| The case of Wosley Securities Ltd v Abbeygate | | | | one agreement or two separate agreements. |
| Management Services (Hampton) Ltd [2007], | | | | If they were one agreement, the defendant accepted |
| concerned an action which was brought as a result of | | | | (subject to any other defence it might have) that it |
| the claimant, the defendant and a company ("ASL") | | | | would be liable for the management charges. If they |
| entering into a joint venture agreement ("JVA") to | | | | were two separate agreements, the claimant |
| construct a block of flats. | | | | accepted that the defendant would not be liable. |
| It transpired that the development was unprofitable | | | | The judge held that there were two separate |
| and ASL went into liquidation. ASL was incorporated | | | | agreements, and therefore made a declaration that |
| for the purpose of carrying out the development and | | | | the defendant was not liable for the management |
| had no assets of its own. The funds to carry out the | | | | charges. The claimant appealed against this decision. |
| development were provided by: | | | | The appeal was allowed. The question as to whether |
| § A bank loan to ASL; and | | | | there was one agreement or two agreements was |
| § A loan from a loan facility granted by the | | | | irrelevant. Whether there was one agreement or two |
| claimant under the terms of a facility letter from the | | | | agreements, there could be no doubt that since the |
| claimant to ASL. This letter was annexed to the JVA. | | | | facility letter was, at the very least, referred to in the |
| According to clause 10.3 of the JVA, the defendant | | | | JVA, both the JVA and the facility letter had to be |
| guaranteed that ASL would perform its obligations | | | | interpreted in each other's context. |
| under the agreement. In addition to this, clause 2.12 of | | | | Considering clause 2.12 of the JVA and clause 4.3 of |
| the JVA obliged ASL to repay to the claimant all | | | | the facility letter, it was impossible to resist the |
| monies that the claimant had advanced in pursuance | | | | conclusion that as and when the claimant did in fact |
| of its loan facility. Furthermore, clause 4.3 of the facility | | | | debit any management charge to ASL's loan account, |
| letter entitled the claimant to debit to ASL's loan | | | | the amount in the loan account (including any |
| account 'any management charge'. | | | | management charge) was part of the advance. |
| The claimant alleged that a sum of £97,762, | | | | According to clause 2.12 of the JVA, it was ASL's |
| which included interest, was due to be paid by the | | | | obligation to pay that sum. As the repayment had not |
| defendant in accordance with the guarantee. Although | | | | been made, the defendant had to be liable as they |
| the claim included only a small part of the outstanding | | | | were the guarantor. |
| loan, it was substantially made for 'management | | | | Please contact us for more information on assessing |
| charges'. Those charges were divided into: | | | | damages due under termination of a contract at Visit |
| § Charges relating to the facility letter; and | | | | © RT COOPERS, 2007. This Briefing Note does |
| § Charges provided for in the cash flow appraisal. | | | | not provide a comprehensive or complete statement |
| The claimant applied for a summary judgement under | | | | of the law relating to the issues discussed nor does it |
| CPR 24. As the management charges were due | | | | constitute legal advice. It is intended only to highlight |
| pursuant to the facility letter, the issue before the judge | | | | general issues. Specialist legal advice should always be |
| was whether the JVA and the facility letter constituted | | | | sought in relation to particular circumstances. |