Tag Archives: Planning Law

Conditional Contracts and Planning Permission

Conditional Contracts and Planning Permission

Residential DevelopmentThe result of a recent case Cohen v Tesco Properties Ltd & Anor (2014) EWHC 2442(Ch) has highlighted the importance of ensuring that a Conditional Contract for the purchase of land subject to obtaining Planning Permission is correctly drafted.

In August 2013, the Claimant landowner (Cohen) entered into an agreement with the Defendant developer for the sale of a property in Finchley North London at the price of £1.3 million.   The agreement for the sale of the land was conditional upon the developer securing planning permission for residential redevelopment.

The contract required a deposit of £50,000 to be paid by the Defendant Buyer to the Claimant Landowner and contained a longstop date of 6 January 2014 by which time the Defendant Buyer had to have completed the purchase.  There was, however, provision for the longstop date to be extend up to 9 June 2014 but this was conditional upon the Defendant Buyer making an application to the Claimant and paying a further sum of £8,333.33 for each month of any such extension.

The Defendant Buyer had been unable to obtain planning permission by the 6th January 2014, but anticipated that it would secure permission shortly.  However the Defendant Buyer did not apply for an extension under the terms of the Conditional Contract prior to the longstop date of the 6th January 2014.   On 14th January, the Claimant gave notice that the agreement was terminated.

The following day the Defendant applied for an extension on the basis that the Defendant believed they could do so at any time up to the final long stop date of 9 June 2014. The Claimant argued that there was no right to make a retrospective application and to pay the monthly additional sums at a later date and therefore the agreement terminated automatically on the 6th January.

Planning permission was finally granted in February 2014 and the Claimant stood to gain the full benefit of this permission and to retain the £50,000 deposit previously paid by the Defendant Buyer upon entering into the Agreement.

The Court noted that although the Conditional Contract was professionally prepared it was nevertheless badly drafted.   Typically conditional contracts of this nature contain complicated definitions and provisions.  In this instance the inter-relationship between the provisions for extensions of time and termination were left unclear.  Many provisions used the wrong tense or could be interpreted in variety of ways leading to ambiguity.

This lack of clarity led the Court to attempt to make sense of what the parties had originally intended.  In order to do so, the Court  departed from a literal interpretation, preferring to interpret the wording with regards to business common sense.

As a result the Court found in favour of the Claimant’s interpretation as this was the only interpretation that gave the certainty that the parties had clearly intended.   If the Defendant wanted further time then the Defendant should have requested this in good time and paid the £8,333.33 per month in advance as the price (or consideration) for this additional extension of time.  To give any other interpretation and, in particular the Defendant argument that the application for an extension could apply retrospectively, would have meant that the Claimant would have had no idea where he stood after the long-stop date of 6th January and would have been unable to seek alternative buyers until after the 9th June without any compensation for this loss of time.

The Court also held that the deposit should be retained by the Claimant since it is standard practice that a Buyer pays a deposit to secure the right to seek to develop the property and clearly knows there is a risk that it may not secure planning permission in time to do so.  Even if the landowner suffers no obvious loss, it has been unable to sell the property in the interim and is therefore entitled to retain all the benefits of the agreement.

In this case the landowner retained the deposit and was released from any further obligations to the developer. Lessons should be learnt from this case, that a well drafted agreement from a reputable firm of lawyers can pay dividends over time.

  This article is intended for general information purposes only and  shall not be deemed to be, or constitute legal advice.  Newnham &   Jordan Solicitors cannot accept  responsibility for   any loss as a result of acts or omissions taken in  respect of this   article or any external articles it may refer or link to.

Permitted Development Rights – Change of Use

 Several noteworthy changes to planning law came into force on 6 April 2014. 

The changes introduce a number of new permitted development rights for change of use:

  • New Class CA allows a building used as a shop to be  used as a bank, a building society, a credit union or a friendly society.
  • New Class IA allows buildings used as shops or for  the provision of financial or professional services to change to residential use.
  • Class K is expanded to allow buildings used for a variety of uses to become nurseries.
  • New Class MA allows agricultural buildings to become schools or nurseries.
  • New Class MB allows agricultural buildings to change to residential use.

 Newnham & Jordan can advise you on all property related legal matters.

 Call us now on 0845 680 7871

This article is intended for general information purposes only and  shall not be deemed to be, or constitute legal advice.  Newnham &   Jordan Solicitors cannot accept  responsibility for   any loss as a result of acts or omissions taken in  respect of this   article or any external articles it may refer or link to.

Permitted Development Rights – Change of Use
Planning Problems – Even Royalty are not exempt!

Planning Problems – Even Royalty are not exempt!

Most people will doubtless know that many of the Royal’s own large property portfolio’s.  Prince Charles, as Duke of Cornwall is no exception.  Prince Charles’ property portfolio  includes the former offices of the Metropolitan Police at Tintagel House on the Albert Embankment in London.  This property has recently hit the headlines due to Lambeth Council issuing a Planning Enforcement Notice in respect of the property.

Tintagel House is held on a 140 year lease by a company called Galaprice.  Since the property was vacated by the Metropolitan Police the building has been occupied by “Property Guardians” as a security measure.

Lambeth Council has issued Enforcement proceedings alleging that the occupation of the property by the Property Guardians constitutes a conversion of the property from commercial to residential use meaning that planning permission is required.   In particular, Lambeth’s argument focuses on the building being turned into 11 self-contained flats without any consideration given to the requirement for the affordable housing, transport and other policies that are currently in force.

The Enforcement proceedings have been issued against all persons interested in the building and recipients include “His Royal Highness Charles Philip Arthur George”.   The Notice has given the inhabitants and owners nine months to vacate the property.

According to London SE1 Community Website this action by Lambeth Council comes as some surprise as it had been widely accepted that occupation of empty premises by Property Guardians is not a change of use and advice previously given by the Office of the Deputy Prime Minister in 2005 would appear to support this

In recent years more owners are using Property Guardians as a cheap an effective way of tackling the problem of empty commercial buildings the result of the case will be eagerly reviewed by legal professionals.

                                                       At Newnham & Jordan Solicitors we are able to assist and advise you with regard to a variety of  property related issues

 Call us now on 0845 680 7871

This article is intended for general information purposes only and  shall not be deemed to be, or constitute legal advice. Newnham &   Jordan Solicitors, in Wimborne Dorset, cannot accept  responsibility for   any loss as a result of acts or omissions taken in  respect of this   article or any external articles it may refer or link to.