Meretz Investments NV v ACP Ltd

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Lewison,MR JUSTICE WARREN,Mr Justice Warren
Judgment Date11 Dec 2007
Neutral Citation[2006] EWHC 74 (Ch),[2007] EWHC 2635 (Ch)
Docket NumberCase No: CH/2007/APP/0292,Case No: HC04C01072

[2006] EWHC 74 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Lewison

Case No: HC04C01072

Between:
(1)Meretz Investments Nv
(2)Britel Corporation Nv
and
(1)Acp Limited
(2)First Penthouse Limited
(3)Hakan Olov Olsson
(4)Annika Silja Olsson
(5)Fahad Al Tamimi

MR PAUL MORGAN Q.C AND MR PASCAL BATES (instructed by GOLDKORN MATHIAS GENTLE) for the CLAIMANTS

MR TIM DUTTON AND MR CIARAN KELLER (instructed by BERWIN LEIGHTON PAISNER) for the FIRST TO FOURTHDEFENDANTS

MR MICHAEL PRYOR (instructed by BIRCHAM DYSON BELL) for the FIFTH DEFENDANT

Hearing dates: November 28 th 29 th 30 th December 1 st 2 nd 5 th 6 th 7 th 8 th 9 th 12 th 13 th 14 th 15 th 16 th 19 th 20 th 21st

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.

Mr Justice Lewison

Introduction

4

The witnesses

4

Mr Stern

4

Mr Olsson

4

Mr Hawkins

5

Mr Tamimi

5

Initial planning and negotiations

5

Planning

5

FP and the modular system

6

Initial negotiations

6

Expected timescale

7

Funding

7

Meretz

8

The initial agreements

8

The Preliminary Agreement

8

The Introduction Agreement

11

The FP Guarantee

13

The reason for two agreements

14

The lease and the first series of charges

14

The CHAPS declaration of trust

14

The development lease

15

The FP Charge

15

The Meretz Charge

16

The NUBBH Charge

16

Car parking and management

17

NUBBH raise the role of Meretz

18

The Deeds of Priority and alterations to the initial agreements

19

The April 1999 Deed of Priorities

19

The Heads of Terms

20

The sale of the freehold and the overriding lease

21

The May 2001 Deed of Priorities

21

Another funding crisis

22

Enter Mr Tamimi

23

Mr Tamimi

23

The relationship between Mr Tamimi and Mr Ware

23

Mr Stern is informed

23

The contingency plan develops

24

Worsening relations

24

Agreement to sell Penthouse A

24

The beginnings of the contingency plan

25

Mr Tamimi gets involved in financing construction

28

Mr Stern intervenes

32

The context of the Wrap Around Agreement

34

The Wrap Around Agreement

35

Mr Tamimi's perception of the wrap around agreement

35

The immediate run up to the injunction

36

Transfer of mortgage

36

Exercise of power of sale

36

Exercise of Lease-Back Option

38

Mr Tamimi takes an assignment

38

Progress of the development

40

The actual progress of the development

40

Impediments to progress

40

Completion never taking place

41

The previous litigation

42

The debt claim

42

The injunction application

42

The assignment action

44

The forfeiture action

45

Lightman J's judgment

45

The appeal to the Court of Appeal

46

The Issues

48

The transfer of the development lease to Mr Tamimi

49

Issues relating to the Lease-Back Option

49

Benefit of the agreements

49

The economic torts

50

Cause of action estoppel issue estoppel and abuse of process

51

The strike out application

51

The different kinds of estoppel

51

The scope of cause of action estoppel

53

The scope of issue estoppel

54

The scope of Henderson v. Henderson

55

Exceptions to the rules

56

Parties and privies

57

Different capacities

58

Public interest

58

The arguments under attack

59

Cause of action estoppel

60

The debt action

60

The injunction application

61

The assignment and forfeiture actions

61

Issue estoppel

61

The assignment and forfeiture actions

61

Abuse of process

62

The injunction action

62

A rush to court?

62

Exercise of power in bad faith

63

Damages for breach of contract

64

A different date?

64

The assignment action

65

Conclusion

65

The position of the parties and the state of the account in the summer of 2002

66

Who had interests in Albert Court?

66

The state of the account between ACP and Britel

66

The state of the account between ACP and Meretz

67

The state of the account between ACP and FP

67

Breaches of contract by ACP and FP

67

Failure to build on time

67

Failure to grant the lease-back

68

Liability to whom?

