Westminster City Council v Gems House Residences Chiltern Street Ltd & Anor [2025] EWHC 1789 (Ch) (22 July 2025)

Westminster City Council v Gems House Residences Chiltern Street Ltd & Anor [2025] EWHC 1789 (Ch) (22 July 2025)

The court held that the mortgagee exclusion clause in the s.106 agreement only applies if, at the time of the disposal by the mortgagee, the mortgagor is a Registered Social Provider. Since Kinsman was deregistered before the transfer to the first defendant, the exclusion does not apply. The affordable housing obligations remain binding on the defendants. The natural and ordinary meaning of the agreement, the statutory context, and the purpose of the registration requirement support this interpretation. The court rejected the defendants' reliance on commercial common sense and alternative drafting possibilities, emphasising the need to construe the actual agreement reached by the parties.

Citation
[2025] EWHC 1789 (Ch)
Parties
Claimant: Westminster City Council; First Defendant: Gems House Residences Chiltern Street Limited; Second Defendant: Gems House Chiltern Street Head Lease Limited
Jurisdiction
England and Wales
Judgment Date
22 July 2025
Procedural Posture
Claim for Declaration and Injunction (chancery Division, Property, Trusts and Probate List) / Final Judgment After Expedited Trial
Outcome
Claim allowed. Declaration granted that the defendants are bound by the affordable housing obligations in the s.106 agreement. Injunction made permanent.
Legal Topics
Section 106 Agreements, Affordable Housing, Contractual Interpretation, Mortgagee Exclusion Clauses, Registered Social Providers
Planning Law Contract Law Property Law Section 106 Agreements Affordable Housing Contractual Interpretation Mortgagee Exclusion Clauses Registered Social Providers

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Parties

Westminster City Council

Claimant

Gems House Residences Chiltern Street Limited

First Defendant

Gems House Chiltern Street Head Lease Limited

Second Defendant

Procedural Posture

Claim for Declaration and Injunction (chancery Division, Property, Trusts and Probate List) / Final Judgment After Expedited Trial

Legal Issues

  1. 1 Whether the first defendant is entitled to the benefit of a mortgagee exclusion clause in a section 106 agreement as a person deriving title through a mortgagee of a Registered Social Provider
  2. 2 Whether the status of 'Registered Social Provider' is determined at the date of grant of mortgage or at the date of disposal by the mortgagee

Ratio Decidendi

The court held that the mortgagee exclusion clause in the s.106 agreement only applies if, at the time of the disposal by the mortgagee, the mortgagor is a Registered Social Provider. Since Kinsman was deregistered before the transfer to the first defendant, the exclusion does not apply. The affordable housing obligations remain binding on the defendants. The natural and ordinary meaning of the agreement, the statutory context, and the purpose of the registration requirement support this interpretation. The court rejected the defendants' reliance on commercial common sense and alternative drafting possibilities, emphasising the need to construe the actual agreement reached by the parties.

Court Disposition

Claim allowed. Declaration granted that the defendants are bound by the affordable housing obligations in the s.106 agreement. Injunction made permanent.

Orders

  • Declaration that the defendants are bound by the affordable housing obligations in the s.106 agreement.
  • Permanent injunction restraining the defendants from occupying, letting, or disposing of the affordable housing units otherwise than as affordable housing.