Ariel Zeckler and Another v Kylun Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Holgate |
| Judgment Date | 13 May 2015 |
| Neutral Citation | [2015] EWHC 1386 (QB) |
| Docket Number | Case No: IHQ/15/0225 and IHQ/15/0226 |
| Court | Queen's Bench Division |
| Date | 13 May 2015 |
[2015] EWHC 1386 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Holgate
Case No: IHQ/15/0225 and IHQ/15/0226
The Claimant in person
Janet Bignell QC (instructed by Alan Asher and Co) for the Defendants
Hearing dates: 12th May 2015
Approved Judgment
The Second Defendants are the Trustees for the Walford Maritime Limited Pension and Life Assurance Plan ("the Trustees"). They are, and for many years have been, the freehold owners of the Vauxhall Cross Island site ("the site") lying to the South East side of the Wandsworth Road, London, SW8. Their ownership is registered under title TGL 18067.
The site has the benefit of a planning permission granted on appeal by the Secretary of State for Communities and Local Government in August 2012. The permission is for a mixed use development of over 600,000 sq ft in the form of two towers, one with 39 floors and the other with 30 floors above ground level. The value of the undeveloped site with the benefit of this permission is said to exceed £100 million.
The First Claimant, Mr. Ariel Zeckler, is a Solicitor who has had over 20 years experience in commercial property law. He specialises in creating opportunities for property investors by operating as a partner in commercial ventures (see paragraph 5 of Particulars of Claim). The Second Claimant Mr. James Barrymore is an experienced property developer (see paragraph 6 of Particulars of Claim).
The Particulars of Claim set out the background over a very long period and contain detail which it is unnecessary for me to recite in this judgment. The matters to which I refer are not in dispute.
By 2009 previous deals for the sale of the site had fallen through. The First Claimant suggested to Mr. Andrew Hurst, one of the Trustees, and acting throughout on behalf of the Trustees, that he had identified and would be able to introduce a suitable purchaser of the site. That turned out to be the First Defendant, Kylun Limited ("Kylun"). By August 2009 Mr. Zeckler had been in touch with other potential participants, Mr. Kunal Tulsiani and Mr. Amin Ali, the fifth and sixth Defendants, as well as Mr Barrymore.
In summary, the intention was for the four participants to purchase the site from the Trustees and to sell on to a sub-purchaser within a relatively short period after exchanging contracts with the Trustees in order to realise an immediate profit.
The four participants agreed to use companies registered in the Turks and Caicos Islands as the vehicles for entering into various legal agreements. The First Claimant Mr. Zeckler used Tempest Limited ("Tempest") as his vehicle. He accepts that he is and was at all material times the sole beneficiary of all the shares in the company.
The vehicle used by the Second Claimant and the Fifth and Sixth Defendants was Kylun Limited (see para 51 of the Particulars of Claim).
On 18 September 2009 Tempest and Kylun entered into a profit-sharing agreement. It was envisaged (see recitals (1) to (4)) that Kylun would enter into a contract to buy the site for £22.5 million conditional upon planning permission being obtained by no later than 1 October 2011, that Kylun would provide the deposit monies under that contract (£0.75 million), legal fees and the finance to complete the planning application (£150,000) and that both parties would thereafter manage the project, including the pursuit of the application for planning permission. The body of the agreement provided for the sharing of profits arising in two alternative scenarios, first where a sub-sale took place within 10 weeks of exchange of contracts with the Trustees and second where Kylun had to complete the purchase of the site before selling on. In either case, it was agreed that Tempest, not the First Claimant Mr. Zeckler, would obtain a substantial share of the profits.
Also on 18 September 2009 Kylun entered into a conditional contract to purchase the site from the Trustees. The contract and the supplemental deeds of variation are not before the Court. But the essential provisions and their consequences have been set out in the Defence of the Second Defendants and are not disputed by the Claimants. The original agreement required a defined planning application to be submitted to Lambeth LBC by no later than 1 March 2010. Completion of the purchase was conditional upon (inter alia) the obtaining of a defined planning permission, but subject to a longstop date of 1 October 2011. The longstop date was also specified as a "termination date" so that if the contract did not become unconditional by that date, then the contract was treated as terminated with immediate effect (clause 12.2). Clause 12.3 also provided that the contract was to terminate on 1 October 2011 regardless of the planning position and regardless of any other provision.
