Greenwood Reversons Ltd v World Environment Foundation Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Thomas,Lord Justice May,Lord Justice Pill |
| Judgment Date | 06 February 2008 |
| Neutral Citation | [2008] EWCA Civ 47 |
| Docket Number | Case No: B5/2007/0067 & 0068 |
| Date | 06 February 2008 |
| Court | Court of Appeal (Civil Division) |
[2008] EWCA Civ 47
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON CIVIL JUSTICE CENTRE
HIS HONOUR JUDGE RYLAND
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill
Lord Justice May and
Lord Justice Thomas
Case No: B5/2007/0067 & 0068
4CL52108 & 6CL50601
James Browne (instructed through the Direct Professional Access Scheme) for the 1 st Appellant
Jan Luba QC and James Browne (instructed by Drummonds) for the 2 nd Appellant
Mark Warwick (instructed by Messrs Howard Kennedy) for the Respondent
On 21 December 2006 Judge Ryland determined at the Central London County Court that the lease of flat 20 Wellesley Court, Maida Vale had been forfeited; he refused World Environment Foundation Ltd (WEF) and Dr Mehra, the defendants to actions in the Central London County Court and appellants in this court, relief against forfeiture. Dr Mehra and WEF appeal by permission granted by Carnwath LJ in relation to their contention that the right to forfeit the lease had been waived and on refusal of relief against forfeiture; they also seek to renew their applications for permission to appeal on other grounds. The factual history of the matters is somewhat tortuous, but it is necessary to set it out as it is of material importance to the appeal on the refusal of relief against forfeiture.
The factual history
(a) The terms of the lease and the acquisition by Dr Mehra
The respondents to the appeal and the claimants in the Central London County Court (Greenwood) are the present owners of a block of 156 flats at Wellesley Court. By a lease dated 5 March 1987 made between the then owners of the block of flats, flat 20 was leased for a term of 125 years from 29 September 1983 to a Mr Walker. The lease contained, as is usual, a covenant (clause 3.10.3) in standard form in relation to assignment which provided that the lessee covenanted with the lessor
“not to assign transfer demise underlet or otherwise part with possession of the whole of the Flat
a) without the licence in writing of the Lessor which shall not be unreasonably withheld in the case of a respectable and responsible assignee transferee or underlessee PROVIDED THAT such licence shall be deemed to be reasonably withheld and shall be granted only after the Lessee shall have duly paid to the Lessor all arrears of rent and Service Charge which are payable hereunder and are calculated to the date of such disposition together with the Lessors reasonable legal fees for the preparation and completion of such licence and the ascertainment and collection of such arrears
b) except to a person who before completion of such disposition covenants directly with the Lessor to perform all the Lessee's covenants by means of a separate Deed of Covenant duly executed and delivered to the Lessor or its Solicitor”
In 1994, Dr Mehra acquired the tenant's interest in the lease. Greenwood, who by then held the landlord's interest in the lease, assented to the transfer. The licence that contained that assent contained, as is usual, a covenant under seal by Dr Mehra as the assignee in the following terms:
“IN consideration of the Licence hereinbefore contained the Assignee hereby covenants with the Lessor that during the term created by the Lease he will pay the rents and other payments thereby reserved and observe and perform the stipulations covenants and conditions on the part of the Lessee contained or referred to in the Lease.”
Disagreements soon arose between Dr Mehra and Greenwood:
i) In March 1995 Dr Mehra stopped paying the ground rent, the service charge and the insurance.
ii) In April 1998 Greenwood began an action in the Bromley County Court for recovery of the arrears of ground rent and service charges due for the period from March 1995 to April 1998. Dr Mehra counter-claimed for various matters including water damage and non-repair to windows. In July 2001 when the action came on for trial before HH Judge Crawford Lindsay, Dr Mehra agreed to pay £7,750; a consent judgment against Dr Mehra for this amount was entered on 9 July 2001.
iii) Subsequently Greenwood obtained an interim charging order in respect of the judgment on Flat 21, Florence Court, Maida Vale which was registered in Dr Mehra's name; at the trial of the present proceedings Dr Mehra admitted in cross examination that he had avoided the imposition of a final charging order by transferring the flat to a company with which he had a connection.
(b) The assignment to WEF
On 3 November 2001 Dr Mehra assigned the tenant's interest in the lease to WEF. WEF is an English company incorporated in 1998. Its registered office was at first at 1 Northumberland Avenue, Trafalgar Square, London, WC2N 5BW.
i) No information was provided to the trial judge or to this court as to the directors of the company.
ii) As a condition of the permission to appeal granted by Carnwath LJ, WEF was required to file a statement setting out its interest in this appeal. In compliance with this order, a witness statement was signed by Mr Ashok Kapur in July 2007. Mr Kapur, who appeared to be a retired member of the Indian Administrative Service, stated that he was instructed on behalf of the trustees of WEF; he stated (as was the case) that WEF was a charity registered in the UK and in the statement he referred to WEF as the charity.
iii) In a letter dated 13 October 2005 (to which I refer at paragraph 17.i) below) Mr Kapur listed the trustees of the English charitable trust known as the World Environment Foundation as Mr John Davidson, 9 Coniston Court, London, W2 2AN and 3 persons resident in India.
iv) The English charity were also connected to an Indian charity (registered in India under the Society Registration Act 21 of 1960) based in New Delhi; the letterhead of World Environment Foundation listed as members of a council or trustees of the Indian charity a number of persons described as holding or having held distinguished positions in India.
v) We were told that none of the trustees of the English or Indian Charity were directors of WEF.
vi) WEF had been founded by Dr Mehra; according to the evidence given at trial, it had very little by way of assets. The judge made a number of findings in respect of WEF (as summarised at paragraph 32 below) including that it was never at arm's length from Dr Mehra; that Dr Mehra acted for it on many occasions and it was a useful vehicle for him to act through on many occasions.
The transfer of the leasehold interest in the flat to WEF was registered with the Land Registry on 7 November 2001 with WEF becoming the registered proprietor. The value of the flat was given as between £100,000 and £200,000.
Although it was claimed on behalf of Dr Mehra and WEF that letters had been sent to Greenwood prior to the assignment to WEF, the judge found that no notice was given to Greenwood prior to 30 November 2001, when Greenwood received a notice dated 12 November 2001 telling it that the lease had been transferred and the rent would be paid in the future by WEF. Greenwood made it clear that it would not consent to the assignment; the Judge held that the consent had not been unreasonably withheld in the light of the arrears. There is no appeal from any of those findings.
(c) The action said to constitute a waiver of the right to forfeit
Greenwood placed a stop upon the demands for rent and the other charges in case they might constitute a waiver of forfeiture of the lease In a statement filed by Mr SN Aga on behalf of WEF on 17 June 2004, it was accepted that Greenwood had never sent any rent and service charge account nor any particularised statement of arrears to WEF despite WEF's request. Dr Mehra had been involved in the preparation of the statement and had made the same point to the Leasehold Valuation Tribunal. No appeal was brought against these findings.
On 9 December 2002, that is over a year after the assignment of the leasehold interest to WEF, Dale & Dale, solicitors then acting for Greenwood wrote to Dr Mehra in the following terms:
“We are instructed by our above Client regarding the substantial arrears of ground rent and service charges. Our Client has already obtained a Judgment against you for £7750.00 together with further interest from 9.7.2001. The interest amounts to date in the sum of £879.89 and continues at a daily rate of £1.70 until payment of the principle is made. Our Client was also awarded its costs of the action and we will soon be serving upon you our Client's Bill of Costs. However we estimate those costs to be £12,434.44 which also attracts interest.
Since the issue of the last claim further ground rent and service charges have fallen due in the sum of £10,471.18.
We note that you have 'sold' the flat to World Environment Foundation. Our Client cannot accept the purported assignment by reason of your breaches of covenant.
Unless we receive payment from you for all arrears of £18,221.18, interest on the Judgment debt of £879.98 together with some form of security for our Client's costs, our Client will be left with no alternative other than to take further action against you and your purported purchaser such proceedings will include a claim for forfeiture of the Lease and hence possession of the flat.
May we suggest that you take legal advice regarding this matter.”
A copy of that letter was sent to WEF under cover of a letter of the same date which stated:
“We are instructed by our above Client regarding the substantial arrears of ground rent...
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