[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hallam Land Management Ltd v UK Coal Mining Ltd & Anor [2002] EWCA Civ 982 (30 May 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/982.html Cite as: [2002] EWCA Civ 982, [2002] 35 EG 96

[New search] [Printable RTF version] [Help]

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(His Honour Judge Reid QC
(sitting as a Deputy High Court Judge)

		Royal Courts of Justice Strand London WC2 Thursday 30th May, 2002

1. LORD JUSTICE THORPE: Lord Justice Rix will give the first judgment.
2. LORD JUSTICE RIX: In this appeal, which comes before the court with the leave of the judge, His Honour Judge Reid QC sitting as a judge of the High Court, Hallam Land Management Ltd, as appellant ("Hallam"), seeks to reverse a ruling that it has failed to bring itself within the terms of an option agreement for the purchase of a parcel of 45 acres of land situated in Orgreave in the Borough of Rotherham in South Yorkshire ("the property").
3. The option agreement is dated 15 November 1996 and was made between RJB Mining UK Ltd, as vendor, and Small Finance Ltd, as purchaser. On 9 March 1998 Small Finance assigned the agreement to Hallam, but nothing now turns on that. Hallam simply stands in the shoes of Small Finance.
4. Two issues have been argued before this court. One is whether the planning application made by Hallam fulfilled the requirements of the agreement which refers in its clause 3.2 to:

"... a planning application or applications for the development of the Property ..."

5. The judge held that these words required a planning application which sought the development of the whole of the property and not merely a part of it.
6. The second issue was whether Hallam's planning application was in fact for the development of the whole property. The judge found that it was not. Therefore Hallam's claim for specific performance of the agreement failed. A number of other points were raised by the defendants below (here the respondents) by way of defence, but they all failed. I shall have to refer below to some of these points, but only in passing. None of them arises on this appeal.
7. The respondents are two companies which, together with other members of their group, has, as I understand it, succeeded to the assets and undertakings, or some at any rate of them, of the National Coal Board. The two companies are RJB Mining (UK) Ltd, now called UK Coal Mining Ltd, which granted the option and RJ Budge (Mining) Ltd, now called Harworth Mining Ltd, which now owns the property. I shall simply refer in the main to vendor and purchaser, the titles used under the agreement, save where I need to distinguish between Small Finance and Hallam.
8. The relevant terms of the agreement are as follows. The price of the option was stated in clause 2 to be £5,000. Clause 1.1 and the first schedule defined "the Property" as:

"45 acres of land or thereabouts situated to the west of Highfield Lane, Orgreave in the Borough of Rotherham, South Yorkshire which is for the purposes of identification only shown edged red on the attached plan numbered 1."

9. The "Option" was defined as:

"... the option to purchase the Property contained in Clause 4 ..."

and clause 4.1 provided:

"If the Purchaser shall serve notice in writing on the Vendor exercise [sic] the Option at any time during the Option Period the Vendor shall sell and the Purchaser shall purchase the Property for the said estate at the Purchase Price."

10. The "purchase price" was defined to mean:

"... the sum of £100,000.00 per Developable Acre ..."

11. "Developable Acre" was defined in the second schedule as follows:

"1. In this Schedule the term `Developable Acre' shall mean each acre of the Property in respect of which planning permission is granted (either by the local planning authority or on appeal) for development in respect of an application submitted by or on behalf of the Purchaser or its nominee. It is agreed that open space or landscaped acres shall specifically be excluded from the definition of Developable Acre.

2. In the absence of agreement between the parties an independent surveyor shall be appointed to determine the extent of the area of Developable Acres such surveyor to be agreed between the parties and in the absence of agreement to be appointed (on the application of either party) by the local President for the time being of the Royal Institute of Chartered Surveyors."

12. It will be observed that the effect of the definition of the purchase price required planning permission to have been granted for development "in respect of an application submitted by or on behalf of the Purchaser". It is common ground that in the absence of such a grant of permission the option was not exercisable. It is also common ground that it was a condition for the exercise of the option that the terms of clause 3.2 should have been complied with, which read as follows:

"Without prejudice to Clause 3.1 the Purchaser agrees and covenants with the Vendor that the Purchaser will submit a planning application or applications for the development of the Property no later than nine (9) months from the earlier of the dates specified in clause 3.1.2 and thereafter shall use and continue to use all reasonable endeavours to obtain planning permission for such development provided that the Purchaser may (but shall not be obliged to) submit an appeal against a refusal of planning permission."

