Proposed demolition — Application for interlocutory injunction — Whether serious issue to be tried — Failure to apply for approval of reserved matters — Outline planning permission lapsed — Extent of term to be implied into section 106 agreement
The first,
second and third defendants (‘Brent Walker’) made two applications to the
plaintiffs, Hertsmere Borough Council (‘the council’) for outline planning
permission to redevelop the site of Elstree Film Studios by forming a new
studio complex (‘the non-retail development’) and by constructing a retail
store (‘the retail development’). On November 1 1990 the council granted
outline planning permission for the non-retail development imposing, inter
alia, a condition requiring an application for approval of reserved matters
to be made within three years. On December 27 1990 the council granted outline
planning permission for the retail development, imposing a similar condition.
The parties simultaneously entered into an agreement pursuant to section 106 of
the Town and Country Planning Act 1990 (‘the Act’) whereby Brent Walker
undertook, in general terms, to carry out the non-retail development in
parallel with the retail development. The latter was completed and occupied,
but Brent Walker failed to apply for approval of reserved matters within a
period of three years in respect of the former. Accordingly, the outline
planning permission in that case lapsed by virtue of section 93 of the Act.
Brent Walker,
while recognising that they were in technical breach of the agreement,
maintained that their obligations under the agreement depended upon the
particular outline planning permission continuing to exist and so they could no
longer be performed. Accordingly, Brent Walker were free to pull down the
existing studio buildings on the site. They sought the determination of these
questions under RSC Ord 14A.
The council
applied for an injunction until judgment in the action restraining Brent Walker
from demolishing.
was allowed and an undertaking accepted: Brent Walker’s Ord 14A summons was
dismissed.
There was a
serious issue to be tried within the principles of American Cyanamid Co v
Ethicon Ltd. Regard should be had to the fundamental objective of the
parties, which related to the physical development to be carried out. To give
business efficacy to the agreement it was insufficient merely to imply a term
into the agreement that Brent Walker were to apply for approval of reserved
matters within the three-year time-limit. It was necessary for a wider term to
be implied, eg that if such an application were not made within the time-limit
then Brent Walker
application) to enable them to carry out the non-retail development: see p9A-C.
In the alternative
there might be an independent doctrine preventing Brent Walker from relying on
self-induced frustration: see p9E.
to in the judgment
Alghussem
Establishment v Eton College [1988] 1 WLR
587; [1991] 1 All ER 267, HL
American
Cyanamid Co v Ethicon Ltd [1975] AC 396;
[1975] 2 WLR 316; [1975] 1 All ER 504, HL
Reardon
Smith Line v Yngvar Hansen-Tangen [1976] 1
WLR 989; [1976] 3 All ER 570; [1976] 2 Lloyd’s Rep 621, HL
Application
for an injunction
This was an
application by the plaintiffs for an interlocutory injunction restraining the
defendants from carrying out works of demolition.
Hutton (instructed by Nabarro Nathanson) appeared for the plaintiffs, Hertsmere
Borough Council.
Keene QC and Paul Stinchcombe (instructed by Simmons & Simmons) appeared
for the first, second and third defendants, Brent Walker Group plc. Brent
Walker Ltd and Elstree Development Corporation.
following judgment was delivered.
JACOB J: Elstree Film Studios have a distinguished past. They currently
stand idle and this case concerns what is to happen to them. The plaintiff
council are the planning authority and the three defendants (between whom there
is no material distinction for the purposes of this case) are part of the Brent
Walker Group of companies. I shall call them collectively BW, although certain
acts were done by only one or other of the three companies.
The council
seek an injunction until judgment in the action restraining BW from, in effect,
demolishing the existing studios (the precise formulation does not matter at
this stage). BW seek an order pursuant to RSC Ord 14A for the determination of
a number of points of law which are set out in its summons and for
consequential judgment in their favour.
In April 1990
BW made two applications for outline planning permission for development of the
Elstree Film Studios site. By that date there had been three earlier schemes
proposed and under discussion. So the April 1990 applications were for schemes
4 (No 0420/90) and 5 (No 0421/90). No 4 was for a redevelopment of the existing
film studio to add a number of buildings to form a new studio complex (of new
and old buildings), a retail store, offices and other items. It seems that
Tesco were on hand with an offer to develop what is called a superstore on the
retail site and BW were anxious to press forward with that aspect of the
development. Hence application no 5 for a retail store only. No 4 covered 11
ha. No 5 covered 5.2 ha of this. The Tesco store now exists and is trading. The
film studio site is moribund, due, so BW say, to the
want to be in a position to pull the old studios buildings down if commercially
convenient to them.
