Sainsbury's Supermarkets Ltd v Bristol Rovers (1883) Ltd

A contractual cut-off date may confer a right to terminate without extinguishing continuing obligations unless the agreement clearly gives it that effect. A party with contractual control over a planning application remains subject to its obligation to use all reasonable endeavours and to act in good faith until the termination right has taken effect.

Where the parties have acted on a shared assumption that a planning application is an appeal for contractual purposes, estoppel by convention may prevent either party from resiling from that assumption. A party cannot rely on non-satisfaction of conditions where that non-satisfaction results from its own causative breach.

The claimant agreed to purchase the defendant football club’s stadium subject to conditions precedent, including acceptable planning permission for a replacement stadium and for redevelopment of the existing stadium. The agreement allowed termination if the conditions remained unsatisfied by the contractual cut-off and termination dates.

The claimant’s planning permission was subject to delivery-hour restrictions. It made an application under section 73 of the Town and Country Planning Act 1990, which was refused. The parties disputed whether that application was an appeal extending the cut-off date, whether the claimant had complied with its endeavours and good-faith obligations, and whether the claimant could terminate when its own breaches had contributed to the outstanding conditions.

1. Construction of the planning provisions. The section 73 application was an “Appeal” within the contractual definition. Although the wording referring to an application to the Secretary of State was technically inappropriate, the parties had acted on the shared assumption that a section 73 application qualified. The claimant was therefore estopped by convention from denying that status.
2. Continuing obligations. The cut-off date operated principally to give the parties a right to serve a termination notice. It did not extinguish the claimant’s obligation under Schedule 1 paragraph 2.8 to use all reasonable endeavours to obtain acceptable store planning permission, nor its obligation under clause 31.1 to act in good faith. Those obligations continued until the termination took effect.
3. Further applications. Schedule 1 paragraph 2.11 applied to section 73 applications and to resubmissions. The claimant had agreed to make the first section 73 application without obtaining Planning Counsel’s opinion, but a resubmission required the contractual opinion that it had at least a 60 per cent chance of success. The claimant was entitled to rely on that provision and good faith did not require it to disregard a specific contractual entitlement.
4. Performance. The claimant should have engaged with local councillors and objectors and kept the defendant informed of the likely refusal. Nevertheless, the application would have failed in any event, and an acceptable permission could not have been obtained before the relevant termination date. The defendant had approved the timing and terms of the application, and Planning Counsel had not approved an appeal under paragraph 2.11.
5. Own-breach principle and alternative findings. A party cannot rely on a contractual termination right where its own causative breach prevented satisfaction of the conditions. The court therefore rejected the claimant’s contrary construction of clause 3.1. Alternatively, in the no-breach world, the remaining conditions would have been satisfied in time, so termination would still have been unavailable.
6. Disposition. The claimant succeeded because paragraph 2.11 of Schedule 1 was an insuperable barrier to the defendant’s case. The court stated that, if that conclusion were wrong, the defendant would succeed.