13. The two essential questions on this appeal, to which I have already briefly referred, both arise directly on the wording of clause 3.2, whose terms I have just cited. Did the purchaser submit a "planning application ... for the development of the Property" within the meaning of that phrase? If it did, no problems of timing are involved on the facts of this case.
14. As to timing it is enough to record that the purchaser had nine months from 31 December 1997 to submit its planning application. It then had 56 days from the determination of an appeal from the refusal of planning permission to exercise its option. The purchaser lodged its planning application on 20 July 1998. That application was refused on 18 February 1999. The purchaser appealed on 19 March 1999. The appeal was allowed on 3 August 1999. The option was exercised - purportedly or validly, that is the question - on 27 August 1999.
15. The essence of the dispute between the parties can be briefly stated by reference to the terms of the purchaser's planning application and the outcome of the planning appeal. I will record those to give point to the further facts that I need to state concerning the context in which the agreement was first made and then put into effect.
16. The planning application, which was for outline planning permission, stated the "brief particulars of the proposed development" as follows:

"45 acres - 42.5 acres of open space and 2.5 acres of land for company HQ."

17. The accompanying plan showed a company headquarters marked up at the northern apex of the 45-acre site, described as a "36,000 sq ft office on 3 floors with 180 parking spaces", occupying, with its curtilage and associated landscaping, 2.5 acres. In the centre of the rest of the site was written "open space 42.5 acres". The vendor submits that that was not an application for the development of the property, meaning the 45-acre site, it was only an application for the development of the 2.5 acres as ascribed to the office building and its curtilage. That application was in any event refused. The refusal notice read as follows:

"Outline application for erection of office development and landscaping at land at High Field Spring Catcliffe for Hallam Land Management.

You are hereby notified that your application for planning permission for the above development was REFUSED on 18th February 1999.

Reason(s) for refusal:

01

The proposal would by way of its location and shape, be prejudicial to the strategic and comprehensive development of the Waverley area as a whole.

02

The proposal would set an undesirable precedent which would make future similar proposals difficult to oppose and which would prove cumulatively unacceptable to the comprehensive development of the area."

18. The purchaser's appeal led to a local inquiry at which competing evidence was led both in favour of and against the appeal. The planning appeal notice stated the description of the development to be:

"Construction of company headquarters offices and open space."

19. The grounds of appeal stated, inter alia, that the appeal site was allocated for industrial/business purposes on the deposit draft of the Rotherham Unitary Development Plan and the offices proposed were in accordance with that allocation. It added:

"The remainder of the site being used for open space does not prejudice the ultimate development of the site ... "

20. In the course of the appeal the purchaser amended the description of the development to read:

"1.01 hectares (2.5 acres) of land for a company HQ with associated landscaping."

21. At the inquiry one of the purchaser's witnesses was a Mr Phil Rech, an Associate Member of the Landscape Institute. He gave evidence of an illustrative landscape master plan indicating how the site could be planted with broad belts of trees and shrubs around open areas of grass. It was suggested that some 18.5 acres, or 7.5 hectares, or about 40 per cent of the site, could be put down to woodland. It was suggested that it would be necessary to import at least one metre of soil to lay across the planted areas and that this soil could be aesthetically contoured. It was suggested that this importing of soil would involve engineering operations.
22. In the Planning Inspectorate's letter of 3 August 1999 allowing the purchaser's appeal, this proposal was referred to as follows:

"It is proposed that the balance of the site could be landscaped with structural tree planting, indicative plans showing that the total area of this could be about 7.5 hectares, some 40% of the total appeal site area."

23. The inspector concluded that the proposal would not after all materially harm the strategic or comprehensive development of the area and therefore considered it acceptable. He allowed the appeal for:

"... the development on 1.01 hectares (2.5 acres) of land for a company HQ with associated landscaping ..."

subject, inter alia, to the following conditions:

"1. approval of the details of the siting, design and external appearance of the buildings, the means of access thereto, and the landscaping of the site (hereinafter called the `reserved matters') shall be obtained from the local planning authority in writing before any development is commenced and such development shall be carried out as approved;

...

5. no development shall take place until details of earthworks have been submitted to and approved in writing by the local planning authority. These details shall include the proposed grading and mounding of land areas including the levels and contours to be formed, showing the relationship of proposed mounding to existing vegetation and surrounding landform. Development shall be carried out in accordance with the approved details."

24. In the light of the purchaser's planning application and its success on appeal, Mr Derek Wood QC, who appears with Mr Martin Dray for Hallam, submits that although clause 3.2 did not require an application for development of the whole property as distinct from any part of it, there was in fact an application for development of the whole property, since landscaping of the site was as much the development of it as the construction of the office building. In this respect he points to the fact that the expression "development" has long been a well-known term of planning art, defined in what is now section 55(1) of the Town and Country Planning Act 1990 as follows:

"Subject to the following provisions of this section, in this Act, except where the context otherwise requires, `development', means the carrying out of building, engineering, mining or other operations in, on, over or under land, or the making of any material change in the use of any buildings or other land."

