Shah & Ors v Colvia Management Company Ltd

A contractual power to regulate parking is constrained by an express requirement of reasonableness. The court may assess objectively whether a regulation is reasonable for the common enjoyment of the relevant rights. The decision-maker has a wide discretion and may adopt any of a range of reasonable schemes, but it must consider the rights and interests created by the lease. A management company may ration parking by allocation, pricing or need. Charges for parking may be reasonable, but a scheme is unreasonable where its prices are fixed solely to recover costs properly chargeable through service charges from all tenants, thereby placing the burden on the minority who need overnight spaces.

The claimants were tenants or sub-tenants of industrial units at Barking Industrial Park and operated vehicle-repair businesses. They challenged an overnight parking scheme introduced by the defendant management company. The scheme imposed charges for allocated overnight bays, with the charges calculated by reference to the company’s costs of administering the scheme and its liability for rates on the car parks.

The claimants accepted that an overnight ban, together with a limited number of paid overnight bays, could in principle be reasonable. They challenged the scheme principally because it required vehicle repairers and other users needing overnight spaces to fund costs which were ordinarily recoverable from all tenants through service charges. They also argued that the scheme would be ineffective and imposed unreasonable practical conditions.

1. Claim succeeded in part. The proposed scheme was an unreasonable regulation of the contractual parking rights. A declaration was to be agreed setting out that conclusion and the grounds for it. The defendant was ordered to pay the claimants’ costs, subject to the ordinary service-charge position.
2. The right to use the car parks was subject to reasonable rules and regulations for their common enjoyment. That qualification was contractual and was not an unlimited administrative discretion. The court could therefore decide objectively whether the regulation was reasonable.
3. The company had a wide discretion and could reasonably ration parking by allocation, pricing or need. The claimants did not challenge the principle of an overnight ban, the number of proposed overnight bays, or the need for proper policing. The ban would provide some benefit by freeing spaces for morning use, even though further daytime policing might be required.
4. The company had power to charge for overnight parking and could potentially charge for daytime parking. However, it had not researched or considered the proper market value of overnight spaces. The prices were calculated solely by reference to the ISTM costs and the car-park rates. Those costs were matters to be recovered through service charges from all tenants, rather than imposed in practical terms on the minority who needed overnight bays.
5. The court distinguished the orderly regulation of competing parking rights in Montrose Court Holdings Ltd v Shamash [2006] EWCA Civ 251 from the cutting down of parking rights considered in Saeed v Plustrade Ltd [2002] EWCR Civ. 2001. The present challenge was directed principally to the funding mechanism, not to the overnight restriction itself.
6. The court rejected the submission that only Wednesbury unreasonableness applied. The contractual standard permitted objective review. In any event, the result would have been the same under that more limited test. A revised scheme could be reasonable if its charges were properly assessed by reference to the market, needs and value of the spaces, rather than merely to the company’s rates and administration costs.

First-instance decision. Permission to appeal was refused, with the judge stating that the important findings were factual and that the legal points would not affect the outcome.