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For the first time, the Court of Appeal has handed down Judgment on the interpretation of the Community Infrastructure Levy Regulations 2010. The issue in the case Giordano v LB Camden  EWCA Civ 1544 related to the interpretation of Regulation 40(7)(ii) which sets out the types of retained floor space that are to be deducted from the chargeable area of a development (i.e. the amount of floorspace on which you can be charged CIL) when calculating the CIL liability of a development.
The appellant had been granted planning permission in 2011 for the change of use of three floors of a building in London to six residential flats on which no CIL was payable because it was carried out before the introduction of any charging schedule by the Council or the London Mayor. Whilst the external works were carried out (thus implementing the permission), the building was not adapted for residential use. The Appellant subsequently sought planning permission for an alternative scheme of three large flats, as opposed to six, which was granted in 2017.
The Council informed the Appellant that the revised development was liable to £547,419 in CIL. The Appellant argued that the whole development qualified for a credit under reg 40(7)(ii) of the CIL Regs because the use of the entire building under the revised scheme (of three larger flats) was one that was “able to be carried on lawfully and permanently without further planning permission” on the day before the 2017 permission was granted. The Council did not accept this on the basis the building was not already adapted for the relevant use. The High Court agreed with the Council.
The Court of Appeal disagreed. It found that the ability to carry on the use in question rested on the lawfulness of doing so, without any further planning permission having to be granted either for the use itself or for any necessary operational development. It did not depend upon the building being actually occupied in that use on the relevant day, or upon its having already been physically adapted for the use.
Therefore, if you are relying on Reg 40 (7)(ii) (which as of 1 September 2019 can be found under SI 2010/948, Sch 1, Pt 1) in England, remember - it is not that the intended use of the retained parts of the building has to match the extant lawful use as it happens to be on the relevant day, but a use that has been authorised or would in any event be lawful. The latter includes an extant lawful use and a use that could lawfully be carried on in the retained parts of the building under an implementable planning permission granted before, or on the relevant day. This also includes a use with the benefit of ‘permitted development’ rights.