Section 92 of
the Town and Country Planning Act 1990 provides (so far as is material):
(1) In this section and section 91 ‘outline
planning permission’ means planning permission granted, in accordance with the
provisions of a development order, with the reservation for subsequent approval
by the local planning authority or the Secretary of State of matters not
particularised in the application (‘reserved matters’).
(2) Subject to the following provisions of this
section, where outline planning permission is granted for development
consisting in or including the carrying out of building or other operations, it
shall be granted subject to conditions to the effect —
(a) that, in the case of any reserved matter,
application for approval must be made not later than the expiration of three
years beginning with the date of outline planning permission; and
(b) . . .
Section 93(4)
provides:
In the case of
planning permission (whether outline or other) which has conditions attached to
it by or under section 91 or 92 —
(a) . . .
(b) an application for approval of a reserved
matter, if it is made after the date by which the conditions require it to be
made, shall be treated as not made in accordance with the terms of the
permission.
Pursuant to
section 92 on November 1 1990 the council granted outline planning permission
on application 4 subject to a number of conditions. Condition 1(a) was:
Application
for approval of reserved matters including detailed siting, design, external
appearance and landscaping shall be made to the local planning authority before
the expiration of 3 years from the date of this Permission.
And on
December 27 1990, outline planning permission on application no 5 was granted.
There was a similar condition as to reserved matters. Simultaneously the
council and BW entered into an agreement pursuant to section 106 of the Act
(whereunder any planning obligation is enforceable by the authority not only
against the covenanting party but any person deriving title from him). The
dispute between the parties rages over this section 106 agreement.
Before I set
out the relevant terms it is helpful to outline the heart of the dispute. Under
the agreement BW undertook to do a number of things in respect of what the
agreement calls the ‘Non Retail Development’, ie in effect the studios. In
particular, there was an obligation to carry out development of the film studio
and film museum in parallel with the retail development, to submit a phasing
programme together with a first application for approval of reserved matters,
an
programme and to cause a ‘performance Bond’ of £ 10m to be given by an
acceptable bank or other financial institution to secure performance of BW’s
obligations.
The council
say the agreement was for a package: BW could have the retail store provided
they redeveloped the film studios. BW say, however, that their obligations
depend upon the particular outline permission (no 4) continuing to exist. BW
did not (as they accept they were impliedly required to do) apply for approval
of reserved matters in outline permission no 4, within three years, that is to
say by November 1 1993. So, by virtue of section 93 that permission has
entirely lapsed. It follows, BW argue, that their obligations to do things
authorised by that very application cannot be performed. It follows, they say,
that they may be in technical breach of contract for not having applied for
approval of reserved matters within three years, but that is all. The council,
as planning authority, have suffered no damage. So BW do not have to develop
the studios and are free, if they want, to pull the old buildings down. That
being the dispute, I set out the relevant provisions of the agreement:
3.9 The Application An application
submitted by the Applicant to the Council dated 10th April 1990 (identified in
the Council’s records by reference number 0420/90) for outline planning
permission for the redevelopment of the existing film studio site to provide
new film studios a retail store of 90,000 square feet gross internal floor
space a four island filling station leisure building including multiplex cinema
with associated film/television museum of a maximum of 200 square metres gross
internal a public house restaurant and bars category B1 offices (not exceeding
8,700 square metres) all with ancillary parking and with new access
arrangements and all on the Property.
3.10 The Permission outline planning
permission dated 1st November 1990 granted by the Council pursuant to the
Application
3.11 The Development the development
authorised by the permission.
3.13 The Film Studio that part of the
Development reserved for film and television production and ancillary functions
all on the land edged with pink on Plan 1.
3.14 The Film Museum a space of not less
than 200 square metres gross internal floor area in the Leisure Office
Development in which material relating to Elstree Studios and the film and
television industry can be displayed to the public.
3.15 The Bond a performance bond to be
procured by the Applicant pursuant to Clause 8 9 hereof such performance bond
to be given by a clearing bank insurance company or other financial institution
acceptable to the Council in favour of the Council in the sum of TEN MILLION
POUNDS (£ 10,000,000) to secure the performance by the Applicant of its
covenants therein contained and reducing in the manner therein contained and
reducing in the manner therein provided.
3.16 The Retail Property all that land
adjoining Shenley Road Borehamwood in the County of Hertford shown edged with
green on Plan 1.