25. Mr Wood points out for good measure that "open space" is also a planning term of art; see section 336 of the 1990 Act which defines it as:

"... any land laid out as a public garden, or used for the purposes of public recreation, or land which is a disused burial ground;"

26. Although "landscaping" is not it seems also a term of art, he submits that where it involves engineering operations it can constitute "development". In this respect he refers to Coleshill & District Investment Co Ltd v Minister for Housing and Local Government [1969] 1 WLR 746 to illustrate the point. There the removal of embankments which were an integral part of an ammunition depot's blast walls was itself held to be a development within the meaning of a predecessor statute.
27. It is now necessary to state some further background facts concerning the property, its surrounding area and the planned status of that area at the time the option agreement was made. I can conveniently do so by reference in part to the findings of the judge. He explained as follows at paragraphs 1(f) and (g) of his judgment:

"(f) The Property lies between Sheffield and Rotherham alongside the Sheffield Parkway (A630) and near junction 33 of the M1. It comprises approximately 45 acres out of a far larger area owned by RJB and forms part of the old South Yorkshire coalfields. It was once worked by opencast mining but this use has long since ceased. It is in a much larger area referred to as Waverley/Orgreave, which amounts to some 300 hectares, including a small part still being used for opencast mining. The manner in which the area as a whole is developed is of great importance to the whole of South Yorkshire and in particular to the nearby towns of Rotherham and Sheffield. The local planning authority is Rotherham Metropolitan Borough Council. The access road to the property is Highfield Spring, a road completed in May 1996.

(g) The Property has a convoluted planning history. It was fully set out in a 23 page chronology provided by the Claimant. I do not need to rehearse it in any detail. For present purposes I can begin with the fact that in June 1995 the deposit draft of the Rotherham Unitary Development Plan was published showing 32 hectares of land at Waverley including the Property allocated for industrial and business use. The Plan indicated class B1, B2 and B8 development proposals would be acceptable, subject to appropriate planning and highways criteria being met. The Public Inquiry relating to the Plan was held between October 1996 and May 1997. On 30 May 1996 an outline planning application was submitted for a leisure complex on 8 hectares of land immediately adjoining the Property. This land was also owned by RJB but was subject to an option in favour of Meridian Land Developments Ltd, which was the applicant. ..."

28. Thus the option agreement was made against the background of the publication of the deposit draft of the Rotherham Unitary Development Plan ("the UDP"). Although subject to review, the UDP had been adopted at the time of the agreement and remained so at the time of the application. It is not stated in terms by the judge that the parties to the option agreement were aware of the UDP, but it is inconceivable that they were not and this appeal has been argued upon that basis.
29. The agreement, moreover, expressly referred to an adjoining piece of land which was equally part of the overall development area, where a company known as Meridian, already referred to in the passage just cited from the judge's judgment, was at that time currently involved in seeking planning permission in respect of a leisure centre (see clause 3.1). The judge also made findings showing that Mr Small, the principal of Small Finance, was informed by the vendor, and was concerned about, landscaped or green corridor areas marked on a plan which had been developed by the vendor in discussions with Rotherham Metropolitan Borough Council and had been provided to him. These areas intruded into the property then being the subject matter of negotiations for the agreement (see paragraphs 1(j) and (k) of the judgment).
30. Mr Wood has submitted that this detail of the background to the agreement is not part of its factual matrix but is part of evidence that was only admitted below in the light of the contention at trial that the agreement should be rectified. In my judgment, however, this aspect of the matter is fairly part of the agreement's matrix and is not inadmissible. It is not part of the actual negotiations for the terms of the contract, but demonstrates what parties were negotiating about.
31. Thus the agreement was made against the background of the UDP. The planning history was put before the judge in an agreed joint statement. Paragraphs 3.17 to 3.19 of that joint statement read as follows:

"3.17 The supporting text in paragraph 6.3.23 of the UDP acknowledges that,

`From 1996, it is anticipated that opencast coal working and progressive restoration will provide 36 hectares* of extremely attractive development land close to the A630 Sheffield Parkway/M1 Motorway junction 33 and to the proposed Sheffield-Rotherham Airport. This is part of a larger regeneration initiative which will provide land for a range of other developments after the Plan period."

32. The reference to 36 hectares is asterisked and the asterisk comments:

"[*at Waverley and therefore including the whole of the Option Land]"

"3.18. Policy EC3 of the Deposit Draft UDP states that,

`The Council will encourage a wide range of industrial and business activities subject to their compliance with all appropriate planning and highways criteria and compatibility with adjacent existing and proposed land uses.'

3.19. Policy EC3.1 of the Deposit Draft UDP confirmed that, `Within areas allocated on the Proposals Maps for industrial and business use (i.e. including the Option Land), development proposals falling within Classes B1, B2 and B8 of the Town and Country Planning (Use Classes) Order, 1987 (as amended) will be acceptable subject, in each case, to all appropriate planning and highways criteria being met.'"

