Plan-it Law

Validity of applications

The other day I was reviewing a design and access statement and found (as per usual) that it did not include content sufficient to satisfy all the requirements of the regulations (the GDPO in this case). I reminded myself  that the need to tick all the boxes is particularly important following the introduction, inot the 1990 Act, of section 327A which in effect prevents local authorities from being able to entertain applications which do not include material required by legislation. By taking these applications forward, local authorities run the risk of granting applications which are void.

Case on the construction of documents

There has been a very recent (1 July 2009) House of Lords  decision on the construction of documents which will have relevance for section 106 agreements. This is the case of Chartbrook Ltd v Persimmon Homes Ltd.

Chartbrook and Persimmon entered into a residential property development agreement in 2001. Chartbrook owned the site and Persimmon agreed to develop it. The dispute between them turned on the meaning of an element of the price defined as the "Additional Residential Payment" in a schedule to the agreement. It is apparent that this payment was intended to provide Chartbrook with a share of additional profit if sale prices exceeded those anticipated at the time of the agreement. Both parties had their own way of interpreting this provision and the way the additional payment should be calculated- Chartbrook argued they were entitled to a payment of £4.6million whereas Persimmon argued that the figure should be £900,000.

The actual wording of the provision favoured Chartbrook - but Persimmon maintained that the negotiations and the heads of terms agreed by the parties had been on a different basis, which favoured them.

When interpreting documents, the usual rule is that you are not entitled to look back at the negotiations which preceded the contract. Chartbrook won at first instance and in the Court of Appeal - but the House of Lords found for Persimmon. Having consideration to the background and context, in particular a letter that set out the intention of the parties, the House of Lords construed the agreement to interpret the ARP as contended by Persimmon, even though this was against the actual wording of the provision. Given the background, it was clear that the words of the provision did not reflect what the parties  had agreed.

In the 106 context this could be a very interesting case. Many 106s are now preceded by heads of terms although the extent and detail of those HOTS will vary. Yet many 106s are drafted poorly and in a way which does not quite deliver for the Council the certainty and enforceability they need and which may well be included (at least impliedly) in the heads of terms. The right approach may well be to have a clear and detailed set of heads of terms before drafting begins - in case there is a dispute on interpretation after the event.