Contract for sale of land –– Completion conditional on buyer obtaining planning permission –– Change of scheme –– Planning appeal –– Whether implied term that buyer would use reasonable endeavours to obtain permission –– Whether implied term required implication of identifiable period of time at date of contract –– Whether breach of implied term
On 8 August 1998 the parties exchanged contracts for the purchase by the defendant of a property owned by the claimant. Under the contract, completion was to take place on the expiry of a specified period after “satisfactory detailed planning permission for a minimum of 16 residential units… has been granted to the Buyer”; there was no longstop date. The claimant alleged that there were two implied terms in the contract: that the defendant would obtain planning permission within a reasonable time, and that it would make reasonable efforts to do so. The claimant contended that the defendant had breached the first term by failing to obtain permission, and the second by wrongly making an application, in October 1998, for a modernist design, rather than a traditional design, which would have stood a better chance of success, and by failing to pursue the application between November 1998 and June 1999. By March 1999 the claimant was considering a scheme of a different design with the local planning authority; this was submitted in June 1999. In August 1999 the claimant wrote to the local planning authority saying that the defendant had no contractual agreement with him and that they should not consider the application. The local planning authority refused to grant planning permission, and an appeal was made in October 1999, to be heard in June 2000. The claimant contended that there had been breaches of the contract and that, because of lapse of time, it was no longer in force. The defendant counterclaimed that the claimant had breached the contract by writing to the local planning authority.
Held: The claimant’s claim was dismissed. At the date of the claim form, the contract remained in force. It was plainly contemplated that it would be the responsibility of the buyer to obtain planning permission. It was necessary to imply a term by which the buyer would pay the planning fee; the submitted documents would be sufficient to enable the application to be considered; the buyer would not withdraw the application or cause it to be refused and would deal with any requests from the local planning authority. A term could be implied that the submitted plans would not be amended. The minimum obligation on the part of the buyer did amount to an obligation to use reasonable efforts to obtain planning permission within a reasonable time. Provided a buyer had not acted negligently or unreasonably, any delay in obtaining permission that was attributable to causes beyond the buyer’s control would not be a breach of the implied term. The implied term was not necessarily a condition of the contract, breach of which would be repudiatory; it was an innominate or
The following cases are referred to in this report.
Aberfoyle Plantations Ltd v Cheng [1960] AC 115; [1959] 3 WLR 1011; [1959] 3 All ER 910
Batten v White (1960) 175 EG 697; (1960) 12 P&CR 66; [1960] JPL 853
Fischer v Toumazos [1991] 2 EGLR 204; [1991] 48 EG 123
Hargreaves Transport Ltd v Lynch [1969] 1 WLR 215; [1969] 1 All ER 455; (1968) 20 P&CR 143; [1969] EGD 87; 209 EG 467
Hick v Raymond & Reid [1893] AC 22
IBM (United Kingdom) Ltd v Rockware Glass Ltd [1980] FSR 335
Longlands Farm, Re; Alford v Superior Developments Ltd [1968] 3 All ER 552; (1968) 20 P&CR 25
Tesco Stores Ltd v William Gibson & Son Ltd [1970] EGD 318; (1970) 214 EG 835
Total Gas Marketing Ltd v Arco British Ltd [1998] 2 Lloyd’s Rep 209
This was the hearing of a claim by the claimant, Leslie Ambrose Jolley, against the defendant, Carmel Ltd, for declarations in respect of a contract, and a counterclaim by the defendant for breach of contract.
David Berkley QC and Susanne Muth (instructed by Gorna & Co) appeared for the claimant; Peter Smith QC and Stephen Pritchet (instructed by Halliwell Landau) represented the defendant.
Giving judgment, Mr Kim Lewison QC said:
Introduction
Lytham St Annes is a well-known seaside town in the Fylde. The coast is dominated by a wide sandy beach flanked by sand dunes. The Lytham St Annes dunes are a remnant of a much more extensive dune system, and were designated as a site of special scientific interest (an SSSI) on 18 March 1991. Blackpool lies to the north of Lytham. The area between the two was designated green belt in 1983.
Just behind the sand dunes lies an old Victorian building. Its address is 606 Clifton Drive North. Mr Jolley bought the building in about 1977. It had been used as a convalescent home, and his intention was to use it for that purpose. However, his plans never came to fruition, and it remained empty for over 20 years. It remains empty to this day. In August 1998 Mr Jolley entered into a contract for the sale of the property to Carmel Ltd. The contract was conditional upon the obtaining of detailed planning permission for residential development. No planning permission has yet been obtained. Mr Jolley began proceedings by claim form dated 29 February 2000. The principal issue I have to decide is whether the contract has been terminated.
Negotiations
As one might expect of an unused building in an exposed seaside position, the property has deteriorated over the years. Mr Jolley said in evidence that the building was in a reasonable state in early 1998. However, the local authority took action under the Building Act 1984 because, in their view, the building was dangerous or ruinous. Mr Jolley was prosecuted and fined both in 1994 and 1996. A newspaper article in early 1998 referred to the dilapidated state of the building. Mr Crowden Collins told me that when he first saw the building in early 1998 it was derelict and a blot on the landscape. When the planners came to prepare their development brief in the summer of 1998, they said:
The building is not as such derelict but considerable monies would be required to renovate it to a level for re-occupation and to ensure it did not deteriorate again.
I reject Mr Jolley’s evidence. I find that, by the time of the events in issue in this action, the property was in a dilapidated state. The deterioration was exacerbated by a fire early in 2000.
In the spring of 1998 Mr Crowden Collins, prompted by reading the newspaper article, pushed a note through the door of the property expressing an interest in it. He and Mr Jolley met soon afterwards. Mr Jolley said that he and his son went to see the planners before Mr Collins came on to the scene. There is no trace of such a meeting in the documents, and I regard this evidence with scepticism. He told me that the planners said that they wanted a composite building similar to what was there, and that the building had to be traditional. He said that he asked them whether they would accept a mews development, and they said definitely not. However, he told me that the officers said that planning permission would be guaranteed. Although he later resiled from this extreme statement, I find it an implausible one. He also said at one stage in his evidence that the planners were clear that any new building had to have the same footprint as the existing building, although not necessarily in the same position. But he later modified this to say that the planners told him that they might recommend planning for the extension for which planning permission had already been granted. That was a significant shift in his evidence.
No planning officer was called to corroborate this evidence. Nor was Mr Jolley’s son. I reject this evidence for a number of reasons. First, because of the lack of documentary evidence. Second, because it was the planning committee, and not the planning officers, who preferred a more traditional style of building. Third, because the application that the planning committee were later minded to accept was, at least in part, a mews development. Fourth, because Mr Jolley could not satisfactorily explain why he went to see the planners, nor why he raised the question of a mews development. He had not put the property on the market, and he had no previous experience of development himself; although Mr Jolley had himself obtained planning permission on appeal, that was a permission to extend the existing building for use as a convalescent home, and not an application for residential development. The permission was not implemented. Mr David Owen, who was Mr Jolley’s solicitor at the time, told me that Mr Jolley explained to him that he had a property that was difficult to deal with and that out of the blue came a person who was keen to buy. Having done almost nothing with the property for 20 years, it is too convenient that Mr Jolley happened to go to see the planners just before Mr Collins expressed an unsolicited interest in the building. Fifth, because his evidence about what the planners told him is inconsistent with what they were telling Mr Stephen Hodder, Mr Collins’ architect, as I shall shortly explain. However, Mr Jolley did go to see the planners later in the story, probably in the summer. That visit is explicable because, by then, the prospect of development was a real one.
Mr Jolley said that he met Mr Collins and Mr Hodder in March or April 1998. Mr Hodder told me that he met Mr Jolley at the end of July 1998. Mr Jolley cannot have been right about the date of the meeting, because Mr Hodder was not instructed until June. Indeed, by the time Mr Hodder gave his evidence Mr David Berkley QC, for the claimant, accepted, contrary to Mr Jolley’s own evidence, that the meeting took place when Mr Hodder said it did. I shall therefore deal with it in its correct chronological place.
