In Anderson Properties Ltd v Blyth Liggins [2017] EWHC 244 (Ch); [2017] PLSCS 43, a buyer claimed damages from its solicitors on the ground that they had been negligent when drafting a conditional contract for the purchase of a development site.
The seller had agreed five extensions of the date for submission of the buyer’s planning application. The last such extension expired on the day before the contractual termination date. When that date drew near, the buyer waived the planning conditions, but the seller refused to complete. It claimed that the agreement was unenforceable because it provided for the grant of a lease and underlease of a “care facility” to be constructed on part of the site. And, although the parties had agreed the forms of lease and underlease, the documents did not contain any plans identifying the land in question. The buyer was advised that the seller had an arguable point and abandoned its claim to enforce the agreement in return for a payment by the seller in the sum of £125,000.
In the subsequent proceedings against them, the buyer’s solicitors argued that the location of the care facility would have become apparent if the buyer had complied with its obligations in the agreement and submitted a full planning application. The care facility would have been shown on plans prepared to accompany the planning application (which were to have been approved by the seller). So, there would not have been any uncertainty on the completion date and the contract would have been enforceable.
The judge drew on principles set out in Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] EWCA Civ 406. In particular, when considering contracts for future performance over a period, where matters need to be worked out in due course, the court will assist parties to achieve their aims, so as to preserve rather than destroy their bargain. In such cases, things that can be made certain will be treated as certain.
There had been good reasons for leaving the precise area of land in question to be determined at a later date. The buyer did not know what the attitude of the planners would be and wanted to be able to negotiate and to alter designs in order to secure their approval. The seller was happy with the arrangement. It had agreed to dispense with plans for the care centre before exchange of contracts and it would have been difficult for it to resile from that position later. Furthermore, the fact that the seller could not unreasonably withhold approval for the planning application showed that some objective standard was to be applied when considering whether the plans that were produced fulfilled the parties’ bargain.
There might have been scope for debate about whether land around the care facility should be included in the lease, but the judge thought it inconceivable that this would render the contract unenforceable. If needs be, the court would imply terms to the effect that the leases of the care facility were to include any surrounding land that was reasonably necessary and, in default of agreement, that the court could settle this itself.
The judge dismissed the buyer’s claim for damages for another reason. It could not afford to complete the purchase and, as a result, had not lost anything at all.
Allyson Colby is a property law consultant