Mullberry Homes Limited v The Council of the Borough of Barrow-In-Furness

A detailed commercial contract will not ordinarily contain implied terms merely because they would be fair or commercially desirable. Implication requires necessity for commercial or practical coherence, or obviousness, and the term must be clear and consistent with the express contract.

Unless the contract provides otherwise, a party must not prevent fulfilment of a condition precedent. A termination provision cannot normally be invoked where the terminating party’s breach has prevented that condition from being fulfilled.

A local planning authority may require separate applications for separate sites, or further ecological evidence before validation, where there are proper planning grounds and the requirements are reasonable having regard to the proposed development.

The proceedings concerned a conditional contract under which the Council agreed to sell two development sites to Mullberry. The contract required Mullberry to obtain satisfactory planning permission for at least 98 dwellings and permitted either party to terminate if the condition precedent had not been satisfied by 31 May 2019.

Mullberry alleged that the contract included a verge adjoining one site, that the Council had breached express or implied obligations to facilitate the planning permission, and that the Council had acted unlawfully in requiring separate applications and further ecological surveys before validation.

The court determined preliminary issues concerning the contractual boundary, implied terms, the Council’s handling of the planning applications, termination, and the parties’ alleged breaches.

1. Boundary. The contract defined the property by reference to the plans attached to it. Plan B showed the Flass Lane Verge outside the red-line boundary, consistently with the physical hedge. The verge and strip were therefore excluded, and the Council had not breached the contract in that respect.
2. Implied terms. The broad terms alleged by Mullberry were neither necessary for commercial or practical coherence nor so obvious as to go without saying. They were also inconsistent with the detailed express terms, including the provisions preserving the Council’s statutory planning functions. The court applied the principles summarised in Yoo Design Services Ltd v Iliv Realty PTE Ltd [2021] EWCA Civ 560.
3. A narrower term was implied that the Council would not prevent fulfilment of the condition precedent. That term reflected the principle in Mackay v Dick (1881) 6 App. Cas. 251. If the Council had dealt with the applications unlawfully in public law terms so as to prevent fulfilment, clause 14 could not have been used to take advantage of that breach.
4. Planning applications. Under section 62 of the Town and Country Planning Act 1990, the Council could require separate applications where proper planning grounds existed and it reasonably considered that separate applications were necessary. The differing characteristics, planning histories, accesses and supporting documentation for the two sites supplied such grounds. The decision fell within the range of reasonable responses and was not irrational.
5. The Council was also entitled to require a further ecological report, including a reptile survey, before validating the Duchy Court application. The requirement was reasonable having regard to the scale of the development, identified biodiversity concerns, the Council’s published requirements and the relevance of the evidence to consultation. Practical difficulties could make such a requirement unreasonable on other facts, but they did not do so here.
6. The condition precedent was not satisfied by the long-stop date. The Council had not breached the contract or unlawfully prevented satisfaction of the condition, so its notice under clause 14 validly terminated the contract. Mullberry was not entitled to specific performance. Mullberry had breached the post-termination obligation to remove entries from the Council’s title, with consequential relief reserved.

First-instance decision. The judgment records no appeal or earlier merits decision.