciless).

Solicitor Alison Trent brought proceedings for judicial review, as a litigant in person, in order to quash a totally unjustified demand notice for £16,389.75 that she received on 21 April 2020 in relation to the construction of a dwelling in Radlett.

Her success represents a loud wake-up call for CIL collecting authorities.

Planning permission was issued on 10 February 2017 for demolition of a house and the construction of a replacement three bedroom dwelling.

Even with a project as simple as this, there is a complicated sequence of notices:

⁃ Under regulation 65(1) of the CIL Regulations 2010 “the collecting authority must issue a liability notice as soon as practicable after the day on which a planning permission first permits development”.

⁃ The person assuming liability for CIL then has to serve an assumption of liability notice and, if appropriate as here, a self build exemption claim form.

⁃ A commencement notice must then be served on the authority before development commences.

When something goes wrong in that sequence, matters invariably get messy.

Here:

⁃ There was no evidence that the necessary liability notice had been sent out in 2017 although a draft was on the council’s computer system.

⁃ Ms Trent had unwittingly jumped the gun by purporting to submit a self build exemption form ahead of planning permission being issued and had failed to submit an assumption of liability notice, both mistakes apparently at least partly due to misleading advice she had received from the authority.

⁃ The development took place and, when the authority realised, it issued a liability notice, demand notice and imposed surcharges for failing to submit an assumption of liability notice (surcharge of £50) and failure to submit a commencement notice to the Council (surcharge of £2,500).

Ms Trent had successfully appealed to the Planning Inspectorate against the imposition of the surcharges. The inspector found that (1) the council had failed to issue a liability notice and therefore she had never been in a position to serve an assumption of liability notice – the 2017 notice had never been served and the 2019 notice was not served “as soon as practicable” after planning permission had been issued – and that (2) the deemed commencement date on the demand notice was incorrect. She had also argued that the notices did not meet procedural formalities but the inspector did not need to consider that issue.

Unbelievably, the authority then issued a replacement demand notice, on 21 April 2020, relying on the 2019 liability notice which the inspector had considered not to be valid!

Ms Trent challenged the issue of that demand notice by way of judicial review, arguing as follows:

“In the light of the Inspector’s findings, and the Council’s material misunderstandings or errors of fact and/or errors of law and/or procedure, the Council’s decision to issue the 2020 demand notice, on the basis that the 2019 liability notice was valid, was manifestly improper and/or irrational and/or unfair and unreasonable.

…the Council’s decision to issue the 2020 demand notice, and to maintain its registration on the Land Charges Register for the Property in respect of the alleged CIL liability, was a breach of the Council’s duty under section 6 of the Human Rights Act 1998 in that it acted in a manner which was incompatible with her Convention rights under Article 1 of Protocol 1 to the European Convention on Human Rights (“ECHR”).”

The judge found as follows (extracts from judgment):

“In my judgment, the Defendant was required to issue and serve statutory notices which complied with the requirements in the CIL Regulations, and to do so in the prescribed sequence. In consequence, the Claimant was not under an obligation to pay the CIL, as required by the 2020 demand notice, unless and until the Defendant had issued and served a valid liability notice, in accordance with regulation 65 of the CIL Regulations.”

“Planning permission was granted on 10 February 2017. So the 2019 liability notice was issued 2 years and 6 months (less 5 days) after the grant of planning permission. I agree with the Inspector that such a long period of time cannot reasonably be described as “as soon as practicable” and this amounted to a breach of the requirement in regulation 65(1). The breach was not waived by the Claimant.

Regulation 65(1) imposes a mandatory requirement without any provision for extensions of time. Time starts to run from the date on which a planning permission first permits development. The phrase “as soon as practicable” gives an authority some flexibility, for example, if the recipients are not readily identifiable or their address known, or if there is an administrative backlog. But in the light of the statutory scheme and its purpose, the expectation must be that any delay would be measured in weeks or months, not years. I consider that the absence of any provision for extensions of time was deliberate, to ensure that authorities comply with the duty in a timely way.”

