Development — Landfill site — Building contract — Proposal to build commercial and leisure complex — Agreement for defendant to carry out development — Defendant failing to complete contract, including obligation to clean and landscape site — Claimant applying to court to order specific performance of contract or damages — Whether defendant in breach of development agreement — Whether defendant should be ordered to fulfil contractual obligations — Section 278 of Highways Act 1980 — Part 24 of CPR 1998
A rectangular piece of land had been used as a dump for domestic rubbish, and then for builders’ rubble and soil, for many years. The site was heavily contaminated and the claimant council had been under threat of prosecution from the environment agency. To reclaim the site, the council prepared a development brief in consultation with English Partnerships and bids were invited. In 1996, K applied for outline planning permission for development of the land as a mixed leisure, commercial and country park complex. Under the development agreement, the claimants undertook to give access to the site to prepare a site survey report and to transfer the site once certain conditions had been satisfied. The defendant undertook, inter alia, to clean up the site and to carry out offsite highway works under section 278 of the Highways Act 1980. The works were to be commenced within six months and completed within two years. Under a supplementary agreement, the defendant replaced K as developer. The defendant was a joint venture company set up by K and P Ltd, the intervenor in the present proceedings.
When the defendant failed to complete the works in accordance with the agreement, the claimants applied to the court, under CPR Part 24.2, for an order requiring specific performance of the development agreement or an award of damages. The defendant argued that an order for specific performance would not be appropriate as: (i) it still needed certain planning permission in relation to the development without which performance of the agreement would be unlawful; (ii) it had no money to go ahead with the works; and (iii) the development agreement was not sufficiently precise to enable an order for specific performance to be made. The intervenor applied to be joined as second defendant in the proceedings.
Held: The claim was allowed in part.
1. There was no good reason why the intervenor should be joined as defendant in these proceedings, but the submissions made on its behalf would be taken into account in so far as they were relevant.
2. The evidence showed that the defendant was in breach of its obligations under the agreement as it had failed to start the works by the date specified in the development agreement. There was no real prospect of defending the claim successfully, and judgment should be entered for the claimant under CPR Part 24.
3. Although the defendant was in breach of its contractual obligations, the development agreement was not sufficiently well defined for the court to make an order for specific performance of the agreement. The defendant had a wide discretion under the terms of the agreement as to how and when the works would be carried out, and there was no clear picture of what works were required to be done. It would be difficult to determine whether the defendant had complied with an order for specific performance. However, the court was inclined to order specific performance of the offsite highway works since they were sufficiently precise for compliance to be monitored. The court found the lack of willingness to push forward with the development depressing, and was not persuaded by the defendant’s claim of impecuniosity: it would not have refused to order specific performance on that ground alone if such an order would otherwise have been appropriate. However, damages were not an adequate remedy in the circumstances of this case.
Peter Smith QC (instructed by the solicitor to North East Lincolnshire Borough Council) appeared for the claimants; John McGhee (instructed by Lovells) appeared for the defendant; Paul Morgan QC and Jonathan Small (instructed by Macfarlanes) appeared for the intervenor.
Eileen O’Grady, barrister
