England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MRS JUSTICE PROUDMAN DBE
[2015] EWHC 2002 (Ch)

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/03/2016

Lord Justice Floyd:

1. On 28 March 2011 the defendant and appellant Bristol Rovers (1883) Limited ("Bristol"), the owner of the Bristol Rovers football club, entered into a conditional contract ("the Agreement") for the sale of its current stadium, the Memorial Stadium, to the claimant and respondent Sainsbury's Supermarkets Limited ("Sainsbury's"). For Bristol this represented an opportunity to raise funds for the purchase of a modern improved stadium which it would build on the campus of the University of the West of England, and which would replace its outdated Memorial Stadium. For Sainsbury's it was an opportunity to expand its retail presence in Bristol. The Agreement contemplated the demolition of the Memorial Stadium and the construction of a retail-led mixed use development including residential units and a Sainsbury's superstore. From mid-2013, however, Sainsbury's realised that the economics of the deal had changed, and wished to terminate the Agreement if it lawfully could. Sainsbury's claims that it has lawfully terminated the Agreement for non-satisfaction of a condition precedent. Bristol's case is that the Agreement is still on foot or has been terminated in breach of contract.
2. The trial of the action took place before Proudman J in the Chancery Division on six hearing days between 15 and 22 May 2015. In her decision dated 13 July 2015 she found that Sainsbury's had validly terminated the Agreement. Bristol appeals from that decision, with permission granted by the judge herself.
3. On this appeal Mr David Matthias QC and Mr George Mackenzie represented Bristol; Mr Mark Wonnacott QC and Mr Philip Sissons represented Sainsbury's.

The structure of the agreement

Basic agreement

4. The agreement on the part of Bristol to sell, and Sainsbury's to buy, was subject to a number of conditions, all of which needed to be satisfied before the Agreement became unconditional. The Agreement thus provided for a date on which the Agreement would become unconditional, the Unconditional Date, defined as the date on which the last of the Conditions is satisfied. Clause 4.1 then said:

"If the Unconditional Date shall occur on or prior to the Termination Date then [Bristol] shall sell and [Sainsbury's] shall buy the [Site]."

5. The satisfaction of the Conditions was not however left to fate. Clause 2.2 of the Agreement introduced Schedules 1 to 4 which contain detailed obligations on the respective parties in relation to the Conditions. In this case we are particularly concerned with Schedule 1, which I explain below. Clause 2.2 did not simply require the parties to fulfil the Conditions. It required that:

"[Bristol Rovers] and [Sainsbury's] will comply with the terms of [and] their respective obligations in Schedules 1 to 4 (inclusive) with the intention of satisfying all of the Conditions as soon as reasonably practicable." (emphasis added)

6. Thus, the object for both parties was to strive to fulfil the Conditions by the Termination Date, so that the agreement to sell and buy could go ahead. It is not, unfortunately, quite as simple as that.

The Store and Stadium Planning Conditions

7. Clause 1.2 defines the relevant Conditions which must be satisfied. One of these is the Store Planning Condition. It is:

"the Unchallenged Date occurring in respect of an Acceptable Store Planning Permission."

8. An Acceptable Store Planning Permission is a Store Planning Permission which contains no Store Onerous Conditions. A list of Store Onerous Conditions is set out in clause 1.2. One of these is a condition:

"restricting the delivery and despatch of goods to and from the Store [to] between the hours of 5.00 am to midnight on any day…."

9. It is now common ground (although previously the subject of dispute) that the delivery restriction would be understood as if the word "to" after "Store" were deleted. The clause was not limited to a condition imposed on a Store Planning Permission which confined deliveries to the times mentioned, but covered any restriction on deliveries between those times. Sainsbury's wanted to be able to deliver and despatch at any time from very early in the morning to very late at night. This had obvious consequences for surrounding residents.
10. The Unchallenged Date is defined by clause 1.2 as:

"the date of expiry of the Challenge Period in respect of an Acceptable Planning Permission unless prior to such date proceedings have been instituted in which case it will be the date on which Proceedings are exhausted and an Acceptable Planning Permission is granted and/or upheld."

11. "Proceedings" means judicial review ("JR"), which is further defined as meaning:

"(a) an application under Rule 53 [sic] of the Civil Procedure Rules

(i) made by any third party arising from the grant of an Acceptable Planning Permission by the Local Planning Authority; or

(ii) arising from a Planning Refusal by the Local Planning Authority in relation to any Planning Application…"

12. The relevant Challenge Period is the period of 3 months and 2 weeks after the grant of an Acceptable Planning Permission by the Local Planning Authority. The meaning of Planning Refusal was deemed to include a grant of Planning Permission which included a Store Onerous Condition, in addition to an outright refusal.
13. Thus the Agreement envisaged that the Store Planning Condition would be satisfied on the expiry of 3 months and 2 weeks after the grant of an Acceptable Store Planning Permission unless before that date JR proceedings were instituted. The period of 3 months and 2 weeks is designed to be slightly longer than the period allowed under the rules to commence judicial review. The idea of the Store Planning Condition is that there should have been a successful planning application for the superstore, which has no unacceptable conditions for Sainsbury's, and that it should have reached the stage where there should be no further challenge to it by way of JR.
14. There was a corresponding Condition relating to an application by Bristol for planning permission for the new stadium, called the Stadium Planning Condition, which also had to be satisfied before the Termination Date. As I have already mentioned, clause 2.2 required the parties to comply with their scheduled obligations with a view to satisfying these Conditions as soon as reasonably practicable.

Sainsbury's planning obligations

15. Schedule 1 paragraph 2 of the Agreement contains Sainsbury's planning obligations. As much attention was focused on these provisions by both parties, I need to set them out in some detail:

i) By paragraph 2.1 Sainsbury's was required to submit a Store Planning Application within 9 months of the later of the date of the Agreement or the date of exchange by Sainsbury's of a Development Agreement. If Sainsbury's did not submit the Application by the defined date, paragraph 2.2 gave Bristol a specific right to terminate.

ii) By paragraph 2.3 Sainsbury's was required to submit a draft of a proposed Store Planning Application to Bristol for its approval.

iii) By paragraph 2.4 the Store Planning Application was to be in the name of or on behalf of Sainsbury's.

iv) By paragraph 2.5 Sainsbury's was to supply a copy of the Planning Application to Bristol within 10 working days after it was submitted and was to keep Bristol informed as to the progress of the application.

v) By paragraph 2.6 it was provided that:

"[Sainsbury's] may at its own expense amend or procure the amendment of any Store Planning Application or withdraw a Store Planning Application and submit another Store Planning Application in each case where it is reasonable to do so in order to obtain an Acceptable Store Planning Permission as soon as reasonably possible or where to do so will enhance the prospects of obtaining an Acceptable Store Planning Permission provided that material amendments are approved in the same manner as provided for in paragraph 2.3."

vi) By paragraph 2.7 Sainsbury's was to forward to Bristol details of any conditions likely to be attached to any Store Planning Permission as soon they became available.

