MP Kemp Ltd v Bullen Developments Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nugee |
| Judgment Date | 21 May 2014 |
| Neutral Citation | [2014] EWHC 2009 (Ch) |
| Docket Number | Case No: HC14EO1610 |
| Court | Chancery Division |
| Date | 21 May 2014 |
[2014] EWHC 2009 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane
London, EC4A 1NL
Mr Justice Nugee
Case No: HC14EO1610
Mr Christopher Stoner QC (instructed by Messrs Birketts) appeared on behalf of the Claimant
Mr Philip Rainey QC (instructed by Messrs Greenwoods Solicitors) appeared on behalf of the Defendant
This is the return date for the continuation of an interlocutory injunction which was granted to the Claimant, MP Kemp Ltd, by Sales J on a without notice application on 16 April 2014, restraining the Defendant, Bullen Developments Ltd, and Mr Mark Sargeantson from taking any further steps in an expert determination, Mr Sargeantson being the expert appointed to hear the determination.
MP Kemp Ltd is a company owned by Martin and Joan Kemp, who I will call "Mr and Mrs Kemp". It is the owner of agricultural land to the south-west of Norwich. This land is adjacent to the Norwich Research Park, a collaboration of a number of scientific research organisations, including the University of East Anglia, the Norfolk and Norwich University Hospital, and others.
In 2009 the local planning authority, the South Norfolk Council, published the Norwich Research Park Development Framework, which envisaged further development of the park, including onto land owned by the Kemps.
By an Option Agreement dated 29 November 2011, the Claimant agreed with the Defendant to grant it an option over parts of its land extending to some 254 acres ("the Property"). The option period was 25 years.
I must refer to some of the provisions of the Option Agreement. The parties to it were the Claimant company, Mr and Mrs Kemp themselves (who were parties in case it turned out that they owned one of the fields forming part of the Property to which title was unregistered), and their son, Mr Benjamin Kemp, as owners' representative, as well as the Defendant.
The scheme of the agreement was that the Defendant could exercise the option once outline planning permission had been granted, and could do so as many times as it liked in respect of the whole or any part or parts of the Property. The price payable was the Purchase Price, which, as defined, was the figure resulting from the calculation in Schedule 2. Schedule 2 set out a calculation to which I will come.
By clause 10 the Defendant could at any time try to agree the Purchase Price and the form of transfer with the Claimant before exercising an option. If agreement was not reached within ten working days, the Defendant could then serve a formal Price and Transfer Determination Notice on the owners' representative (that is Mr Benjamin Kemp), confirming that it required the Purchase Price and form of transfer to be agreed or determined in respect of the whole or any part or parts of the Property, and the parties were then to use reasonable endeavours to agree the Purchase Price and/or the form of transfer of the Property or any part or parts of it.
By clause 10(3), if agreement had not been reached within a further ten working days from service of the Price and Transfer Determination Notice of the Purchase Price and the form of transfer, the matter might be referred by either party for determination in accordance with clause — it says "23 hereof", but it is common ground that the Option Agreement where it refers to "clause 23", which it does in a number of places, was intended to refer to clause 24.
Subject to clause 10, under clause 11, which governed the exercise of the option, the Defendant could exercise the option by serving an Option Notice, which could be done once outline planning permission had been granted. The notice could be served whether or not the Purchase Price and form of transfer had already been agreed or determined in accordance with clause 10. If the Purchase Price and form of transfer had already been agreed, then the Option Notice to be served would specify the Purchase Price and attach the agreed form of transfer, and completion would then take place 20 working days later.
If the Purchase Price and the form of transfer had not been agreed, then the Option Notice was to contain an offer, the procedure then being governed by clause 11.4.1, which reads:
"The Developer will include in the Option Notice an offer to the Owner as to the amount of the Purchase Price and annex to the Option Notice the draft form of transfer required by the Developer. If agreement shall not have been reached within 10 Working Days from the date of service of the Option Notice of the Purchase Price and/or the form of transfer, then the matter may be referred by either party for determination in accordance with clause 23 hereof."
Under 11.4.2:
"and if the Purchase Price and/or the form of the transfer to be entered into is determined by the surveyor in accordance with clause 23, the Developer may, in its entire discretion, serve written notice on the Owner prior to the Completion Date withdrawing the Option Notice and the land to which that Option Notice relates will form again part of the Property over which the Option continues to be exercisable."
If there was no such notice withdrawing the Option Notice, then the transfer was to be completed within five working days of determination. The practical effect of this is that the Defendant was never bound to complete the purchase of any parts of the Property until it knew what the price and terms of such a purchase were.
I should read clause 24 in its entirety. It provides as follows:
"DISPUTES
Any dispute arising between the parties on any matter arising out of this agreement may be referred by either party to an independent chartered surveyor with no less than 20 years post qualification experience in the valuation of land and development agreed upon by the parties or in default of agreement appointed by the President for the time being of the Royal Institution of Chartered Surveyors and the following provisions shall apply:
24.1. The surveyor will act as an independent expert;
24.2. The expert is required to prepare a written decision and give notice (including a copy) of the decision to the parties within a maximum of 20 Working Days of the matter being referred to him;
24.3. The expert shall give the parties an opportunity to make representations to him before making his decision;
24.4. The Developer shall bear 50% of the costs of the expert, the remaining costs of the expert will be split as between the Owner and Mr and Mrs Kemp as they shall decide in their entire discretion."
Schedule 2, which is headed "Purchase Price", sets out the details of how to calculate the Purchase Price. The starting point is by finding the Market Value, which is dealt with in paragraph 1.1 and is defined as follows:
"'Market Value' means the best Price for which the Property or relevant part or parts of it should exchange as at the date of exercise of the Option assuming a willing buyer and a willing seller in an arm's-length transaction after a reasonable period within which to negotiate the sale, taking into account the nature of the Property (or part or parts thereof) and the state of the market, when the parties have each acted knowledgeably, prudently and without compulsion, that no account is taken of any additional bid by a buyer with a special interest but disregarding the existence of the Developer's rights under this Option and disregarding any services and infrastructure the Developer has procured on any adjoining or neighbouring land so that the Property is valued as unserviced agricultural land with the benefit of any services, rights and easements existing at the date of this agreement and with the benefit of the relevant Planning Permission only, and providing that fair, proper and reasonable account is taken of the cost of providing the Property or relevant part or parts of it with services and infrastructure."
"Planning Permission" being defined as:
"outline planning permission for the development of the whole or any part or parts of the Property."
Having found the Market Value is then necessary to identify the Developer's Costs. They are defined by paragraph 1.2, which it is not necessary to read. It is common ground that they do not include the infrastructure costs; that is, the costs of providing the Property or the relevant part or parts of it with services and infrastructure that have already been taken account of under paragraph 1.1 in finding the Market Value.
Paragraph 3 provides that the Purchase Price for the Property should be 80 per cent of the Market Value of the Property after deduction of the Developer's Costs, and then very helpfully sets out a hypothetical example which shows that one deducts the Developer's Costs from the Market Value and takes 80 per cent of the resulting amount.
Paragraph 5 provides:
"If the Owner and the Developer fail to agree on the Purchase Price within ten Working Days after the date of …"
It then says:
"… the date of the Price Determination Notice or (as the case may be) the exercise of the Option they shall be entitled to refer the matter for determination to surveyor [sic] in accordance with clause 23."
In July 2012 the Defendant decided to seek to draw down an initial parcel of about 34.5 acres as a first tranche (which I will call "tranche 1"). This was, in fact, before the grant of outline planning permission, but in confident anticipation of it. Outline planning permission was in...
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