MALKINS NOMINEES Ltd v SOCIT FINANCIÔRE MIRELIS SA & OTHERS
| Jurisdiction | England & Wales |
| Judgment Date | 28 June 2006 |
| Neutral Citation | [2006] EWHC 2132 (Ch) |
| Docket Number | Case No: TLC 524/05 |
| Court | Chancery Division |
| Date | 28 June 2006 |
[2006] EWHC 2132 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr M Crystal Qc
(sitting As A Deputy Judge Of The High Court)
Case No: TLC 524/05
MR JAMES THOM QC (Instructed by Messrs Howard Kennedy) appeared on behalf of the Claimant
MR CHRISTOPHER STONER (Instructed by the Messrs Radcliffes Le Brasseur) appeared on behalf of Defendant
Approved Judgment
Wednesday, 28 June 2006
THE DEPUTY JUDGE:
Introduction
This is the hearing of an inquiry as to damages occasioned by the conversion of a share transfer form and share certificate relating to 100 shares in Maycrown Developments Limited ("Maycrown"). As at 1 November 1996, these amounted to a 10 per cent shareholding in Maycrown. There have been two previous trials: (1) a trial on liability in which Etherton J gave judgment for the claimant and by order dated 17 May 2002, directed an inquiry as to damages; (2) a trial of preliminary issues in the inquiry in which Laddie J gave judgment on 18 November 2004. Laddie J ruled that damages were to be assessed on the inquiry on the basis of a permanent deprivation of the 100 shares. He also ruled that the date at which damages were to be assessed was 1 November 1996 and that the recoverable loss was to be the benefit (if any) which Circle Trade Inc ("Circle") would have obtained from the headlease of a residential property at 55/57 Melbury Road, London W14 ("the property").
On this hearing, two questions arise: (1) did the Landlord and Tenant Act 1987 (as amended) prevent Circle from obtaining any benefit from the head lease; (2) if not, what benefit would Circle have obtained from the head lease?
The Inquiry
Helpful written opening and closing submissions were provided by counsel on both sides. Oral evidence was heard from three witnesses on 26 June 2006. At the conclusion of the argument on 27 June 2006, I announced that the claimant was entitled to succeed on the inquiry to the extent of £39,950 for reasons which I would give on 28 June 2006. These are my reasons.
The witnesses
Mr David Akerob gave brief oral evidence. He was an honest witness. The other witnesses were expert valuers, Mr Eric Shapiro and Mr Anthony Ford.
Mr Shapiro
Mr Shapiro was an extremely impressive witness. His report was fair, authoritative and well-reasoned. He plainly had a considerable grasp of the facts and issues in the inquiry and has much experience. Under cross-examination he appeared anxious to assist the Court. He made concessions where he thought they were justified. He was, to my mind, an ideal expert witness.
Mr Ford
Mr Ford's report was less satisfactory. He accepted that it had been prepared in a hurry and that in places it was short on detailed explanation. Whilst Mr Ford was plainly trying to assist the court, I found his evidence to be, in general terms, less impressive than that of Mr Shapiro.
In these circumstances, in considering the valuation issues which arise, I am inclined as a matter of general approach to attach more weight to the evidence of Mr Shapiro than that of Mr Ford. Of course, that does not mean, as Mr Thom QC accepted, that my general preference may not need to give way in relation to the merits of any particular issue. As will be seen, in some respects I have not accepted the views of Mr Shapiro in their entirety.
The Landlord and Tenant Act 1987 (as amended) ("the 1987 Act").
The 1987 Act was amended by Schedule 13, Housing Act 198By 1 November 1996 it had also been amended by the Housing Act 1996, which amendments came into force on 1 October 1996: see SI 1996/2212 Article 2(2).
Part I of the 1967 Act.
Section 1(2) of the 1967 Act provides that Part I applies to premises if: (a) they consist of the whole or part of a building; (b) they contain two or more flats held by "qualifying tenants"; and (c) the number of flats held by such tenants exceeds 50 per cent of the total number of flats contained in the premises. Accordingly, Part I would only apply if, on the relevant date (ie, 1 November 1996) more than 50 per cent of the flats were occupied by "qualifying tenants".