After a number of meetings, Mr Collins and Mr Jolley reached an agreement in mid-May for the sale of the property. Mr Jolley told me that the matters upon which they agreed were the purchase price, the identity of the purchaser, that Mr Collins was going to put flats on the
I was shown a number of documents relating to the negotiations that led up to the making of the contract. These included a letter written by Mr Jolley to Mr Owen, his solicitor, on 18 May 1998. In that letter, Mr Jolley set out the terms he wanted to have included in the contract. The overall structure of what Mr Jolley wanted may be summarised as an unconditional contract of sale, with completion deferred for up to one year while a planning permission was sought. The fact that he was prepared to accept a deferment of completion for one year shows that he realised that obtaining planning permission might well take that long. Indeed, the letter provided for completion to take place at the end of one year, even if planning permission had not been obtained by then. It seems to me that this shows that Mr Jolley was well aware that even a year might not be long enough to obtain planning permission.
Those terms appeared in Mr Owen’s first draft of the contract, but the terms were rejected by Mr Peter Bond, Mr Collins’ solicitor. I also saw the various versions of the travelling draft and I heard oral evidence about the negotiations. I do not consider that it would be right to take any of this material into account for the purpose of interpreting the contract. However, both Mr David Berkley QC and Mr Peter Smith QC said that I could make use of this evidence for the purpose of determining what facts were in the minds of the parties. To that limited extent, the evidence was relevant and admissible. But I can only take into account background facts that were known to both parties or that would have been reasonably available to them.
Planning policy
The Fylde Borough Council local plan was adopted on 14 March 1994. Policy SP5 said that development within the green belt would not be permitted except in very special circumstances. Para 2.31 stated specifically that large and substantial extensions to buildings and sites would not be permitted where these prejudiced the purposes of the green belt.
On 4 June 1998 Mr Paul Drinnan and Mr Nigel Robinson, planning officers with Fylde Borough Council, met Mr Collins and Mr Hodder. Mr Drinnan and Mr Hodder knew each other. Mr Drinnan knew that Mr Hodder was a committed modernist. At the meeting, Mr Hodder tabled preliminary sketches. The sketches were modernist in design. Mr Drinnan wrote on 6 July 1998 to record the matters discussed. He said:
As you will recall, the policy context of the site was set out for you. Two particularly relevant policies were highlighted, namely the Green Belt designation which severely restricts development of an inappropriate type and the nature conservation policies relating to the foreshore and dune area.
The only exception to normal restrictive policy would arise where existing, permanent development were to be replaced. Even accepting this, one must accept that built development in the Green Belt, whilst established and part of the local scene, nevertheless is of itself inappropriate. However, the pragmatic view must be that any permanent built development could be replaced subject to restrictions. Indeed if it is accepted that the volume of built development which exists on the site can be replaced (including approved extensions), then any reconfigurations could actually result in a visual benefit.
The letter continued with observations on the possible design of the new development and drew attention to the sensitivity of the dune landscape. At this stage, I note that the letter contemplated that the volume of the built development might include not only the volume of the existing building but also the volume of the approved extension. It also said nothing about any preference for a traditional design. Mr Jolley said that the council were “falling over themselves” to have the building replaced. I do not think that this letter bears out his view.
On 16 July Mr Hodder wrote to Mr Collins expressing his delight at the manner in which his outline proposals had been received by the planners.
On 30 or 31 July Mr Jolley met Mr Collins and Mr Hodder. Mr Hodder said that, in the course of that meeting, he told Mr Jolley that there was a high risk of a refusal of permission, and that an appeal might be necessary. Mr Collins corroborated his evidence. Mr Hodder accepted in cross-examination that he made these statements in the course of a wider-ranging discussion, and that to isolate these two statements gave an unduly negative impression. He said that he had an enthusiasm for the site, but that it was quite clear that it was not going to be an easy application. He accepted that Mr Jolley had a familiarity with the planners’ requirements in terms of extending the existing building. By this, I understood him to mean that Mr Jolley realised that the planners would allow an extension. As I have said, Mr Jolley told me that the meeting took place in March or April, but it is accepted that he was wrong about that. It does not, of course, follow that because Mr Jolley was wrong about the date, he is also wrong about what was said at the meeting. But Mr Jolley’s account of the meeting was radically different. He said that Mr Collins had told him that he (Mr Collins) had been to the planning department and confirmed the type of development. It would be a new block of flats. He said that he told Mr Hodder and Mr Collins that the planners would allow flats but not mews. He said that he asked Mr Collins what he wanted the property for and said: “If you want it for mews you won’t get it. If you want it for flats, you will.” Mr Collins then said, according to Mr Jolley: “As it happens, I want it for flats.” Mr Jolley also said that he told Mr Collins that the planners wanted a traditional building and that Mr Collins agreed that that was what he wanted. I have already explained why I reject Mr Jolley’s evidence about what the planners told him. In addition, Mr Hodder is a committed modernist architect, and does not design traditional buildings. Mr Collins had engaged him on a previous project and knew that. It is implausible that Mr Collins, accompanied by Mr Hodder, would have agreed in Mr Hodder’s presence that he wanted to build a traditional building. I reject Mr Jolley’s evidence about this meeting.
Relevant background facts
I am now in a position to summarise the background facts that, in my judgment, it is appropriate to take into account in interpreting the contract.
First, both parties knew that planning permission would be needed. Second, they knew that the property was adjacent to an SSSI. As Mr Bond, the defendant’s solicitor, put it in a letter of 23 July 1998 to Mr Owen, Mr Jolley’s solicitor:
they [the planners] have rightly pointed out that any proposed development is very much at the mercy of English Nature in view of the SSSI covering part of the site.
Third, they knew that the property was in the green belt, and that a green-belt designation made development more difficult.
Fourth, they knew that the nature of the development was such that it was likely that English Nature would have to be consulted. Mr Jolley told me that he had himself been to see English Nature, and a reference to English Nature appeared in one of the early drafts of the contract, as well as the letter, part of which I have quoted. Although I accept that Mr Jolley did go to see English Nature, I am not satisfied that he did so in April 1998, which is what he said in evidence. He produced some documents that he said he was given by English Nature, and among them was the English Nature newsletter for summer 1998. That does not sit easily with an April visit.
In the light of my findings about the meeting on 30 or 31 July, I find that both parties were aware that the planning application was likely to be sensitive and that an appeal might be necessary. Mr Owen told me that Mr Jolley appreciated that the development of the land would be difficult. When Mr Jolley himself applied for planning permission to extend the building, he was only successful on appeal after a delay of
Sixth, both parties knew that, as I have just mentioned, Mr Jolley had succeeded on appeal in obtaining planning permission to extend the building, and that the planning permission had not been implemented.
Seventh, both parties knew that the planners might permit an extension to the volume of the existing building.
One legal consequence of the known fact that the site was in the green belt is that the Secretary of State has the power to call in an application for planning permission. In brief, if the local planning authority are minded to grant planning permission, they must give notice to the Secretary of State. The Secretary of State then has six weeks in which to decide whether to determine the application himself If he does, the local planning authority cannot grant permission, and the Secretary of State holds a public inquiry. It was in issue whether knowledge of this legal consequence could be attributed to the parties. I will return to this point later on.
Eighth, a timescale of a year for obtaining planning permission was not acceptable to Mr Collins.
Contract
The contract was exchanged on 7 August 1998. The buyer was Carmel Ltd, a company controlled by Mr Collins, with Mr Collins standing surety for its obligations. Both Mr Jolley and Mr Collins were present in Mr Owen’s office when the exchange took place by telephone. Mr Owen told me that this was unusual. Mr Jolley told me that he did not understand that the contract had reached a final form without any longstop date for completion. He said that he was just told to sign. But Mr Owen said that every word of every phrase of every draft was thoroughly discussed between him and Mr Jolley, and I accept his evidence. It is another example of Mr Jolley’s unreliability.
