Automatic discharge of a s106?

I have recently read an article that states "if the planning obligation has been drafted in accordance with modern drafting practice, the grant of a new planning permission may automatically modify or discharge an earlier planning obligation. "

I assume the modern practice referred to is as in the Law Society's model clause 8.10 which provides that "nothing in this Deed shall prohibit or limit the right to develop any part of the Site in accordance with a planning permission (other than the Planning Permission) granted (whether or not on appeal) after the date of this Deed".

Does that really amount to an automatic modification or discharge if a newer permission is granted? Or is this not the modern drafting practice referred to (in which case, what is?)?

By way of example, what if the earlier s106 related to a permission for a residential scheme and contained an obligation that on commencement of development a library contribution of £x was to be paid and a further library sum of £y was to be paid 5 years after that initial payment. Say that scheme was commenced but not completed and 2 years later a developer got a further permission for commercial development at the same site. On the face of it, the second payment of £y would still be payable when the 5 year trigger was reached, and any new s106 obligations would sit on top of that.

If the article is correct, does that sum of £y never in fact become due because the old s106 is discharged? I assume you would be able to get a formal discharge if the library sum was no longer appropriate but I wouldn’t have thought the wording above amounted to an automatic discharge such that a further deed (or an application after the 'relevant time', which won't help us in the example above) under s106A was not needed.

Has anyone seen that successfully argued?

Comments

[Beverley Firth]

i havent seen this argued in practice but have always taken the view that provisions in a 106 (commonly seen) saying that terms will change in the future depending on circumstances, cannot work to vary the original 106 unless the variation is clearly set out and also the circumstances which give rise. This would then work as a condition. In the example you give, i would not regard that as making any automatic modification - rather there could be 2 overlapping obligations so that a discharge would need to be negotiated

[David Brock]

If modern practice does mean the Law Society's s.106, then as one of its draftsmen I can say Caroline that you are quite tight - that certainly is not what the clause means.