Persimmon wins ‘ransom strip’ lawsuit against Kent housebuilder

The former directors of Maidstone-based homebuilder Hillreed Homes are likely to have their payout reduced after they lost a lawsuit brought by Persimmon Homes, the firm that bought them out. Hillreed’s Anthony Hillier and Colin Creed sold the business to Persimmon in 2912 for around £34m. However, after the sale had completed, Persimmon discovered that it didn’t have access to one of the plots it had an option on as part of the sale. It also discovered 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, saying it had acquired a “landlocked site, with a ransom strip running though the middle of it”. And in a ruling last year, High Court judge John Martin QC backed Persimmon, finding that, while the “ransom strip” was unintentional, Hillreed’s directors later decided to take advantage of it. He ruled that the value of the land, with access and planning permission, was £1.78m. He said the figure should be used as a “starting point” to calculate damages owed to Persimmon. The former directors appealed to the Court of Appeal, but in a ruling this week a three-judge panel upheld the High Court ruling. They found that the intention of the parties had not been to include a “ransom strip” and therefore the sale and purchase agreement should be rectified to reflect the parties original intentions. Persimmon Homes Limited -and– (1) Anthony John Hillier (2) Colin Michael Creed Court of Appeal (Mccombe LJ, David Richards LJ and Newey LJ) Timothy C. Dutton QC (Instructed by Whitehead Monckton Limited) for the Appellants Michael Fealy QC (Instructed by Walker Morris LLP) for the Respondent