The contract for sale of what was, reputedly, Britain’s oldest brewery came under the legal microscope in Minerva (Wandsworth) Ltd v Greenland Ram (London) Limited [2017] EWHC 1457 (Ch). The land was being sold with the benefit of planning permission for development, but the seller hoped to obtain an enhanced permission and to be paid overage as a result. Unsurprisingly, the seller needed the buyer’s approval before making any further planning application but, with the deadline for obtaining an enhanced permission fast approaching, went ahead and submitted a planning application even though the buyer objected to the changes to the scheme.
The application was successful. The planning authority resolved to grant an enhanced permission subject to the execution of a revised section 106 agreement obliging the buyer to pay an additional affordable housing contribution of £1.75m. But the buyer refused to sign the agreement and the resolution lapsed, leaving the seller out of pocket to the tune of £3,786,400 (which was the overage that the seller would have earned had planning permission been granted). Was the buyer liable to pay the seller an equivalent sum in damages for breach of contract?
The buyer claimed that the emailed request for approval that it had received was too informal to constitute a proper request for the purposes of the parties’ agreement – and that the request was invalid because the seller failed to inform and consult it while preparing the planning application. But the judge disagreed. Breaches of the obligation to inform and consult were irrelevant to the validity of the request for approval of the planning application. And there was nothing in the contract that stated in what form requests should be made.
Was the buyer’s refusal to approve the planning application unreasonable? It seems that the common law position is that a party refusing consent can rely on factors that influenced it at the time, even if it does not communicate them to the seller: Bromley Park Garden Estates Ltd v Moss [1982] 1 WLR 1019. However, none of the reasons provided by the buyer were reasonable. Consequently, the seller had been entitled to submit its planning application without the buyer’s approval.
Did the fact that the seller had asked the buyer to change its mind just four days before lodging its planning application reset the clock, giving the buyer more time to consider the request for approval? The judge rejected the buyer’s suggestion that the seller had waived its initial unreasonable refusal and ruled that the buyer would have been no better off in any event. The buyer had replied saying that it would need at least four weeks to consider the application, even though the parties’ agreement required decisions within 10 days, failing which requests would be deemed to be approved, and could not now say that the seller should have hung on for another six days just in case a reply were to materialise.
Had the seller used reasonable endeavours to minimise the affordable housing contribution associated with the enhanced planning permission (as was required by the parties’ agreement)? The judge decided that it had and ruled that the revised section 106 obligations were “proportionately no more onerous” than the obligations associated with the existing planning permission. Consequently, the buyer had wrongly refused to execute the new section 106 agreement, in breach of the overage agreement, and was liable for the damages sought.
Allyson Colby is a property law consultant
