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In 2001, Aisling Developments Limited became aware of a profitable opportunity to be exploited between Queen Margaret University College and Persimmon. QMUC wished to move from its site of around 25 acres at Clermiston in Edinburgh to one with an area of around 35 acres. Aisling knew that Persimmon owned around 130 acres at Old Craighall on the outskirts of the city but that that ground was in the Green Belt and therefore had restricted development potential. However, Aisling believed that planning permission could be obtained for a University at Old Craighall. Accordingly there could, effectively, be a site swap, with 70 acres of Persimmon’s land going to Aisling in return for Persimmon acquiring title to the QMUC site at Clermiston and Aisling paying Persimmon £4.55 million. As part of the deal, Aisling would pass on around 35 acres at Old Craighall to QMUC whilst retaining the other 35 acres for future development.

In March 2002, a meeting of all three parties was called by QMUC. QMUC expressed its wish to deal with Persimmon direct and Persimmon stated that they were happy to do so. There was an existing Exclusivity Agreement between Aisling and Persimmon which prevented this but Aisling agreed with a QMUC proposal that two separate agreements be pursued – one between Persimmon and QMUC and one between Aisling and Persimmon.

It was Aisling’s understanding that the deal between QMUC and Persimmon was to be completed quickly. It was not, in fact, concluded until December 2005. Negotiations on a written agreement between Aisling and Persimmon were similarly delayed with Persimmon repeatedly asserting that the deal would be proceeding imminently. Matters came to a head in August 2006, when Persimmon wrote to Aisling withdrawing from any further negotiations on the basis that Aisling had allegedly failed to deliver a ‘suitable partner’ for future development at the Old Craighall site as requested by Persimmon.

Aisling then brought an action against Persimmon seeking declarator that Aisling and Persimmon were bound by an ‘enforceable verbal contract’ for the sale of 35 acres at Old Craighall. There was no written contract but Aisling argued that an oral contract had been entered into at the meeting in March 2002 and that, as they had gone on to act on the strength of that contract (including spending over £500,000 on the project), the contract was enforceable. Persimmon argued that neither Persimmon nor Aisling had intended to conclude a deal at the March 2002 meeting and that no agreement had been reached.

The court refused Aisling the declarator it was seeking. The judge, Lord Glennie, while clearly favouring the accounts of events put forward by Aisling, found that neither party had gone into the March 2002 meeting with the intention of concluding a deal there and then and no oral contract had come into existence.

Many will be surprised that this matter reached court. Surely, in property dealings, you do not have a leg to stand on unless you have a written contract. It is well known in the property industry that agreements relating to the purchase and sale of land require to be in writing and this was a dispute between two development companies who know the rules only too well.

However, it is not as simple as that. There are circumstances in which oral agreements for the purchase and sale of land can be enforceable. Originally a matter of common law, the rules were put on a statutory footing by the Requirements of Writing (Scotland) Act 1995. In short, where (1) an oral agreement for the purchase and sale of land is followed by one of the parties taking action on the basis that the oral agreement exists and (2) the party who takes action has been affected to a material extent by taking such action (most commonly by spending money) and would be adversely affected to a material extent (most commonly by losing the money spent) if the other party withdrew from the agreement, then the oral agreement can be enforceable. The only additional requirement is that the other party to the oral agreement has to know that the first party is taking such action on the basis of the oral contract. Incidentally, the same rules apply where one of the parties refrains from taking action because of an oral contract being in place and loses out as a result.

So, despite there being no written agreement between Aisling and Persimmon, there was a possible legal safety net for Aisling and not only did the dispute reach court but the judgement runs to 33 pages, a sure indication that it would have been rash to dismiss out-of-hand the possibility of Aisling being successful.

This bit is simple. In order for the provisions of the 1995 Act, which I have mentioned, to apply, there has to be an oral agreement in the first place. That is where Aisling’s case failed. The judgement contains a helpful summary of what is needed for the formation of a contract. The parties have to intend to contract at that particular time and there has to be agreement between them on all the matters which are essential to the particular bargain. In this case, the judge was simply not convinced that the parties intended to come to a binding agreement at the meeting in March 2002. Equally, he was convinced that when they left the meeting, about 40 minutes after it began, neither of the parties believed a concluded agreement had been reached.

It is worth noting that Lord Glennie also took into account that, given that both parties were in the property development business, they would normally have expected any deal to be concluded in writing and so, if they had intended to be legally bound by what they had said to each other on this occasion, they would have made that patently clear at the meeting, which they did not.