33. Unfortunately for the parties to the agreement, in between November 1996 when the agreement was made and 30 September 1998 by which time at latest the purchaser's planning application had to be submitted, there had been a change of heart on the part of the planning authorities. The judge referred to it in paragraphs 18 to 19 of his judgment. In April 1998, when, in the month following the assignment to Hallam, Mr Power of Hallam approached the planning authorities with his ideas for a development of the property for retail and leisure purposes, he was told that:

"Things had moved on and they were averse to the sort of proposal he had in mind ..."

since they wanted first to work at a comprehensive development of the whole of the Waverley/Orgreave area, subject to a master plan which took account of infrastructure and major traffic implications.

34. In the circumstances it was established at trial that the application made by the purchaser in July 1998 was the best option then available to a prospective developer of the property. The vendor had run the point below that the purchaser was obliged, under a term to be implied into the agreement, to obtain the maximum development potential of the property and maximise the number of developable acres. It was even suggested that the planning application submitted had not been made in good faith, but was an attempt to obtain a form of planning permission which would enable the purchaser to minimise the number of "developable acres" for the purposes of the second schedule, and thus minimise the price to be paid for the exercise of the option.
35. Those submissions, however, were both rejected by the judge who found that the purchaser had acted in good faith because it knew at the time of submitting its planning application that what it asked for was the best it could reasonably expect.
36. I turn to Mr Wood's submissions. His logically first submission was that in clause 3.2 the words "the property" in the phrase "a planning application or applications for the development of the property" means "the property or any part or parts of the property". It was sufficient, therefore, for the purchaser's planning application to be limited to the development of the 2.5 acres which embraced the office building and what I shall continue to describe as its curtilage or ancillary environment, even if the rest of the site, the other 42.5 acres, were left as open space, or landscaped areas, or without any change, and even if the result of that approach was that the only developable acres within the meaning of the second schedule produced, or that could be produced, by that planning application were those 2.5 acres, rendering a price for the whole property of only £250,000.
37. Mr Wood submitted that although the property was defined in terms of the 45 acres as a whole, the definition section opened with the words "unless the context otherwise requires". The context of clause 3.2, he continued, did otherwise require, for otherwise the purchaser might be forced to make a hopeless application, as in the circumstances which came to prevail at the time of its application, and its option would become worthless. The covenant in clause 3.1 that the purchaser would not submit "details of any proposals relating to the property or enter into discussions of any nature ... concerning the property", nor submit "any planning application in respect of the property" prior to a certain date was an example, he submitted, where the context similarly demanded that "the property" included "any part of the property".
38. In any event, he continued, it was fanciful to suppose that a planning application had to propose the development of the entire surface of the property: why should it? Why not a number of discrete buildings? What about parts of the property whose contours or other geographical features made development there impossible or undesirable? It would be unworkable and unjust to the purchaser to demand such an interpretation.
39. In this connection Mr Wood also relied on the second schedule and the structure for establishing the price of the land. It was payable for each developable acre, he pointed out. It was a matter of aggregating each such acre or part of an acre. There was no price for the whole site other than by reference to "each acre of the Property in respect of which planning permission is granted".
40. On the other hand, Mr Wood recognised that the opportunity given to the purchaser to earn its right to purchase the whole property for the price of only that part of the property which it applied to develop, via the mechanism of the adjustment of the price of the property in accordance with the number of developable acres, would tilt the contract too much in favour of the purchaser. He sought a construction of the agreement therefore which operated fairly between the parties. He therefore proposed that the purchaser was limited by two implied terms.
41. The first was that the purchaser had to act in good faith. It could not use the planning application mechanism to manipulate in bad faith the price for the exercise of the option. That concession was made before the judge below and was not repudiated by the vendor or the judge. Indeed, the vendor had sought to show that the purchaser had acted in bad faith, but he failed in that submission.
42. The second implied term posited by Mr Wood was that the purchaser was bound to apply for the best planning permission reasonably available at the time of application. By the best planning permission reasonably available at the time, Mr Wood indicated that he meant that which maximised the value of the site for the applicant, not that which maximised the price of the exercise of the option in terms of developable acres for the vendor. It was a matter of quality, not quantity. After all, he pointed out, the number of developable acres might be maximised by a planning application for open storage over the whole of the area of the property, but the value of the property might be maximised by a high-rise building or leisure facilities which utilised only a smaller part of the surface of the property.
