Defendant agreeing to pay overage to claimants in respect of building contract — Overage calculated after deductions for sales incentives — Defendants deducting cost of car-parking spaces prior to calculation — Whether car-parking spaces integral to accommodation units or “incentives” for sales purposes — Claim allowed
The claimants agreed to sell properties to the defendant, which intended to construct a residential building consisting, in part, of apartments and associated parking. The agreement provided that the defendant would pay overage to the claimants.
The method for calculating the overage was set out in clause 11.4 of the agreement, and was based upon the net internal area of the building. In clause 3.2.1, the net internal area was described as including associated car parking. However, a further description in the clause specifically excluded the car-parking spaces.
The question before the court therefore turned upon a true construction of the terms of the agreement, and whether a figure for those spaces should have been deducted from the gross sale price prior to assessing the figure owed to the claimants for overage.
Held: The claim was allowed.
A true construction of the terms of clause 11.4 was of little assistance because its ambiguity was capable of helping both parties. It was not therefore a matter of what the parties had understood to be the arrangement at the time of the agreement, but rather a question of what actions the parties had subsequently taken.
The defendant had sold the permitted parking spaces together with individual flats for a single price. Where a parking space was included in the sale, a single lease conveyed both the flat and the parking space. In those circumstances, the defendant could not justify the deduction from those prices of the elements representing the parking spaces.
The claimants were therefore entitled to 35% of the amount by which the total sale price for the residential units exceeded the stated amount, and the sale price was the gross price achieved after deducting “incentives” as provided by the defendant, but excluding the parking spaces.
James Thom QC (instructed by Watson Farley & Williams) appeared for the claimants; Jonathan Small (instructed by DLA) appeared for the defendant.
Vivienne Lane, barrister