vii) Paragraph 2.8 required Sainsbury's to:

"use all reasonable endeavours to procure the grant of an Acceptable Store Planning Permission as soon reasonably possible…"

viii) Paragraph 2.9 required Sainsbury's to notify Bristol in writing within 20 working days of the date that they received a copy of a Store Planning Permission whether it considered it to be an Acceptable Store Planning Permission or not and (if not) to supply a written statement as to why it was not "Acceptable". Paragraph 2.10 then provided a mechanism by which a Planning Permission was deemed to be an Acceptable one if Sainsbury's did not explain why it was not.

ix) Paragraph 2.11 provided as follows:

"[Sainsbury's] may in its absolute discretion pursue an Appeal against a Planning Refusal but shall be obliged to do so if:

(a) Planning Counsel confirms that such an Appeal has a 60% chance or greater of achieving an Acceptable Store Planning Permission on or before the Long Stop Date; and

(b) an Acceptable Stadium Planning Permission has been granted;

in which case [Sainsbury's] will give notice of Appeal within the time limits imposed or specified in the Planning Act and in such case:

(c) [Sainsbury's] will prosecute the Appeal with due diligence and will conduct its part in the Appeal proceedings in a good and efficient manner

(d) in prosecuting any Appeal [Sainsbury's] will keep [Bristol] fully informed of all relevant information in respect of the Appeal

(e) if [Sainsbury's] considers it appropriate [Sainsbury's] will submit a duplicate or alternative Store Planning Application not the subject of Appeal proceedings and the provisions of the schedule should apply to that duplicate or alternative store planning application."

16. "Appeal" is defined in the Agreement as all or any one of:

"(a) a Call-In;

(b) an appeal to the Secretary of State in accordance with Section 78 of the Planning Act;

(c) an application to the Secretary of State in accordance with section 73 of the Planning Act in respect of the grant of a Planning Permission which is not an Acceptable Planning Permission."

17. The Planning Act means the Town and Country Planning Act 1990. "Call-In" means the direction by the Secretary of State that a Planning Application be referred to him for determination under Section 77 of the Planning Act.
18. These provisions make it plain that Sainsbury's has an obligation to pursue the Store Planning Application with all reasonable endeavours to procure the grant of an Acceptable Store Planning Permission as soon reasonably possible. There is however a limit on the zeal with which Sainsbury's must pursue an Acceptable Store Planning Permission where success would involve an Appeal. Sainsbury's can only be obliged to pursue an Appeal if Planning Counsel advises that there is a 60% chance or better of success ("the 60% test"). An important issue between the parties is what is meant by an Appeal in this context. Sainsbury's contends that it includes a section 73 application. Bristol contends for the opposite.
19. Finally, paragraph 3.2 (a) of Schedule 1 prohibited Bristol from making any planning application in respect of the property without the prior written consent of Sainsbury's.

Termination

20. Clause 3.1 sets out the mechanism by which the Agreement may be terminated. Either party may serve a Termination Notice on the happening of certain specified events. One such event is where the Conditions are not satisfied in accordance with the Agreement before the Cut Off Date. The definition of the Cut Off Date is not straightforward, and its exposition is not assisted by some rather inelegant drafting. The basic provision is that the Cut Off Date is the anniversary of the last to be submitted of the Store Planning Application and the Stadium Planning Application. However this is not so if on that anniversary:

"(a) a decision is awaited in respect of a Planning Application submitted to the Local Planning Authority prior to such date; or

(b) an enquiry and/or decision are awaited in respect of an Appeal or if such an enquiry has been held (in whole or in part) a decision is awaited; or

(c) the Challenge Period shall not have expired after the date of grant of a Planning Permission or the date of a Planning Refusal; or

(d) Proceedings have been instituted; or

(e) the Local Planning Authority has passed a resolution to grant or the Secretary of State has passed a resolution to grant all the Secretary of State is issued a statement saying he is minded to grant a Planning Permission and a Planning Permission as not been granted then in which case such date shall be extended until the date 20 Working Days after the later of (as appropriate):

(i) the date on which such Proceedings [or Appeal] are exhausted and an Acceptable Planning Permission is not granted or upheld; and

(ii) the Unchallenged Date occurring in respect of the relevant Planning Permission; and

(iii) the expiry of the Challenge Period following the date of issue of a Planning Refusal unless within such period an Appeal shall have been lodged to the Secretary of State or Proceedings shall have been instituted in which case it shall be the date referred to in paragraph (i) … of this definition

Provided That in any event the date is no later than the Long Stop Date."

21. The judge held that the words "or Appeal" needed to be read in to sub-paragraph (i) of the definition to make sense of it. Neither side suggests that this was incorrect. More difficult is the fact that the Challenge Period is a period which commences after the grant of an Acceptable Planning Permission, yet sub-paragraph (iii) of the definition of Cut Off Date talks of the expiry of the Challenge Period following a Planning Refusal. No doubt the draftsman had in mind that a Planning Refusal is deemed to include a grant of permission which is subject to a Store Onerous Condition, and yet might still be the subject of a judicial review challenge by others. However Planning Refusal also includes an outright refusal. The judge held that the Challenge Period in the case of a Planning Refusal was the same as defined in relation to a grant of an Acceptable Planning Permission. Again, this conclusion is not the subject of challenge.
22. We are not concerned on this appeal with the calculation of the Cut Off Date. It is worth noting two points at this stage. Firstly, an important issue between the parties is whether Sainsbury's obligation to seek planning permission ceased on the Cut Off Date, or whether the arrival of the Cut Off Date simply gives a party the right to serve a Termination Notice, with no automatic consequences for other obligations under the Agreement. Secondly, one of the events which may delay the arrival of the Cut Off Date is the existence of an Appeal. This second point explains why Bristol have at times found it necessary to contend (and Sainsbury's to deny) that a section 73 application is an Appeal, at least for this purpose. These positions are the opposite of that for which they contend in relation to the operation of paragraph 2.11 of Schedule 1.
23. The Long Stop Date was defined as 31 May 2015, but by a subsequent agreement was brought forward to 14 December 2014.
24. The effect of service of a valid Termination Notice is then explained in the remainder of clause 3.1 in the following way:

"this Agreement shall automatically cease and determine on the date 20 Working Days after the date of service of the Termination Notice (unless prior to such date all the Conditions shall be satisfied in accordance with the terms of this Agreement) provided that any such termination shall be without prejudice to the rights of any one party as against the other for any antecedent breach of the terms of this Agreement."

25. Ignoring the complexities of the definition of the Cut Off Date, clause 3.1 gives the party the right to serve a Termination Notice if any Condition is not satisfied on that date. It is common ground, however, that this is subject to the well-known general legal principle that a party cannot take advantage of its own breach of contract. Thus if a particular Condition is not satisfied as a direct consequence of a breach of contract, the party in breach cannot rely on the state of affairs created by its own breach of contract to terminate the Agreement. In the context of the present case, if one of the parties were in breach of its obligations to use all reasonable endeavours to obtain an Acceptable Planning Permission as soon as possible, and in consequence failed to obtain such a permission by the relevant date, that fact could not be relied on to justify the service of a valid Termination Notice. The appeal was argued on the basis that those propositions were applied on the facts of this case.

