If planning consent was granted, the price for the whole 45 acres would then be calculated by reference to the consent obtained at the rate of £100,000 per ‘developable acre’. The developer then put in a planning application but for the development of 2.5 acres only, with the balance of the site being set aside for landscaping. Eventually, that planning permission was granted and the developer sought to exercise the option for £250,000 (ie 2.5 acres only).

Not surprisingly, the seller refused. In response, the developer pointed out that the landscaping on the remaining 42.5 acres was part of the planning consent and was thus ‘development’, and accordingly the whole of the planning application did cover the development of the whole 45 acres.

The CA rejected this argument holding that the developer’s application should have been in respect of substantially the whole of the site. In its view, no ‘reasonable person’ would consider the application to be for ‘development’ of the whole property, and the word ‘development’ should be given its usual (non-planning) meaning. In practice, given the LA’s plans for the area, it was likely that there were substantial future development opportunities for the other 42.5 acres in future years.

Being wise after the event, these are some of the lessons that seem to emerge:

• always consider what will happen if planning consent is granted for only a small part of a site. Clearly, in this case the advisers had not considered that possibility. If they had done, then they might have got around the problem by providing for a minimum purchase price, or perhaps only allowing the developer the option to acquire the land needed to implement the planning consent granted;
• in practice, most option agreements contain restrictions on the seller's ability to object to the planning application, but do ensure that those provisions are not too widely drawn. For instance, allow the seller to object if the planning application is not for a pre-agreed development proposal (in this case, the developer had a lot of flexibility);
• consider whether the seller should have the right for it to be a joint planning application. The advantage of this will be to allow the seller to step in and continue with an application or appeal if a buyer submits a planning application but decides not to proceed. If such a clause is inserted then do make sure that it is combined with a licence for the seller to use all drawings, plans and other documents submitted with the application.

For a note on Hallam Land v UK Coal Mining [2002] see [2004] 124 Property Law Journal 6. © Practical Lawyer