Option to purchase land — Condition that planning permission obtained for residential development — Specified option period — Provision for extension — Refusal of planning permission — Appeal — Option period expiring before determination of appeal — Master holding that option period extended by parties pending outcome of appeal — Court of Appeal upholding decision — Appeal dismissed
The plaintiff (“R”) owned 2.25 acres of land at Lower Upham, nr Bishops Waltham, Hants. By a written agreement dated May 5 1988 she granted an option to purchase that part of the land for which “satisfactory planning permission” for residential development could be obtained to the defendants (“Crest”). Subject to a provision for extension the option period was for 18 months. That was subsequently extended to two years from May 5 1988. Crest registered the option to purchase as a land charge. The parties recognised that the option term might expire: before the decision of an outstanding appeal; while court proceedings were still in progress, or while court proceedings were holding up service of a “first price notice” to initiate the option procedure; or before determination of the relevant purchase price following service of a first price notice. In any of those events the parties agreed by clause 4.1 that the option term should be extended.
Crest made an initial planning application, which was refused. On January 29 1990 they gave notice of appeal from that refusal. On March 8 1990 a second identical application was submitted. The option agreement expired on May 4 1990 subject to any extension under clause 4.1. On that day the planning authority gave conditional permission in respect of the second application. Crest received the permission on May 10 and subsequently considered the conditions to be satisfactory within clause 4.1. On July 5 1990 (outside the two-year period) Crest served first price notice to initiate the option procedure. On July 26 1990 Crest withdrew the appeal from the refusal of the first permission. On May 23 1991 R started proceedings seeking removal of the land charge from the register claiming that the option period had expired before any exercise thereof. Master Munrow dismissed her claim. R appealed.
Held The appeal was dismissed.
1. When the option term expired on May 4 1990 no planning permission had been given on which Crest had been able to form any opinion whether it was satisfactory, but an appeal against a deemed refusal was outstanding. That was effective to extend the option period. It could not be retrospectively invalidated because, although satisfactory planning permission was thereafter given, it was not given in response to the outstanding appeal.
2. Crest’s appeal against the council’s deemed refusal of planning permission had the effect of extending the option term under clause 4.1 until the appeal was withdrawn and came to an end. That was the determination of the appeal. On that basis Crest served its notices in time.
3. Per Hobhouse LJ dissenting: The earlier planning application was made over 15 months after the signing of the agreement and the later application over six months after that. The loss of time through the making of late applications was not one of the events covered by clause 4.1 and did not entitle Crest to serve a first price notice after the expiry of the two-year period based on a permission resulting from such an application.
Leolin Price QC (instructed by Bates Ellison & Morris, of Havershill) appeared for the plaintiff; David Neuberger QC and Stephen Jourdan (instructed by Denton Hall) appeared for the defendants.
