Development of barn — Planning permission — Joint venture — Agreement for sale of land — Rescission of sale agreement — One party seeking to rely on earlier agreement — Other party claiming rescission by later contract for sale — High court holding that earlier agreement not rescinded — Plaintiff entitled to payment of half value of increase in land after planning permission obtained.
G was a restorer of old buildings. T was a farmer who owned land, including an old barn at Walkers Farm, Barling, Essex. With T’s consent G applied on his behalf for planning permission to convert the barn into a house. They planned to share the enhancement in value of the barn that would result from the grant of planning permission, and that T would instruct G to undertake the conversion. On December 3 1987, before the grant of planning permission, they entered into the 1987 agreement. It provided that: upon the grant of planning permission T would pay to G half of the increased value of the barn; and that, if G so requested, T would instruct him to design and carry out the conversion, paying him the cost of the work plus 10% of that cost. G secured the grant of planning permission on November 16 1989 and became entitled to £45,000 under the 1987 agreement. G asked for the money but T refused. G decided to exercise his right under the 1987 agreement to convert the barn. Meanwhile T and G continued to negotiate G’s purchase of the barn. T obtained a valuation of £125,000 for the site with the benefit of planning permission. They eventually agreed subject to contract, a price of £100,000, less £15,000 in payment for some other work G had done for him.
In 1991 contracts were exchanged for sale of the barn to G. It was later destroyed by fire. G spent about £140,000 on work on the conversion. G recovered £102,000 of his outlay in insurance. G fell back on the 1987 agreement and claimed his continuing entitlement under it to the £45,000 and the right to develop the barn. T argued that the 1987 agreement had been rescinded by the 1991 contract. The county court decided that the 1987 agreement had not been rescinded and ordered that T should pay to G the sum of £45,000 pursuant to it. T appealed to the Court of Appeal.
Held The appeal was dismissed.
1. Whether a subsequent agreement amounted to a rescission or a variation of an earlier one depended on the intention of the parties, indicated by the terms of subsequent agreement and from all the surrounding circumstances.
2. The intention of the parties as revealed by the terms of the 1991 contract and the surrounding circumstances was that the 1987 agreement should remain alive until the 1991 contract was completed. They could not have intended that G would lose his accrued rights under the former before he was sure of the performance of the latter, in the form of transfer to him of the legal ownership of the barn he had build. Nor could they have understood of intended that T should, in the event of completion not taking place, receive the benefit of the planning permission and the undestroyed works, both the result of G’s labour, without paying him for them.
3. The consequence of the rescission of the 1991 contracts was to restore the parties to their position before it was made, namely subject to the 1987 agreement.
Jill Gibson (instructed by Holmes & Hills, of Braintree) appeared for Tabor; Witold Pawlak (instructed by Tolhurst Fisher, of Southend on Sea) appeared for Ginns.
