AC-2024-LON-001877 - [2025] EWHC 2132 (Admin)

On 16 March 2023 a without prejudice meeting round table meeting was held between the Claimant and members of her family, the Second Defendant’s Corporate Director of Inclusive Economy and Housing, Vicky Clark, and the parties’ legal representatives. Further correspondence and emails were exchanged over the course of the following days. On 20 March 2023 Ms Clark again met with the Claimant and members of her family. On 21 March 2023, the Second Defendant agreed to extend the deadline for acceptance of the offer until 29 March 2023.

On 27 March 2023 Ms Clark emailed the remaining leaseholders, including the Claimant, in the following terms –

“I am very pleased that we are moving towards an agreed date for Vacant Possession of 29^th March. This date is important for the Council because it allows us to progress the scheme, and to safeguard £12m of Greater London Authority grant investment in the scheme.

Moreover the Council is not minded to extend deadlines again as we have already made our best and final offer to leaseholders and there is no scope to amend this further.

I would like to remind you that the offer being made to you via the contract offers exceptional value.

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You have the right to return to a fully refurbished flat worth significantly more than the property in its current state, at no net cost to you.

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Should the scheme start but stall part way through you will have sufficient compensation to purchase something equivalent in size and quality to your refurbished flat, in a similar location.

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You will receive a disturbance payment of £40,100 per flat within fourteen working days of the contract being signed.

In the event that you do not accept the offer and agree the VP date, the Council will move to make a Compulsory Purchase Order.

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Under the terms of a confirmed Compulsory Purchase Order the price which the Council can offer you is your flat’s market value, plus 10%.

I know that alongside final assurances on contracts, you have all had some practical concerns regarding arrangements for Vacant Possession, Inventory and Removal and I thought it sensible to group these in a single email to everyone - please note that this email is intended to cover all the specific issues that people have raised in discussions over the last week.

If you have raised an issue which you feel is not covered here, or if you want further clarification, then please contact me as soon as possible”.

The Claimant’s son, Pirakalathan Saravanamuthu, gave evidence at the public inquiry. In his proof of evidence, he states that on 17 March 2023, on receipt of the revised draft agreement the Claimant had instructed new solicitors, Irwin Mitchell LLP, to review it and advise on its terms. He states that it was on 22 March 2023 that the Second Defendant informed the Claimant that the deadline for accepting the revised draft agreement was linked to the availability of GLA grant funding. He says that the Second Defendant agreed at the Claimant’s request to extend the deadline for acceptance of the terms of the revised draft agreement to 29 March 2023. He says that the Claimant received Irwin Mitchell’s advice “around 28 March 2023”.

In mid-afternoon on 29 March 2023, Irwin Mitchell emailed a letter to the Second Defendant raising a number of points, including –

“We have not had enough time to review the Agreement and the supporting documentation in detail but we understand that you have told our clients that they must sign the Agreement today (29 March 2023) or you will compulsorily purchase the Property. They have also told me that the grant funding given to you by the Greater London Authority is dependent on you having acquired the keys to the four leaseholder properties in the Building by 31 March 2023.

In respect of the grant funding, I would be grateful if you could confirm that our client’s understanding is correct. Please also let us know whether it is possible to extend this deadline, how the funding is essential to delivery of the Agreement and if you lose the funding, how the Council would fund the compulsory purchase of the Property.

In respect to the Agreement, essentially our clients want to secure a position whereby, if the Council does not refurbish the Property and hands it back to them, or hands it back to them prior to the Commencement Date, they are ensured their global settlement figure of £1 million. These principles are contained in the Agreement, and our clients are not seeking to a renegotiation of the principles already agreed. However, further amendments are required to make the Council's obligations enforceable and to protect our clients. Our clients are acting reasonably in seeking to ensure that this happens.

The Agreement gives the Council a wide discretion to decide not to carry out the works to the Building and the Property and to decide to exercise the Option and purchase the Property instead. In these circumstances and in the light of past structural and repair issues with the Building, we believe that it is entirely reasonable that our clients want to secure their uplift payment and to avoid any unforeseen expenses or circumstances”.

At the end of the afternoon on the same day (29 March 2023), the Second Defendant’s lawyers responded to that letter –

“I write after attempting to ring you without success. We are surprised to be contacted by yourselves as we were unaware of your client’s change in solicitors acting. …

We would like to confirm that the standing offer is for £1 MILLION as per the contract agreement your client has hopefully shown you. The uplift payment will remain open until midnight tonight if your client can give us vacant possession in that time. I'm afraid we cannot entertain any further amendments to the contract. We have been repeatedly clear on this. It is now the day of signature and three other leaseholders have now completed. We cannot realistically circulate a change at this last minute.

We note your letter states that we will compulsorily purchase the property - this is not in fact the case. The relevant deadline today is for the option uplift payment. If your clients provide us with VP after today they will not be entitled to the uplift payment under the contract, but the offer to enter into the contract remains”.

The Claimant’s solicitor immediately responded –

“I am sorry that you were not able to get hold of me - I'm not sure what happened. Please can you urgently consider extending the deadline to 30 March (tomorrow) so that I may have time to consider the information in your email below with my client”.

On the morning of 30 March 2023, the Second Defendant’s lawyers emailed the Claimant’s solicitors as follows –

“I write following our call a moment ago. I must be extremely clear that the uplift offer has now expired and will not be reinstated. Please brief your clients accordingly.

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Your client is still welcome to sign the contract and hand over the keys. The uplift clauses will no longer be operable but the council's existing compensation offer is quite generous and you must be aware it is a substantial improvement on the statutory minimum. If your clients are agreeable to this route we would ask that they sign as quickly as possible, ideally today.

