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

The principal purpose of the proposed terms of the revised draft agreement was to enable the Second Defendant to undertake the refurbishment works at JRP without the need for compulsory purchase of the remaining leasehold interests. Its proposed terms provided a basis on which each of the remaining leaseholders would give vacant possession of their leasehold premises at JRP and grant a licence to the Second Defendant to occupy those premises for the purposes of carrying out the refurbishment works comprised in the Scheme. The Second Defendant was to grant to each remaining leaseholder a tenancy of comparable alternative premises during the course of those works and until their practical completion. That tenancy was to be at no rent. The Second Defendant was also to make two payments to each remaining leaseholder – the Phase One Payment and the Phase Two Payment. The Phase One Payment was a disturbance payment in the sum of £41,100. The Phase Two Payment was to reimburse the reasonable expenses incurred by the remaining leaseholders in moving into the temporary accommodation and later returning to their leasehold premises following completion of the refurbishment works at JRP. There was to be no transfer of title. Upon practical completion, each remaining leaseholder would resume possession of their leasehold premises at JRP, taking the benefit of a newly refurbished flat and any uplift in the value of their lease resulting from the refurbishment of that flat and of JRP. The revised draft agreement proposed a long stop date of three and a half years from the date on which the Second Defendant was to take vacant possession of the remaining leasehold premises at JRP for practical completion of the Scheme.

Clause 9.3 of the revised draft agreement contemplated three scenarios in which the Scheme may not achieve completion. The first was that having started the refurbishment works, the Second Defendant may not have achieved practical completion by the long stop date. The second was that the Second Defendant became convinced for good reason that the works would or could not achieve practical completion by that date. The third was that following the commencement of the Scheme in accordance with clause 3 of the revised draft agreement – the “Commencement Date” – it may become clear to the Second Defendant acting reasonably, that the works could not be carried out wholly or in part for one or more specified reasons – a “Works Termination Event”. In the event of any of these three possible scenarios coming about, the Second Defendant was able under clause 9.3 to exercise the option granted by the leaseholder to the Second Defendant under clause 10 of the revised draft agreement – the “Landlord’s Option”.

A further possible outcome contemplated by the revised draft agreement was that the Second Defendant may decide that the refurbishment works at JRP were no longer viable prior to reaching the “Commencement Date” in accordance with clause 3. Clause 9.4 made provision for that event –

“9.4

In the event that the Commencement Date has not been reached and the Landlord deems the Works no longer viable for any reason, such that the Commencement Date cannot occur, then the Landlord shall at its absolute discretion (acting reasonably):

(a)

hand back the Property to the Leaseholder and end the Temporary Accommodation Tenancy as if Practical Completion had taken place (save that the Property will be handed back in accordance with its condition at the Property Vacant Possession Date); and

(b)

pay to the Leaseholder the Phase Two Payment; and

(c)

this Agreement shall immediately determine (save for any payments due under this Agreement or the Lease) following the end of the Temporary Accommodation Tenancy.”

Clause 10.2 and 10.3 of the revised draft agreement provide the “Landlords Option” –

“10.2

From the date here of until the date of Practical Completion the Leaseholder grants to the Landlord, in consideration for the Landlord’s obligations set out in this agreement, the Landlord’s Option to purchase the Property (or accept the Leaseholder’s surrender of all interest in the Property).

10.3

The Landlord’s Option shall only be exercised in relation to the Property in the event that any one of the circumstances set out in clause 9.3 have occurred, or that the Landlord has determined that the Commencement Date cannot occur in accordance with clause 9.4”.

Clause 10 made contractual arrangements for agreement of the purchase price, for the resolution of a dispute as to that price and for the mechanics of exercising the option (including service of an option notice) and completing assignment of the lease. Clause 10.4(b) required the purchase price to be determined on the assumption that the refurbishment works both to the leasehold premises and to JRP as a whole had been practically completed. On completion of the assignment, clause 10.13 required the Second Defendant to pay any outstanding Phase Two Payment, the leaseholder’s professional fees reasonably incurred and a sum equivalent to the Home Loss Payment due to the leaseholder under section 29 of the Land Compensation Act 1973, had their lease been compulsorily purchased.

Clause 10.14 of the revised draft agreement then stated the terms of the uplift offer –

“10.14

In the event that all leaseholders in the Building have given vacant possession of their properties to the Landlord by 17^th March 2023 and either:

(a)

a Works Termination Event has occurred; OR

(b)

Practical Completion has not been reached,

by 29^th September 2026, then within 30 days of that date the Landlord shall exercise the Option and serve an Option Notice in accordance with clause 10.4, and pay to the Leaseholder the Option Uplift Payment on completion of the Transaction”.

The “Option Uplift Payment” was defined in clause 1 of the revised draft agreement as –

“The difference between the total of the Agreed Purchase Price together with all sums paid under clause 10.13, and the sum of £1,000,000.00 (ONE MILLION POUNDS)”.