The relevant clause in the contract said:
Completion Date
The Buyer shall within three calendar months of the date hereof lodge an application with Fylde Borough Council for detailed planning consent for the erection on the Property of a new residential development and associated landscaping. The Completion Date shall be 28 days after satisfactory detailed planning permission for a minimum of 16 residential units within the curtilage of the Property together with approval for associated landscaping has been granted to the Buyer. If such application for detailed planning permission and associated landscaping is not lodged within three calendar months from the date of this Agreement then the Completion Date shall be 17 weeks from the date hereof. Alternatively, completion shall take place 28 days from the Buyer serving Notice on the Seller of the Buyer’s wish to complete regardless of the situation at that time in respect of the said planning application.
Special condition 8 of the contract required the buyer to deliver to the seller a full copy of the planning application on or before its lodging with the local planning authority. It is common ground that a “satisfactory” planning permission is one that is satisfactory to the buyer.
The contract was deficient in a number of respects. First, it imposed no express obligation on the buyer to progress the planning application. Second, it made no provision for any appeal. Third, it expressed no date by which planning permission was to be obtained. Fourth, it imposed no longstop date for completion or determination of the contract. Mr Berkley submitted that some or all of these deficiencies could be overcome by the implication of terms.
Allegations of breach
To set the ensuing narrative in context, I must now set out the implied terms for which Mr Berkley contended and the allegations of breach of those terms. The first implied term is a term that the buyer will obtain planning permission within a reasonable time. It is alleged that Carmel failed to obtain planning permission within a reasonable time. This allegation is also material on the question of whether the condition was one that had to be fulfilled (if at all) within a reasonable time.
The second implied term alleged is an obligation on the part of the buyer to make reasonable efforts to obtain planning permission within a reasonable time. It is alleged that Carmel failed to use reasonable efforts to obtain planning permission. The first alleged breach is that it submitted a scheme that was modernist in design and that was too big. This was Scheme 1A. A scheme of a more traditional design, and which was contained within the footprint of the existing building, would have had a better chance of success. The second is that, having submitted Scheme 1A, it failed to pursue it. In particular, it is alleged that no action was taken in relation to the planning application between November 1998 and mid-June 1999. It was not clear to me whether the allegation was that Scheme 1A should have been taken to committee or whether the allegation was that Scheme 1B should have been substituted earlier than it was. After discussion with Mr Berkley, it emerged that the complaint was that Scheme 1A was not taken to committee. It is not alleged that Scheme 1B should have been substituted earlier. Indeed, since that allegation was neither explicitly pleaded, nor put to the witnesses, it would not have been right to allow Mr Berkley to pursue such an allegation.
Events leading to the first planning application
Through the summer of 1998, Mr Hodder and his assistant Ms Victoria Hilton continued to work on the scheme. By the end of August they had spent 195 hours on it. Mr Neil Swanson, a landscape architect, had also been instructed, and he had been in contact with English Nature.
In the late summer of 1988, the planning officers drew up a draft development brief for approval by the planning committee. They seem to have done so as a result of a visit from Mr Jolley. The draft brief said:
Given the current central government advice upon building in the green belt and that in the on going review of the Borough Local Plan, a pragmatic view would be that consideration could be given to rebuilding on the site accepting a tolerance of the volume of the existing built development incorporating approved extensions not yet built.
The draft development brief was placed before the planning committee on 9 September 1998, with a recommendation to approve it. The committee did approve it, subject to the amendment:
that development be confined to the extent of the footprint and volume of the existing building.
Thus, the committee decided that the volume of the approved, but unbuilt, extensions should not be taken into account. There are two points that should be made about this. First, it shows that the committee did not always take the advice of their planning officers. Second, this was the first time that the footprint of the existing building was seen as a limiting factor. This amendment to what Mr Hodder had been told in Mr Drinnan’s letter does not appear to have been communicated to Mr Hodder before the first planning application was lodged. Mr Hodder agreed in cross-examination that it was astonishing that it was not communicated to him, but was adamant that it was not. Mr Robinson was under the impression that Mr Drinnan had made Mr Hodder aware that the draft development brief had not been accepted by the committee, but Mr Hodder said that he was wrong. I find that Mr Hodder was not aware of the change in policy until late October.
First planning application
The first planning application was lodged on 12 October 1998. It was accompanied by drawings prepared by Hodders. The drawings showed 29 flats with a total volume of approximately 8,670m2. The volume of the existing building (plus approved extensions) was approximately 8,580m2, so that the proposals envisaged a greater volume even than Mr Hodder had been led to expect the planning authority would accept. An axonometric drawing illustrates the scheme. It was “modernist” in style. This scheme was described in argument as “Scheme 1A”. A fee of £5,510 was paid. Notice of the application was given to Mr Jolley on 12 October 1998. Mr Jolley said that he did not receive the letter.
On 16 October 1998 Mr Collins delivered a set of plans to Mr Owen and obtained a receipt for them. Mr Jolley said that Mr Owen did not
The planning authority acknowledged receipt of the application on 16 October 1998 and allocated it the reference number 98/0681. The acknowledgement said that the formal decision was due by 11 December 1998. This was the period prescribed by statutory instrument, and I cannot infer from that that the planning authority actually envisaged giving a decision by that date. Mr Jolley suggested several times during the course of his evidence that the council were legally obliged to reach a decision within the period of eight weeks. That is a misunderstanding. The effect of the expiry of the eight weeks is that the application is deemed to be refused, paving the way for an appeal. Mr Jolley also suggested that the applicant should have appealed at the earliest possible opportunity. That is, in my judgment, an unrealistic suggestion. Any sensible developer will try to negotiate with the local planning authority, rather than undertake an appeal. This was certainly Mr Hodder’s approach. Mr John Fallows had a similar approach.
On 21 October 1998 the planning authority asked for more details of the scheme. The letter also pointed out that the draft development brief had not been approved by the committee, and that the volume of the scheme might well be problematical at the planning committee. However, the letter did not criticise the architectural style of the proposals. Indeed, it asked Mr Hodder to prepare an architectural model of the scheme.
In early November 1998 the planners had a meeting with Hodders. In the course of that meeting, they said that the scheme should be volumetrically equal to the existing building only. This meant that the scheme would have to “lose” about 1,500m2. There was a suggestion, however, that the planners might compromise at 7,500m2.
On 11 November 1998 the council sent Mr Collins a copy of the draft development brief for comment. The draft brief included the following passage:
Given the current Central Government advice upon building in the Green Belt and that in the on-going review of the Borough Local Plan, a pragmatic view would be that consideration could be given to rebuilding on the site accepting a tolerance of the volume of the existing built development, however not incorporating approved extensions not yet built. Similarly the extent of the footprint of the new development must respect that of the existing building, although not essentially on the same site coverage of the existing building.
This draft reflected the decision of the planning committee. The brief therefore confined the footprint of the new development to that of the existing building only, and did not include the 25 permitted, but unbuilt, extensions. Through November, Hodders continued to work on amending the scheme to scale down the volume. Mr Hodder was also working on a draft letter to send to Mr Robinson in response to his letter of 21 October. The final draft was faxed to Mr Richard Collins (Mr Crowden Collins’ brother) for approval on 30 November. I infer that it was approved and that it was sent to Mr Robinson on 1 December 1998. Towards the conclusion of his letter, he defended the merits of his scheme, and ended by saying:
We therefore would ask the current application be considered as it stands.
Although Mr Hodder did not prepare a model of the development, as architectural models are expensive, he did produce computer generated photomontages, which he sent to Mr Robinson on 10 December. Mr Hodder met the planners on 21 December. A compromise was reached about the volume of the development. The development was to be reduced to 8,100m2 instead of the 7,000m2 that the planners had initially asked for. More photomontages were produced, and Mr Robinson was helpful about them. None of the planning officers expressed any concern about the modernist design.
Hodders reworked the scheme yet again, and revised areas were sent to Mr Collins in early January 1999. The volume of the scheme was reduced to 8,0168m2, a little more than the agreed compromise. On 25 January 1999 Mr Hodder submitted his drawings to the Royal Fine Art Commission and he met the commission on 5 February.
