Ground Rents Income Fund PLC Notification of Judgment (7604O)
February 01 2019 - 2:00AM
UK Regulatory
TIDMGRIO
RNS Number : 7604O
Ground Rents Income Fund PLC
01 February 2019
Ground Rents Income Fund plc
("GRIO" or the "Company")
Notification of Judgment
Ground Rents Income Fund plc (LSE: GRIO), a listed real estate
investment trust ('REIT') investing in UK ground rents, wishes to
announce that a High Court judgment has been handed down in
connection with the recent hearing of the case between its wholly
owned subsidiary North West Ground Rents Limited ('NWGR') and Blue
Manchester Limited ('BML'), a leaseholder within Beetham Tower,
Deansgate, Manchester, (the 'Building') the principal freehold
property asset owned by NWGR.
In the Company's 2018 Annual Report and Financial Statements
details were disclosed regarding NWGR's intention to defend legal
action brought by a leaseholder (as set out within the Notes to the
Consolidated Financial Statements: Note 22 Other financial
commitments and contingencies). Legal advice obtained at the time
of approval and publication of the 2018 Annual Report indicated
that no significant liability or no material irrecoverable losses
were likely to arise in respect of the claim. Furthermore, the
published Net Asset Value ('NAV') of GRIO as at 30 September 2018
included a write down of the Building's value to reflect the
influence of the legal action and the uncertainty of its
outcome.
The principal basis of the claim relates to the failure of the
structural sealant on a number of shadow box units, which form part
of the façade of the Building, and the question of whether or not
the remedial work done to date has kept the building in good and
substantial repair.
A summary of the judgment is as follows:
The court has found for BML. The Building is in disrepair and
BML is entitled to an order for specific performance that permanent
remedial works be designed and implemented within a period to be
agreed or the subject or further order although the provisional
view of the court is that this should be within 18 months from the
judgment date. Hoardings, which were erected by the contractor
while the initial remedial works were carried out, must be removed
within a period to be agreed or the subject or further order
although the provisional view of the court is that this should be
within one month and BML is entitled to damages in respect of a
period of 31 months when the hoardings have been in place.
NWGR was ordered to pay GBP250,000 on account towards BML's
costs within 28 days. The final amount of costs will be determined
at a future date.
In a second issue considered by the court, BML is also entitled
to damages in respect of the release of dirty water into the water
supply of the building due to lack of maintenance. BML is entitled
to two-thirds of its costs in respect of an interim injunction it
sought in connection with the water supply issue, such costs will
be determined at a future date.
The damages associated with this judgment have yet to be
determined in a separate hearing, for which a date has not been
set.
There are a range of potential next steps which NWGR could take,
which include pursuing the proceedings which it has already issued
against the original contractor's insurers and the sub-contractor
through existing warranties and indemnities, which, if successful,
would limit any potential liabilities or irrecoverable losses for
NWGR. The proceedings have been issued against the contractor's
insurers because the contractor was Carillion Construction Limited,
now in liquidation.
BML has also commenced action against the contractor's insurers
and sub-contractor through their existing warranties.
As regards the remedial works, the scope of the trial was
limited to the issue of liability for the remedial works to be
completed, but not the issue of the quantification of the cost of
such works. NWGR continues to seek advice on the nature of the
remedial works required to comply with the judgment and their
associated cost.
NWGR will evaluate what the next actions and consequences of the
judgment may be. NWGR is reliant on the financial support of GRIO
to finance further legal action and to comply with the judgment.
The Company continues to review its own obligations in regard to
NWGR and NWGR's obligations under the judgment.
The GRIO board will keep shareholders informed of progress and
provide a further update as and when appropriate.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
Contacts:
Ground Rents Income Fund plc
Simon Wombwell (Director) 020 7499 6424
Brooks Macdonald Funds Limited
James Agar (Head of Specialist
Funds) 020 7659 3454
N+1 Singer (Broker)
James Maxwell / Ben Farrow 020 7496 3000
Appleby Securities (Channel
Islands) Limited (Sponsor)
Andrew Weaver/Zim Ceko 01534 818230
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END
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