Impact of Prince Charles’ Interference with the Chelsea Barracks
Author: Chris Alexander
Much has been made of the interference of Prince Charles in the row surrounding development of the Chelsea Barracks site in London, some of the most expensive residential real estate in the world. The resulting litigation between CPC Group Limited (“CPC”) and Qatari Diar Real Estate Investment Company (“QD”) has been widely reported particularly because of the connection to the heir to the throne. While Prince Charles’ involvement does raise interesting legal issues regarding royal political interference, the key issues in dispute between the parties have been glossed over to some extent.
Contract
CPC and QD entered into a joint venture for the acquisition of the Chelsea Barracks site in the form of a Guernsey based special purpose vehicle called Project Blue (Guernsey) Ltd (“PB”) which applied for planning permission for the development of 638 residential units, a hotel and various other community facilities.
CPC then sold its interest in PB to QD for an initial payment of just under £38 million and a deferred payment mainly dependant upon the success of the planning application up to a combined total of £81 million. QD was under an express obligation to use all reasonable but commercially prudent endeavours to achieve the triggers for payment of the deferred consideration and to act in good faith.
As we now know, His Royal Highness then expressed his displeasure at the architectural merits of the scheme contained in the planning application to his royal counterparts in Qatar. Boris Johnson also expressed differing architectural concerns. The planning application was then withdrawn, potentially in breach of QD’s obligations to CPC.
Proceedings
With the planning application withdrawn, CPC faced a much longer wait for their second payment and sought a number of declarations that QD were in breach of their obligations and for further or other relief. QD responded to the claim by alleging that CPC had acted contrary to the requirement for good faith by forcing QD’s hand after Prince Charles had intervened and that QD had in turn accepted this repudiatory breach bringing the joint venture to an end (in their favour).
Mr Justice Vos held that in withdrawing the Planning Application, QD were in breach of their contractual obligations although not in breach of their obligation of good faith. CPC were also declared not to have acted contrary to their requirement of good faith. However, it was not a complete victory for CPC, who did not get all of the declarations sought and the question of what damages they may be entitled to, was left for another day as were costs.
Conclusion
With the sale contract still in force, a new planning application will probably be submitted in due course and CPC may well still receive payment of the deferred consideration, albeit somewhat later than they would have liked. What therefore did this litigation achieve? Mr Justice Vos identified that had the parties focused upon resolving their mutual problems rather than digging in for an expensive fight then the dispute could well have been avoided. That sentiment often rings true whether the sums involved are millions, thousands or just hundreds of pounds.
Conditional payments or conditional obligations are commonplace in many land transactions, particularly where development is involved and while in most instances royal intervention won’t be an issue, conditionality is a fertile ground for disputes.