Mogens Alex Bastholm v Peveril Securities (Dalton Park Retail) Ltd
| Jurisdiction | England & Wales |
| Judge | Davis-White |
| Judgment Date | 03 March 2023 |
| Neutral Citation | [2023] EWHC 438 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: PT-2021-NCL-000008 |
[2023] EWHC 438 (Ch)
HH JUDGE Davis-White KC
(SITTING AS A JUDGE OF THE CHANCERY DIVISION)
Case No: PT-2021-NCL-000008
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN NEWCASTLE UPON TYNE
PROPERTY TRUST AND PROBATE LIST (ChD)
The Moot Hall, Castle Garth,
Newcastle upon Tyne, NE1 1RQ
Mr Jason Jamil of Arndale Solicitors LLP for the Claimant
Mr Jonathan Gavaghan (instructed by Flint Bishop LLP) for the First Defendant
The Second and Third Defendants did not appear and were not represented.
Hearing dates: 12–15 December 2022
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HH JUDGE Davis-White KC (SITTING AS A JUDGE OF THE CHANCERY DIVISION)
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30am on 03 March 2023
HH Judge Davis-White KC:
This case concerns a payment deed (the “Payment Deed”) under which overage becomes, or became, payable in certain circumstances. There having been an attempt to submit a valuation question to expert determination, under the terms of that Deed, as long ago as May 2014, the main question is whether that attempt was valid or not and, if it was, whether the expert determination clause should now be enforced. However, the parties, in an agreed list of issues, agreed that various other matters would be put before the court for determination.
Representation before me
The claimants were represented by Mr Jason Jamil, a solicitor with Higher Court advocacy rights who also acted for the claimants as the partner in the firm of Arndale Solicitors Limited and having conduct of the litigation on their behalf.
The first defendant was represented by Mr Jonathan Gavaghan of Counsel, instructed by Flint Bishop LLP.
The second and third defendants did not appear and were not represented. I am told that they are content to abide by the court's decision as is set out in their Defence where they explain their position and that they do not intend to participate in these proceedings.
I am grateful to Mr Jamil and Mr Gavaghan for their helpful written and oral submissions.
The background to the Payment Deed
The agreement under which overage could arise is a payment deed dated 9 May 2000 (the “Payment Deed”).
The background to the Payment Deed is as follows.
On 10 June 1998 a company called Matthew Fox (UK) Limited was incorporated. It changed its name to Matthew Fox Developments Limited (“MFD”) on 25 June 1998.
Also on 25 June 1998, the first claimant, Mr Mogens Alex Bastholm (“Mr Bastholm”), was appointed director and secretary of MFD. Mr Graham Gill, the second claimant (“Mr Gill”) and Mr Barry Dunn (Mr Dunn”) (whose trustee in bankruptcy is the fourth claimant) were also appointed directors. The relevant representatives of the company formation agents resigned on the same date as director and secretary. Two shares were also issued and allotted, one each to Mr Gill and Mr Dunn.
By the time of the annual return submitted as at 10 June 1999, the shareholdings in MFD were as follows:
| Mr Bastholm | 30 |
| Mr Dunn | 20 |
| Mr Gill | 20 |
| Angela Matthews (the 3 rd claimant) | 30 |
By letter dated 31 January 2000, the Secretary of State, on the joint application of MFD and JJ Gallagher Limited granted outline planning permission for development of land lying to the west of the A19 at Dalton Flats, Murton, Seaham, County Durham, which land was shortly afterwards purchased by MFD, as explained below. The site is located east of Murton, approximately 3 miles south-west of Seaham and 5 miles north of Peterlee.
By letter dated 15 February 2000, David Sail, a development surveyor agreed to market for sale the shares in MFD.
On 4 March 2000, Mr Bastholm and Mr Dunn resigned as directors and on 6 March 2000, Mr Mark Graves, the husband of Angela Graves (nee Matthews) was appointed a director of MFD.
On 13 March 2000, MFD, as purchaser, entered into an agreement with RJB Mining (UK) Limited, as vendor, in relation to the purchase of land described as “land lying to the west of the A19 highway at Dalton Flats, Murton of 35 hectares or thereabouts” as further identified as a plan attached to a draft TR1 attached to the said agreement. The sale price was in excess of £3.5 million. I shall refer to this land as “Dalton Park”.
