Option to purchase — Expiration of option unless extended — Conditions for extension — Appeal or application for judicial review — Appeal lodged before option expired — Whether option holder entitled to extension
By an agreement of March 10 1987, the defendant, the owner of Cowstead Farm, Sheerness, Kent, granted the plaintiff company an option to purchase certain land at a price of £300,000. The option fee was £1,000 and the option was exercisable during the “option period”. This period was from the date of the agreement until March 28 1988 — “but subject to extension in accordance with Clause 14”.
Clause 14 provided that “If no planning permission has been granted by the 27th March 1988 but prior to that date an Appeal has been lodged or submitted or an application has been made by the Planning Authority to the Court for judicial review in respect of the decision of the Secretary of State to grant Planning Permission (an Application) the Option Period shall be extended so as to expire forty two days after the Grantee receives written notification of the Appeal decision or where an Application is made following an Appeal decision forty two days after the Grantee receives written notification of the final order of the Court pursuant to the Application Provided that the Option Period shall not extend in any event beyond 27th March 1989 and in the event of the Option Period extending beyond 27th March 1988 the Grantee shall pay to the Grantor an additional sum of £1,000 within 14 days of the said date”.
On November 20 1987 an application for outline planning permission was refused by the local planning authority. The plaintiffs lodged an appeal on March 23 1988 and they tendered to the defendant £1,000 as payment for the extension of the option period; the defendant refused to accept that sum. In these preliminary proceedings by the plaintiffs for a declaration as to the validity of the option, the defendant denied that the plaintiffs had any right to enforce the option; he contended that the right to extend the option period related to an application for full detailed planning permission, as that expression was so defined in the agreement, and not, as was the case, an application for outline planning permission.
Held The plaintiffs were entitled to the extension to the option period. The extension was automatic and not a right exercisable by the plaintiffs. The option agreement contained definitions of the expressions used in the extension clause, clause 14. Although no detailed planning permission had been applied for, an “Appeal” had been lodged in time. “Appeal’ was defined as “any appeal against any refusal deemed refusal . . . as provided for by the Town and Country Planning Act 1971”.
A declaration was granted that, in the events that have happened, the option period will expire on March 27 1989 or 42 days after the determination of the appeal.
Hargreaves Transport v Lynch
[1969] 1 WLR 215 considered.
Martin Mann QC (instructed by Reynolds Porter Chamberlain, for Thomas Eggar & Son, of Chichester) appeared for the plaintiffs; and Gavin Lightman QC and Anthony Allston (instructed by Christopher Harris & Co, of Sheerness) appeared for the defendant.