Other relevant terms

26. It is convenient to set out here the following additional, and much more general, terms of the Agreement:

i) Under clause 31.1 both parties agreed:

"to act in good faith in relation to their respective obligations in this Agreement and to assist the other in achieving an Acceptable Store Planning Permission for the Store Development and the Stadium Development."

ii) Clause 32 is headed "General Obligations" and reads:

"32.1 No party shall take any action or suffer anything to happen which is or is likely to be or become detrimental to, or increase the cost of the other's endeavours to satisfy their obligations contained in this Agreement.

32.2 All parties shall (at no cost to that party) lend such assistance as the other may reasonably and specifically request and lies within their ability to give."

The 60% test

27. As has been seen, paragraph 2.11 of Schedule 1 obliged Sainsbury's to pursue an Appeal against a Planning Refusal if Planning Counsel advised that such an Appeal satisfied the 60% test. Clauses 26 and 30 of the Agreement provided a mechanism for preparing instructions to Planning Counsel to be submitted jointly by the parties, and for resolving any dispute about the content of the instructions. In this way, it could be decided whether the pursuit of an Appeal was a matter for Sainsbury's discretion, or a distinct obligation under the Agreement.

The facts

28. On 4 May 2012 Sainsbury's submitted its original application for planning permission to the local authority, Bristol City Council ("BCC"). The application sought the ability to make deliveries to the store 24 hours a day, 7 days a week.
29. On 16 January 2013 BCC resolved to grant (but did not yet formally grant) planning permission. The grant was, however, to be subject to a condition ("Condition 11") which limited deliveries to the store to the hours of 6 am to 11 pm on weekdays and 9 am to 8 pm at weekends and Bank Holidays. It was also subject to the execution of a satisfactory section 106 agreement (subsequently executed on 14 June).
30. There followed a period during which Sainsbury's and Bristol disputed whether Condition 11 was a Store Onerous Condition, such as to allow Sainsbury's to assert that the permission was not an Acceptable Store Planning Permission. The argument was made possible because of the ambiguity to which I have referred in the drafting of the definition of Store Onerous Condition. However, by an exchange of correspondence on 26 September and 9 October 2013 ("the September/October 2013 agreement"), Bristol and Sainsbury's agreed to resolve this dispute on the basis that Condition 11 was a Store Onerous Condition, and therefore that the original permission was not an Acceptable Store Planning Permission. Accordingly there was a deemed Planning Refusal within the meaning the Agreement. At the same time Sainsbury's agreed to pursue an application under section 73 of the Planning Act to obtain a permission which did not restrict delivery hours. The agreement also provided that the application would be pursued without taking Planning Counsel's advice as to the chances of success of the application. Such an application, was duly filed by 27 November 2013 relying on a report on noise mitigation measures.
31. It is necessary to set out some of the correspondence leading up to and including the September/October 2013 agreement, because it is relevant to Sainsbury's contention and the judge's conclusion that there was an estoppel by convention to the effect that a Section 73 Application was an Appeal for the purposes of paragraph 2.11 of Schedule 1 of the Agreement. Thus, on 15 August 2013 Sainsbury's solicitors emailed Bristol's solicitors making it clear that they were not prepared to waive Condition 11. The email continued:

"Accordingly in view of this, I would be grateful if you could confirm whether your clients accept that [Condition 11] is a Store Onerous Condition for the purposes of this Agreement. If your clients confirm, then my clients will be required to either lodge a Section 73 Application requesting planning consent to be approved without the offending condition being imposed, or otherwise seek counsel's advice as to whether a Section 73 Application enabling the Store Development to be constructed without complying with the offending condition has a 60% chance of success. If Counsel advises that there is a greater than 60% chance of success, then my clients will be obliged to pursue the Section 73 Application as above referred. If not, then either party will be entitled to determine the agreement."

32. Bristol had suggested that Sainsbury's had waived their right to assert that Condition 11 was a Store Onerous Condition by negotiating and entering into a Section 106 Agreement. In a letter dated 6 September 2013 Sainsbury's solicitors stated that it was:

"… only prepared to commence the preparation of a Section 73 Application without reference to Planning Counsel on the basis that your client acknowledges and agrees that:

2.1 Condition 11 of the Planning Permission constitutes a Store Onerous Condition; and

2.2 that the actions of our client in negotiating and entering into the Section 106 Agreement has not constituted a waiver of Condition 11 from constituting a Store Onerous Condition."

33. On the basis of those acknowledgments Sainsbury's confirmed that it would be prepared to pursue a section 73 application without taking Counsel's advice as to the merits of the chances of success of that application. On the other hand if Bristol were not prepared to agree, then Sainsbury's:

"…will request that both parties adhere to the terms of the Agreement, which will then necessitate a dispute mechanism being invoked as to whether or not an Onerous Condition exists. If it is held to exist, then the matter will be referred to Counsel for Counsel's advice as to the merits of success. If this achieves a higher than 60% acknowledgement from Counsel, then my client will pursue the Section 73 Application in accordance with its contractual obligation."

34. Bristol's solicitors replied on 23 August 2013 indicating that Bristol was ultimately prepared to refer the question of whether Condition 11 was a Store Onerous Condition to expert determination, but that this was likely to be time-consuming and expensive. They went on to explain that that they had already discussed Condition 11 with BCC and that BCC had indicated that it would be prepared to consider an amendment to the delivery hours in Condition 11. The solicitors expressed the view that, in the light of these indications, the prospects of amending condition 11 were significantly greater than 60% and that resolving the matter by way of a section 73 application would be a preferable solution and quicker than going to expert determination on whether condition 11 was a Store Onerous Condition.
35. Sainsbury's reply dated 5 September 2013 continued to argue that Condition 11 was a Store Onerous Condition and that their right so to contend had not been waived. The letter included the following:

"The contract provides expressly, for dealing with Onerous Conditions, and that is the position and route that my client intends to pursue in order to honour its obligations in the Agreement. Whether this leads to a right for determination or otherwise, is not within my client's hands, but in the control of Counsel (as to advice as to the merits of pursuing a Section 73 Application), and ultimately, the Local Planning Authority in reconsidering any such further application."

36. Bristol's solicitors wrote on 26 September 2013 confirming the content of a telephone conversation on 19 September. The letter recorded that the parties confirmed that:

"2.1 Condition 11 of the Planning Permission constitutes a Store Onerous Condition…

2.2 The actions of your client in negotiating and entering into the Section 106 Agreement do not constitute a waiver of Condition 11 of the Planning Permission constituting a Store Onerous Condition;

2.3 Your client will pursue a Section 73 Application in relation to Condition 11 without taking Counsel's advice as to the chances of success of that application. As stated in your letter, the objective of the Section 73 Application will be to limit the restrictions on deliveries to those set out in the Agreement…."