Change of scheme
In the meantime, a number of things were happening. First, a housebuilding company, Morris Homes Ltd, had approached Mr Collins expressing an interest in taking over the contract and the planning application. A written offer was made on 28 October 1998. Mr Collins accepted it almost immediately, and negotiations began for the entry into a formal contract. Mr Collins told Mr Hodder nothing about any of this. Morris Homes build houses in a traditional style, and Mr Hodder’s scheme would not have been to their liking. Although they flirted with the idea of retaining Mr Hodder as architect, they soon decided that they would employ their own. Second, the local planning authority had been consulting interested parties. Replies expressing no objection were received from the Civil Aviation Authority (28 October 1998), Blackpool Borough Council (3 November 1998), Lancashire Constabulary (12 November 1998), Lancashire County Council (18 November 1998) and the Royal Society for the Protection of Birds (23 November 1998). An objection was received from the Lytham St Annes Civic Society on 10 November 1998, which asked the council to acquire the site compulsorily and demolish the building. Responses were still awaited from English Nature, the Royal Fine Arts Commission and English Heritage.
Third, Mr Collins had been taking soundings among the councillors, many of whom he knew. The feedback he was getting demonstrated hostility to the modernist scheme. They expressed a preference for a more traditional scheme. Mr Hodder told me, and I accept, that he would not have reclothed his scheme in traditional garb. This caused Mr Collins considerable concern, as it looked as though six months’ work was likely to be wasted.
The upshot was that, still unknown to Mr Hodder, the scheme was to be radically revised. However, this was to be done, not by making a new planning application, but by substituting plans under the existing one.
The particulars of claim allege that Mr Collins instructed the planners to put the application “on hold” and Mr Berkley put this allegation both to Mr Hodder and to Mr Collins. Both denied it. There is certainly no trace of this in the documents*. I accept the denials.
* Judge’s note: The one document relied upon in fact related to a quite different application
On 6 January 1999 Morris Homes engaged Mr Fallows to prepare an alternative scheme. Again, Mr Hodder was unaware of this and continued to work on his own scheme. Mr Fallows met Mr Robinson for an informal meeting on 4 February, and on 24 February he submitted a sketch to the planners.
Meanwhile, English Nature had responded to the consultation process on 9 February 1999. Subject to requiring certain minor amendments to the proposals, they expressed no objection to Mr Hodder’s scheme. The Royal Fine Art Commission replied on 9 March 1999. It expressed its regret that any development was taking place at all, but did not criticise the nature of the architectural design.
A meeting with the planners took place on 2 March 1999. Mr Robinson did not like the preliminary sketch. He felt that the design should be more open and that there should be more communal space on the site. So Mr Fallows redesigned the scheme.
By mid-March, Mr Jolley was becoming concerned. Mr Owen wrote to Mr Bond on 15 March 1999. He said:
We refer to the above and would be obliged if you would kindly advise us of the present developments.
We would be obliged if you would supply us with a copy of the Application to Fylde Borough Council for detailed Planning Consent together with acknowledgments and replies from the Fylde Borough Council to Mr Collins.
Mr Owen sent a chaser on 24 March, and this prompted a reply from Mr Bond (who had been on holiday) on 26 March. He reminded Mr Owen that Mr Collins had given him the plans on 16 October 1998, and enclosed a copy of the council’s acknowledgement. The letter continued:
The application as lodged is to be amended as the Planning Committee indicated that a more traditional style of development would be better received.
The amended plans are now being finalised and will be discussed with the Planning Officers in the very near future.
As we are sure your client will appreciate, there have had to be detailed discussions with other authorities than the planners and these discussions have inevitably led to delays.
Mr Owen did not reply to this letter.
On 29 March Mr Hodder, who had by now been told of the involvement of Morris Homes and the change of scheme, wrote to Mr Collins. He expressed his concern about the delay. He said:
I do believe that you need to accelerate the Morris Homes application because if this does not replace the current application it is likely to miss the May Committee meeting and the current applications will have lapsed.
By the end of March, it had become necessary to engage a new landscape architect, as Mr Swanson was unwilling to continue. This was not because of any clash of personalities, but because the new design was taking a different tack, and he felt that he would not be able to argue the new case with English Nature. So Mr Colin Barnes was engaged instead. Mr Berkley submitted that the change of personnel of itself caused delay. But Mr Anthony Macateer, the expert planning witness, denied this. He accepted that delay was caused by the change of scheme, but said that the same delay would have been caused even if it had been the same architect who had had to redesign it.
Another meeting with the planners took place on 7 April 1999. Mr Robinson expressed concerns about the site layout, the shape of the buildings and the choice of brickwork. Mr Fallows did not consider these concerns to be significant. But through April, he and his colleague, Mr Christopher Stubbs, continued to work up the scheme.
On 30 April Mr Owen wrote again. He asked for an update about the revised plans being lodged. Mr Bond replied on 10 May by sending him a copy of a letter from Mr Collins. That letter said:
We are having what we hope will be a final meeting with the planners next week, mainly to check that they are happy about elevations. Following that meeting, the amended and fully detailed plans will be submitted.
In fact, a meeting with the planners took place on 14 May. The meeting was positive.
Discussions with the planners continued through June. A meeting took place on 14 June. Mr Drinnan confirmed that he was satisfied with the landscaping. A formal application was anticipated in the week beginning 21 June. Mr Fallows said in evidence that he was doing what the planners wanted, and that, in his experience, that was the best way of getting a satisfactory outcome.
On 28 June 1999 Mr Fallows submitted the new scheme to the council. This scheme was referred to as “Scheme 1B”. Because of certain technical defects, it had to be resubmitted on 12 July. Landscaping details were provided on the following day.
Fate of scheme 1B
Through August, the application was being prepared for the September meeting of the planning committee. Mr Robinson asked for, and was provided with, more information and a statement of architectural intent. Shortly before the meeting, Mr Barnes attended a meeting with councillors. He wrote:
I know John will have spoken to you after the meeting with the councillors. We both felt that the reaction could not have been better. There was a general agreement as to the style of the buildings. The councillors also took a keen interest in the management of the dunes and felt this was a very good positive gesture…
I await with keen interest and optimism the decision on Wednesday.
The planning officers had also recommended approval. I have not seen their report, but extracts from it were quoted in the local newspaper on 4 September 1999. They are quoted as saying that the scheme “has considerable merit and if developed would create a very prestigious development”.
However, to everyone’s surprise, the planning committee refused permission by 15 votes to 10.
Mr Robert Peters, of GVA Grimley, was instructed to advise on the merits of an appeal, and he did so on 23 September 1999. An appeal was lodged on 15 October 1999. That appeal is due to be determined on 27 June 2000.
Mr Jolley’s activities
I must now backtrack a little to deal with Mr Jolley’s activities. In late May 1999, Mr David Marsden, of BS Property Developments Ltd, got in touch with him. After a couple of meetings, Mr Marsden made an offer to buy the property. The offer was made verbally around the beginning of June, probably on 2 June, and confirmed in writing on 11 June 1999. The offered price was £425,000, and the offer, although subject to contract, was otherwise unconditional. The reason for this was that Mr Marsden or his colleagues had made their own inquiries about planning, and came to the conclusion that Scheme 1B was likely to receive approval.
On 2 June Mr Jolley went to see Mr Owen. They clearly had a discussion about whether the contract with Carmel Ltd had been repudiated. On 3 June Mr Owen wrote to Mr Bond asking about progress with the application, and he received a reply on 8 June.
On 10 June Mr Jolley wrote to Mr Owen to say that he had accepted an offer from a building company. This must have been BS Property Developments, even though its written offer was dated the following day. On 11 June Mr Owen wrote to Mr Bond. He said:
A period of nearly eight months has elapsed since the application was lodged and there is no sign that your client is even close to obtaining an approval. It was an implied term of the contract dated 7th August 1998 that the Buyer thereunder would use his best endeavours to secure consent within a reasonable length of time.
