The term “overage” is often used to describe deferred consideration for land, which is payable at some point in the future. The buyer’s liability to make the payment is usually contingent on the grant of planning permission, or some other future event, and the amount payable is often calculated by reference to an agreed formula.
Loxleigh Investments Ltd v Dartford Borough Council [2019] EWHC 1274 (Ch); [2019] PLSCS 97 concerned a developer’s liability to pay overage following the grant of detailed planning permission for the development of land previously owned by the council. The council had sold the land with outline planning permission for the erection of five detached houses and extracted a covenant from the developer that it would pay overage if “any detailed planning permission” were granted for the construction of a residential dwelling or a commercial property over 3,000 sq ft on the land before 11 March 2018. The developer obtained a reserved matters approval in 2013 and obtained a further permission in 2015 for revisions to the external design, layout and floorplans of the dwellings. Consequently, it was able to build four houses with gross internal areas that were greater than 3,000 sq ft and to build a fifth house with a floor area that was less than 3,000 sq ft.
The expression “detailed planning permission” is not defined in the relevant legislation. But the council took the view that both the 2013 and 2015 permissions were “detailed planning permissions” within the meaning of the overage clause and asked the developer to pay overage in the sum of £235,977.
The developer argued that there was a distinction between planning permission and reserved matters approvals. It had done nothing more than obtain the latter and the council’s interpretation would expose it to serial liability for different approvals. It also relied on Lord Justice Chadwick’s analysis in Titanic Investments Ltd v MacFarlanes [1988] All ER (D) 682, in which he described overage as a payment that “depends on unpredictable future events”. There had not been any such event in this case. The land was sold with the benefit of the outline planning permission and the grant of reserved matters approvals pursuant to the outline permission could not have been intended to fall within the overage clause.
But the council argued that there was no basis for construing the phrase “any detailed planning permission” as meaning only full planning permission from the outset. It claimed that this would be contrary to the natural meaning of the words used and that the word “any” indicated an intention to include reserved matters approvals, as well as full planning permission for a different development, within the scope of the overage clause.
The judge agreed. The 2015 permission referred to the 2013 permission as a “planning permission”, and the word “any” in the phrase “any detailed planning permission” was apt to include either the grant of full planning permission for another development, or an approval pursuant to the outline permission. Furthermore, although in many instances overage is payable if and when an unpredictable event occurs, that need not necessarily be the case and was not the case here. The parties had expressly provided that liability to make a payment arose only once in respect of each unit constructed on the land. So the developer would not be liable for repeated payments for different approvals or permissions – and the very fact that the parties had considered such a provision necessary supported the council’s interpretation of the overage clause.
Allyson Colby, property law consultant
