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

His Honour Judge Hodge KC: I: Introduction

1. This case raises one short issue concerning the true interpretation of an agreement imposing planning obligations under s. 106 of the Town and Country Planning Act 1990 : is the first defendant entitled to claim 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’ ? It arises in the context of the question whether the first defendant is bound by planning obligations in a s.106 agreement which require that 16 residential flats within a newly built residential development at 76 Chiltern Street, London W1 shall not be used otherwise than as affordable housing units. The resolution of this issue depends upon whether the status of the mortgagor as a ‘Registered Social Provider’ (as defined) falls to be determined as at the date the mortgage was created or the later date when the mortgagee sold the leases of all 16 flats to the first defendant.

2. The claimant, Westminster City Council, is the local planning authority for the administrative area in which the Chiltern Street development is situated. It is represented by Mr Matt Hutchings KC, leading Mr Michael Feeney (of counsel). The first and second defendants are the leasehold and head leasehold owners respectively of the 16 affordable housing units within the development. They are represented by Mr David Elvin KC, leading Mr Tom Morris (also of counsel).

3. By a claim form, issued on 30 April 2024, the claimant seeks a declaration that the defendants are bound by, and an injunction to enforce, planning obligations contained within the s. 106 agreement that require the 16 flats not to be occupied otherwise than as affordable housing. By a notice of discontinuance, dated 30 September 2024, the claimant discontinued certain aspects of its originally pleaded claim.

4. There is some urgency in delivering this judgment. By an Order made on 30 October 2024, Edwin Johnson J granted an interim injunction against the first defendant, until trial or further order, preventing it from occupying, letting, or otherwise disposing of the affordable housing units otherwise than as subsidised housing for persons who cannot afford to rent or buy dwellings generally available on the open market. In accordance with authority, the claimant, as the local planning authority, gave no cross-undertaking in damages. The defendants therefore applied for an expedited trial of this claim. That application was not opposed by the claimant. On 23 January 2025, Mr David Halpern KC (sitting as a deputy High Court judge) granted the defendants’ application for an expedited trial. Case management directions were given at a hearing before Deputy Master Collaço Moraes on 14 February 2025. The case management order records a concession by the defendants that if they lose at trial on the point of construction of the s. 106 agreement, they will not oppose the grant of an injunction if they do not give an undertaking to the court on the same terms. Naturally, the defendants hope to defeat this claim, and secure their release from the injunction which presently binds the first defendant. In light of the urgency, this judgment will be less full than might otherwise have been the case. Against the background that, if the claimant prevails on the short point of contractual interpretation that is before the court, the defendants will not resist the existing injunction being made permanent, the short issue between the parties is whether, as a matter of contractual interpretation, the affordable housing obligations in the s. 106 agreement are binding on the first defendant. II: Background

5. On 11 April 2013, the claimant granted full planning permission for a mixed-use, new-build development, to include 60 residential flats, at 22-28 Paddington Street and 74-76 Chiltern Street, London W1, subject to conditions. Simultaneously with the grant of this planning permission, and as agreed in principle before it was issued, an agreement was entered into pursuant to s. 106 of the Town and Country Planning Act 1990 . The parties to this agreement were the claimant (as the local planning authority), the freehold owners, and developers of the property, Paddington Street GP Ltd and Paddington Street Nominee Ltd (both Jersey registered companies), and their mortgagee, Barclays Bank plc. The terms of the s.106 agreement had been negotiated between the claimant’s legal department and Howard Kennedy LLP on behalf of the developer. The s. 106 agreement was duly registered as a local land charge. I will return to the material terms of the s. 106 agreement later in this judgment.

6. The claimant’s original particulars of claim raised many allegations of fact concerning the conduct of the defendants’ predecessors in title and various (allegedly) connected companies to which the defendants object that they are in no position to respond. Faced (as the defendants say) with the threat of striking out, the claimant deleted substantial parts of its original particulars of claim and served a notice of partial discontinuance. Since the claimant no longer relies upon such allegations (which included a case of illegality), I can take subsequent events fairly shortly.

7. By a loan agreement made on 22 October 2014 between two (allegedly) connected entities, PGP Securities No. 17 Ltd ( Securities ), as lender, and PGP Finance No. 17 LP ( Finance ), as borrower, Securities agreed to advance to Finance the total sum of £3m to enable London District Housing Association Ltd ( London District ) to purchase the 16 affordable housing units within the development. On the same day, London District and Finance entered into a property management agreement and a separate declaration of trust. On 19 August 2015, the developer granted 16 separate 125 year leases of the affordable housing units to London District. At that time, London District was a registered provider of social housing. The leases all contained a tenant’s covenant to use the demised premises as an affordable housing unit in accordance with the s. 106 agreement. Also on 19 August 2015, London District granted a third party legal charge over all the leases in favour of Securities.

8. On 27 July 2016, London District transferred the legal title to all 16 leases to Kinsman Housing Ltd ( Kinsman ). At that time, Kinsman was a registered provider of social housing. By a deed of novation, also made on 27 July 2016, between Securities, Finance (the beneficial owner of the affordable housing units), London District, and Kinsman, all of London District’s rights, obligations and liabilities under the legal charge were novated to Kinsman. On the same day, Kinsman and Finance entered into a corresponding property management agreement and separate declaration of trust.

9. On 9 August 2017, the developer granted a 999 year intermediate lease of the affordable housing units to Chiltern 999 Ltd (another company allegedly connected with the ultimate owner and controller of Securities and Finance) for a premium of £80,000.

10. Following earlier regulatory notices published by the Regulator of Social Housing (the regulator ) on 28 November 2018, 13 March 2019, and 15 February 2023, on 30 June 2023 the regulator published a further regulatory notice stating that it was proposing to exercise its power de-register Kinsman from the register of social housing providers. On 16 August 2023, the regulator published a further regulatory notice stating that it had made the decision to de-register Kinsman on the basis that it remained in breach of the Governance & Financial Viability Standard 2015. The regulator had assessed that Kinsman had failed to demonstrate that it could sustain its viability on an ongoing basis and, as a result, that it no longer continued to meet the eligibility criteria for continuing registration as a social housing provider. This decision had apparently been communicated by the regulator by way of a letter dated 8 August 2023, confirming the compulsory deregistration of Kinsman. Kinsman brought no appeal against the decision to de-register it; and it was de-registered on 7 September 2023. Kinsman thereupon became an unregistered provider of social housing.

11. The notice of the regulator’s intention to de-register Kinsman qualified as an event of default under clause 7.1 (i) of the loan agreement and, consequently, an event of default under the third party legal charge. Securities gave notice of this default to Finance (with a copy to Kinsman) by letter dated 23 August 2023. The claimant emphasises that there is no evidence that Securities at any time gave notice to the regulator that it intended to enforce its legal charge over the affordable housing units (as it was required to do by statute). The defendants point out that there is no evidence of this either way.

12. By a transfer dated 16 February 2024, made in the purported exercise of its power of sale under the legal charge, Securities assigned the 16 leases of the affordable housing units to the first defendant, subject to the occupational assured shorthold tenancies, for the sum of £12.6m. On the same day, Chiltern 999 Ltd assigned the head lease to the second defendant for £1.4m. Both transfers were registered at HM Land Registry with effect from 14 March 2024. III: The s. 106 Agreement

13. The s. 106 agreement was entered into pursuant to s. 106 of the Town and Country Planning Act 1990 . This provides for planning obligations to be enforceable to the extent mentioned in s. 106 (3) . By s. 106 (1) (a), such obligations may include obligations “restricting the development or the use of the land in any specified way” . S. 106 (3) – (5) provide as follows: (3) Subject to subsection (4) a planning obligation is enforceable by the authority identified in accordance with subsection (9) (d) — (a) against the person entering into the obligation; and (b) against any person deriving title from that person. (4) The instrument by which a planning obligation is entered into may provide that a person shall not be bound by the obligation in respect of any period during which he no longer has an interest in the land. (5) A restriction or requirement imposed under a planning obligation is enforceable by injunction.

14. The third recital to the s. 106 agreement records that: The Council considers it expedient in the interests of the proper planning of its area and having regard to the provisions of its local plan policies that provision should be made in this Agreement for regulating or facilitating the Development and/or use of the Property in the manner set out in this Agreement

15. Clause 1 (headed ‘Interpretation’ ) includes the following relevant definitions: Affordable Housing subsidised housing available through a Registered Social Provider (or other social provider as the Director of Housing shall have approved in writing beforehand for this transaction) to persons who cannot afford to rent or buy dwellings generally available on the open market Affordable Housing Units That part of the Development comprising sixteen residential units made up of ten Social Rented Units (being 3 x one bedroom, 2 x two bedroom, 5 x three bedroom) and six Intermediate Rented Units (being 2 x one bedroom, 2 x two bedroom, 2 x three bedroom) within the Development and all as shown as Affordable Housing Units on the Floor Plans annexed to this Agreement Registered Social Provider a registered provider of social housing as defined in Part 2 of the Housing and Regeneration Act 2008 or who is approved by the Council (such approval not to be unreasonably withheld or delayed)

16. Clause 2.2 of the s. 106 agreement provides as follows: Subject to Clause 9 below the obligations in this Agreement shall be binding on the Developer together with the agents and the successors in title and assigns of each and those deriving title under them Provided That no person shall be liable for any breach of any covenant or obligation contained in this Agreement after it has parted with all of its interest in the Property save in relation to any antecedent breach prior to parting with such interest. By clause 5.2, the developer covenants with the claimant To observe and perform and cause there to be observed and performed the undertakings covenants and restrictions contained in Schedule One of this Agreement.

17. For present purposes, the relevant undertakings, covenants, and restrictions are those contained in paragraph 11 of Schedule One (headed ‘ Affordable Housing ’). Nothing turns on their precise terms. Their broad effect is to ensure that the ‘Affordable Housing Units’ will be used and occupied only for the purposes of ‘Affordable Housing’ . This accords with the requirements of the development plan in force at the time of the planning permission, which identifies the provision of affordable housing as a key strategic and local planning objective. It is, however, necessary for me to set out the terms of paragraph 11.1 because of the light they throw upon the earlier definition of ‘ Registered Social Provider ’. This reads: 11.1 Not to occupy any of the Market Housing Units until the Affordable Housing Units have been completed and made ready for occupation and for transfer on a long lease of at least ninety nine years to a Registered Social Provider or other Social Provider as the Director of Housing shall have approved in writing beforehand for this transaction The concluding part of this sub-paragraph clearly contemplates that the claimant’s director of housing might give a prior, bespoke approval to an unregistered social provider for the purposes of this specific development. In the event, this was not done in the present case. Relying on Mr McDermott’s unchallenged evidence that, from the claimant’s perspective, it is of vital importance for affordable housing to be managed by a registered provider, in the course of his oral submissions, Mr Hutchings emphasised that the bespoke approval of an unregistered social housing provider would be very much the exception to the norm of using a registered provider to provide the affordable housing units; and he submitted that ‘the tail should not be allowed to wag the dog’ when approaching issues of interpretation. Nevertheless, it is noteworthy that the claimant clearly contemplated the giving of such bespoke approval. I consider that any interpretation of the s. 106 agreement must be able to accommodate this exception from the norm; and that the implications of any proposed competing constructions must be tested against this alternative, albeit exceptional, scenario.

