How the Court will interpret the meaning of planning permission and development

Facts

The High Court was asked to interpret a written option agreement for the purchase of a farm and decide whether the option to purchase had become exercisable by virtue of a planning permission obtained by Fishbourne Developments Ltd.

Stephens granted an option agreement to Fishbourne Developments Ltd. “Planning Permission” in the option agreement was defined as “a planning permission granted by the Local Planning Authority permitting any development of the Property”.

To activate the option to purchase, Fishbourne Developments Ltd simply needed to demonstrate that they had obtained planning permission granted by the Local Planning Authority permitting any development of the property.

Fishbourne Developments Ltd took the wording at face value and claimed the option had been triggered by the grant of planning permission giving consent for a new roof on an agricultural building. It was accepted that Fishbourne Developments Ltd never had any intention of implementing that permission. Nevertheless, the grant of planning permission enabled them to start a contractual process under the option that would lead to them acquiring the whole of the farm at a discount from its market value.

Held

The case turned on the proper meaning of the term “Planning Permission” in the option agreement.

The option agreement followed previous options agreements. In interpreting the option agreement, the High Court said that all agreements should be read in conjunction with each other. It was held that the agreements were informal and poorly drafted, and that commercial common sense should be applied.

The High Court held that “development” meant development including new buildings involving a change of use from agricultural use, and “development of the Property” meant of the whole or substantially the whole of the farm.

As such, the High Court found in favour of the Stephens as the permission Fishbourne Developments Ltd obtained did not meet that criteria. It was not a “Planning Permission” as defined and Fishbourne Developments Ltd was not able to exercise the option.

This case highlights how the courts will examine all the surrounding circumstances to determine the intentions of the parties. In this case, the parties should have considered the specific type of development that would trigger the option, if it applied to the whole or part of the farm and whether the grant of planning permission would suffice or the physical implementation of it.

It is important that any agreement is drafted carefully to ensure that the intentions of the parties are clear from the onset.

Contact us

If you have any questions regarding the issues in this article or are seeking up-to-date legal advice for property development, contact Emma Stainwright on 01202 294 566 or email [email protected].

*The information set out in this article is correct at the date of publication (15 June, 2020). 

Ref: Fishbourne Developments Ltd v Stephens [2020] EWHC 932 (Ch)