Developer succeeds in case against Scottish Borders Council over rescission of missives

Scottish Borders Council has lost a legal battle over the sale of land for a new hotel, restaurant and housing development in Galashiels.

In March 2017, the local authority entered into missives for the sale of the former Burgh Yard to Ramoyle Developments and subsequently granted planning permission for the redevelopment of the site.

Developer succeeds in case against Scottish Borders Council over rescission of missives

The Burgh Yard site viewed from Albert Place

It later decided to rescind the contract on the basis that the appropriate fee had not been paid when the planning application was submitted.

A judge in the Court of Session held that the submission of the planning application via an online portal constituted “submission” of the application in terms of a clause in the missives even though the fee had not be received, therefore the planning authority was not entitled to rescind.

Planning application ‘submitted’

Lord Ericht heard that the pursuer entered into missives for the purchase from the defender as seller of land at Burgh Yard, Galashiels at a price of just over £1 million in order to regenerate the site with a mixed development of retail, hotel and houses. 

The missives were conditional on the various conditions, in particular planning permission, roads construction consent and all other necessary consents of whatever nature for a mixed use development, as set out in clause 2.2.2.

Further provision was made in respect of planning permission in condition 2.5.2, in that the purchasers were required to lodge the application for planning consent with the local planning authority as soon as reasonably practicable following the date of purification or waiver of the suspensive condition contained within clause 2.2.4 and no later than six months after the said date of purification or waiver, failing which either party would be entitled to rescind the missives.

The six-month period referred to in condition 2.5.2 expired at 23.59 on 22 November 2017.

On 20 November 2017 at 16.48, the pursuer submitted an online application for planning permission in principle through the web portal, which provides for payment of the application fee after the application is submitted. 

The pursuer then sent a cheque on 23 November 2017 for the application fee of £2,807 to the defender. 

The planning authority duly determined the application as of 30 January 2018, deciding to grant a conditional approval, subject to a section 75 agreement which addressed financial contributions towards the Borders railway line, local schools, affordable housing (or on site provision) and play space.

Rescission of missives

However, immediately upon the expiry of the six-month period, and prior to receipt of the cheque, the defender purported to rescind the missives in a formal letter from its solicitor, which stated that “Ramoyle Developments Limited (‘the purchasers’) have failed to submit a planning application in terms of condition 2.5.2, and therefore in terms of that condition, I hereby rescind the Missives entered into between the council and the purchasers…and hereby hold the transaction to be at an end.”

The issue before the court was whether the submission of the planning application on the on-line portal without a cheque constituted “submitting” the application in terms of clause 2.5.2.

Senior counsel for the defenders argued that properly construed, condition 2.5.2 of the missives required the pursuer to have provided the planning authority with the “complete application” for planning consent.

The tendering of payment of the requisite fee for a planning application was a “necessary part” of such an application; no application for planning permission was submitted or lodged until all material required in order to allow the planning authority to process the application had been received. 

Accordingly, the pursuer having failed to make payment of the required planning application fee by 22 November 2017, it had not lodged or submitted a planning application within the time scale specified in condition 2.5.2 and the defender was entitled to resile from the missives. 

Counsel also submitted that the provisions of the missives fell to be construed in accordance with the normal approach to be taken to the construction of commercial contracts, and that on an ordinary structure of the language used, condition 2.5.2 required the pursuer to provide the complete planning application, which could be processed and determined by the planning authority. 

This was consistent with the language of the missives and also “commercial common sense”. 

It was further argued that the missives ought to be construed with the planning legislation in mind, and that the Town and Country Planning (Development and Management Procedure) (Scotland) Regulations 2013 require that an application must be accompanied with the requisite fee, and that any application is to be taken as having been made on the date on which the last of the accompanying items is received by the planning authority. 

‘Commercial common sense’

However, the judge ruled in favour of the pursuers.

In a written opinion, Lord Ericht said: “The planning authority uses a system for submission of planning applications on – line through a web portal. The portal specifically uses the words ‘submitting’ and ‘submitted’. 

“The portal advises the applicant to check the amount of the fee ‘before submitting an application’. It states that ‘you won’t be able to submit the application’ until a payment method is selected. 

“The system expressly provides that an application can be submitted without the fee having been paid: the portal states that ‘The method of payment you select here will be applied once you have submitted the application’. The system advised the pursuer that the pursuer’s application had been ‘successfully submitted’. 

“In my opinion the successful submission of an application under the system used by the planning authority for on-line submission satisfies the requirement to ‘submit’ an application under condition 2.5.2. This is in accordance with the natural and ordinary meaning of the word ‘submit’. 

“In addition in my opinion it makes commercial common sense in this digital age for the pursuer to use the planning authority’s on-line submission system and comply with the provisions of that system. That system provided that an application is successfully submitted prior to payment of the fee by cheque.” 

He added: “Accordingly, I find that the successful submission of the planning application through the online planning portal on 20 November 2017 constituted submission in terms of condition 2.5.2, notwithstanding that the fee had not been received at that time. The consequence of this is that the defenders were not entitled to rescind.”

Following the decision, a Scottish Borders Council spokesperson said: “We are considering the verdict and our options.”

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