Hallam Land Management Limited v UK Coal Mining Limited & Anor

An option covenant requiring a planning application for development of defined land ordinarily requires an application directed to the site as a whole, not merely a small part, unless the contractual context makes that reading necessary. A price calculated by reference to developable acres does not alter that requirement.

Development is interpreted contextually. A technical planning definition does not automatically govern the contract. Ancillary open space or landscaping may be included, but a proposal leaving a significant area for later development does not satisfy a requirement to apply for development of the property as a whole. Terms requiring good faith or the best permission reasonably available will not be implied where the express agreement supplies the relevant balance.

Hallam claimed specific performance of an option to purchase approximately 45 acres. The option required a planning application for development of the property and calculated the price by reference to developable acres.

Hallam applied for outline permission for a company headquarters on 2.5 acres, with the remaining land described as open space and landscaping. The planning appeal was allowed for the headquarters and associated landscaping. The High Court, Chancery Division, held that the agreement required an application for development of the property as a whole and that Hallam's application did not meet that condition. Hallam appealed on the construction of the agreement and the meaning of development.

The Court of Appeal unanimously dismissed the appeal. Rix LJ gave the leading judgment. Arden LJ agreed, and Thorpe LJ agreed without adding reasons.

1. Scope of the planning covenant. Clause 3.2 required an application for development of the property as defined, namely the 45-acre site as a whole. The fact that Schedule 2 permitted planning permission to be granted for only part of the site did not mean that the application itself could be limited to a small part. The possibility that substantially the whole might suffice was left open on different facts, but did not arise where the proposed office occupied only about five per cent of the site.
2. Implied terms. The proposed terms requiring good faith and the best planning permission reasonably available were neither necessary nor reasonable. They were advanced only because Hallam's construction altered the defined meaning of the property. The express agreement already set the parties' balance: an application for the site as a whole, reasonable endeavours to obtain permission, no obligation to appeal, and a price adjusted by reference to developable acres.
3. Meaning of development. Applying the contextual approach in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, the word had its ordinary contractual meaning in this agreement, rather than automatically bearing the technical meaning in section 55(1) of the Town and Country Planning Act 1990. It referred principally to building operations or other use realising the site's development potential. The question whether an application concerned the property as a whole was one of fact and degree. Buildings need not cover every part of the site, and ancillary open space or landscaping could be included.
4. Application to the facts. The proposal left a substantial area available for later development. The landscaping largely retained that future opportunity rather than developing the site as a whole. Even treating relevant engineering works as development for planning purposes, the proposal did not amount to development across the property as a whole. The planning condition was therefore unmet and specific performance failed.

The appeal and cross-appeal costs were awarded to the respondents, save for the costs of the respondent's notice.

1. Court of Appeal (Civil Division): Appeal dismissed with costs of the appeal and cross-appeal, save for the costs of the respondent's notice.
2. High Court of Justice, Chancery Division: His Honour Judge Reid QC, sitting as a Deputy High Court Judge, held that clause 3.2 required a planning application for development of the whole property and that the application did not meet that condition. The claim for specific performance failed.