Dudley Muslim Association v Dudley Metropolitan Borough Council [2015] EWCA Civ 1123; [2015] PLSCS 315 concerned land that was acquired to construct a mosque and community centre. The site occupied a prominent position and the local authority that owned the land did not want it to remain derelict for long. Consequently, it extracted covenants from the buyer that it would transfer the property back to the local authority if development had not been completed within a specified period.
The buyer applied for planning permission for its scheme, which was refused (even though the planning officer had recommended that it should be approved) and, in the time that it took to secure the requisite permission, the deadline for completion of the development passed. The council called on the buyer to comply with its obligation to re-transfer the site – and battle commenced.
Would insistence on the re-transfer breach the buyer’s legitimate expectation that it would be permitted to develop the site within a reasonable time frame, taking into account delays caused by the council? The buyer did not allege that the council was acting in bad faith, but drew the court’s attention to a letter in which the council had suggested that it might extend the deadline. And was the council acting with conspicuous unfairness – and, therefore, abusing its powers – by insisting on its contractual rights? Are such defences even available to a claim to enforce a commercial bargain?
The Court of Appeal considered that it would be wrong in principle if parties, who would otherwise be limited to private law remedies, were to be entitled to improve their position by relying on public law principles simply because private law does not afford them a sufficiently attractive solution. The dispute concerned a contract whose terms were perfectly clear. The deadline for development had passed and the council had not had to exercise any discretionary or statutory power to trigger the buyer’s obligations, which were simply a consequence of the terms that had been agreed.
Therefore, unless the buyer could assert that there had been a variation of the contract or a promissory estoppel, which affected the deadline, the contract was enforceable according to its terms. The buyer was not claiming either. Furthermore, the obligation to transfer the site back to the council fell within the ambit of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. This requires contracts to sell land, and, importantly, variations of such contracts, to be recorded in writing and signed by the parties. However, there was no such document and the court doubted whether the doctrine of promissory estoppel can be used to outflank these requirements.
Quite apart from this, there was no factual basis for the buyer’s claims. It had not had any legitimate expectation that the council would extend the deadline for completion of the development because, after consideration, the council had made it clear that it would not do so. Furthermore, it would not usually be an abuse of power for a public authority to exercise its contractual rights – even though this might seem harsh.
Allyson Colby is a property law consultant
