Long lease — Plaintiffs intending to acquire lease on shopping centre and build thereon — Defendants agreeing to proposal — Agreement allowing for determination in event of specified conditions not being met — Defendants intending to sell whole shopping centre — Purchasers not wanting to buy subject to agreement with plaintiffs — Defendants terminating agreement in default of conditions being met — Whether defendants entitled to determine agreement — Judgment for the defendants
The first plaintiff acquired properties in enterprise zones while, the second plaintiff, its parent company, developed them. They reached agreement with the defendants that the first plaintiff would obtain a long lease in the Merry Hill Shopping Centre, Dudley, and that the second plaintiff would get access to the site to carry out development works. The lease was to be for 150 years commencing on January 1 1994. The building agreement contained an important provision whereby the agreement could be determined by December 30 1992 (“the end date”) if certain specified conditions had not been fulfilled.
The conditions comprised, inter alia, that detailed planning permission should be received in accordance with the application, and that a sublease to another company for one of the retail units for 35 years should have been agreed (clause 3). An application for detailed planning permission had been submitted to the local planning authority, but had been refused and an appeal had been lodged. There was a subject to contract agreement for the sale of the whole of the shopping centre with C Ltd. The plaintiffs understood that that sale would be subject to the agreement with the defendants but it transpired that C Ltd did not want to proceed on that basis. The plaintiffs served a writ and the defendants served a notice purporting to terminate the agreement on the basis that the conditions specified in clause 3 were not met. The plaintiffs sought an injunction for specific performance of the lease and the building agreement. They waived any right to terminate, while the defendants returned the plaintiffs’ deposit with interest. The plaintiffs argued, inter alia, that detailed planning permission was not necessary in an enterprise zone (see section 88(1) of the Town and Country Planning Act 1990) and that the defendants were estopped by their own conduct from determining the agreement.
Held The injunction was refused.
1. As a matter of construction of the agreement, no matter whatever the conditions of the enterprize zone for planning consent, the parties had contracted that detailed planning consent should be obtained by the end date. That date had passed and consent had not been obtained in accordance with the application lodged. The defendants were therefore entitled to determine on that ground.
2. The argument for the plaintiffs that the defendants were in breach of their obligation to use their reasonable endeavours to reach an agreement with the sublessees was also not accepted. Prima facie the condition had not been satisfied as the lease had not been agreed upon by the determining date.
3. With regard to the estoppel argument, the plaintiffs stated that they had become anxious as the deadline approached and had made suggestions for a supplemental agreement and that they had been lulled into a sense of “false security”: see Hughes v Metropolitan Railway Co (1877) 2 App Cas 439. However, there had to be a clear and unequivocal representation that the party against whom promissory estoppel was sought would not rely on his strict contractual rights. In the present case, the discussion concerning a supplemental agreement to extend the deadline did not amount to such a representation. The plaintiffs might have come to believe that the right to terminate would not be exercised but that was not as a result of any representation by the plaintiffs that they would not exercise their legal rights. Their right to terminate was valid and effective and remained so.
David Halpern (instructed by Edward Lewis & Co) appeared for the plaintiffs; Mark Warwick (instructed by Titmuss Sainer Webb) appeared for the defendants.
