Sale of land – Planning condition – Breach of contract – Claimant agreeing conditionally to purchase stadium from defendant for supermarket – Claimant being obliged to obtain acceptable planning permission for new development – Permission containing store onerous condition – Local authority refusing to vary restriction – Claimant terminating agreement for non-satisfaction of – condition precedent – Whether claimant lawfully terminating agreement – Claim allowed
The defendant owned a stadium in Horfield to the north of Bristol. It wished to move to a new stadium which it intended to build on the Frenchay campus of the University of the West of England. The claimant was looking for a development site in Bristol for a new supermarket. The parties entered into an agreement whereby the claimant would buy the stadium for £30m and lease it back to the defendant at a peppercorn rent while the defendant built its new stadium. Once the new stadium was built, the claimant would develop the site as a supermarket.
The agreement was subject to a number of conditions, one of which required the claimant to obtain an acceptable store planning permission to redevelop the stadium as a supermarket. By clause 3.1(a) of the agreement, if the conditions were not satisfied by the cut-off date, then either party might terminate the agreement by service of written notice, whereupon the agreement should determine on the date 20 working days after the date of service of the termination notice. The agreement provided that a planning refusal included the grant of planning permission which was not an acceptable planning permission, ie one containing no onerous store conditions, defined as any condition which had the effect of restricting the delivery and despatch of goods to between 5 am and midnight on any day.
The claimant submitted an application to the local planning authority for planning permission for a new store with the ability to deliver to the store 24 hours a day, every day of the week. Although the local authority resolved to grant planning permission, it was subject to a restriction on delivery times. In consideration of the defendant’s agreement that the restriction on deliveries was a store onerous condition, the claimant applied to vary that restriction under section 73 of the Town and Country Planning Act 1990 but that was refused in January 2014.
No termination notice was in fact served but the parties agreed that the claimant would be deemed to have served a termination notice on the first day when it could lawfully have done so after 27 October 2014 when it said it was going to serve such a notice. The claimant subsequently argued that it had lawfully terminated the agreement for non-satisfaction of conditions precedent. The defendant argued that the agreement was either still on foot or had been terminated in breach of contract.
Held: The claim was allowed.
(1) Under the agreement, the claimant, as buyer, was under an obligation to procure the grant of an acceptable store planning permission. Where a buyer obtained, as it had in this case, a contractual monopoly as to the conduct of a planning application, the obligation to use all reasonable endeavours was the quid pro quo for the surrender by the seller of all its rights to make planning applications itself. If, instead of serving a termination notice, the parties elected to continue to pursue the objectives of the agreement after the cut-off date, the reasonable endeavours obligation would not be extinguished. Therefore, until 20 days after the expiry of a termination notice, the claimant remained bound to use all reasonable endeavours to procure the grant of an acceptable planning permission and was bound by the obligation of good faith: IBM v Rockware Glass Ltd [1980] FSR 335 and Berkeley Community Villages v Pullen [2007] EWHC 1339 (Ch); [2007] 3 EGLR 101 considered.
(2) The correspondence made it clear that the claimant had only agreed to make one section 73 application without resort to planning counsel. An acceptable store planning permission could not have been obtained before the termination date because the defendant had uneqivocally assented to the timing and terms of the section 73 application and planning counsel had not approved an appeal. In the circumstances, the store planning condition had not been satisfied, and could not have been satisfied on the facts, so that the claimant’s claim had to succeed.
(3) If, contrary to the court’s primary findings, the claimant had been in breach of the agreement, the claimant was precluded from exercising the contractual right to terminate under clause 3.1 if that right had accrued as a result of its own breaches. That was an implied term of the contract unless there was a clear intention to the contrary. There was a presumption that the implied term formed part of the agreement and the burden was on the claimant to rebut that presumption. The language of clause 3.1 was concerned with the effects of service and not with the circumstances in which a party acquired the power to serve it: BDW Trading Ltd v JM Rowe (Investments) Ltd [2011] EWCA Civ 548; [2001] PLSCS 127 considered.
Mark Wonnacott QC and Philip Sissons (instructed by Dentons UKMEA LLP) appeared for the claimant; David Matthias QC and George Mackenzie (instructed by Burges Salmon LLP) appeared for the defendant.
Eileen O’Grady, barrister
