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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bride Hall Estates Ltd & Anor v St George North London Ltd  EWCA Civ 141 (18 February 2004)
Cite as:  EWCA Civ 141
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF
JUSTICE (CHANCERY DIVISION)
MR JOHN McDONNELL QC
sitting as a Deputy High Court Judge
London, WC2A 2LL
B e f o r e :
LORD JUSTICE CARNWATH
LORD JUSTICE MAURICE KAY
| BRIDE HALL ESTATES LIMITED
|- and -
|ST GEORGE NORTH LONDON LIMITED
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Jonathan Seitler QC and Mr Jonathan Small (instructed by DLA) for the Defendants/Appellants
Crown Copyright ©
Lord Justice Carnwath :
"Whether upon the true construction of the Agreement… and in the events which have happened the aggregate sale prices for the Residential Units includes the sum paid in respect of parking spaces for the purposes of calculating overage under Clause 11.4 of the Agreement."
i) Mr Maxfield for the Claimants noted that the price in the contract was "a global one for the flat and the parking space". This was in support of his suggestion that the Defendants' proposed figures for parking, making up the total of £823,000, represented their own apportionments of the sale prices, rather than contractually agreed figures; and that such issues of quantification should be left for subsequent resolution if the Defendants succeeded on the point of principle.
ii) Mr Brierley for the Defendants disputed this interpretation. He exhibited correspondence relating to Flat 6 which showed that "separate prices were achieved for the flats and car-parking spaces…" He asserted that:
"… the car parking spaces were indeed marketed separately to the flats and revenue for the sales of the car parking spaces was treated entirely separately."
There is no indication in the papers, or skeleton arguments below, that either party thought the resolution of this apparent dispute to be relevant to the preliminary issue. It seems to have been left open as a matter to be resolved if necessary at the quantification stage.
The relevant clauses
"St George shall obtain detailed planning permission for the Works in a form satisfactory to the Company and St George …for the construction on the Property of a new primarily residential building comprising in aggregate approximately 60,963 sq ft of Net Internal Area and consisting of a unit on the ground floor and part first floor … for use within Class A3 of the Schedule to the Town & Country Planning (Use Classes) Order 1987 and a mix of apartments of 54,505 sq ft of Net Internal Area (or thereabouts) for residential use together with associated car parking (whether at basement and/or ground level) …".
"11.4.1 On the sales of the Residential Units if the aggregate sale prices (subject to Clause 11.4.2) achieved exceeds (sic) £340 per square foot of the total Net Internal Area of the Residential Units (measured in accordance with Clause 3.2) then within 5 days following completion of the sale of the last Residential Unit St George shall pay a sum calculated at 35% of the amount by which the total sale price for the Residential Units exceeds £340 per square foot as aforesaid apportioned equally between the Company and the Option Holder.
11.4.2 St George will use all reasonable endeavours to procure that the Residential Units are sold at the best price reasonably obtainable and as soon as reasonably possible (which may include off-plan sales). St George confirm that it is not their normal practice to offer sale incentives but if, acting reasonably, market conditions dictate that incentives should be given, the sale prices achieved for the Residential Units shall be net of reasonable sales incentives consisting of any of the following: carpets, curtains, purchasers' legal fees and stamp duty, but shall otherwise be the gross sale price achieved. St George shall notify the Company in each case of the amount of such incentives and such net sale price."
"'Residential Unit' means the residential units for which planning consent shall be obtained under Clause 3.2'."
"'Net Internal Area' means the number of square feet of area to be provided in a unit of accommodation each such unit of accommodation to be measured from the internal face of its perimeter walls… It will exclude common areas such as entrance lobbies corridors lifts and fire escapes and will exclude terraces and balconies and car parking spaces."
Unfortunately, there was no definition of "aggregate sale price" in clause 11.4.1, other than the indication in the following subclause that it was to be the "gross sale price" (subject to deduction of "incentives").
i) Residential Units do not naturally comprise or include car parking, at least where the units are apartments, and the parking is physically separate. The word "unit" connotes a physical living space.
ii) The agreement left the Defendants free (subject to the planning permission) to deal with the car parking spaces as they saw fit. They were not obliged to attach them to the individual flats, nor to dispose of them at any particular time or at all. For example, they could have been kept back, and offered on short-term licences to the residential lessees, or even to the wine bar for its staff or customers.
