PLANNINT BY AGREEMENT -- THE RULESTwo recent Court of Appeal cases have important practical implications for the development industry.

The cases concerned the relevance and legitimacy of planning obligations and have been referred to as the Plymouth and Witney cases.The Witney case was appealed to the House of Lords and on 11 May their Lordships issued their decision which has important implications for local planning authorities and developers.

Tesco won a local plan allocation and support from the local planning authority, West Oxfordshire District Council, for its proposal for a store in Witney.One factor was its offer to fund a new link road to the west of Witney, to the tune of £6.6 million.

The proposal went to inquiry jointly with a competing scheme promoted by Sainsbury's.The relationship between the link and additional traffic to be generated from either of the proposed stores was found by the inspector to be 'tenuous', but the inspector holding the inquiry recommended that permission be granted for Tesco on the basis that it had won a local plan allocation and since it would have been perverse to ignore the planning gain offer.

The inspector followed the reasoning in the Plymouth case, where the Court of Appeal had stated that planning obligations need only be relevant to planning and fair and reasonable - they need not be 'necessary'.The secretary of state, however, disagreed.

In his view the offer did not meet the test of reasonableness in Circular 16/91 and consequently he gave it limited weight.

He preferred Sainsbury's scheme, on its planning merits, and granted planning permission for this.The High Court quashed the decision, relying on Plymouth, but the decision was restored by the Court of Appeal who restated the fundamental principle that planning permissions should not be bought or sold.

As Lord Justice Steyn said 'the philosophy of the bazaar has been rejected' and he considered that Plymouth may require reconsideration.The House of Lords confirmed the decision of the Court of Appeal and stated that the decision of the secretary of state could not be challenged.

Paradoxically, however, the decision followed the reasoning of the Court of Appeal in the Plymouth case rather than Witney.Their Lordships stated that the simple test to be applied in considering whether a planning obligation is a material consideration is whether it has some connection with the proposed development which is not de minimis.

Once that link is established then the planning obligation is relevant and it must be taken into account by the decision maker.Consequently the House of Lords held that the offer of £6.6 million for the road link must be taken into account by the secretary of state, but that the weight to be attached to that material consideration is entirely a matter for the decision maker, and the courts will not interfere unless the decision is perverse (ie unreasonable in the Wednesbury sense).

The secretary of state had taken Tesco's offer into account and he was entitled to give little or no weight to it.

His decision therefore could not be challenged.It is important to remember that Circular 16/91 deals with cases where a planning authority seeks a planning obligation as a result of a planning application being made and where permission might be refused without it.

If a development is acceptable on its planning merits then the authority cannot require any element of planning gain.

This position is not affected by the Plymouth and Witney cases.However, this does not prevent a developer offering planning gain (whether on his own or as a result of discussion with the authority) and if that is the case then, provided the offer has some connection with the development which is not de minimis, it must be taken into account by the authority.

The weight that is attached to the planning obligation is a matter for the authority.Consequentl y it is only where an authority is proposing to refuse a planning application that Circular 16/91 is relevant.

Then it is necessary for both authority and developer to establish (a) that the planning gain has the required connection with the development; and (b) that the authority has taken into account the advice in Circular 16/91, namely that the planning gain is both reasonable and that it fairly and reasonably relates its scale and kind to the proposed development.PLANNING PERMISSIONBefore any offer of planning gain is made, the developer and his advisers need carefully to consider whether the advantages of making the offer outweigh the risk of subsequent legal challenge by rival developers or unplacated objectors and harm being caused by the developer's case should the proposal ultimately be determined by the secretary of state.Given the very wide discretion confirmed on the decision maker by the House of Lords the risk of successful legal challenge to planning permissions issued on the basis of planning obligations has receded.

Once a sufficient link between the planning obligations and the development is established, it will be extremely difficult to overturn a decision.However, the possibility that the decision may ultimately be made by the secretary of state is now of increased importance.

In Witney the secretary of state disregarded the £6.6million planning gain package offered by Tesco - and it is possible that the enormous difference in magnitude between the planning gain offered and the relatively inconsequential adverse traffic impact of the proposed development coloured in some way the secretary of state's view of the merits of the case.

The secretary of state was faced with a particularly stark choice as Sainsbury's, the rival developers, had made no offer of planning gain.Consequently, it is extremely important that developers do not commit themselves to planning gain packages without carefully considering the implications.

It is extremely difficult to withdraw an offer once it has been made, without damaging the applicant's credibility before a local planning authority.Nevertheless, something that may be a major consideration in the eyes of the authority may turn out to be entirely worthless in the eyes of the secretary of state and, even worse, may adversely affect his consideration of a scheme if it comes before him.

Indeed, an over-generous applicant runs the risk of the secretary of state calling in the application for his own determination.Finally, the House of Lords' decision has given rise to the spectre of planning permissions being 'auctioned' between developments, which would be acceptable individually (but not collectively).

In these circumstances a developer's only recourse is for the application to be called in by the secretary of state (as happened in the Witney case) and to endeavour to succeed on the planning merits.

It is necessary for the secretary of state to update his guidance in Circular 16/91 to ensure that, in any case where planning obligations are a material consideration, such obligations must fairly and reasonably relate in scale and kind to the proposed development.TAXING THE ENVIRONMENTAll waste which is disposed of in UK landfill sites will soon be the subject of a new landfill tax.

Developers, civil engineers and other potential waste producers will be keen to identify whether and to what extent they are subject to new cost burdens.

