Property development — Agreement to obtain planning permission within specified period — Permission refused — Whether application should have been made earlier — Whether any loss caused — High Court holding that defendants in breach but no loss established — Plaintiff entitled to nominal damages only
Nihad Obagi (“the plaintiff”) brough a claim in damages against Stanborough (Developments) Ltd and three of its directors (“the defendants”) for breach of a written contract made on March 8 1984. Under the contract the defendants were required, as soon as reasonably practicable within a period of five years, to apply to Wimborne District Council for planning permission for residential development of an undeveloped freehold site of 25 acres known as “The Warren” on the outskirts of Ferndown, East Dorset. Under the agreement, if planning permission were obtained, the plaintiff was entitled to purchase one-half of the site for £200,000 plus half the defendants’ expenses incurred in obtaining the permission. It was common ground that the defendants applied for the requisite permission in February 1988 and that the application was refused. The plaintiff claimed damages for loss of profits in “the appropriate equation”, ie the difference between the value of half the site and what he would have had to pay for it. The defendants said that at no stage during the five-year period provided by the contract was there ever any reasonable prospect of the site receiving planning permission. Therefore, they resisted the plaintiff’s claim.
Held The defendants were in breach of the agreement, but the plaintiff was entitled to only nominal damages.
1. On the evidence the defendants were in breach of the agreement. The question remained whether, if the defendants had used their best endeavours and applied for planning permission at any earlier stage, they would have got it, or had a substantial chance of getting it.
2. In determining what had happened in the past, a court decided on the balance of probabilities: anything more probable than not was treated as certain. But in assessing damages which depended upon the court’s view of what would happen in the future if something had not happened in the past, the court had to estimate the chances and reflect those chances in its award, whether they were more or less than even: see Mallett v McMonagle [1970] AC 166 at p176.
3. The sole issue was whether the chance or probability was substantial. If it was, it must be evaluated. If it was a mere possibility, it must be ignored. Many different words had been used to indicate the dividing line. There were none better than “substantial” on the one hand or “speculative” on the other: see Davis v Taylor [1974] AC 207.
4. On the evidence the plaintiff in this case had failed to establish that even if the defendants had used their best endeavours, their chance of obtaining the requisite planning permission was more than a mere speculative possibility. The plaintiff had failed to establish that the breach had caused any loss and thus was entitled to no more than nominal damages of £5 and should pay the defendants’ costs.
Roy Vandermeer QC and Alistair Craig (instructed by Beale & Co) appeared for the plaintiff; James Munby QC and Peter Village (instructed by Paris Smith & Randall, of Southampton) appeared for the defendants.