Our client considers that the delay is unreasonable and sufficient in itself to justify his contention that Carmel Limited and its contract guarantor have repudiated the contract which has become a nullity. In consequence our client reserves the right to re-market the property at the best price reasonably obtainable.
Mr Bond replied on the same day. He pointed out that a considerable amount of money had been spent on the application and that Carmel had used its best endeavours to secure consent. On 24 June he wrote to say that there was no question of removing the C(iv) land charge.
Mr Jolley, however, stuck to his guns. In late August 1999 he wrote to the council objecting to the planning application for Scheme 1B on the ground that Mr Collins had no contractual agreement with him. He asked the council not to consider the application. This was clearly not a proper planning ground for objection, although it appears that the letter was read out at the September meeting.
On 30 November 1999 Mr Jolley’s new solicitors wrote to Mr Bond. In their letter they said that because of the lapse of time Mr Jolley was no longer bound by the contract.
Scheme 2
On 1 December 1999 a new scheme was submitted for planning permission. The council acknowledged receipt of this application on 6 December and allocated it the reference number 99/0851. This scheme was referred to as “Scheme 2′. Scheme 2 differed from Scheme 1B in a number of ways. First, it was smaller, although its volume still exceeded that of the existing building. Second, there was a greater bias towards flats rather than mews. Third, there was less private space and more communal space. The planners gave Scheme 2 a cautious welcome. At their request, certain details were clarified. The application went before the planning committee on 23 February 2000. The committee approved it. However, the scheme represented a departure
Implied terms
It was common ground that a term can only be implied into a contract if it is necessary to give business efficacy to the contract or if it is so obvious that it goes without saying. As originally pleaded, Mr Jolley’s case was that the contract contained an implied term that obliged the buyer to obtain planning permission within a reasonable time. That would have imposed upon the buyer an absolute obligation to obtain planning permission. In my judgment, it is an impossible term to imply. The grant of planning permission was not within the buyer’s control, and no sensible businessman would give an absolute promise to do something that was not within his control.
By amendment on the second day of the trial, Mr Jolley alleged that there was an implied term of the contract that the buyer would make reasonable efforts to obtain the grant of planning permission within a reasonable time. Where a contract is conditional upon the grant of some permission, the courts often imply terms about obtaining it. There is a spectrum of possible implications. The implication might be one to use best endeavours to obtain it (see Fischer v Toumazos [1991] 2 EGLR 204*), to use all reasonable efforts to obtain it (see Hargreaves Transport Ltd v Lynch [1969] 1 WLR 215†) or to use reasonable efforts to do so. The term alleged in this case is at the lowest end of the spectrum.
* Editor’s note: Also reported at [1991] 48 EG 123
† Editor’s note: Also reported at (1968) 209 EG 467
In Hargreaves Transpor Ltd v Lynch [1969] 1 WLR 215, the parties agreed to sell land conditional upon the grant of planning permission. The buyer wanted to use the property as a transport depot. He obtained outline permission, but the local planning authority refused to approve the details. Reading between the lines, it seems that they repented of their decision to grant the outline permission. The first issue before the Court of Appeal was whether the grant of outline permission satisfied the condition. The Court of Appeal held that it did not. The second issue was whether the buyer was required to appeal against the refusal to approve details. Lord Denning MR said at p219C:
[Counsel for the defendant] says that, if there had to be approval of details, it was up to [the plaintiffs] to take all reasonable steps to get the details approved. He says they ought to have appealed to the Minister. He referred to Brauer & Co (Great Britain) Ltd v James Clark (Brush Materials) Ltd [1952] 2 All ER 497. In that case a seller was under a duty to apply for an export licence. It was held that he had to use due diligence and to take all reasonable steps to get it. I entirely agree with that as a general rule, but I do not think that in this case it was reasonable to expect the plaintiffs to appeal to the Minister.
Russell LJ said at p220C:
On the other points I would entirely agree that it is implicit in the contract that the purchaser would take all reasonable steps by way of attempting to get not only the outline planning permission but also the approval of detail under the condition upon which that permission was granted; and the one question is whether the purchaser failed in that obligation in that he did not appeal to the Minister from a decision of the local planning authority refusing approval, a refusal which it would be flattering to describe as suspect. If you have a case like this where it must have been known to the parties to the contract that an appeal from the local planning authority to the Minister might take six months for its solution, or nine months if there were a public inquiry; when you find that at least the target for completion is 1st April and the appeal, if successful at all, would be towards the end of the year at best, it seems to me that, bearing in mind the urgency of the matter to the purchaser which I have already mentioned, one cannot include as a reasonable step an appeal to the Minister, however sure it might appear that such an appeal would ultimately succeed.
Widgery LJ agreed with both judgments. It may be said that this case is authority for the proposition that the court will imply into a contract conditional upon the grant of planning permission an obligation on the buyer to take reasonable steps to obtain it. It does not, however, appear that the point was argued. What was argued was the content of the obligation, rather than its existence.
In Batten v White (1960) 12 P&CR 66* the parties entered into a contract for the sale of land “subject to planning permission to develop and satisfactory drainage”. The seller found a new buyer and wished to withdraw. The seller argued that the condition about planning permission was not a term of the contract because he would be bound for an indeterminate time, and the buyer was under no obligation to do anything, and might apply for permission to develop in a way that the local planning authority would be bound to reject. Russell J disagreed. He said at p69:
These arguments do not persuade me that the relevant phrase should not be regarded as a part and term of a contract. If it be such a term, it must, I think, follow that the purchaser must proceed with due diligence and in a bona fide manner to seek the relevant permissions.
* Editor’s note: Also reported at (1960) 175 EG 697
This is a case in which the existence of the term, rather than its content, was in issue.
On the other hand, in Tesco Stores Ltd v William Gibson & Son Ltd [1970] EGD 318†, Buckley J refused to imply any such term. In that case, a contract for the sale of land was conditional upon planning permission being obtained to the buyer’s satisfaction. The relevant clause was condition 10. The contract was made in May 1964. For various reasons, the contract went off. The buyer asked for the return of its deposit in December 1964 and again in February 1966. The seller served notice to complete in November 1966, but the buyer refused to complete. The question was whether the buyer was liable in damages or whether the buyer was entitled to the return of its deposit. The buyer had not, in fact, applied for planning permission. In order to found liability, Buckley J had to consider whether the contract contained an implied obligation on the part of the buyer. The relevant part of his judgment reads at (in reported speech) as follows p321 :
He (his Lordship) thought that it was clear that the language of condition made the contract conditional, the condition being the obtaining by the plaintiffs of planning permission for the use of the building in all its parts. The case resolved itself into quite a short and simple point: could it be said, on this contract, that the plaintiffs were under a contractual obligation to apply for planning permission of some sort in respect of this property, whether or not the uses for which they sought planning permission were uses which could be commercially acceptable to them? Was the contract one in which a term should be inferred that the plaintiffs must seek planning permission of some kind or other, however unprofitable the exploitation of the property might be to them? It was accepted on both sides that any planning permission would have to be obtained within a reasonable time. If the effect of condition 10 was that, as soon as a reasonable time had elapsed, it would have been open to the defendants to say that in the circumstances they would treat themselves as no longer bound by the contract and free to sell the property elsewhere, then he (his Lordship) did not think there was sufficient ground for inferring a contractual obligation on the part of the plaintiffs to apply for planning permission. It was true that upon that view the plaintiffs could unilaterally decide not to go on with the deal, but that was a position in which the defendants would not be exposed to any hardship or unfair terms, because of the limited extent of the time during which the contract would bind them.
