Minerva (Wandsworth) Ltd v Greenland Ram (London) Ltd, Court of Appeal - Chancery Division, June 23, 2017, [2017] EWHC 1457 (Ch)

Issuing Organization:Chancery Division
Actores:Minerva (Wandsworth) Ltd v Greenland Ram (London) Ltd
Resolution Date:June 23, 2017
 
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Neutral Citation Number: [2017] EWHC 1457 (Ch)

Case No: HC-2015-000954

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 23/06/2017

Before :

MRS JUSTICE ROSE

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Between :

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NICHOLAS DOWDING QC and MARK SEFTON (instructed by Mishcon de Reya LLP) for the Claimant

DAVID ELVIN QC and CHARLES BANNER (instructed by Ashurst LLP) for the Defendant

Hearing dates: 8 - 10 February, 13 - 16 February, 20 - 23 February, 6 April 2017

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Judgment Approved

Mrs Justice Rose:

  1. INTRODUCTION

    1. In December 2013 the Claimant (`Minerva') obtained planning permission from Wandsworth Borough Council for a large and complex building regeneration scheme for an area in the borough known as the Ram Brewery. The Ram Brewery ceased operating 2006 and the site it occupied, together with adjacent land was earmarked for development. The site, which is located in London about 7 miles south west of the city centre, was acquired by the Claimant in 2007 or 2008.

    2. The scheme for which planning permission was granted included the demolition of many existing buildings and the construction of several new buildings including a tower, referred to in the plans as Block 5, which would be 34 storeys high (`the Tower'). It would have retail units at the ground floor level and then floors of apartments including some duplex apartments on the top two floors. The proposal sought consent for retail and residential uses together with a small-scale brewery and a museum. The plans also included the creation of public areas and a river walkway by the River Wandle that cuts through the site. As a condition for obtaining the planning permission of December 2013, Minerva had entered into an agreement with Wandsworth pursuant to section 106 of the Town and Country Planning Act 1990 (`TCPA'). That section provides that any person interested in land in the area of the local authority may enter into an enforceable planning obligation to do something on the land or to pay the authority a sum of money. Under this agreement (`the Original 106 Agreement') Minerva took on various obligations including an obligation to build a certain number of affordable houses on the site (not as part of the Tower) and to pay up to an additional £1.2 million as an affordable housing contribution if the sales of the accommodation they planned to build sold for more than was expected.

    3. Shortly before they had obtained this planning permission, which I will refer to as the ``extant planning permission'', Minerva had sold the whole site to Greenland Holding Group Overseas Investment Company Ltd for £135,735,800. Minerva hoped to be able to improve on the extant planning permission by adding extra storeys to the Tower. The agreement between the parties for the sale of the site therefore incorporated terms the effect of which was that Minerva was entitled and obliged to apply for an enhanced planning permission for the site. If Minerva achieved a resolution by Wandsworth for an enhanced planning permission before 20 October 2014 then, if certain conditions were satisfied, Greenland would have to pay Minerva overage of £200 psf of additional saleable space. Under the sale agreement, Minerva had to submit its plans for the changes to the Tower to Greenland for its consent before applying for enhanced planning permission from Wandsworth. That consent from Greenland was subject to a tight timetable and could not be unreasonably withheld.

    4. Between January and March 2014 Minerva pursued the idea of adding an additional 10 storeys to the Tower. This was abandoned because Wandsworth was unlikely to approve such a major increase in the height of the Tower in the period just before local elections were being held in May 2014. Later Minerva drew up plans to seek approval from Wandsworth for only two additional storeys to be added to the Tower, something which would generate additional revenue for Greenland but be less controversial from the Council's point of view.

    5. Minerva say that they made two requests to Greenland to approve the submission of an enhanced planning application to Wandsworth. The first request was made by email on 8 July 2014 and was refused by Greenland by an email on 9 July 2014. Minerva contend that the refusal was unreasonable. Minerva made a second more formal request by letter sent on 11 July 2014. Greenland replied to that on 17 July 2014 saying that it would need at least four weeks to consider the request. Minerva contend that that reply is to be treated as a failure by Greenland to respond so that according to the sale agreement, Greenland was deemed to have consented to Minerva making the application.

