An agreement for lease provided that it would become unconditional on the obtaining of planning permission which was free from unacceptable conditions (the Unconditional Date).
The developer was obliged to notify the tenant as soon as it learned that the planning authority had made its decision, and then to forward a copy of the planning permission to the tenant immediately on receiving it. The developer and the tenant then had 10 working days to notify the other whether the planning permission was acceptable. If a party failed to give notification, it was deemed to be acceptable to that party.
If the Unconditional Date had not occurred by 23 February 2009 (the End Date), then either the developer or the tenant could rescind the agreement.
Planning permission was granted on 29 October 2008. On 4 November the developer wrote to the tenant informing them of this, but the developer did not enclose a copy of the permission. In fact no copy of the planning permission was sent by the developer to the tenant until 26 February 2009; after the End Date of the agreement.
In November 2008 the tenant wrote to the developer, stating that it did not intend to fit out the unit or trade from the site. On 23 February 2009 the tenant served notice claiming to rescind the agreement.
The tenant argued that the planning condition could not be satisfied on the date of grant of the permission. Rather, it could only be satisfied at the end of the 10-day period when the exercise of judgment had taken place (or the deeming provision took effect).
The developer argued that the provisions requiring the developer to serve a copy of the permission on the tenant were mere machinery, and that the sole question was whether planning permission with the requisite characteristics had been granted by the End Date.
The High Court noted that the agreement provided that the planning condition was satisfied on the "obtaining" of planning permission of a particular kind.
Suppose the developer had forwarded a copy of the permission to the tenant, and, the following day, had notified the tenant that it was acceptable to the developer. Two days after that, the tenant notifies the developer that the planning permission is unacceptable to the tenant. The matter is referred to arbitration, and in due course the arbitrator decides that the tenant was not entitled to take the view it did. When was the planning condition satisfied? On the date of grant of the permission? When the developer gave notice that it was acceptable? When the tenant wrongly gave notice that it was not? At the end of the 10-day period? Or when the arbitrator reached his decision?
The court concluded that the natural answer was that the planning permission was, from the date of its grant, an acceptable permission. The "obtaining" of permission was simply the other side of the coin from the "grant" of planning permission. It looks at the same act from the perspective of the grantee rather than the grantor.
On that basis the Unconditional Date had occurred before the End Date, and the tenant was not entitled to rescind the agreement.
Things to consider
This case turns on its drafting, but is illustrative of the fact that in the current climate parties will seize on any minor breach of an agreement to try to escape contractual obligations which have become unattractive. The developer's omission to send the tenant a copy of the planning permission proved not to be fatal. However, careful attention should be paid to procedural clauses, as they will not always be found to be "mere machinery".
Gregory Projects (Halifax) Ltd v Tenpin (Halifax) Ltd