18. It is, I think, common ground – and if it is not, I so hold – that the reference in clause 2.2 of the s. 106 agreement to clause 9 was obviously intended to refer to clause 10 (headed ‘Enforceability of Obligations’ ). So far as material, clause 10 provides as follows: 10.1 The obligations contained in Schedule One of this Agreement shall not be binding upon nor enforceable against: 10.1.1 any mortgagee of a Registered Social Provider or any receiver appointed by such mortgagee or any person deriving title through any such mortgagee or receiver; 10.1.2 any mortgagee of a residential tenant or person to whom a Registered Social Provider grants a lease or transfer or any receiver appointed by such mortgagee or any person deriving title through any such mortgagee or receiver; 10.1.3 any statutory undertaker or other person who acquires any part of the Property or interest therein for the purposes of the supply of electricity gas water drainage telecommunications services or public transport services; 10.1.4 any tenant who has exercised the right to acquire pursuant to the Housing Act 1996 or any statutory provision for the time being in force (or any equivalent contractual right) in respect of a particular Affordable Housing Unit or any successor in title thereto; 10.1.5 any tenant who has exercised any statutory right to buy (or any equivalent contractual right) in respect of a particular Affordable Housing Unit or any successor in title thereto …

19. Mr Hutchings points out that mortgagee exclusion clauses are a well-established feature of s.106 agreements which include affordable housing obligations. Their primary purpose is to encourage sufficient commercial lending for a registered provider to acquire the long leases of the affordable housing units. Mr Hutchings referred me to an Inside Housing article, dated 15 August 2008, and entitled Security Blanket , by Patricia Umunna and Shelley Chadda, who were solicitors at Winckworth Sherwood LLP. He said that this article provides an objective insight into how the market viewed mortgage exclusion clauses in 2008, during the global financial crisis. Mr Hutchings accepts that this was all a matter for negotiation between the parties. The article describes the opposing interests of the developer’s lending bank and the local planning authority when negotiating mortgagee exclusion clauses, as follows: The preference of any lending bank would be for an agreement to contain an unqualified exclusion clause, so that the bank can be certain that if the social landlord defaults, it can recover the money it has lent by realising its security for the best possible value without delay … The preference of any local authority would be for an agreement not to have any exclusion clause at all. Local authorities are concerned to ensure that affordable housing stock, partly funded by public money, is preserved by imposing restrictions in an agreement on the mortgagee’s power to dispose of the property on default. Mr Elvin notes that if one takes anything from this article, it is the recognised tension between the secured lender, which wants to be as free as possible to enforce its security, and the local planning authority, which wishes to restrict the mortgagee’s ability to sell free from all affordable housing restrictions.

20. The article notes that it was becoming common for exclusion clauses to impose a contractual moratorium of between three months and two years on the lender’s ability to sell affordable housing units on the open market. The authors go on to address the question whether the local authority can rely on any other protection for the preservation of social housing stock. They observe that: Before the mortgagee of a social landlord can enforce its security, there is a 28-day moratorium while the Housing Corporation [now the regulator] decides what to do with the distressed landlord, including considering the possibility of a transfer of engagements to an alternative social landlord. The moratorium can, and is likely to be, extended and does provide protection for the public purse and social housing stock, as has been shown in the case of Ujima Housing Association. One could argue that a further delay imposed by an agreement is unnecessary. The Law Society has drawn up a model section 106 agreement that provides a delay of three months in the exclusion clause before a lender can enforce a sale of the mortgaged property without any restriction on the open market. This has been supported by the Council of Mortgage Lenders and has generally been accepted by lending banks. But the debate is certain to continue, given the current economic climate.

21. It is common ground that the statutory regulation of social housing providers forms part of the admissible background against which the subject s. 106 agreement falls to be construed. This system of regulation is contained within Part 2 of the Housing and Regeneration Act 2008 (the HRA ). It includes provision for a publicly accessible register of providers of social housing. The regulator’s powers include the compulsory deregistration of a private registered provider if it has failed to meet prescribed regulatory standards. As I have already explained, this was Kinsman’s eventual fate.

22. S. 108 (2) of the Housing and Planning Act 2016 (the HPA ) provides that a person may not take any steps to enforce a security over the property of a private registered provider unless written notice of its intention to do so has been given to the regulator by or on behalf of the person intending to enforce the security, and either a period of 28 days has elapsed since the notice was given, or the regulator has waived this notice requirement (which requires the consent of the Secretary of State). The giving of such a notice (or waiver of the notice requirement) triggers a moratorium under s. 145 of the HRA. This lasts for 28 days, subject to any extension (which requires the consent of the secured creditor). During the moratorium, any disposal of the registered provider’s land requires the regulator’s consent, subject to certain specified exceptions. The purpose of the moratorium is to create a period of time for the regulator to seek to find a solution to a provider’s viability problems, in order to protect the social housing assets and the interests of the provider’s tenants. This may involve the regulator appointing an interim manager, making proposals, appointing a manager to implement proposals agreed with creditors, or applying for a housing administration order. In April 2013, when the s. 106 agreement was entered into, the legislative scheme governing moratoriums was materially similar (by virtue of the Housing and Regeneration Act 2008 (Moratorium) (Prescribed Steps) Order 2010), save that the bespoke legislative scheme for housing administration orders under the 2016 Act was only brought into force on 5 July 2018.

23. Mr Hutchings emphasises that, in the absence of any contractual moratorium, reliance on the statutory moratorium to protect social housing assets will only work if the housing provider is a registered provider at the time when the lender comes to enforce its security.

24. Mr Hutchings referred me to an article entitled Safe as Houses? Insolvency in the social housing sector , dated 1 October 2024, by Nicholas Levy, a partner and co-head of dispute resolution at Trowers & Hamlins LLP. This explains the background and operation to the special administration regime that relates to registered providers of social housing as follows: These bodies are crucially important to the provision of affordable housing in the UK. They are subject to oversight by the Regulator of Social Housing. The sector has historically been very stable, with only a few incidences of registered providers suffering financial adversity. However, no sector is immune from the vagaries of the economy or poor strategic or operational judgments. Part of this risk is mitigated by the variety of tools that the Regulator has long had to oversee and intervene in operations that do not meet its standards. There has also long been a tool that gives the Regulator a chance to find a solution if a registered provider or one of its creditors takes a step towards a formal insolvency process. This is currently found in section 143 onwards in the Housing and Regeneration Act 2008 … … it is nonetheless notable that there has not been a single housing administration, despite the fact that the legislation has now been in place for some 8 years. This fact takes us back to the premise at the outset of this article, namely that the sector has been a stable one. All key stakeholders are keen to see this continue.

25. Mr Hutchings draws two conclusions from what he describes as this ‘helpful overview’ . First, that the provision of affordable housing is a highly regulated sector. Second, that the moratorium usually “does its job” .

26. During the course of oral submissions, Mr Morris took me to alternative forms of s. 106 agreement that the claimant had entered into, both shortly before, and shortly after, it entered into the subject s. 106 agreement. He did so, not as an aid to the true construction of the subject s. 106 agreement (since he accepts that these other agreements form no part of the admissible background), but simply to illustrate how the claimant might have chosen to regulate the continuing availability of affordable housing units at the Chiltern Street development in an alternative way. For his part, Mr Hutchings accepts that the subject s. 106 agreement could have been drafted differently.

27. One such agreement (from May 2011) provides that the affordable housing restrictions … shall not be binding on any mortgagee of any Registered Provider who seeks to dispose of the Affordable Housing Units or any part thereof (as to such part) pursuant to its power of sale exercised pursuant to default of the terms of the mortgage or any receiver appointed by such mortgagee of any Registered Provider or any receiver so appointed or any person deriving title from them shall first for a period of three (3) months from the date of default use its reasonable endeavours to dispose of the Affordable Housing Units (or part thereof) to another Registered Provider to be used for Affordable Housing and only at the end of the said period can the Affordable Housing Units (or part thereof) be disposed of on the open market and the restriction in this Agreement on use only as Affordable Housing will not then be binding in relation to the Affordable Housing Units (or the part thereof) provided further that the Council shall be notified of the said default within five Working Days and shall be notified at the end of the said three month period of marketing Whilst this provision is clearly not happily drafted, omitting certain crucial wording, it demonstrates that it was possible for the claimant to negotiate the terms of a contractual moratorium which might (a) last longer than 28 days, and (b) impose additional restrictions on any mortgagee seeking to enforce its security. Indeed, it would have been possible to extend such a moratorium to any nominated, but unregistered, social housing provider.

28. A similar, but better drafted, provision can be found in a s. 106 agreement entered into by the claimant in February 2014. This stipulates that the affordable housing restrictions shall not be binding: … on any mortgagee of any Registered Provider who seeks to dispose of the Affordable Rented Housing Units or any part thereof (as to such part) pursuant to its power of sale exercised pursuant to default of the terms of the mortgage or any receiver appointed by such mortgagee of any Registered Provider PROVIDED THAT the mortgagee or any receiver so appointed or any person deriving title from them shall first for a period of three months from the date of default use its reasonable endeavours to dispose of the Affordable Rented Housing Units (or part thereof) to another Registered Provider to be used for Affordable Rented Housing and only at the end of the said period can the Affordable Rented Housing Units (or part thereof) be disposed of on the open market and the restriction in this Agreement on use only as Affordable Rented Housing will not then be binding in relation to such Affordable Housing Units (or the part thereof) PROVIDED FURTHER THAT the Council shall be notified of the said default within five Working Days and shall be notified at the end of the said three month period of marketing

29. The defendants submit that it is noteworthy that in alternative s. 106 agreements which were concluded at around the same time as the subject s. 106 agreement, the claimant negotiated wording which gave express contractual effect to a moratorium. Mr Morris refers to these provisions as operating as a form of ‘cascade’ , giving a mortgagee three months to use its reasonable endeavours to dispose of the affordable housing units to another registered provider so that they might continue to be used as affordable housing. Only at the end of this period might the mortgagee dispose of the affordable housing units on the open market free from the restrictions in the s. 106 agreement on use only as affordable housing. The defendants point out that if that had been the intention of the parties, it would have been open to the claimant to have required the inclusion of similar wording in the subject s. 106 agreement, thereby ensuring that the 16 leases of affordable housing units could not be sold by any mortgagee on the open market free from the affordable housing restrictions until any moratorium had run its course. However, the defendants say that it would have made no difference if the claimant had done so. In all of these s. 106 agreements, it is clear that the parties intended that any mortgagee should be free to sell its interest in the affordable housing units after the end of the applicable moratorium period free from the affordable housing restrictions. The defendants say that even allowing for the statutory effect of the moratorium in the present case, the parties clearly intended that any mortgagee of a registered social provider should be able to sell its interest free from the relevant restrictions if no satisfactory solution to the provider’s difficulties had been found before the end of the moratorium period. The defendants also point out that the fact that an agreement may not have worked out as well as one of the parties had intended is no basis for taking what Mr Morris described as the ‘crow-bar of commercial common sense’ to the actual language used in the agreement.

30. The May 2011 s. 106 agreement, and a further s. 106 agreement entered into by the claimant in March 2012, also contain an extended definition of ‘Registered Provider’ . This is in similar terms to the definition in the subject s. 106 agreement, but with the addition of the words “and has not been removed from the register pursuant to” the applicable statutory provision. Had this form of drafting been adopted in the s. 106 agreement, the parties’ legal representatives would have been denied their fees for litigating the issue this court has to decide; and I would not be crafting this reserved judgment.

31. I consider that it is rarely helpful for a court of construction to be referred to different forms of words which, had they been adopted, might have put the true interpretation of an agreement beyond doubt. Whilst weighing the effect of alternative competing constructions, the task of the court is to construe the document which the parties ultimately did agree. If its meaning were clearly expressed, there would be no issue of construction for the court to determine. As will appear, authoritative support for this approach is to be found in the judgment of Lewison LJ in Napier Park European Credit Opportunities Fund Ltd v Harbourmaster Pro-Rata CLO 2 BV [2014] EWCA Civ 984 , at paragraph 38. IV: The trial

32. The trial took place on Tuesday 24 and Wednesday 25 June 2025, concluding before the short adjournment. The claimants rely on two witness statements, from: (1) Mr Jonathan McDermott, dated 8 April 2025. He has been the service manager of the claimant’s intermediate housing service since 2012. So far as material to this claim, he gives evidence about the background to the s. 106 agreement; the claimant’s planning policies concerning the provision of affordable housing, both at the time when planning permission for this development was granted, and also when this claim was brought; the vital importance, from the claimant’s perspective, for affordable housing provided pursuant to s. 106 agreements to be managed by a registered provider so as to ensure that this is managed appropriately and its use is protected in perpetuity; the deregistration of the registered provider; and the current situation concerning the relevant affordable housing units. Mr McDermott concludes thus (at paragraph 26): The claimant therefore brings this claim and seeks a final injunction to protect the vulnerable tenants and their family members residing in Flats 1-8 and 11-16 from eviction and to ensure that the 16 affordable housing units are not lost to the private rental market in one of the most expensive boroughs in the country. It is of the utmost importance to the claimant to protect the affordable housing stock in Westminster in line with relevant legislation and policy. (2) Ms Heather Clarke, dated 8 April 2025. She is the claimant’s Director of Housing Needs – Allocations; and she gives evidence dealing with the circumstances of the current residents of the affordable housing units.

33. The defendants rely upon a single witness statement, dated 11 April 2025, from Mr Andreas Xenofontos. He is the Group Legal Counsel for Turanco Investment Limited. This is the ultimate holding, and controlling, entity of a group of companies holding assets primarily in the real estate sector in the United Kingdom and Germany, including the defendant entities. He gives brief evidence concerning the defendants’ purchase of the development; its very limited knowledge of, and limited prior relationship and dealings with, the sellers, and their controller, Mr McMillan; and the current status of the affordable housing units within the development, and their passing rents.