Secondly, we would be prepared to reinstate the original landlord’s offer made to your clients late last year and purchase the flat from them outright. This would be on the basis of a new pre-sale valuation of the property in its current condition. This will offer your clients certainty. If your clients do take this route then we suggest adopting the 14th April as a possible exchange date for simplicity's sake.

Please take instructions and let us know your position, particularly if your clients wish to sign the contract”.

On 31 March 2023, having failed to obtain vacant possession of the Premises, the Second Defendant lost the opportunity of GLA funding for the Scheme in the sum of £12M. Cabinet’s approval of the budgetary and funding arrangements for the Scheme as set out in the March report and confirmed on 30 March 2023 following call-in by the Overview and Scrutiny Committee had assumed the loss of that GLA grant funding.

On 6 April 2023, the Second Defendant’s lawyers sent a detailed response to the Claimant’s solicitors’ letter of 29 March 2023 –

“We appreciate at the time of your writing that you had not had sufficient time to review the Agreement. Further, that you were under the impression from your clients that if they had not signed the Agreement by 29^th March 2023 an extension was required because the only alternative was for the Council to compulsory purchase the Property.

As we explained when we spoke on 29^th March, however, an extension is unnecessary. The significance of the 29^th March date relates only to the Option Uplift Payment of £1m under clause 10.14, applicable in the event that all leaseholders gave vacant possession of their properties to the Council by that date. The contract remains available for your clients to enter into with the Council, notwithstanding that the effect of clause 10.14 is now academic. In consequence, no extension of time was or is required by your clients. In any event, whilst the Council's Cabinet has approved the use of CPO powers, as we are sure you will have already advised your clients, negotiations can occur alongside a CPO and are not a reason to hold it up.

We note that the offer set out in clauses 10.1- 10.13 still applies and your client will still be entitled to receive the purchase price (as valued on the basis that the works were completed) plus a 10% uplift if the works are terminated.

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We must emphasise that following the passing of the 29^th March, the effect of cl. 10.14 no longer applies and therefore there is no ‘global settlement figure of £1 million’. We do not follow how you maintain the assurance in your letter that the agreed principles continue to apply. We also note that you state your clients wish to receive payment upon their property being handed back to them, including where this may occur prior to the Commencement Date. Payment under clause 10 of the Agreement where the works do not complete is on an acquisition basis, not a hand back of the property. Further, prior to the Commencement Date and where the works are deemed no longer viable, the provisions of clause 9.4 apply entitling your clients to hand back of their property and the Phase 2 Payment.

In summary, the sum of £1 million in clause 10.14 (and the still active full back offer of the refurbished value plus 10% per 10.13(c)) was intended to allow your clients to purchase an equivalent property in the event works had to be halted. It was not a compensation payment for disturbance or disruption, which are covered by the Phase One and Phase Two payments”.

Thereafter, during the course of continuing negotiations on the revised draft agreement the Claimant sought to persuade the Second Defendant to reinstatement of the uplift offer. On 6 October 2023, the Second Defendant’s solicitors wrote to the Claimant’s solicitors as follows –

“The Council has considered carefully your various amendments to the Option Uplift Payment, which we note as proposed would operate to reinstate the Option, provide a mechanism where payment of the uplift would be made regardless of the date of entry into the agreement by your client and be index-linked.

The terms offered to all four leaseholders who retained interests in James Riley Point included at 10.14 of the draft agreement an offer (as amended) of the Option Uplift Payment in the event that a Works Termination Event occurred or Practical Completion had not been reached by 29^th September 2026. The Option Uplift Payment is defined in the Agreement as the difference between the Agreed Purchase Price for the unit (together with all sums paid under cl. 10.13) and the sum of £1m. The commitment on the part of the Council to make the Option Uplift Payment in accordance with cl. 10.14 required all leaseholders to give vacant possession by 29^th March 2023. In the event that vacant possession was not given by all leaseholders, the Option Uplift Payment ceased to be payable to any. Although the three other leaseholders agreed terms with the Council in accordance with the draft agreement, the Option under cl. 10.14 lapsed in all cases as a result of your client failing to agree terms and give vacant possession by the due date.

The time limitation on the offer, ending (as amended) on 29^th March 2023, was included because vacant possession of all units within James Riley Point was required by 31^st March 2023 in order to enable the Council secure £12m grant funding from the GLA. Your client's decision not to agree to the terms offered has meant that the grant has now been lost. More widely, the Option Uplift Payment was proposed as a time-limited offer operating, it was hoped, to incentivise leaseholders to provide early vacant possession. This would have thereby enabled the Council to avoid the costs of making a full CPO, deliver an earlier start on site with associated construction cost savings and avoid the costs of works for compliance with building and fire safety requirements for an occupied building which will become largely redundant once refurbishment of the block commences.

As a public body, when offering financial compensation for land in advance of a compulsory purchase order, the Council must consider value for money and avoid any repercussive cost impacts or pressures on both the scheme in question and other publicly funded schemes. In the circumstances attaching to this scheme, the Council considers that it was reasonable for the offer of the Option Uplift Payment to have been time-limited and that it is also reasonable now not to reinstate that offer.

The potential and now actual loss of the GLA grant funding were and remain factors which reasonably justified the Council's decision that the offer should be time limited and is not to now be reinstated. The offer of £1m exceeded (and exceeds) the reasonable open market value of the leasehold interest in your client's flat both now and upon completion of the refurbishment works. Absent any other compelling reason, the £1m sum would also potentially give rise to repercussive effects on the acquisition of other interests within the wider Carpenters Estate. For these reasons we regret that we are unable to reinstate the Option Uplift Payment”.