Castlebay Ltd v Asquith Properties Ltd

Planning-law language used in a commercial option agreement ordinarily bears its established planning-law meaning where the agreement was made against that legislative background. A wider meaning may be required by the contractual context, but only where that context clearly indicates it.

An application for approval of reserved matters under an outline permission is distinct from an application for planning permission. It will not, without clear contractual language or equivalent contextual grounds, satisfy a condition extending an option period while a decision on a planning application is awaited.

Castlebay granted Asquith an option to buy a development site. The option period could continue beyond 22 December 2004 if a decision was awaited on a defined planning application. Asquith had obtained outline planning permission in August 2004. It submitted an application for approval of reserved matters in December 2004 and later served an option notice.

The High Court held that the reserved-matters application was not a planning application within the agreement. The option had therefore expired before the notice was served. Asquith appealed. The central issue was whether an application for approval of reserved matters was an application for planning permission for the development as defined by the option agreement.

1. Appeal dismissed. Chadwick LJ, with whom Rix LJ agreed, upheld the order that the option had expired and that the entry protecting it in the land register be cancelled.

2. The agreement had to be construed against the background of Town and Country Planning Act 1990 and the development procedure order. Under that framework, outline planning permission is planning permission, but an application for approval of reserved matters is not an application for planning permission. The statutory distinction was supported by R v Bradford upon Avon Urban District Council, ex parte Bolton [1964] 1 WLR 1136.

3. The parties had used planning-law terminology in an agreement clearly drafted with the legislation in mind. The phrase “application for planning permission” therefore bore its ordinary planning-law meaning unless the agreement’s context required a wider meaning. It did not do so here. The agreement balanced the owner’s interest in a defined period of restraint against the grantee’s interest in time to assess development prospects.

4. Hargreaves Transport Ltd v Lynch [1969] 1 WLR 215 did not require a different construction. In that case the particular contractual context required consent sufficient to allow work to begin. There was no analogous urgency or other contextual indication in this option agreement. Since the outline permission had been granted before 22 December 2004, no decision on a planning application was then awaited. The reserved-matters application did not extend the option period, and the April 2005 option notice was ineffective.

5. The appeal was dismissed with costs. Detailed assessment was ordered, with £16,000 payable on account within 14 days.

• Court of Appeal (Civil Division): Dismissed Asquith’s appeal and affirmed that the option period had expired.
• High Court, Chancery Division: On 6 June 2005, Mr James Allen QC held that no relevant decision was awaited on 22 December 2004, cancelled the register entry protecting the option, and restrained further registration applications.