Nirah Holdings Ltd v British Agricultural Services Ltd & Anor, Court of Appeal - Commercial Court, September 11, 2009, [2009] EWHC 2282 (Comm)

Resolution Date:September 11, 2009
Issuing Organization:Commercial Court
Actores:Nirah Holdings Ltd v British Agricultural Services Ltd & Anor

Neutral Citation Number: [2009] EWHC 2282 (Comm)

Claim No: 2009-774




Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 11/09/2009

Before :


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Between :

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MR H. MATOVU (instructed by Addleshaw Goddard LLP) for the Claimant

MR J. MILNER (instructed by Gosschalks Solicitors) for the Defendants

Hearing dates: 25 -28 August June 2009

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Mr Justice Beatson:


  1. On 22 December 2005 the defendants, British Agricultural Services Limited and Hanson Building Products Limited (hereafter ``Hanson''), formerly the London Brick Company, granted the claimant NIRAH Holdings Limited (hereafter ``NIRAH'') an option to purchase approximately 180 acres of a clay pit in Marston Vale in Bedfordshire known as Quest Pit. NIRAH stands for National Institute for Research into Aquatic Habitats. The option was granted to enable it to build a major visitor attraction and science research park both focussed on the study and understanding of all aspects of freshwater (hereafter ``NIRAH's project'').

  2. The core of the visitor centre is to be a 15,000 square metres freshwater aquarium biotope and there are to be ancillary retail and food and drink facilities, a spa, hotels, and exhibition and conference facilities. NIRAH estimates the total cost of the project will be in excess of £375 million. The consideration agreed for the option was a nominal sum of £1. Clay was no longer being extracted from the part of the pit subject to the option and Hanson was subject to an obligation to remediate it. The option did not include the northern part of the pit where at that time Hanson was still extracting clay. The option agreement also contained an option for NIRAH to purchase that part of the pit, once Hanson ceased clay extraction there but these proceedings are not concerned with that option.

  3. The agreement provided that NIRAH would apply for planning permission, the draft application to be approved by Hanson, which has other substantial property holdings in Marston Vale, mainly used or formerly used to extract clay and for brick making, which they are concerned to protect. The agreement contains other provisions to safeguard the respective aims of the parties as specified in the agreement. It was clear that one of the important issues to be dealt with in the planning process would be access and the impact of traffic generated by NIRAH's project on the road network. Initially NIRAH and its advisers contemplated a direct route from the A6 to the site but by February 2006 they were considering a shuttle bus option. This was to be from a Council-owned landfill site at North Elstow, over 3 kilometres away from Quest Pit, just south of the south western quadrant of the junction of the A6 and the A421, which NIRAH has agreed to lease from Bedfordshire County Council. The land between Quest Pit and North Elstow is owned by Gallagher Estates Limited (hereafter ``Gallaghers) and O & H Properties Limited (hereafter ``O & H'').

  4. Hanson gave its consent to NIRAH submitting an application for outline planning permission in a letter dated 29 November 2006 and NIRAH submitted the application on 1 December 2006. In October 2007 the local planning authority resolved that it was ``minded to approve'' NIRAH's application for outline planning permission for the development, subject to a number of conditions and planning obligations it required pursuant to section 106 of the Town and Country Planning Act 1990, one of which concerns the shuttle bus service and route. Since then there have been negotiations about the terms of the proposed section 106 agreement, and many drafts of it. On 30 January 2009 the Council sent NIRAH an engrossed section 106 agreement.

  5. These proceedings, instituted on 10 June 2009, concern whether Hanson is obliged under clause 5.1 of the agreement to consent to the form and contents of the final draft section 106 agreement. ``Satisfactory planning permission'' is a pre-condition to the exercise of the option, and without the section 106 agreements required, it will not be granted. The issue at the core of the case, broadly stated, is whether NIRAH has provided Hanson with sufficient information principally about the route of the proposed shuttle bus link between a park and ride facility and Quest Pit, but also about travel plans and highway mitigation measures to enable Hanson to decide whether to approve a draft section 106 agreement.

