Contractual right to acquire land lost in renegotiation

Whether a contractual right to acquire an interest in land survives a renegotiation depends on what the parties have agreed. In determining the issue, the High Court has considered the provisions of agreements reached in 2004 and 2018 in University College London Hospitals Charity and another v The Mayor and Burgesses of the London Borough of Camden [2023] EWHC 1070 (KB). The first claimant charity acquired from the University College London Hospitals NHS Trust redundant land from the UCLH estate following the opening of the new hospital in the early 2000s. This included the Middlesex Annexe Site (the MAS). Camden council granted a planning permission to the trust in 2004 in return for an agreement under section 106 of the Town and Country Planning Act 1990 requiring a minimum level of affordable housing provision to be provided on one of two sites, one of which was the MAS. If the affordable housing was not delivered by the deadline, Camden could require the trust to transfer to it for £1 a freehold/leasehold interest in the chosen site and the claimants could require the land to be used only for affordable housing (the £1 clause). The affordable housing was not delivered by the deadline and, after years of negotiations, discussions and enquiries, a fresh planning permission and section 106 agreement were made in 2018 for mixed-use development on the MAS and a differently defined level of affordable housing. The question for the court was whether the £1 clause prohibited or limited the claimant’s rights to develop the MAS. The claimants argued that their obligations under the 2004 agreement had fallen away, superseded by the obligations under the 2018 permission. Camden argued that if the 2004 agreement was read correctly, its right to implement the £1 clause remained intact and the agreement envisaged that future planning permissions would be required to give effect to the consequences of doing so. The judge preferred the claimants’ construction. It was artificial to sever the terms of the £1 clause from the consequences of invoking it which flowed directly from and formed the rationale for including the provision in the 2004 agreement. The reasonable reader would regard the protection of the £1 clause as safeguarding performance of the 2004 affordable housing obligation and not performance of a different obligation. Camden could have served a notice to invoke the £1 clause at any time between 2010 and 2018 but chose instead to renegotiate in a manner that rendered the £1 clause inoperable. Louise Clark is a property law consultant and mediator