Greenridge Luton One Ltd and Another v Kempton Investments Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 22 January 2016 |
| Neutral Citation | [2016] EWHC 91 (Ch) |
| Docket Number | Case No: HC-2014-000049 |
| Court | Chancery Division |
| Date | 22 January 2016 |
[2016] EWHC 91 (Ch)
Mr Justice Newey
Case No: HC-2014-000049
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Miss Joanne Wicks QC (instructed by DAC Beachcroft LLP) for the Claimants
Mr Mark Warwick QC and Miss Camilla Chorfi (instructed by Philip Ross) for the Defendant
Hearing dates: 22, 23, 26, 27 and 28 October 2015
This case arises out of a contract which the claimants entered into in 2013 for the purchase from the defendant, Kempton Investments Limited ("Kempton"), of a property known as Wigmore Place. According to the claimants, they rescinded the contract and are entitled to the return of their deposit and damages. Kempton, however, denies any liability and maintains that the contract came to an end when it accepted the claimants' repudiation of it.
Narrative
Wigmore Place comprises three office buildings near Luton Airport. Some 79% of the office space is leased by TUI Northern Europe Limited, a subsidiary of TUI Travel plc, as the group's UK headquarters. Peverel OM Limited, a property management company, occupies another 13.5% of the office space. During the relevant period, two floors of one of the buildings were vacant.
In 1995, the freehold title to Wigmore Place was bought by Kempton. Kempton, an investment company beneficially owned by members of the Schlaff family, was incorporated in the Isle of Man and its directors are professionals based there. The day-to-day administration of its property portfolio is, however, conducted by Provewell Limited ("Provewell"), of which a Mr Shulem Aksler is the sole director and a shareholder. Mr Aksler has explained in a witness statement that Provewell was incorporated for the sole purpose of managing Kempton's property interests and that he is "at the centre of the decision-making process" and is responsible for delegating legal and professional matters to accountants and solicitors to deal with on his behalf.
In January 2013, Mr Aksler was informed that TUI had appointed a Mr Bob Smith, a service charge consultant with Lambert Smith Hampton, to investigate service charges at Wigmore Place. TUI was said to have "grave concerns over the management of the service charge over the past 5 years".
Mr Aksler referred the matter to a Mr Ranbir Singh Bains, who explained to Mr Smith that he had dealt with service charge queries for many years. Mr Bains was at the time a solicitor with very considerable experience of conveyancing. He had practised as Bains & Co until February 2011, when the Solicitors Regulation Authority intervened in the practice. Although Mr Bains' practising certificate was automatically suspended at that point, it was restored within a few months, and by 2013 he was working as a consultant to a firm of solicitors called Blackstones. Mr Bains retired as a solicitor at the end of September 2013, was adjudged bankrupt on his own petition in October 2013 and was struck off the Roll of Solicitors in May 2014 following a hearing before the Solicitors Disciplinary Tribunal in March 2014. He has, however, continued to work as a consultant for, among others, Provewell and a number of the other clients he had when a solicitor.
One of the allegations that the Solicitors Disciplinary Tribunal found proved involved dishonesty. The Tribunal said the following about this:
"The Tribunal was satisfied that in transferring monies from the Mr D and Mr A ledgers for the benefit of AT Ltd [Mr Bains] had acted dishonestly by the standards of reasonable and honest people. Further, the Tribunal was satisfied to the required standard that in making the transfers, which he knew were unauthorised loans at the relevant time, [Mr Bains] knew that what he was doing was dishonest by the standards of reasonable and honest people. His use of other client money was grossly reckless … but the Tribunal was not satisfied to the required standard that he had been dishonest in that regard. The Tribunal was, however, satisfied to the highest standard that [Mr Bains] had been dishonest in relation to his use of money belonging to the Mr D and Mr A estates."
Mr Bains appealed that finding, but his appeal was dismissed by Holman J on 18 February 2015.
