Harry Rollo Gabb v Meghdad Farrokhzad
| Jurisdiction | England & Wales |
| Judge | Mr Simon Gleeson |
| Judgment Date | 03 February 2022 |
| Neutral Citation | [2022] EWHC 212 (Ch) |
| Docket Number | Case No: PT-2021-000604 |
| Court | Chancery Division |
[2022] EWHC 212 (Ch)
Mr Simon Gleeson
Sitting as a Deputy High Court Judge
Case No: PT-2021-000604
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS OF ENGLAND & WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Rolls Building
Fetter Lane
London EC4A 1NL
Andrew Butler Q.C. ( Directly instructed) for the Defendant
Joanne Wicks Q.C. (instructed by Forsters LLP) for the Claimant
Hearing dates: 18 & 19 January 2022
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.
Introduction
On the 15 October 2020, the Claimant, who is a long leaseholder, asked the Defendant, his freeholder, for consent to assign his lease. As of January 2022 consent has still not been granted. The question as to why not is at the heart of this trial.
The property concerned is a residential flat at 120A Kensington Park Road, London (“the Flat”). Mr Farrokhzad is the landlord, and Mr Gabb is the lessee. The Flat includes almost the whole of the building from the first floor to the roof – however, below the Flat is a ground floor shop and a basement, which is in the hands of the landlord.
Mr Gabb has made a number of attempts to sell the Flat by assigning the lease which, he says, have been defeated (or, in the case of the current proposed transaction, are threatened to be defeated) by the unreasonable conduct of Mr Farrokhzad by refusing to consent to the assignment. His case is that because Mr Farrokhzad's conduct has been unreasonable he is therefore entitled to both a declaration that he may assign without consent, and to damages under s. 4 of the Landlord and Tenant Act 1988 (the “1988 Act”). He also seeks an injunction in respect of Mr Farrokhzad's future conduct in relation to the current sale and exemplary damages.
In response to this Mr Farrokhzad's counsel, Mr. Butler, has raised a number of issues. His primary case is that Mr Farrokhzad's actions have not been unreasonable. However, he also argues that even if his actions were unreasonable, various formal defects in the communications made by Mr Gabb in respect of his requests for consent mean that those requests do not satisfy the requirements of the 1988 Act, so that liability under it did not in fact arise. It is necessary to deal with these before coming to the fundamental issue of unreasonableness.
Mr Butler identifies four broad ways in which he argues that the various communications failed to satisfy the relevant requirements. One relates to the mechanism by which the relevant communications were transmitted, a second relates to their wording, a third relates to what I have called the “ultimatum” issue, and the fourth to the sequencing of events. These points are made in respect of both transactions, but for the sake of clarity I will deal with them in principle before considering the specific facts of the transactions.
Consequently, I will deal with the issues as follows:
1. The lease
2. The facts
3. The applicable law
4. The validity of the various communications
5. Whether the Landlord's conduct was unreasonable
6. Potential liability under the 1988 Act
7. What the consequences of the unreasonable behaviour should be at common law
8. What the consequences of the unreasonable behaviour should be under the 1988 Act
9. Whether exemplary damages are appropriate in this case
10. Whether an injunction should be granted in this case.
I. The lease
Mr Gabb holds the Flat pursuant to a lease dated 4 December 2007 (“the Lease”) which was granted by way of a lease extension under the Leasehold Reform, Housing and Urban Development Act 1993. It is for a term of 189 years from 24 June 1991.
The Flat comprises the first, second and third floors of the building known as 120 Kensington Park Road. There is a commercial unit on the ground floor and basement below. The demise of the Flat includes the external walls on the first, second and third floors and the roof (including a roof terrace), as well as the entrance to the Flat, which is separate from the commercial unit. It also includes all wires, pipes, cables or other conduits which exclusively serve the Flat. There is a standard repairing covenant in respect of the demise in clause 3(3).
The rent is a peppercorn (if demanded) (cl. 2). There is no traditional service charge provision, but there is an obligation in clause 3(4) to contribute a “due proportion” in arrear to the Landlord's expenses “of constructing repairing rebuilding renewing lighting cleansing and maintaining all things the use of which is common to the demised premises the Building and to other premises (other than any part or parts of the demised premises)”, and to any managing agent's fees. However, given that the Lessee's demise includes the external structural elements, there is no shared entrance or other common parts and, it appears, no shared services, there appear to be no, or very limited, “things the use of which is common to the demised premises the Building and to other premises” within the meaning of the clause. The Lessee has never historically been required to make any payment under clause 3(4).