† Editor’s note: Also reported at (1970) 214 EG 835
Neither Batten v White nor Hargreaves Transport Ltd v Lynch, which had been reported some time before this decision, were apparently referred to. The Tesco case was one in which there were no express obligations placed upon the buyer at all. By contrast, in the present case, the buyer had an express obligation to lodge a planning application within three months. The application had to be an application for permission to carry out a particular kind of development, namely residential. I consider, therefore, that Tesco is distinguishable. It was plainly contemplated in the present case that the obtaining of the planning permission would be the responsibility of the buyer. I accept that it is necessary to imply some term defining that responsibility, otherwise the seller is simply left hanging. At the very least, it seems to
(i) the buyer would pay any fee payable on lodging the application;
(ii) the documents supplied to the planning authority would be sufficient to enable them to consider the application;
(iii) the buyer would not withdraw the application and would not deliberately cause it to be refused;
(iv) the buyer would deal with any requests for information or clarification by the local planning authority.
On the other hand, since the amendment of plans is commonplace during any application for planning permission, it would not be right to imply a term that the application, once made, is incapable of amendment. Such a term would not be a reasonable one to imply, and is not one to which the buyer would have unhesitatingly agreed. These minimum obligations seem to me to amount, in substance, to an obligation on the part of the buyer to use reasonable efforts to obtain planning permission. I accept, therefore, that there was an implied term that the buyer would use reasonable efforts to obtain planning permission within a reasonable time.
The content of an obligation to perform a contractual obligation within a reasonable time was considered by the House of Lords in Hick v Raymond & Reid [1893] AC 22. In that case, a cargo of grain was shipped under a bill of lading. The bill provided that the cargo was to be applied for within 24 hours of the ship’s reporting to the Custom House in the port of London, but was silent about the time within which the cargo was to be unloaded. The ship duly arrived and unloading began. After a few days it was interrupted by a strike that lasted for the best part of a month. Unloading should have taken six days under normal circumstances. It was common ground that the consignees of the cargo had an implied obligation to unload the cargo within a reasonable time. The issue was whether a reasonable time was to be measured by reference to ordinary circumstances or whether the extraordinary event, namely the strike, should be taken into account. The House of Lords held that the latter was correct. Lord Herschell LC said that the only sound principle was that the reasonable time should depend upon the circumstances that actually existed. Lord Watson said at p32:
When the language of a contract does not expressly, or by necessary implication, fix any time for performance of a contractual obligation, the law implies that it shall be performed within a reasonable time. The rule is of general application, and is not confined to contracts for the carriage of goods by sea. In the case of other contracts the condition of reasonable time has been frequently interpreted; and has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, notwithstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably.
In my judgment, this is the right approach to apply in the present case. I conclude, therefore, that the buyer would not be in breach of the implied term so long as any delay in obtaining planning permission was attributable to causes beyond its control, and so long as it had not acted negligently or unreasonably.
It was suggested that such a term was a condition of the contract, in the sense that any breach of it, however small, would amount to a repudiatory breach of contract. I reject that suggestion. In my judgment, such a term could be broken in many ways and the effect of the breach could be almost infinitely variable. In my judgment such a term is an innominate or intermediate term, breach of which might or might not amount to a repudiation, depending on the gravity of the breach and its consequences.
As I have said, in Hargreaves Transport Ltd v Lynch the Court of Appeal held that an implied obligation to take all reasonable steps to obtain planning permission did not oblige the promisor to appeal against a refusal of permission. By contrast, in IBM (United Kingdom) Ltd v Rockware Glass Ltd [1980] FSR 335, an express obligation to use best endeavours to obtain planning permission did require the promisor to appeal against a refusal of permission if an appeal had a reasonable chance of success. In the present case, it seems to me that if (as happened) the application for planning permission was called in by the Secretary of State, the implied obligation would require the buyer to appear at the public inquiry. So far as an appeal against a refusal of permission is concerned, this seems to me to raise a different question. Hargreaves Transport Ltd v Lynch stands for the proposition that the promisor could not be compelled to appeal. However, that was a case in which there was urgency in the application, and in which the parties had already set a fixed target date for completion. Where, as here, the parties themselves contemplated that an appeal might be necessary, the implied obligation might well extend to an appeal. Whether it does or not may not matter in the end. An obligation to take reasonable steps to obtain planning permission is a contractual obligation that may be performed in a variety of different ways. Where a contractual obligation may be performed in a variety of different ways, the choice of method of performance is that of the promisor. The answer may therefore be that whether or not to appeal against a refusal of planning permission is a matter for the choice of the buyer, and that whichever choice he made, it would not be a breach of the implied term.
Satisfaction of the condition
The main area of debate revolved around the concept of obtaining or trying to obtain planning permission within a reasonable time. In Re Longlands Farm; Alford v Superior Developments Ltd [1968] 3 All ER 552 the parties entered into a contract for the sale of land for £114,000. It was conditional upon the buyer obtaining planning permission and approving title. Completion was to take place eight weeks after the condition had been satisfied. The contract was made on 2 April 1964. The buyer did not pay a deposit, but only paid £5. The buyer then registered a C(iv) land charge. Nothing else happened for three years. In March 1967 the seller wrote to the buyer requiring him either to make a planning application or to cancel the C(iv) land charge. The buyer replied that a planning application would be premature because of considerations of planning policy. Nevertheless, the buyer did make an application, which was refused on 24 July 1967. There is no indication in the report that there was an appeal against the refusal of permission. Following the refusal of planning permission, the seller successfully applied for the cancellation of the C(iv) land charge. Cross J held that the condition relating to planning permission had to be fulfilled (if at all) within a reasonable time. He said at p556A:
So, treating this document as a conditional contract –– the purchasers, that is to say, the defendants, were given a reasonable time in which to procure planning permission to their satisfaction. If they were unable to procure planning permission to their satisfaction within a reasonable time, then the contract never became an absolutely binding contract and the plaintiff was entitled to treat it as at an end, and to have the registration discharged.
Two other points seem to be clear, first that the reasonableness of the time must be determined as at the date of the contract and that what is reasonable must be judged by an objective test applicable to both parties, and does not simply mean what is reasonable from the point of view of the defendants. The time that the defendants were allowed by the plaintiff to have, in order to obtain planning permission, was a period of over 3.5 years. He says that that is, on an objective view of the matter, far more than a reasonable time. In answer to that the defendants say that the obtaining of planning permission in a matter of this magnitude is notoriously a very long drawn out business; and that they could not apply, with any hope of success, until the local authority had considered the Buchanan report and decided the policy that it would adopt in the light of that report. They say that, in their view, the other four grounds for refusal were minor matters, which would probably be capable of adjustment and that the substantial ground for refusal was the fourth one, which I have read, namely, that an immediate granting of planning permission would prejudice the outcome of any decision which the authority may eventually make on the Buchanan report. They say that it is only when the Hampshire county council have decided on a course of action in view of the report that an application has any reasonable chance of success. Of course it may not succeed. It is possible that the report may say that the fifty-seven acres must be an open space between Portsmouth and Southampton. But there is a possibility that, after that report has been studied and a decision taken, an application may then succeed. This amounts to saying that the condition which must be implied here is that the purchase is to be subject to the defendants’ obtaining planning permission, on an application made at the earliest time when such an application would have a reasonable chance of success. They say, “We were forced to make an application which we ourselves considered quite premature, in March 1967. This was foredoomed to
Now, I think that to look at the case in that way is to look at it far too much from the point of view of the defendants. If they had wanted –– as perhaps they did want –– to tie up the plaintiff for a period of five years or so, they could easily have said in the document: “Such purchase to be subject to my company obtaining planning permission, which they have five years to get…” But, of course, if that had been said, it may very well be that the plaintiff would have said he wanted more than £5 down, particularly in view of the constant fall in the value of money, to induce him to tie himself up for that period. I suspect that the reason why no time was put in may have been because the defendants realised, that, if they put in this sort of time which they wanted they would have to pay much more than £5 to get the plaintiff’s signature.
Viewing the matter objectively, and giving as much weight to the plaintiff’s position as to that of the defendants, I think that the period which had elapsed before he treated the contract as at an end was far more than reasonable.
Mr Berkley relies upon this case for three propositions. First, that where a contract is silent on when a condition must be fulfilled (if at all), it must be fulfilled within a reasonable time. Second, that the reasonable time must be judged as at the date of the contract. Third, that the reasonable time must be judged objectively, having regard to the interests of both the buyer and the seller.
