Morris & Anor v Glendore Investments Ltd.

An option agreement is construed according to its commercial purpose and clear express terms. Where the agreement extends the exercise period until a specified period after written planning decision, the court will not imply restrictions which contradict that mechanism unless the language or business efficacy clearly requires them.

Planning legislation may permit an authority to determine an application after the statutory period has expired. A non-determination does not necessarily terminate the application or require an immediate appeal. Contractual powers to negotiate, extend time and appeal do not, without more, prevent parallel applications or continued negotiations. Conduct undertaken in good faith for the agreement’s purpose does not constitute a breach.

The claimants owned a former cinema and snooker-club property. They granted the defendant an option to purchase it for redevelopment. The agreement provided for a termination date, subject to extensions where a planning application made before that date remained undecided, and allowed negotiations with the planning authority, extensions of the statutory decision period and appeals.

The defendant submitted an application before the termination date. It later pursued parallel applications involving a housing association while asking the planning authority to keep the first application in abeyance. The first application was eventually refused, and the defendant exercised the option within 98 days of receiving written notice of that decision.

The claimants argued that the option had lapsed because the defendant had delayed or diverted the planning process. The central issues were the construction of the agreement, the effect of non-determination under planning legislation, breach of contract and estoppel.

1. Construction of the option agreement. The first application was made before the contractual termination date. Under paragraph 1 of the Third Schedule, the termination date therefore extended until 98 days after written receipt of the planning authority’s decision on that application. The option was exercised within that period.
2. Clauses 3.2, 3.3 and 3.5 did not impose an express or implied obligation to pursue only the first application, to avoid parallel applications, or to appeal immediately after the statutory decision period expired. Those clauses supported the commercial purpose of giving the defendant sufficient flexibility to obtain planning permission.
3. The eight-week period under Article 20 of the GDP Order was directory rather than mandatory. The planning authority remained under a continuing duty to determine the application, and a decision made after that period remained valid. The statutory and contractual provisions did not require the defendant to appeal a non-determination in order to preserve the option.
4. If the question had been directly relevant, there was no written agreement under section 78(2) of the 1990 Act extending time. However, the phrase “extended period” would have been sufficiently certain if the parties had agreed that the application should remain pending determination.
5. The defendant had kept the first application alive in good faith and for a proper purpose. Its twin-track planning strategy was an established planning technique and was not undertaken to keep the option alive as an end in itself. No term of the agreement was breached, and there was no basis for implying a term which contradicted paragraph 1 of the Third Schedule.
6. The court did not need to decide the estoppel issue. It nevertheless held that, if necessary, the claimants’ knowledge and acquiescence, together with the defendant’s expenditure and efforts, would have made it unconscionable for them to assert that the option had lapsed.
7. The claim failed. The counterclaims for specific performance and repayment of the loan succeeded.

First-instance judgment. No prior appellate decision is stated in the judgment.