Glenmere Plc v F Stokes & Sons Ltd

In construing a development agreement, a consent required by the agreement must be identified from the contractual definition and structure. A planning permission granted in full is not converted into further “Requisite Consents” merely because conditions remain to be discharged. Nor does approval required under a restrictive covenant become such a consent where the agreement separately addresses third-party proprietary rights. A perceived gap in contractual protection cannot justify an unnatural construction, particularly where damages may provide the remedy.

F. Stokes & Sons Limited owned land subject to a development arrangement under a Project Coordination Agreement assigned to Glenmere Plc. Glenmere obtained planning permission for the proposed office development, but some planning conditions remained unfulfilled and Network Rail approval under a restrictive covenant had not been obtained. The defendant purported to terminate the agreement under clause 6.5 for failure to obtain “Requisite Consents”. Glenmere sought declarations that the termination was ineffective and that the agreement remained binding.

The central questions were whether the outstanding planning conditions and Network Rail approval fell within the contractual definition of “Requisite Consents”, and, if so, whether they were necessary for commencement of construction.

1. Declaration granted. The defendant was not entitled, by its solicitors’ letter of 4 October 2005, to terminate the Project Coordination Agreement.
2. The contractual definition of “Requisite Consents” was construed in the context of the agreement as a whole. The full planning permission granted on 27 September 2005 was the required planning consent. The attached planning conditions were not additional “Requisite Consents”. Clause 8.4 required the development to be carried out lawfully, but did not enlarge the definition or make fulfilment of the conditions a precondition to avoiding termination under clause 6.5. The defendant retained a possible damages remedy for breach of clause 8.4.
3. The court nevertheless considered the alternative issue. If the planning conditions were “Requisite Consents”, at least condition 14, concerning approval of arrangements for site vehicles, loading, unloading and storage, would have been necessary for commencement of construction.
4. Network Rail’s approval under the restrictive covenant was not a “Requisite Consent”. The covenant was a proprietary right akin to the easements and other rights addressed by clause 6.6. The approval requirement could not be detached from that contractual scheme while leaving comparable proprietary matters outside the definition.
5. If Network Rail approval had been a “Requisite Consent”, the words “part of the property adjacent to the railway” would have limited the covenant to that part of the property. Approval was therefore not necessary for commencing development on the property generally.
6. The possible contractual gap if approval was unavailable did not justify the defendant’s construction. The agreement could provide damages under clause 8.4 without providing a termination right under clause 6.5.