BL-2025-000402 - [2025] EWHC 2974 (Ch)

Powis is a property investment company owned by a consortium of investors. The investors were represented by Tony Khalastchi, Alex Barnett, Michael Baker, Franco Sidoli and Keith Rodwell.

In or prior to 2011, Powis engaged Cradick to sell 138-152 and 132-136. Cradick, acting through its principal Mr Cradick, negotiated the sale of 138-152 to a company called Dagmar Ventures Limited (“Dagmar”) and on 23 May 2011 heads of terms (“theHeads of Terms”) were agreed. One of the terms agreed concerned overage:

“The parties agree that in respect of future sales of the privateresidential accommodation should these exceed £315 per sq ft per flat any overage lesssale costs, not taking into account any inducements, will be divided between the parties ona 50/50 basis. This condition is to run with the title and will bind successors in title”.

The term concerning overage did not specify any time period within which overage would be payable.

Wallace was the firm of solicitors retained by Powis to act for it in relation to the sale of 138-152. On 26 May 2011, Wallace sent a draft contract to the purchasers’ solicitors which provided for an “Overage Period” of “5 years starting on the date of this Agreement”. This was in contrast with the heads of terms which did not provide for any limited time period within which overage would be payable. There is no documentation which sheds light on why this clause was included in the draft contract and it was not thereafter mentioned in correspondence with Dagmar. Wallace’s letter to Powis of 7 July 2011 summarising the terms of the proposed deal just prior to exchange of contracts informed Powis of the Overage Period but said no more about it.

On 16 August 2011, Powis and Dagmar exchanged contracts (“the Dagmar Contract”). The Dagmar Contract contained an Overage Period of “5 years starting on the date of this Agreement” and did not contain any provision requiring reasonable (or any) endeavours to be used to build out the development and sell the residential units within the Overage Period or a reasonable time.

Under the terms of the Dagmar Contract, Dagmar was in broad terms only required to complete the purchase after it had obtained planning permission. This meant that completion of the Dagmar Contract did not take place until 6 June 2013. Dagmar simultaneously sold 138-152 to Laxcon Development Limited “Laxcon”, which ultimately developed 138-152.

Contracts were exchanged for the sale of 132-136 on 19 August 2013, to Provenance Pub Limited (“Provenance”). Cradick and Wallace also acted on behalf of Powis in relation to this sale. The plan attached to this contract conflicted with that used in the Dagmar Contract, and gave rise to a boundary dispute between Powis, Laxcon and Provenance.

On 23 January 2015, Laxcon’s solicitors wrote to Powis to inform it that Laxcon would place on hold any sales of residential units at 138-152 until after 16 August 2016 (i.e., five years after the date the Dagmar Contract was exchanged). The effect was that Powis did not receive any overage payments. All the flats were sold between 16 August 2016 and approximately mid-2017, and overage of £4,797,970 would have been payable to Powis, had the Overage Period not expired prior to these sales taking place.