Westminster City Council v Gems House Residences Chiltern Street Limited & Anor

Westminster City Council v Gems House Residences Chiltern Street Limited & Anor

The mortgagee exclusion clause in the s.106 agreement applies to a mortgagee to whom a Registered Social Provider granted a mortgage at the time of the grant, and to any person deriving title through such a mortgagee, regardless of whether the provider was deregistered before the disposal. The relevant time for determining Registered Social Provider status is the date of the grant of the mortgage, not the date of the subsequent disposal. This construction best accords with the purpose of the clause, which is to facilitate commercial lending for affordable housing units by ensuring mortgagees can enforce their security free from affordable housing restrictions.

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
23 July 2025
Procedural Posture
Civil (contract/planning) / Final Judgment After Expedited Trial
Outcome
Claim dismissed; injunction discharged
Legal Topics
Section 106 Agreements, Affordable Housing, Contractual Interpretation, Mortgagee Exclusion Clauses
Planning Law Contract Law Property Law Section 106 Agreements Affordable Housing Contractual Interpretation Mortgagee Exclusion Clauses

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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

Civil (contract/planning) / Final Judgment After Expedited Trial

Legal Issues

  1. 1 Whether the first defendant is bound by planning obligations in a s.106 agreement requiring residential flats not to be used otherwise than as affordable housing units
  2. 2 Whether the first defendant is entitled to the benefit of a mortgagee exclusion clause in the s.106 agreement as a person deriving title through a mortgagee of a Registered Social Provider
  3. 3 Whether the status of ‘Registered Social Provider’ is determined at the date of grant of mortgage or at the date of disposal of flats by mortgagee

Ratio Decidendi

The mortgagee exclusion clause in the s.106 agreement applies to a mortgagee to whom a Registered Social Provider granted a mortgage at the time of the grant, and to any person deriving title through such a mortgagee, regardless of whether the provider was deregistered before the disposal. The relevant time for determining Registered Social Provider status is the date of the grant of the mortgage, not the date of the subsequent disposal. This construction best accords with the purpose of the clause, which is to facilitate commercial lending for affordable housing units by ensuring mortgagees can enforce their security free from affordable housing restrictions.

Court Disposition

Claim dismissed; injunction discharged

Orders

  • The claim is dismissed.
  • The interim injunction granted on 30 October 2024 is discharged.