Arthistory Ltd v Mr Alan Eric Campbell
| Jurisdiction | England & Wales |
| Judge | Ms Lesley Anderson |
| Judgment Date | 08 April 2022 |
| Neutral Citation | [2022] EWHC 848 (Ch) |
| Docket Number | Case No: D90LV070 |
| Court | Chancery Division |
[2022] EWHC 848 (Ch)
Ms Lesley Anderson QC sitting as a Deputy Judge of the High Court
Case No: D90LV070
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN LIVERPOOL
BUSINESS LIST (Ch D)
Liverpool District Registry
Liverpool Civil and Family Courts
35 Vernon Street
Liverpool L2 2BX
Nicholas Jackson (instructed by MSB Solicitors Ltd, for the Claimant)
The Defendants (were not represented and did not appear)
Hearing dates: 5, 6 and 8 April 2022
Introduction
Mr and Mrs Campbell, the Defendants, are the registered owners of the freehold property situated at 98 New Cut Lane, Southport which is registered at HM Land Registry with title number LA580469 (“the Property”). By an agreement made by deed dated 9 September 2015, the Defendants granted an option to the Claimant to acquire the Property (“the Option Agreement”). By its Part 8 Claim Form dated 27 November 2017, the Claimants seek specific performance of the Option Agreement and/or for an order that the Defendants be compelled to execute a transfer in Land Registry Form TR1 (“the Transfer”) to give effect to the option thereby granted.
The Claimant was represented by Nicholas Jackson of Counsel. The Defendants act as litigants in person. A pre-trial review was held on Monday 4 May 2020. HHJ Hodge QC recorded at Recital (4) that the case was presently ready for trial but that the case was unsuitable for trial remotely and that as the Defendants are elderly and vulnerable persons who could not reasonably be expected then to attend court in person each day of the three-day trial due to the coronavirus pandemic, the matter should be adjourned.
On Monday 4 April 2022, the day listed prior to commencement of the trial, I heard and dismissed an informal application by Mr Campbell (who attended Court in person to make oral submissions) to adjourn the trial. I dismissed the application for the reasons set out in my separate judgment. However, despite being contacted by Court staff in the morning of Tuesday 5 April 2022 and being given firm encouragement to attend, Mr and Mrs Campbell failed to attend the trial, as Mr Campbell had indicated would be his position following the rejection of his application to adjourn the trial. At the commencement of the trial, I therefore considered whether it was appropriate for me to continue with the trial in the absence of the Defendants. For the reasons given in the short judgment delivered by me at about 1100 that morning, I concluded that it was appropriate for me to continue with the trial.
I have been assisted by written skeleton arguments from both sides, although Mr Campbell was not able to complete his before the commencement of the trial, and by the careful oral submissions on behalf of the Claimant. At my request, Mr Jackson encapsulated in a short, written submission certain comparative calculations which he had referred to in oral closing.
The Suite of Agreements
The Option Agreement was part of a suite of written agreements all dated 9 September 2015 made between the Claimant and the Defendants. I am satisfied that the agreements are related to one another in that they are together intended to give effect to the arrangements between the parties.
First, a Facility Agreement was made between the Defendants (1) and the Claimant (2) (“the Facility Agreement”). By clause 2.1 and paragraph 1.3 of Schedule 4, the Claimant as Lender agreed to make a facility of £123,215.18 to the Defendants. Although clause 2.1 purports to refer to the purpose of the loan as being that set out in paragraph 1.4 of Schedule 4, no such purpose is stated (whether at that paragraph or elsewhere). Clause 2.2 provides for the loan to be repaid by the repayment date which is specified by paragraph 1.5 of Schedule 4 to mean the date which is 36 calendar months from the date of the Facility Agreement. If the loan was not repaid in full together with interest (at the Initial Interest Rate of 28% per annum from Drawdown Date until Repayment Date) and fees, clauses 2.2 and 6.3 provide for Default Interest (at an additional 2.5% per month or part thereof) to be paid. By clause 3.1 and Schedule 1, the Claimant was entitled to call for security over the Property in the form of a legal charge in terms satisfactory to it. Clause 6.4 and paragraph 1.1 of Schedule 4 also provides for an Arrangement Fee equivalent to 15% of the Facility and paragraph 1.2 of Schedule 4 provides for an Exit Fee equivalent to 3% of the Facility. Paragraph 1.9 of Schedule 4 provides that the Redemption Sum was the total of the Costs (as defined in clause 1.1), the Initial Interest, the Exit Fee, the Default Interest (if any) and the Facility. Clause 10 of the Facility Agreement specified various events of default including at clause 10.17 if the Borrower repudiated or evidenced any intention to repudiate a Finance Document (as defined in clause 1.1).
