Charles-Argyle Property Management Limited & Anor v Boston Meadows Property Company Limited & Anor

A judgment must be read objectively, together with the order made consequential upon it. Where the order directs a full account of actual expenditure, it is unlikely that the judgment has already fixed a party’s profit entitlement at a specified sum. In determining whether property should be sold or valued, the court may exercise its jurisdiction under Civil Procedure Rules 1998, rule 40.16, or its inherent jurisdiction. The court should balance the parties’ respective financial positions and interests. A valuation may properly reflect current saleability, investment value, rental history, planning difficulties and the prospect of future development.

The claim concerned accounts for two property joint ventures. A previous judgment determined, among other matters, that the second claimant had a 25% rather than a 12.5% profit share in the First Choice House venture and directed consequential accounting steps.

At this hearing the court determined three preliminary issues. They concerned whether the earlier judgment had fixed the claimants’ profit at £2.4 million, whether the value of unsold flats should be determined by sale or valuation, and how any future development of further phases should affect the claimants’ share.

1. Fixed profit. Issue 1 was decided in the negative. The judgment and consequential order did not objectively establish an entitlement to a fixed profit of £2.4 million. The order required a revised draft account containing a full account of actual expenditure. That requirement was inconsistent with the claimants’ contention that the amount had already been conclusively fixed.
2. Paragraph 84 of the earlier judgment had to be read in its context. It addressed whether the claimants could share in rental income from unsold flats after choosing in January 2016 to receive their capital and an estimated profit share without such rental income. The reference to the same assumptions did not convert the estimated payment into a fixed award.
3. Sale or valuation. The court had jurisdiction to order a sale under Civil Procedure Rules 1998, rule 40.16, or under its inherent jurisdiction, notwithstanding that no sale order had been sought in the claim form. However, an immediate sale was not appropriate. The defendants had provided most of the capital and had financed the venture since the claimants’ capital was repaid, while the claimants’ profit remained tied up without rental income.
4. The proper course was to proceed with the account as soon as reasonably practicable. If unnecessary delay occurred, the claimants could apply for an order for sale. If valuation was required, it should be based on current value and should reflect both the saleability of the flats and the property’s investment value without individual sales. The valuation should also take account of the letting history, rental income after the planning difficulties emerged, and avoid a valuation date materially affected by Covid-19.
5. Future phases. The possibility of phases 3 and 4 becoming available remained a matter for the valuation. The valuer should assess whether there was continuing hope or potential for development as originally envisaged.

This was a first-instance determination of Issues 1, 2 and 3 in the context of an existing claim for accounts. The judgment records an earlier judgment handed down on 31 January 2020 and consequential orders made in February 2020.