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Articles 11th Jun 2019

Travis Perkins: Real Estate Bulletin – June 2019

Welcome to the June edition of the Travis Perkins Group Real Estate Bulletin.

This quarter, we discuss the use of endeavours and trigger events, lease renewals of redevelopment ground and the errors in a planning permission.

Property

Overage: use of reasonable endeavours

A joint venture company intended to acquire, develop and forward sell a site in Milton Keynes. The scheme involved a number of agreements to acquire various land interests and to vary other rights. One of the agreements included obligations on the developer to use reasonable endeavours firstly to assemble the site and secondly, to obtain an Acceptable Planning Permission ‘as soon as reasonably practicable’. This would then trigger an overage payment of £1.4M to one of the former occupiers of part of the site.

There was also a long stop date, beyond which no overage could be triggered (4 July 2013). Things rumbled on and although arguably the developer had obtained an Acceptable Planning Permission by May 2013, it didn’t satisfy the site assembly condition until 8 July 2013, so four days after the long stop date…

The proposed recipient of the overage payment brought proceedings against the developer for breach of contract, arguing it had not used its reasonable endeavours to satisfy the site assembly condition as soon as reasonably practicable as required by the overage agreement. Both the High Court and the Court of Appeal found the developer to be in breach of its obligations and the developer has to pay damages of £1.4M plus interest.

  • Practical tip: the sheer volume of case law on what ‘reasonable endeavours’ means indicates that the phrase is open to interpretation depending on whether you are on the endeavouring or the receiving end!
  • Practical tip: the courts will not allow a party to deliberately drag its feet to suit its own financial circumstances
  • Practical tip: when negotiating overage arrangements, bear in mind that some projects can take many years to get off the ground, so agree an appropriate overage period
  • Practical tip: where the trigger for making an overage provision is the grant of an ‘acceptable’ planning permission, developers should be wary of claiming a permission is unacceptable unless the terms or the conditions of the permission itself are a genuine impediment to the proposed development

Town or Village Greens: trigger events

A landowner owned an area of land in Wootton Bassett that had been used as amenity land in a residential area, prior to the land being fenced off. The County Council accepted an application to register the land as a TVG, which the landowner challenged on the basis that a statutory trigger event had occurred.

The trigger event relied on was that the land in question had been identified in a development plan document for potential development. The landowner asserted that two policy documents forming part of the Wiltshire Core Strategy 2015 identified the land for potential development.

Both the High Court and the Court of Appeal found the land had been identified as suitable for development. The County Council should not have accepted the application for registration and the registration should be cancelled.

  • Practical tip: certain statutory trigger events can prevent land being registered as a town or village green (TVG)
  • Practical tip: these can provide some relief for landowners from the risk of their land being registered, and therefore rendered undevelopable
  • Practical tip: for further advice on TVGs, contact Mark Brown in our Milton Keynes office

Property Litigation

Lease renewals: redevelopment ground

L owned an airfield, which was occupied by various business tenants whose tenancies have security of tenure under the Landlord & Tenant Act 1954. L sought to terminate the leases on the redevelopment ground (Ground f). The proposed scheme involved demolishing some of the buildings occupied so L could promote the site for residential development, and the demolition works required planning permission.

The tenants applied for new leases and the Court had to consider L’s chances of getting planning permission. L had indicated that even if the residential development did not ultimately go ahead, it would promote the site for other commercial uses such as vehicle storage, car parking and driver training and would not return the buildings to aviation-related use. The Court found that L had a reasonable chance of obtaining planning permission for the demolition works to facilitate the residential development, so the tenants were not granted new leases.

  • Practical tip: landlords must be able to show the courts they have a firm and settled intention to carry out works of redevelopment when seeking to regain possession of property occupied by a tenant with security of tenure
  • Practical tip: landlords must be ready to go with any redevelopment works on the termination of the tenancy; if the proposals are more long-term, the courts might not be persuaded that Ground f has been made out
  • Practical tip: any intended development must be a legally viable proposition and if planning permission is needed, there must be a reasonable chance of a landlord obtaining it – the courts will take account of both local planning policy and the NPPF

PLANNING

Judicial review: errors in a planning permission

Two companies (TH and THH) owned competing wedding and function venues. TH obtained planning permission to erect three marquees on its land. Due to a clerical error, the permission was unconditional – in fact, it should have been limited to a period of five years. TH was aware of the mistake, but chose to keep quiet.

Some five and a half years later, THH became aware of the mistake and successfully applied to the High Court to have the permission quashed. TH appealed on the basis that THH’s application was well outside the six-week time limit for judicial review and the Court should not have extended the time for the claim to be brought.

TH’s appeal was dismissed.

  • Practical tip: it is unusual for extensions to the time limit to be granted, unless there are special circumstances
  • Practical tip: the courts will take account of whether the recipient of the permission has suffered any hardship as a result of the delay in challenging the permission
  • Practical tip: don’t seek to take advantage of clerical errors and, where you become aware of issues with a planning permission granted to a third party which may adversely affect you, take action as soon as possible

The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.

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