Point Me To The Clause That Says I Can't Sell My Land

Could agreement stop sale under promoter's nose?

Berkeley Community Villages Limited, a subsidiary of Berkeley Group plc, the major development company, signed an agreement with the Pullens, a family of dairy farmers in Kent. Berkeley was to use its property development expertise to promote around 520 acres of the Pullens' land for development; in return Berkeley was to receive a fee (based on 10% of the net sale price) if it was successful.

Berkeley made considerable efforts to promote the land and maximise its potential for development and it was generally recognised that the prospects of the land gaining planning permission for development were greatly enhanced by Berkeley's efforts.

However, before Berkeley had completed its obligations under the agreement and its fee became payable, the Pullens received an offer of over 35 million for the land from a third party; they decided that they wished to accept that offer.

The agreement between Berkeley and the Pullens did not contain a clause specifically prohibiting the Pullens from selling the land but, since a sale of the land to a third party before planning permission was obtained would deprive Berkeley of its fee, Berkeley raised proceedings to prevent the sale.

A number of arguments were put forward on each side but the principal conclusions of the court were:

No account should be taken of the wording of draft agreements. The Pullens had argued that, because wording in earlier drafting explicitly prohibiting sale of the ground did not appear in the signed agreement, that implied that the Pullens could sell the ground: the court rejected that.

While there was no explicit provision prohibiting sale of the ground, the Pullens would be in breach of a number of other terms of the agreement if they sold the ground. Those terms included obligations on the Pullens: (1) to co-operate with Berkeley and use all reasonable endeavours to promote the property for development through the planning process (2) to render all reasonable assistance necessary to Berkeley in connection with Berkeley's efforts to obtain a consent (3) not to do anything which might directly prejudice Berkeley achieving the consent (4) to enter into a planning agreement if requested by Berkeley and (5) to "act with the utmost good faith" towards Berkeley.

A prohibition on the Pullens disposing of the land while the agreement with Berkeley remained in place could be implied into the agreement.

Bruce Anderson, Head of our...