In February and April 2013, Mr Bains sent Mr Smith information in response to requests he had made. On 29 April, Mr Smith told Mr Bains in an email that he had "fully reported" to his clients and that "any matters from [here] on will be handled by them". On 30 April, however, a Mr Ian Spann of TUI wrote to tell Mr Bains that Lambert Smith Hampton had reported "a number of detailed concerns about specific elements of the [service] charge" and that they were still awaiting a formal response from Mr Bains on certain matters; Mr Spann asked that Mr Bains continue to deal with Lambert Smith Hampton on these issues. Mr Spann went on to say that he was "writing … directly on the issue of the Sinking Fund Management and the budgeting of capital works that would in normal circumstances be covered by such a fund". Mr Spann observed that the sinking fund stood to have a balance in excess of £1.3 million by the end of the year and that TUI did "not believe that this figure is either reasonable or appropriate". He continued:
"It is important therefore that we have a clear and rational approach to the management of the fund including a review of relevant contribution rate and the times which would rationally be charged to the fund. We are also anxious to ensure that there is no double counting of the management fees charged as part of the service charge. It would be perfectly possible under the existing arrangements for a fee to be paid when the money is collected and then again when it is spent.
Pending a formal response from you dealing with our concerns and bearing in mind the current level of the Fund we will not be making any further quarterly payments that reflect this element of the charge. This withholding is in accordance with the findings in Concorde Graphics v. Andromeda (1982) and reflects the fact of a formal dispute between your client and our tenant company. In terms of actual amount this means that we will be reducing the quarterly service charge payment by £109,900.
One further point of detail which I would also like to draw to your attention is the unsatisfactory failure to provide annual budgets in time for review and discussion prior to any liability arising. This extends into the annual reconciliation which is not presented in a manner that is consistent with the presentation of the budget nor does it provide adequate detail to enable a proper review to be carried out of the expenditure incurred. We believe that this is both a reasonable and necessary requirement for compliance with the 'good estate management' covenant on the part of your client in dealing with the service charge …."
In the course of May 2013, Mr Smith sent Mr Bains several emails asking for information relevant to the service charges. On 29 May, Mr Smith told Mr Bains that, in the absence of a response, he saw "little alternative but to treat all the issue as a formal dispute". In an email to Mr Bains of 11 June, Mr Smith said that he had "no choice but to say that the issues I've raised are treated as a dispute, just as is the sinking fund about which TUI has written to you". On the following day, however, Mr Bains sent responses to both Mr Smith and Mr Spann. The email to Mr Smith referred to the enquiries appearing to be "never ending" and the hope that the matter would now be brought to a "complete conclusion". The letter to Mr Spann included these passages:
"It obviously costs our clients a considerable amount of money and time dealing with queries in the first place and to have to repeat them every few years is most frustrating, time-consuming and expensive. Our clients do not understand what it is that you are hoping to gain by revisiting the same issues on multiple occasions. They have, in the past, tried to accommodate those requests without sounding too disgruntled. However it seems that you are now, once again, threatening to withhold monies properly due to our clients and, with the benefit of hindsight and our explanations, we trust that you will agree that it is quite an outrageous threat so far as our clients are concerned. For the avoidance of doubt, please be under no misapprehension, if any money is withheld then our clients will reluctantly take appropriate measures to enforce their legal rights without any delay and that may be very embarrassing indeed for TUI and its staff at Wigmore Place"
and
"We shall be grateful for your early confirmation that you accept the matter is now closed and that the service charge will be paid on time so that our clients do not have to start considering preparation for enforcement action."
Undeterred, TUI deducted £95,256.01 (representing some £79,000 plus VAT) from the quarterly payment it made on 24 June 2013. Mr Bains complained in an email of 1 July, in which he said:
"Presumably these monies have been withheld because of your misconceived position regarding the operation of the sinking fund.
Your misreading of the figures and the amounts does not transform the situation into a legal 'dispute'. Were that the case, any tenant could at any time simply query a figure and claim a 'dispute'.
We have, of course, provided a detailed explanation to assist you, and so there can be no doubt.
The withholding of these monies constitutes a serious breach of the...
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