iii) The terms of the agreement contain a number of indications that the parties did not regard dealings with the car parking as equivalent to dealings with the Residential Units:
a) clause 11.4 obliges the Defendants to use all reasonable endeavours to sell the Residential Units as soon as reasonably possible, but imposes no equivalent obligation in relation to the car parking;
b) clause 22.214.171.124, which sets out the circumstances in which the Defendants may "declare dissatisfaction" with the planning permission, makes no reference to onerous car-parking conditions;
c) overage is payable within 5 working days of the sale of the last Residential Unit (Clause 11.4.1), but makes no provision for the possibility of parking being sold at a later time;
d) the calculation of overage is related to the prices per square foot of the Net Internal Area, which excludes car parking areas.
i) In ordinary language the price for a flat is the price for the bundle of rights and collections of bricks and mortar which the purchaser buys, including ancillary rights of various kinds. Clause 11.4.2 makes it clear that these are to be the gross sale prices, except that certain specified sales incentives can be deducted if they are reasonable.
ii) In Clause 3.2.1 the word "apartment" is used in contrast to "residential unit"; a "residential unit" includes the apartment plus parking. The aggregate prices include the price of car parking, just as they include all the other benefits that go with a flat, such as balconies, common parts, lifts etc. Further, the language of clause, and the restriction of the Wine Bar to the ground and first floors, show that the parking spaces are associated with the apartments and not the Wine Bar.
iii) The definition of "Net Internal Area" does not affect the meaning of the aggregate sales prices, since
a) it is a measuring provision, not a valuation provision.
b) it excludes from valuation not only car parking spaces, but also the common parts, balconies and even external walls, all of which are naturally included in the price of the flat. The price of a flat also includes things which are not in ordinary language part of the flat - such as the right to use common parts, communal gardens or other common facilities.
The judgments below
"36. I infer that all 40 permitted parking spaces were in fact sold with individual flats under agreements expressing the flat and the parking space to be sold for a single price and that where a parking space was included in the sale both flat and parking space were conveyed by a single lease."
"38. Since the Defendant has chosen to sell the 40 permitted parking spaces with 40 of the flats in each case as a single property, and since each such property is clearly a "residential unit for which planning consent has been obtained under Clause 3.2"… and since a car parking space is not one of the "extras" for which a deduction is permitted under Clause 11.4.2, I can see no basis for the deduction which has been made."
"40…. First of all, it treats a car parking space as an area which would naturally be included when measuring the "area provided in a unit of accommodation". Secondly, it means that the area of the terrace or balcony of a flat is excluded when calculating the threshold amount under the first part of the formula in Clause 11.4 even though the value of the terrace or balcony is clearly part of the total consideration for the purposes of working out the Claimant's percentage. The parties plainly treated that as a perfectly sensible approach (as indeed it was), so there is nothing surprising about the conclusion that the car parking spaces were treated in the same way. "
"41 … the Agreement plainly envisaged that (the parking spaces) might be disposed of as part of 'units of accommodation (see the definition of 'Net Internal Area') and since that is what the Defendant actually chose to do the Claimants are entitled to their percentage in the events which have happened."
i) The term "residential unit" is defined by reference to the description (Clause 3.2.1) in which the planning permission is defined. That refers to the building as being "primarily residential", the components being the wine bar (the class A3 unit) and "a mix of apartments…for residential use together with associated car parking." Although it is grammatically possible that the word "associated" refers to the wine bar as well as the apartments, the more natural reading is that it is associated with the apartments only. This view is reinforced by the fact that the wine bar is subject to separate provisions defining the nature of the lease, which contain no indication that any parking is to be provided.
ii) "Net internal area" is defined as excluding the common areas, and also specifically "terraces and balconies and car parking spaces." This strongly suggests that such rights are regarded as prima facie appurtenant to the residential unit, but to be excluded for the purposes of calculation. It also strongly suggests that the rights of individual flat owners to car parking spaces are regarded as in the same category as terraces and balconies. Although clearly the availability of a terrace may add significantly to the value of a flat, just as may a car parking space, it is not included in the specific comparison required by Clause 11.4. Like the Judge, I think the Deputy Master was wrong to treat the exclusion of car parking spaces as something which favoured the Defendants' construction. On the contrary, I see it as a strong pointer in favour of the Claimants' construction. If it is accepted that the residential unit included the rights to common areas and terraces and balconies, although not within the definition of "net internal area" there seems no reason why the rights to car parking spaces should be treated any differently.
iii) I agree with the Claimants that the "gross sale price" referred to in Clause 11.4.2 would normally mean the price, not just of bricks and mortar, but also of the "bundle of rights" which the purchaser acquires. Apart from the specific "incentives" referred to in that clause, there seems no reason to deduct the value of the right to a car parking space where this is provided, any more than a right to a terrace or to any other ancillary facilities.
Lord Justice Maurice Kay
Lord Justice Keene