Appeal court backs Persimmon over landlocked plot

Housebuilder Persimmon Homes has fended off an appeal against a damages ruling in its favour over a landlocked plot of land that it bought an option on as part of a corporate acquisition. The Court of Appeal dismissed on appeal the former directors of a Kent and Sussex housebuilding business called Hillreed, which Persimmon bought in 2012 for £34m. After the sale had completed, Persimmon discovered that it did not have access to one of the plots it had an option on as part of the sale. It also discovered that the freehold to the plot that would have given it access had been owned by Hillreed, but had been moved to another Hillreed company that wasn’t part of the acquisition prior to the deal. Persimmon sued the former directors of Hillreed, claiming damages for breach of warranties and saying it had acquired a “landlocked site, with a ransom strip running through the middle of it”. Last year, deputy judge John Martin QC found that the sale and purchase agreement negotiated between Persimmon and Hillreed did not include the plot of land that gave access to the larger plot. However, the judge examined the negotiations that took place prior to the sale and found that this was unintended. He said that both Persimmon and Hillreed “entered into the developments [sale and purchase agreement] under the same mistaken apprehension” that Persimmon would have access to the larger plot. Hillreed’s directors then “sought to take advantage of the situation when the mistake was discovered”. The judge ruled that the schedule connected to the sale and purchase agreement should be amended to add the freehold of the access-giving plot. This made the directors of Hillreed liable for damages. Upholding that decision today, Lord Justice David Richards said that the judge was “fully entitled” on the evidence before him to conclude that the share sale and purchase agreement and the associated disclosure letter “did not accurately record the terms agreed between the parties and that the requirements for rectification of those documents had been met”. In the High Court decision, the judge ruled that the value of the land, with access and planning permission, was £1.78m. He said that the figure should be used as a “starting point” to calculate damages owed to Persimmon. Persimmon Homes Ltd v Hillier and others Court of Appeal (McCombe, Richards and Newey LJJ) 9 May 2019