Zhang's lawyers argue that the property was sold at a material undervalue due to inadequate marketing and that Regal is responsible for the loss, citing the fact that the buyer's company refinanced the property for closer to £12 million shortly after the sale.
A property developer is suing a former tenant for around £4.5 million ($6.1 million), arguing she reneged on the purchase of a seven-bedroom mansion just off one of London's most sought after streets.
Jun Zhang entered an agreement to purchase the north London home, previously rented out to England football captain Harry Kane, in December 2023 for £16.9 million, but failed to complete by the April 2024 deadline, according to High Court filings prepared for a trial this week in London.
The failure to pay led developer Regal B A Ltd. to sell the house for a lower price five months later, leaving the firm on the hook for mortgage and transaction costs.
Lawyers for Zhang argued that the fact High Trees, 16 White Lodge Close was sold at great haste for an undervalue was effectively Regal's own fault. The house -- which has a cinema room, indoor swimming pool, gym and treatment room -- was sold for around £10.2 million on September 2024 to a newly formed company owned by a since-bankrupted businessman
"Such a freefall drop in value is extraordinary," Martin Dray, Zhang's lawyer, said in written legal arguments. "She contends that the marketing was inadequate and the resale of the property to the newco was at a material undervalue."
White Lodge Close sits just off The Bishops Avenue, a road so famous for its monied denizens it's commonly referred to as "Billionaire's Row." Such properties are eye-wateringly expensive and can attract only a small number of affluent buyers, meaning they can take a long time to sell. Zhang's lawyers argue that insufficient time and care was given to trying to sell the property.
The Bishops Avenue has counted a coterie of business leaders and celebrities as residents. It also become emblematic of the slew of questionable capital that's been attracted to the top end of London's property market in recent decades, from Iran's Supreme Leader to the former President of Kazakhstan. Recent sales on the road include a large house for £24.5 million and a two-bedroom flat for £4.2 million, according to property listings firm Rightmove.
Zhang lived in the house for more than a year before agreeing to purchase the 11,135 square-foot (1,034.5 square meters) home. Regal purchased and began developing the home in 2015 with the interior designed by Kelly Hoppen, who has worked for David and Victoria Beckham and on British Airways's first-class cabins. It was completed in 2018 and let to Kane, then playing for Tottenham Hotspur, for the best part of three years.
Regal argued that they did market it properly, employing Sotheby's International to advertise the property overseas. Regal also instructed Daniel Daggers, a luxury real estate agent who goes by the sobriquet "Mr Super Prime", to help market the property in the UK. Zhang also tried to find a buyer herself, but both parties struggled to find one at a price similar to what she had agreed to pay.
"It's all about supply and demand at the time," Regal co-founder Paul Eden said in court on Tuesday. "At the time there was a lot more supply then demand."
In the end Regal sold the property to a newly incorporated company owned and controlled by a businessman called Gabriel Gherscovic, who Eden happened to meet at a social event after Zhang decided not to go ahead with her purchase. Regal had loaned money from Deutsche Bank AG against High Trees and were, in part, motivated to sell the home so as not to incur additional interest costs.
The property was sold in September for £6.75 million less than was initially agreed between Regal and Zhang to Gherscovic's company. Shortly after that, Gherscovic's company refinanced the property for closer to £12 million, evidence Zhang's lawyer suggested, that the property was worth more than it was sold for.
The company that bought the firm is now in administration and Gherscovic has since been bankrupted by one of the lenders with a charge registered against High Trees.
Regal "ended up achieving a price totally out of keeping with all expectations of market value," Zhang's lawyer said in written arguments. "There is good reason for the court to conclude that Regal resold the property at a marked undervalue."