34. Mr Xenofontos explains that through their management team, and their then solicitors, the defendants were aware, before purchasing the properties, of the terms of the s.106 agreement; but, through due diligence undertaken by its former solicitors, they took all necessary steps to satisfy themselves that the mortgagee exclusion clause in the s.106 agreement was engaged, so that the affordable housing restriction would not be binding upon them. Had anyone been aware that the properties would be subject to the s. 106 agreement, the defendants would not have completed their purchase. They were bought at a full market price so that they could be redeveloped and let on the open market at an appropriate rent. The defendants’ holding entity is not a social housing provider, nor does it intend to become one. It proceeded with the purchase of these properties in good faith, relying on legal advice it had received that they were not subject to any restrictions under the s. 106 agreement upon the use of the properties as social housing. The defendants purchased the properties in good faith; and they maintain that they are innocent parties who wish to deal with their property free from the s. 106 obligations. Neither Mr Xenofontos, nor any other agent of the defendants, is able to say anything about the circumstances surrounding the negotiation and completion of the s. 106 agreement, or the relevant factual matrix against which it falls to be construed.

35. Mr Xenofontos explains that the current passing rent generated from all of the 14 affordable housing units that are currently let out to social housing tenants is £158,592 per annum (excluding service charges). Six of those flats are currently in arrears (of rent and/or heating charges). Mr Xenofontos understands that it is the first defendant’s intention (if it is able to recover possession of the 16 flats and let them out on the open market free of the affordable housing units restrictions) to refurbish the flats, at an approximate budgeted cost of about £4 million. It is anticipated that the refurbishment will take around nine months. After that, the first defendant anticipates that the letting of the flats – all at open market rents – will generate a passing rent of approximately £1.5 million per annum.

36. No live evidence was given before me. There was therefore no challenge to any of the written evidence. But the corollary of this is that the only evidence before the court is that contained within the witness statements, and the publicly available, and other, disclosed documents. During the course of his oral submissions, Mr Hutchings asserted that on any disposal of affordable housing units by a mortgagee, the local planning authority would check whether the current mortgagor was then on the official register of social housing providers. That is not something that is mentioned in either of the claimant’s witness statements. It may (as Mr Hutchings asserts) be a ‘common sense’ , or ‘obvious’ , step to take for a local authority housing, or planning, officer to check the register of social housing providers to see whether a person deriving title from a mortgagee is entitled to claim the benefit of the mortgagee exclusion clause after the mortgagee has exercised its power of sale. But there is no evidence before the court that this is what is actually done. In the present case, as Mr Elvin pointed out, it was the social tenants of the affordable housing units who first alerted the claimant to their disposal to the defendants. V: Principles of contractual interpretation

37. There was no real issue between the parties as to the applicable principles of contractual interpretation. Mr Hutchings began by taking me to the headnote to Re Sigma Finance Corporation [2009] UKSC 23 , [2010] 1 All ER 571 at page 269 E-H: The resolution of an issue of interpretation in a case such as the instant case was an iterative process, involving checking each of the rival meanings against other provisions of the document and investigating its commercial consequences. In the ascertainment of the meaning that the deed would convey to a reasonable person with the relevant background knowledge, an understanding of its overall scheme and a reading of individual sentences and phrases which placed them in the context of that overall scheme was of much greater importance than its infelicities. The conclusion of the Court of Appeal elevated a subsidiary provision for the interim discharge of debts ‘so far as possible’ to a level of predominance which it had not been designed to have in a context where, if given that predominance, it conflicted with the basic scheme of the deed. The provision by cl 7.6 for discharge of short term liabilities as they fell due appeared in a context where the underlying assumption was that all secured liabilities could be covered and no issue of priority could arise. To treat it, in the different context of insolvency, as creating effective priority for such short term liabilities as happened to fall due during the realisation period involved the risk of changing fundamentally the apparent financial structure of the relationship. The task of the reasonable person in understanding the meaning and application of the last sentence of cl 7.6 was greatly facilitated by the existence of a clear basic scheme from which it was improbable that the parties would have wished to depart. Mr Hutchings emphasises, by reference to the judgment of Lord Mance (at paragraph 12), the need to read the key provisions of any agreement in the context of the overall contractual scheme created by the relevant document.

38. I was taken to the usual passages in the standard authorities on contractual interpretation: Arnold v Britton [2015] UKSC 36 , [2015] AC 1619 at paragraphs 15-20 and 35-37 per Lord Neuberger PSC; and Wood v Capita Insurance Services Ltd [2017] UKSC 24 , [2017] AC 1173 per Lord Hodge JSC at paragraphs 10-13. Of particular resonance are the words of Lord Hodge in Wood v Capita at paragraph 28: Business common sense is useful to ascertain the purpose of a provision and how it might operate in practice. But in the tug o’ war of commercial negotiation, business common sense can rarely assist the court in ascertaining on which side of the line the centre line marking on the tug o’ war rope lay, when the negotiations ended.

39. Mr Hutchings relies upon the observations of Aikens LJ at paragraph 24 of BMA Special Opportunity Hub Fund Ltd v African Minerals Finance Ltd [2013] EWCA Civ 416 , which can be distilled down to the following propositions: (1) The court’s task is to discern the intention of the parties, objectively speaking, from the words used in the commercial document, in the relevant context, and against the factual background in which the document was created. (2) The starting point is the wording of the document itself, and the principle that the commercial parties who agreed the wording intended the words used to mean what they say in setting out the parties’ respective rights and obligations. (3) If there are two possible constructions of the document, a court is entitled to prefer the construction which is more consistent with ‘ business common sense’ , if this can be ascertained. (4) However, ‘commercial common sense’ is not to be elevated to an overriding criterion of construction; and the parties should not be subjected to the individual judge’s own notions of what might have been the sensible solution to the parties’ conundrum. Still less should the issue of construction be determined by what seems like ‘commercial common sense’ from the point of view of only one of the parties to the contract. At paragraph 33, Aikens LJ concludes that there is no lack of commercial common sense in the parties settling on a compromise position, which he considers to be “the essence of ‘commercial common sense’.”

40. Mr Hutchings stresses the importance of adhering to the natural and ordinary meaning of the words of the relevant document; and warns that the court should be very slow to reject this meaning merely because it may have proved to be an imprudent bargain for one of the parties to have entered into. He submits that the subject s. 106 agreement is a sophisticated and complex document, entered into with the benefit of skilled professional advice on both sides, which should be interpreted according to its terms. He also emphasises that clear words are required to remove, through a subsidiary provision, part of the benefit which it appears was the purpose of the contract to provide. He cites observations of Lord Toulson JSC at paragraph 35 of Impact Funding Solutions Ltd v Barrington Support Services Ltd [2016 UKSC 57, [2017] AC 73 as follows: … Like any other provision in a contract, words of exception or exemption must be read in the context of the contract as a whole and with due regard for its purpose. As a matter of general principle, it is well established that if one party, otherwise liable, wishes to exclude or limit his liability to the other party, he must do so in clear words …

41. Mr Elvin points to Popplewell J’s synthesis of the principles applicable to the construction of commercial documents at paragraph 8 of his judgment in Lukoil Asia Pacific PTE Ltd v Ocean Tankers (Pte) Ltd (The ‘Ocean Neptune’) [2018] EWHC 163 (Comm) , [2018] 1 Lloyd’s Rep 654 , as follows: The court’s task is to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement. The court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. The court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to the objective meaning of the language used. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other. Interpretation is a unitary exercise; in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest; similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated. It does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.

42. Founding himself upon observations of Lord Neuberger in Arnold v Britton at paragraph 20, Mr Elvin also emphasises that a court should be slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of the wisdom of hindsight. Mr Elvin also points out that it is not necessary for the court to make findings of fact about post-contractual events in order to be able to weigh up competing constructions in the light of commercial common sense. He refers to the following statement of Lewison LJ at paragraph 33 of his judgment in Napier Park European Credit Opportunities Fund Ltd v Harbourmaster Pro-Rata CLO 2 BV [2014] EWCA Civ 984 : … we must seek to discern the commercial intention, and the commercial consequences from the terms of the contract itself; and that feeds in to the process of deciding whether a particular word or phrase is in reality clear and unambiguous. It follows in my judgment that, where possible, the court should test any interpretation against the commercial consequences.

43. It is common ground that the usual principles of contractual interpretation essentially apply to s.106 agreements. Mr Hutchings relies upon observations of Richards LJ, speaking on behalf of the Court of Appeal, at paragraphs 28-29 of his judgment in R (Robert Hitchins Ltd) v Worcestershire County Council [2016] JPL 373. Mr Elvin relies upon observations of Holgate J at paragraphs 70 and 75 of his judgment in Norfolk Homes Ltd v North Norfolk DC [2020] EWHC 2265 (QB) , [2021] PTSR 863 as authority for the proposition that a s. 106 agreement is a contractual instrument like any other, to which the standard principles of contractual interpretation apply. Mr Elvin draws my attention to paragraphs 41-42 of the judgment, where Holgate J makes it clear that subsequent conduct is irrelevant to the construction of a s.106 agreement; and to the emphasis placed by both parties upon “the importance of interpreting . Mr Elvin also refers me to paragraph 70, where Holgate J makes it clear that s. 106 obligations, like planning permissions, as public documents which are comprehensible to the public, landowners and developers alike” “the suggested distinction between principles of interpretation applied to contractual documents and planning documents is fallacious” . The Supreme Court (in Trump International Golf Club Limited v Scottish Ministers [2015] UKSC 74 , [2016] 1 WLR 85 ) had previously stated that there is no such distinction: Instead, the public nature of planning documents operates so as to restrict the operation of general principles in two respects: (i) the extent to which the court may take into account the factual background as regards ‘the shared knowledge’ of the contracting parties (or, indeed, the knowledge of the covenantor in relation to a unilateral undertaking), and (ii) the limited scope for the use of extrinsic material, given the constraints on public access to such material. There is nothing in the decision in Trump to indicate that the public nature of planning documents justifies a broader, or more ‘liberal’, approach to interpretation than is applied generally, or in relation to agreements. At paragraph 91 of his judgment, Holgate J also makes the following point: The Supreme Court did not lay down any interpretative principle that planning documents, whether a [for the local planning authority] s.106 agreement or a subsequent s.73 permission, should be read so as to prevent landowners and developers from avoiding or side-stepping obligations which they have previously entered into. Ms Dehon did not point to any authority which supports any anti-avoidance principle or presumption in the construction of planning documents.

44. In his reply, Mr Hutchings emphasises that the Norfolk Homes case involved a straightforward (and impermissible) attempt to rely upon subsequent conduct as an aid to the construction of an earlier document.

45. Mr Elvin also refers me to R (Greenfields (IOW) Limited v Isle of Wight Council [2025] EWCA 488 as a recent illustration of the importance of compliance with the statutory requirement to place a copy of a proposed, or finalised, s. 106 agreement on the planning register. The Court of Appeal held that the failure by the local planning authority to place a proposed s. 106 agreement on the planning register resulted in the unlawfulness of the authority’s later decision to grant planning permission: see paragraph 70. I was taken to paragraphs 56, 58, 60 and 67 in the leading judgment of Lewis LJ. He emphasises that one of the purposes of publishing a s. 106 agreement on the planning register is “to enable members of the public to know the terms of a proposed or agreed planning obligation” . Mr Elvin submits that this emphasises the importance of the public-facing nature of the planning register. VI: The competing constructions (a) The claimant

46. The claimant’s case on construction is helpfully summarised in its re-amended statement of case. At paragraph 2 of the re-amended particulars of claim, the claimant notes that: The defendants allege that they are not bound by the planning obligations requiring the affordable housing units not to be occupied otherwise than as affordable housing, because the first defendant is a person deriving title through a mortgagee of a registered social provider entitled to the benefit of the mortgagee exclusion clause in the s. 106 agreement. This is disputed by the claimant, for the reasons stated below.

47. The claimant’s submissions on interpretation are set out at paragraphs 111-120, as follows:

111. On the proper interpretation of the s. 106 agreement in context, in order to come within exclusion clause 10.1.1, a person ( Person A ) must derive title through another person ( Person B ) who is a mortgagee of a registered social provider at the time of the disposal from Person B to Person A.

112. The phrase ‘any mortgagee of a Registered Social Provider’ must be given a temporal meaning, in that when seeking to apply the exclusion clause, one has to ask ‘when?’ in relation to the requirement or test that the predecessor in title was a mortgagee of a registered provider. It would be nonsense to apply the exclusion to a person who had been, but long ago ceased to be, a mortgagee of a registered provider. The defendants appear to accept this point in principle, by submitting that the crucial point in time is the date of default under the loan agreement and legal charge.

