Chantry Estates (South East) Ltd v Anderson and another

Property – Registered title – Option to purchase – Parties entering into option to purchase registered property – Contract entitling claimant to extend option period – Claimant seeking specific performance of option agreement – Whether claimant entitled to summary judgment – Claim allowedThe defendants owned a freehold property with registered title. By a written agreement dated 26 September 2006, the claimant, which wanted to develop the property, was granted an option to purchase the property for £875,000. The payment for the option was £1, which would be deducted from the purchase price payable on completion. The option period was defined as being six months from the date of the agreement. However, there was provision to extend that period until three months after the date of the grant of written planning permission for the proposed development or the date of any appeal decision against a refusal of planning permission. If the claimant chose to exercise the option, the defendants were obliged to convey the property within 18 weeks. It therefore appeared that the option period was potentially indefinite, possibly lasting up to the end of the 21-year perpetuity period. Following the option agreement, the claimant made a number of unsuccessful planning applications with alternative proposals for development. However, its appeal against the refusal of planning permission was withdrawn when consent was granted, on 29 April 2008, for a 58-unit residential care home. The claimant subsequently brought an action for specific performance of the option agreement and damages for breach of contract in addition to, or in lieu of, specific performance or at common law. It applied for summary judgment pursuant to CPR 24. The claimant relied upon the express terms of the written agreement, submitting that the option period had been extended by virtue of its planning appeal. Thus, when it gave notice exercising the option, the defendants were obliged to convey the property. The defendants argued that the claimant was in breach of an implied obligation to pursue any appeal with proper speed or due expedition; alternatively, to give the contract business efficacy, it was necessary to imply a limitation so that the extension of the option period operated only in the event that the claimant used reasonable endeavours or appealed expeditiously. Held: The claim was allowed.The defendants had no reasonable prospect of succeeding at trial. In particular, there was no reasonable prospect that a court would imply an obligation or a limitation of the kind identified. A term would be implied only if it were necessary to render a contract workable. The present contract worked perfectly well as a contractual instrument having regard to its express terms.Although the contract was not entirely even-handed, since it favoured the buyer, the court could not say that it failed to work. If the court were to imply a term, it would create a different contract, one that he claimant had not entered into, and that was not the function of the court. This was a formal document with some particularity, which should discourage the court from writing in terms that the parties chose not to insert. If the parties had tried to draft express words to impose an obligation or limitation of some kind on the claimant, they could have used a range of words and phrases, some more onerous on the claimant and some imposing greater limitations. It was not the court’s function to rewrite the contract and to select from a menu of possibilities the one that it considered to have been more even-handed for the parties to have agreed.Richard Morgan (instructed by England Palmer) appeared for the claimant; the defendants appeared in person.Eileen O’Grady, barrister