UK developer claims Qatari investor had no reason to back out of project.
Qatari Diar Real Estate Investment Co, a unit of the emirate’s sovereign wealth fund, should pay as much as 81 million pounds ($117 million) for abandoning a deal to build luxury apartments at London’s Chelsea Barracks, UK developer CPC Group Ltd said at a trial today.
Qatari had no reason to back out of the project and is now refusing to pay so called deferred compensation it owes after buying CPC’s share of the development, lawyer Anthony Stephen Grabiner said in opening arguments at a London trial over the contract dispute.
Qatari’s employees made personal allegations against real estate entrepreneur Christian Candy, who controls CPC, in a “desperate throw of the dice to divert attention from its own actions,” Grabiner said.
A joint venture of CPC and Qatari Diar paid $1.41 billion for Chelsea Barracks in January 2008. In November of that year, Qatari Diar bought out CPC’s stake for an initial payment of about $56.1 million and agreed to pay $119.6 million later in deferred compensation, CPC said. Candy was retained for project management, design and marketing.
When Prince Charles subsequently criticized the development as unsuitable for the area, Qatari Diar withdrew its planning application. CPC sued in November for breach of contract.
Sheikh Hamad Bin Khalifa Al Thani, the emirate’s ruler, spoke to Prince Charles in February 2009 about his objections to the project, according to CPC’s lawsuit. Prince Charles turned over notes about the meeting, Grabiner said.
Joe Smouha, Qatari’s lawyer from Essex Court Chambers, said the deferred compensation being demanded by CPC was “uncertain in both amount and timing.”
Qatari argues that it shouldn’t have to pay the deferred compensation because no value has been created on the site.
In his opening remarks, Smouha said: “There’s a stark difference in the understanding of the nature of the contract."
CPC said the deferred payment is intended to cover what has already been sold to Qatari, rather than a projected value.
In the court papers, CPC said: “Whether or not QD believed it had made a bad bargain, it was and is still required to comply with its terms. Qatari “wants full control of the project, and wants to shuffle off the corresponding obligation to pay for it.”
The trial before Judge Peter Smith is scheduled to last from five to 10 days.
The Chelsea Barracks development was planned to include mixed use buildings of between five and 13 stories, comprising 638 residential units, as well as hotel space, a community center, retail units and restaurants, court papers show.
Another of CPC’s projects is building One Hyde Park in central London with an interior designed by Candy & Candy Ltd, the company Christian Candy founded with his brother Nick.