3.17 The Retail Application an application
be submitted by the Applicant to the council dated 10th April 1990 (identified
in the Council’s records by reference number 0421/90) for outline planning
permission for a retail store of 90,000 square feet gross internal floor space
with ancillary car
together with 140 car parking spaces on the Non Retail property [This is no 5].
3.18 The Retail Permission outline planning
permission granted by the Council pursuant to the Retail Application [ie that
for no 5].
3.19 The Retail Development the development
authorised by the Permission.
3.20 The Non Retail Property the property
but excluding the Retail Property.
3.21 The Non Retail Development the
Development (including the 140 car parking spaces within the Retail
Development) but otherwise excluding the Retail Development. . .
8. The
Applicant and the Freeholder (for themselves and their successors in title for
all or any part of the Non Retail Property) hereby jointly and severally
covenant WITH THE COUNCIL ONLY as follows:
8.1 Not to commence the Non Retail Development or
any part thereof (save for site clearance excavation and foundation works and
works for the refurbishment of existing buildings or not requiring planning
permission which are excluded) unless and until details of a drainage strategy
for the Non Retail Development have been approved in writing by the council
(such approval not to be unreasonably withheld or delayed) and arrangements
have been made to the satisfaction of the Council (such approval not to be
unreasonably withheld or delayed) for the provision of adequate foul and
surface water drainage for the whole of the Non Retail Development which would
comprise the provision and/or enlargement of such drainage as may be necessary
as determined by the Council (as Local Planning Authority in consultation with
the Sewerage Undertaker) and secured where properly demanded by payment by the
Applicant or the Freeholder of a contribution to meet the reasonable costs
incidental to such drainage strategy incurred by the Sewerage Undertaker.
8.4 That the Film Museum shall be included in the
Leisure Office Development and shall be constructed and completed including
floor covering plastering and painting ready for occupation by the museum
operator’s furniture. It shall be fitted with all services which shall include
a 2M lighting grid to take high intensity display spot-lighting together with a
minimum of 40 spots and a flexible power circuit around the perimeter such as
MK Power Link or similar with a minimum of twelve 12 amp switched outlets.
Emergency lighting shall be provided to statutory requirements and heating
shall be to the same standard as the remainder of the building. Ducting shall
be provided for provisional and telecommunications cable. Provision of separate
metering of all services shall be provided. The Film Museum shall be managed by
a nominee jointly agreed by the applicant and the Council.
8.5 The Film Studio shall not be used for any
purpose other than for film and television productions and other ancillary uses
for a period of twenty five years from the date hereof unless otherwise agreed
in writing by the Council (such agreement not to be unreasonably withheld or
delayed).
8.6 The Non Retail Development shall be carried
out so that development of the Film Studio and Film Museum proceeds in parallel
with the Retail Development. A phasing programme for the Development shall be
submitted by the Applicant and the Freeholder to the Council together with the
first application for approval of reserved matters pursuant to either the
Permission of the Retail Permission (whichever is the earlier) within six
months of the signing of this agreement.
8.7 The Applicant and the Freeholder will build
the Non Retail Development or any part thereof strictly in accordance with the
phasing programme approved by the Council (such approval not to be unreasonably
withheld or delayed).
8.9 Within 6 months of the signing of this
agreement, or on or before the first application for approval of reserved
matters pursuant to either the Permission of the Retail Permission (whichever
is the earlier) the Applicant and the Freeholder shall secure the execution of
the Bond such Bond to bind the Applicant and the Freeholder to secure the
development of the Film Studio (including a replacement of Sound Stage 6) and
Film Museum in accordance with the approval of reserved matters pursuant to the
Permission within five years of the grant of such approval of reserved matters
pursuant to either the Permission of the Retail Permission (whichever is the
earlier) the Applicant and the Freeholder shall secure the execution of the
Bond such Bond to bind the Applicant and the Freeholder to secure the
development of the Film Studio (including a replacement of Sound Stage 6) and
Film Museum in accordance with the approval of reserved matters pursuant to the
Permission within five years of the grant of such approval of reserved matters
(subject to reasonable extensions of time for force majeure or any events
beyond the reasonable control of the Applicant). Such Bond will reduce to the
sum of FIVE MILLION POUNDS (£ 5,000,000) on practical completion of the post
production facility and shall be cancelled by practical completion (as such
phase is defined in the JET Form of Contract without quantities current
edition) of the Film Studio (including a replacement for Sound Stage 6) and the
Film Museum in accordance with such reserved matters approvals.