    6. Despite the absence of Greenland's consent, Minerva submitted an enhanced planning application to Wandsworth on 18 July 2014. A resolution to grant the enhanced planning permission for the two extra floors to be added to the Tower was passed by Wandsworth just before the deadline set in the sale agreement.

    7. However, Greenland later refused to enter into the additional agreement pursuant to section 106 TCPA with Wandsworth upon which the actual grant of planning permission depended (``the Revised 106 Agreement''). The Revised 106 Agreement required Greenland to make an affordable housing contribution of £1.75 million in addition to the contribution already agreed for the extant scheme. Because the Revised 106 Agreement was not signed by Greenland, the planning permission that Wandsworth had resolved to grant was never granted and the resolution lapsed.

    8. Minerva contend that Greenland's refusal to enter into the Revised 106 Agreement with Wandsworth was a breach by Greenland of the sale agreement. They therefore claim in these proceedings damages for breach of contract in the sum of the overage they would have earned had planning permission being granted.

    9. Greenland dispute this claim. They argue that only one request for approval for their consent to the submission of the enhanced planning application was made but that this request was invalid because it was not accompanied by the documents which Greenland needed to be able to assess whether to give its consent or not. They further argue that their reasons for refusing consent to the first request were good reasons under the contract. They say that Minerva was itself in breach of its obligations under the sale agreement because it failed to keep Greenland informed of the consultations and discussions taking place between Minerva and Wandsworth and between Minerva and its various building project consultants in the lead up to the request for Greenland's consent. This meant that Greenland was bounced into having to decide whether to consent or not in too short a time and on the basis of incomplete information.

    10. Further, Greenland argue that they were entitled subsequently to refuse to enter into the Revised 106 Agreement with Wandsworth because the conditions which had to be satisfied before their obligation to do so arose were not met.

  2. BACKGROUND

    (a) The planning process

    1. Before describing the factual background to this dispute, it is important to understand some basic concepts used in the planning permission process.

      (i) Section 73 of the TCPA

    2. The application made by Minerva to Wandsworth on 18 July 2014 for enhanced planning permission was made under section 73 of the TCPA (`section 73'). Section 73 concerns applications for planning permission to develop land where the developer does not want to comply with conditions which have previously been imposed in a planning permission granted for the site. Section 73(2) provides that where such an application is made, the local planning authority must consider only the question of the conditions subject to which the planning permission should be granted. The authority can decide to vary the conditions or grant the permission unconditionally or they can decide to refuse the application in which case the existing conditions remain in place.

    3. Greenland stressed and I accept that although section 73 contemplates an existing planning permission which the applicant now wants to vary, the application is for a new planning permission and not simply an alteration of the existing planning permission. What is granted if the section 73 application is approved by the Council is a new planning permission not a variation of the old one.

      (ii) Section 106 agreements and affordable housing contributions

    4. Section 106 of the TCPA allows the local planning authority to attach conditions to the grant of planning permission. The authority can impose obligations on the developer to provide amenities or services to the local population that they might not otherwise want to include in their plan. One of the obligations that the local authority includes in the section 106 agreement is an obligation on the developer to provide affordable housing. This obligation can take a variety of forms. The developer can be required to include affordable housing among the residential units that it plans to build on the site. As well as or instead of building affordable housing, the developer can be required to make a payment in lieu to the local authority. This money is then used by the local authority to pay for affordable housing built somewhere else.

    5. The decision by the authority as to how much affordable housing the developer of a particular site should be required to provide or how big a payment it should make in lieu of providing affordable houses depends on an assessment of the viability of the development scheme. Viability in this context does not mean simply that a development will be profitable but rather that the development is likely to generate more profit for the developer than the developer needs to have enough incentive to bring the land forward for development. An important part of the negotiation between the developer and the authority is...

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