He also took the view that the protracted negotiations which followed the meeting were more in the nature of attempts to reach a concluded agreement than putting into writing and “fleshing out” a deal which had already been done at the meeting, pointing to no agreement having been reached at the meeting.

Of course, the moral of the story is to resolve afresh to ensure that you always have agreement in writing before spending heavily, no matter how confident you are that you have a deal – to do otherwise can be very costly. Being convinced at and after a meeting that a deal will go ahead is not the same as reaching an oral concluded agreement which can safely be founded on later. Getting it in writing takes all the doubt away.

Interestingly, there has been a flurry of recent property cases south of the border where the lack of written agreements in property transactions has created difficulties – perhaps a sign of the times. The law is different there but the moral is the same.

Case referred to Aisling Developments Limited v Persimmon Homes Limited (OH) [2008] CSOH 140

A full text of the decision is available on the Scottish Court Service website accessible here

Caroline Docherty, Partner in our Strategic Land Team comments on progress in the funding of infrastructure debate, brought bang up to date with publication of the Delivering Planning Reform document today.

In previous editions of SLU, we have reported on the progress of the Government’s policy on the funding of infrastructure to support development. In July 2007, we reported that Gordon Brown was prepared to look at alternatives to PGS. We commented at that time on the uncertainty that this would lead to and that the status quo (i.e. lengthy site by site negotiations via the Section 75 procedure, coupled with an additional new charge) was probably the least attractive option.

When we made that comment, who would have thought the market would be where it is now? (And how many times have you heard that said in recent months?)

We now have the situation where England and Wales is to have exactly that scenario which we felt was the “worst case”. We will see the introduction in 2009 of the Community Infrastructure Levy down south. This will be a new charge which local authorities in England and Wales will have a discretion to levy on development. It is intended that the Levy will be based on a formula which relates the amount payable to the size and character of the development involved. It will be spent on infrastructure to meet the needs of future development provided for in the Development Plan. In effect, the Levy will be fixed on a tariff basis by the relevant authority and will be payable on commencement of the development. It is said that this approach gives the industry the certainty it said it was looking for when it was lobbying against PGS. However, the Levy will not replace obligations undertaken in Section 106 Agreements (the English equivalent of Section 75 Agreements). These will still be used to deal with the specific issues raised by a particular development, and affordable housing.

So, if our neighbours down south are soon to be faced, at a time when the industry is in crisis, with the new Levy, plus the cost of affordable housing and site-specific issues, is Scotland in any better a position? SPP3, published in July 2008, referred to a review being undertaken of the framework governing planning agreements with the aim of producing a system that will balance the provision of contributions to support related infrastructure while facilitating development. This was followed by an announcement in August by Alex Salmond that the review would be postponed in the light of market conditions, to avoid placing new burdens on development at this time.

Where does this leave the issue in Scotland? The problems with necessary infrastructure remain. These are referred to in the draft National Planning Framework 2 which identifies the deficiencies that exist, and the need for up to date infrastructure to support development. Clearly, an additional burden on development at this time is not desirable, but is there sufficient understanding of the commercial realities among those charged with negotiating planning gain on behalf of local authorities? The system has always encouraged an approach which seeks to maximise contributions, and which has a tendency to look at what has been achieved on other developments, regardless of what the terms of Section 75 itself says about the need for the provisions in Section 75 Agreements to relate in nature, scale or kind to the proposed development. When consumer demand does return, and developers are, once again, picking up on postponed negotiations, will there be an acceptance that the old “rule book” be thrown out the window? The beginnings of an answer to that may lie in the package of reforms announced today by finance secretary John Swinney - Delivering Planning Reform.

These reforms are said to be the result of consultation between the Government, the Convention of Scottish Local Authorities and the development industry. They begin to put flesh on the bones of the much heralded “new way of working” to improve the efficiency of the planning system, the foundations of which were laid by the Planning etc (Scotland) Act 2006. They are to see the public sector working together in a “different way” and more effectively with the development sector. One of the benefits of the new way of working, as detailed in today’s announcement, is said to be “More proportionate demands made of developers by the public sector to focus resources on matters of greater significance.” This is coupled with an intention to prepare a series of model agreements covering different types of development, and also “a template for local schemes of developer contributions.” There are clearly two important elements in that statement. It would seem that at long last there is an intention to produce an element of “standardisation” of Planning Agreements. We have long complained that without this, we would continue to see the long delays that tend to be associated with negotiation of such agreements. It is difficult to guess at this early stage, and on the basis of the bald statements contained in the document, what is intended by the local schemes of developer contributions referred to, but it does look, at first glance, as though it may resemble the Levy from down south. Will it give the certainty that the industry said it wanted, or will it simply be another layer of payment sought? One is tempted to ask - will it be any more palatable because it is being “contributed,” with the associated implication of free will, rather than levied? There will obviously be much amplification, and commentary, in the weeks and months to come.

