SCOTLAND'S councils and developers are expected to review land levies going back years after the Supreme Court ruled two councils demands for cash from a duke building a new town was illegal.

The 4,000-home Chapelton of Elsick town between Portlethen and Stonehaven, Aberdeenshire, will also provide shops and a community hub and was praised by Prince Charles but opposed by planners because the builder Elsick Development Company had not agreed a suitable payment of contributions to a pooled fund over the impact of the new town 10 miles south of Aberdeen.

CGI image of Chapelton of Elsick

Aberdeen City Council, Aberdeenshire Council and their venture the Shire Development Planning Authority lost the appeal case and their policy was described as unlawful.

The court found that the local authorities had no powers to compel Elsick to make a financial contribution to a pooled fund to be spent on infrastructure as a condition of the planning approval.

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The case has implications for councils and developers who have entered contributions deals and it has been suggested it may be possible for developers to claim back contributions now considered to fall outwith the Supreme Court parameters.

Elsick challenged the councils' policy as it did not establish a direct relationship between the level of contribution sought and the impact of a development.

The Supreme Court found that the connection between certain developments, including Chapelton, and the actions which the pooled transport fund was intended to finance, was “at best trivial”.

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Elaine Farquharson-Black, partner at Burness Paull, who acted for EDC in the challenge, said: “Since 2010, my client has consistently advised the SDPA that its approach is unlawful.

"The guidance did not require contributions sought from a development to be fairly and reasonably related to a particular transport improvement, nor that such a payment should be used to fund an intervention that was required as a result of the development.”

The fourth Duke of Fife, David Carnegie, above, representing EDC and owner of the land, said: “This has not been on a mere technicality but on a fundamental and long-established principle of planning law.

"The whole saga has been an unfortunate waste of time and money.

“EDC remains fully committed to investing in infrastructure that is affected by the increased traffic generated by the development of Chapelton.

The firm has invested in a new £1m and as Chapelton grows, he said, a further £12m will be spent on a new junction on the A90.

(Image credit: Google)

The duke, great-great-grandson of Edward VII, said: "This shows that we are quite prepared to put up the necessary money to create the improvements to the public infrastructure that our development necessitates.

"However, we are not willing to do so for those that other developments need, which is what the SPDA was unfairly trying to make us do."

Lord Hodge said "it is not lawful to restrict the commencement of development by planning obligation until the developer undertakes to make a financial contribution towards infrastructure which is unconnected with the development of the site".

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A legal source said: "Pooled infrastructure contributions towards transport and other infrastructure measures are not unique to the north east of Scotland.

"Today’s judgement will require planning authorities to review development plan policies and related supplementary guidance to ascertain whether they meet the Supreme Court’s requirements."

Prince Charles once viewed blueprints of the plans for Chapelton and likened them to Poundbury, the Prince's model community in Dorset, pictured above.

Robert Gray, Aberdeenshire Council's head of planning, said: "We note the decision of the Supreme Court and will be looking in detail at the implications for this area.

"The Strategic Transport Fund was an innovative mechanism to ensure developers made appropriate contributions to improvements to infrastructure, in particular road and rail.

"It had, at its heart, the principle that genuinely joined-up developments were in the interests of the entire region and promoted a more sustainable approach to planning policy."

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A spokesperson for Aberdeen City Council said: “The ruling and its implications will be considered by the SDPA in due course.”

A spokesperson for the SDPA said: “The initial reaction is the judgement is very disappointing, not only for the future development of Aberdeen City and Aberdeenshire but it also has relevance elsewhere in Scotland.

"It is essential that proposals are brought forward to address the key infrastructure requirements of new development through the Scottish Government’s ongoing planning review.”

A Scottish Government spokesperson said: "We will consider the Supreme Court judgement as we progress our proposals for the Planning Bill.”

Gary McGovern, planning expert at legal firm Pinsent Masons, said: “This was a high profile and important case in a financial sense.

“On the one hand it has the potential to affect the scale of contributions developers are liable to pay from a range of developments across the authority area, and on the other, to curtail the monies received by the authority to invest in strategic transport infrastructure interventions."