Court of Appeal clarifies legitimacy of non-objection clauses

Non-objection clauses have been used in option agreements for many years; they typically require the party granting the option (i.e., landowner) to refrain from objecting to the option-holder’s (i.e., developer) planning application. Non-objection clauses are commonly used where an applicant for planning permission seeks to use compulsory powers to acquire land. 

A renewable power company intended to enter into agreements with 55 landowners to take options over their land to facilitate the development of two new offshore wind farms. The option agreements would all contain a non-objection clause to prevent the landowners from objecting to SEAS’ applications for development consent.  

The Secretary of State for Business, Energy and Industrial Strategy (Secretary) subsequently granted Development Consent Orders (DCOs) for the construction of two offshore windfarms and their associated onshore development. The DCOs authorised the compulsory purchase of land needed for the onshore works.

The appellant, Suffolk Energy Action Solutions (SEAS), was set up by a local residents’ group and opposed the onshore works on the basis that it would have a deleterious impact on people, the countryside and the environment.  SEAS argued that the DCO decision-making process did not properly examine whether or not the proposed development was in the public interest.  

SEAS’s position on the non-objection clauses was that they were unlawful as they had hindered the landowners’ abilities to express their views on a matter that affected the public interest (including matters beyond the impact on their own land). 

SEAS judicially reviewed the Secretary’s decision to grant DCOs.  After the judicial review claim was dismissed, SEAS appealed to the Court of Appeal. The crux of the case on appeal was whether the landowners could be contractually prevented from objecting to the renewable energy company’s application for a DCO.  

The court clarified that the legitimacy of non-objection clauses must always be a question of fact; the examination process is inquisitorial in nature and objections / disagreements are not fundamental. However, decision-makers must still ensure that a fair procedure is followed and that their decision is sufficiently informed. The key question is whether the effect of a non-objection clause is that the decision-maker has insufficient information to enable a planning decision to be made.  

In this case, the court held that the non-objection clauses were legitimate for a number of reasons including:

The Heads of Terms were not legally binding and no Option Agreements had been signed before the examination was completed.  As a result, the landowners were not contractually bound by the non-objection clauses and were not prevented from objecting to the proposal before the examination process concluded.  

• The landowners had legal advisors, who should have explained that the Heads of Terms were not binding.  Furthermore, the renewable energy company had informed SEAS that the non-objection clauses were not binding.  
• 39 out of 55 landowners did in fact object to the scheme. This showed that the landowners were not ‘stifled’ from objecting to the scheme.

The affected landowners were not, in fact, constrained from providing their views on the Proposal. Accordingly, the court found that the integrity of the planning process was not undermined and that there was sufficient information to enable an informed planning decision to be made. The court held that the non-objection clauses were legitimate in this case.