  6. NIRAH seeks a declaration that it has provided Hanson with sufficient information and that Hanson is obliged by clause 5.1 of the option agreement to approve the form of the draft section 106 agreement. It also seeks specific performance by Hanson of obligations in clause 5.1 of the option agreement to approve the form of and enter into the final draft section 106 agreement. Hanson maintain that they have insufficient information to decide whether to approve the draft agreement because they have insufficient information to make an assessment as to whether its terms will be detrimental to their own development aims in Marston Vale. Hanson have also brought a counterclaim alleging that NIRAH has materially breached the option agreement by failing to (a) supply it with information, (b) give it notice of relevant meetings, (c) take account of and comply with its representations, and (d) to comply with the provisions of the agreed position evidenced in the letter dated 29 November 2006. Hanson seek declarations that they are entitled to terminate the option agreement; alternatively that they have done so.

  7. On 6 July 2009 (the date on which the defence and counterclaim were signed) Hanson's solicitors wrote giving NIRAH notice to rectify the alleged breaches of contract referred to in their pleading. On 4 August they wrote a letter stating that they were terminating the option agreement with immediate effect. Hanson seek declarations that they are entitled to terminate the option agreement, or alternatively that they have done so and that the agreement is of no continuing effect.

  8. On 25 June Andrew Smith J ordered expedition. He did so because the option must be exercised by 31 December 2009 and, if planning permission is not obtained by 29 September, it will be impossible for NIRAH to do so before it expires.

    The Option Agreement

  9. The material terms of the option agreement are: Clause 1, definitions; Clause 2, the background to the agreement; Clause 3 the grant of the option; Clause 4, headed ``Planning Application''; and clause 5, headed ``Planning Obligations''. Clause 7 is headed ``Determination of Satisfactory Planning Permission'' by an independent surveyor acting as an expert, and clause 8 deals with the exercise of the option. The agreement thus has four stages; the submission of the planning application; the negotiation of planning obligations; the determination whether planning permission granted or to be granted is ``satisfactory'' within the terms of the option agreement; and the exercise of the option. There is an overlap between the first three stages.

  10. The agreement contains provisions designed to protect the parties' respective aims. Broadly speaking, see in particular clause 2.1, these are; NIRAH's aim in undertaking the development of the visitor attraction and science research park in such a way that maximises its value and amenity, and Hanson's aim to have the ``ability'' ``to continue its business activities'' at Quest Pit and elsewhere in the Marston Vale and ``to enhance the value and promote and subsequently undertake the development or redevelopment of its land in Marston Vale''.

  11. Clause 2.3 states that NIRAH and Hanson acknowledge each other's stated aims and intend to pursue their respective obligations under this agreement in accordance with such stated aims. Clause 2.2 states that NIRAH wished to undertake the project at Quest Pit ``but always recognising and in a manner which is consistent with'' Hanson's aims and wishes as stated in clause 2.1. One of those stated aims is that, following the exercise of the option, NIRAH will restore the property it requires by undertaking the project, thus relieving Hanson of an obligation which would have been very expensive to perform.

  12. Clause 3.2.3 provides that, if ``... at any time the planning application is withdrawn or amended without [Hanson's] consent'', Hanson ``may determine this agreement forthwith upon written notice served on NIRAH''.

  13. Clause 4.1 obliges NIRAH to use all reasonable endeavours to obtain satisfactory planning permission within the option period and to pursue the planning application and any ancillary agreements and appeals expeditiously and diligently. NIRAH is required to submit a draft planning application to Hanson for its approval, such approval, having regard to Hanson's stated aims at clause 2.1, not to be unreasonably withheld or delayed: see clause 4.3 and the definition of ``planning application''.

  14. Clause 4.2 requires NIRAH to do a number of things. It is (clause 4.2.1) required to attend a monthly meeting with Hanson to appraise Hanson of progress in finalising the extent of the project and the preparation of the planning application. It is (clause 4.2.2) required to take account of Hanson's aims as stated in clause 2.1 and not to object to any planning applications made by Hanson in respect of those stated aims. It is (clause 4.2.3) required to give Hanson notice of any meetings in respect of the planning application and the project with the planning authority or any other relevant body involved in the process, and, if reasonably required by Hanson, to allow Hanson to attend such meetings, and in any event, if Hanson is not present, to advise Hanson of the outcome of such meetings.

  15. Clause 4.3 requires NIRAH to...

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