Property law reports

Building contract: Overage

Defendants agreeing to pay overage to claimants in respect of building contract - overage calculated after deductions for sales incentives - defendants deducting cost of car-parking spaces prior to calculation - whether car-parking spaces integral to accommodation units or 'incentives' for sales purposes

Bride Hall Estates Ltd and another v St George North London Ltd: ChD (Mr John McDonnell QC, sitting as a deputy judge of the division): 30 April 2003

The claimants agreed to sell properties to the defendant, which intended to construct a residential building consisting, in part, of apartments and associated parking.

The agreement provided that the defendant would pay overage to the claimants.

The method for calculating the overage was set out in clause 11.4 of the agreement, and was based on the net internal area of the building.

In clause 3.2.1, the net internal area was described as including associated car parking.

However, a further description in the clause specifically excluded the car parking spaces.

Therefore, the question before the court turned on a true construction of the terms of the agreement, and whether a figure for those spaces should have been deducted from the gross sale price prior to assessing the figure owed to the claimants for overage.

James Thom QC (instructed by Watson Farley & Williams) for the claimants; Jonathan Small (instructed by DLA) for the defendant.

Held: The claim was allowed.

A true construction of the terms of clause 11.4 was of little assistance because its ambiguity was capable of helping both parties.

Therefore, it was not a matter of what the parties had understood to be the arrangement at the time of the agreement, but rather a question of what actions the parties had subsequently taken.

The defendants had sold the permitted parking spaces together with individual flats for a single price.

Where a parking space was included in the sale, a single lease conveyed both the flat and the parking space.

In those circumstances, the defendants could not justify the deduction from those prices of the elements representing the parking spaces.The claimants were therefore entitled to 35% of the amount by which the total sale price for the residential units exceeded the stated amount, and the sale price was the gross price achieved after deducting 'incentives' as provided by the defendant, but excluding the parking spaces.

Town and country planning: Procedural fairness

Change of use - enforcement notice - appeal -procedural fairness - whether inspector dismissing appeal on ground not put before him - whether claimant denied opportunity to comment - claim allowed

Entertainu Ltd v First Secretary of State and another: QBD: Administrative Court (Mr Justice Collins): 6 May 2003

The claimant operated a hostess bar in the Soho conservation area close to Chinatown, London W1.

The local planning authority issued an enforcement notice, alleging an unauthorised change of use of the premises from class A3, and refusing an application for planning permission for the use as a hostess bar.

In their attached reasons, the authority stated that the bar would detrimentally affect the amenity of local residents and would harm the character of Chinatown, citing suspected crime on, and the touting for business outside, the premises.

The claimant appealed to the secretary of state.

The inspector found that any crime associated with the bar was confined to the premises themselves, and that the establishment did not significantly affect residential amenity.

However, he dismissed the appeal after finding that a sex-related use in that location would adversely affect the character of Chinatown and that there was, accordingly, a fundamental objection to it on policy grounds, which could not be overcome by the use of conditions.

The claimant appealed.

It argued that the inspector had decided the appeal on a ground that was not raised before him, namely that any hostess bar on that site would be unacceptable, whereas the council's objections had been limited to the nature of the bar in question.

The claimant contended that, accordingly, it had been unaware of the case it had to meet, and had been unable properly to deal with it in its submissions.

Kevin Leigh (instructed by Lucas McMullan Jacobs) for the claimant; Sarah-Jane Davies (instructed by the Treasury Solicitor) for the first defendant; the second defendants, Westminster City Council, did not appear and were not represented.

Held: The claim was allowed.

It was clear from the council's formal reasons for the enforcement notice and for the refusal of planning permission that it was objecting to that particular hostess bar because of the activities associated with it, in the form of crime and touting.

It was not clear that it was suggesting that permission could not properly be granted for any hostess bar in that part of Soho.

The ground on which the inspector had dismissed the appeal, namely fundamental policy objections, constituted a very different objection from the one that the claimant had believed it was obliged to meet, and was therefore a matter that the claimant had not been able properly to cover in its submissions.

It was not possible to say that the inspector's decision would have been the same had submissions been made on that point.

The decision would be set aside and remitted to the secretary of state for reconsideration.