The tax which was announced in the November 1994 budget is now the subject of an extensive consultation exercise.The government has s tated that the tax will apply to all forms of landfill waste disposal which involves the deposit of waste in or on land.

It is proposed that the landfill tax will be an ad valorem tax on the charges levied by landfill site operators and not rated by reference to weight or volume.

The rate will be a uniform one.

However, where no charges are levied for landfilling, (eg own site disposal) it is intended to fix a notional 'open market value' of the service and to tax it accordingly.

The value to be used will be laid down by law, related to the 'quantity' of waste disposal, either by weight or by volume.The proposed ad valorem basis will mean that cheaper sites will have an advantage over those which are more expensive.

This may be the case even though the latter may ensure more effective environmental safeguards.Inert waste, such as much construction and demolition waste, should generally be subject to lower tax bills because their disposal costs are usually lower, although prices will be greater in areas where land is in short supply.

Of the 100m tonnes of waste per annum to which this tax is to apply, over 20% of this is construction and demolition waste.The landfill site operators will be liable to account for the tax paid.

This will apply whether they are disposing of their own waste or waste produced by third parties.

The intention of the government is to enable waste disposal companies to pass the additional costs on to waste producers, thereby providing them with an incentive to reduce the waste they produce.However, the practicalities of them may not be so simple, particularly where the redevelopment of contaminated land is concerned.

Furthermore, the costs of disposal for contaminated soils will generally be more than the cost of disposal for less contaminated materials.The rate at which the tax will be charged is yet to be determined, although the indicators appear to point to it being levied at between 30% and 50%.

VAT will be added to the landfill charge inclusive of landfill tax.

The Chancellor of the Exchequer has expressed his determination not to impose additional costs to business.

The government is therefore looking at ways to offset the impact of the tax by making reductions in the level of employer National Insurance contributions.The tax, which is to be collected by HM Customs & Excise, will come into effect on 1 October 1996.The government has proposed a tax rebate for landfill operators who make payments to environment trusts, up to a maximum of 90% of the payments made.

This would not reduce the extra cost of the tax for waste producers.

Trust payments would have to be directed to the restoration or remediation of closed landfill sites where responsibility for them is unclear, or where liability falls on a person without the means to carry out remedial works.This has the potential to alleviate some of the problems associated with contaminated 'orphan sites'.

Alternatively, funds may be used for research and development into more sustainable waste management practices.Fly tipping is already an environmental offence under the Environmental Protection Act 1990, and the consultation document notes that any business depositing waste illegally will also be evading tax.

In addition to environmental criminal proceedings and remedial measures, they will also be liable to penalties imposed by Customs & Excise.Much concern has already been raised about the likely increase in fly tipping on the tax's introduction.

Producers of waste should therefore continue to engage reputable contractors and to comply by the book with the duty of care waste procedures, including verifying waste destination points.It is apparent that the proposals will introduce extra costs for the disposal of waste, including that produced on construction and demolition sites.

Where contaminated land is being acquired for development, the landfill tax may be a further element to take into account in assessing the purchase price of such land.THE 1995 BUSINESS RATES REVALUATIONA new business rating list came into force on 1 April 1995, the multiplier for 1995/96 has been fixed at 43.2p/£.

The last revaluation occurred in 1990 and was based on rental values at 1 April 1988 when rents in central London and the rest of the south east were still rising.The 1995 list is based on values at 1 April 1993, when London was still suffering from the effects of the recession.

Consequently, the most marked change in rateable values in the 1995 list has occurred in central London office premises where, in some cases, rateable values have fallen by as much as 50 to 60%.By contrast, in the rest of the country (particularly in the north), not only did the recession strike later than in the south east, its impact was also less severe.

The changes in rateable values are therefore generally less marked and are more sensitive to particular locations and property sectors.The 1990 list was the first revaluation in 17 years and not surprisingly the rateable values of many properties changed substantially.

To minimise excessive rates increases transitional relief was introduced.

The government has decided to reinstate transitional relief for the 1995 list again to minimise the impact on businesses of substantial changes.The phasing differs for small and large properties (ie with a rateable value greater than £10,000 or £15,000 in Greater London).

Any increase in the rates paid for the first year will be limited to 10% per annum (7% for small properties) and reductions will be limited to 5% per annum (10% for small properties).

These figures will be adjusted for inflation and therefore a 5% reduction in effect leaves only a 2.9% reduction.

Although initially intended to apply through the life of the 1995 list, there is no guarantee that the government will not change the rules or abandon transition altogether.It should be noted that because transitional relief will limit rate reductions for existing offices in London, there will be significant differences between the rates payable on newly erected office buildings, especially in central London where rates will be based on the new lower rateable value, and rates payable on existing buildings which will be subject to transitional relief based on the old higher rateable value.

In order to minimise tax avoidance there are complicated rules dealing with properties that are taken out of the rating list for, for example, renovation to ensure they will still be subject to phasing.The previous six month time limit on appealing against entries in the new lists has been removed - an appeal may now be lodged at any time prior to 1 April 2001.

However it may be advisable to appeal early to ensure that the chances of appeal are not adversely affected by agreements being reached in respect of other properties and secondly in order to secure an early repayment of rates.There is still an enormous backlog of appeals in respect of the 1990 list and many ratepayers are still waiting for refunds (in some cases running into millions of pounds) which are dependent on the outcome of these appeals.

In addition, if transitional relief is abolished the full impact of the changes will be felt immediately.