Chelsfield chairman Elliott Bernerd is being sued for damages in a £1.8m dispute by property developer Jack Bistricer.
A writ issued at London’s High Court and just made publicly available says Bernerd persuaded Bistricer and two companies to withdraw from a planned joint venture set up to help a company which was being pressed by bankers over an £18m loan.
However, the writ says that since persuading them to pull out of the deal, Bernerd has failed to pay money promised despite assuring Bistricer he could rely on his word, and that the two “were family”.
The case centres on the lease of Camelford House at Albert Embankment, London, which was subleased to British Telecom, and charged to a consortium of banks as security for an £18m loan, the writ says.
It alleges that in 1992 the banks were threatening to repossess the property and sell it, and were looking for around £15-16m.
Bistricer was friendly with Bernerd and in confidence mentioned the possibility that BT would pay a reverse premium for surrendering the sublease and being granted a shorter lease.
The writ says that Jersey companies Savoy Corporation and Project Lord Co, Bistricer and Edward Sonshine QC knew that because of this the property could be acquired for a net sum substantially less than its value, which would lead to a very considerable profit on resale.
Bernerd suggested a plc or group company would raise the money needed to develop the property fully and make a substantial profit, with 40% of profits going to the four, and 60% to the company.
Bernerd is said to have entered into negotiations with BT, which resulted in BT agreeing to pay between £7.5m and £9m in exchange for being released from the lease, and being granted a new lease on different terms.
Bernerd and the four are said to have prepared heads of agreement, and agreed that Chelsfield Properties should enter into an option agreement to buy the property, and pay £750,000 as required by the option agreement.
However, it is alleged that on July 17 1992 Nigel Hugill, a director of Chelsfield, wrote to Sonshine saying that the company would not pay a deferred payment or any other form of payment on Camelford House.
The four claim this amounted to a repudiatory breach of agreement, entitling them to seek damages.
On the same day, Bernerd told Bistricer that the banks were unwilling to go ahead if Bistricer was involved in the project and urged him to allow a Chelsfield group company to proceed, and for them to withdraw entirely.
He is said to have promised that if they did this, he would personally ensure they would receive the same money they would have received under a full binding agreement.
Bistricer believed this, and the four withdrew from the deal, allowing Chelsfield Properties to enter into an option agreement, buy the property, enter into a surrender and new agreement with BT with BT paying a reverse premium of £8.85m, in December 1992, the writ says.
Since 1997 the four are said to have pressed Bernerd to pay the money agreed orally, and say he has never denied an obligation to pay but has temporised, and sought to reach a further agreement with them.
They are seeking payment of £1,872,253 or £1,734,496, and interest.
EGi News 16/08/02
