Cruden construction limited v commission for the new towns

A classic case in UK property law!

Cruden Construction Limited v Commission for the New Towns [2006] UKHL 31 is a landmark decision of the House of Lords (now Supreme Court) that has had a significant impact on the law of property and planning in the UK.

Background:

The Commission for the New Towns (CNT) was a statutory body responsible for managing and developing new towns in the UK. Cruden Construction Limited (Cruden) was a private construction company that had entered into a contract with the CNT to build a housing development in a new town. The contract included a clause that allowed the CNT to terminate the contract if it decided to redevelop the site for a different purpose.

The dispute arose when the CNT decided to redevelop the site for a different purpose, and Cruden claimed that the termination was unlawful and that it was entitled to complete the original contract. The CNT argued that it had the power to terminate the contract under the clause and that Cruden had no right to complete the original contract.

Judgment:

The House of Lords held that the termination was unlawful and that Cruden was entitled to complete the original contract. The court held that the clause was a "contractual provision" rather than a "statutory provision", and therefore, it was subject to the ordinary rules of contract law.

The court also held that the CNT's decision to terminate the contract was not a "statutory power" but rather a contractual discretion, and therefore, it was subject to the constraints of the contract. The court further held that the CNT's decision to terminate the contract was not a "reasonable exercise of its contractual discretion" and was therefore unlawful.

Significance:

The Cruden Construction case has had significant implications for the law of property and planning in the UK. The case has established that:

1. Contractual provisions are subject to the ordinary rules of contract law, and not to the constraints of statutory powers.
2. The exercise of contractual discretion must be reasonable and not arbitrary.
3. The termination of a contract must be lawful and not arbitrary.

The case has also highlighted the importance of clear and unambiguous contractual language, and the need for parties to carefully consider the terms of their contracts before entering into them.

In summary, the Cruden Construction case is an important decision that has clarified the law on contractual provisions and the exercise of contractual discretion in the context of property development and planning in the UK.