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  The planning application was then withdrawn, potentially in breach of QD’s obligations to CPC.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 With the planning application withdrawn, CPC faced a much longer wait for their second payment and sought a number of declarations that QD were in breach of their obligations and for further or other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.

Author: Jacqueline Button

Public sector employees worried about their pay and pensions aren’t the only ones affected by the new government’s clamp down on spending.

Property Week reported last month (4/6/10) that on 24 May Whitehall’s Efficiency and Reform Group announced a halt to lease extensions in the current financial year that do not have Treasury approval. The government is also planning to exercise break options which it has this year, including at Eland House, Victoria Street SW1, the 24,200 sq ft headquarters of the Communities and Local Government Department.

A client of ours has had a similar experience – a government department tenant, initially keen to renew their lease have backed out of negotiations and will be relocating to cheaper premises. (Spare a thought for the staff – no pay rise, no pension and forced to work in the back of beyond).

So landlords of public sector bodies must beware – your once star tenants are fading. Check break dates and expiry dates. If any are coming up soon, you may find yourself looking for a new tenant.

Authors: Steve Kenneford & Caroline Beale

There still appears to be confusion over the obligation to provide Home Information Packs since the announcement to suspend the same on the 21st May 2010.

The situation is as follows:-

Any/all properties marketed prior to the 21st May 2010 will require a fully compliant HIP.   Any properties marketed after the 21st May 2010 will no longer require a HIP but will require an Energy Performance Certificate to be provided at the cost of the seller.   The cost of the local authority and drainage searches will once again fall upon the Purchaser. 

So, effectively, with the exception of the EPC which is being retained, the last 4 years and probably the 3 before that (whilst we were all preparing ourselves for the new HIPS revolution) were a complete waste of time, effort, money and a further erosion of our already depleted rainforests in terms of the monumental waste of paper involved. Thanks for everything Yvette (Cooper)!

It remains to be seen whether any further changes will be made and we will keep you advised.

Author: Terence Ritchie 

In line with their pre-election manifestos, the new  coalition  government has announced that the definition of ‘previously developed land’  otherwise known as ‘brownfield land’ is no longer to include garden land.  The intention being that it will be easier for councils to stop unwanted developments and reject planning applications for developments that local people oppose, or which are considered to ruin the character of the area, preventing the practice of ‘garden grabbing’ by developers.

Under the old rules, residential garden land was considered suitable for development and the previous government encouraged high density development on such sites. Local authorities have found it difficult to prevent the trend of houses being built in gardens as developers and home owners alike have taken advantage of these rules . Indeed, in 2008 a quarter of new homes were built on garden land. This is a figure the new government is keen to reduce by favouring development of existing empty properties or the development of what they consider to be genuine brownfield sites such as derelict industrial areas and wasteland. Whether it has the desired effect, only time will tell. In practice, many small to medium sized developers  nationwide  will be looking at this with a degree of concern with planning restrictions likely to become more strict as a consequence.