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

1. On Tuesday 22 July 2025 I handed down my substantive judgment dismissing Westminster City Council’s claim for a declaration that the defendants are bound by, and an injunction to enforce, planning obligations contained within a s. 106 agreement that requires 16 flats not to be occupied otherwise than as affordable housing. I also indicated that I would discharge an interim injunction granted against the defendants by Edwin Johnson J on 30 October 2024. I invited the parties to seek to agree a substantive order to give effect to this judgment. That order was also to address the effect of the interim injunction.

2. Prior to formal hand down, on the afternoon of 21 July, I received emails from the parties indicating that the consequential order was largely agreed. The parties were in agreement that the claimant should pay the defendants’ costs of the proceedings (save for the costs of the application for an interim injunction), which were to be assessed if not agreed. The parties were also in agreement that the claimant should pay £250,000 (plus VAT) on account of those costs within 28 days. The reason for the carve-out in relation to the costs of the injunction application was because paragraph 3 of the injunction dated 30 October 2024 had ordered that the costs of the application for an interim injunction should be the claimant’s costs in the case.

3. For the claimant, Mr Matt Hutchings KC and Mr Michael Feeney filed and served brief initial submissions on relief, the substance of which was to seek a temporary continuation of the injunction pending the court’s decision on permission to appeal. The claimant sought an extension of the injunction until 19 August 2025. That was to hold the ring until the court and, if necessary, the Court of Appeal should have had the opportunity to consider any application by the claimant for permission to appeal and a stay pending appeal. The extension until 19 August 2025 was said to be the minimum period required for this purpose. The claimant relies, in particular, on two risks of injustice, if the injunction is not extended: (1) the defendants would be free to take immediate steps to frustrate any appeal in relation to the two unoccupied flats (9 and 10); and (2) the residents of the other 14 flats, many of whom were vulnerable, would needlessly suffer the imminent prospect of the defendants commencing the eviction process consequent upon the court’s judgment. These risks were said to have been identified in a letter from the claimant’s solicitors, dated 18 July 2025, to which no response had been received at the time of counsel’s written submissions.

4. The claimant’s counsel explained that it had not yet decided to seek permission to appeal. As a local authority, the claimant had governance processes under its constitution which mean that it had not yet been practicable for it to make a decision on this issue. The claimant had not then formulated grounds of appeal. However, on any appeal, it would be for the Court of Appeal to reach its own view on the correct interpretation of the s.106 agreement. That was because the meaning of a written contract is a question of law. Mr Hutchings and Mr Feeney submitted that, on a provisional view, there was a sufficient prospect of the Court of Appeal being convinced by a refinement of the submissions made on behalf of the claimant at trial (including responses to the findings in the judgment) to merit the temporary extension of the injunction sought.

5. The defendants were not content with any continuation of the interim injunction, nor with any extension of the usual period of 21 days for any appeal from my judgment. Due to conflicting professional commitments, they asked the court for a short extension of time beyond the hour set for formal hand down to enable their counsel to submit short further submissions on the matters still in contention between the parties.

6. As a holding measure following the impending formal hand down of my judgment, by an email timed at 5.47 on the evening of Monday 21 July, I directed as follows: (1) The parties should file written submissions on matters not agreed in respect of the terms of the court’s final order by noon on Thursday 24 July 2025. (2) I would adjourn the hearing (on the papers) of any matter not agreed in respect of the terms of the court’s final order (including any application for permission to appeal) until Tuesday 29 July 2025. (3) I would extend the time for appealing to 4.00 pm on Tuesday 19 August 2025, with permission for the defendants to request an abridgment of time in their written submissions filed pursuant to paragraph (1) above. (4) The injunction would continue (in the first instance) until the final determination (on the papers) of the terms of the court’s final order (including any application for permission to appeal).

7. I have now received full written submissions from both parties’ counsel.

8. On 24 July I received short written submissions from Mr Tom Morris for the defendants. These address both the time for permission to appeal and the continuation of the injunction. As to the former, the defendants invite the court to order that any Appellant’s Notice should be lodged by 21 days from the date on which judgment was handed down (i.e. by 12 August 2025). Mr Morris submits that the defendants are entitled to finality and to certainty. If an appeal is pursued, they face a further period of uncertainty. The claimant ought therefore to be required to determine what it proposes to do as soon as possible. Its advisers have had the court’s judgment in draft since 15 July 2025. Any application for permission to appeal to this court is to be made by 29 July 2025. The claimant must therefore have made up its mind about whether to appeal the court’s judgment. No explanation has been given as to why any additional time is required. Under the circumstances, the defendants invite the court to abridge the time by which any appellant’s notice is to be filed at the Court of Appeal to 12 August 2025 – i.e. by 21 days from the date on which judgment was handed down. If (contrary to the defendants’ further submissions), the interim injunction is temporarily continued until the date by which the appellant’s notice must be lodged at the appeal court, then of course the case for abridgement will be reinforced.

9. The defendants note that the claimant invites the court to order that the interim injunction granted by Edwin Johson J should continue until the date by which it must lodge its appellant’s notice. The claimant does not ask the court to continue the injunction pending the determination of any application for permission to appeal. Mr Morris comments that this is properly the case, since that would require a further application, supported by evidence, and consideration at a hearing at which the court could consider, and apply, the principles which apply to the grant of interim relief pending an appeal, as distilled by Floyd LJ in Novartis AG v Hospira UK Ltd [2013] EWCA Civ 583 , [2014] 1 WLR 1264 at [41].

10. Mr Morris points out that the defendants have been prevented by injunction from lawfully dealing with their property on the open market, at considerable cost to themselves. He reminds the court that the subject flats are currently generating a rental income of £158,592 a year, whereas their open market rental value is expected to be £1.5 per annum after refurbishment. The defendants have therefore incurred considerable losses over the life of these proceedings, in the region of £1.3 million. In the absence of any cross-undertaking in damages from the claimant, that loss is irrecoverable. Notably, the claimant has offered no cross-undertaking in damages for the further period of any injunction. The defendants will therefore continue to suffer irrecoverable loss until the interim injunction is discharged.

11. Mr Morris emphasises that the defendants have – at great cost – vindicated their property rights. Indeed, the court had “ no hesitation in preferring the defendants’ submissions to those advanced on behalf of the claimant” : see my substantive judgment at [97]. Given the passage of time since these proceedings were issued, the losses suffered, and the losses which will continue to be suffered unless and until the injunction is discharged, the defendants invite the court not to continue the interim injunction.

12. In response to these submissions, Mr Hutchings contends that there is no proper basis for the defendants to contest the existing direction for a temporary continuation of the injunction until relief is finalised. Such a direction, which is entirely ordinary, merely holds the ring until any application for permission to appeal, and an injunction pending appeal, can be determined by the court: see Metropolitan Housing Trust Ltd v Taylor [2015] EWCA Civ 1595 at [1]. There Briggs LJ recorded that the lower court (Warren J) had not discharged the relevant freezing order with immediate effect but instead had continued it for the very short period necessary to give the claimant an opportunity to apply for permission to appeal to the Court of Appeal against the discharge of the freezing order. Further, Mr Hutchings invites this court to note that at the hearing on 30 October 2024 the defendants did not contest either: (1) that no cross-undertaking in damages is required in a claim of this nature, which is a public law enforcement action (as defined in the relevant case law); or (2) that the balance of convenience was in favour of the grant of an interim injunction. So far as a temporary extension of this nature is concerned, nothing fundamental is said to have changed in these respects.

13. Mr Hutchings notes that the defendants also contest the existing direction (made and confirmed) for a modest extension of the period for appealing until 19 August 2025. He says that there is no proper basis for doing so. The commentary in the current (2025) edition of Volume 1 of Civil Procedure materially states (at paragraph at 52.12.3): The brevity of the 21-day period reflects a clear policy decision in favour of finality. … An example of a good reason for seeking a modest extension of time may be that the appellant (through no fault of its own) has an unwieldy decision-making process, such as a board of trustees which needs to be convened. This example of a good reason for a modest extension is said to apply to this claimant. Its constitution provides for any decision whether to appeal this matter to be taken by its Housing Committee. This requires a report to be submitted by the Director of Housing Needs to councillors and its Finance Director, with advice from Legal Services. Unfortunately, at this time of year, the next meeting of the Housing Committee is scheduled for 2 October 2025 (the last meeting was on 3 July 2025). This is causing considerable difficulties for the Claimant in obtaining the necessary authorisation to appeal, so the claimant is very grateful to the court for the modest extension it has already granted, which is said to be entirely appropriate.

14. Having considered these representations, on 28 July I sent an email to all counsel in the case. I stated that, as part of the submissions on the issue of permission to appeal, I would welcome the parties’ views on whether any further extension of the existing interim injunction should include a condition that, if the court should later finds that such extension has caused any loss to the first defendant, and decides that it should be compensated for that loss, the claimant would comply with any order the court might make. Whilst acknowledging that it was common ground that no cross-undertaking in damages is required where an injunction is granted pending trial in a claim of this nature (a public law enforcement action), I questioned whether such a cross-undertaking might be required (or a corresponding condition imposed) as a condition of what is effectively a stay pending appeal/permission to appeal.

15. On 29 July, Mr Morris, for the defendants, responded. He says that the defendants’ position remains that no such extension of the injunction should be granted, for the reasons set out in previous submissions. What follows is said to be without prejudice to that. Mr Morris first addresses the case law authorities. The default position is that an applicant for an interim injunction is required to give an unlimited cross-undertaking in damages; that is regarded as the price for interfering with the defendant’s freedom before he has been found liable for anything. That is subject to what is referred to as the ‘law enforcement action exception’ : that price may not always be exacted where the applicant is a law enforcement agency which is simply enforcing the law in the public interest. This exception was considered by the Supreme Court in The Financial Services Authority v Sinaloa Gold plc [2013] UKSC 11 , [2013] 2 AC 28 . That was a case involving a freezing injunction under s. 380(3) of the Financial Services and Markets Act 2000 . The Supreme Court considered that “ there is no general rule that an authority like the FSA acting pursuant to a public duty should be required to give such an undertaking, and… there are no particular circumstances why it should be required to do so in the present case” . Mr Morris submits that that case stands as authority for the proposition that “no cross-undertaking should be exacted as a matter of course, or without considering what is fair in the particular circumstances of the particular case” per Lord Mance at [33]. Mr Morris says that it follows that there is no rigid rule that a public authority in the position of the claimant in these proceedings should not be required to give a cross-undertaking. Whether or not such an undertaking should be required depends on the particular circumstances of the case.

16. Mr Morris submits that the circumstances are obviously different where the public authority claimant has lost at trial, and seeks an injunction whilst it makes up its mind about an appeal. Before trial, there has been no adjudication on the lawfulness of the conduct which the claimant seeks to restrain. At the present point in time, the court has already ruled that the defendants are not bound by the restrictive provisions in the s. 106 agreement, so that in point of law they are not required to continue to make the relevant flats available to affordable housing tenants. Indeed, when reaching that ruling, the court (at [97]) had “ no hesitation in preferring the defendants’ submissions to those advanced on behalf of the claimant” .

17. To extend the injunction at this point without any cross-undertaking, says Mr Morris, would be to inflict upon the defendants further financial loss for which they would not be compensated, despite the court’s clear finding that the defendants should be free to realise the full value of their property. As already noted, the effect of the interim injunction being imposed has been to deprive the defendants of around £1.3 million. In that light, and that of the court’s decision, it cannot possibly be just and convenient (to adopt the wording of s. 37 of the Senior Courts Act 1981 ) to inflict on the defendants what – on the strength of this court’s decision – amounts to the certainty of further financial loss without compensation.

18. Mr Morris says that the court has already noted that what the claimant seeks is effectively a stay pending an application for permission to appeal. The authorities on whether the order of a trial judge should be stayed pending appeal are well-established. The general rule is that the stay of a judgment will not be granted, but the court nonetheless has the discretion to do so. Mr Morris refers the court to Leicester Circuits Ltd v Coates Brothers Plc [2002] EWCA Civ 474 . In that case, the Court of Appeal made it clear that the proper approach is to make the order which best accords with the interests of justice, with the court balancing the alternatives in order to decide which is the less likely to cause injustice. In case of any doubt, the answer may well depend upon the perceived strength of the appeal.

19. These principles reinforce the defendants’ position that the interim injunction should not be extended unless the claimant is prepared, or required, to give a cross-undertaking in damages in return. Without one, there will be obvious injustice to the defendants if the injunction is later discharged. The defendants accept, of course, that there will some injustice, in the public interest sense, if the injunction is not continued. However, a proper balance can be struck by requiring the claimant to give a cross-undertaking to pay damages as the price for wishing to keep its options open at this stage. Were there any doubt about where the balance should be struck, the court’s clear findings on the construction of the s. 106 agreement ought to tip the scales in favour of the cross-undertaking being required.

20. For the claimant, Mr Hutchings has now submitted draft grounds of appeal, and written submissions in support of its application for permission to appeal. The grounds of appeal are clear, crisp and concise. They are four in number, and cover only two pages. Ground 1 asserts that the trial judge was wrong in law to construe the words “any person deriving title through any mortgagee of a Registered Social Provider” , in subclause 10.1.1 of the s. 106 agreement, as meaning “a third party which acquires title by way of a disposition from a mortgagee whose mortgage was granted by a registered social provider” . Ground 2 sets out the reasons why the claimant says that the criteria set out in subclause 10.1.1, read together with the applicable definitions, including the criterion that the mortgagor is a person listed in the register of providers of social housing, must be satisfied as at the date of the disposition from the mortgagee to the third party claiming the exemption. Ground 3 asserts that insofar as the judge made a finding at paragraph 110 of his judgment that no lender would be prepared to lend to a provider of the affordable housing units on the basis of the appellant’s construction of the s. 106 agreement, this was not based upon any evidence. Ground 4 asserts that the judge was accordingly wrong to hold that the first defendant was a person deriving title through any mortgagee of a Registered Social Provider within the meaning of subclause 10.1.1 of the s. 106 agreement; and was wrong to dismiss the claim on that basis.

21. The claimant’s written submissions in support of its application for permission to appeal is a much more expansive document, extending to no fewer than 21 pages. After introducing the case, this document sets out the relevant provisions of the s. 106 agreement, and the applicable principles of construction. It emphasises that the appeal court will allow an appeal where the decision of the lower court was “wrong” . It makes the uncontroversial point that the construction of a binding contract is a question of law. Therefore, on appeal, the appeal court reaches its own view as to the “true construction” of the contract. The more restrictive approach on an appeal from findings of fact, or evaluative judgments, does not apply. Mr Hutchings emphasises that test for permission to appeal is “a real prospect of success” , which is precisely the same test as that which the courts apply when considering summary judgment. He points out that at the interim injunction hearing on 30 October 2024, the only contentious issue was whether there was a triable issue. After hearing reasonably full argument on the construction issue, Edwin Johnson J concluded that the claimant’s case had a real prospect of success, and so he granted the interim injunction. Mr Hutchings suggest that the fact that a High Court Judge has decided that the date of disposition construction has a real prospect of success is a matter deserving of real weight. Having set out the grounds of appeal, Mr Hutchings proceeds to develop the claimant’s case on construction. Much of this involves rehearsing the arguments that were advanced, unsuccessfully, before the lower court. Mr Hutchings acknowledges that the focus of the Court of Appeal will be on the s. 106 agreement, and the admissible material relevant to its construction. However, at sub-paragraphs 51a through 51m (extending over some four pages), Mr Hutchings explains that the judgment is affected by no less than 13 errors. Whilst recognising that the court does not agree with the claimant’s construction, Mr Hutchings submits that the court should accept that the claimant has a real (and not a fanciful) prospect of success on appeal, and accordingly should grant the claimant permission to appeal.

