Mount Anvil Construction Ltd v Pub Development Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE NEUBERGER |
| Judgment Date | 17 March 2000 |
| Judgment citation (vLex) | [2000] EWHC J0317-13 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 17 March 2000 |
| Docket Number | NO: HC 1999 04632 |
[2000] EWHC J0317-13
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2
Mr Justice Neuberger
NO: HC 1999 04632
MR MICHAEL DRISCOLL QC (instructed by Beller & Co, 43 Portland Place, London W1N 3AG) appeared on behalf of the Claimant
MR JONATHAN GAUNT QC (instructed by Vizards Staples &Bannisters, 4 Great James Street, London WC1N 3DA) appeared on behalf of the Defendant
(Draft for Approval)
Friday 17th March 2000
This is an appeal against an order made on 4th January 2000 by Master Price. He ordered specific performance of an agreement for the sale of land against the Defendant ("the Vendor") , Pub Developments Ltd, at the suit of the Claimant ("the Purchaser") , Mount Anvil Construction Ltd. The agreement concerned was made on 21st May 1999. It related to a freehold property known as Jimmyz, Winston Churchill Avenue, Portsmouth, together with adjoining land.
Clause 3 of the agreement provided: "3.1. The purchase price shall be £650,000. …
3.2. The Purchaser shall also pay to the Vendor any further sum or sums as may become payable under the provisions of the second schedule. …."
The second schedule provided: "1. In the event that the Purchaser …
shall within a period of three years after the date of this agreement obtain any planning permission … for the erection of buildings with the number of bedrooms in excess of 250 and the purchase of the property be completed hereunder, a further sum or sums shall become payable in accordance with the provisions of this schedule.
2. Upon each occasion that such a planning permission … is obtained the Purchaser shall pay to the Vendor the sum of £4,000 for each additional bedroom for which planning permission is granted in excess of 250 bedrooms ("the additional payment") . …
3. Any additional payment due under the provisions of this schedule shall be made on the later of 3.1 ("the completion date") and 3.2 (seven days after the grant of a planning permission) , giving rise to an additional payment under the provisions of this schedule."
Clause 5 of the agreement is the centrally relevant clause. It provided as follows: "5.1. Subject to the succeeding provisions of this clause completion … shall take place … on or before the expiry of ten working days after the condition referred to in 5.3 has been satisfied or waived by the Purchaser as the case may be ("the completion date") .
5.2. … This agreement shall determine if by the relevant date is defined as in clause 5.3 an acceptable planning permission as defined in 5.3 for the property has not been granted and received by the Purchaser or the requirement therefore waived by the Purchaser.
5.3. For the purpose of clause 5.2: 5.3.1 "the relevant date" shall be the date of the expiry of the period of five calendar months immediately following the date of this agreement.
5.3.2 acceptable planning permission shall mean detailed planning permission granted pursuant to an application made by or on behalf of the purchaser in accordance with the provisions of clause 5.4 and which is in all respects to the entire satisfaction of the Purchaser in its absolute discretion.
5.4. Not later than 30 working days after the date of this agreement the Purchaser shall make an application to the planning authority for detailed planning permission in the form already agreed with the vendor for student accommodation consisting of 312 bedrooms … ("the planning application")
and shall then use its reasonable endeavours to obtain such consent pursuant to the planning application."
The remainder of the clause deals with an appeal.
"5.5. The vendor shall enter into such planning agreements as may be necessary in order to secure the grant of planning permission. …
5.6. If an acceptable planning permission has not been obtained by the relevant date or the requirement therefore waived by the Purchaser then this agreement shall immediately determine [subject to certain exceptions I need not deal with]."
I omit 5.7.
"5.8. The purchaser shall supply a full copy of all plans and specifications submitted with the planning application to the Vendor and shall also supply copies of all correspondence passing between the Purchaser and it architects, and the local planning authority of the Vendor. The Purchaser shall give notice of any meeting convened between the local planning authority and the Purchaser and/or its architects. The Vendor should be entitled to attend such meetings."
Clause 15 provided: "The provisions of this agreement shall not merge on completion of the sale and purchase of the property so far as they remain to be important."
