Agreement for major city centre retail development – Whether intended lease to developer void for omitting date of commencement of term – Whether council contractually bound to co-operate in consultation process – Whether council’s power to withhold approval of certain matters impliedly subject to reasonableness – Whether council entitled to insist that outside consultants should consider merits of alternative scheme
In September 1996 the defendant developer (Walton) entered into an agreement (the Walton agreement) with the claimant council whereby Walton, in return for the grant of a 99-year, rent-free lease of a city centre area known as Chavasse Park, agreed to carry out a scheme of development that would provide, together with other extensive facilities, some 1.1m sq ft of retail space. The Walton agreement itself was subject to the overriding condition that it would not come into operation unless, and until, the council ceased to be bound to perform an “option agreement”, relating to the same area, which had been concluded with another developer (RCL) some months before the Walton agreement. In such an event the “first period” of the Walton agreement would run for a period of 12 months beginning on the date that Walton was notified of RCL’s failure to exercise, or its decision not to exercise, its rights under the option agreement.
During the first period, Walton was obliged, inter alia to provide, at its own expense, an independent consultative study (the study), which would be subject to the acceptance and approval of the council, whose decision would be final. In procuring the study, Walton was required, by clause 5 of the agreement, to consult with the council for the purpose of furnishing the consultants (to be approved by the council) with the necessary “brief”. A draft lease was annexed to the Walton agreement, the commencement date being (necessarily) left blank.
In April 1999 the council, having reviewed their retail strategy for Liverpool city centre, issued a consultation draft favouring a site not included in the Walton agreement (the Paradise Street site) as the location for the desired major redevelopment. In December 1999 the council notified Walton that they were no longer bound by the option agreement. The Walton agreement accordingly entered into the first period.
The dispute between the parties centred upon allegations by Walton that the council had dragged their feet in the clause 5 consultation process, and had wrongly insisted that the brief should require the consultants to consider the merits of the alternative Paradise Street site. Various issues came before the court, which also considered a late submission by the council that, because no commencement date had been specified in the draft lease, there could be no binding agreement to grant a lease on the terms contained in the draft.
Held: Walton succeeded on the major issues.
1. While it was trite law that a purported lease was void if the commencement date was uncertain (see Marshall v Berridge (1881) 19 Ch D 233 and Harvey v Pratt [1965] 1 WLR 1025), that objection could not be raised if the intended date could be inferred from a reading of the lease as a whole: see Brilliant v Michaels [1945] 1 All ER 121. In the light of the timetables laid down in the Walton agreement, there was no reason why the parties should have intended any date other than the date on which the lease was to be executed.
2. Even if the agreement was void as a matter of law, Walton, having incurred substantial expense, time and effort in the reasonable belief that all aspects of the agreement were enforceable, was entitled, on the basis of proprietary estoppel, to call for a grant of a 99-year lease commencing on the date that it was notified that the option agreement was no longer in force: Dodsworth v Dodsworth (1973) 228 EG 1115 and Baker v Baker (1993) 25 HLR 408 considered.
3. The principle that where co-operation is necessary, it is implied that it is forthcoming (see per Viscount Simon LC in Luxor (Eastbourne) Ltd v Cooper 1941 AC 108 and the observations of Devlin J in Mona Oil Equipment & Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All ER 1014) did not entitle Walton to a general declaration that the council were obliged to co-operate at all stages in implementing the agreement. However, looking at specific aspects, it appeared that Walton’s obligation to consult with appropriate council officers with a view to achieving an acceptable development did carry a concomitant implied obligation on the part of the council not to prevent their officers from entering into the consultations or from playing their part in formulating the brief for the consultants: see the helpful summary in Chitty on Contracts (28th ed) vol 1 at para 13-011.
4. It was a question of construction whether there was an implied proviso that the council could not unreasonably refuse to approve the required consultative study, there being no general principle either way: see per Millet J in Price v Bouch (1987) 53 P&CR 257 at p260. Looking at the agreement as a whole, it was unlikely that the parties would have intended that the council would be free to withhold their approval on unreasonable grounds: Braunstein v The Accidental Death Insurance Company (1861) 1 B&S 782 and Cryer v Scott Brothers (Sunbury) Ltd (1988) 55 P&CR 183 considered.
5. The council were not entitled to insist, over the objection of Walton, that the brief should require the consultants to report on topics involving a comparative exercise of the kind urged by the council.
Kim Lewison QC and Jonathan Seitler (instructed by Berwin Leighton Paisner) appeared for the claimants; Derek Wood QC and Janet Bignell (instructed by SJ Berwin & Co) appeared for the defendant.
Alan Cooklin, barrister
