Reasonable endeavours come to the fore in Minerva v Greenland

An understanding was reached in the case of Minerva v Greenland of when a party has done enough to meet its contractual “reasonable endeavours” obligations to secure a specific result.

The property case, heard in the High Court, revolved around the sale by Minerva to Greenland of a London site for development. Minerva was granted planning permission from Wandsworth Borough Council for the large and complex building regeneration scheme for an area in the borough known as the Ram Brewery. The Ram Brewery ceased operating 2006 and the site it occupied, together with adjacent land, was earmarked for development. The site was acquired by Minerva in 2007 or 2008.

The scheme for which planning permission was granted included the demolition of many existing buildings and the construction of several new buildings including a tower. It would have retail units at the ground floor level and then floors of apartments, including some duplex apartments on the top two floors. The proposal sought consent for retail and residential uses together with a small-scale brewery and a museum. The plans also included the creation of public areas and a river walkway by the River Wandle that cuts through the site.

As a condition for obtaining the planning permission of December 2013, Minerva had entered into an agreement with Wandsworth Borough Council pursuant to section 106 of the Town and Country Planning Act 1990. That section provides that any person interested in land in the area of the local authority may enter into an enforceable planning obligation to do something on the land or to pay the authority a sum of money. Under this agreement Minerva took on various obligations, including an obligation to build a certain number of affordable houses on the site (not as part of the Tower) and to pay up to an additional £1.2 million as an affordable housing contribution if the sales of the accommodation they planned to build sold for more than was expected.

Shortly before it had obtained this planning permission, Minerva had sold the whole site to Greenland Holding Group Overseas Investment Company Ltd for £135,735,800. Minerva hoped to be able to improve on the planning permission by adding extra storeys to the Tower.

In the contract for the sale of the land, it was stated that if Minerva achieved enhanced planning permission within a specific but short timeframe, Greenland would pay an “overage” fee. Such permission was received but then lapsed while terms were disputed by Greenland with the local authority. Minerva said that the inability to agree with the local authority meant that Greenland had breached the contract and prevented Minerva from receiving the overage fee.

Greenland argued that Minerva was in breach of its obligation under the sale agreement to use reasonable endeavours to limit the affordable housing contribution required as part of the enhanced planning permission.

After listening to the evidence produced by witnesses, the court found that Minerva had done enough and had therefore acted reasonably given the tight timeframe in which it had to act. Minerva had complied with the reasonable endeavours obligation and its claim for damages succeeded.