The recently published case of Gaia Ventures v Abbeygate Helical (Leisure Plaza) Ltd [2018] EWHC 118 (Ch) is worth consideration. The well written judgment of Mr Justice Norris provides both a useful reminder of commonly used terminology but also a fascinating read of a developer's attempts to wriggle out of an overage payment.

Concisely put the facts of the case revolve around the redevelopment of Elder Gate in Milton Keynes. The site prior to the redevelopment constituted an ice rink and retail stores and the issues of the case arise from the developer's obligations to assemble the site and seek planning permission.

Part of the site assembly process involved the acquiring of the various freehold and leasehold interests on the site. This included the long-leaseholder of ice rink transferring its leasehold interest to the developer for consideration which included an additional payment of £1.4 million. The payment required, in essence, everything to be lined up for the redevelopment prior to 20 June 2013. 

As Mr Justice Norris begins his judgment by saying - 'How hard do you have to work to make yourself liable to pay £1.4 million? The essential question for decision in this case is whether a developer used 'reasonable endeavours' to achieve 'as soon as reasonably practicable' the satisfaction of certain conditions upon the fulfilment of which the developer became obliged to make an overage payment of £1.4 million.'

The conditions needed for the payment (agreement for the terms of a new ice rink development; surrender of the substation leases; and variations to easements benefitting other land) were finalised in the period of 18 days after the long stop date. This arose suspicion from the Claimant's perspective when the timeframe for the satisfaction of the conditions was over a period of years and the initial overage agreement was settled in 2003.

In considering the question for the decision in this case Mr Justice Norris referred back to the judgment of Mr Julian Flaux QC in Rhodesia International Holdings Limited v Huntsman [2007] EWHC 292 which provides valuable guidance upon endeavours obligations more generally:

"There may be many reasonable courses which could be taken in a given situation to achieve a particular aim. An obligation to use reasonable endeavours to achieve the aim only requires a party to take one reasonable course, not all of them, whereas an obligation to use best endeavours probably requires a party to take all reasonable courses he can. In that context, it may well be that an obligation to use all reasonable endeavours equates with using best endeavours..."

Mr Justice Norris also makes the point that an obligation to use 'reasonable endeavours' implicitly requires the party to not make that aim more difficult of achievement. 

The understanding of 'as soon as reasonably practicable' is more clear cut - the party needs to achieve the end as soon as it can and not at a time convenient or best suited to it. 

In this case it was judged that through a means of prevarification, procrastination and simply 'sitting  back and let[ting] events take their course' the developer failed to show the necessary effort to achieve its contractual commitments to the beneficiary of the overage. 

The views of the judge consistently found for the Claimant in this matter and throughout believed that the developer was acting to a game plan of seeking the securing of the stages of the site assembly for its own benefit without reference to its contractual obligations. On this basis it found against the developer.