43. It may be observed that this second implied term had not previously surfaced in the purchaser's submissions, either before the judge or in the notice of appeal. On the contrary, it was somewhat similar to an implied term which the vendor had argued for below as a fallback position to the effect that if clause 3.2 did not require a planning application for the whole of the property, then there had to be an implied term which required a planning application for development of substantially the whole property, and in a manner so as to maximise the property's potential.
44. The purchaser argued against that implication and the judge agreed. The vendor by its respondent's notice sought to raise its implied term again on this appeal, but did not pursue that notice. The purchaser has now taken up the running with an altered form of this implied term, but not so as to require it to cover substantially the whole property. I record the history of this point, not to suggest that the implied term point cannot be relied on by the purchaser as part of its appeal - in any event no point has been taken about that - but to demonstrate its novelty on the part of the purchaser.
45. Finally, in support of his submissions Mr Wood relied upon the element of uncertainty introduced into the working out of the option agreement if the planning application in question had to be one which covered the development of the whole property. What would count as development of the whole property? The judge himself accepted that development went beyond the footprint of any building or structure; as in the present case the development of the company headquarters went beyond the footprint of the building itself and extended to its car parking areas and to its landscaping - what I have, perhaps inaccurately, sought to express by reference to its curtilage. Thus it was common ground below that the development of the office building extended to the whole of the 2.5 acres in question. But what about a development of high rise buildings? What about a business park set, as an estate agent might express it, in rolling acres? The judge said it was a matter of fact and degree. But Mr Wood said that led to the kind of uncertainty which should be absent from an option agreement whose conditions necessarily had to be strictly applied so that the parties could know where they stood. Mr Wood returned to this particular theme under his second submission which focused on the meaning of development, to which I will have to revert to below.
46. In my judgment, however, Mr Wood's first submission, finely articulated as it was, ultimately lacks cogency. The purchaser must submit a planning application for the development of the property. The expression "the Property" is defined as meaning the 45-acre site. For it to mean merely part of the property, and on the facts of this case a mere five per cent of the property, would prima facie be inconsistent with that definition. Does the context then "require otherwise"? Where one is concerned with a vital ingredient in the progress to the exercise of an option which brings with it, if it is validly exercised, the whole of the property, it would take, as it seems to me, nothing short of necessity (perhaps in any event implicit in the word "requires") to reduce the meaning of "the Property" as defined to "any part of the Property". That is a fortiori the case where the price of the whole property will be determined by the extent of the acreage for which planning permission is granted.
47. When I speak of "the whole property" I mean of course to distinguish it from "any part of the property", Mr Wood's submission. It might be better to speak of "the property as a whole", in the sense in which one might refer to "the site" to mean the 45-acres as a whole. Of course in such a context a question can always arise whether, commercially speaking, "substantially the whole" is the equivalent of "the whole", as it usually, or at any rate often is, in a commercial forensic context. On different facts that question might have had to have been addressed. But it does not arise on the present case where the 2.5 acres in question amount to only some five per cent of the property.
48. Unless, then, the planning application is to be for the development of the whole property or the property as a whole, in the sense that I have indicated, what protection does the vendor have against losing the whole of his land and its current value for future development just because, within the nine-month window allowed for the purchaser's planning application plus the period of any subsequent appeal, only a small-scale development is possible. I am not assisted by reference to clause 3.1 where, because of the negative form of the covenant and the prohibition from "any" proposal or discussion or planning application in respect of the property, there is no need to construe the property otherwise than as a reference to the site as a whole.
49. Of course Mr Wood recognises the force of this response, which is why he proposes his two implied terms. They are only needed, however, because he first posits a construction of the word "Property" which is contrary to the definition in the parties' agreement. In my judgment, to proceed from that manipulation of the definition of the word "Property" to the positing of two implied terms is not so much a process of construction, but of the remaking of a contract to cater for circumstances which the parties did not anticipate at the time of their agreement in November 1996. At that time the parties contemplated a general or comprehensive development of the property. They anticipated failure of course in one sense, on the basis that what was proposed was simply not acceptable to the planning authorities. They also anticipated that the authorities would not permit development of the whole site, on the basis that there would be some requirement of a green belt or landscaped areas or some other such requirement imposed on them. That is why open space and landscaped areas were specifically excluded and why the definition of "developable area" was created.
50. What they did not anticipate, however, was that the planning authorities would simply be unwilling to permit any comprehensive development of the site because they were unwilling to contemplate such a planning permission without a still more comprehensive master plan for the whole of the Waverley/Orgreave area, but would nevertheless be willing to contemplate a very small development on the basis that it was so small as to be regarded as immaterial to the future overall development of the area. But even if the parties had anticipated such a turn of events, the question is whether it is necessary to construct implied terms of the contract to cater for the redefinition of the defined term "the Property". It is classic law that an implied term must be both necessary and reasonable. Is it necessary to make the implications which Mr Wood contends for? In my judgment, no. They are only posited in the first place to answer a problem which arises if the definition of the word "Property" is altered to mean "the Property or any part of the Property".
51. Secondly, they are not necessary because it does not follow from the fact that a planning application for the development of the whole property would fail that the agreement must contemplate a planning application for development of any part of the property. The purchaser had paid only £5,000 for his option. He buys a mere spes for a small price. The agreement does not have to go out of its way to ensure him success.
52. Thirdly, the implied terms are not a reasonable response to the self-inflicted problem. That is proved by this case. If the submission were correct, then the purchaser gets the whole of the site for £250,000 with all its development potential in the future intact. If the innocent bystander had put such a case to the parties at the time of their negotiations, he would not have been told "of course that is what we intend to happen in such a case", but on the contrary "of course not".
53. Fourthly, if you want to know what the best possible planning outcome would be (to adopt Mr Wood's terminology), in my judgment, you put it to the test. The only absolutely fair way of doing so, trying to be fair between the parties at the time of contract, is by making a planning application for the development of the whole property. Any other process invites litigation. You may be told by advance discussion - because Mr Wood submits that the proper or normal way of going about such things is to discuss first and apply later - that the planning authorities will not contemplate such an application. But such advice may be wrong. That is where, amongst other things, the appeal process may be important.
54. Fifthly, it may be that you are warned in advance of the planning authorities' desire for something like a green corridor. You may make allowances for that in your planning application, and it may be that that is still a planning application for a comprehensive development of the property as a whole. Or it may be safer to leave it to the planning authorities to impose the green corridor as a requirement or condition of planning permission. It is inevitable either way that buildings would not cover the entire surface of the property.
55. Sixthly, clause 3.2 contains its own terms relating to what the purchaser must do. He must make the required application, whatever that means, and he must "use and continue to use all reasonable endeavours to obtain planning permission for such development", but he is not obliged to appeal. Such a term does not, in my judgment, leave room for further implication.
56. Seventhly, the implied term suggested does not go to maximise the acreage as much as the development potential. Why in any event does the purchaser need to be told by an implied term to maximise his development potential? He will presumably do so in any event unless acting in bad faith.
57. Eighthly, as to the implied term of good faith, outside the area of fiduciary duties such a term is not a typical English common law response to such problems in the commercial sphere. It would seem to be neither necessary (in the English sense) nor sufficient, hence it is, even on Mr Wood's submissions, buttressed by the second implied term.
58. In my judgment the agreement has its own express terms regulating all these questions. It strikes its own balance, as Mr Tregear on behalf of the respondents puts it. The planning application must be for the development of the site as a whole. Only such a planning application will put the best possible development potential to the test. Moreover, the purchaser must use all reasonable endeavours to promote or to obtain planning permission for such development - that is for the same reason - but he is not obliged to appeal. So his committed expenses are limited. If on such a planning application there are parts of the property for which planning permission is not granted, then the price falls; and specifically so if the limitation on planning permission is because the requirement is of open space or landscaped areas and it is that which prevents planning permission and makes part of the property undevelopable. If, however, the planning authorities are simply wanting to contemplate a comprehensive development of the property as a whole, then the planning application fails, and the purchaser's £5,000 speculation is lost. Of course matters of fact will always raise questions at the margin: is such and such a planning application an application for development of the whole property? Questions of that kind cannot be avoided. Even if one gets past that question and proposes, for instance, a comprehensive development in the nature of a business park or a leisure centre with ancillary picnic areas etc, the next question becomes: is that open space or landscaped area in the business park or is the picnic area in the leisure centre a developable area; or alternatively an open space or landscaped area; or is it all ancillary to the development as a whole, just as in the case of the landscaped areas involved in the development of the 2.5-acre office building development?
59. So far as that second question is concerned, the parties have expressly provided, in the expert referred to in the second schedule, for at any rate one dispute resolution mechanism for such issues.
60. I turn then to Mr Wood's second submission. He says that in any event the purchaser's planning application was for development of the whole property. The 2.5 acres were plainly going to be developed - there was no issue about that. The 42.5 acres were all going to be landscaped. Landscaping involves engineering. Engineering is development. Therefore the whole property was to be developed. The word "development" must be a term of art used in a planning sense. Anything else would be too uncertain. It is not a matter of fact and degree as the judge thought. The judge said this:

