Royal Free London NHS Foundation Trust v Newlon Housing Trust

For a contractual valuation, the expert’s jurisdiction and mandate come from the parties’ agreement. A preliminary decision made within an unfinished expert determination has no separate binding effect unless the parties made a distinct agreement to that effect. A bespoke market-value clause is not supplemented by a Red Book valuation or a fairness-based exclusion simply because one outcome appears generous. A special purchaser’s bid and hope value are not excluded unless the contract says so. Vacant possession unencumbered by the Nomination Agreement removes that agreement’s effect on value but does not erase the lease’s social-housing restrictions or require an assumption of reprovision. Planning obligations and reprovision remain matters for evidence in the valuation.

Royal Free London NHS Foundation Trust v Newlon Housing Trust concerned a 99-year lease of accommodation within a former hospital site. The Trust exercised a break clause and selected Option B, under which compensation was calculated as 80 per cent of Market Value. The appointed expert issued an interim determination on the special-purchaser issue but resigned before determining the final Market Value and compensation. The contractual machinery was agreed to have failed. In a Part 8 claim, the court was directed by consent to determine Market Value and considered four preliminary issues concerning the expert’s determination, special-purchaser value, hope value and reprovision.

The court determined all four preliminary issues but did not determine the ultimate Market Value or compensation payable.

1. Expert determination. The scope and finality of an expert’s jurisdiction and mandate are contractual questions. The court applied the principles in Barclays Bank plc v Nylon Capital LLP [2011] EWCA Civ 826, Great Dunmow Estates Ltd v Crest Nicholson Operations Ltd [2019] EWCA Civ 1683 and Premier Telecom Communications Group Ltd and anor v Webb [2014] EWCA Civ 994. Mr Harris was appointed to determine the Option B compensation. His determination of the special-purchaser issue was an interim step in an unfinished process. There was no separate agreement making it independently final and binding, so it was a contractual nullity. The court’s jurisdiction had not been excluded.
2. Estoppel. Applying Tinkler v HMRC [2021] UKSC 39, the Trust had not established an expressly shared assumption, manifested assent, reliance or sufficient detriment to make it unconscionable for Newlon to rely on the true legal position.
3. Contractual construction. The bespoke compensation mechanism had to be construed as a whole. The language, the 80 per cent discount and the provisions addressing planning use and change of use did not import a Red Book valuation or a fairness-based exclusion. The court followed the objective approach summarised in ABC Electrification Limited v Network Rail [2020] EWCA Civ 1645 and applied Arnold v Britton and others [2015] UKSC 36.
4. The bid of a special purchaser was not excluded. Hope value, including value referable to a future sale to a special purchaser for redevelopment, could also be contended for, subject to evidential proof.
5. Reprovision. Vacant possession required the premises to be vacant at the valuation date. Being unencumbered by the Nomination Agreement neutralised that Agreement’s effect on value, but did not erase the premises’ historic use or the lease’s separate social-housing restrictions. Whether planning consent would require reprovision was a question of evidence, not contractual interpretation. The four answers were therefore: not bound by Mr Harris’s determination; special-purchaser value not excluded; hope value could be advanced; and no automatic negative reprovision assumption.

This was a first-instance Part 8 claim. The parties agreed that the contractual expert-determination machinery had failed. On 8 October 2025, the court directed by consent that it determine Market Value under Schedule 1 of the lease. No lower-court decision or appeal is stated.