Harris & Anor v Berkeley (Strategic Land) Ltd & Anor

In construing an overage clause tied to planning permission, the court must consider both the physical character of the permitted development and the uses permitted by the planning permission. Units may constitute units of residential accommodation even where they form part of a care home or residential institution and must be used as part of a composite provision including care. Ancillary facilities and classification under class C2 do not prevent that description where the contractual language is broad enough to include residential accommodation provided under that class. Ordinary meaning should be adopted where it produces a coherent commercial result.

The claimants sold development land to the defendants under a contract providing for overage based on the number of permitted units exceeding an agreed threshold. Planning permission was later granted for an extra-care scheme comprising 60 care units, ancillary facilities and 15 sheltered flats. The parties agreed that the 15 sheltered flats counted as permitted units, but disputed whether the 60 care units also fell within the contractual definition of units of residential accommodation. The central issue was whether the planning permission permitted 75 such units for the purposes of the overage provisions.

1. Construction of the contractual definition. The definition of permitted units required consideration of what was permitted by the relevant planning permission. That assessment involved two related matters: the physical character of the permitted development and the use to which it could lawfully be put.
2. Physical character. The 60 care units were separately identifiable units with their own accommodation, including bedrooms, lounges, kitchens, bathrooms, halls and storage. They were physically indistinguishable in the relevant respects from the 15 sheltered units. Ancillary facilities such as the café, lounge, hairdresser and communal areas did not deprive the individual care units of their character as residential accommodation.
3. Permitted use. Class C2 of the Town and Country Planning (Use Classes) Order 1987 permitted the provision of residential accommodation and care to people in need of care. The use was composite: it required both residential accommodation and care. The fact that the development fell within class C2, rather than class C3, did not mean that it ceased to involve residential accommodation.
4. Contractual language and result. The contract used the general expressions “units” and “residential accommodation”. It did not exclude accommodation provided under class C2 or confine the definition to dwelling houses under class C3. The ordinary meaning of the words produced a sensible commercial result and should be adopted. The planning permission therefore permitted an aggregate of 75 units of residential accommodation.
5. The court made the requested declaration, ordered detailed assessment of the claimants’ costs and ordered payment on account of costs in the sum of £40,000 within 14 days. Permission to appeal was refused, although the defendants remained free to apply to the Court of Appeal.