This matter concerns a dispute arising from an off-plan property investment and associated bond purchase. In June 2021, two purchasers entered into an Off-Plan Purchase Agreement (OPPA) with a development group, and simultaneously invested £715,000 in a 3-year 10% growth bond issued by a related entity.
In consideration of the bond investment, the parent company agreed to offer a discount on a specified property to be built on a designated plot. The development site was later sold to a third party, who denied any relationship with the original developer and refused to honour the discount.
The purchasers-initiated arbitration, resulting in a consent order requiring the parent company to repay the principal sum. Partial payments were made, but the company defaulted on the final instalments. The purchasers now seek to enforce a clause in the OPPA entitling them to repayment of the principal plus interest from the date of agreement, on the basis that the property was not ready for occupation by the operative date.
The key issue is whether the OPPA clause creates an enforceable obligation on the parent company to repay the principal sum plus interest, independent of the bond maturity terms.
The bond and OPPA are separate contracts involving distinct entities. The issuer is responsible for bond repayment, while the parent company is bound by the OPPA. The purchasers argue that the clause operates at their sole discretion and triggers repayment if the property is not ready or if they elect not to proceed.
Additional concerns include the lack of a registered interest in the property, limiting any claim against the third-party purchaser. The concept of “equity’s darling” may protect the new owner from claims due to lack of notice.
Counsel advised that while the purchasers have largely recovered the bond, their claim for the lost bargain under the OPPA is less certain. The operative clause may be interpreted as a discretionary trigger, but its enforceability depends on the full contractual context and any subsequent agreements.
To assess the viability of further action, Counsel requested copies of the arbitration award, settlement agreement, bond documentation, and any secondary drafting. The parent company may resist enforcement by producing counter-documentation.
Counsel noted that pursuing a claim without foundation would be inadvisable, but reserved judgment pending review of the full contractual suite. The purchasers were advised to consolidate documentation and prepare for potential correspondence with the parent company to test their position.
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