Centenary Homes Ltd v Victoria Claire Liddell

JurisdictionEngland & Wales
CourtQueen's Bench Division
JudgeJohn Kimbell
Judgment Date06 May 2020
Neutral Citation[2020] EWHC 1080 (QB)
Docket NumberCase No: QB/2015/002014

[2020] EWHC 1080 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

John Kimbell QC

(sitting as a Deputy High Court Judge)

Case No: QB/2015/002014

Between:
Centenary Homes Limited
Claimant
and
(1) Victoria Claire Liddell
(2) Jon Howard Gershinson
Defendants

Edward Bennion-Pedley (instructed by Judge Sykes Frixou) for the Claimant

Ivor Collett (instructed by Kennedys Law LLP) for the Defendants

Hearing dates: 14,15,16 January 2020

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

John Kimbell QC SITTING AS A DEPUTY HIGH COURT JUDGE

John Kimbell QC sitting as a Deputy High Court Judge:

Introduction

1

The Claimant in these proceedings (‘ CHL’) is a property development company. Two of the properties it developed are Warne Court, 8a Village Road, Enfield, Middlesex EN1 2FD (‘ Warne Court’) and 26–30 Cubitt Street, London WC1X OLS ( ‘Cubitt Street’). The director and sole shareholder of CHL is Mr Marc Rowan (‘ Mr Rowan’)

2

The Defendants are Fixed Charge Receivers (‘ the Receivers’). They are both chartered surveyors and were both at all material times partners at Allsop LLP, which is a well-known property consultancy firm. The First Defendant is now a consultant.

3

CHL obtained finance from the Bank of Scotland (‘ the Bank’) to develop Warne Court and Cubitt Street. CHL gave the Bank a legal mortgage over each property in standard terms as security for the loan facility. The Receivers were appointed by the Bank on 8 March 2012 under the mortgages when CHL defaulted on its repayment obligations to the Bank. By this time the sum due to the Bank from CHL was £4,397,000.

4

The Receivers sold Warne Court in July 2012 for £3,250,000 and sold four of the flats in the Cubitt Street development in 2013. The flats were initially offered for private sale through an estate agent but ultimately sold by public auction. Having discharged CHL's secured debt to the Bank and returned a surplus to CHL, the Receivership ended on 26 July 2013.

5

CHL claims that the Receivers acted in breach of their duties relating to the sale and management of both properties in a number of respects and that the breaches have caused CHL significant losses. The claims in respect of Warne Court were disposed of at an earlier stage in the proceedings by two judgments of Master Thornett dated 19 September 2017 and 13 April 2018 following an application for summary judgement by the Receivers. The sum claimed in these proceedings after those judgments is approximately £1 million.

Representation

6

CHL was represented by Mr Bennion-Pedley of counsel. The Defendant was represented by Mr Collett of counsel.

Factual Background

7

Cubitt Street lies between King's Cross Road to the east and Gray's Inn Road to the west. King's Cross station is within walking distance to the north and Chancery Lane Tube station is less than one mile to the south. For planning purposes, the site lies within the London Borough of Camden (‘ the Council’).

8

CHL acquired the Cubitt Street site in 2004 for £2.4 million. It had previously been a factory. CHL obtained planning permission to construct a new four-storey building with a basement. The planning permission was for office/light industrial, so-called ‘B1’ use, in the basement and on the ground floor with eight residential units on the upper floors. The ground floor and basement were, however, subsequently converted to residential use. Cubitt Street in its final form therefore contained 14 residential flats. Flats 1 – 3 in the basement, flats 4 – 6 on the ground floor, flats 7 – 10 on the first floor and flats 11 – 14 spread over the second and third floors.

9

Flats 7 – 14 were sold by CHL with 125-year leases in 2007 – 2008.

10

Flats 1 – 6 were let by CHL on assured shorthold tenancies.

11

CHL retained the freehold for the whole building.

12

Prior to the appointment of the Receivers, Cubitt Street had been managed by Ashley's High Maintenance (‘ AHM’), a company owned and controlled by Mr Rowan's daughter, Ashley. Following their appointment, it was the Receivers who managed the building. They appointed Allsop Residential Investment Management Ltd (‘ ARIM’), which is a subsidiary of Allsop LLP. The management of the building reverted to AHM at the end of the Receivership in July 2013.

13

CHL carried out work on flats 3 and 5, in particular by renewing the solid wood floor in both flats. They were also then sold in 2014 on 125 year leases.