Secondly, a Legal Charge was duly executed over the Property (“the Legal Charge”). By clause 2.1, the Defendants covenanted in “all monies” form to pay on demand the Secured Liabilities.
Thirdly, the Option Agreement was entered into between the Defendants as Seller and the Claimant as Buyer. That provides at clause 3.1 for the grant of the option in consideration of payment of the Option Fee of £1.00 and at clause 3.2 for the Option to lapse if not validly exercised before the end of the Option Period (defined by clause 1 to mean the date which is 36 calendar months from the date of the Option Agreement). Clause 5.1 provides that the Option is to be exercised by the Buyer giving written notice and clause 5.2 provides that if the Option is exercised, the Seller and the Buyer became bound to complete the sale and purchase of the Property on the Completion Date (being the date that is 28 Working Days after exercise of the Option or such other date agreed by the parties). Clause 5.3 provides that upon the exercise of the Option, the Defendants would forthwith instruct their solicitors to act on their behalves in the sale of the Property. Although it purports to be a definition of the Price, in clause 1 the Price is defined as “ the consideration for the price payable for the Property is the sum which represents the release of the Buyer of all monies due and outstanding under the terms of the Facility Agreement and Legal Charge of even date and in consideration of the terms of clause 16”. Under the general heading “Enhancement of the Property”, by clause 16.1 the Buyer agrees and the Seller grants consent to the Buyer to take steps to enhance the value of the Property by seeking planning permission for the residential development of the land situated at the Property and/or to explore other possible options for the land at the Property. Clause 16.2 provides that in the event that any uplift in value of the Property is achieved by virtue of such enhancements made by the Buyer the uplift in value shall be shared equally by the Seller and the Buyer. Clause 16.2 then goes on to make specific provision if such uplift is calculated prior to the option having been exercised.
Schedule 1 to the Option Agreement provides that on valid exercise of the Option by the Buyer: “ The sale of the Property by the Seller shall be subject to the continued occupation of the Seller pursuant to an agreed shorthold tenancy agreement in similar terms to the assured shorthold agreement annexed to this Option Agreement and signed by the parties at a rental of 1% of principal monies loaned by the Buyer to the Seller and to include any further advances made by the Buyer to the Seller”.
Fourthly, there is a Buy Back Option Agreement (“the Buy Back Option”). That largely mirrors the terms of the Option Agreement save that: (a) the Claimant is the Seller and the Buyer is the Defendant and (b) the Price is defined to mean an amount equal to the amounts outstanding under the terms of the Facility Agreement and Legal Charge together with any further advances and certain additions to the Price depending on when the Option is exercised. For example, if the Option is exercised in the first year of the Option Period, the Price was to be payable together with 20% of the Price. If the Option was exercised in the second year of the Option Period, the Price was payable together with an amount equal to a further 5% compounded sum of the Price and the additional 20% referred to above. If the Option was exercised in the third year of the Option Period, the Price was payable together with an amount equal to a further 5% compounded sum of the Price and the additional 20% and 5% referred to above. The draft Transfer annexed at Schedule 1 contains a number of additional terms including at 11.2 provision for an overage to be paid by the Defendants (as Transferee) to the Claimant (as Transferor) in the event that the Property was disposed of with the benefit of planning permission. The Overage Payment was to be 50% of the difference in Market Value with or without the permission.
Finally, in anticipation of the exercise by the Claimant of the Option, on 9 September 2015, the Defendants executed two transfers in Land Registry Form TR1 in relation to the Property which were delivered to the Claimant's solicitor to be held in escrow pending the exercise of the Option (“the Transfer”) and the Buy-Back Option (“the Buy-Back Transfer”). The draft Transfers contain a number of additional terms including at 11.2 provision for an overage to be paid by the Claimant (as Transferee) to the Defendants (as Transferor) in the event that the Property was disposed of with the benefit of planning permission. The Overage Payment was to be 50% of the difference in Market Value with or without the permission.
On 12 October 2015, the Claimant exercised the Option under the Option Agreement,...
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