37. The persistent references to the taking of Counsel's advice and to the 60% test are consistent with a belief that a section 73 application was an Appeal for the purposes of the Agreement, and in particular for the purposes of Schedule 1. Sainsbury's solicitors wrote on 9 October confirming the points in the letter of 26 September.
38. It appears that Sainsbury's continued to hold an understanding that the Section 73 Application which they had agreed to make was an Appeal for the purposes of the Agreement and therefore subject to the 60% test. Thus in an internal email of 22 January 2014 Sainsbury's solicitors reminded their clients that they had accepted "an obligation to submit a Section 73 Application (an Appeal for the purposes of the Agreement) without taking Counsel's advice as to the merits of success of such an application" only on the basis that Bristol withdrew their objection that Condition 11 was not an Onerous Condition. Later in the email they said of the section 73 application which had by then been made:

"If this Planning Application (i.e. Appeal) is refused, then unless that decision is the subject of a judicial review claim, the store planning condition will not be satisfied or be capable of being satisfied further (i.e. there is no obligation on [Sainsbury's] to lodge an Appeal under section 78 of the Town and Country Planning Act 1990 in relation to the Refusal of a Section 73 Application."

39. TRASHorsfield ("TRASH") was a group of local residents and traders opposed to the Sainsbury's development. On 4 September 2013 TRASH made an application to the High Court for permission to seek JR of BCC's decision to grant planning permission on the original application. Permission to seek judicial review was granted on 15 November 2013 and the application for JR ("the TRASH JR") was heard on 20 March 2014.
40. On 28 January 2014 BCC refused Sainsbury's section 73 application on the grounds that the noise occasioned by deliveries outside the Condition 11 hours would have a detrimental effect on the amenity of surrounding residents and future residents of the site. In addition, insufficient information had been supplied to show that the amenity of these residents would not be harmed.
41. Having received advice from its solicitors, on 7 February 2014 Sainsbury's Investment Board resolved to terminate the Agreement. In due course, on 11 February 2014, Sainsbury's informed Bristol by telephone that it would seek to terminate the agreement. No Termination Notice was served.
42. On 17 February 2014 Bristol's solicitors wrote to Sainsbury's solicitors asserting that the section 73 application omitted necessary detail and had failed on this count. There had therefore been a failure to use all reasonable endeavours, contrary to paragraph 2.8 of Schedule 1. The letter continued:

"Our client therefore requires your client to submit a further Appeal against this Planning Refusal pursuant to Paragraph 2.11 of Schedule 1 and/or the all reasonable endeavours clause in Paragraph 2.8

Whether this Appeal should be by way of a new s.73 Application to the Council or an appeal to the Secretary of State in relation to the Council's refusal of your client's previous application is ultimately a point for your client and their planning advisers… our client considers that were an Appeal to be submitted on this basis, the prospects of success would be 60% or greater."

43. This letter shows Bristol's continued belief that a section 73 application continued to be regarded as an Appeal for the purposes of the Agreement. By a letter dated 26 February 2014 Sainsbury's solicitors declined to lodge a further Appeal. They stated:

"Our clients will not be submitting [a] further Appeal against this refusal there is no obligation on our clients to submit a further Appeal. The Section 73 Application was an "Appeal" for the purposes of the agreement. Furthermore, its Refusal was not a "Planning Refusal" and therefore the obligation to make a further Appeal in respect of that Refusal does not apply within the ambit of paragraph 2.11 of Schedule 1."

44. The TRASH JR was heard by Hickinbottom J on 13 March 2014 and dismissed by him on 20 March 2014. On 2 April 2014 TRASH confirmed that it would not appeal.
45. There followed a period during which Bristol sought to persuade Sainsbury's to take steps (a) to appeal to the Secretary of State against BCC's refusal of their section 73 application; (b) to make a fresh section 73 application for extension of the delivery hours; and/or (c) to consent to Bristol making a fresh application in Sainsbury's name under section 73 to BCC for extension of the delivery hours.
46. Thus, on 16 April 2014 Bristol's solicitors wrote saying:

"… we consider that your client is still required to pursue an Appeal, which in this case should be a further s. 73 Application which focuses purely on removing the remaining Store Onerous Condition."

47. The same letter made an offer that Bristol would itself make a section 73 application on Sainsbury's behalf and at Bristol's cost. The letter asked for express confirmation that this section 73 application would be an "Appeal" under the Agreement and (if successful) that the amended Planning Permission would be accepted as a Store Planning Permission. Bristol was no doubt concerned that the section 73 application should be treated as an Appeal in order to ensure that Cut Off Date was duly extended, and that Sainsbury's were not thereby enabled to serve a Termination Notice.
48. Sainsbury's solicitors response, by their letter of 2 May 2014, was that they were not obliged to pursue what they described as an "Appeal of an Appeal".
49. On 23 June 2014 Bristol sent Sainsbury's a report from a specialist acoustics expert which proposed further noise mitigation measures to those in the report used in the section 73 application. The letter also attached an opinion by Douglas Edwards QC that if the mitigation measures included in the new report were carried out, then a further section 73 application or a section 78 appeal would have a greater than 60% chance of success. The letter also offered that Bristol would fully fund the application as well as the implementation and maintenance of the additional mitigation measures.
50. In July 2014 Bristol issued proceedings in the Chancery Division ("the July action") and on the same day sought interim relief compelling Sainsbury's to lodge a section 78 appeal and to consent to Bristol making a section 73 application to BCC. The July action was compromised by agreement between the parties. Sainsbury's (a) undertook to lodge a section 78 appeal against BCC's refusal of its section 73 application, and (b) gave consent to Bristol to make a fresh section 73 application with unrestricted deliveries. The consent order allowed Sainsbury's to withdraw the appeal following either an opinion from Planning Counsel that the prospects of achieving an Acceptable Store Planning Permission were less than 60% or a determination from the Expert that any Planning Permission containing a condition that requires the mitigation measures in the 24A report to be implemented would be subject to a Store Onerous Condition. The agreement also recorded that Bristol's section 73 application was not "made by or on behalf of [Sainsbury's]" and that Sainsbury's permission was "only given in respect of paragraph 3.2(a) of schedule 1 of the Agreement [prohibition on Bristol submitting planning applications] and for no other purpose."
51. Pursuant to the compromise, Sainsbury's appeal under section 78 was lodged on 28 July 2014 and Bristol's section 73 application was made on 20 August 2014.
52. Christopher Katkowski QC was jointly instructed by the parties as Expert and Planning Counsel. On 11 September 2014 he gave his Expert Determination and Planning Counsel Determination. His determination was that (a) the prospects of success on the section 78 appeal were 55%, and (b) if a condition of planning permission imposes limitations on noise levels which can only be complied with at an additional cost in excess of £40,000 then that would still be a Store Onerous Condition even if Bristol funds the costs of such additional measures. In consequence, on 21 October 2014, Sainsbury's withdrew its section 78 appeal.
53. On 24 October 2014 Sainsbury's wrote to Bristol stating that it intended to serve a Termination Notice on Bristol on 29 October 2014. This led, inevitably, to a dispute about whether Sainsbury's was entitled to serve the Termination Notice. That dispute was compromised on terms that Sainsbury's was to be deemed to have served a Termination Notice on the first date after 27 October 2014 on which it could lawfully have served one.
54. On 12 November 2014 BCC's development control committee resolved to grant Bristol's section 73 application subject to certain amendments to a section 106 agreement. On 4 December 2014 BCC formally granted permission under section 73 permitting any number of deliveries to be made between 0500 hours and 0001 hours. The Challenge Period (of three months and two weeks) in respect of the outcome of Bristol's section 73 application expired on 18 March 2015 without further incident.

