City & General (Investment) Ltd v Razama (2009)
A property seller had obtained the consent required under a restrictive covenant restricting the development of land without the approval of an adjoining landowner, notwithstanding that the consent obtained was qualified. The qualification was narrower than the restrictions imposed by the covenant, showing that the consent had been given in principle.
The appellant property seller (C) appealed against a decision to refuse its application for a declaration that it had obtained a consent from the owner (N) of an adjacent railway line as required by the purchase agreement it had made with the respondent buyer (R). C had obtained detailed planning permission for the development of the property, and agreed to sell the property to R with the benefit of that permission. The property was subject to a restrictive covenant against developing the property without the consent of N or without complying with any reasonable conditions as to foundations or other matters imposed by N. The purchase agreement imposed an obligation on C to obtain the necessary consent from N. R agreed to approve that consent, such approval not to be unreasonably withheld. C obtained N's consent to the development as outlined in the planning permission, subject to N's approval of further details of the development in relation to foundations for the protection of the adjacent railways and compliance with any reasonable requirements attached to that approval. The purchase of the property completed, but R withheld its approval and part of the purchase money on the ground that the consent had not been validly obtained. The judge refused C's application on the basis that the definition of "N's consent" in the purchase agreement effectively required an unqualified approval and that had not been provided.
The definition of the consent in the purchase agreement had to be construed against the commercial background in which it arose. The planning permission had not made any provision as to the design of the foundations of the development. It would be for R as the developer to design the foundations. Further, N had clearly approved the whole development encompassing the fact of its close proximity to the railway line. There could in reality be no question of N repudiating the development in principle because of some dissatisfaction with the design of the proposed foundations. It was also important to appreciate the narrowness of the qualification placed on N's approval: it was a narrower restriction than that imposed by the covenant. That emphasised that the development was agreed to in principle. The nature of the provisions set out in the approval was consonant with the definition in the purchase agreement. In the circumstances there was no reasonable basis on which R might withhold approval of the consent.
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02 Dec 2009
Court of Appeal
Laws LJ, Jacob LJ, Lewison J
LTL 7/4/2010;  EWCA Civ 1568
John McGhee QC