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Court of AppealThursday 23 May 2019

Gaia v Abbeygate Helical [2019] EWCA Civ 823

Last week, the Court of Appeal handed down its decision in Gaia v Abbeygate Helical [2019] EWCA Civ 823, a case about whether a developer, Abbeygate Helical, had fulfilled its obligation to use ‘reasonable endeavours’ to satisfy certain conditions ‘as soon as reasonably practicable’ so as to trigger an obligation to make a £1.4million overage payment.  The conditions related to ’site assembly’, specifically the acquisition of and variation to various interests to enable the development to take place.

The High Court (Norris J) had held that Abbeygate had not satisfied the obligation but, if they had, the overage would have been triggered at a time that entitled Gaia to claim the overage. Abbeygate Helical was, therefore, ordered to pay the £1.4m overage payment.

There were several grounds of appeal. But Abbeygate’s principal argument was that its endeavours obligation entitled it to have regard to its own commercial interests when deciding what steps to take to satisfy the conditions. It said that it would have been absurd and ‘commercially irresponsible’ if Abbeygate Helical had made commitments that would satisfy the conditions without first securing funding for the development (of a few tens of millions).

The Court dismissed Abbeygate’s appeal. On the endeavours point, it held that, in circumstances where Abbeygate had itself restricted access to funding, it was open to the first instance Judge to conclude that, even if access to funding was a relevant consideration, it could not be relied upon to show that it had used ‘reasonable endeavours’ to satisfy the conditions ‘as soon as reasonably practicable’. Abbeygate Helical’s manipulation of the timetable to take the satisfaction of the conditions beyond the long stop date for payment of the overage was “on any view” a breach of the obligation. The other grounds of appeal also failed.

Mark Wonnacott QC and Harriet Holmes acted for the successful respondent.

The full judgment can be found here.

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