Chichester District Council are locked in a legal dispute with a property company in a bid to overturn a court ruling that they claim could leave them up to £1.9m out of pocket.
The dispute relates to an agreement reached between the council and West Sussex Properties Ltd (WSP) in December 1972, in respect of a site in Terminus Road, Chichester. Under the terms of the agreement, WSP was to construct a factory unit to be built in two stages; phase one within two years and phase two within three years. The agreement did not state whether the rent should include one or both phases of the development.
In April 1999, Deputy High Court Judge Nicholas Stewart QC backed WSP’s claim that a rent agreement worked out in 1991 for payment of an annual ground rent of £54,000 mistakenly took into account the second phase of the development, and that, in fact, the rent should have been set at £18,387.
The judge ordered the council to repay the amount of rent paid by WSP since June 1990 which exceeded the correct ground rent for the period from June 1989 to March 2020. The amount payable was to be determined at a fresh rent review.
However, counsel for the local authority, David Oliver QC, claims that there was no evidence to support the judges finding that the original lease agreement in 1972 did not include phase two, and that, in those circumstances, the judge had been wrong in his decision.
Counsel for WSP admits that the 1972 agreement was ambiguous as to whether the rent was to be based on phase one only, but argues that the judge had been entitled to find that, on the balance of probabilities, the people who negotiated the 1991 rent review did so under a mistake, common to both, that the 1972 agreement reflected the value of both phases.
The Appeal Court was told that the exact financial implication of the decision is not yet clear. However, the council’s estates department estimates that if the appeal fails, the council could face a loss of around £1.9m.
The hearing continues.
West Sussex Properties Ltd v Chichester District Council Court of Appeal (Morritt and Sedley LJJ and Sir Christopher Staughton) 14 June 2000.
David Oliver QC and Clifford Darton (instructed by the solicitor to the council) appear for the appellants; Kirk Reynolds QC and Timothy Dutton (instructed by Thomas Eggar Church Adams, of Horsham) appear for the respondent.
PLS News 15/6/00