The evidence establishes that it was envisaged from the outset that the development would, or at any rate might, involve the Purchaser effecting a subsale to a housing association. The agreement provided or indirectly alluded to such eventuality by providing in clause 13 that the Purchaser would be released from its obligation to pay overage upon procuring a direct covenant from any subpurchaser to pay overage in accordance with the provisions of the agreement.
On 28th May 1999 the Purchaser applied to Portsmouth County Council, the local planning authority ("the Council") , for planning permission for constructing a building which would contain 312 bedrooms. During July 1999 the Council deliberated and decided to grant planning permission, subject to an agreement being entered into pursuant to section 106 of the Town and Country Planning Act 1990 ("the 1990 Act") . Indeed on 30th July 1999 the Council issued a conditional permission notice with an outline of the terms of the proposed section 106 agreement. It was agreed between the Purchaser and the Vendor that the Purchaser would deal with the Council in relation to the section 106 agreement.
Meanwhile, the Purchaser was negotiating an agreement to sell on the property to Parchment Housing Group Ltd ("Parchment") . When pursuing its negotiations with the Council in relation to the terms of the section 106 agreement, the Purchaser was communicating with Parchment, to make sure that it was content with the terms of the proposed section 106 agreement.
Parchment eventually pulled out of the negotiations for the acquisition of the property from the Purchaser on 21st September 1999. The Purchaser immediately started negotiations with another potential subpurchaser, Drum Housing Group Ltd ("Drum") . In light of those negotiations, the negotiations between the Purchaser and the Council with regard to the section 106 agreement were conducted with the Purchaser referring to Drum.
On 20th October 1999 the Purchaser entered into an agreement with Drum to sell on the property to Drum ("the Drum Agreement") .
On the same date the Purchaser decided to waive the requirement under the agreement that planning permission had to be obtained. Accordingly the agreement became unconditional, on the face of it at least, and was due for completion on 3rd November 1999.
Two days later however, on 22nd November 1999, the Vendor purported to rescind the agreement on the ground that the Purchaser was in breach of its obligations under clauses 5.4 and 5.8.
On 3rd November 1999 the Purchaser served notice on the Vendor to complete the agreement. On the same day Drum served notice on the Purchaser to complete the Drum Contract.
On 5th November the Purchaser issued a claim for specific performance of the agreement.
This was followed up by application for summary judgment on 17th November.
Meanwhile, on 10th November 1999, after discussions with Drum, the Purchaser returned the draft section 106 agreement to the Council with a clause 6.6 (hereafter "clause 6.6") which stipulated that the provisions of the section 106 agreement would not be binding on a mortgagee of the covenantee or on a purchaser from such mortgagee.
The Council returned the draft on 6th December 1999 with no amendments of significance, save deletion of clause 6.6.
On 9th December 1999 Master Price heard the specific performance application and reserved judgment. He indicated to the parties on 4th January 2000 that he had decided to grant specific performance, that is to give the Purchaser summary judgment, and subsequently made available his reasons in writing, which I have seen. It is against that decision that the Vendor now appeals.
I propose first to consider whether or not the Master was right in my view to grant specific performance on the basis of the case and the facts as they were before him. On the face of it, the claim for specific performance was justified. Completion was to take place, according to clause 5.1 of the agreement, ten days after an acceptable planning permission had been granted or, if (as happened) the Purchaser decided to waive the requirement of an acceptable planning permission, ten working days after such waiver. Such waiver occurred on 20th October. Therefore completion should have taken place on 3rd November.
Before Master Price, the Vendor contended that the Purchaser should not be granted specific performance as the Purchaser was in breach of its obligations under the agreement in three respects. First, it was said by the Vendor that the Purchaser failed to use reasonable endeavours of obtaining planning permission, in that it delayed answering a letter from the Council dated 19th August 1999, requesting information relevant to the provisions of the section 106 agreement and the Council's attitude generally, until 20th September 1999. Secondly, it is said that the Purchaser failed to copy in the Vendor in respect of correspondence between the Purchaser's...
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