22. Nothing that Mr Hutchings has said in his written submissions in support of the claimant’s application for permission to appeal persuades me that the claimant has a real prospect of persuading the Court of Appeal that my conclusion about the true meaning and effect of sub-clause 10.1.1 of the s. 106 agreement is wrong. It is not suggested that the court’s decision was unjust because of any serious procedural or other irregularity in the proceedings before the lower court. Nor is there any submission that there is some other compelling reason for an appeal to be heard. It follows that I refuse permission to appeal. The claimant may renew its application for permission to appeal to the Court of Appeal.

23. At paragraphs 53 and 54 of his written submissions, Mr Hutchings addresses the continuation of the interim injunction granted by Edwin Johnson J. He notes that at paragraph 4 of their submissions filed on 24 July 2025, the defendants made clear, as is their right, that any application for the continuation of the interim injunction, dated 30 October 2024, pending an appeal on the Novartis basis should be made by formal application notice, supported by evidence, and determined at a hearing. He further recognises that the court has raised the issue of a possible ‘half-way house’ cross-undertaking as a condition of any continuation of the interim injunction. Mr Hutchings suggest that the cross-undertaking issue is one best determined in the round, in the exercise of the court’s Novartis jurisdiction. Mr Hutchings recognises that it is not possible for the hearing of such an application to be accommodated within the scope of the existing directions for finalising the order consequential on the substantive judgment by 29 July 2025. He says that the position on the ground is most unlikely to change during the short interval required to allow for such an application to be made and determined. For the time being, the claimant simply reserves its right to make such an application. In light of this, I need say no more about the continuation of the interim injunction. My interim holding solution of 21 July provided for the injunction to continue (in the first instance) until the final determination (on the papers) of the terms of the court’s final order (including any application for permission to appeal). That has now taken place. I therefore discharge the interim injunction.

24. My interim holding solution also extended the time for appealing to 4.00 pm on Tuesday 19 August 2025, with permission for the defendants to request an abridgment of time in their written submissions. In those submissions, the defendants invite the court to abridge the time by which any appellant’s notice is to be filed at the Court of Appeal to 12 August 2025 – i.e. 21 days from the date on which my substantive judgment was handed down. I agree with the defendants that they are entitled to finality and to certainty. If an appeal is pursued, they face a further period of uncertainty. The claimant ought therefore to be required to determine what it proposes to do as soon as possible. Its advisers have had the court’s judgment in draft since 15 July 2025. The claimant has already instructed counsel to prepare, and has received, draft grounds of appeal, together with detailed written submissions in support of its application for permission to appeal. These have already been submitted to this court. There is no reason why the claimant cannot now file its Appellant’s Notice with the Court of Appeal. Mr Hutchings has explained the difficulties involved in securing a decision from the claimant’s Housing Committee as to whether to appeal the court’s substantive judgment. However, the next meeting of the Housing Committee is not scheduled until 2 October 2025. There is no indication that a seven days’ extension of time for appealing, from 12 to 19 August 2025, will make any appreciable difference to the claimant’s position in relation to any appeal. Now that the necessary documentation is available, I consider it appropriate to accede to the defendants’ invitation to abridge the time by which any appellant’s notice is to be filed at the Court of Appeal to 12 August 2025 – i.e. 21 days from the date on which my substantive judgment was handed down. That will also tend to put some additional pressure on the claimant to decide whether or not to seek to invoke the court’s Novartis jurisdiction, and thus achieve an element of greater clarity about the position moving forward.

25. That concludes this further judgment on consequential matters. I invite the parties to agree an order to give effect to this consequentials judgment.