113. However, the natural meaning of the wording is to apply the test at the time of the disposal under which the first defendant derived title. It is natural to say that the first defendant derived title through a mortgagee of an unregistered provider.

114. The requirement in the s. 106 agreement that the provider of the affordable housing be a registered provider is an important provision contributing towards the overall aim of securing the provision of affordable housing at the affordable housing units for successive occupants in perpetuity in accordance with the planning policies. The registration requirement ensures that the provider of the affordable housing is subject to the standards issued by the regulator and subject to regulation by the regulator, thus minimising the risk of loss of the social housing assets due to incompetence or dishonest or abusive practices.

115. Another aspect of the registration requirement is that, if Securities had sought to enforce its security by selling the affordable housing units while Kinsman was still a registered provider, this would have required notice to be given to the regulator under s. 108 of the HPA (ex. s. 144 of the HRA), triggering the statutory moratorium under s. 145 of the HRA. The purpose of the statutory moratorium is to create a period of time for the regulator to seek a solution to a provider’s viability problem, in order to protect the social housing assets and the interests of the provider’s tenants.

116. Mortgagees can protect themselves against the risk of deregistration, by including within their finance documentation provision for the power of sale to be triggered by adverse regulatory notices. The loan agreement included such a provision at clause 7.1(i).

117. On the facts of the present case (which are typical), over two months elapsed between the regulator’s proposal to deregister Kinsman dated 30 June 2023 and its deregistration on 7 September 2023, which was on the cards over six months earlier, when the enforcement notice dated 15 February 2023 was given. Securities had ample warning to prepare for and exercise its power of sale before 7 September 2023, had it wished to. By waiting until after Kinsman had been deregistered before seeking to exercise its power of sale, Securities evaded the statutory moratorium.

118. As illustrated by the facts of this case, the defendant’s interpretation of the s. 106 agreement creates a lacuna in the protection of the social housing assets which is contrary to the aims of the s. 106 agreement (see para 37 above).

119. Furthermore, clear words are required to remove, through a subsidiary provision, part of the benefit which it was the purpose of the s. 106 agreement to provide. The words of clause 10.1.1 do not clearly provide for a mortgagee of a deregistered provider or persons deriving title through a mortgagee of a deregistered provider to be excluded.

120. For the reasons stated above, the first defendant does not come within the terms of exclusion clause 10.1.1.

48. In the course of his oral submissions, Mr Hutchings emphasises two points: (1) Whilst the court goes through an iterative process of interpretation, this does not mean that it should discount the natural meaning of the words actually used in the document. Not all possible interpretations should be treated as equal. (2) The court should exercise considerable caution before departing from the natural meaning of the words of a contract of the nature of the subject s. 106 agreement on account of its commercial consequences. One reason for this is the subjectivity, and therefore the unpredictability, of the interpretations to which commercial considerations may give rise. Echoing observations of Aikens LJ in the BMA case, Mr Hutchings cautions the court against both elevating commercial common sense to an overriding criterion of construction, and subjecting the parties to the individual judge’s own notions of what might prove to be the sensible solution to any conundrum. He also urges the court not to determine the issue of construction by applying what might seems like ‘commercial common sense’ from the point of view of only one of the parties to the contract. Mr Hutchings points to the need for caution, emphasising that the competing interests of the parties are no clear guide to the point where, at the end of their negotiation, they might ultimately choose to draw the line. ‘Commercial common sense’ my often reflect nothing more than a better commercial outcome for one of the parties to the contract. The court should be particularly sceptical about accepting arguments founded upon ‘commercial common sense’ in the case of a complicated contract, such as this s. 106 agreement, which has been drawn up by skilled professionals on both sides.

49. The claimant develops its submissions in its skeleton argument. It begins by analysing the text of clause 10.1.1. Its case is that: (1) In its ordinary and natural meaning, the term ‘mortgagee of a Registered Social Provider’ simply means a mortgagee whose mortgagor is a registered social provider. (2) The words ‘such mortgagee’ within the phrase ‘any person deriving title through any such mortgagee’ naturally refer to the circumstances of the mortgagee at the time of the disposition of title to the person claiming the exemption. (3) It is common ground that, as at the date of the Transfer, Kinsman was not a ‘Registered Social Provider’ as defined. It had been deregistered some five months earlier. (4) It follows from the above that, as at the date of the transfer, Securities was not a ‘mortgagee of a Registered Social Provider’ . (5) It is therefore natural to say that the first defendant derived title through a mortgagee of an unregistered provider of social housing.

50. The claimant says that the defendants’ central submission - that ‘any mortgagee of a Registered Social Provider’ is synonymous with ‘any mortgagee of a person which was a Registered Social Provider when it granted the mortgage’ - is simply wrong as a matter of the ordinary and natural meaning of the words used in the s. 106 agreement. It amounts to an attempt to re-write the s. 106 agreement. The claimant says that this submission should be rejected for the following textual reasons: (1) The natural meaning of the phrase ‘any mortgagee of a Registered Social Provider’ does not refer specifically to the time the mortgage is granted but, rather, like the status of a registered provider of social housing, on which it is primarily dependent, it is ambulatory. (2) If a mortgage is granted by a registered social provider but the next day the properties are transferred to a private owner subject to the mortgage, and the private owner holds the properties for a period of a year, at the end of that year it would not be a natural use of language to describe the mortgagee as a ‘mortgagee of a Registered Social Provider’ . (3) The defendants’ interpretation appears to have the surprising consequence that, even if Kinsman had never been a registered provider of social housing, nevertheless Securities was, and remained, potentially for the term of the affordable housing leases, a ‘mortgagee of a Registered Social Provider’ . This is because, on the defendants’ case, its qualification as an excluded person was fixed upon the grant of its legal charge on 19 August 2015. (4) When the parties intended the qualification of a person as an excluded person to be fixed by reference to historical circumstances as at the date of a transaction, they knew how to express this concept. The very next subclause (10.1.2) uses the phrase ‘any … person to whom a Registered Social Provider grants a lease’ . This focuses the reasonable reader’s attention upon the status of the landlord at the date the lease was granted. The status of the landlord at the date the mortgage was created is not a relevant consideration. The difference in language is telling. (5) The remaining wording of subclause 10.1.1 provides the immediate context. The phrase ‘any person deriving title through any such mortgagee’ , in particular the use of the present participle ( ‘deriving’ ), indicates that the relevant time at which to inquire whether the contractual criteria are met is when the first defendant derives title from Securities.

51. In the course of his oral submissions, Mr Hutchings points out that, with the benefit of hindsight, it is usually possible to say that the use of different words would have put a disputed issue of construction beyond doubt. Such an approach is rarely helpful. He points to paragraph 38 of Lewison LJ’s judgment in Napier Park . Noting that both sides, whilst disavowing the argument “if that is what the phrase means, why did the draftsman not say it?” , have pointed to different forms of words which would have put the other side’s interpretation beyond doubt, Lewison LJ makes it clear that he does not find that exercise helpful. The court has to construe the words the parties have actually used in their agreement, not other words that they might have used. The claimant says that the wording actually used in clause 10.1.1 favours its construction, whilst the defendants’ interpretation involves reading in words that are not actually there. Mr Hutchings also says that the defendants’ reliance upon the terms of clause 10.1.2 is misplaced because it is founded on the premise that both this subclause and clause 10.1.1 are intended to work in the same way. However, this inference cannot be discerned from the language of the two sub-clauses, which are expressed in different ways.

52. The claimant submits that its case is supported by considerations of commercial common sense. There is no dispute that the class of those entitled to the benefit of the mortgagee exception clause is not limitless; nor is there any dispute about the substantive criteria that limit it. The question is: what is the relevant time at which to inquire whether those criteria are met? Mr Hutchings’s oral submissions focus upon two points: First, how the scheme created by the s. 106 agreement is administered by local authority housing, or planning, officers. This is a matter upon which I have already touched when reviewing the witness evidence. The second is the purpose of the requirement that the mortgagor should (in most cases) be a registered provider of social housing.

53. The claimant says that one of the applicable criteria is that the excluded person derives title from the mortgagee, which can only be ascertained (at the earliest) at the point in time when title is disposed of. This is a strong pointer that the relevant time at which to inquire whether all the criteria are met is the date of the disposition of title. There is no textual indication to the contrary. This results in a simple test, which is straightforward for officers of the local planning authority to administer. The registrar publishes a list of registered providers (pursuant to s. 111 (2) of the HRA 2008 ), which is updated monthly. Although he has to recognise that there is no evidence to this effect, Mr Hutchings asserts that the local authority’s planning officers simply check that list following any exercise by a mortgagee of its power of sale.

54. Mr Hutchings submits that the question whether a person is the mortgagee of a registered social provider naturally falls to be applied at the time when the exception falls to be applied. He says that it would be nonsense to apply the exception to a person which was once a mortgagee of a registered social provider, but which has now ceased to be such. There is no indication in the text of the exception that any different time-frame applies to the two applicable criteria: whether a person derives title through a mortgagee, and whether, at that point in time, the mortgagor is then listed in the register of social housing providers. One should not be inquiring whether the mortgagor was a registered social provider at some date earlier than the disposal that triggers the inquiry. The status of registration is ambulatory; and the obvious time to pose the question whether the mortgagor is registered is at the time when the exception falls to be applied, and thus at the time of the relevant disposal by the mortgagee.

55. Mr Hutchings relies, by way of analogy, upon two authorities which, he says, illustrate how the courts have dealt with similar issues in other cases in the past. The first is Commissioners of Customs and Excise v Gallaher Ltd [1971] AC 43 , a decision of the House of Lords. This concerned the application of import duties on tobacco imported from Southern Rhodesia following that country’s unilateral declaration of independence in November 1965. The UK responded by making Orders in Council, excluding Southern Rhodesia from the Commonwealth preference area. In order to qualify for Commonwealth preference, goods had to be grown, produced or manufactured in that area, and consigned to the United Kingdom from a place in that area. The majority of the House of Lords held that the relevant date for determining whether the goods continued to qualify for Commonwealth preference was once their transit was over, and they had arrived in the United Kingdom and become chargeable to import duty. At page 62B-D, Lord Hodson (one of the majority) said: … I think that some additional support to what I have called the natural construction is supplied by the meaning I have already given to the word ‘consigned,’ for it will not be until importation to this country that it will be readily ascertainable whether the goods qualify as ‘consigned to the United Kingdom.’ On this footing the customs officials have only to ascertain the place of growth and whether that place is on the list of Commonwealth preference areas when the liability to pay the duty attaches and likewise with regard to consignment. They do not have to inquire in addition whether at the time of growth and at the time of consignment that place was on the current list. Lord Diplock (with whom Lord Donovan agreed) reasoned (within a passage at pages 69B-70F) that: The words ‘grown,’ ‘produced,’ ‘manufactured’ and ‘consigned’ are participles describing the characteristics possessed by goods at the moment at which duty becomes chargeable or payable … In my view, the key to the construction of the participle ‘consigned’ is to be found in the time at which the inquiry as to whether the goods are consigned to the United Kingdom from a place in the Commonwealth area falls to be made, i.e., when the transit is over and the goods become chargeable to customs duty after they have arrived.

56. Mr Hutchings notes that the defendants’ argument is that the mortgagee’s qualification as an excluded person is ‘franked’ at the date of the mortgage and thereafter fixed, potentially for the term of the long lease of each affordable housing unit. However, given that a provider of social housing is able to move on and off the register maintained by the regulator, he submits that it would be artificial to ‘stop the clock’ at the point of the grant of the mortgage. Mr Hutchings also relies, again by way of analogy, upon the reasoning of Adam Johnson J in Lowe v The Governors of Sutton’s Hospital in Charterhouse [2024] EWHC 646 (Ch) , [2024] L&TR 17 (at paragraphs 53 – 59), holding that the wording of the threshold test in s. 215 B (1) of the Housing Act 2004 that ‘a tenancy deposit has been received by a landlord in connection with a shorthold tenancy’ is sufficiently pliable to cover the situation of a deposit paid in respect of a tenancy which was not originally a shorthold tenancy, but has later become one. Since the prescribed information requirements had been complied with in connection with the original tenancy, the landlord fell to be treated as having also complied with them in connection with any later shorthold tenancies in the same chain. At paragraph 59, the judge said this: The gist of Mr Lowe's argument as I understand it is that one must stop the clock at the point of receipt – here, January 2010 – and nothing that occurs thereafter is relevant to determining what the receipt was in connection with. But that is quite artificial, as the judge pointed out, given what he described as the ‘ambulatory’ nature of the regime of assured tenancies under the Housing Act 1988 , which means that tenancies can move in and out of assured status and into shorthold status … In such an environment, it makes no sense to take such a restrictive approach, and as the judge put it, to ‘ossify the treatment of the statutory scheme in its application to a particular tenancy’. I respectfully agree, and therefore also agree with the judge's conclusion that Mr Lowe's deposit, although originally paid in connection with his January 2010 contractual tenancy, can properly be regarded as having been received in connection with either the shorthold tenancy which arose by operation of law in October 2010, or that which arose in January 2011 when the period of the new statutory periodic tenancy commenced. In either case, the prescribed information was provided within the relevant time limit, because it was provided in September 2010, before either of the tenancies commenced and thus before the deposit was received in connection with either of them.

57. Leaving aside the atypical case of the bespoke approval of an unregistered provider, Mr Hutchings submits that the mortgagee exclusion clause affords an incentive for a lender to provide finance which enables the delivery of affordable housing at the development by a registered provider over a period of time. In that context, he says it makes little sense to ossify the treatment of the contractual scheme by reference to an historical date. This would not give proper effect to the purpose of the requirement that the mortgagor is a registered provider. Clause 10.1.1 might have exempted ‘any mortgagee of the Affordable Housing Units’ . That would have given the secured lender the ‘ free pass’ which the defendants say it was the purpose of the mortgagee exclusion clause to provide. But that is not what clause 10.1.1 says. Mr Hutchings also points out that the defendants’ ‘ossified’ interpretation would not always operate to the benefit of a mortgage lender. He invites the court to consider the case of a new registered provider being set up as a subsidiary of a larger registered provider to manage the affordable housing at a particular development. He further invites the court to assume that, in error, the leases of the affordable housing units, and the charge over them, were granted before the subsidiary was listed on the register of social housing providers, with the registration being completed shortly afterwards. In such circumstances, Mr Hutchings suggest that there is no commercial reason why the lender should not thereafter qualify as ‘any mortgagee of a Registered Social Provider’ .

58. Mr Hutchings further submits that the claimant’s proposed interpretation is also supported by the wider planning and regulatory context which underpins the s. 106 agreement. The relevant provisions pursue a number of aims: (1) The overall aim of the affordable housing obligations in the s. 106 agreement is to secure the provision of affordable housing on-site as part of the development, and its maintenance as affordable housing for successive occupants in perpetuity, in accordance with the claimant’s planning policies. This will have been well-known to the developer; and it was, and is, well-known in the development sector generally. (2) The requirement that (absent bespoke approval from the claimant), the affordable housing is to be delivered by a registered provider is an important requirement contributing towards this overall aim. The one-off obligation, under paragraph 11.2 of Schedule One, was to grant the long leases of the affordable housing units to a registered provider. The continuing obligation under paragraph 11.3 is not to occupy the units other than for affordable housing available through a registered provider. Registered providers of social housing are highly regulated. This ensures that the provider of the affordable housing is subject to the standards issued, and subject to regulation, by the regulator, minimising the risk of loss of the social housing assets due to mismanagement or dishonest or abusive practices. (3) This requirement also means that any step taken by the provider’s mortgagee to enforce its security over the affordable housing units will trigger the 28 day statutory moratorium under s.145 of the HRA. This moratorium will provide an opportunity for the regulator to seek to find a solution to the provider’s viability problems, in order to protect the social housing assets and the interests of the provider’s tenants. It thus represents a safety net in the event of any threat to the social housing assets. (4) The primary aim of subclause 10.1.1 is to encourage sufficient commercial lending for a registered provider to acquire the long leases of the affordable housing units. It achieves this by permitting the lender, upon an event of default, to realise its security by selling the social housing assets at open market value.

59. Mr Hutchings submits that subclause 10.1.1 should be interpreted having regard to all of these aims, as part of a ‘whole contract reading’ . He says that the claimant’s interpretation gives effect to the purposes of subclause 10.1.1 and the other relevant provisions of the s. 106 agreement, read as a whole, and produces a coherent scheme: the affordable housing is to be provided by a registered provider of social housing, and, if and so long as this is done, the lender is entitled, upon any default, to realise its security by selling the social housing assets at open market value.

60. Mr Hutchings also relies upon this further point: The regulation of the provider, and the safety net of the statutory moratorium, are all part of the benefit which it is the purpose of the s. 106 agreement to provide. It cannot be said that subclause 10.1.1 contains clear words removing this benefit in the event of the mortgagee’s enforcement of its security.

61. Mr Hutchings points out that, on his interpretation of clause 10.1.1 of the s. 106 agreement, in an ordinary case of mortgage default, the application of the statutory moratorium, in combination with that subclause, is straightforward. The lender has a right to sell the affordable housing units at open market value; but it must first notify the regulator of its intention to enforce its security, thereby triggering the statutory moratorium, and providing an opportunity for the regulator to seek a solution to the provider’s viability problem, or secure the disposal of the units to another registered provider.

62. Mr Hutchings seeks to anticipate, and address, the supposed difficulties which, on the claimant’s interpretation, arise in the special case where the regulator notifies the registered provider of its intention to deregister, and this constitutes the event of default which triggers the exercise of the mortgagee’s right to sell. At the hearing of the claimant’s interim injunction application, on 30 October 2024, the defendants contended that in the case of such a deregistration default, on the claimants’ interpretation, the mortgagee would be exposed to the risk of only recovering existing use value because, after deregistration, the affordable housing units would have to be sold to another registered provider. The defendants argued that this risk would incentivise a mortgagee to sell early, rather than waiting to see if the registered provider could come to an arrangement with the regulator that would leave the social housing provision in place; and that this would undercut the agreement’s broad purpose of securing affordable housing provision.

63. The short answer to this objection, says Mr Hutchings, is that, in the light of the statutory moratorium, the early initiation of enforcement by the mortgagee promotes, and does not undercut, the broad purpose of the s.106 agreement. The defendants’ submissions on this point are said to fail to take account of how the system of regulation, and the moratorium, operate. The first formal step towards the sale of the affordable housing units (or the appointment of a receiver) lies in the mortgagee notifying the regulator of its intention to enforce its security. This alerts the regulator to the threat of the loss of the social housing assets, and triggers the statutory moratorium, and the regulator’s powers to intervene to seek a solution. Indeed, any responsible lender will engage with the regulator before this point, so as to bring the threat of the loss of the social housing assets to the regulator’s attention at as early a time as possible. The idea that, in such circumstances, the regulator would bring its powers of intervention to an end, and punish the lender, by proceeding to deregister the provider, regardless of the financial position of the lender, and, specifically, leaving the lender unable to recover the full amount secured by the mortgage, is characterised as ‘fanciful’ .

64. Even if, despite this, there is a real risk of the lender being limited to recovering existing use value in the special case of a deregistration default, the claimant’s interpretation of subclause 10.1.1 represents a negotiated compromise between the public policy aims of the local planning authority, and the developer’s competing desire to ensure adequate funding for the affordable housing units. This is ‘the essence of commercial common sense’ ; and there is no reason to think that the parties did not intend it. To inject some realism into this debate, Mr Hutchings points to the absence of any evidence that any prospective lender has ever raised any issue with the wording of clause 10.1.1, although it was clearly apparent to the defendants’ former conveyancing solicitors that it was a potential problem for the first defendant.

65. On the other hand, the defendants’ interpretation is said to create a lacuna in a deregistration default scenario because the lender is able to avoid the statutory moratorium by failing to engage with the regulator, and simply waiting until after the registered provider has been deregistered before selling the affordable housing units. That is what happened in the present case. Once Kinsman was deregistered, the regulator’s powers to intervene fell away.

66. Mr Hutchings emphasises that this lacuna is not limited to the circumstances of a deregistration default. Since, on the defendants’ interpretation, the mortgagee’s qualification as an excluded person for the purposes of enforcement is fixed at the date of the mortgage, there are multiple scenarios under which the mortgagee would retain the benefit of the mortgagee exclusion clause, even though its mortgagor had long since ceased to be a registered provider of social housing. In all such cases, upon any default by the provider, the secured lender would be entitled to sell the affordable housing units at full market value; and the local planning authority would lose the safety net of the statutory moratorium. Mr Hutchings says that on the defendants’ construction, any mortgage lender is incentivised to encourage or facilitate the housing provider’s deregistration. This would run counter to the whole purpose of the s. 106 agreement, which is to ensure the provision of affordable housing, not just at the outset of the development, but continuing into the future.

67. In conclusion, Mr Hutchings submits that clause 10.1.1 of the s.106 agreement provides an incentive for a lender to provide finance which enables the delivery of affordable housing at the development by a registered provider over a period of time. Simplicity of administration required the parties to choose a single point in time at which the relevant criterion ‘mortgagee of a Registered Social Provider’ is satisfied, in order for a person deriving title from the mortgagee to qualify for the exclusion. For the reasons already identified, commercial common sense supports the conclusion that this point in time is the date of the disposition of title. Particularly in a case such as the present, where the s. 106 agreement is a sophisticated contract, negotiated and prepared with the assistance of skilled professionals, the court should primarily be guided by a textual analysis, which is said decisively to support the claimant’s interpretation. For these reasons, the court should hold that, on the correct interpretation of the s. 106 agreement, the first defendant does not come within the scope of sub-clause 10.1.1. The court should therefore grant the declaration claimed at paragraph 133, and the final injunction claimed at paragraph 135, of the re-amended particulars of claim.

68. In his reply to the oral submissions of Mr Elvin and Mr Morris, Mr Hutchings emphasises that it is common ground that commercial common sense only has a minor role to play in the interpretation of this s. 106 agreement. Neither party is advocating that the court should take the crow-bar of commercial common sense to the wording of this agreement. Nor does Mr Hutchings place undue reliance upon the commercial consequences of adopting either of the competing constructions. The paramount exercise is to focus intensively on the ordinary and natural meaning of the phrase “any person deriving title through … any mortgagee of a Registered Social Provider” , and to ask when these criteria have to be satisfied. There is no disagreement about the criteria themselves; merely as to when they must be satisfied. The claimant’s case is that they had to be satisfied as at 16 February 2024, being the date of the sales of the affordable leases. If that is correct, the defendants lose the case. The defendants’ case is that Securities was required to be a mortgagee as at that date; but (as confirmed by Mr Elvin during Mr Hutchings’s submissions in reply) the requirement that Securities should have been the mortgagee of a registered social provider fell to be satisfied as at 27 July 2016, the date of the novation, when Kinsman became a party to the mortgage. That, says Mr Hutchings, is the basic contradiction that lies at the heart of the defendants’ case, and which they have never satisfactorily explained. That is because there is no textual basis for applying two different dates to the satisfaction of the two essential qualifying criteria. That becomes crystal clear when one bears in mind the contrasting language of clause 10.1.2, which is not replicated in the immediately preceding sub-clause.

69. Mr Hutchings makes it clear that he is not advocating that the whole of clause 10.1.1 is ambulatory: whether it is or is not depends upon the precise language of the sub-clause. In the case of a sale by a receiver, the mortgagor must have qualified as a registered social provider at the time the receiver was appointed; but there is no need for it also to do so at the time of any later disposition by the receiver. However, Mr Hutchings reminds the court, any appointment of a receiver would require notice to be given to the regulator, thereby triggering the statutory moratorium. In answer to a question from the bench, Mr Hutchings accepts that a secured lender might be better off appointing a receiver at an early stage, because any sale by the receiver would not then be affected by any subsequent deregistration of the provider/mortgagor. But he emphasises the protective effect of the statutory moratorium triggered by any notice of the mortgagee’s intention to appoint a receiver.

70. Mr Hutchings emphasises that the bespoke approval of an unregistered social housing provider would be very much the exception to the norm of using a registered provider to provide the affordable housing units because of the advantages that registration offers in terms of regulation. He submits that ‘the tail should not be allowed to wag the dog’ when approaching issues of interpretation. Mr Hutchings also submits that the precise terms of the mortgagee exclusion clause were essentially a matter for commercial negotiation. The only reliable way of “ascertaining on which side of the line the centre line marking on the tug o’ war rope lay, when the negotiations ended” (to adopt the language of Lord Hodge in Wood v Capita ) is to apply the natural and ordinary meaning of clause 10.1.1. (b) The defendants

71. The defendants’ response to the claimant’s pleaded case on interpretation is set out at paragraphs 65-68 of the re-amended defence, as follows:

65. Paragraphs 111 and to 119 set out submissions, fall outside the scope of ‘a concise statement of the facts on which the claimant relies’ as required by rule 16. 4(a) of the Civil Procedure Rules, and do not advance any facts which the defendants can either admit or deny.

66. Accordingly, the defendants do not plead to those paragraphs and will make appropriate submissions on the interpretation of the s. 106 agreement in due course, as required.

67. Without prejudice to that (and without limiting the submissions which will be made in due course), the defendants aver that, on its true and proper construction, clause 10.1.1 does apply to the first defendant.

68. Paragraph 120 is accordingly denied: the first defendant does come within the terms of the exclusion stipulated by clause 10.1.1.

72. At paragraph 81, the defendants: (1) admit that, if these proceedings are resolved in its favour, the first defendant intends to let the affordable housing units at market rents; (2) deny, for all the reasons set out above, that doing so would amount to a breach of any of the obligations in the s. 106 agreement; and (3) admit that, if these proceedings are resolved in its favour, the second defendant intends to permit or suffer the first defendant to let the affordable housing units at market rents.

73. At paragraph 83, the defendants deny that the claimant has any cause of action which entitles it to any injunctive relief; and aver, in any event, that it would not be just and convenient to grant final injunctive relief in the terms sought.

74. The defendants submit that the first defendant falls within the scope of the words “ any mortgagee of a Registered Social Provider … or any person deriving title through any such mortgagee …”. Mr Elvin submits that this conclusion is supported, first, by the natural and ordinary meaning of the words of clause 10.1.1, particularly when read in the context of the immediately following words of clause 10.1.2; and, secondly, by the purpose of both the mortgagee exclusion clause, and the whole s. 106 agreement. I will relate each limb of his submissions in turn.

75. First, concerning the natural and ordinary meaning of the words of clause 10.1.1, Mr Elvin begins by identifying three different ways in which an entity can enjoy the benefit of the clause 10.1.1 exclusion: (1) An entity will be excluded from the burdens imposed by Schedule One to the s.106 agreement if it is “any mortgagee of a Registered Social Provider” . (2) An entity will also be excluded from those burdens if they are a receiver appointed by such a mortgagee. (3) An entity will also be excluded from those burdens if they derive their title through an entity which was such a mortgagee or a receiver appointed by such a mortgagee – i.e. because the power of sale was exercised by the mortgagee, or by a receiver appointed by them.

76. Mr Elvin emphasises that the relationship of mortgagor and mortgagee comes into existence upon the grant of a mortgage. That mortgage also sets out the terms upon which any receiver may be appointed, and of the relationship between receiver and mortgagor. Thus, the phrase ‘mortgagee of a Registered Social Provider’ naturally contemplates a mortgagee of an entity which was a ‘Registered Social Provider’ at the point at which that entity granted the mortgage. As a matter of ordinary language, then, a third party which acquires title by way of a conveyance from a mortgagee whose mortgage was granted by a registered social provider will be a ‘person deriving title through any such mortgagee’ . The title derives from a mortgage granted by a registered social provider because it was necessarily that grant which conferred any rights on the mortgagee in the first place.

77. Analysed in this way, the mortgagee exclusion clause will apply to a mortgagee of a registered social provider from the point of the grant of the mortgage; and it will continue to apply even if the provider in question is deregistered. The root of the mortgagee’s title remains a mortgage granted by a registered social provider; and the same applies to any third-party disponee of the mortgaged property by the mortgagee.

78. In this case, London District was a registered social provider when the 2015 mortgage was executed. Kinsman was a registered social provider when the deed of novation was executed on 27 July 2016. In other words, the root of the first defendant’s title to the leases is a mortgage granted by a registered social provider. As a matter of ordinary language, Mr Elvin submits that it is not relevant that Kinsman was subsequently deregistered, prior to the disposition by the mortgagee to the first defendant.

79. Mr Elvin says that this analysis can be taken a step further. If the first defendant were to convey any of the leases to another entity, that other entity would still derive its title through the mortgagee of a registered social provider, regardless of the fact that the first defendant is not itself such a mortgagee. It is the grant of the mortgage by a registered social provider in the first place which engages the operation of the mortgagee exclusion clause, and not the registered social provider remaining registered at the point of the original disposition by its mortgagee.

80. The claimant contends that the phrase must be given a ‘temporal meaning’ and that the only relevant moment of time is the date of the disposal to the first defendant. Not only is this at odds with the natural and ordinary meaning of the sub-clause, but also it involves reading into the exclusion a proviso that it only applies to an entity deriving title through any such mortgagee ‘provided that at the time of the disposal by such a mortgagee, the mortgagor was still registered as a Registered Social Provider’ .

81. The difficulties with the claimant’s interpretation are, first, that this is clearly not what the parties to the s. 106 agreement intended; and, secondly, that there is no need for the clause to be read in that way. The defendants note that in alternative s. 106 agreements entered into at around the time of the subject s. 106 agreement, the claimant negotiated wording which specifically incorporated the term it now seeks to imply. In an agreement dated 17 May 2011, between the claimant and Charles Eyre and others, the definition of ‘Registered Provider’ is in similar terms to that in the subject s. 106 agreement, but with the addition of the words “and has not been removed from the register pursuant to . The same proviso is incorporated into a later agreement the claimant negotiated and entered into in in March 2012. Section 4 of that Act ”

82. The drafting of the subject s. 106 agreement may not adopt the same detailed controls as other agreements, but this is a matter that lay within the control of the claimant, as the local planning authority. Even if that demonstrates weaker controls by the claimant, it does not make it legitimate to construe the contractual language so that it has the same effect as the differently drafted provisions in those other agreements, which were clearly required by the claimant in other cases.

83. Mr Elvin points out that the definition of ‘Registered Social Provider’ in this s. 106 agreement extends to an unregistered social housing provider that the claimant may previously have approved for the specific purposes of this development. In such a case, the statutory moratorium would not apply; and the parties did not include any provision in the subject s. 106 agreement for any contractual moratorium. In any event, the statutory moratorium confers a considerable measure of protection upon secured creditors. Any interpretation of clause 10.1.1 must encompass both types of ‘Registered Social Provider’ . It must provide a coherent and logical structure to the clause as a whole. An approved provider cannot be subject to deregistration; and its status is fixed at the time the mortgage is granted.

84. Mr Elvin further submits that the claimant’s construction is counter-intuitive, because it puts the mortgagee at the mercy of the actions of third parties over which it has absolutely no control: the conduct of the registered social housing provider, and the response of the regulator. He says that there is nothing in the language of clause 10.1.1 that might suggest that the qualifying characteristics of mortgagor and mortgagee are ambulatory in their effect.

85. Mr Elvin addresses, secondly, the purpose of both the mortgagee exclusion clause and the whole s. 106 agreement. This was intended to impose obligations on the use and occupation of certain housing units to secure the provision of affordable housing as part of the development. However, it is clear from the presence of clause 10 that the parties (including the claimant) did not intend those obligations to apply in all circumstances, or to every successor in title to the developer. Once that is recognised, it becomes essential to determine why the parties provided for the exclusions in clause 10.

86. In the case of the clause 10.1.1 exclusion, the parties understood there to be a need to exclude from the effect of the affordable housing restrictions a mortgagee of a registered social provider. That can only have been because the parties considered and understood that: (1) in order for the relevant units to be occupied as social housing, long leases would need to be sold to a registered social provider; (2) such a provider might need to borrow money for the purposes of acquiring those leases; (3) a lender would be likely to require a mortgage to be granted over the leases in order to secure the loan; and, (4) such a lender would need to be satisfied that they would be able effectively to enforce their security in full in the event of any default on the part of the registered social provider; and that, to do so, they would need to be able to obtain a satisfactory disposal on the open market free from the Schedule One obligations.

87. Mr Elvin points to paragraph 76 (d) of Mr Hutchings’s skeleton argument, where he recognises that: The primary aim of subclause 10.1.1 was to encourage sufficient commercial lending for a registered provider to acquire the long leases of the affordable housing units. It achieved this by permitting the lender upon a default to realise its security by selling the social housing assets at open market value. That end is achieved by the defendants’, rather than the claimant’s, construction of clause 10.1.1.

88. In this context, Mr Elvin submits that the difficulties with the claimant’s interpretation can be clearly seen. If, as it contends, the Schedule One obligations became binding on the mortgagee at the moment of Kinsman’s deregistration, its security became encumbered by those obligations from that point in time. That would substantially undermine the purpose of the exclusion – not least because, on the claimant’s case, a mortgagee could contract to sell its interest to a third party whilst the registered social provider was still registered, only for it to be deregistered before completion. That risk to the security might well deter mortgagees from lending at all. It would also introduce a powerful incentive for any mortgagee to structure its security on terms that enabled it to enforce at the earliest point in time, so as to maximise the chance of achieving an open-market sale before the mortgagor/provider was deregistered.

89. Putting to one side the moratorium, on which the claimant heavily relies, that incentive would work against the principal aim of the s. 106 agreement: it would encourage a mortgagee to sell early, free from the Schedule One restrictions, rather than waiting to see if a registered social provider could come to an arrangement with the regulator which would leave the social housing provision in place. That is unlikely to be what the parties intended: it appears very unlikely that it would have been considered necessary for any mortgagee of a registered social provider to become bound by the Schedule One restrictions after deregistration of such a provider, but not before.

90. Mr Elvin acknowledges the claimant’s reliance upon the moratorium imposed by s. 108 of the HPA. The effect of that provision is that a person may not take any step to enforce a security over the property of a registered social provider unless notice of that intention has been given to the regulator and either (1) a period of 28 days has elapsed since the notice was given, or (2) the regulator has waived the notice requirement. The claimant contends that the purpose of the moratorium is to create a period of time for the regulator to seek a solution to a provider’s viability problems, in order to protect the social housing assets and interests of the provider’s tenants.

91. Mr Elvin submits that the claimant’s suggestion that the defendants’ construction has exposed a gap in the scheme of legislative protection for affordable housing requirements is greatly exaggerated. By s. 108 (2) of the HRA (re-enacting previous legislation), a person may not take any step to enforce a security over any of the property of the registered provider unless (a) notice of the intention to do so has been given to the regulator and a period of at least 28 days has elapsed since the notice was given, or (b) the regulator has waived that notice requirement. Here, the claimant could have elected to challenge the validity of the mortgagee’s lease disposals to the first defendant on the grounds of want of due notice. Instead, it has elected to seek to enforce the affordable housing restrictions against the first defendant. In any event, if clause 10.1.1 has not worked in the way the claimant had hoped, and it has proved to have made a ‘bad bargain’ , that is no basis for adopting an unnatural construction of the sub-clause.

92. Mr Elvin says that it is notable that in alternative s. 106 agreements negotiated and concluded by the claimant at around the same time as the subject s. 106 agreement, the claimant had negotiated wording which gives express contractual effect to a moratorium. He points out that, had this been the intention of the parties, it would have been open to the claimant to have required similar wording in the subject s. 106 agreement, so as to ensure that the leases of units intended for affordable housing could not be sold by a mortgagee on the open market free from the Schedule One restrictions until after the moratorium had run its course. He says, however, that it would have made no difference if the claimant had done this. Even in such circumstances, it is clear that the parties intended that any mortgagee should be free to sell its interest in the affordable housing units after the end of any moratorium period free from the affordable housing restrictions. Even allowing for the statutory effect of the moratorium in the present case, the parties clearly intended that any mortgagee of a registered social provider should be able to sell its interest free from the Schedule One restrictions if no solution to the difficulties facing the provider were to be found during the moratorium.

93. Mr Elvin points out that no moratorium could apply after any deregistration of the registered social provider; and, to that extent, the existence of the statutory moratorium does not lend support to the claimant’s construction in this case. Rather, it is said to reinforce the defendants’ construction. If, as the claimant contends, a mortgagee could only sell free from the Schedule One restrictions if it achieved a sale before deregistration, it would be incentivised to structure its security so as to be able to point to events of default entitling it to enforce that security at the earliest possible moment, thereby triggering the 28-day moratorium as far in advance of the date of deregistration as possible. Only then could the mortgagee maximise its chances of disposing of the leases before deregistration. On the defendants’ case, by contract, no such perverse incentive exists. So construed, the machinery in the s. 106 agreement confronts the mortgagee of the registered social provider with no incentive to enforce its security early. It is not penalised if it first seeks a solution involving a transfer to another registered social provider. If the provider/mortgagor is deregistered in the meantime, its mortgagee is nonetheless able to dispose of the leases free from the Schedule One restrictions after any rescue process has proved to be unsuccessful. For these reasons, Mr Elvin submits that the defendants’ construction better accommodates the purposes of the s. 106 agreement.

94. Mr Elvin further submits that the correctness of the defendants’ interpretation is also apparent from clause 10.1.2 of the s. 106 agreement. This provides that the obligations in Schedule One shall not be binding upon, nor enforceable against, “any mortgagee of a residential tenant or person to whom a Registered Social Provider grants a lease or transfer or any receiver appointed by such mortgagee or any person deriving title through any such mortgagee or receiver”. There is no suggestion in the contractual language that a mortgagee of a residential tenant who is granted a lease by a registered social provider should fall within the scope of the Schedule One obligations simply because the provider/lessor has been deregistered. The intention, clearly, was to ensure that residential tenants should be able to raise mortgage finance in order to buy leases from a registered social provider. In this case, no ‘temporal’ restriction is suggested; and there is no good reason why a mortgagee entitled to the benefit of the mortgagee exclusion in clause 10.1.1 should be in any different position. It would be illogical to permit a mortgagee of a residential tenant to whom a registered social provider has granted a lease to sell free from any affordable housing restrictions even though that provider had since been deregistered, but not a mortgagee whose mortgage had been granted by a registered social provider which has since been deregistered.

95. Mr Elvin submits that the defendants’ approach to the construction of clause 10.1.1 is logical, and is in in keeping with the structure and the terms of clause 10.1, and the s. 106 agreement, as a whole. He further points out that clause 10.1.1 also applies to any person driving title through a receiver appointed by a mortgagee of a registered social provider. What if the provider is deregistered between the receiver’s appointment and any sale by the receiver? On the claimant’s construction, the purchaser should lose the benefit of the mortgagee exemption because it would be illogical to construe part of clause 10.1.1 as ambulatory and other parts as not. But it cannot have been intended that any purchaser from a receiver appointed by a mortgagee of a registered social provider as at the date of the appointment should lose the benefit of clause 10.1.1 merely because the provider is subsequently deregistered.

96. For all these reasons, the defendants invite the court to dismiss claim and to discharge the interim injunction granted by Edwin Johnson J. VII: Analysis and conclusions

97. I bear all of the competing submissions of counsel firmly in mind. Not without some regret at the consequent loss of much-needed affordable housing, I have no hesitation in preferring the defendants’ submissions to those advanced on behalf of the claimant. I do so because, in my judgment, the defendants’ construction is consistent with the rationale and purpose of the mortgagee exclusion clause whilst the claimant’s construction is not. That rationale and purpose is accurately identified by the claimant at paragraph 76 (d) of the skeleton argument of Mr Hutchings and Mr Feeney, as follows: The primary aim of subclause 10.1.1 was to encourage sufficient commercial lending for a registered provider to acquire the long leases of the affordable housing units. It achieved this by permitting the lender upon a default to realise its security by selling the social housing assets at open market value. I consider that this aim is better achieved by the defendants’, rather than the claimant’s, construction of clause 10.1.1.

98. After re-arranging the order of the words, so as to elucidate, without distorting, their meaning, the wording of clause 10.1.1 of the subject s. 106 agreement that falls to be construed by the court is the phrase “any person deriving title through any mortgagee of a Registered Social Provider ”. That phrase must be construed in the context of the whole of clause 10.1, and the s. 106 agreement more generally; and against the background of the then prevailing planning policies and objectives, and the applicable regulatory regime governing social housing.

99. I recognise that it is necessary to read the key provisions of any agreement in the context of the overall contractual scheme created by the relevant document. The court must also bear in mind the four propositions which I have sought to distil from the observations of Aikens LJ at paragraph 24 of his judgment in the BMA case, as set out at paragraph 39 of this judgment. I have sought to discern the intention of the parties, objectively speaking, from the words they used in the subject s. 106 agreement, read in their relevant context, and against the factual background in which that document was created. The starting point is the wording of the s. 106 agreement itself, and the principle that the commercial parties who agreed that wording intended the words they used to mean what they say in delineating the parties’ respective rights and obligations. If there are two possible constructions of the agreement, the court is entitled to prefer the construction which is more consistent with ‘commercial common sense’ , provided this can be objectively ascertained from the document itself and the admissible background. However, ‘commercial common sense’ is not to be elevated to an overriding criterion of construction. Nor should the parties be subjected to the individual judge’s own notions of what might have been the sensible solution to the parties’ conflicting aims and aspirations. I recognise the potential subjectivity, and consequent unpredictability, of the interpretations to which competing commercial considerations may give rise. I recognise also, in the context of this agreement, that there is always a tension at play between the opposing interests of the developer’s secured funder, which wants to be as free as possible to enforce its security, and the local planning authority, which wishes to restrict the mortgagee’s ability to sell free from all affordable housing restrictions. The precise terms of any mortgagee exclusion clause are ultimately a matter for negotiation between the individual parties to the particular s. 106 agreement.

100. I acknowledge that the subject s. 106 agreement is a sophisticated and complex document, entered into with the benefit of skilled professional advice on both sides, which should be interpreted according to its terms. I also recognise that clear words are required to remove, through a subsidiary provision, any part of the benefit which this s. 106 agreement was intended to confer upon the parties to it. I bear in mind that no anti-avoidance principle, and no presumptions, apply to the interpretation of s.106 agreements.

101. I recognise that on the unchallenged evidence of Mr McDermott, the bespoke approval of an unregistered social housing provider would be very much the exception to the norm of using a registered provider to deliver the affordable housing units. I also acknowledge Mr Hutchings’s submission that ‘the tail should not be allowed to wag the dog’ when considering issues of interpretation. Nevertheless, I consider it noteworthy that the claimant clearly contemplated the giving of such bespoke approval in the present case. In my judgment, any reading of the s. 106 agreement must be able to accommodate the exception from the norm in terms of the potential nomination of an unregistered provider; and the implications of any competing constructions must be tested against this alternative, albeit exceptional, scenario.

102. I bear in mind that shortly before (and after) entering into the subject s. 106 agreement, the claimant had negotiated and entered into similar s. 106 agreements, which included provision for a contractual moratorium. I also acknowledge that before entering into the subject s. 106 agreement, the claimant had negotiated and entered into similar agreements, which expressly identified the need for continuing registration as a pre-condition to qualification as a ‘Registered Provider’ . It is common ground that these agreements are not admissible as an aid to the construction of the subject s. 106 agreement. They do, however, show that the claimant was aware of the potential for the use of different drafting techniques to address some of the issues that have been raised in the present case.

103. As I have already indicated, I consider that it is rarely helpful for a court of construction to be referred to different forms of words which, had they been adopted, might have put the true interpretation of the subject agreement beyond doubt. With the benefit of hindsight, it is usually possible to say that the use of different words would have put a disputed issue of construction beyond doubt. At paragraph 38 of his judgment in Napier Park , Lewison LJ makes it clear that he does not find that exercise helpful. The court has to construe the words the parties have actually used in their agreement, and not alternative forms of words that they might have employed instead. Whilst weighing the effect of alternative competing constructions, the task of the court is to construe the document which the parties ultimately agreed to enter into. If its meaning had been clearly expressed, there would likely be no issue of construction for the court to determine.

104. I do not find Mr Hutchings’s argument by analogy from other decided cases of any real assistance. The facts, and context, of the two cases that he cited are very different from the present. Rather, the court should primarily be guided by a textual analysis, supplemented by an understanding of the objective rationale and purpose of the inclusion of this mortgagee exclusion clause within this s. 106 agreement.

105. There is no dispute that the class of those entitled to the benefit of the mortgagee exclusion clause is not limitless. Nor is there any dispute about the substantive criteria that limit it. To qualify for the benefit of the mortgagee exclusion clause, a person ( Person A ) must derive title through another person ( Person B ) who is the mortgagee of a registered social provider ( Person C ). The question is: what is, or are, the relevant time, or times, at which those criteria fall to be satisfied? The phrase ‘ any mortgagee of a Registered Social Provider’ must be given a temporal meaning: when seeking to apply the exclusion clause, one has to ask ‘when?’ in relation to the requirement, criterion, or test that the immediate root of title is the mortgagee of a registered social provider. It is common ground that at the time Person A derives title to the relevant property, Person B must be the mortgagee of that property. The issue is whether the requirement that Person C is a registered social provider must be satisfied at the point in the time when Person A derives title to the property from Person B, or merely at the earlier date when the mortgage was first granted to person B. The paramount exercise is to focus intensively on the ordinary and natural meaning of the phrase ‘any person deriving title through … any mortgagee of a Registered Social Provider’ , and to inquire when these criteria have to be satisfied. There is no disagreement about the criteria themselves, but merely as to when they must be satisfied.

106. The claimant’s case is that the natural meaning of the phrase ‘any mortgagee of a Registered Social Provider’ does not refer specifically to the time the mortgage is granted. Rather, like the status of a registered provider of social housing, on which it is primarily dependent, it is ambulatory. It simply means a mortgagee whose mortgagor is a registered social provider. The claimant says that the wording actually used in clause 10.1.1 favours its preferred construction, whilst the defendants’ interpretation involves reading in words that are not actually there. The words ‘such mortgagee’ within the phrase ‘any person deriving title through any such mortgagee’ naturally refer to the circumstances of the mortgagee at the time of the disposition of title to the person claiming the benefit of the exclusion. Person A derives title from the mortgagee, and can only be ascertained at the point in time when the mortgagee realises its security. This is said to be a strong pointer that the relevant time at which to inquire whether all the criteria are met is the date of the disposition of title. The phrase ‘any person deriving title through any such mortgagee’ , in particular the use of the present participle ( ‘deriving’ ), indicates that the relevant time at which to inquire whether the contractual criteria are met is when the first defendant derived its title from Securities. One should not be inquiring whether the mortgagor was a registered social provider at some date earlier than the disposal that triggers that inquiry. The status of registration is ambulatory; and the obvious time to pose the question whether the mortgagor is a registered provider is at the time when the exception falls to be applied, and thus the time of the relevant disposal by the mortgagee.

107. Mr Hutchings argues that it would be nonsense to apply the exclusion to a person who had once been, but had long ago ceased to be, the mortgagee of a registered provider. The natural meaning of the wording is to apply the test at the time of the disposal under which the purchaser from the mortgagee – in this case, the first defendant – derives title. Here, it is natural to say that the first defendant derived title through a mortgagee of an un registered social provider. There is no indication in the text of the exception that any different time-frame applies to the satisfaction of the two qualifying criteria: whether a person derives title through a mortgagee, and whether, at that point in time, the mortgagor is then listed in the register of social housing providers. That becomes crystal clear when one bears in mind the contrasting language of clause 10.1.2, which is not replicated in the immediately preceding sub-clause. When the parties intend the qualification of a person as an excluded person to be fixed by reference to historical circumstances as at the date of a particular transaction, they know how to express this concept. The very next subclause (10.1.2) uses the phrase ‘any … person to whom a Registered Social Provider grants a lease’ . This focuses the reasonable reader’s attention upon the status of the landlord at the date the lease was granted. The status of the landlord at the date any mortgage over that lease was created is not a relevant consideration. The difference in language is said to be telling. Furthermore, clear words are required to remove, through a subsidiary provision, part of the benefit which it was the purpose of the s. 106 agreement to provide. The words of clause 10.1.1 do not clearly provide for a mortgagee of a deregistered provider, or persons deriving title through such a mortgagee, to be excluded from the scope of the affordable housing obligations and restrictions.

108. The defendants contend that the mortgagee’s qualification as an excluded person is ‘franked’ at the date of the mortgage and thereafter fixed, potentially for the term of the long lease of each affordable housing unit. However, given that a provider of social housing is able to move on and off the register maintained by the regulator, Mr Hutchings objects that it would be artificial to ‘stop the clock’ at the point of the grant of the mortgage. He says it makes little sense to ‘ossify’ the treatment of the contractual scheme by reference to an historical date.

109. I do not accept the claimant’s submissions, as summarised at paragraphs 106-108 above. I do so essentially for the reasons given by Mr Elvin and Mr Morris, which I have set out earlier in this judgment. I do not agree with Mr Hutchings that the natural reading of the phrase ‘any person deriving title through … any mortgagee of a Registered Social Provider’ is ambulatory, and naturally refers to the characteristics of the mortgagee at the time of the disposition of title to the person claiming the benefit of the exclusion, rather than the earlier time when the mortgage was granted. In my judgment, the meaning of this phrase is open-ended, in the sense that it is capable of either of the two competing meanings advanced in this litigation. I agree that the parties could have more clearly identified the point in time at which the status of the registered social provider is to be determined by the use of different wording (as they did in clause 10.1.2); but they chose not to do so. That being the case, in my judgment the ascertainment of the point in time by reference to which the status of the mortgagor falls to be determined has to be identified by looking to the commercial consequences of the two alternative constructions, and deciding which of those constructions is the more consistent with the rationale and purpose of the mortgagee exclusion clause: in other words, which, objectively, is the better fit?

110. In my judgment, this points clearly to the point in time at which the mortgage was granted. I agree with Mr Elvin and Mr Morris that the primary objective of facilitating a registered provider to raise sufficient funding to enable it to acquire the long leases of the affordable housing units, which are mandated by the s. 106 agreement, requires the mortgagee’s qualification as an excluded person to be ‘franked’ as at the date of the mortgage, and thereafter fixed. I cannot accept Mr Hutchings’s submissions that, given that a provider of social housing is able to move on and off the register maintained by the regulator, it would be artificial to ‘stop the clock’ at the point of the grant of the mortgage; or that it makes little sense to ‘ossify’ the treatment of the contractual scheme by reference to the historical date of the creation of the legal charge. In my judgment, such a temporal restriction is required if mortgagees are to be encouraged to lend to registered providers, so as to enable them to acquire and develop the affordable housing in the first place. No lender would be prepared to run the risk of subsequent deregistration imperilling the value of their security.

111. In my judgment, Mr Elvin and Mr Morris are right to emphasise that the relationship of mortgagor and mortgagee comes into existence upon the grant of the mortgage. That mortgage also sets out the terms upon which the mortgagee may appoint any receiver, and of the relationship between that receiver and the mortgagor. Thus, the phrase ‘any mortgagee of a Registered Social Provider’ naturally contemplates a mortgagee of an entity which was a registered social provider at the point at which that entity granted the mortgage. As a matter of ordinary language, then, a third party which acquires title by way of a disposition from a mortgagee whose mortgage was granted by a registered social provider can properly be said to qualify as ‘any person deriving title through any such mortgagee’ . Their title derives from a mortgage granted by a registered social provider because it was necessarily that grant which conferred any rights on the mortgagee in the first place. I agree with Mr Elvin and Mr Morris that the claimant’s alternative interpretation suffers from two difficulties. First, it is clearly not what the parties to the s. 106 agreement intended, given the objective reasons underlying the inclusion of the mortgagee exclusion clause. Secondly, there is no need for clause 10.1.1 to be read in such a counter-intuitive manner.

112. Analysed in this way, the mortgagee exclusion clause applies to a mortgagee of a registered social provider from the time the mortgage is granted; and it continues to apply even if the provider in question is subsequently deregistered. The root of the mortgagee’s title remains a mortgage granted by a registered social provider; and the same applies to any third-party disponee of the mortgaged property by the mortgagee. In my judgment, clause 10.1.1 falls to be read in the sense that it applies to any person deriving title through any mortgagee to whom a registered social provider has granted a mortgage, rather than in the alternative sense of any mortgagee of a registered social provider for the time being. Both possible meanings are encompassed by the phrase ‘any person deriving title through … any mortgagee of a Registered Social Provider’ . But the former reading is the only reading that fits with the underlying primary objective of facilitating a registered provider to raise sufficient funding to enable it to acquire and develop the long leases of the affordable housing units which are mandated by the s. 106 agreement.

113. I agree with Mr Elvin and Mr Morris that the claimant’s construction is counter-intuitive, because it puts any mortgagee at the mercy of the actions of third parties over which it has absolutely no control: the conduct of the registered social housing provider, and the response of the regulator. There is nothing in the language of clause 10.1.1 that requires a court of construction to conclude that the qualifying characteristics of the mortgagor and the mortgagee are ambulatory in their effect.

114. The terms of clause 10 show that the parties (including the claimant) did not intend the affordable housing restrictions in the subject s. 106 agreement to apply in all circumstances, or to every successor in title to the developer. So it is necessary to understand why the parties provided for the exclusions in clause 10. In the case of the clause 10.1.1 exclusion, the parties clearly understood that there was a need to exclude any mortgagee of a registered social provider from the effect of the affordable housing obligations and restrictions. As Mr Elvin submits, that can only have been because the parties considered and understood that: (1) in order for the relevant units to be occupied as social housing, long leases would need to be sold to a registered social provider; (2) such a provider might need to borrow money for the purposes of acquiring those leases; (3) any lender would be likely to require a mortgage to be granted over the leases in order to secure any loan; and, (4) any such lender would need to be satisfied that they would be able effectively to enforce their security in full in the event of any default on the part of the registered social provider; and that, to do so, they would need to be able to dispose of their security on the open market free from the Schedule One obligations and restrictions.

115. On this footing, the difficulties with the claimant’s interpretation are immediately apparent. If, as it contends, the Schedule One obligations became binding on Securities at the moment of Kinsman’s deregistration, its security became encumbered by those obligations and restrictions from that point in time. That would substantially undermine the purpose of the exclusion. The risk to their security that this would entail might well deter mortgagees from lending at all. It would certainly introduce a powerful incentive for any mortgagee to structure its security on terms that enabled it to enforce it at the earliest point in time, so as to maximise the chance of achieving an open-market sale before the mortgagor was deregistered. Mr Elvin suggests that, on the claimant’s case, a mortgagee could contract to sell its interest to a third party whilst the registered social provider was still registered, only for it to be deregistered before completion. I do not necessarily view this as a fatal objection to the claimant’s construction because, in such a case, it might well be the date of the contract, when the equitable title passes to the purchaser, rather than the date of completion (or subsequent registration of the transfer), effecting the transfer of the legal estate, that should be taken as the relevant qualifying date. However, the overarching objections to the consequences of the claimant’s construction remain.

116. I agree with Mr Elvin and Mr Morris that their approach to the construction of clause 10.1.1 is logical, and in keeping with the structure, and the terms, of both clause 10.1, and the s. 106 agreement, as a whole. In my judgment, the defendants’ construction is supported by considering the application of clause 10.1 to other possible scenarios. First, there is the position of the unregistered provider who is approved by the claimant on a bespoke basis for the purposes of this particular development. There can be no risk of any mortgagee from such a provider losing the benefit of the mortgagee exclusion clause on any subsequent deregistration because the provider has never been registered in the first place. What is the rational justification for such differential treatment? It can only be because the claimant has chosen to approve the provider in the first place, notwithstanding its status as an unregistered provider. That does not seem to me to afford any sufficient justification for the potential loss of the full value of the mortgagee’s security.

117. Secondly, there is the case, addressed in clause 10.1.2, of the mortgagee of a residential tenant who has been granted a lease by a registered social provider. There is no suggestion in the language of clause 10.1.2 that any person deriving title through such a mortgagee should fall within the scope of the Schedule One obligations and restrictions simply because the provider/lessor has subsequently been deregistered. The clear intention of clause 10.1.2 is to ensure that potential residential tenants should be free and able to raise mortgage finance in order to buy leases from a registered social provider. In this case, no ‘temporal’ restriction is suggested. Mr Hutchings emphasises the differences in the language of clauses 10.1.1 and 10.1.2; and he objects that the defendants’ reliance upon the terms of the latter sub-clause is misplaced because it is founded on the impermissible premise that both these subclauses are intended to work in the same way. He says that this inference cannot be discerned from the language of the two sub-clauses. Whilst I appreciate Mr Hutchings’s point, I agree with Mr Elvin’s counter-submission that there is no principled good reason why a mortgagee entitled to the benefit of the mortgagee exclusion in clause 10.1.1 should be in any different position from the mortgagee of a residential tenant of an affordable housing unit. It would be illogical to permit a mortgagee of a residential tenant, to whom a registered social provider has granted a lease, to sell free from any affordable housing obligations and restrictions, even though that provider has since been deregistered, but not a mortgagee whose mortgage was granted by a registered social provider which has since been deregistered.

118. Thirdly, clause 10.1.1 also applies to any person driving title through a receiver appointed by a mortgagee of a registered social provider. Mr Elvin poses the question: what if the provider is deregistered between the receiver’s appointment and any sale by the receiver? He suggests that, on the claimant’s construction, the purchaser should lose the benefit of the mortgagee exception clause, because it would be illogical to construe part of clause 10.1.1 as ambulatory and other parts as not. He submits that it cannot have been intended that any purchaser from any receiver appointed by a mortgagee of a registered social provider as at the date of the receiver’s appointment should lose the benefit of clause 10.1.1 merely because that provider is subsequently deregistered. Recognising this potential anomaly, Mr Hutchings made it clear during his oral submissions that, in the case of a sale by a receiver, the mortgagor must have qualified as a registered social provider only at the time the receiver was appointed. There is no need for it also to do so at the time of any later disposition by the receiver. However, in my judgment, this simply serves further to demonstrate the illogicality of the claimant’s construction, by throwing a further potential qualifying date into the mix. In the case of a sale by a receiver appointed by the mortgagee of a registered social provider, as with the case of a sale by such a mortgagee, the relevant qualifying date for determining the status of the registered social provider must be the date of the grant of the mortgage, and not any later date.

119. For all these reasons, I reject the claimant’s case that the defendants cannot claim the benefit of the mortgagee exclusion clause because Kinsman was not a registered social provider on 16 February 2024, being the date of the sales of the affordable leases. There is, however, one aspect of the case on which I would part company with Mr Elvin and Mr Morris, although it may be unlikely to arise in other cases, and, on the particular facts of the instant case, it makes no difference to the outcome. The defendants’ case (as confirmed by Mr Elvin by way of an intervention during the course of Mr Hutchings’s submissions in reply) is that the requirement that Securities should have been the mortgagee of a registered social provider falls to be considered as at 27 July 2016, the date of the novation, when Kinsman became a party to the mortgage. In my judgment, for all the reasons I have given, I consider that the crucial date is the date of the grant of the original mortgage by London District to Securities on 19 August 2015. London District needed to be a registered social provider as at that date for the mortgagee exclusion clause ever to apply. It may well be – and, indeed, I incline to think – that Kinsman also needed to be a registered social provider as at the date of the novation of the legal charge on 27 July 2016. But since it was so registered on that date, it is strictly unnecessary for me to decide this further point.

120. Mr Hutchings invites the court to consider the case of a new provider being set up as a subsidiary of a larger registered provider to manage the affordable housing at a particular development. He then postulates that, in error, the leases of the affordable housing units, and the charge over them, are granted before the subsidiary has been listed on the register of social housing providers, with the registration being completed shortly afterwards. In such circumstances, Mr Hutchings suggests that there is no commercial reason why the lender should not thereafter qualify as ‘any mortgagee of a Registered Social Provider’ whereas, on my preferred construction of clause 10.1.1, it would not. I consider that this is a most unlikely scenario. In any event, it could be addressed by the discharge of the existing charge, and the immediate grant of a fresh charge. Failing that, a claim in professional negligence would almost certainly lie on the part of the secured lender against its conveyancing solicitors (backed by their insurers). Certainly, I do not consider that this unlikely scenario should be allowed to dictate a forced, and irrational, construction of clause 10.1.1. VIII: Disposal

121. For the reasons I have given, I find in favour of the defendants. I dismiss the claim; and I discharge the injunction granted by Edwin Johnson J on 30 October 2024.

122. I invite the parties to seek to agree a substantive order to give effect to this judgment. This should address the effect of the injunction granted by Edwin Johnson J. In that connection, I note that the injunction continues “until trial or further order” . The draft order should also provide for the costs of and incidental to this claim.

123. If the parties cannot agree upon a suitable form of order, they should provide a draft composite order, containing their alternative provisions, together with brief written submissions on the outstanding consequential matters. This should be no longer than is strictly necessary, and, in any event, no longer than five pages in length, employing a font size of no less than 12 points, and without any foot-notes and annexures. Unless I direct otherwise, I will proceed to determine any outstanding matters on the papers.

124. I propose formally to hand down this judgment remotely at 10.00 am on Tuesday 22 July 2025. No attendance is required. I will extend the time for appealing to 28 days after formal hand down (i.e. to 4.00 pm on 19 August 2025). I direct that written submissions in support of any application for permission to appeal, with concise draft grounds of appeal, are to be filed and served within seven days after hand down (i.e. by 4.00 pm on 29 July 2025). Unless I direct otherwise, I will determine any such application on the papers.

125. I conclude by reiterating my thanks to all four counsel (and their respective solicitors) for their considerable assistance in facilitating the disposal of this application.

126. That concludes this reserved judgment.