Jamie Hunter, Solicitor in our Strategic Land Team comments on the 2008 update to Scottish Planning Policy 3

The revised SPP 3 was introduced at the end of July to deal with the inadequacies of the version released in 2004 and bring this crucial aspect of development in line with the broader aims of the Planning etc. (Scotland) Act 2006.

Quite whether the timing of its release is good or bad remains to be seen. In large part, SPP 3 is designed to tackle issues of restricted supply and, in addition, secure the Government’s target of new house-building at the rate of 35,000 units per year by 2015. Regardless of the economic downturn, there remains a substantial requirement for housing that is unmet and, even if a downturn renders the targets harder to achieve, SPP 3 does set out clear guidelines which should prove useful in the formulation of policy and development strategy.

The revised document seeks to tackle the issue of limited land availability throughout the system due to a failure to provide the releases called for in the previous iteration and the problems this caused for local authorities and developers. It recognises that flexibility is required in assessing need and demand as well as providing the necessary land and resources to ensure the delivery of completed units.

Instead of authorities constantly reacting to the conditions in the housing market, SPP 3 now expects housing land supply to be well planned and provides, in far more detail than before, the criteria by which housing need and demand should be assessed by planning authorities.

As with its predecessor, the document looks to achieve ‘well-designed, good quality housing in sustainable locations’ and ‘the creation of high quality places’, all of which are laudable but are also addressed throughout the planning system and are therefore worth mentioning only in passing.

The fact that this revisal to SPP 3 comes at the point of a serious downturn in the property market sees a significant point of divergence between business reality and government hope. As has been pointed out, SPP 3 requires authorities to look to the future but may (somewhat ironically) be a document that is, in itself, somewhat behind the times.

Whilst there is a call for the ‘generous’ supply of land, this currently seems irrelevant, wistful or possibly both, in the current economic climate. The news over the past few weeks has been of development on existing sites slowing and projected completions are at very low levels. Recent NHBC figures suggest that completions in 2008 will come to somewhere in the region of around 12,000-15,000 and projections for 2009 estimate that approximately 9000 new units will be completed. Against these figures, the old target of 25,000 units per annum is untenably high and the new target of 35,000 seems more-or-less academic. Looking to the long term, and hopefully beyond the impending recession, SPP 3 is a clear illustration that, regardless of the number of units being built, there is an undeniable and increasingly unsatisfied demand. Whilst it is currently a point of uncomfortable debate amongst those concerned as to whether the funding exists to satisfy the demand, at least in recovery the development industry can be sure that there will be deals to be done.

Another issue that crops up from the revised guidance, though it is not unique in presenting this difficulty, is that affordable housing is seen as a vital component and ‘mixed’ communities are encouraged. Addressing these issues is nothing new to the development industry but providing affordable housing in a situation where ‘conventional’ units are not proceeding at any great rate is a serious issue which the document, due to the timing of its preparation and publication, does not address. It would not be particularly surprising to see movement on this type of issue and some sort of interim guidance forthcoming from the Scottish Government in the months ahead.

Other hope will come from the objectives of the SPP which, amongst other things at Paragraph 16, sets the requirement that assessment of need and demand is carried out which is ‘…consistent and robust…’ and achieved ‘…through joint working between local authorities and a range of partners…’ Whilst there has always been consultation between different actors in the system, it is encouraging to see that they are being more-or-less compelled to work with one another. This should reduce the frequency of those extremely frustrating situations where one arm of state bureaucracy does not know what the other is doing at any given time.

Also, it is worth remembering that much of the content of the SPP will only be given its full effect in practice through the new Strategic and Local Development Plans which will take years to emerge. For this reason, the revised SPP 3 may well be coming at the best possible time and, even if the target of 35,000 remains unachievable, the guidance will still be relevant in times to come.

So it can be seen that the revised SPP 3, whilst perhaps coming a little too late in the cycle to have immediate effect, is not entirely without merit. Developments in the economy will ultimately determine whether Planning for Homes is a document that serves as a wistful footnote of times past or a genuinely useful guide for the future.

A package of improvements to make Scotland's planning system more efficient was announced on 28 October 2008.

The reforms will build on work already done to ensure planning is geared towards supporting increased sustainable economic growth - vital in the current economic climate.