“In my judgment, it is of fundamental importance to the operation of the statutory scheme that the liability notice is issued and served soon after the grant of planning permission because of the key information it contains about the recipient’s liability to CIL, and the next steps which follow under the scheme. It is not the practice of this Council to provide this information in any other form or at any other time, and I assume that the same applies in other authorities.

I consider that the failure to issue and serve a valid liability notice on the Claimant within the prescribed time period was prejudicial. If the Claimant had received a timely liability notice, in February 2017, it would have alerted her to” the need to apply for exemptions.

In my judgment, as the liability notice is a formal legal document, which imposes a tax liability on the recipient, and places a land charge on the owner’s property, it is of fundamental importance that the recipient is correctly identified by their name. In this case, the liability notice should have been addressed and issued to “Alison Trent”. She should have been identified as the owner of the relevant land. Instead, the Defendant addressed and issued the liability notice to “C/O Alison Trent & Co”. “Alison Trent & Co.” is the Claimant’s business. It has no legal or beneficial interest in No. 40 and does not fall within any of the categories of recipients. I consider that the only plausible explanation for this error was incompetence on the part of the Defendant. As the liability notice was not addressed and issued to the correct person, it is invalid.

The regulations do not contain any provisions to save a non-compliant notice. The Claimant pointed out that this is in contrast to other regulatory schemes such as enfranchisement notices under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 which may be saved by paragraph 15(1) of Schedule 3.

As a general rule, failure to effect valid service of a liability notice would invalidate a notice. However, in this case, the notice was successfully served on the Claimant, care of the London business address, which was the second of the two addressees she provided on the Land Register. Therefore, despite the failure to serve the Claimant at No. 38 or No. 40, which was in breach of the requirements of the CIL Regulations, I do not consider the failure is of sufficient significance to invalidate the notice.”

Whilst the inspector could not formally quash the 2019 liability notice, “I would expect a responsible authority to have regard to the Inspector’s findings when deciding upon its next steps.”

The Claimant’s ground of challenge under Article 1 of Protocol 1 to the ECHR turned on the lawfulness of the 2019 liability notice, and the consequent 2020 demand notice, requiring her to pay the CIL as assessed. As I have found that the notices were not valid, it follows that there would be a breach of A1P1 if the Claimant was required to pay the CIL.”

“In conclusion, the Claimant’s claim for judicial review is allowed. The liability notice issued by the Council on 5 August 2019, and the demand notice issued by the Council on 21 April 2020, are invalid for the reasons set out in this judgment, and are to be quashed.”

So there we have it.

Woe betide any collecting authority that delays unreasonably in serving a liability notice (common in my experience) or addresses it incorrectly. The judgment would imply that the authority may lose the right to serve a liability notice at all (and thereby not be entitled to levy any CIL in relation to the development) if it delays unreasonably in serving a liability notice (in this case there was a delay of two and a half years, but in circumstances where the authority’s records had probably, although wrongly, shown that one had already been served). That had not previously been my understanding and it would be extremely risky for a developer to embark on construction in reliance on that approach, rather than (as is often currently the case) chasing down the late notice so that it can go on the merry-go-round of assumption of liability, securing exemptions and serving the commencement notice. But I can foresee arguments being raised in some situations.

And woe betide this Government if its proposed Infrastructure Levy is as unnecessarily complicated as CIL. First, why do we have a self build exemption in the first place? Secondly, given that we do, it should be obvious from the planning application that the development proposed is likely to qualify. Why the need for any forms at all? Under a properly constructed system, there would be no need for these reeling spools of, of, yes, of red tape – there I’ve said it.

Simon Ricketts, 17 April 2021

Personal views, et cetera

PS This week’s clubhouse Planning Law Unplanned session will be a careers special. 6pm, 20 April. As always, message me for more information.

Author: simonicity

Partner at boutique planning law firm, Town Legal LLP, but this blog represents my personal views only.

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