The recent case of Fishbourne Developments Limited v Stephens (2020) has underlined the importance of applying commercial common sense when interpreting “Development” as a trigger for exercising any option over land where planning permission has been granted over part only for its development.
The facts in Fishbourne were such that the developer was seeking to argue that the grant of the planning permission for a new pitched roof on an existing farm building had triggered its right to acquire the entirety of the option land, some 117-acres of farm land which comprised open fields and multiple farm buildings. The option itself entitled the option holder to a 30% discount on the open-market value.
The ruling in Fishbourne underlines the important of the factual context. The option defined a “planning application” as “any application made by the purchaser in respect of land which includes the property or any part thereof to obtain the planning permission” (and “Planning Permission” defined to mean “[a] planning permission granted by the Local Authority permitting any development of the Property”). The High Court ruled against the Developer by concluding that “…any development of the Property” meant the erection of new buildings involving, for example, a change of use from agricultural concerning the whole, or substantially the whole, of the option land.
On appeal, the Developer’s argument was that the definition of “Development” should be interpreted far wider by virtue of section 55 of the Town and Country Planning Act 1990 (“TCPA”). The TCPA defines “Development” as “…building, engineering, mining or other operations in, on, over or under land or the making of any material change in the use of any buildings or other land”.
This argument was dismissed by the Court of Appeal (“CoA”), who concluded that “Development”, in the context of the option, did not fall within the scope of the TCPA.
The CoA also supported the High Court’s ruling that it would make little commercial sense to allow the developer, in receipt of only planning permission of part, to trigger the option and purchase the land at a discount of 30% when it ought to, reasonably, be expected that the developer take proper steps to enhance the value of the whole of the land before being able to exercise it.
In summary, the definition of “Planning Permission” for the purposes of exercising an option agreement in this context, requires that the permission relate to the whole, or substantially the whole, of the option land notwithstanding that an option may define a “Planning Application” to include “the property or any part thereof”.