8.10 To construct at their own expense to adoption
standards to be approved by the Council a footpath including lighting from
Shenley Road to Hillside Avenue. The Council shall be responsible for securing
all necessary permissions consents and rights to construct the footpath on any
land not owned by the Applicant or the Freeholder.
If BW are
clearly right then there is no serious issue to be tried within the principles
of American Cyanamid Co v Ethicon Ltd [1975] AC 396. Moreover, it
would follow in the circumstances of this case that BW ought to have judgment
under Ord 14A. If on the other hand their argument is not right, or the
council’s arguments do raise a serious issue, Miss Caroline Hutton invites me
to grant an interlocutory injunction rather than grant judgment in her favour
under Ord 14A. Her reason was that the council would rather have the matter
decided at a full trial when the background matrix of facts could be more fully
examined. In this context she particularly pointed out that BW have not at this
stage provided any witness concerned with the making of the agreement or that
matrix. Mr Keene said that did not matter — the only thing that mattered was
the terms of the agreement itself and of the planning permissions referred to
therein. In effect his application under Ord 14A was to have the matter treated
as a construction summons.
So, as it
seems to me, what I have to decide is whether BW are clearly right. If yes,
they win, if not there will be an injunction. I turn to examine BW’s arguments.
They run as follows:
BW’s
obligations in clause 8 related to ‘The Development’ and the ‘Non Retail
Development’. This throws one back to the definitions of these. ‘Permission’
means, following clauses 3.9 and 3.10, the no 4
Development’, namely that ‘authorised by the Permission’ means, so he argues
only any development work authorised by that permission. He emphasises the word
‘authorised’. He says this so clearly indicates that it is not just the type of
development being referred to but also the source of its lawfulness that no
other meaning is possible. Once the permission goes then ‘the Development’ can
never be lawfully carried out. True, exactly the same works could be done
authorised by further permission (which indeed could be granted with a
procedural short cut in that section 73 would allow the grant of a fresh
permission with a different time condition for an application for reserved
matters), but that is beside the point. Those works would not be ‘authorised’
by permission 4.
Mr Keene goes
on to reinforce his point by reference to several subclauses of clause 8:
(a) First he points to the bond clause, 8.9. The
bond is ‘to secure the development of the Film Studio . . . and Museum in
accordance with the approval of reserved matters pursuant to the Permission’.
How, he asks forensically, can that be done now? The permission has gone.
(b) Likewise there is reference to the film
studio in that clause and in others. But, he urges, film studio is defined in
clause 3.13 and is tied to ‘the Development’, ie that which authorised by the
now defunct permission.
(c) Further, he said, look at the time periods.
The agreement contemplated that people would get on with the development.
Clause 8.6 contemplates a phasing programme (so that the retail and non-retail
development proceed in parallel), that programme to be submitted to the council
within six months of signing. So also clause 8.9 refers to a maximum six-month
period for provision of the bond.
Before
considering those arguments further it is convenient to consider also the
arguments as to implied terms. The agreement does not contain any express term
requiring BW to apply for approval of reserved matters. The council say, that
if necessary, there is an implied term to the effect that if the permission
drops away because no application for permission for reserved matters is made
in time, then BW will reapply for a fresh permission (and do all other such
steps as may be necessary) to develop in the manner contemplated by the
original permission (I paraphrase para 5A of the amended statement of claim).
Mr Keene, as I have said, accepts that something ought to be implied, but no
more than is necessary. All that is necessary, he says, is an obligation to
seek permission for reserved matters within three years. That he says
makes the agreement workable, so no more is necessary — indeed he goes so far
as to suggest that the council’s implied term is inconsistent with the time
periods of the agreement.
Mr Keene’s
arguments have a compelling but wholly abstract logic. But to my mind they lead
to such an absurd conclusion that they are very probably wrong — and certainly
it cannot be said they are clearly right. I must explain why.
First, there
is his central thesis in relation to ‘the Development’. I cannot see any
purpose in the source of planning authority for the
either the council or BW care? What
matters is the substance of what is to be done. So, Mr Keene’s construction,
hinging as it does on the word ‘authorised’ in the definition of development
has no sensible purpose behind it. I think it entirely possible to read the
definition as meaning in context and substance ‘the development of the kind
authorised by the Permission’. That has a purpose.
I am fortified
in this view by Miss Hutton’s submission (which I accept and do not recollect
Mr Keene specifically addressing) that I should have regard to the fundamental
objective of the parties — a matter which forms part of the essential
background factual matrix against which the agreement is to be construed. That
objective related to the physical development to be carried out. Miss Hutton
intends to call evidence at trial as to that factual matrix, which, as I have
said, is why she does not herself seek judgment under Ord 14.
