The CIL appeal in Braithwaite

One of the decisions discussed in an earlier article on the late service of a liability notice published on 2nd September 2022 was R (oao Braithwaite) v East Suffolk Council. It has been the subject of an appeal and just before Christmas the Court of Appeal decision was published ([2022] EWCA Civ 1716). The appellant developer failed and the CIL liability remains enforceable. In arriving at the decision not all the points considered by Mrs. Justice Lang DBE were discussed by Sir Keith Lindblom giving the judgment of the Court of Appeal. His judgment does, however, serve to forcefully emphasise yet further certain lessons which are discussed in section 7 at the end of this article.

Before focusing on the appeal issues it might help to set out the sequence of events giving rise to those issues. Quite often landowners or developers will present to their professional advisers stories which are similar in nature. Usually there will be considerable time pressure in which to provide the advice. The Braithwaite case illustrates the difficulties faced by an owner or developer when wanting to challenge a collecting authority which has not complied with the strict requirements of the CIL regime. It serves to emphasise that by the time the story has been told to the adviser often it will in fact be too late.

  1. Sequence of events –  the facts material to the appeal were:
  • First planning permission granted on 6th November 2017;
  • Liability notice issued 19th December 2017;
  • Assumption of liability by Mr. Braithwaite on 30th August 2018;
  • Section 73 planning permission granted on 13th December 2018 which resulted in in no change in the amount of the CIL liability so no liability notice issued;
  • Second section 73 planning permission granted on 7th February 2019 which resulted in reduced CIL liability;
  • In March 2019 Mr. Braithwaite transferred the site to a company;
  • The development commenced 2nd August 2019 but with no commencement notice being given;
  • Liability notice served in relation to second 73 planning permission on 30th June 2020 (“the 2020 Liability Notice”) but on the company and not on Mr. Braithwaite who still remained liable to pay the CIL;
  • Demand notice accompanied this liability notice;
  • Second demand notice served on 29th December 2020 imposing late payment surcharge;
  • Appeal under regulation 117 of the 2010 CIL Regulations which resulted in the quashing of the second demand notice due to the irregularities relating to the 2020 Liability Notice – late service and service on wrong person;
  • Fresh liability notice served on Mr. Braithwaite on 17th September 2021 (“the 2021 Liability Notice”).

2. Appeal Issues – the argument for the developer was that the 2020 Liability Notice was a nullity due to the two breaches of regulation 65 which meant that the 2021 Liability Notice was the first liability notice served and invalid as it had been served late. The Council’s response was that the 2020 Liability Notice had not been challenged by the issue of judicial review proceedings with the consequence that it continued as a valid liability notice. This means the Council argued that the 2021 Liability Notice is a revision of the earlier 2020 Liability Notice and can be served “at any time” in accordance with regulation 65(5).         

The challenge by the developer had been made by means of judicial review proceedings seeking to quash the 2021 Liability Notice but there was no application with regard to the 2020 Liability Notice until the appellant’s skeleton argument in the Court of Appeal which sought permission to apply out of time.  

The appeal arguments gave rise to four issues on the appeal as outlined by Sir Keith Lindblom –

  • was the challenge to the 2021 Liability Notice in time?
  • What was the status of the 2020 Liability Notice?
  • Was the 2021 Liability Notice a revised liability notice?
  • What was the status of the 2021 Liability Notice  

As was stated by Sir Keith the 2020 Liability Notice was the real target (paras 5 and 52). As the key issue the status of the 2020 Liability Notice will be taken first.

3. Status of 2020 Liability Notice – the appellant’s case was that this liability notice was a nullity because there had been two serious breaches of the statutory requirements of regulation 65. It had not been served as soon as practicable (reg. 65(1)) and separately had not been served on Mr. Braithwaite (reg. 65(3)(b)). The obstacle to be overcome by this argument had been outlined by Mrs. Justice Lang in the Trent case. A decision by a public body is generally to be treated as valid unless and until struck down by a Court (De Smith Judicial Review (8th Ed.) para. 5-058). The consequence of this is that even if there are irregularities which would have caused the decision to be struck down had a challenge been launched in the absence of such a challenge the decision stands. The only means by which a late served liability notice can be challenged is by judicial review proceedings as there is no alternative procedure provided in the CIL regime.

In the context of this matter that is crucially important because the 2020 Liability Notice was not challenged and this allows the argument that the 2021 Liability Notice is a revised liability notice and not an original liability notice. This point did not arise in Trent because it was held that the draft of the first liability notice remained a draft and did not become an issued liability notice so the challenged liability notice was the first to be issued.

Unsurprisingly at first instance Mrs Justice Lang’s discussion of this point very much follows her discussion in the earlier Trent case. Sir Keith Lindblom considered the point between paragraphs 67 and 71. He cited a passage from De Smith Judicial Review (8th Ed. at para. 4-063) including the statement that decisions “are thus presumed lawful unless and until a court of competent jurisdiction declares them lawful”. Applying this Sir Keith Lindblom stated at paragraph 70:

“On the basis of that statement of the law, it would not be right to assert that those affected by decisions made by public authorities exercising their statutory functions are generally entitled to disregard the legal consequences of such decisions, and to refrain from challenging them by the appropriate means, including, where appropriate, a timely claim for judicial review, merely because they consider the decision-making procedure to have been unlawful. The law has long accepted that the constitutional protection of judicial review, with its three-month time limit and the presumption that public decisions are valid until judicially quashed, strikes the correct balance between the importance of finality in public decision-making and the justice of remedying decisions which are unlawful. It would be a significant departure from settled principles of public law to treat such a decision automatically as having been a nullity and of no effect from the outset, and without an authoritative relevant determination by a competent court.”

