CONDITIONS PRECEDENT – an important development

On 28 January of this year, I reported on the High Court judgment in Greyfort Properties Ltd v. SSCLG [2010] EWHC 3455 (Admin). [Lawful implementation of planning permission – another case]. On 28 July, the Court of Appeal upheld that decision ([2011] EWCA Civ 908).

The appellant ("Greyfort") obtained planning permission in 1974 for the erection of 19 flats in Torquay . Greyfort contended that access work carried out in January 1978 amounted to commencement of the development, with the consequence that the planning permission remains extant. An inspector held that the work was carried out in breach of a condition of the planning permission and could not therefore amount to commencement of the development authorised by the permission. That decision turned on the application of the Whitley principle (see Whitley & Sons v Secretary of State for Wales (1992) 64 P&CR 296), which was extensively reviewed by Sullivan J (as he then was) in giving judgment in R (Hart Aggregates Ltd) v Hartlepool Borough Council [2005] EWHC 840 (Admin).

As noted in my commentary on the first instance decision, this case turned on the wording of a condition which read - “Before any work is commenced on the site the ground floor levels of the building hereby permitted shall be agreed with the Local Planning Authority in writing”. At first instance, Mitting J upheld the Inspector’s view that this was a true condition precedent, saying [27] “There is in any event, in my judgment, no material difference between a condition which expressly prohibits development before a particular matter is approved and one which requires a particular matter to be approved before development commences. The effect is the same.”

As I predicted, the appellant obtained permission to take the case to the Court of Appeal, and it was Sullivan LJ who granted leave, although he agreed with Mitting J’s observation that the relevant law is "still in a state of flux". Sullivan LJ also observed that the question whether Hart Aggregates was correctly decided and/or was correctly applied by the judge was of some wider importance. Before the Court of Appeal, however, it was common ground that Hart Aggregates had been correctly decided and the argument proceeded within the framework established by Sullivan J's observations in that case. The real disagreement was about their application to the particular circumstances of this case.

With regard to condition 4 of the 1974 planning permission, the Planning Inspector had said that he was satisfied that "any work that took place on the site in advance of this condition having been discharged would not comprise a lawful implementation of the 1974 permission"; it was a condition that needed to be discharged before any work was commenced on the site. He went on to find as a fact that condition 4 had not been discharged prior to the date of the access works relied on as constituting commencement of the development. It was, in the Inspector’s view, a condition precedent that did go to the heart of the 1974 permission. He considered that the ground floor levels were fundamental to the authorised development rather than merely being a minor component, such as a detail of the external finish of the flats like facing materials. On the basis of Whitley he decided that the specified operations contravened condition 4 and so could not commence the development authorised by the 1974 permission.

As was to be expected, leading counsel for the appellant (Martin Kingston QC) placed particular reliance on Sullivan J's statement in Hart Aggregates at [58] that if a local planning authority wishes to impose any obligation on an applicant by way of a requirement or prohibition it should do so in express terms, and that the need to spell out the requirement or prohibition in clear terms applies with particular force where the condition is said to prevent not merely some detail of the development but the commencement of any development pursuant to the planning permission. Since Hart Aggregates, it has certainly been my own understanding that expressly prohibitive wording of the condition is one of the two essential characteristics of a true ‘condition precedent’.

The inspector held that condition 4 was a prohibition that had to be satisfied before any work could commence on any part of the site. In the Court of Appeal, Richards LJ held that there could be no doubt that the access works fell within the prohibition. The condition referred to commencement of any work on the site. In substance, therefore, the prohibition in condition 4 on the commencement of "any work … on the site" was at the very least equivalent to a prohibition on the commencement of "development".

Mitting J had held at first instance that condition 4 was in substance exactly that which Sullivan J gave in Hart Aggregates as an example of an express prohibition. Secondly, he made the observation which I have previously quoted that [27] "There is in any event, in my judgment, no material difference between a condition which expressly prohibits development before a particular matter is approved and one which requires a particular matter to be approved before development commences. The effect is the same." Richards LJ agreed with the judge's conclusion and his reasons for it. The passage in Hart Aggregates to which the judge referred was at [59], quoted in my original piece in January, where Sullivan J gave two examples of express language that could have been used by the local planning authority if it had wished to prohibit extraction before a restoration scheme for the worked out areas was agreed: it could have imposed a condition in the form "No extraction shall take place …"; or it could have imposed the standard form of condition used in the grant of outline planning permission, namely "before any development takes place". Sullivan J plainly, and in Richards LJ’s view rightly, regarded the two forms of words as equivalent. It could not seriously be suggested that the latter form of words is inapt to impose an express prohibition on the commencement of development before submission and approval of reserved matters.

The appellant’s second contention was that Condition 4 was not one which ‘went to the heart of the permission’ (the second essential characteristic of a ‘true’; condition precedent). Unsurprisingly, the Court rejected this submission.

The importance of this latest decision on ‘conditions precedent’ is that it makes it clear that whilst (in accordance with Sullivan J’s observations in Hart Aggregates) a true condition precedent must both prohibit development without compliance with it and must also go to the heart of the permission (and not merely be concerned with some minor detail), it is not necessary, as might have appeared from Sullivan J’s judgment in Hart Aggregates, that the wording itself should be expressly prohibitive One has to look at the substance of the condition. If it is essentially prohibitive in its effect, even though it is only expressed as requiring something to be done “prior to the commencement of development” then it is still capable of being a true condition precedent (subject, of course, to its also going to the heart of the permission).

This does leave a slight area of doubt, because not every condition which requires something to be done “prior to the commencement of development” will necessarily be construed as prohibitive in substance or in its effect. It may depend on the precise language used in the condition. This poses an additional problem in determining the legal effect of the condition, quite apart from the need to show that the condition also goes to the heart of the permission. I foresee scope for plentiful further litigation on this issue!

© MARTIN H GOODALL