I am further
fortified in the view I take by the decision of the House of Lords in Reardon
Smith Line v Yngvar Hansen-Tangen [1976] 1 WLR 989. There a
charterparty for a to-be-built ship specified as no 354 to be built at Osaka
was held to be properly fulfilled by a ship specified no 004 built at Oshima.
The question was asked whether the shipyard or number had any special
significance for the parties. Since the ship was the same in substance, there
was compliance. So here. What matters is the substance of the development. As I
see it, the points Mr Keene uses to bolster his thesis in the end really amount
to no more than repetition of it. Thus, the bond point turns on ‘the
Permission’, but if that is regarded (to make commercial sense of the
agreement) as permission to carry out the physical works, there is no problem.
The film studio point, even as articulated, comes back directly to the meaning
of ‘the Development’. And the point on time periods loses its force once one
recognises that the contract does not make time of the essence.
There are also
difficulties with Mr Keene’s arguments on implied terms. This case is unusual
in that it is common ground that something must be implied. This puts Mr Keene
on a slippery slope. He says it stops with an implied duty on BW to seek
reserved-matter permission within three years. He says that makes the contract
complete and, after all, the three-year period of section 92(a) must have been
known to both parties to the agreement. If BW are seen within the three-year
period not to be complying with this implied duty then, he says, the council
could go and apply to court to make BW apply. I found that argument
unsatisfactory. Assume such a duty. Then BW could comply with it by making such
an application at any time within the three years. Doing so at the 59th minute
of the last hour of the last day would do. And one cannot know until the period
is over whether BW are in breach. But by that time it would be too late. Mr
Keene’s suggestion of invocation of the court’s powers inside the three-year
period depends on notice of an intention not to comply being given. Moreover,
it would have to be given in time to get the matter not only before the court
but decided by it. So it depends on a number of matters extraneous to the
contract. I think there are real difficulties with Mr Keene’s implied term. It
does not go far enough to give business efficacy to the agreement. The
officious
reserved matters within three years?’ is unlikely to get the answer: ‘well the
studios can go’.
Further, once
it is accepted that a term is to be implied the necessity for an examination of
the factual matrix becomes, it seems to me, all the greater. There is much
room, in my view, for a wider term to be implied, of the kind suggested by Miss
Hutton. It may be that the term can be expressed as no more than this, that if
an application for reserved permission is not made within three years, then BW
will do all such acts as are necessary (including making a fresh planning
application) to implement a development as described in permission 4 or
otherwise to put the council in the position they would have been in if an
application for reserved permission had been made within the three-year period.
I say no more at this interlocutory stage.
There is yet
another difficulty in Mr Keene’s way. He accepts that his clients were in
breach of the duty which he puts forward as an implied term. If that is right,
then by breach of that duty BW escape their onerous duties under clause 8, even
though they have got the benefit of the retail permission no 5. That makes no
kind of sense. It is a conclusion which the ordinary citizen would regard as
revolting. And all the more so because the system of planning control is for
his benefit. There are two legal routes which may very well serve the council
to avoid that conclusion. First, there is construction of the contract — which
leads one back to implied terms. This would involve invoking the presumption
that a party to a contract cannot take advantage of his own wrong when
considering what term to be implied. Alternatively, there may be an independent
doctrine preventing a party from relying on self-induced frustration which
operates here in the council’s favour. Whether one regards the matter as one of
construction or one of BW relying on a self-induced frustration does not matter
for present purposes. I note that the House of Lords has left open for debate
the extent if any of the latter doctrine: see Alghussein Establishment v
Eton College [1988] 1 WLR 587. Accordingly, I reject the claim by BW for
judgment under Ord 14A and dismiss that summons. On the council’s motion I hold
that they do have an arguable case. What are the consequences? Mr Keene fairly (and rightly in my view)
accepted that his clients could not demolish the existing film studio buildings
within the initial three-year period and that if he was wrong on construction,
his clients could not do so now. However, he made it clear that his clients
have no immediate intention of demolition and in the circumstances
conditionally offered an undertaking in the same terms as any injunction which
the court might otherwise make if the court came to the conclusion (as I have)
that the council’s case was arguable. Subject to anything which Miss Hutton may
say I am willing to accept such an undertaking, which in law has the same
effect as an injunction.
I will hear
counsel as to the form of order.
The council’s
application was allowed and an undertaking accepted: Brent Walker’s Ord 14A
summons was dismissed.
