Kirkwood Homes loses £5m legal battle over farmland option

The residential developer took Robert Cameron, owner of Conveth Mains farm near Laurencekirk, to court after a long-running dispute over a land deal.

Back in 2008, the two sides agreed that Kirkwood Homes could buy parts of Cameron’s farmland over a 10-year period, once the company got the necessary planning permissions. The developer paid an upfront fee and annual payments to keep that right open.

In 2014, Kirkwood Homes applied to build 310 houses on part of the land. As part of getting that planning permission approved, the company made a promise in 2016 that it would only ever use its buying option for the whole development site - or for some other area both sides agreed to. Planning permission was granted later that year.

But in November 2018, just before its option period was due to run out, Kirkwood Homes tried to exercise its option over a much smaller, different area of land than the development site.

The two sides then corresponded for several months about valuation. Eventually, in March 2019, Cameron told the developer he considered its notice invalid and refused to go ahead. Kirkwood Homes claimed this amounted to Cameron backing out of the deal and sued for over £5m, arguing it had missed out on the land’s development potential.

The developer argued that its 2016 promise couldn’t change the original contract, since a one-sided promise can’t alter a two-way agreement. But the judge, Lord Harrower, disagreed with the conclusion the company drew from that argument. He ruled that while the promise didn’t change the contract itself, it did limit what the developer was allowed to do under it, meaning Kirkwood Homes had effectively given up its right to buy anything other than the full site, or an area both sides agreed on.

Because the company had given up that right, the judge said, it couldn’t be brought back simply by claiming the landowner had acted unfairly or missed a chance to object. Only a fresh agreement from Cameron could have restored it, and no such agreement was made.

As a result, the court threw out the developer’s case. The question of legal costs has yet to be decided.

A full case report can be read on our sister publication Scottish Legal News.