Fishbourne Developments Ltd v Stephens

In construing an option agreement, “development” is not automatically given the full technical meaning in section 55 of the Town and Country Planning Act 1990 merely because the agreement refers to planning permission. The court must ascertain objective meaning from the agreement as a whole, the relevant background and, where rival meanings arise, business common sense. Here, the option was triggered only by permission for development including new building and a change from agricultural use, affecting the whole or substantially the whole of the property. Permission for an inconsequential alteration to an agricultural building did not suffice. The substantial discount indicated that the permission had to enhance the land’s value.

Fishbourne appealed from a decision of HHJ David Cooke, sitting as a High Court judge in the Chancery Division. The judge held that the option’s definition of “Planning Permission” required permission for development involving new building and a change from agricultural use, affecting the whole or substantially the whole of the farm. A permission to erect a new roof on an agricultural building therefore did not trigger the option, and the notice exercising it was invalid.

The appeal concerned the construction of “development”, the relevance of section 55 of the Town and Country Planning Act 1990, whether permission for part of the property was sufficient, and the significance of earlier option agreements.

The Court of Appeal unanimously dismissed the appeal.

1. Contractual construction. The proper approach was the unitary and iterative exercise described in Arnold v Britton, Wood v Capita and Rainy Sky. The court had to ascertain the objective meaning of the words used, reading the option as a whole and considering the relevant factual and commercial background known to the parties. Textual and contextual analysis were complementary. Where rival meanings existed, business common sense could assist, without undervaluing the language used.
2. Meaning of “development”. The reference to planning permission granted by a local planning authority did not import every activity within the technical definition of “development” in section 55 of the Town and Country Planning Act 1990. In the context of this farm option, “development” meant development including new building involving a change from agricultural use. The Roof Permission did not meet that description.
3. Whole or part of the property. “The Property” was defined as the whole farm, and clause 1.9 used that expression without the qualification “or any part thereof”. Other clauses demonstrated that the draftsman knew how to refer expressly to part of the property. Clause 1.8 allowed planning applications concerning parts of the property so that multiple applications could secure permission for development of the whole. The trigger therefore required development of the whole or substantially the whole of the property.
4. Commercial context and other matters. Fishbourne’s construction would have allowed the whole property to be bought at a 30% discount following an inconsequential permission, without any increase in value for the owner. That was commercially implausible, particularly because the option contained no claw-back or overage provision. The alleged physical constraints did not alter the result because there was no sufficient evidence that they prevented development of part of the property. Earlier agreements formed part of the factual matrix, although it was unnecessary to rely on their precise terms. The alternative “Interpretation C” and the Respondent’s Notice were therefore unnecessary to determine.

• Court of Appeal (Civil Division) — [2020] EWCA Civ 1704: appeal dismissed unanimously.
• High Court of Justice (Chancery Division) — HHJ David Cooke held that the Roof Permission was not a “Planning Permission” under the option and that the notice was invalid.