"39. The argument that the landscaping involved required planning consent does not seem to me to carry any weight. The fact that the landscaping might be development within the meaning of the planning legislation because it would involve engineering works quite apart from any change of use does not mean that the landscaping would in any ordinary sense of the word have involved the development of the Property. ...

40. The proper approach to construction is set out in the speech of Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 at 912F to 913G. Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. Using that approach I am satisfied that no reasonable person reading the Option Agreement in its context at the time would have regarded the application which was made as being an application for `the development of the Property' within the meaning of the agreement. An application for development of the Property would not have had to propose development of every single part of the site. A developer could properly apply for a layout with a reasonable amount of landscaping (just as the 2.5 acres to be devoted to a company HQ contained an element of free space). The question is one of fact and degree. An application for a high-rise development might well be an application for development of the Property even though having a comparatively modest footprint. Here the application made (whether in its original form or its amended or clarified form) could not reasonably be said to be an application for the development of the Property."

61. Mr Wood criticised that passage. He said that development could not be given an ordinary meaning outside the technical meaning in the planning context. He agreed that an application would not have to propose development of every single part of the site, but also criticised the judge for the uncertainty of his test of fact and degree.
62. In my judgment, however, the judge was right. The word "development" in the context of the 1990 Act has to deal with all situations in which planning authority is required, and that refers as much to the destructive (see the Coleshill case cited by Mr Wood) as to the constructive. In the context of this agreement, however, the word "development" was being used consistently with the planning legislation, but in its own context and with its own meaning. The context was the extraction of commercial potential from the development of a restored but otherwise barren (in the sense of entirely vacant) site in the middle of a comprehensive development area. The site was only to be priced on the acreage which was developable. "Developable" specifically excluded open space or landscaped areas, even if planning permission extended to it. The concentration of attention therefore was on development, in the sense of using the land for the purposes of the UDP and thus in the primary sense of building operations, the first sense to which reference is made in the statutory definition. If the question is whether a planning application was for the development of the whole site, that cannot but be answered as, at least in part, a question of fact and therefore as a question of fact and degree. On the facts the answer to the question of how a reasonable man would have regarded the planning application in question is plainly, no, he would not have regarded it in my judgment as a development of the property as a whole. Landscaping is not a defined term within the planning legislation. Engineering operations may be, but the proposal was not for engineering operations throughout the site as a whole, but in respect of only some 40 per cent or so of it where the planting was to be carried out. Therefore, on any view, development, even in its most technical sense, was not proposed on the site as a whole. In any event, I would not regard a proposal for the construction of a building of 36,000 square feet on five per cent of the site area as development of the property as a whole, even if it was accompanied by a proposal for landscaping throughout the site.
63. In my judgment, to the extent that a question of construction is involved, no reasonable person having all the background knowledge reasonably available to the parties at the time of contracting would have regarded Hallam's application as one for development of the whole property. The landscaping of the site, to the extent that it would have been done, was not so much the development of the site, as the retention of the opportunity for further development of the site. To the extent that the question involves a matter of fact, it seems to me that Hallam's letter to Rotherham Metropolitan Borough Council dated 11 June 1998 tells its own story. The letter said:

"I am aware that there are various problems relating particularly to the Highways issues which are likely to create difficulties in terms of obtaining an immediate planning permission for development of the whole site.

I would seek your guidance as to what level of development may be permitted without any difficulty and whether a proposal to develop the whole site is likely to attract a refusal.

As I mentioned to you it would be our intention in the fullness of time that the whole site could be developed if and when the outstanding problems are resolved but in the interim I would understand if you were to advise that development of the whole of the site, today, was not appropriate."

64. Mr Wood fairly accepted that that letter was inconsistent with Hallam's case. Quite apart from any question of construction which arises out of the words "development of the property", to the extent that a question of fact is involved, that letter is a reminder of the purchaser's own view of the factual question. That letter was also consistent with the reference in the purchaser's formal grounds of appeal, which I have already cited, to this effect:

"The remainder of the site being used for open space does not prejudice the ultimate development of the site ..."

65. To the extent that the construction which I favour of the words "development of the property" involves any uncertainty inherent in questions of fact, it seems to me that such uncertainty is unavoidable, is in any event introduced on Mr Wood's implied terms, and for the purposes of the questions of developable acres and the true extent of open space or landscaped areas is a matter of fact and uncertainty which the parties have provided for themselves in the two clauses of the second schedule. Such questions of fact could always arise in the context of a business park for the development of the site as a whole in the way that I have already indicated.
66. So, for all these reasons, I would dismiss this appeal.
67. LADY JUSTICE ARDEN: I agree.
68. We are concerned with the interpretation of the agreement dated 15th November 1996. The principles for the interpretation of documents have been expounded by Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, 912-913. He said - and I need only quote paragraphs 1 and part of paragraph 4:

"(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract...

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean..."

