Bovis Homes has won a legal dispute to force rival developer Persimmon to repurchase land it sold to Bovis for £9m because it missed a deadline for building a road to the development.
The Court of Appeal unanimously ruled that Bovis is entitled to exercise a put option in the sale contract because Persimmon did not finish the construction of a bypass near the housing development site in Stanground,
In 2007, Bovis agreed to buy the land, which was adjacent to a 1,500-home Persimmon development called Cardea.
The sale agreement contained a condition that Persimmon had to provide certain services, including a bypass.
The agreement gave Bovis an option to sell the property back to Persimmon for the price it originally paid if the bypass was not opened to the public by the agreed date.
After the deadline passed, a dispute developed as to whether the condition had been met.
Persimmon claimed that because it had allowed the public to drive along a stretch of new road – intended to form the bypass – at 11pm on 30 October, just one hour before the deadline passed, it had fulfilled the condition.
However, Bovis claimed that the bypass was not truly open because work continued on its construction until after 2 November 2009.
Dismissing Persimmon’s appeal against a High Court ruling in favour of Bovis, Etherton LJ said: “As was candidly admitted during the course of oral submissions on this appeal, what lies behind this dispute is a dramatic fall in the market value of the property between the date of the sale agreement and the date on which Bovis served notice exercising the option.
“If the option has been properly exercised, that fall will be borne by Persimmon. If it has not, it will be borne by Bovis. While that explains the economic reality underlying the dispute, it cannot affect the legal merits of each side’s case.
“In my judgment, the judge was entitled to find, and correctly determined, that the bypass was not opened to the public… by the time Bovis was deemed to serve notice exercising the option on 2 November 2009, and the judge was entitled to order specific performance of the option,” he said.
Bovis Homes Ltd v Persimmon Homes Ltd Court of Appeal (Ward, Moore-Bick, Etherton LJJ) 4 November 2010.
Ashley Underwood QC and Miriam Stacey (instructed by Wragge & Co) appeared for the appellant; John Randall QC and Andrew Charman (instructed by HBJ Gateley Wareing LLP) appeared for the respondent.
