Vendors entering into agreement with property developer – Developer to obtain planning permission within time-limit – Agreement containing clause that either party may determine contract if planning permission not obtained within time-limit – Developer not obtaining planning permission within time-limit – Neither party terminating agreement – Developer subsequently obtaining planning permission – Whether developer entitled to purchase land – High Court holding that developer’s interest had expired – Court of Appeal upholding decision
The plaintiffs were the freeholders of 32.5 acres ripe for development, but without planning permission at Somerton, Somerset. They entered into an agreement with the defendant property developer to sell the land to the defendant in areas, when the defendant had obtained planning permission in relation to the relevant area. It was a term of the agreement that when planning permission for a specified area of the land was obtained the defendant was to give the plaintiff a purchase price notice requiring the contract price for the relevant part of the land to be determined in accordance with a prescribed formula. The notice relating to the area was to be given within the time-limits of either six months of the grant of planning permission and not later than December 31 1992, or alternatively 30 days after the date of the results of a relevant planning appeal or decision of an application which had been lodged within the time limit. Under clause 4 of the agreement either party could determine the agreement by notice if the defendant failed to obtain planning permission for the specified area within the time-limit.
Following completion of the agreement the defendant entered three registered C(iv) land charges. On February 2 1993 the local authority refused planning permission and accordingly the time-limit for the defendant to serve a purchase price notice expired 30 days thereafter. However, no clause 4 notice was served by either party.
In June 1995 the defendant obtained planning permission for an area of the land and served a purchase price notice. The plaintiffs claimed that the agreement had ceased to have effect in February 1993 and commenced proceedings seeking vacation of the registration. The defendant contended that no clause 4 notice had been served and the agreement continued in full force. The judge found that the agreement had come to an end in February 1993 and ordered that the land charges be vacated. The defendant appealed.
Held The appeal was dismissed.
1. The agreement contained important time-limits which accorded with the commercial purpose of the agreement, which was to tie the parties respectively to sell and buy property for a limited period if certain conditions were satisfied. It was clear that not only was planning permission to be obtained within the time-limits specified, but service of the relevant purchase price notice had also to be effected within the time-limits. Therefore, subject to clause 4, the agreement clearly provided that the defendant’s right to purchase the land was to come to an end if planning permission was not obtained within the time-limit.
2. Although the agreement had not determined without the service of a notice under clause 4 that did not serve to extend the defendant’s right to buy the land after the failure to obtain planning permission within the specified time period. Therefore the defendant had ceased to have any interest in the land after February 1993 and had not been entitled to the registration of the land charges since that date.
Guy Adams (instructed by Over Taylor & Biggs, of Exeter) appeared for the appellants; Amanda Michaels (instructed by Rowe & Maw, London agents for Porter Bartlett & Mayo, of Yeovil) appeared for the respondents.