Sir Keith Lindblom then went on to state that the absence of any specified consequence for failure to comply with the requirements of regulation 65 meant applying the question identified by Lord Steyn in R v Soneji [2005] UKHL 49 at paragraph 29 that the Court had to determine “whether Parliament can fairly be taken to have intended total invalidity.” (para. 71). The Court of Appeal agreed with Mrs Justice Lang that the 2020 Liability Notice was not a nullity but continued to have legal effect.

It was pointed out that if the 2021 Liability Notice was quashed it would revive the 2020 Liability Notice (para. 51). The appellant’s argument was that the 2020 Liability Notice had been extinguished by the revised liability notice and treated as if it had never had legal effect due to regulation 65(8). In consequence it could not be revived if that revised liability notice was set aside. This was not accepted by the Court of Appeal. 

An important practical point in the context of this issue is that the appeal decision quashing the demand notice was held not to impact on the validity of the 2020 Liability Notice. The point was made that the appeal jurisdiction under regulations 117 and 118 is limited to quashing surcharges or demand notices but does not extend to liability notices. In consequence a demand notice can be quashed because a liability notice has breached regulation 65 but that liability notice can still continue in effect. The Court of Appeal did not consider that the quashing of the surcharge had any bearing on the lawfulness of the 2020 Liability Notice (para. 84).

4. Nature and status of 2021 Liability Notice (issues (iii) and (iv) in section 2 above) – had the 2020 Liability Notice been held to be a nullity then the 2021 Liability Notice would clearly have been invalid. The gap of sixteen months between the second section 73 planning permission and the 2020 Liability Notice was an indisputable breach of regulation 65(1). With the 2021 Liability Notice the gap would be thirty months. However, the position is reversed once the validity of the 2020 Liability Notice is confirmed. The 2021 Liability Notice was needed to correct the failure to serve the 2020 Liability Notice on Mr. Braithwaite. Such a revised liability notice can be issued “at any time” (reg. 65(5)) and the obligation in reg. 65(1) to serve as reasonably practical does not apply.

As a subsidiary point it was argued that because the 2021 Liability Notice was not stated to be a revised liability notice it could not be one but that was swiftly rejected.

5. Delay (issue (i) in section 2 above) – the challenge to the 2021 Liability Notice was in time but failed as it was a valid revised liability notice. Both Mrs. Justice Lang and the Court of Appeal considered that the challenge should have been made to the 2020 Liability Notice but clearly the three month time limit prescribed by CPR 54.5(1)(b) had expired in December 2020. No formal application was made to extend time for such a challenge although a request was included in the appellant’s skeleton argument.          

Even if an application had been made for an extension of time it would have failed. Not only does there have to be a good reason for the extension but the Court has a statutory discretion in section 36(1) Senior Courts Act 1981 to refuse if it “would be likely to caused substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental  to good administration”.      

In contrast to the Trent decision it was not accepted that the appellant “was reasonably pursuing an adequate alternative remedy” by appealing against the demand notice under regulation 117 (para. 59). That appeal was not against the 2020 Liability Notice and there was no power to set it aside. One factor distinguishing this case from the Trent case was that the appellant is a commercial developer with access to professional advice who “could reasonably have been expected to obtain legal advice sooner than they did.” (para. 60).

The Court of Appeal did not consider that there were good grounds for extending time and doubted that there had been any prejudice suffered by the Appellant (para. 91). Even if there had been good grounds the statutory discretion would have been exercised against extending time. The clear conclusion of the Court was there would be detriment to good administration if permission was granted (para. 61). In reaching this conclusion account was again taken of the appellant being a commercial developer who had been fully aware that there was a CIL liability by reason of the grant of the planning permissions. Further it would defeat the expectations of the inhabitants of the local area that the CIL amounts would be received (para. 63).

6. First instance grounds not taken into account on appeal – two grounds that were included amongst the reasons for the decision of Mrs. Justice Lang were not considered by the Court of Appeal because there was no need. The first was waiver arising from an agree bespoke payment time table (para. 92). The second was the application of section 31(3D) of the Senior Courts Act 1981 as to whether the outcome would have been different if the conduct complained of had not occurred (para. 99).

7. Lessons  

(i) boringly it needs to be stated that yet again this case serves to emphasise the importance of understanding the CIL consequences of carrying out a development before commencing the development.

(ii) late served liability notices will not be a nullity but will have effect unless and until set aside by the Court.

(iii) such a late served notice can only be challenged by the commencement of judicial review proceedings which will be subject to the three month time limit.

(iv) initiating a challenge to a demand notice or surcharges imposed by it rather than issuing an application for judicial review is unlikely to be regarded as the reasonable pursuit of an alternative remedy. It will not be a justification for the three month period expiring without judicial review proceedings being commenced.

(v) once the three month period running from the issue of a late served liability has expired the liability notice will not be capable of subsequent challenge unless time is extended to apply for judicial review proceedings.

(vi) it will not be easy to obtain such an extension as is made clear in the Court of Appeal judgment  because (a) there will need to be good grounds for the extension; (b) the discretion in section 36 of the 1981 Act must not be exercised against the extension; and (c) the outcome would have been different if the liability notice had not been served late. 

(vii) when presented with a set of facts similar in character to those in Braithwaite the professional adviser faces a difficult task with little time in which to reach a conclusion.  Is it enough to take the simpler and cheaper option of challenging a demand notice or should the client opt for the more expensive and time consuming route of judicial review with if necessary an application for extension of time. The Braithwaite decision has made it much harder to opt for the first option. From the point of view of revenue collection why that should be is not hard to understand. From the point of view of the developer/owner it would appear that there is an element of unfairness. Irregularities by developers/owners are treated more harshly under the CIL regime than those by collecting authorities.