The planning issue

14

The conversion of the basement and ground floor to residential use was the subject of extensive correspondence between CHL and the Council between 2007 and 2009. In a letter dated 16 April 2007, the Council indicated that it was minded to approve a change of use application made by CHL. The Council's formal approval for the change of use was, however, conditional on CHL paying approximately £16,000 in the form of a highways contribution.

15

CHL felt that it was unfair of the Council to demand payment of this sum because CHL had asked the Council's Highways Department for advice at an earlier stage and believed they had received permission from the Council to do the work. CHL had then carried out the work.

16

The Council did not accept CHL's argument. On 11 June 2007 the Council explained to CHL that the highways contribution condition remained. The Council wrote:

“Unfortunately, regardless of your discussions with the Highways Department for the work you carried out, we still require you to pay the contribution”.

17

CHL subsequently engaged a solicitor to argue its case but the Council refused to back down. A lengthy correspondence ensued but without any resolution.

18

In May 2009 the Council indicated that it was intending to close its file on the change of use application. A meeting proposed by CHL to discuss the issue did not take place. The position was therefore that by the time the Receivers were appointed, three years later in 2012, there was no planning permission in place for flats 1 – 6.

19

At the time the Receivers were appointed in March 2012 assured shorthold tenancies for flats 2 and 4 – 6 were due to expire by September 2012 (as shown in the table below paragraph 21).

The handling of the receivership

20

The day to day handling of the receivership was managed by Mark Randall. He was provided with a valuation report by the Bank from June 2010. It referred to flood damage in the basement in 2010 and a query about whether there was planning consent for the flats in the basement and on the ground floor.

21

Mr Randall consulted Richard Adamson from the Allsop auction team. On 22 March 2012, Mr Adamson sent Mr Randall a table of what sort of sums might be realised for Flats 1 – 6 if they were sold by a local estate agent with vacant possession. The information provided by Mr Adamson is summarised in the table below:

Flat

Bedrooms

Floor

Size (sqft)

VP value

£/sqf value

End of AST

1

3

LG

1054

£700,000

664

Jan/ 13

2

3

LG

962

£645,000

670

Sep/ 12

3

2

LG

797

£525,000

659

Jan/ 14

4

3

UG

995

£725,000

729

Aug/ 12

5

3

UG

965

£700,000

725

Sep/ 12

6

3

UG

936

£675,000

721

Jul/ 12

Total

5709

£3,970,000

22

The initial strategy adopted by the Receivers was to sell Warne Court and then as many of the Cubitt Street properties as they needed to clear the £4.4 million debt. The Bank agreed this strategy. The Receivers expected to realise about £3.3 million by the sale of Warne Court. Mr Randall initially recommended giving notice to the tenants in flats 4, 5 and 6 that their flats might be marketed for sale from May 2012.

23

Mr Rowan was informed of the strategy by Mr Randall by an email sent on 27 April 2012.

24

On 31 May 2012, Mr Randall informed the Bank that best bids were being sought for Warne Court, and three flats from Cubitt Street were going to be entered into the next residential auction.

25

On 6 June 2012, Mr Randall asked the Allsop auction team to prepare for the auction of flats 4, 5 and 6 in an auction due to take place on 18 July. However, two weeks later a decision was made to auction flats 2 and 3 instead. In the meantime, flat 1 which had fallen vacant was being marketed with Winkworth estate agency.

26

Mr Randall wrote to Mr Rowan to inform him of the Receivers' plans on 3 July 2012. The recommended guide price for flat 2 was £450,000 – £500,000 and £400,000 – £450,000 for flat 3.

27

The successful bid for flat 2 was £535,000 and for flat 3 was £435,000. The purchaser for both flats was said to be a company called PPXT Investments Ltd. The bidder identified himself as Harry Barclay. The sales did not complete because the deposit cheques were not honoured. Neither the people behind PPXT nor Harry Barclay could be traced. The Receivers rescinded the sale contracts.

28

Flat 6 was then put on the market on 27 July with Winkworth with an asking price of £675,000. At around the same time, the Receivers paid for some work to be carried out at flat 1 on the advice of Winkworth, who said that it would improve its marketability. The work was to make good a leak into the main bedroom and clear a patio. Some further redecoration work on the same flat was carried out in August 2012.

29

Flat 4 then became vacant and the Receivers instructed Winkworth to market it at the end of August 2012. The asking price was £690,000.

...

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