Finally, on 18 September 2009 a written agreement was made between the Trustees and Tempest whereby in the event of all the conditions of the contract of the same date for the sale of the site being fully satisfied, the Trustees would pay Tempest a fee of £500,000. This has been referred to as a finder's fee, or an introduction fee. It was agreed that the fee would only be paid once certain conditions had been "met in full" including:-
"1. All conditions of "The Agreement" have been met in full and the Contract has completed with the Conveyance of the Site and full payment of the consideration within the agreed timescales set out in "The Agreement".
2. The Trustees or Trustees Solicitors have received cleared funds of £22.5m (including any deposits paid)."
"The Agreement" was defined so as to refer to the contract dated 18 September 2009 between the Trustees and Kylun for the sale of the Vauxhall Cross Island Site.
During the hearing it was common ground that the relevant planning application was not submitted by 1 March 2010 and that an "event of default" arose under the 2009 sale agreement entitling the Trustees to rescind that agreement (at that stage the sale agreement dated 18 September 2009 had been varied by a First Supplemental Agreement dated 23 October 2009 but nothing turns on that). That position was discussed at a meeting between the relevant parties on 6 March 2010 and a re-negotiation took place resulting in the Second Supplemental Agreement between Kylun and the Trustees dated 21 May 2010. Mr. Zeckler signed this agreement on behalf of Kylun.
The new agreement converted the original conditional contract into an unconditional contract, under which Kylun was to complete the purchase of the site on 1 March 2011 in consideration of a payment of £22.5million. Paragraph 86 of the Trustees' defence states that no new introduction fee agreement was offered by the Trustees, or sought by Mr. Zeckler, or agreed between these parties, in the event of the purchase being completed in accordance with the second supplemental agreement. The Claimant's Particulars of Claim do not suggest otherwise.
By 1 March 2011 planning permission had not been obtained and Kylun decided not to complete the purchase of the site under the Second Supplemental Agreement. Accordingly, that sale and purchase agreement lapsed.
The Second Defendants have explained that various discussions then took place for the sale of the site involving Kylun and other separate parties. Subsequently on 11 January 2012 a Deed of Release was entered into formally terminating the Second Supplemental Contract. On the same date Wendover Investments Limited (a company in which certain of the Trustees are involved) entered into a collaboration and profit sharing agreement with Kylun.
On 14 February 2012 the Trustees entered into a charge by way of legal mortgage of the site with Kylun in order to secure loan facilities made available by Kylun to Wendover.
On 8 March 2012 the Trustees granted an option to Vauxhall Properties Limited ("Vauxhall"), the Third Defendant, for the purchase of the site. It is said by the Claimants that Vauxhall is beneficially owned by the Sixth Defendant or by his father.
The present proceedings were commenced by a Claim Form issued on behalf of both Claimants on 26 February 2015. Paragraph 10 asserts that the First, Second, Fifth and Sixth Defendants entered into the 2012 agreements for the sole purpose of denying Mr. Zeckler his fee of £0.5 million and denying both Claimants their respective shares of profits in accordance with the Profit Share Agreement dated 18 September 2009. Paragraphs 11 and 12 seek a declaration that the Claimants are entitled to shares in the profits to be made by the First, Third, Fifth and Sixth Defendants. Paragraph 14 seeks damages for breach of fiduciary duties as against the same Defendants. The Claimants also seek damages for breach of the 2009 profit share agreement from the Fifth and Sixth Defendants. The only specific money claim brought against the Trustees is for the introduction fee of £0.5 million said to be due to the First Claimant.
At paragraph 15 both the First and Second Claimants ask for a legal charge to be registered over the site.
The Claim Form did not indicate any legal basis upon which the Claimants could be entitled to a legal charge over the site.
At paragraph 16 both of the Claimants ask for entry 7 on the Charges Register of Title TGL 18067 relating to the site, which entry concerns the option granted to Vauxhall dated 8 March 2012, to be...
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