Summary

It was not necessary to imply terms into an option-to-buy contract entered into by a property development company and the former owners of the freehold property to which the option related as the proposed terms were not necessary to make the agreement work.

Facts

The appellant former freehold owners (N) appealed against a decision ((2008) EWHC 2457 (Ch)) granting the respondent property development company (C) summary judgment for specific performance of a contract for the sale of a residential property. C and N had entered into an agreement giving C an option to buy N's freehold property. The option agreement was favourable to C. Payment for the option was £1 and did not oblige C to buy the property but gave it the right to buy, whereas N were subject to a restriction on their freedom to sell during the option period. In addition there was scope in the agreement for the option period to be extended with essentially no real cut-off date. The option agreement did not impose much by way of obligation on C other than limited duties in relation to the planning process and the submission of applications. There had been delay, partly at the instigation of C, and particularly in relation to a decision on C's appeal against the refusal of its original application. Having received permission for a separate application, C withdrew its appeal and exercised its option to buy the property some 20 months after the agreement was entered into. N contended that by the time that C purportedly exercised the option, the time for doing so had expired and that therefore there was no binding contract for a sale, and sought to imply terms into the agreement limiting C's actions. The judge held that such terms were not necessary in order for the contract to work. N submitted that the basic machinery of the option agreement was to provide a six-month option period that could be extended as a result of events beyond C's control.

Held

There was nothing in the option agreement that obliged C to act with expedition except a clause which required C as soon as reasonably practicable to resubmit an earlier application for planning permission. The option agreement contemplated other planning applications being made and with the obligation on the seller to assist, C had a free hand to make multiple applications. It was only natural that C as a buyer would try to maximise profits and planning applications would be made with that object in mind. The crucial question was whether the option agreement, in its provision as to the option period, must have meant what was contended for by the proposed implied terms. On any reasonable view of the agreement the suggested implied terms were not necessary, and the agreement worked perfectly well without them, Attorney General of Belize v Belize Telecom Ltd (2009) UKPC 10, (2009) 1 WLR 1988 considered. The position might have been different if the option period could have been extended indefinitely by applying successively for an appeal in abeyance, which the planning inspectorate would have to do, but that was not the law and the planning inspectorate did not keep appeals indefinitely. The option agreement allowed C to make and pursue planning applications to see if it was worth exercising the option. There was no basis on which to conclude that the agreement must have meant what was in the proposed implied terms. The deal entered into might have been a good or a bad deal, but it was the deal that the parties had entered into.

Appeal dismissed