The relevant planning regime

55. I should set out the terms of the relevant sections of the Town & Country Planning Act 1990. Section 73 is concerned with obtaining planning permission on terms which differ from those on which a previous application was granted:

"73. (1) This section applies, subject to subsection (4), to applications for planning permission for the development of land without complying with conditions subject to which a previous planning permission was granted.

(2) On such an application the local planning authority shall consider only the question of the conditions subject to which planning permission should be granted, and –

(a) if they decide that planning permission should be granted subject to conditions differing from those subject to which the previous permission was granted, or that it should be granted unconditionally, they shall grant planning permission accordingly, and

(b) if they decide that planning permission should be granted subject to the same conditions as those subject which the previous permission was granted, they shall refuse the application."

56. An application under section 73 is an application for a new planning application, not, in strict legal terms, an appeal against the imposition of the condition. A decision to grant an application under section 73 results in the grant of a fresh planning permission which subsists concurrently with the original permission: see Pye v Secretary of State for the Environment [1998] 3 PLR 72 per Sullivan J; approved by the Court of Appeal in Powergen v Leicester CC [2000] EWCA Civ 165. No doubt, in lay terms, it might be thought of as an appeal against the imposition of the conditions. But that is not the true legal nature of the proceeding.
57. Section 78, by contrast relates to appeals properly so-called. It provides:

"78 (1) where a local planning authority –

(a) refuse an application for planning permission granted subject to conditions;

(b) …

the applicant may by notice appeal to the Secretary of State.

(3) Any appeal under this section shall be made by notice served within such time and in such manner as may be prescribed by a development order."

The judgment of Proudman J

58. At paragraph 28 of her judgement Proudman J identified the issues which she had to decide as, in summary, whether one or more of the Conditions remained unsatisfied on the relevant termination date; whether they would have been satisfied but for some breach of contract by Sainsbury's; and what the consequences are in any event. That involved the following questions:

i) when did the Cut Off Date occur?

ii) was Sainsbury's obliged to continue trying to obtain an Acceptable Store Planning Permission after the Cut Off Date?

iii) could Sainsbury's have done more to satisfy the Store Planning Permission (either before or after the Cut Off Date) and if so would the Store Planning Permission have been satisfied before the Termination Date?

iv) would the other outstanding Conditions have been satisfied before the Termination Date?

59. In relation to the first issue, identifying the Cut Off Date, the judge noted that it was clear that the date had been extended because Sainsbury's original planning application had not yet been decided at the anniversary of Sainsbury's planning application, namely 4 May 2013. The precise Cut Off Date did not matter, however, because she considered that Sainsbury's obligations survived after the Cut Off Date until expiry of the Termination Notice: see paragraph 74.
60. On the way to this conclusion the judge came to the following determinations about the construction of the Agreement:

i) an application under section 73 was not an appeal in the strict sense within the Agreement because there was no application "to the Secretary of State" as required by the definition: see paragraph 36;

ii) however the September/October 2013 agreement showed that the parties agreed and acted on the assumption that Sainsbury's section 73 application would count as an Appeal, and it was therefore an Appeal within the definition: see paragraphs 40-42;

iii) a re-submission of a section 73 application to BCC after a withdrawal would also be an Appeal, notwithstanding the reference to "Secretary of State" in the definition, because of the parties' shared assumption: see paragraph 44;

iv) a further question was whether Sainsbury's were also estopped from relying on their entitlement to insist upon Planning Counsel's opinion as to the chances of success before they were obliged to pursue any subsequent "Appeal". On a proper construction of the 26 September agreement, the parties were only agreeing that one section 73 application be made without resort to Planning Counsel: see paragraph 46;

v) the TRASHorsfield JR was not a judicial review within the definition in the Agreement, because to comply with the definition the JR would have to be in respect of an Acceptable Planning Permission, which it was not: see paragraph 53;

vi) the Agreement did not define what the Challenge Period was in the case of a Planning Refusal (which is what was deemed to be the fate of Sainsbury's original application), but the Period should be taken to be the same as in the case of grant of an Acceptable Planning Permission, i.e. three months and 14 days in the case of the Local Planning Authority: see paragraph 56;

vii) the Cut Off Date must have occurred in the summer of 2014: see paragraph 74.

61. The judge answered in the negative the second question, namely whether the obligation to use all reasonable endeavours to procure the grant of an Acceptable Planning Permission ceased at the Cut Off Date. The obligation continued until the expiry of the Termination Notice: see paragraph 73. Her reasons were these:

"71. It seems to me that where a buyer obtains, as it did in this case, a contractual monopoly as to the conduct of a planning application, the obligation to use all reasonable endeavours is the quid pro quo for the surrender by the seller of all its rights to make planning applications itself.

72. If, instead of serving a Termination Notice under Clause 3.1, the parties elected to continue pursuing the objectives of the Agreement after the Cut Off Date, I find that the reasonable endeavours obligation would not be extinguished."

62. The judge next tackled Bristol's case that Sainsbury's should have withdrawn and resubmitted the section 73 application. She rejected the submission that resubmission would not involve an Appeal within paragraph 2.11 of Schedule 1 (even if it were an appeal within the broader definitions section). Sainsbury's were therefore not bound to launch a further section 73 application unless on the advice of Planning Counsel it passed the 60% test.
63. The judge next examined and rejected Bristol's case that the section 73 application which it did bring (a) was not prosecuted with due diligence and (b) was not conducted in a good and efficient manner, contrary to paragraph 2.11(c) of Schedule 1 and that Sainsbury's had not kept Bristol informed of all relevant information in respect of the Appeal contrary to paragraph 2.11(d).
64. An Acceptable Store Planning Permission could not therefore have been obtained before the Termination Date. This meant that Sainsbury's case succeeded: paragraph 123.
65. The judge then went on to consider, in case she was wrong thus far, the argument about what would have happened if Sainsbury's had been required to submit a further section 73 application. Broadly speaking:

i) Sainsbury's would have made a fresh section 73 application within 5 weeks of the dismissal of the TRASH judicial review on 20 March 2014;

ii) BCC would have dealt with that application within 3 months;

iii) and so an Acceptable Store Planning Permission would have been in place by 7 August 2014;

iv) the Challenge Period would have expired 3 months and 2 weeks thereafter;

v) all of which would have occurred by 21 November 2014, within the period in which the Termination Notice would expire.

