Bride Hall Estates Ltd & Anor v St George North London Ltd

In construing a poorly drafted overage clause, the court must identify the most likely objective meaning from the agreement’s language, defined terms and relevant factual background. Where an agreement describes a primarily residential building as apartments with associated parking, parking rights can form part of the residential units. Their exclusion from net internal area may be a measurement device, not an exclusion from the sale price. Gross sale price ordinarily includes the bundle of rights acquired with the unit, subject to expressly permitted deductions. The possibility that parking could have been sold separately or later does not displace that construction. Subsequent events should not alter the parties’ contractual entitlements.

The claimants sold property at 171/176 Aldersgate Street to the defendant under an agreement requiring development of a primarily residential building with apartments and associated parking. Clause 11.4 provided for overage calculated by reference to the aggregate sale prices of the residential units.

The defendant argued that consideration attributable to parking spaces should be deducted. Deputy Master Nurse decided the preliminary issue in the defendant’s favour. John McDonnell QC, sitting as a Deputy High Court Judge in the Chancery Division, reversed that decision. The central issue before the Court of Appeal was whether the agreement included parking consideration in the aggregate sale prices for overage purposes.

Appeal dismissed. Carnwath LJ delivered the judgment, with Maurice Kay LJ and Keene LJ agreeing.

1. Objective construction. The agreement was poorly drafted and contained no definition of aggregate sale price. The court therefore had to identify its most likely meaning from the contractual language, defined terms and relevant factual background. The construction issue was not properly determined by the phrase referring to the events which had happened.
2. Residential units and associated parking. Clause 3.2.1 described a primarily residential building comprising a wine-bar unit and apartments for residential use together with associated car parking. The natural reading was that the parking was associated with the apartments, not the wine bar. The definition of Net Internal Area excluded car parking, terraces, balconies and common areas for measurement purposes. That exclusion was a strong indication that those rights were appurtenant to the residential units, while excluded from the floor-area calculation.
3. Gross sale price. The reference in clause 11.4.2 to gross sale price ordinarily covered the bundle of rights acquired by the purchaser, not merely the bricks and mortar. There was no basis for deducting the value of parking rights, any more than the value of terraces, balconies or other ancillary facilities. The only permissible deductions were the specified reasonable sales incentives.
4. The absence of an obligation to sell parking within a particular period, and the possibility of separate or later disposal, did not displace the construction indicated by the agreement. The agreement did not address every eventuality, but the hypothetical possibilities were insufficient to defeat the more likely interpretation. The Deputy Judge was correct in substance, although reliance on subsequent events was unnecessary and misplaced.

1. Court of Appeal (Civil Division): In [2004] EWCA Civ 141, the appeal was dismissed. The High Court’s conclusion was upheld in substance, although its reliance on subsequent events was rejected as unnecessary and misplaced.
2. High Court of Justice (Chancery Division): John McDonnell QC, sitting as a Deputy High Court Judge, allowed the claimants’ appeal and reversed the preliminary decision.
3. Deputy Master: Deputy Master Nurse answered the preliminary issue in the defendant’s favour, holding that parking consideration was deductible for overage purposes.