Before considering this submission, I must refer to another case upon which Mr Berkley relied. In Total Gas Marketing Ltd v Arco British Ltd [1998] 2 Lloyd’s Rep 209 the parties entered into a contract for the sale of Arco’s interest in a North Sea gas field. The gas was transported to a multi-user terminal where the raw gas was processed. Because the terminal was multi-user, it was necessary for the users to agree between themselves how to allocate the processed gas. This was done by means of an allocation agreement. The contract was dated 15 February 1995. It was conditional upon a number of things. These included the construction of delivery facilities before the first delivery date, and Arco becoming party to the allocation agreement. The first delivery date was a date established in accordance with clause 2.1 of the contract. It was to be fixed by notice given by Arco within a window, and if no notice were given, there was a default date. The window was between 15 September and 15 December 1996. The latter date was also the default date. It is important to note that without an allocation agreement, the gas could not flow. Arco also had an express obligation to use its reasonable endeavours to become a party to the allocation agreement by 1 March 1996. Arco gave notice fixing the first delivery date as 31 October 1996. By that date, the allocation agreement had not been concluded. The question before the House of Lords was when the condition precedent relating to Arco becoming party to the allocation agreement had to be fulfilled. Despite Arco’s obligation to use reasonable endeavours to become party to the allocation agreement by 1 March 1996, it was not contended that the condition had to be fulfilled by that date. Total’s contention was that the condition had to be fulfilled by the first delivery date. Arco contended for a number of different dates. Its first choice was a reasonable period, not being less than 12 months after the first delivery date, as long as the commercial purpose of the contract was not frustrated. Its second choice was the last possible first delivery date. Its third choice was such period after the first delivery date as was reasonably required for it to be ascertained whether or not the allocation agreement would be concluded. The House of Lords unanimously held that the condition had to be fulfilled by the first delivery date. Lord Slynn of Hadley (with whom Lords Nolan and Hope of Craighead agreed) pointed out that the first delivery date, once ascertained, was central to the intended operation of the contract. He said at p216:
But by when must the condition be fulfilled? It seems to me that the natural meaning of the clause is that it must be fulfilled in order to allow the first delivery date to be put into effect and that if looked at at the date of the contract (Feb 15, 1995) that is what the parties would be likely to have said in the context of the scheme which they had set up.
He then considered the dates for which Arco contended, and said at p217:
Moreover it, like the other two suggested alternatives, leaves the condition to be satisfied after the first delivery date, which seems to me to be contrary to the intention of the parties deduced from a consideration of the contract as a whole. It is difficult to see why, if the reasonable period is to be assessed at the date of the contract (as I think it should see Longlands Farm, Alford v Superior Developments Ltd…) it should be necessary to fix any time after the first delivery date.
This may fairly be said to be direct, although fleeting, approval of Re Longlands Farm. Lord Steyn approached the matter differently. In the first place, he rejected the analogy between contracts for the sale of land and a contract such as the House was considering. Second, he approached the question via the implication of terms. He held that the obligation to use reasonable endeavours to become party to the allocation agreement was coterminous with the period within which the condition needed to be fulfilled. However, the Total case was one in which the shape of the contract as a whole, and, in particular, the critical importance of the first delivery date, made it clear that in order for the gas to flow, the allocation agreement had to be agreed before that date. This case is much more open-ended.
Re Longlands Farm built upon the foundation of the decision of the Privy Council in Aberfoyle Plantations Ltd v Cheng [1960] AC 115. That case concerned a contract for the sale of a rubber plantation. Part of the plantation had been held under seven leases, which had expired. The contract was therefore conditional upon the renewal of those leases. The contract provided for completion on 30 April 1956. The leases had not been renewed by that date. The Privy Council held that the condition had to be satisfied by the completion date, and that since it had not, the contract was at an end. In the course of the opinion of the board, delivered by Lord Jenkins, his lordship said at p124:
Within what period of time did the agreement (read in conjunction with the purchaser’s solicitors’ letter of May 4th, 1956) require the condition contained in clause 4 to be performed? The answer to that question must plainly depend on the true construction of the agreement, or in other words, on the intention of the parties as expressed in, or to be implied from, the language they have used.
But, subject to this overriding consideration, their Lordships would adopt, as warranted by authority and manifestly reasonable in themselves, the following general principles: (i) Where a conditional contract of sale fixes a date for the completion of the sale, then the condition must be fulfilled by that date; (ii) where a conditional contract of sale fixes no date for completion of the sale, then the condition must be fulfilled within a reasonable time; (iii) where a conditional contract of sale fixes (whether specifically or by reference to the date fixed for completion) the date by which the condition is to be fulfilled, then the date so fixed must be strictly adhered to, and the time allowed is not to be extended by reference to equitable principles.
In arriving at these principles, their lordships relied upon earlier cases that concerned contracts for the sale of land. In both the cases referred to, the contract had fixed a date for completion and, in both, it was held that a condition had to be satisfied (if at all) by that date. Lord Jenkins said at p126:
Before parting with these two authorities, their Lordships would observe that the reason for taking the date fixed for completion by a conditional contract of sale as the date by which the condition is to be fulfilled appears to their Lordships to be that, until the condition is fulfilled, there is no contract of sale to be completed, and accordingly, that by fixing a date for completion the parties must by implication be regarded as having agreed that the contract must have become absolute through performance of the condition by that date at latest.
Similar considerations are, in their Lordships’ judgment applicable where a conditional contract of sale fixes no specific date for completion of the sale by the performance of both sides of the bargain, but does fix a date for the performance on the part of the purchaser of his part of the bargain by payment of the purchase money, even though no definite date is fixed for the performance on the part of the vendor of his part of the bargain by the transfer of the property. In such a case it could hardly have been intended that the purchaser should on the date specified perform his part of the bargain unless by that date a binding contract had been brought into existence by fulfilment of the
It can be seen that the rationale for the rule is related to the performance of obligations. If the contract fixes a completion date, any contingent condition must be satisfied by that date, otherwise the obligation to complete cannot be implemented. If the contract fixes no date for completion, then the law will imply a term that completion must take place within a reasonable time. Thus, the second general principle that Lord Jenkins enunciated can be seen, on analysis, itself to be related to an obligation to complete.
In this case, as in Longlands Farm, the contract does specify a completion date, but ties it to the obtaining of planning permission. However, Cross J appears to me to have treated the case as one in which no completion date was specified, and therefore applied the principle that the condition had to be satisfied (if at all) within a reasonable time. As a broad generality, I do not find difficulty with this principle. However, a different analysis is possible. If, as I have held, there was an implied obligation on the part of the buyer to take reasonable steps to obtain planning permission, it might be said that, for as long as the buyer continued to perform that obligation, time for satisfaction of the condition was still running. This would, in my judgment, be closer to what the parties expressly agreed than the imposition on them of some arbitrary time-limit. If the approach of Cross J is followed to the letter, it seems to me to involve the proposition that the court must select, by reference to circumstances prevailing at the date of the contract, a fixed period of time that would constitute the reasonable time. Suppose that the court decides that one year would have been a reasonable time. The effect of this is that the court is not implying a term that the planning permission had to be obtained within a reasonable time, but that it had to be obtained within one year. But why, one might ask, is one year (rather than 11 or 13 months) necessary to give business efficacy to the contract? And if the parties had been asked by the officious bystander whether they agreed that if no planning permission were obtained within one year (rather than 11 or 13 months) the contract would lapse, would they have unhesitatingly have agreed? The truth is that if the parties had given any conscious thought to the question of how long it might take to obtain planning permission, they would not have been able to do more than make an educated guess. And if, in addition, the buyer had been told that if, for whatever reason, the grant of planning permission was delayed beyond the period arrived at by an educated guess, the contract would automatically lapse and he would lose his investment of time and money in the planning process, I cannot think that he would have unhesitatingly agreed.
