Harris and another v Berkeley (Strategic Land) Ltd and another

Sale of land – Residential accommodation – Overage – Claimants selling land to defendant developers – Local authority granting planning permission for development of land – Dispute arising whether defendants liable to make overage payments to claimants – Claimant seeking declaration of entitlement to overage payments – Whether units build on land properly constituting permitted units under contract – Whether planning permission allowing units of residential accommodation – Claim allowed In September 2007, the claimants sold a parcel of land to the defendant developers for £13m. The contract of sale provided for overage payments triggered by development in excess of 290 units. Under three planning permissions granted in 2009 and 2011, the defendants developed the site with 290 of what the developer considered to be residential units, 15 of which were covered by the November 2011 permission, plus an additional 60 extra care units in a care home that formed part of the ultimate scheme also included in that permission. The claimants argued that this triggered the overage provision. However, the defendants argued that the care home, which comprises 60 flats with communal facilities including a café, lounge and hairdressing facilities, did not constitute permitted units of residential accommodation under the terms of the contract. The claimants sought a declaration that, on its true construction, they were entitled to the overage payments provided for under the terms of the contract. The court was asked to determine: (i) whether the 60 units were units of residential accommodation within the definition of permitted units in the contract for sale to be included in the operation of the overage provisions; and (ii) whether the relevant planning permission permitted a number of units of residential accommodation. Held: The claim was allowed. The relevant planning permission had described the permitted development by reference to class C2 of the Town and Country Planning (Use Classes) Order 1987. There was no difficulty in describing the 60 units as units of residential accommodation. It might be that there were additional ways of describing them but none of those descriptions make it inappropriate to describe the units as “units of residential accommodation”. If necessary, one could break down the phrase into its component parts. The units were undoubtedly units in that they had their own doors and could be separated in terms of occupation and use. They were not to be regarded as only parts of a greater unit, although they might also be parts of a greater unit. Moreover, it was clear that they were areas of residential accommodation in that they provided accommodation and its character was residential. The Use Classes Order did not suggest a different answer. Class C2 referred to the provision of residential accommodation. Although it also referred to providing care in addition, on the way it referred to providing residential accommodation. In looking at the physical makeup of that which was permitted by the planning permission, the court’s preliminary or provisional view was that one was dealing with something which included units of residential accommodation, although it included other things such as the shop and the hairdresser and so on. The physical thing might be used for the use described within class C2 and might not be used for the use described within class C3. This distinction between C2 and C3 was made for planning purposes but when one considered the permitted use planning law was all important. The relevant part of class C2 was the first part of class C2 which referred to the physical thing being used for the provision of residential accommodation and care to people in need of care. The units therefore could be used for the provision of residential accommodation but not for residential accommodation absent the provision of care. Residential accommodation had to be provided as part of a composite provision which had two elements: one was residential accommodation, the other was care. Although the 60 units and ancillary facilities were within use class C2 rather than C3, the definition of permitted units in the contract did not adopt the classification of C2 or C3 and the word “units” was a general and wide word. “Residential accommodation” was general and wide. The contract distinguished between some types of residential accommodation and other types of residential accommodation but not between the type of residential accommodation (a phrase used in class C2 itself) which came within class C2 and other types of residential accommodation. Against that background, having appraised the physical thing permitted by the permission and having considered the range of permitted uses that might be made of the physical thing, the units in issue were clearly units providing accommodation of a residential character within the terms of the contract. The language of the contract was perfectly apt to include residential accommodation within the definition. The units did not cease to qualify as units of residential accommodation because the building in which they were permitted included additional facilities. Giving the words of the contract their ordinary English meaning, the planning permission permitted altogether in aggregate 75 units of residential accommodation. Jonathan Small QC ( instructed by Burgess Salmon LLP) appeared for the claimants; Timothy Mould QC (instructed by Blake Morgan LLP) appeared for the defendants.   Eileen O’Grady, barrister   Click here to read transcript: Harris v Berkley