This case relates to the high profile redevelopment of the Chelsea Barracks site in London, in which the Prince of Wales intervened during the planning process and the planning application was ultimately withdrawn.
Facts: Under a sale and purchase agreement entered into by the parties, after payment of an initial sum in consideration, the purchaser was to pay the vendor deferred consideration dependent mainly on progress with obtaining planning permission for redevelopment of the site. Under the agreement, the purchaser owed the vendor an obligation to "use all reasonable but commercially prudent endeavours to enable the achievement of the various threshold events and payment dates...". Both parties owed each other the express duty to act in utmost good faith.
Following the Prince of Wales's letter expressing distaste for the proposed design of the Barracks on 1 March 2009 and a further meeting in that regard on 11 May 2009, the purchaser withdrew the planning application on 12 June 2009.
There were a number of issues to be considered by the court, including whether the purchaser was in breach of the sale and purchase agreement, specifically, the duty to use all reasonable but commercially prudent endeavours to enable the achievement of the various threshold events and payment dates.
The judge reminded the parties of the application of Yewbelle Limited v London Green Developments, stating that "the obligation to use 'all reasonable endeavours' does not always require the obligor to sacrifice his commercial interests." However, based on the specific wording of the sale and purchase agreement, there was no doubt that the purchaser was not required to act contrary to its commercial interests and, indeed, could consider its own commercial interests alongside those of the vendor. Thus when the purchaser considered how to respond to the Prince of Wales's intervention, the judge considered that the purchaser was permitted to consider its own commercial interests. The clauses did not, however, allow the defendant to consider its own political interests, insofar as they were different from its commercial interests or insofar as they required commercially imprudent measures.
Key Messages: When drafting a 'reasonableness' clause, care should be taken in the drafting as additional wording may serve to limit the scope of the duty being given. 'All reasonable endeavours' alone may not require the undertaking party to sacrifice his commercial interests. However, additional wording can clarify the boundaries of the obligation.
Source: CPC Group Limited v Qatari Diar Real Estate Investment Company  EWHC 1535 (Ch), High Court, Chancery Division, Mr Justice Vos, 25 June 2010