Simpler and more transparent processes.
Government agencies to focus increasingly on matters of genuine national interest.
Scottish Government and agencies to publish annual reports on performance.
Up to date development plans that provide investors and communities alike with greater certainty.
Quicker decision making by councils on high-quality applications.
Streamlining over 20 separate Scottish Planning policies into one. The first two parts, on core principles and the key elements of the planning system are to be published imminently and the third part, a statement of policy on a number of development themes, will be published in Spring 2009.
A new electronic planning system to be formally launched next Spring.

Details of the proposals can be found on the Scottish Government's website accessible here.

All non-confidential responses to the discussion draft on NPF2 have now been published on the Scottish Government’s website accessible here

NPF 2 - Strategic Environmental Assessment (SEA) Supplementary Assessment of Candidate National Developments Consultation

Following numerous proposals by stakeholders as to what should be included as National Developments within NPF2, the Scottish Government has published a consultation on the required SEA into the effects of a plan, and alternatives to it, before its content is finalised.

The findings from the SEA and the views expressed by consultees, will form one part of an ongoing process of evaluation to decide which projects will be designated as National Developments.

No firm decisions have as yet been made by the government on what will or will not be designated as National Developments within the plan.

Written responses to the consultation paper are to be submitted by October 31, 2008.

The consultation document is available on the Scottish Government’s website accessible here

Draft Regulations on Development Planning: Consultation Paper: Analysis of Consultation Responses

The Scottish Government has published its analysis of responses received to the consultation on Draft Regulations on Development Planning.

Draft Regulations on Development Plan Examinations: Consultation Paper: Analysis of Consultation Responses

The Scottish Government has published its analysis of responses received to the consultation on Draft Regulations on Development Plan Examinations.

The Scottish Government is to run a dissemination programme to ease the implementation of SPP 3. It will do so by (1) running a series of seminars and events designed to address the key points of the revised SPP 3, (2) providing consistent advice on SPP 3 and the related policy, and giving consideration to particular issues.

Officials from across the Scottish Government, including planning, housing and the newly-formed Centre for Housing Market Analysis, will deliver the seminars and events.

assist with the implementation of the revised SPP 3;
help with the transition from the previous SPP 3 by highlighting key changes;
place the revised SPP 3 within the context of the Scottish Government's ambitions for housing supply, including Housing Need and Demand Assessment and the Local Housing Strategy, as well as the modernisation of the planning system;
examine particular elements of the revised SPP 3;
address specific problems which are relevant to particular sectors or regions; and
provide contact points for support with the suite of guidance associated with SPP 3.

This PAN has been produced as part of the Scottish Government's commitment to the design quality agenda. It aims to:

promote the use of masterplanning to create better places;
explain how to achieve more effective masterplanning;
achieve more consistency in the presentation of masterplans; and
encourage good practice through a range of exemplar case studies.

The PAN covers the masterplanning process from beginning to end: from understanding the need for masterplanning, to preparing, creating, processing and implementing a masterplan.

The government convened 70 experts drawn from planning, forestry, farming, environmental organisations and academics to shape the research projects to be undertaken. It will be the most comprehensive study of its kind and will culminate in Scotland's first ever land use summit next year.

Ministers see the need for a debate on the importance of land as a resource for communities, land managers, land owners and for the country as a whole.

Approximately 98 per cent of Scotland is classified as rural, with almost 80 per cent as agricultural (6.12 million hectares) and 17 per cent as forest and woodland. The majority of agricultural land is rough grazing with only 10 per cent of agricultural land used for crops, fallow and set-aside.

how Scotland's rural land can best contribute to sustainable economic growth;
the role Scotland's rural land can play in tackling climate change; and
how land use can best facilitate sustainable rural community development

Details of the review are available on the Scottish Government’s website accessible here

The Scottish Government has received more than 70 plans for new "eco-towns" in response to its initiative to create new green communities that will be examples for developers to follow.

Unlike the UK Parliament which announced plans for ten new eco-towns, Scottish Ministers have not set any limit to the number of eco-developments that could be developed.

All proposals received will have to undergo and pass an assessment process in the course of the remainder of this year.

All applications will still have to go through the entire planning process, including full consultation with local communities. Proposals must also:

contribute to meeting housing requirements in the area;
show a level of innovation that will serve as an inspiration to future development in Scotland;
contribute significantly to reducing emissions of carbon dioxide;
aim to keep pollution to a minimum;
generate possibilities for people to lead healthier, more active and environmentally responsible lives; and
demonstrate that top quality, sustainable development is something that can be achieved within a reasonable timescale.