The obligation to contribute to common expenses falls within the definition of “service charge” in s.18 of the Landlord and Tenant Act 1985 and is subject to the provisions of that (and other) legislation for the protection of tenants, including s.19 of the 1985 Act (by which service charge costs must be reasonably incurred and reasonable in amount) and the consultation requirements, before work is carried out (often referred to as “major works”), in s.20 of the 1985 Act.
By clause 3(20)(c), the Lessee covenants
“Not to agree to assign or to assign or part with possession or occupation of the whole of the demised premises unless the Tenant shall first obtain in each case the prior written consent of the Landlord (which consent shall not be unreasonably withheld) Provided that on the occasion of every such intended assignment the Tenant shall first procure that:
(i) Any intended assignee shall covenant direct with the Landlord to pay the rents reserved by and to observe and perform the covenants and conditions contained or referred to in these presents…”
By clause 3(20(c)(ii), if the assignee is a limited company, provision is also made for a guarantee to be given by two of its directors.
The Facts
Mr Farrokhzad was registered as proprietor of the freehold on 15 September 2020, having acquired it by inheritance from the estate of the previous owner, Mr Paul George. Mr Farrokhzad was involved in the management of Mr George's affairs with respect to the Flat for some time prior to Mr George's death, had visited the flat with Mr George during his lifetime, and he and Mr Gabb knew each other for this reason.
When Mr Farrokhzad acquired the freehold of the building, Mr Gabb indicated that he was prepared to sell the Flat to him. Mr Farrokhzad initially showed interest in acquiring it. However, on 15 October Mr Gabb told Mr Farrokhzad that he had received an offer of £3.25m for the property from an external buyer, and Mr Farrokhzad indicated that he was not interested at that price. Mr Gabb then accepted an offer of £3.175m from an Oliver Green (“the Green Sale”).
On the 12 November, Mr Gabb discovered that Mr Farrokhzad had applied for a late-night and all-week alcohol licence as part of a plan to turn the ground floor shop (then unoccupied) into a Sushi bar. He immediately posted an objection to the licence. A short time later Mr Green withdrew his offer – on the basis, according to Mr Gabb, of his discovery of the plan for the Sushi bar.
No claim is made in these proceedings relating to the Green Sale.
Mr Farrokhzad's next step was a solicitor's e-mail, sent on the 24 December, from Mason & Co, acting on his behalf. This letter alleged breaches of the lease, and threatened major refurbishment works, in respect of which a Section 20 notice was said to be being prepared. It is Mr Farrokhzad's case that this was purely coincidental, and entirely unconnected with Mr Gabb's opposition to the alcohol licence. Mr Gabb's response was (a) to e-mail Mr Farrokhzad asking why he had not raised any of these concerns directly, and (b) to e-mail Mason & Co explaining that the breaches complained of had been agreed by Mr Farrokhzad's predecessor in title, Mr. George, and that this was well-known to Mr Farrokhzad. Mr Farrokhzad's response was to commence proceedings in the First-Tier Tribunal Property Chamber on the 18 th January for forfeiture of the lease.
It may be significant that these proceedings were not commenced through Mason & Co, but conducted directly by a Mr Mostafavi acting for Mr Farrokhzad. Mr Mostafavi does not appear to be legally qualified, but throughout this saga regularly acted for Mr Farrokhzad. Mason & Co were instructed to cease all communication with Mr Gabb. Mr Mostafavi then contacted Mr Gabb's solicitors directly.
One of the minor mysteries of this case is the question of what Mr Farrokhzad hoped to achieve by these FTT proceedings. The tribunal found that the breaches complained of had been agreed with Mr Farrokhzad's predecessor in title, Mr George, on the basis of clear documentary evidence to this effect. Mr Gabb says that Mr Farrokhzad was fully aware of this before he commenced the proceedings, having been involved in the discussions with Mr George. However, even if this was not the case, the breaches were minor and easily remedied, such that there was no reasonable (or even remote) possibility of forfeiture or significant compensation – and indeed Mr Farrokhzad barely escaped the unusual fate of being...
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