Beazer Homes today won a £5m Court of Appeal dispute with Bellway Homes over land allocation under a joint venture agreement for development in the north east of England.
The court overturned a high court ruling that Bellway was entitled to a larger share of undeveloped land at Middle Warren, Cleveland, after an area Bellway had been allocated at Cramlington, Northumberland, was declared undevelopable due to trapped methane gas from old underground mining operations.
In March, high court judge Mr Justice David Richards granted a declaration that Bellway was entitled to a further allocation of land at Middle Warren to make up for the imbalance in the allocation at Cramlington, which it claimed was worth around £5m.
Today, the Master of the Rolls, Lord Justice Lloyd and Lord Justice Gross allowed Beazer’s appeal and overturned that decision, ruling that Bellway bore the risk of being refused planning permission to develop the land it was allocated.
Lord Justice Gross confessed to a “degree of sympathy” with Bellway, but said that there was no basis for revisiting the final agreement as to the allocation between the developers of the remaining undeveloped land at Cramlington, which was reached in September 1999.
He said: “In September 1999, the parties could have waited to see whether full planning permission would be granted. They could have reserved their position, in the event that it was not. Instead, they did no such thing.
“They went ahead, inescapably in my judgment, relying on their own view as market professionals, with their eyes open.
“Having done so, it seems to me that Bellway assumed the risk of a subsequent refusal of full planning permission.
“Despite its apparent harshness for Bellway, this solution both serves to give effect to the parties’ intentions, objectively evaluated, and has very considerable attractions in terms of certainty and finality.”
He added that it seemed “most improbable” that the parties at the time envisaged reopening the allocation years after the event.
Bellway and Leech Homes entered into the jv for the development of sites in the North East, including the two large sites at Cramlington and Middle Warren. Leech’s shares in Leebell were subsequently acquired by Beazer.
However, an area of the Cramlington land was later found to be undevelopable when the local planning authority refused to grant full planning permission because it was concerned that any development would displace methane gas from old underground mine workings into areas already developed.
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