Romal Capital (C02) Limited v Peel L&P (Ports) Limited

An agreement for lease governing a collaborative development venture should be construed commercially and as a whole. Contractual approval and co-operation obligations are not to be treated as fatal procedural hurdles where the parties have agreed to proceed and have acted on that basis. A party may not rely on the non-occurrence of a contractual step where its own conduct prevented or dispensed with that step.

Where a contract requires reasonable endeavours to integrate developments and to assist in pursuing planning permission, those obligations may continue beyond initial design approval and submission of an application. They require positive co-operation and do not shift responsibility to the other party merely because information might have been discovered through due diligence. Loss of a chance of planning permission is assessed by first asking whether the chance was real and substantial and then evaluating its percentage probability.

Romal and Peel entered into an agreement for lease concerning a residential redevelopment at Central Docks, Liverpool. Romal submitted an application for a 646-apartment scheme and later amended it to a 538-apartment scheme. Peel did not join the application, failed to give formal written approvals, and pursued amendments to the wider outline permission and a neighbourhood masterplan which conflicted with Romal’s proposals.

Romal claimed damages for breach of contractual obligations to approve, integrate, support and assist in obtaining planning permission. Peel contended that Romal had failed to satisfy contractual conditions, that the obligations had never arisen, and that there was no realistic prospect of permission for the larger schemes. The issues included contractual construction, estoppel, breach, causation, loss of profits, ground rents and wasted costs.

1. Contractual status. The agreement for lease was a collaborative commercial arrangement intended to secure the most valuable reasonably obtainable development, not a unilateral venture in which every procedural misstep was fatal. The 646-apartment application was a contractual Planning Application. The parties agreed that it could be submitted in Romal’s sole name, and Peel waived or was estopped from relying on the absence of prior written approval. The amended 538-apartment application also remained within the contractual framework.
2. Approval and prevention. Where approval was not to be unreasonably withheld or delayed, informal agreement followed by permission to proceed prevented Peel from relying on the absence of formal written approval. The principle that a party cannot rely on a condition not occurring when it was required to perform the relevant act supported that conclusion, applying King Crude and Mackay v Dick.
3. Scope of obligations. Clause 2.8 imposed a continuing mutual obligation to use all reasonable endeavours to integrate the developments. Clauses 5.1 and 5.3 were distinct. Clause 5.3 required reasonable endeavours to assist in pursuing a satisfactory planning permission, including pre-application engagement and support. Romal’s due-diligence obligation did not transfer Peel’s contractual responsibilities or fix Romal with constructive knowledge of Peel’s undisclosed plans.
4. Breach. Peel breached clauses 2.8 and 5.3 by failing to support the applications, failing to disclose and integrate its changing plans, pursuing conflicting amendments and the neighbourhood masterplan, failing to seek appropriate amendments to the outline permission, and failing to persuade the Council of the merits of the proposed schemes. Clause 5.1 was not breached because the stage for that distinct obligation had not been reached. The alleged implied negative term was unnecessary and was not implied.
5. Causation. Questions concerning the conduct of third parties were governed by Allied Maples: first, whether there was a real and substantial chance of the relevant conduct; and second, the percentage chance. In the counterfactual world, there was a 20% chance of permission for the 646 Scheme from the Council and a 50% chance on appeal, producing an overall 60% chance. The 538 Scheme would also have had a real and substantial chance, but the 646 Scheme was the scheme that would probably have proceeded.
6. Planning considerations. The outline permission was an important material consideration but did not rigidly fix all parcel, plot and height parameters for a standalone application. Planning policy required a balance between regeneration and conservation. The 646 Scheme caused moderate less-than-substantial harm to the setting of Waterloo Warehouse, but its public benefits provided a real and substantial prospect of permission.
7. Loss. Romal sufficiently pleaded that it would have implemented the development and made profits. It was not required, absent a pleaded issue, to prove detailed funding arrangements or every step needed to build out the schemes. The court preferred a broad-brush comparison based on actual development costs, sales and timelines rather than a residual valuation at the planning dates, applying One Step.
8. Ground rents and wasted costs. Loss of ground rents was foreseeable when the agreement was made and was recoverable subject to proof of the number and value of sales. The claim for wasted planning costs was rejected because recovering those costs in addition to lost profits would risk double recovery. Judgment was entered for Romal, with damages to be calculated by the parties’ quantum experts and consequential directions to follow.