Option to purchase land — Option period extendable where planning application outstanding — Meaning of “planning application” — Whether applicable to reserved matters application — Appeal dismissed
The respondent was the registered owner of land over which it granted an option to purchase in favour of the appellant developer. The appellant’s option was registered on the charges register. Under the terms of the option agreement, the appellant undertook to apply for planning permission for a proposed development on the land within six months of the agreement, time being of the essence. The option was expressed to be exercisable up to December 2004, although the option period was extendable in certain circumstances, including where a decision was awaited on a planning application. In any event, the option was not to be exercisable after June 2005.
The appellant obtained outline planning permission subject to conditions. At the December 2004 termination date the applicant was still awaiting approval of reserved matters. The respondent sought to cancel the appellant’s entry on the register, on the basis that the option had expired. The appellant maintained that the option was extant because of the outstanding reserved matters application. The respondent sought a declaration that the option had expired.
At first instance, the judge held that the term “planning application” was intended to have the same meaning in the agreement that it had in planning law. Since the relevant planning statutes made a distinction between an application for planning permission and an application for reserved matters approval, he held that the latter could not be an outstanding planning application within the meaning of the agreement.
On appeal, the appellant contended that a “planning application”, in the context of the agreement, meant the totality of the consents necessary to allow development to go ahead.
Held: The appeal was dismissed.
The option agreement had been professionally drafted with the planning legislation in mind, and the parties would be expected to use the term “planning application” in the sense that it held in that legislation. Had a wider meaning been intended, the agreement would have been worded accordingly. The agreement struck a balance between the competing interests of the parties: the interests of the respondent in being able to deal with its land, and those of the appellant in keeping its option open for as long as possible. The tension between those interests had been resolved by the definition of the termination date, which gave the appellant until December 2004 to satisfy itself of the matters affecting the development, and until June 2005 to resolve them. That was of the essence of the bargain. The circumstances provided no reason to construe the agreement differently; it was not possible to say that the balance struck by the parties, in giving the term “planning application” its usual meaning, did not make commercial sense: Hargreaves Transport Ltd v Lynch (1969) 209 EG 467 distinguished.
Grant Crawford (instructed by Walker Morris, of Leeds) appeared for the appellant; Thomas Jefferies (instructed by Lee & Priestley, of Leeds) appeared for the respondent.
Sally Dobson, barrister