69. The particular clauses with which this case is concerned are clauses 3.2 and Schedule 2, which Rix LJ has already set out.
70. The questions are: does clause 3.2 mean that an application for planning permission must be an application for the development of the whole property, as the judge held; and what constitutes a development for this purpose?
71. The end result of interpretation in this case must be to interpret clause 3.2 and Schedule 2 consistently, so as to form a part of a whole. This is because, as Lord Hoffmann also explained in the ICS case, as a matter of common sense the courts do not easily accept that people have made linguistic mistakes, particularly in formal documents. The curiosity here is that clause 3.2 appeared to contemplate the development of the whole of the site; whereas Schedule 2 contemplates that planning permission may be only partial, thus suggesting as a matter of common sense that an application might also be made for part only of the site.
72. The judge resolved this apparent lack of symmetry by construing development as meaning development as a matter of ordinary language rather than in any technical sense, and by holding that any development had to be in respect of the whole property. He did not, however, give his own meaning of the word "development".
73. On this appeal the appellants have advanced complex arguments as to the meaning of "development" and clause 3.2 and Schedule 2 taken together. In essence, they submit that the application may relate to part only of the price, and in that rely particularly on the provisions of Schedule 2, which provide for a price to be ascertained on an acre-by-acre basis. They also submit that any form of development within section 55 of the Town and Country Planning Act 1990 would be permitted. They point out that it is difficult to define "development" in any other way. Then, as Rix LJ has explained, they contend that there is an implied term that the purchaser would have to make an application in good faith with a view to optimising the option price, and also that the purchaser would be bound to apply for the best planning permission reasonably available at the time. This is both a subjective and objective test.
74. The respondent's case is a very different one. They point to the draft Rotherham Urban Development Plan ("the UDP") which stated that the site within which the property was included was appropriate for industrial and business development within classes B1, B2 and B8 of the Town and Country Planning (Use Classes) Order 1987. The UDP also permitted ancillary development and certain other developments in particular circumstances.
75. The respondent's contention is that the word "development" must be development for a purpose contemplated by the UDP, but this would of course exclude a development for instance for housing which would commonly be regarded as a development, and that it is commonplace that applications are accepted which do not in all respects conform with a UDP. Moreover, in this case the planning permission was stated to conform with the UDP.
76. Moreover, on the respondent's construction an application which includes open spaces or landscaped areas which are not ancillary to the uses within classes B1, B2 and B8 would not be permitted.
77. Having considered the arguments, which are explained in detail by Rix LJ, I prefer the judge's interpretation of the word "development". There is nothing in the documents or evidence that we have seen to suggest that the parties intended to use the technical meaning on which the appellants rely.
78. As to the meaning of "development" in a non-technical sense, as a matter of ordinary language it seems to me that "development" means either constructing a new building of some kind on land, or realising the potential value of land by using it for some other purpose. I appreciate that such a meaning leaves penumbral areas, but I recall that Professor HLA Hart once pointed out that the pithy park sign "no vehicles in the park" if read literally contains an ambiguity. It could be read as excluding even a child's pram. Language has to be read contextually, and while there are, no doubt, penumbral areas if "development" were to mean the development as a matter of ordinary language, these could be resolved, it seems to me, by reference to the context and are not likely to cause a problem.
79. Accordingly, while I accept the appellant's challenge to find a meaning other than the statutory meaning, I conclude that there is an alternative meaning to the statutory definition as a matter of ordinary language which is available in the instant case. However, the question is, "What is the meaning of the word "development" in this agreement?" and it is to that to which I return.
80. I have already noted that there is nothing to suggest the parties intended to use the word "development" in its technical sense. Moreover, there is nothing to show that they only intended a development which conformed with the UDP. As I see it, they could apply for permission to develop in the sense that I have given as its ordinary meaning which did not conform with the UDP. So one returns to the question: what then did the parties in this document mean by an application for development?
81. In my judgment, the best indicator that we have of what they meant is in Schedule 2 itself. This contemplates an application for development which includes open space and landscaped areas. However, in the context of this agreement there must, as it seems to me, be a limit contemplated by Schedule 2 on the amount of such areas. That limit is, in my judgment, that the application must still be one which can fairly be described as a matter of ordinary language as being an application for development. In my judgment, as a matter of ordinary language, it is not necessary for the buildings to cover the whole of the site in that application. The value of land can be realised by including in the development ancillary or incidental areas which are not used, for instance, for buildings, if those areas enable the whole value to be realised.
82. By contrast in the present case, the application left land for development later. Thus, if one had posed the question immediately after the inspector's decision: is there any significant area within the property which, taking the word "development" according to its non-technical meaning (which I have given above), can be developed later? The answer, in my judgment, to this question is undoubtedly "yes", and that is what the application which the appellants made directly contemplated. Such an application does not, in my judgment, comply with clause 3.2.
83. Accordingly, for these reasons and the further reasons which Rix LJ has given, I would dismiss this appeal.
84. LORD JUSTICE THORPE: I agree and can add nothing.
ORDER: Appeal dismissed with costs of the appeal and cross-appeal, save for the costs of the respondent's notice. (Order not part of approved judgment)