Angelo Continental Educational Group v Capital Homes
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Thomas,Lord Justice Richards |
| Judgment Date | 17 March 2009 |
| Neutral Citation | [2009] EWCA Civ 218 |
| Date | 17 March 2009 |
| Docket Number | Case No: A3/2008/1748 & 1749 |
| Court | Court of Appeal (Civil Division) |
[2009] EWCA Civ 218
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)
DAVID DONALDSON QC, SITTING AS
A DEPUTY HIGH COURT JUDGE
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Arden
Lord Justice Thomas and
lord Justice Richards
Case No: A3/2008/1748 & 1749
Mr Michael Norman (instructed by Messrs Turners LLP) for the Respondent
Miss Caroline Hutton (instructed by Messrs Lester Aldridge LLP) for the Appellant
Hearing date : 23 February 2009
Lady Justice Arden :
The two parties to this appeal are locked in battle over a contractual provision for a discount in the calculation of the purchase price for two properties. The appellant, Anglo Continental Education Group (GB) Ltd (“AC”), which is the seller, contends that, in the events which have happened, there is no discount. The respondent, Capital Homes (Southern) Ltd (“CH”), which is the buyer, contends that the discount is allowable but that it cannot be calculated as at completion and so there is to be implied a term for deduction of an estimated amount at completion and for the determination of the true amount thereafter. Both parties say that the agreement is void for uncertainty if that interpretation is not correct. The judge, David Donaldson QC, sitting as a deputy judge of the Chancery Division of the High Court, rejected both their interpretations of the agreement, but declined to declare what in his judgment was the true interpretation of the agreement. Accordingly the meaning of the agreement was not resolved. The parties contend that it was not open to the judge to wash his hands of the matter in this way.
This agreement concerns two properties, 10 and 12 Cavendish Place, Bournemouth, of which AC is the registered proprietor. These properties fall within a conservation area and are subject to restrictive covenants that prevent the development of these properties without the consent of the covenantees, the trustees of the Cooper Dean Estate. Each property has a single dwelling on it and is ripe for development. AC marketed the properties and CH expressed an interest in buying. There were negotiations. AC and CH entered into an agreement dated 4 January 2006, subject to the grant of planning consent for development of the demolition of the existing houses and the construction of not more than 14 flats on the site.
The agreement gave CH responsibility for applying for planning permission. It made two applications, one for 13 flats and one for 14 flats. Both were refused. CH appealed but that appeal was dismissed on 12 February 2007. CH then exercised its contractual right to waive the condition requiring planning consent on 14 February 2007. It followed under the terms of the agreement that the date for completion was then 26 March 2007, being 28 working days thereafter. Completion did not however take place because of a dispute as to the precise amount payable. Since the completion date, planning permission has been obtained for 9 flats.
The relevant provisions of the agreement were clause 14 and clause 1(1). Clause 14 made the agreement conditional on the buyer obtaining a “satisfactory planning permission” (defined, so far as material, as unconditional planning permission) for the “Development”. Clause 1(1) contained a number of definitions, prefaced by the following words:
“In this Agreement:
1.1 the following words and expressions shall have the following meanings for all purposes:”
Accordingly the possibility of defined terms being excluded by the context is ruled out. One of the defined terms was:
“Development: the development of the property as residential flats with not more than 14 two-bedroom units”
Under clause 14, CH agreed to apply for planning permission for the development and use all reasonable endeavours to obtain planning permission. CH had the right to modify the original plans if in its opinion or on the advice of the local planning authority officers it was considered appropriate at any time prior to the decision of the local planning authority. Both parties had the right to terminate the agreement if planning permission was not obtained within nine months (subject to an extension if there was an appeal). If CH wished to prevent AC from terminating the agreement, it had to exercise a right, which was expressed to be exercisable “at any time before the grant of satisfactory planning permission”, to waive the condition for planning condition. If the planning condition was waived, the agreement had to be completed 28 days after notice of the waiver was given. At completion, CH had to pay “the Purchase Price”.
The definition of “the Purchase price” is also in clause 1(1) and it provides:
“Purchase Price: £862,000 (eight hundred sixty-two thousand pounds) less the amount (including covenantees' fees and costs) required to obtain a deed of release/variation of the covenants contained in entry 1 of the charges registers to both Title No. DT61359 and DT56503 to enable the Development to be implemented.”
When the agreement was made, it was known to both parties that the covenantees would, if planning permission was given, probably require a sum between £8,000 and £10,000 per unit to release or vary the covenants, together with a sum of about £1,500 for costs. It was not its policy to agree to vary restrictive covenants until planning permission was given. There was another important fact, which forms part of the factual matrix. CH enquired of the local authority about planning permission and discovered that there would be no objection in principle to demolishing the two houses in question and replacing them with a single block of flats. This was information known or available to both parties.
AC considered that, under the agreement, no discount was to be allowed where the buyer had waived the planning condition and no deed of release or modification of the restrictive covenants was in existence at the contractual completion date. On 23 August 2007, it issued proceedings against CH claiming a declaration as to the true meaning and effect of the term “Purchase Price.” CH filed a defence and counterclaim claiming damages for breach of contract. CH sought the implication of the term into the contract or “other such implied term as the court may determine as would enable the contract to be completed in circumstances where the price was not known on completion date but would be ascertained thereafter”. On 3 January 2008 case management directions were given by consent by Deputy Master Lloyd. These included a direction for a stay of the claim and counterclaim other than paragraph 1 and the claim for relief. The proceedings (apart from a counterclaim by CH for damages) were set down for trial with directions for disclosure and inspection and witness statements, and came before Mr David Donaldson, QC, who ordered that the claim and the counterclaim should both be dismissed, with no order as to costs. He also made no order on an application made by AC for the exclusion of certain documents and passages of witness statements on the ground that they contained material which was inadmissible on an issue of construction.
The judge disagreed with the interpretations put forward by both parties. Both parties sought to persuade the judge to make a declaration as to such implied term as he should determine. The judge held that he had serious doubts that he had jurisdiction to do so and in any event he did not consider such a course to be appropriate. He held that, at least in the case of a contractual dispute, a declaration should only be made on the basis of a submission advanced by one of the parties, rejected by the other, contested by adversarial argument.
On this appeal, both parties continue to press for the interpretations rejected by the judge. Miss Caroline Hutton, for AC, submits that the discount is only deductible from the Purchase Price if there has been a grant of planning permission and if the amount required to be paid for release of the covenants has actually been paid. She submits that “the amount” means “the amount, if any,”. She submits that no amount is required for the purpose of enabling the development to take place unless planning permission has actually been given. She also submits...
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