Property law reports

LEGAL UPDATE

Highways - planning obligation - reasonable endeavours - claimants agreeing to pay contribution sum to defendants for highway improvements - whether agreement discharged by defendants' repudiatory breach - whether arguable by claimants that no improvement works necessary - claim allowed in part

Patel and others v Brent London Borough Council: ChD (Mr Justice Hart): 7 April 2004

The claimants, the trustees of a religious charity, purchased from the defendants the site of a former school.

They subsequently sold the site to a third party, with the benefit of a planning permission obtained by the purchaser for residential development, permitting the construction of 149 new dwellings.

In connection with the planning permission, the claimants made an agreement with the defendants to enter into a planning obligation under section 106 of the Town and Country Planning Act 1990.

The agreement required the claimants to deposit 550,000 (the contribution sum) with the defendants in respect of certain highway improvements.

The section 106 agreement required that the defendants use their reasonable endeavours to complete the improvements within two years of the grant of planning permission.

In fact, the highway works were not completed until 10 years later.

The claimants sought to recover the contribution sum on the basis that the purpose for which it had been deposited had either ceased or failed.

The court was asked to decide, as a preliminary issue, whether, among other things: the section 106 agreement could, as a matter of law, be discharged by a repudiatory breach by the defendants of their obligations; and the claimants could argue that, in the event, no works of improvement were necessary.

Jonathan Small (instructed by Hugh Cartwright & Amin) for the claimants; Edwin Johnson (instructed by CMS Cameron McKenna) for the defendants.

Held: The claim was allowed in part.

The relevant obligation was one that required 'a sum or sums to be paid to the authority on a specified date or dates periodically' under section 106(1)(d).

The agreement constituted no more than a means of providing the defendants with a security for the performance by the claimants of their financial obligations.

In fact, no payment to the defendants took place until the defendants had drawn down on the deposited sum.

The claimants had to permit a drawdown unless, and until, that obligation was itself discharged or modified.

The relevant planning obligation was the basis for the claimants' agreement to permit their money to be so used.

Accordingly, the claimants' contention that the section 106 agreement had been discharged by the acceptance of a repudiatory breach failed.

Whether the works were necessary was essentially a matter of judgment for the engineer.

If, in his opinion, the permission ought not to have been granted without some particular improvement being made, the test of necessity would be satisfied.

He was entitled to take into account the facts that the planning officer's recommendation to the defendants had been to insist on the planning obligation before granting permission, and that both the purchaser and the claimants had been prepared to undertake that obligation.

However, the defendants were expressly obliged to consider what works were necessary in sufficient time to complete those works within two years.

Furthermore, they had undertaken an unqualified obligation to use reasonable endeavours to complete the works.

Their own organisational inadequacies were no excuse for non-compliance.

Accordingly, the claimants were entitled to an inquiry as to what (if any) damage had been caused to them as a result of the defendants' works not having been completed within the requisite period.

LANDLORD AND TENANT: TERMINATION OF LEASE

Commercial premises - termination of lease - break- clause - whether claimant yielding up entirety of demised premises - claim allowed - counterclaim dismissed

John Laing Construction Ltd v Amber Pass Ltd: ChD (Mr Robert Hildyard QC, sitting as a deputy judge of the division): 7 April 2004

The claimant was granted the lease of commercial premises by the defendant's predecessor-in-title.

Pursuant to a break-clause, the lease was determinable at the end of the 15th year by the service in writing of six months' notice, expiring at the end of that year, together with payment of 12 months' rent, and 'upon yielding up of the entirety of the demised premises'.

The claimant sought a declaration that it had validly terminated the lease by giving notice.

The defendant counterclaimed for declarations that the claimant's purported break-notice was ineffective and that the lease was subsisting.

The issue was whether the claimant had yielded up the entirety of the demised premises within the meaning of the break clause.

The claimant argued that 'yielding up' meant leaving the premises so that the landlord could re-enter in circumstances where it was clear that the tenant was no longer seeking to assert any right to them.

The defendant submitted that 'yielding up' meant 'handing back' and implied some overt act on the part of the tenant.

It maintained that the landlord was not required to ask the tenant for the return of incidents of occupation, such as keys, but that the tenant must seek out the landlord to initiate and complete such things.

Christopher Pymont QC (instructed by Nicholson Graham & Jones) for the claimant; Paul de la Piquerie (instructed by Robinsons, Derby) for the defendant.

Held: The claim was allowed and the counterclaim was dismissed.

The position adopted by the defendant was wholly artificial, and its reliance on the claimant's provision for the security of the premises as negating any 'yielding up' was misplaced.

Unless any special form or process was prescribed, in adjudicating on a claim of unilateral termination, the court's task was to look objectively at what had occurred.

It had to determine whether the person whose acts were said to have brought about a termination had clearly manifested its intention to effect such termination, and whether the landlord could occupy the premises without difficulty or objection: Gray v Bompas (1862) 11 CB(NS) 520; Cannan v Hartley (1850) 9 CB 634; Oastler v Henderson (1877) 2 QBD 575 and Relvok Properties Ltd v Dixon (1972) 224 EG 1401 considered.

The claimant had plainly and obviously manifested a desire to terminate the lease.

It had served a notice compliant with the conditions of validity and effectiveness, and had done all that was necessary to make it clear to the defendant both that it asserted no right to the premises and that the defendant could occupy or deal with them as it wished without any hindrance.