66. In broad terms the judge accepted this as a likely scenario. Accordingly if she was wrong about the effect of clause 2.11, Bristol would have succeeded.

The issues

67. It is common ground that the Store Planning Condition was never satisfied, because there was never a grant of an Acceptable Store Planning Permission before the Long Stop Date of 14 December 2014.
68. The right to serve a Termination Notice arose if the Store Planning Condition was not satisfied by the Cut Off Date. The judge said that the Cut Off Date, occurred in the summer of 2014. In fact, on the judge's finding that the TRASH JR was not "Proceedings" it would appear that it occurred somewhat earlier, but neither side sought to make anything of this point. Accordingly, subject to the doctrine that a party may not rely on its own breach of contract, Sainsbury's were entitled to serve the Termination Notice when they did. The issues that potentially arise are therefore the following:

i) Did the obligation in paragraph 2.8 of Schedule 1 to use all reasonable endeavours to obtain an Acceptable Store Planning Permission survive beyond the Cut Off Date?

ii) If the answer to issue (i) is "yes", was Sainsbury's in breach of paragraph 2.8 by failing to pursue a further section 73 application seeking to have condition 11 removed?

iii) If the answer to issue (ii) is "yes", if Sainsbury's had not breached paragraph 2.8, would it have obtained an Acceptable Store Planning Permission by the date when it purported to be entitled to serve Notice of Termination?

iv) If the answer to issue (ii) is "no", was Sainsbury's in breach of an obligation to assist Bristol to make a planning application in Sainsbury's name?

v) If the answer to issue (iv) is "yes", if Sainsbury's had not breached the obligation to assist Bristol, would it have obtained an Acceptable Store Planning Permission by the date when it purported to be entitled to serve Notice of Termination?

vi) If the answer to either issue (iii) or issue (v) is "yes" (and accordingly Sainsbury's ability to serve a Termination Notice arose out of their breach of contract) were Sainsbury's nevertheless entitled to serve a Termination Notice on any other ground?

Issue (i): Did the obligation in paragraph 2.8 of Schedule 1 to use all reasonable endeavours to obtain an Acceptable Store Planning Permission survive beyond the Cut Off Date?

69. Mr Wonnacott submitted that the Cut Off Date meant what it said. Sainsbury's obligations under the Agreement were those identified in Schedule 1, and were linear and chronological. Thus it had to lodge and pursue a Store Planning Application. Depending on the fate of this application Sainsbury's could appeal if it wished, and would only be obliged to if the dispute resolution mechanism was invoked and the 60% test was passed. If at the end of this process an Acceptable Store Planning Permission had not been obtained, the Cut Off Date would occur. Sainsbury's would have no obligation to pursue planning permission thereafter.
70. Mr Wonnacott also submitted that the reasons given by the judge (quoted in paragraph 61 above) as to why the obligations continued beyond the Cut Off Date were flawed. The judge had accurately summarised the nature of the bargain between Sainsbury's and Bristol under which Bristol handed over the right to apply for planning permission for the site in exchange for the reasonable endeavours obligation, but this was not informative of the point at which the obligation to pursue planning permission ceased. There was also no sense in which any known legal doctrine of election assisted in eliciting the answer to this question.
71. As McCombe LJ suggested in the course of argument, I doubt that the judge was using "election" in the technical legal sense in which Mr Wonnacott interprets it. She was merely stating her conclusion that where no Termination Notice is served, the obligations continue. I agree with Mr Wonnacott, however, that it does not necessarily follow from the nature of the bargain struck between the parties that they intended the obligation to pursue planning permission to persist beyond the Cut Off Date.
72. It seems to me that Mr Wonnacott's principal submissions are in two parts. The first is his chronological and linear analysis of the obligations placed on Sainsbury's by paragraph 2 of Schedule 1. The second is his submission that the Cut Off Date represented the point at which Sainsbury's obligations came to an end.
73. I am unable to accept Mr Wonnacott's chronological and linear analysis of the Schedule 1 obligations. The overall purpose of these provisions is to impose on Sainsbury's an obligation to use all reasonable endeavours to obtain an Acceptable Store Planning Permission as soon as reasonably possible. This is not only spelt out in paragraph 2.8 but appears also in paragraph 2.6 of Schedule 1 and reflects the terms of clause 2.2 of the Agreement itself. The process does not end with an initial planning application which is refused or an unsuccessful appeal. Thus, under paragraph 2.6 of schedule 1, it is envisaged that Sainsbury's might withdraw a Store Planning Application and submit another one where it is reasonable to do so in order to obtain an Acceptable Store Planning Permission "as soon as reasonably possible or where to do so will enhance the prospects of obtaining an Acceptable Store Planning Permission". It is true that Sainsbury's obligation is qualified by the provisions about appeals in paragraph 2.11. Whatever the reason for the qualification, it does not seem to me to be an indication that the process envisaged by paragraph 2 of Schedule 1 comes to a halt after an unsuccessful appeal. Rather it will do so when there are no more reasonable steps which Sainsbury's can take to secure the grant of an Acceptable Store Planning Permission.
74. I am also unable to accept Mr Wonnacott's submission that the Cut Off Date marks the end of Sainsbury's obligation to pursue the Store Planning Permission. Whilst the submission that the Cut Off Date means what it says is a beguiling one, it cannot be right. If the arrival of the Cut Off Date terminated the parties' obligations under the Agreement without more, the service of Termination Notices would be unnecessary. If the parties choose (or "elect" to use the judge's word) not to serve a Termination Notice, the obligations continue.
75. It follows, in my judgment, that Sainsbury's obligation to pursue Planning Permission does not come to an end after an unsuccessful Appeal, and continues beyond the Cut Off Date until brought to an end by the service of a valid Termination Notice.

Issue (ii): were Sainsbury's in breach of paragraph 2.8 of Schedule 1 by failing to pursue a further section 73 application seeking to have condition 11 removed?

76. If a section 73 application is properly to be treated as an Appeal for the purposes of paragraph 2.11 of Schedule 1 to the Agreement, then the failure to launch a second such application would not put Sainsbury's in breach of the "all reasonable endeavours" obligation in paragraph 2.8. That is because the launching of an Appeal was only required (as opposed to permitted) if the 60% test was passed, and it was not. This was the critical issue which caused Bristol to lose before the judge. For her, the conclusive argument was that the parties had agreed to treat section 73 applications as appeals for the purposes of paragraph 2.11 of Schedule 1, in such a way as to give rise to an estoppel by convention.
77. To recapitulate, the contractual definition of "Appeal" includes, amongst other things:

"an application to the Secretary of State in accordance with section 73 of the Planning Act in respect of the grant of a Planning Permission which is not an Acceptable Planning Permission".

