Docklock Ltd v C Christo & Co Ltd

Where parties’ conduct objectively demonstrates acceptance of termination, a management-services agreement may end by consensual termination on the date established by that conduct. The agreed management fee must be calculated according to the contractual basis on which the parties fixed the price, rather than by substituting an invoiced percentage of rents. Benefits forming part of that agreed remuneration may be included. An occupation charge may be set off against the management fee for the whole period to which the charge applies. Before an order is drawn up and perfected, the court may change its mind and correct an evident calculation error, particularly where the issue was raised before final determination.

The judgment determined outstanding issues following a reserved judgment dated 19 February 2021 concerning the account between Docklock Limited and C Christo & Co Limited. The earlier judgment had found a binding agreement under which Docklock assumed liability for two employees’ salaries in lieu of management fees, and had allowed an occupation charge for premises at 66–70 Parkway to be set off against those fees.

Following permission to apply, the parties asked the court to determine the termination date, the correct management-fee rate, the applicable occupation-charge period, possible forfeiture, and additional service charges omitted from the account. The central questions were the proper construction of the parties’ remuneration arrangement and whether the court could correct the account before its final order was drawn up and perfected.

1. Termination. The agreement for payment of management fees ended consensually on 9 February 2015. The conclusion followed from Chris’s unequivocal evidence, Christo’s assumption of responsibility for Mr Forrester’s salary, Docklock’s resolutions, and the letter of 9 February 2015 requesting termination of the management arrangements. The court rejected the submission that termination could not occur before 9 June 2015.
2. Management fee. The parties had agreed that Docklock would pay the salaries of Nicholas and Mr Forrester, with their benefits, in lieu of management fees. That contractual basis governed the calculation. The court rejected the alternative claim based on 5% of rents collected. Docklock remained liable for the same agreed price for the same services after 1 November 2014, notwithstanding that it continued paying Nicholas directly. The fee for the relevant period was therefore £28,617.34.
3. Occupation charge and forfeiture. Docklock was entitled to set off the occupation charge for the whole period from 1 October 2014 to 9 February 2015. The charge of £28,570.08 left a management-fee balance of £47.26. It was unnecessary to decide whether any fee should be forfeited because that balance was de minimis.
4. Correction of the account. The court corrected the service-charge figure from £14,330.68 to £23,232.12. Applying Re L-B (Children) [2013] 1 WLR 634 at [16]–[19], the judge held that the court could change its mind before the order was drawn up and perfected. Correction was appropriate because the error was apparent from the underlying schedules and had been raised before final determination.
5. The management fee was adjusted to £253,110.54, the occupation charge to £151,508.00, and the corrected service charge was substituted. The resulting net figure was £78,370.42, subject to agreement of the final total.

The judgment was a further first-instance determination following the court’s reserved judgment of 19 February 2021. The parties exercised permission to apply for determination of the outstanding management-fee, occupation-charge and account issues.