In April 2000, further shares in MFD were issued and allotted so that the overall shareholdings were as follows:
| Mr Bastholm | 40 |
| Mr Dunn | 40 |
| Mr Gill | 40 |
| Mrs Graves | 60 |
| Mr Jackson (the 5 th claimant) | 60 |
On 9 May 2000, a number of documents were entered into in connection with the sale of the shares in MFD to London and Amsterdam Developments Limited (“LAD”). These included a share option agreement and a share sale agreement. Under the latter agreement, the shares in MFD were sold for a consideration of just over £4.4 million together with certain sums to pay off certain expenses due to various of the vendors from the MFD. The total of such payments was just under £5m million. In addition, further sums were due to be paid by LAD to MFD to clear its borrowings with its bankers.
The Payment Deed was also entered into which provided for overage payments in certain circumstances.
The Payment Deed
The Payment Deed was entered into between Mr Bastholm, Mr Dunn, Mr Graves, Mrs Gill and Mr Jackson, described collectively as “the Seller”, and MFD, described as the “Purchaser”. The opening part of the Payment Deed is as follows:
“THIS DEED is dated 9 May 2000
And is MADE BETWEEN:-
(1) MOGENS ALEX BASTHOLM of [address] BARRY DUNN of [address] GRAHAM GILL of [address] ANGELA JANE GRAVES of [address] and JONATHAN FRANK JACKSON of [address] (together called “the Seller”)
(2) MATTHEW FOX DEVELOPMENTS LIMITED whose registered office is at [address] Company Registration No 3578654 (“the Buyer”)”
Later on, at a meeting at Teeside Airport in December 2013, it was decided to refer to the former shareholders in MFD, referred to in the Payment Deed as “the Seller”, as the “Matthew Fox Consortium”. I shall use the term the “Consortium” to refer to the relevant individuals, namely Mr Bastholm, Mr Dunn, Mr Gill, Mrs Graves and Mr Jackson.
The Payment Deed identified two separate areas of land within Dalton Park. These two areas are respectively referred to as “Phase 1” and “Phase 2”. For convenience I refer to these two areas of land as “Phase 1 Land” and “Phase 2 Land”. This is to avoid confusion with the separate concept of Phase 1 development and Phase 2 development, being informally used to cover development that took place at different times. Overage under the Payment Deed became payable in certain circumstances by reference to development works carried out on the Phase 2 Land, provided that they commenced within the “Phase 2 Period” being a period of 15 years commencing with the date of the Payment Deed. That period therefore expired on or about 9 May 2015.
Clause 1 of the Payment Deed contains definitions which I shall come back to,
Clauses 2 to 5 and clause 11 of the Payment Deed relate to various obligations between Buyer and Seller with regard to applying for, facilitating and paying for an application for planning permission in relation to the Phase 1 Land. Those provisions are not immediately relevant.
Clause 6 of the Payment Deed sets out the circumstances in which overage may become payable. The following definitions in clause 1 of the Payment Deed are immediately relevant to clause 6:
“ “Notional Interest” means 1 per cent above the base rate from time to time of Barclays Bank plc compounded with quarterly rests thereon from the date hereof to the date payment is made to the Seller pursuant to Clause 6
“Credits” means:-
(a) all reasonable and proper costs (including, without limitation, professional fees) incurred by or on behalf of the Buyer in obtaining any planning permission for Development on the Relevant Phase 2 Part
(b) the cost of all Infrastructure Works servicing the Relevant Phase 2 Part which are in place prior to commencement of Development on the Relevant Phase 2 Part
(c) Notional Interest on the Relevant Phase 2 Part Value
“Development” means development works other than Infrastructure Works, the commencement of ground works, operations in connection with site clearance, demolition of existing buildings, archaeological investigation works for the purposes of assessing contamination remedial works in respect of any contamination diversion of services and the creation of means of enclosure for site security
“Infrastructure Works” means the construction of any infrastructure works serving Phase 2 including (without prejudice to the generality of the foregoing) roads, footpaths, utilities...
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