Case Comment: Residential Moorings

Djurberg (t/a Hampton Riviera) v Smalls; Johnstone v Djurberg (t/a Hampton Riviera)

A residential mooring is a long-term mooring which may need planning permission for the moored boat to be used as the occupant's sole or primary residence. Such moorings require planning permission as they may constitute a material change of use. Residential moorings are therefore treated by local planning authorities as residential development and are subject to national and local planning policy. Without planning permission a boat occupied as a primary residence at a long-term leisure mooring would constitute a breach of planning control. This became an issue in the case, decided in September 2017, discussed below.

Background

Mr Djurberg (the Seller) owns and manages the Hampton Riviera boatyard and marina, located on the northern bank of the River Thames. He built and sold two luxury houseboats (HRB3 and HRB4) to the Smalls and the Johnstone-Sydneys (the Buyers).

The main issue in this case was that the Buyers claimed Mr Djurberg induced them to buy the houseboats by representing their purchases included long-term rights to moor the houseboats at Hampton Riviera and lawfully occupy them as their permanent family homes. However, the site did not have permission for residential properties. Mr Djurberg is accused of misrepresentation and breaches of contract.  

The Smalls and Johnstone-Sydneys

The Buyers responded to advertisements placed by estate agents for luxury houseboats (HRB3 and HRB4), marketed by Mr Djurberg with a 125-year mooring licence, intending to make them their family home. However, after the couples had begun their residence, Mr Djurberg stated the price for the houseboats did not include mooring rights at Hampton Riviera, and proposed an additional premium for this right.

To purchase the houseboat, the Johnstone-Sydneys were offered a loan from Mr Djurberg repayable to him over 15 years- they needed to sell their house to buy HRB4 but were not able to raise enough money. A few days before they were due to move in the Seller emailed them to say monthly repayments would be £2,500 rather than £1,500 which they could not afford. They moved in regardless but Mr Djurberg was unhappy. He withdrew the loan offer and introduced a mortgage broker. 

Consequently, both Buyers felt unable to afford the houseboats and decided to market them for sale. But, they were informed by the London Borough of Richmond not to market the houseboat for sale with permanent residential mooring rights at Hampton Riviera as such use was unlawful.

When the Smalls made their intentions to remove the HRB3 from the dry dock, Mr Djurberg claimed mooring fees and served a Lien Notice. When the Johnstone-Sydneys moved out of HRB4, Mr Djurberg disputed that they had any mooring rights and took possession, marketing the HRB4 for sale himself and selling it to Mr Cairns for £600,000.

The Moorings Issues

The fundamental basis for the sale and purchase of the houseboats was for the couples and their families to live in them moored at Hampton Riviera. The Buyers relied on Mr Djurberg that the price offered included a 125-year residential licences, and they would not have proceeded otherwise.

However, Mr Djurberg was not in a position to properly offer or grant residential mooring licences to purchasers of houseboats as there was no public right by which they could lawfully moor their houseboats for permanent or residential use at Hampton Riviera.

The Seller contended that there was no concluded contractual promise that the houseboats could be lawfully moored at Hampton Riviera for permanent residential use without further charge. But, as Mr Djurberg caused and allowed the Buyers to proceed on the basis they had secured lawful moorings at Hampton Riviera within the price offered, he was and is not entitled to a lien over the HRB3.

The Johnstone-Sydneys' Loan, Contract and Resale Issues

When Mr Djurberg repossessed and sold the HRB4 to Mr Cairns, the Buyers sought financial relief by way of repayment of the instalments and/or damages for misrepresentation.

The representations as to the mooring of the HRB4 at Hampton Riviera was not covered by any document but was basic to the parties' bargain. It was unfair and unreasonable for Mr Djurberg to rely on the lack of a contractual clause as the bargaining position of the Buyers was weak and had been exploited- they had devoted significant time and effort to their new life in a houseboat and had sold their house, for example.

Mr Djurberg claimed that the Johnstone-Sydneys' failure to pay the balance of the purchase price disentitled them from taking delivery, possession and ownership of the HRB4, and put them in repudiatory breach of the construction contract. However, Mr Rosen QC rejected that the Johnstone-Sydneys renounced or repudiated the relevant agreement as when the Buyers moved into the HRB4 there must have been some consent as to their taking possession and thus delivery.

When they informed Mr Djurberg they wished to sell the HRB4 and pay what as owed out of the sale proceeds, they did not demonstrate unequivocally an intention not to perform the agreement or give up possession for Mr Djurberg to sell. When the Buyers vacated the HRB4, they were owners entitled to possession subject only to continuing rights and obligations under their agreement with Mr Djurberg. The construction contract provided that on Mr Djurberg exercising any right to terminate the agreement, he was obliged to repay the "balance to proceeds of sale" after deducting the sums owed to him and expenses incurred. Mr Djurberg therefore conceded that he was accountable to the Johnstone-Sydneys in respect of proceeds of his sale of the HRB4.

Legal Consequences

Throughout the negotiations between the Seller and the Buyers, the inclusion of permanent residential mooring rights in the sale of the houseboats was fundamental, and Mr Djurberg knew that. He misrepresented the factual position, and allowed the Buyers to act in reliance of his promise and the lawfulness of the residential moorings at Hampton Riviera. But, Mr Djurberg did not believe or have reasonable grounds for believing such residential moorings were lawful. The Buyers subsequently suffered damage as they did not receive lawful or secure moorings.

Mr Djurberg was and is liable for damages for misrepresentation under section 2(1) of the Misrepresentation Act 1967. However it was held that Mr Djurberg expended great effort in building HRB3 to very luxurious specifications and maintains that it has substantial value. Mr Rosen QC therefore wishes him to have an opportunity to reacquire it, provided he complies with the damages awards. Failing that, it may be that an order for sale would assist.