NIRAH Holdings v Hanson Building Products & Another


The Message

A party is bound by the terms of the agreement and cannot subsequently seek to rely on matters it has not provided for.

The Case

The Court had to decide whether the Defendant was obliged to enter into a S.106 Agreement to enable the Claimant to proceed with the proposed development of a major visitor attraction and science park in Bedfordshire In December 2005, the National Institute for Research into Aquatic Habits (“NIRAH”) entered into an Option Agreement with the Defendants in relation to the purchase for £1 of 180 acres of a clay pit known as Quest Pit in Marston Vale, Bedfordshire. The intention of NIRAH is to build a 15,000 square meters freshwater aquarium with ancillary retail and hotel and exhibition facilities. The cost of the project is estimated to be in excess of £375 million.

The Defendants own adjoining land which they want to develop and the proposed sale of Quest Pit for only £1 was in their interests as the clay pit was no longer being used and it would save them from having to spend substantial sums on remediation works.

The Option Agreement provided for NIRAH to apply for planning permission but to involve the Defendants in this respect and seek their consent and the Defendants are obliged to act reasonably and enter into any ancillary agreements required. Satisfactory planning permission has to be obtained before Nirah can exercise their option to purchase

Planning permission was applied for in 2006 and the deadline for obtaining it is 29 September 2009 if the option is to be exercised by NIRAH. In 2007, the Local Authority resolved to grant planning permission subject to an Agreement being entered into under S.106 of the Town & Country Planning Act 1990 but the Defendants refused to approve the S.106 Agreement and had thereby prevented the planning permission being granted.

The Defendants relied on a number of grounds to justify their position. Their concern related to the proposed route of the bus shuttle service. They claimed they had not been properly consulted or provided with sufficient information and that the terms of the S.106 Agreement were too uncertain and would leave it exposed if variations were made. They argued the proposals would prevent them from maximising the value of their land. They claimed to have terminated the Agreement due to NIRAH’s breaches.

The Court noted that the Option Agreement was carefully drafted by lawyers and sought to strike a balance between the interests of the parties. It expressly stated that the aim of NIRAH was to maximise the value of its project and the aim of the Defendants was to continue its business activities on the adjoining land and to enhance the value and promote and undertake the redevelopment of its land.

The Court considered the Defendants had no right to object on the basis the S.106 Agreement could affect it maximising the development value of its land. The Option Agreement was only concerned with the Defendants still being able to advance, rather than maximise, their interests. It struck a balance between the parties interests and there was a clear contrast between NIRAH’s aim to maximise the value of its project and the Defendant’s aim to simply enhance the value of its as yet unspecified development.

The Court also dismissed the Defendants’ other objections. It considered it had been kept properly informed and provided with sufficient information to decide whether to approve the S.106 Agreement and that NIRAH had no liability to pay their costs for assessing the traffic position. Whilst the Court noted there were difficulties and uncertainties in providing the shuttle bus route over neighbouring land, it thought there was a reasonable prospect and that this was all that was required under the Agreement. It rejected the Defendants’ case that the route had to be certain and noted that the Agreement did not prevent variations being made.

Accordingly, the Court ordered the Defendants to approve the S.106 Agreement and dismissed its case that it was entitled to terminate the Option Agreement due to breaches by NIRAH. The Court found not only that the grounds for termination were not made out but they were so unparticularised that the notice of termination was of no effect as it was so vague that NIRAH would not have known what to do to remedy the position.