Law Report: Agreement not to oppose planning appeal lawful: Fulham Football Club Ltd and others v Cabra Estates plc. Court of Appeal (Lord Justice Neill, Lord Justice Balcombe and Lord Justice Steyn), 31 July 1992

There was no rule of public policy which rendered illegal or unenforceable a commercial transaction involving the disposition of land under which one party in return for substantial payments agreed to refrain from giving evidence opposing the other party's application for planning permission at a planning inquiry.

The Court of Appeal allowed an appeal by Cabra Estates from Mr Justice Chadwick's decision on 13 July 1992 that covenants entered into by the second to fifth plaintiffs, the shareholders and directors of the first plaintiff, Fulham Football Club Ltd, were illegal and contrary to public policy.

In 1989, Vicenza Developments Ltd, a susbsidiary of Cabra which owned Craven Cottage, the football ground, applied to Hammersmith and Fulham Borough Council for planning permission to develop Craven Cottage for residential purposes. The council then applied for an alternative development and issued a compulsory purchase order for Craven Cottage. The plaintiffs supported the council's applications. The Secretary of State ordered a public inquiry which was fixed to begin on 30 January 1990.

On 28 January 1990 Cabra and Vicenza made an agreement in writing with the plaintiffs involving the payment of substantial sums of money to the first plaintiff. The second to sixth plaintiffs also entered into a letter of undertaking with Cabra and covenanted for seven years not to support the council at any inquiry or to provide witnesses or evidence to support the council and covenanted to support Vicenza's application.

In November 1990 the Secretary of State agreed with the inspector's decision not to confirm the CPO and to refuse the council planning permission. Vicenza made fresh applications for planning permission which were refused by the council. Another public inquiry began on 2 June 1992. The plaintiffs refused to support Vicenza's application.

The plaintiffs issued a writ claiming a declaration that the second to sixth plaintiffs were entitled to give evidence they considered to be in the best interests of Fulham. The plaintiffs argued that the restraints imposed by the covenants were unforceable as being illegal and contrary to public policy, and that to comply with the undertakings would conflict with the fiduciary duties owed as directors to the first plaintiff.

Anthony Scrivener QC and Timothy Dutton (Lovell White Durrant) for Cabra; Ian Hunter QC and Joseph Smouha (Frere Cholmeley) for the plaintiffs.

LORD JUSTICE NEILL, giving the judgment of the court, said that the covenants extended to any application for planning permission or listed building consent for re-development of Craven Cottage during the currency of the letter of undertaking.

The proceedings before a planning inspector were ones to which section 2 of the Witnesses (Public Inquiries) Protection Act 1892 applied. No covenant or undertaking could lawfully require a covenantor to give false evidence.

However, there was no valid objection on grounds of public policy to a covenant whereby a party to a commercial transaction involving the disposition of land undertook to support, and to refrain from opposing, planning applications by the other party for the development of the land. Such covenants were commonplace.

The principle which underlay both the law of contempt of court and the rules governing the immunity of witnesses from suit was that, as a matter of public policy, the court would prevent, and if necessary, punish, conduct which interfered with the proper administration of justice.

In any individual case therefore the question was: had the act impugned, interfered with, or would it interfere with, the due administration of justice? It was not sufficient merely to pose the question: was the effect of the agreement that a party or a witness might be prevented from putting forward a particular contention in court or before a tribunal? It was necessary to take a broad view of the public interest, and where necessary, seek to achieve a balance between countervailing public policy considerations.

In the present case there was the public interest in allowing business to be transacted freely and in holding commercial men to their bargains.

Where, as here, a commercial agreement relating to land had been entered into between parties at arms' length and one party agreed in return for very substantial payments to support the other party's applications for planning permission, there was no rule of public policy which rendered such an agreement illegal or unenforceable. That did not mean that a witness could be prevented by agreement from giving evidence on subpoena, because that would involve an interference with the course of justice.

On the facts of this case, the covenantors could not rely on any rule of public policy which enabled them to ignore the provisions of the covenants of the letter of undertaking and to volunteer to oppose Vicenza's application.

It was trite law that directors were under a duty to act bona fide in the interests of their company. However, it did not follow from that proposition that directors could never make a contract by which they bound themselves to the future exercise of their powers in a particular manner, even though the contract taken as a whole was manifestly for the benefit of the company. Such a rule could well prevent companies from entering into contracts which were commercially beneficial to them.

In the present case the undertakings given by the directors were part of the contractual arrangement which conferred substantial benefits on the company. It could not be said that the directors improperly fettered the future exercise of their discretion.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive or Senior Sales Executive - B2B Exhibitions

£18000 - £30000 per annum: Recruitment Genius: A Sales Executive or Senior Sal...

Recruitment Genius: Head of Support Services

£40000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Warehouse Team Leader

£22000 per annum: Recruitment Genius: This industry leading company produces h...

Recruitment Genius: Business Development Manager / Sales - OTE £40,000

£20000 - £40000 per annum: Recruitment Genius: This IT provider for the educat...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory