Royal Free London NHS Foundation Trust v Newlon Housing Trust

Facts

The Royal Free London NHS Foundation Trust owns Queen Mary's Hospital, East Heath Road, a prime Hampstead site with substantial redevelopment potential which has not been used as a hospital since about 2008. By a lease dated 1 July 2005 the Trust let parts of the ground and second floors — 1 flat and 53 bedsits — to Newlon Housing Trust, a charitable housing association and Registered Social Landlord, for 99 years at a peppercorn rent, as part of a larger transaction with two other properties for a total premium of £5m, of which £843,558 was allocated to this lease. A Nomination Agreement gave the Trust first call on the accommodation for its healthcare and key workers at set rents. Because redevelopment was foreseen, the lease contained a bespoke landlord's break clause with compensation calculated under Schedule 1 as the lower of Option A (an accounting exercise) or Option B (80% of Market Value), the Trust choosing between them. The Trust broke the lease with effect from 1 April 2021, electing Option B with a valuation date of 27 June 2018. The valuers disagreed radically — nil against over £20m — and the expert appointed under clause 9(8), Mr AP Harris, determined that a special purchaser's bid was to be excluded before resigning in 2023 without determining Market Value. The Trust issued this Part 8 claim.