"Qualifying Tenants"
Section 3 of the 1987 Act (as amended) reads:
"(1) Subject to the following provisions of this section, a person is, for the purposes of this Part a qualifying tenant of a flat if he is the tenant of a flat under a tenancy other than -
(a)a protected shorthold tenancy as defined in section 52 of the Housing Act 1980;
(b)a tenancy to which Part II of the Landlord and Tenant Act 1954 (Business Tenancies) applies;
(c) a tenancy terminable on the cessation of his employment; or
(d)an assured tenancy or assured agricultural occupancy within the meaning of Part I of the Housing Act 1988.
(2) A person is not to be regarded as being a qualifying tenant of any flat contained in any particular premises consisting of the whole or part of a building if, by virtue of one or more tenancies, none of which falls within paragraphs (a) to (d) of subsection (1), he is the tenant not only of the flat in question but also of at least two other flats contained in those premises.
(3) For the purposes of subsection (2), any tenant of a flat contained in the premises in question who is a body corporate, should be treated as the tenant of any other flat so contained and let to an associated company.
(4) A tenant of a flat whose landlord is a qualifying tenant of that flat, is not to be regarded as being a qualifying tenant of that flat." [Quote unchecked]
Thus, in order for the 1987 Act to apply to the property, it is necessary to determine how many of the eight flats were let to qualifying tenants on 1 November 1996 and how many were not.
In the light of the applicable statutory provisions, it is common ground that five of the eight flats in the property were occupied by qualifying tenants and so over 50 per cent of the flats were so occupied. Part I of the 1987 Act accordingly applied to the premises.
Qualifying Majority
Section 18A of the 1987 Act defines the requisite majority of qualifying tenants as "qualifying tenants of constituent flats with more than 50 per cent of the available votes". "Available votes" are equal to the total number of constituent flats let to qualifying tenants on the relevant date: see section 18A(3). So there is one vote per flat. The constituent flats are the flats let to qualifying tenants at the time when the right is triggered: see sections 5(1) and 11(1).
Circle had two votes. Mr Akerob says, and I accept, that Circle would have voted against the exercise of rights of first refusal for the reasons given in paragraph 7 of his third witness statement.
Each of the other three qualifying tenants had one vote. Because section 18A of the 1987 Act, defines the requisite majority of qualifying tenants as "qualifying tenants of constituent flats with more than 50 per cent of the available votes", only a vote by all three other tenants could have defeated Circle's two votes. In other words, all three other tenants had to combine for Circle to lose the head lease. Only one flat had to abstain for Circle to get it.
There is no evidence as to the position of two of the other three tenants. That leaves Peninsula Enterprises Inc ("Peninsula") which was the tenant of Flat 4. Peninsula was controlled by Mr Caspi, on whose behalf Circle held 200 out of its 300 shares in Maycrown. Flat 4 had been charged by Peninsula to the first defendant ("Mirelis") who had apparently obtained a possession order against Peninsula which had defaulted on its obligations under its lease.
Mr Thom QC submitted that Peninsula would not have voted for the exercise of rights of first refusal for the following reasons.
(1) Mirelis wanted the transaction to go...
To continue reading
Request your trial
-
Alwie Handoyo v Tjong Very Sumito
...232 CLR 635 (refd) Mac Donald Dickens & Macklin v Costello [2012] QB 244 (folld) Malkins Nominees Ltd v Société Financière Mirelis SA [2006] EWHC 2132 (Ch) (refd) MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675 (refd) Midland Bank Ltd v Eastcheap Dried Fruit Co [19......
-
CPIT Investments Ltd v Qilin World Capital Ltd and another
...Inc v Lehman Brothers International (Europe) [1998] 4 All ER 675, Malkins Nominees Limited v Société Financiéré Mirelis SA and others [2006] EWHC 2132 (Ch), and EG Tan & Co (Pte) v Lim & Tan (Pte) and another [1985–1986] SLR(R) 1081, the case referred to by the Judge, were all held to be ca......
-
Alwie Handoyo v Tjong Very Sumito and another and another appeal
...Inc v Lehman Brothers International (Europe) [1998] 4 All ER 675, Malkins Nominees Limited v Société Financiéré Mirelis SA and others [2006] EWHC 2132 (Ch), and EG Tan & Co (Pte) v Lim Tan (Pte) and another [1985–1986] SLR(R) 1081, the case referred to by the Judge, were all held to be capa......