78. An application under section 73 is of course made to the local planning authority and not to the Secretary of State. Given the express reference to section 73, however, I would with respect to the judge, have concluded that the words "to the Secretary of State" were a draughtsman's slip which the informed reader would instinctively correct.
79. The definition is not, however, an all-purpose one. The introductory words of the definition say that an appeal "means all or any of the following as the case may be". Mr Matthias submitted that, in the case of paragraph 2.11 of Schedule 1, an Appeal has the more limited meaning of an appeal, properly so-called, to the Secretary of State under section 78. The other listed items within the definition, namely a call-in and an application under section 73 were not imported into paragraph 2.11.
80. It is not necessary to consider Mr Matthias's submissions on this topic any further because Mr Wonnacott did not engage with them. He argued the appeal on the footing that Mr Matthias was right, and that, simply as a matter of contractual interpretation, a section 73 application was not an Appeal for the purposes of paragraph 2.11.
81. Mr Matthias accepted that in concluding the September/October 2013 agreement, and carrying it out, the parties had acted on the common assumption that a section 73 application was an Appeal. However, he submitted that the judge had been wrong to hold that the estoppel by convention continued to have effect after the refusal of the section 73 application by BCC on 28 January 2014. Once that application had run its course, the parties were free to resile from the common assumption as to the meaning of Appeal. There was nothing in the September/October 2013 agreement which touched on events outside the scope of that agreement itself. Neither side had argued at trial that the collateral agreement under which Sainsbury's agreed to make its section 73 application had a significance beyond 28 January 2014. Indeed Sainsbury's had argued that any estoppel by convention that was generated would only have been binding in the event that the section 73 application had been successful.
82. Mr Matthias points out that Sainsbury's did not decline to make a further section 73 application on the basis that it was an Appeal which had not passed the 60% test. Instead it had argued that any new permission would still be subject to a Store Onerous Condition because it would be accompanied by unacceptable noise mitigation measures, or that they were not obliged to make more than one such application.
83. Mr Wonnacott supported the decision of the judge. In addition to drawing attention to the passages in the later correspondence which I have set out in paragraphs 42 and 43 above, he relies on the fact that it was part of Bristol's case that there was an estoppel by convention that a section 73 application was an Appeal for the purposes of the Agreement. Bristol had so argued in order to defer the Cut Off Date by relying on the section 73 application made by Sainsbury's. Thus, for example, in paragraph 14 be of the re-re-amended defence, Bristol pleaded:

"Further or alternatively, the parties acted on a shared assumption that an Application pursuant to Section 73 in respect of a Planning Permission which was not an Acceptable Planning Permission constituted an Appeal in the context of the Agreement, in that the Claimant made such an assertion through its solicitors but offered to pursue an Appeal by way of an application without first seeking the advice of Planning Counsel as to the prospects of such an Appeal succeeding, if the Defendant would agree that condition 11 of the Original Permission constituted a Store Onerous Condition, and the Defendant accepted such offer and agreed that condition 11 of the Original Permission constituted a Store Onerous Condition in consideration of the Claimant making such application without first seeking the advice of Planning Counsel. In the premises it would be unjust and unconscionable for the Claimant now to be permitted to go back upon that shared assumption, and the Claimant is estopped by convention from doing so."

84. I start with the principles. In Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878 at page 913 Lord Steyn set out the requirements of an estoppel by convention:

"It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption: The August Leonhardt [1985] 2 Lloyd's Rep. 28; The Vistafjord [1988] 2 Lloyd's Rep. 343; Treitel, Law of Contracts, 9th ed., at 112-113. It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention."

85. In Hiscox v. Outhwaite [1992] 1 AC 562 at 575 Lord Donaldson added the rider:

"once a common assumption is revealed to be erroneous, the estoppel will not apply to future dealings."

86. In Troop v Gibson [1986] EGLR 1 Ralph Gibson LJ said:

"… the doctrine of estoppel, when applied, deprives a party of the ability to enforce a legal right for the period of time and to the extent required by the equity which the estoppel has raised…."

87. As to the way in which the estoppel operates, Mr Wonnacott placed some reliance on what Lord Denning said in Amalgamated Investment & Property Co. Ltd. (in liquidation) v Texas Commerce International Bank Ltd. [1982] QB 84. First, in a passage concerned with the way in which "a course of dealing may give rise to obligations" he said at page 121:

"If it can be used to introduce terms which are not already there, it must also be available to add to, or vary, terms which are there already, or to interpret them. If parties to a contract, by their course of dealing, put a particular interpretation on the terms of it – on the face of which each of them – to the knowledge of the other – acts conducts their mutual affairs – they are bound by that interpretation just as much as if they had written it down as being a variation of the contract."

88. Later, in the same section of his judgement, Lord Denning said this:

"So I come to this conclusion: When the parties to a contract are both under a common mistake as to the meaning or effect of it – and thereafter embark on a course of dealing on the footing of that mistake – thereby replacing the original terms of the contract by a conventional basis on which they both conduct their affairs, then the original contract is replaced by the conventional basis. The parties are bound by the conventional basis. Either party can sue or be sued upon it just as if it had been expressly agreed between them."

89. Finally, under the heading "Conclusion", Lord Denning said:

"When the parties to a transaction proceed on the basis of an underlying assumption – either of fact or of law – whether due to misrepresentation or mistake makes no difference – on which they have conducted the dealings between them – neither of them will be allowed to go back on the assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other side remedy as the equity of the cases demands."

90. Under the September/October 2013 agreement Sainsbury's secured agreement that Condition 11 was a Store Onerous Condition, something which was in dispute, and could have been resolved against them. This was to the disadvantage of Bristol, who could otherwise have contended that the Store Planning Condition was satisfied. In return for Bristol's agreement about Condition 11, Sainsbury's agreed to lodge a section 73 application, a step which, on the common misapprehension that it was an Appeal, would otherwise have needed to pass the 60% test. This was a concession by Sainsbury's, who could (on the mistaken assumption) have insisted on the matter being placed before Planning Counsel, jointly instructed by the parties. It was also (on the mistaken assumption) a perceived benefit to Bristol, who thereby avoided any possibility of Planning Counsel rating the prospects as less than 60%. Both sides were concerned to avoid potential uncertainties which could have been fatal to their immediate objectives: in the case of Sainsbury's to avoid the Agreement becoming unconditional, and in the case of Bristol to avoid Sainsbury's planning obligations becoming spent.
91. The compromise was plainly determinative of the question whether a section 73 application was an Appeal for the purposes of the September/October 2013 agreement. Did the compromise bind the parties so that neither could subsequently assert that a section 73 application was not an Appeal, even after 28 January 2014 when the section 73 application was refused? It would do so only if it would be unconscionable for them to do so.
92. The judge did not spell out the reasons why she considered that it would be unconscionable for the parties to resile from the common assumption that a section 73 application was an Appeal for the purposes of the Agreement. However, it is not difficult to see why this should be so. Firstly, although the mistaken common assumption about the meaning of Appeal in paragraph 2.11 of Schedule 1 occurred in the context of the September/October 2013 agreement, it was a common assumption about the way in which the main Agreement, and in particular paragraph 2.11 of Schedule 1 of that Agreement, worked. The date 28 January 2014 (the date of the refusal of Sainsbury's section 73 application) therefore has no significance so far as the continued effect of the estoppel is concerned. Secondly, although the question of whether a section 73 application is an Appeal may seem an incidental and somewhat recondite question, its consequences for the operation of the Agreement are very important. Whether or not such an application is an Appeal can have an impact both on whether the Agreement becomes terminable (through the definition of Cut Off Date) and on whether Sainsbury's are placed in breach of their obligations in paragraph 2.8 of Schedule 1. For Bristol to resile from the common assumption so as to place Sainsbury's in breach is, on the face of it, unconscionable. Thirdly, although Sainsbury's never expressly asserted that they were not obliged to lodge a second section 73 application because it was an Appeal which had not passed the section 73 test, preferring to rely on other points, it was plainly a part of their armoury on which they were entitled to rely. Fourthly Bristol never revealed to Sainsbury's that it considered the common assumption to be erroneous. On the contrary, it continued to rely on the common assumption, and to assert that it would be unconscionable for Sainsbury's to resile from it.
93. In those circumstances it would, in my judgment, plainly be unjust to allow Bristol now to assert that Sainsbury's failure to lodge a further section 73 application was a breach of its planning obligations. Sainsbury's were not obliged to lodge such an application unless Planning Counsel advised that it passed the 60% test, and this had not occurred.