At this point, I revert to Tesco Stores Ltd v William Gibson & Son Ltd. It will be recalled that Buckley J decided that since the seller was protected by an implied condition that planning permission was to be obtained within a reasonable time, there was no need to imply an overlapping contractual obligation. Is the converse true? In other words, if, as I have held, there was an implied obligation on the part of the buyer to use reasonable efforts to obtain planning permission, and if completion is not simply left in the air, but is firmly tied to the grant of permission, why is there any need to imply a term to the effect that planning permission must be obtained (if at all) by some arbitrary date? To put it another way, would both parties have unhesitatingly agreed to the contract going off automatically if the planning permission had not been obtained by some arbitrary date? I cannot say that they would.
In my judgment, for as long as the buyer in this case is complying with its obligation to use reasonable efforts to obtain planning permission, the condition is still capable of fulfilment. In Re Longlands Farm, although Cross J said that the reasonable period had to be ascertained at the date of the contract, he did not, in fact, decide what it was. He simply held that, whatever it was, it had been exceeded. Moreover, in that case the buyer had not been using reasonable (or indeed any) efforts to obtain planning permission for over three years. The result would have been the same if he had adopted the approach which I prefer.
As I have mentioned, in the Total case Lord Steyn adopted an approach that made the fulfilment of a condition and an obligation to use reasonable endeavours to procure its fulfilment coterminous. This is very similar to my preferred approach. In Batten v White Russell J at p71 analysed the effect of the condition that the contract was subject to planning permission as follows:
The final phrase does not, in my view, mean that either party was free on the following day to back out. It was a term of the contract concluded on that day and, in my judgment, operated as a proviso in favour of the purchaser that if he pursued with due diligence a reasonable application for planning permission to develop by erecting houses and (whether because of special drainage difficulties or otherwise) it was not granted, he could resile from the contract.
This, too, seems to me to equate performance of the implied obligation and the period within which the condition is to be satisfied.
It is trite law that the construction of a particular contract is not subject to the doctrine of stare decisis. I do not regard myself as precluded by binding authority from adopting the approach that I prefer. In my judgment, for as long as the buyer is performing its obligation to use reasonable efforts to obtain planning permission, the condition is still capable of being fulfilled. If I am wrong, I must nevertheless consider what, objectively speaking, would have been a reasonable time for the fulfilment of the condition. Mr Berkley submitted that if the parties themselves did not regard the planning process as likely to prove complicated, that would point towards a short time as being a reasonable time. He submitted in particular that if both parties were unaware of the Secretary of State’s power to call in an application, the period of call-in should be left out of account. I do not accept that submission. If the period must be fixed as at the date of the contract and if, as Cross J held, it must be fixed objectively, then it seems to me that the court should take into account the real circumstances of the case and not the circumstances as the parties mistakenly believed them to be. In my judgment, since one of the legal consequences of the land being in the green belt was that the Secretary of State had the power to call in the application, a period of call-in must form part of any objectively ascertained reasonable period of time. Since the parties themselves knew that an appeal might be necessary, I consider that a period of time for an appeal against a refusal of permission must be built in too. Of course, the period for an appeal and a period for a call-in may overlap.
I heard evidence from Mr Macateer, an expert in planning. He was asked for his opinion about how long a hypothetical planning application would have taken. He accepted in cross-examination that he had not previously undertaken this exercise. But that does not cause me to doubt his reliability, particularly since his conclusions were not seriously challenged, and no contrary expert opinion evidence was called.
Mr Macateer’s evidence, which I accept, was that the process, including either a call-in or an appeal, would have taken 23 months. Two months of that period would have been occupied by what he called “pre-application discussions”, and the planning application would have been submitted in month three. Thus, from the submission of the planning application the process would have taken 20 months. Mr Berkley submitted that since pre-application discussions had been going on in the present case for longer than two months, credit should be given for some of that time. However, even though those discussions had been going on for longer than three months, the parties still expressly agreed that the buyer would have a further three months from the date of the contract in which to make the application. In my judgment, the right approach is to join Mr Macateer’s timetable at the point at which the planning application is made. The application for Scheme 1A was submitted in October 1998. Twenty months from that date have not yet elapsed. On that basis, therefore, the contract has not yet lapsed.
Was Carmel in breach of the implied term?
On my preferred approach to the period within which the condition may be satisfied, it is necessary to determine whether Carmel Ltd is in breach of the implied term. Only two breaches have been pleaded. The first alleged breach was the submission of Scheme 1A. Mr Berkley
So far as the size of Scheme 1A is concerned, I accept Mr Berkley’s submission that a smaller scheme would have had a better chance of success. But that, in my judgment, is not the relevant question. Rather, the question is whether the submission of a larger scheme was unreasonable. Mr Berkley’s specific criticism was that Scheme 1A was not confined to the footprint of the existing building. As at October 1998, when the application was made, Mr Hodder was unaware of the committee’s rejection of the planning officer’s draft development brief. As far as he was concerned, development would be permitted up to the volume of the existing building and the permitted (but unbuilt) extensions. Moreover, even after the committee had made their amendment to the draft development brief, the officers were still willing to compromise over the volume of the development. What is more, the volume of Scheme 2, which the committee were willing to approve, was itself greater than the volume of the existing building. I therefore reject the suggestion that it was unreasonable to submit an application for a scheme whose volume exceeded that of the existing building.
The second pleaded breach of the implied term was that Scheme 1A was never tested before the committee. This alleged breach sits uneasily with the first one. If it was a breach to submit Scheme 1A in the first place, how could it be a breach to abandon it? However, given my conclusion on the first alleged breach, I accept that it is open to Mr Berkley to make this criticism. Mr Hodder continued to work on Scheme 1A through into January 1999. By that time, however, Mr Collins had been gauging the reaction of the planning committee, and it was not favourable. Moreover, the development brief had become public, and it was clear from that, and, indeed, from Mr Robinson’s letter of 21 October 1998, that the committee did not always take their officers’ advice. In my judgment, the decision to abandon Scheme 1A and to substitute Scheme 1B was a reasonable one to take.
Although, in his closing address, Mr Berkley did complain of a three-month delay in submitting Scheme 1B, this was not a pleaded breach of the implied term. Nor was it put to Mr Fallows that he could have worked faster. Moreover, since Scheme 1B was, in any event, refused planning permission, and since the appeal has not yet been heard, I do not consider that the outcome would have been any different as at the date of the claim form even if Scheme 1B had been submitted earlier.
I conclude, therefore, that Carmel Ltd was not in breach of the implied term in the respects alleged against it. This makes it unnecessary for me to deal with Carmel’s defence based on waiver or estoppel. However, if I had been of a contrary view, I would have held that the defence was made out. Mr Jolley had been in possession of the plans (either actually or through his agent, Mr Owen) since shortly after the planning application was made. He never complained about the design or size of the scheme. He was told in advance that the plans were to be altered to produce a more traditional design, but, again, he never complained. If those matters were a breach of contract, I consider that he acquiesced in them and that it would now be unconscionable for him to take advantage of them. I also consider that if they were breaches of contract they were not repudiatory breaches, in that they did not deprive Mr Jolley of the whole benefit he was intended to receive under the contract.
Conclusion
It follows, in my judgment, that the contract was still on foot at the date of the claim form and that therefore the claim must be dismissed.
Counterclaim
The counterclaim alleges that Mr Jolley was in breach of an implied term not to do anything that would hinder the grant of planning permission. It is alleged that he was in breach of that term by writing a letter objecting to the grant of planning permission. The existence of the term was conceded, and, in my judgment, rightly so.
Although Mr Jolley’s letter of objection did not raise any proper planning objection, it was plainly calculated to induce the committee to refuse planning permission. The very fact that it was read out at the committee meeting shows that it was a matter that the committee knew about. In my judgment, that was a breach of the implied term, However, as Mr Smith QC fairly conceded, no loss has been proved to have been caused by the breach. There will therefore be judgment on the counterclaim for £2 nominal damages.
Claim dismissed; counterclaim allowed.
