Transfer agreements and overage payments

A local authority recently succeeded in a summary judgment application in relation to overage payments due under a transfer agreement. Lina Mattsson explains how.

In Loxleigh Investments Ltd v Dartford Borough Council [2019] EWHC 1274 (Ch), 24 May 2019, the council had in 2012 obtained outline planning permission for the erection of five detached houses on land it owned. The outline planning permission was granted subject to a number of reserved matters.

In March 2013 the council sold the land to a property developer, Loxleigh. The transfer included overage provisions. They provided that an “Additional Payment” would be payable “If a Planning Permission is granted at any time during the Overage Period” for the construction of a unit over 3,000sqf. “Planning Permission” was defined in the transfer as “any detailed Planning Permission which grants planning permission for the construction of Units”. The Overage Period was “5 (five) years starting on the date of this transfer”.

Loxleigh applied for, and was granted, approval of details in respect of the reserved matters. Overall, permission was granted for four houses with internal areas greater than 3,000 sqf.

Loxleigh completed the houses in 2018 and the council requested payment in respect of the four houses. Loxleigh denied that any overage was payable asserting that no “Planning Permission” was granted during the overage period, only the approval of the reserved matters and conditions.

The Decision

Master Clark granted the council’s summary judgment application. She held that the case turned upon the contraction of “detailed planning permission” as contained within the transfer. She noted that the phrase “detailed planning permission” is not defined in legislation, but it is generally used in textbook and case law to describe planning permission obtained following the approval of the reserved matters in an outline planning permission. The word “any” was apt to include more than one type of detailed planning permission: either the grant of full planning permission for another development, or an approval or consent pursuant to the outline permission. Master Clark distinguished the cases relied upon by Loxleigh to say that the approval of reserved matters or permission for non-material changes were not a “planning permission”. These cases concerned with the meaning of “planning permission” in the legislation, and were therefore of no assistance in construing the meaning of “detailed planning permission” in the transfer.

Master Clark rejected Loxleigh’s argument that an overage could by definition only relate to an unpredictable event, and could therefore not relate to the approval of reserved matters as these were not “unpredictable in nature”. She also rejected Loxleigh’s argument that the court should adopted a strict approach to the construction of overage provision. There was no support in the case law for such proposition.

In the circumstances Loxleigh had no real prospect of successfully defending the council’s claim and there was no other compelling reason why it should be disposed of at a trial.

Lina Mattsson is a barrister at Hardwicke. She can be contactedThis email address is being protected from spambots. You need JavaScript enabled to view it..

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