Issue (iii): had Sainsbury's had not breached paragraph 2.8, would they have obtained an Acceptable Store Planning Permission by the date when they purported to be entitled to serve Notice of Termination?

94. In the light of my conclusion on issue (ii), this issue does not arise.

Issue (iv): were Sainsbury's in breach of an obligation to assist Bristol to make a planning application in Sainsbury's name?

95. The judge did not deal with this aspect of Bristol's case. Mr Matthias submits that it provides an alternative basis for demonstrating that the state of affairs upon which Sainsbury's rely in order to justify the service of a Termination Notice was brought about by a breach of Sainsbury's obligations under the Agreement.
96. The gist of Mr Matthias' argument is as follows. Sainsbury's was obliged by the Agreement to consent to Bristol making an application for Store Planning Permission in Bristol's name, and it failed to do so. The obligation arose because of (a) the obligation to use all reasonable endeavours to obtain an Acceptable Store Planning Permission as soon as reasonably possible in paragraph 2.8 of Schedule 1, and/or (b) the obligation under clause 31.1 of the Agreement to act in good faith in relation to its respective obligations under the Agreement and to assist Bristol in obtaining an "Acceptable Store Planning Permission for the Store Development", and/or (c) the obligation contained 32.2 to lend such assistance as Bristol might reasonably and specifically request of Sainsbury's which lies within Sainsbury's ability to give.
97. I am not able to accept that the "all reasonable endeavours" obligation in paragraph 2.8 of Schedule 1 requires Sainsbury's to give consent to Bristol to file its own section 73 application in circumstances where Sainsbury's would not themselves be obliged to file such an application. Such an interpretation would cut straight across paragraph 2.11 if not wholly negate it. Once the conclusion is reached that the all reasonable endeavours obligation is curtailed by paragraph 2.11 so as not to require a section 73 application to be filed by Sainsbury's, it cannot have been the intention of the parties that it would be reasonable nevertheless for Sainsbury's to consent to a section 73 application by Bristol.
98. The first part of clause 31.1 requires each party to act in good faith in relation to their respective obligations under the Agreement. Mr Matthias submitted that this obligation meant that Sainsbury's was obliged to "adhere to the spirit of the contract" and not resort to its black letter, and that this meant assisting Bristol to obtain planning permission for the store development on Sainsbury's behalf. However, if Sainsbury's was not itself required to submit a further section 73 application by the terms of paragraph 2.11 of Schedule 1, I have great difficulty in understanding on what principle it can be held that its reliance on that contractual provision can lack good faith. If my conclusions on issue (ii) are correct, Sainsbury's has discharged its obligations under the Agreement, and has not failed to act in good faith in relation to them.
99. Similarly, I fail to see how the terms of clause 31.1 can give rise to a positive obligation to consent to a section 73 application by Bristol. The duty is to use good faith in relation to the respective obligations of the party. Bristol have no obligation at all under the Agreement to make an application for Store Planning Permission. It follows that Sainsbury's is not failing to act in good faith in relation to its respective obligations under the Agreement.
100. The second part of clause 32.1 is more specific in that it requires each party to assist the other in achieving an Acceptable Planning Permission for the Store Development and the Stadium Development. Read in context, however, this sub-clause requires Bristol to assist Sainsbury's with its Store Planning Application and Sainsbury's to assist Bristol with its Stadium Planning Application. I am unable to read it as imposing an obligation on Sainsbury's to assist Bristol with an application for Store Planning Permission which neither party is under an obligation to lodge.
101. Finally, clause 32.2 requires Sainsbury's to lend such assistance (at no costs to Bristol) which it lies in its power to give as Bristol may reasonably and specifically request. Mr Matthias points to the various occasions on which Bristol requested Sainsbury's to challenge BCC's imposition of Condition 11, whether by way of a section 73 application or an appeal to the Secretary of State.
102. Read literally the sub-clause requires each party to "lend … assistance" without limitation, provided only that it is reasonably and specifically requested, and that the other party is not made liable for any costs. So, when Bristol specifically ask Sainsbury's for permission to make a Store Planning Application, Sainsbury's must lend assistance and consent to it.
103. I am unable to accept such a broad interpretation of clause 32.2. I accept that the clause does not contain the qualification, expressed in clause 32.1, that the assistance must be in relation to the other party's obligations under the Agreement. However, this does not mean that the obligation to lend assistance is not so limited. Mr Matthias was prepared to go as far as to accept that the assistance must be in connection with the overall objectives of the Agreement. I do not think that the clause would be read in such an unspecific way. Such an obligation would sit very uncomfortably in an Agreement which spells out the respective obligations of the parties, and in particular their planning obligations in such detail. To my mind the clause would be read, even though it is not spelled out, as requiring assistance in relation to the discharge of the opposite party's obligations under the Agreement.
104. It follows that I do not consider that Sainsbury's was in breach of these more general obligations in failing to give its name to a planning application by Bristol.

Issue (v): had Sainsbury's had not breached the obligation to assist Bristol, would they have obtained an Acceptable Store Planning Permission by the date when they purported to be entitled to serve Notice of Termination?

105. In the light of my findings on issue (iv), this issue does not arise.

Issue (vi): were Sainsbury's nevertheless entitled to serve a Termination Notice on any other ground?

106. Sainsbury's were entitled to serve the Termination Notice. It is not therefore necessary to consider these further points.

Conclusion

107. For the reasons I have given, if my Lords agree, this appeal will be dismissed.

Lord Justice McCombe

108. I agree.

Lord Justice Laws

109. I also agree.