Conditions precedent and termination of an agreement to sell plots of land
Wilson Horne reports on a recent High Court case over whether a council was entitled to determine a contract to sell two plots of land for £1.9m.
The case of Mullberry Homes Ltd v The Council of the Borough of Barrow-in-Furness [2023] EWHC 38 (TCC)¸which was tried by HHJ Cawson KC, concerned a contract dated 22 May 2018 between the council and Mullberry, whereby the council agreed to sell and Mullberry agreed to buy two plots of land on Flass Lane, Barrow-in-Furness for the sum of £1.9m, conditional on the obtaining of a satisfactory planning permission.
The council contended that it was entitled to determine the contract under its express terms by notice, as the long stop date had passed and the condition precedent had not been satisfied by Mullberry.
Mullberry defended on the basis that due to various breaches of contract on the part of the council, it was not entitled to terminate the contract.
The Court rejected Mulberry’s implied terms and found that the council was only subject to an implied term that it would do nothing to prevent the fulfilment of the condition precedent under the contract.
The Court held that the council’s decisions on validation were not Wednesbury unreasonable particularly having regard to the terms of the Development and Design Briefs that had been issued by the council’s planning department prior to sale of the sites.
Further, the Court held that notwithstanding the differing views of the planning experts, the council’s decisions were rational and within a range of reasonable responses notwithstanding the time constraints imposed by the contract on Mulberry for the satisfaction of the condition precedent and the fact that the protected species report could only be completed at certain times of the year.
Consequently, the council was not in breach of contract and was entitled to terminate the same.
Wilson Horne is a barrister at Kings Chambers. He was instructed by Brown Barron solicitors on behalf of the Council.