68

Mortgagee's equitable duties

68

The general principles

68

To whom are the duties owed?

69

The content of the duty

70

The mortgagee's motives

71

Protection of purchasers

75

The statutory provision

75

Limits to the protection

75

Knowledge of impropriety

76

Did FP have a power of sale to exercise?

78

Why did FP exercise its power of sale?

78

The case for Britel and Meretz

78

Financial pressures

78

Potential loss of security

80

The proof of the pudding

80

Conclusion

80

If FP exercised its power of sale for improper reasons, is Mr Tamimi affected?

80

The nature of the Lease-back Option

81

Security for Site Payments

81

Penalty

81

Void agreement to surrender

82

The effect of the transfer of the NUBBH charge

83

Does section 114 apply to a registered charge?

84

The economic torts: legal framework

85

Introduction

85

The relevant state of mind

86

Imputed intention?

87

Mistaken appreciation of law

87

Conspiracy to injure by unlawful means

89

Unlawful means

90

Interfering with contractual relations

90

Justification

91

Consent and the voluntary assumption of risk

92

Economic torts: application to the facts

92

Knowledge of the contracts

92

Consequence of exercising the power of sale

93

The state of mind of FP and ACP

93

Mr Tamimi's state of mind

93

The breaches of contract and unlawful acts relied on

94

Justification and consent

94

Causation of loss

95

Conclusion

96

Liability of directors in tort

96

General principles

96

Conspiracy cases

97

Corporate governance of ACP and FP

97

FP

97

ACP

98

Board meetings

98

Mrs Olsson

99

Conclusion

99

Result on liability

99

Loss to Meretz and Britel

100

Alternatives

100

How to choose?

100

Meretz' claimed loss

100

Britel's loss

103

Result on damages

103

Introduction

1

This case principally concerns the effectiveness and legal consequences of a purported sale by a mortgagee of a long lease of a partially completed penthouse development on the roof of a block of flats at Albert Court, Prince Consort Road, London SW7. The two claimants, Britel Corporation NV ("Britel") and Meretz Investments NV ("Meretz") are each subsidiaries of a common parent called Lingo Corporation NV, which in turn is owned by a Liechtenstein trust. The ultimate ownership of the two companies is a partnership. Until May 2000 Britel was the freehold owner of Albert Court. Albert Court consisted of some 85 flats, sold off on long leases, and a basement garage. Meretz was the leaseholder of flat 6. Mr William Stern is the London agent for both companies; and he reports to Mr Neumann in New York. The second Defendant, First Penthouse Ltd ("FP"), was the mortgagee in question. It held a first charge over the lease and was the transferee of a second charge over the same lease. The first Defendant, ACP Ltd ("ACP"), was the leaseholder, and, at the material time, was the wholly owned subsidiary of FP. Mr Olsson is the managing director of both ACP and FP. Mrs Olsson is his wife; and for some of the time was also a director of ACP and FP. They are the third and fourth Defendants. The fifth Defendant, Mr Tamimi, was the purchaser of the lease.

2

Mr Paul Morgan QC and Mr Pascal Bates appeared for Britel and Meretz; Mr Timothy Dutton and Mr Ciaran Keller appeared for ACP, FP and Mr and Mrs Olsson; and Mr Michael Pryor appeared for Mr Tamimi.

The witnesses

Mr Stern

3

Mr Stern is highly experienced in the world of property; and is no stranger to litigation. It was he who was responsible for introducing Britel and Meretz to Albert Court. He was intimately involved in the commercial deals that form the subject of this action; although he was not (or not heavily) involved in drawing up the documentation to give effect to those deals. He is highly articulate and has a thorough and detailed knowledge of the trial papers. He also has a strong and genuinely held view that Mr Olsson is dishonest; that Mr Olsson and Mr Tamimi have defrauded Meretz and Britel; and that they are the worst kind of conspirators. His evidence was at times passionately given. He was loath to accept that it was inappropriate for him to give "evidence" which was no more than the conclusions and inferences that he (with the benefit of hindsight) drew from documents revealed on disclosure. He was free with allegations of dishonesty, corruption and impropriety. While I do not doubt that Mr Stern's opinions are genuinely held, the very strength of those opinions has, in my judgment, coloured his evidence to such an extent that I consider it unsafe to rely on it.

Mr Olsson

4

Mr Olsson is an engineer by training. He is the managing director of both FP and ACP. He has less of a grasp of the trial papers than Mr Stern; and took time during his cross-examination to read documents put to him. I do not consider that he did so as a stalling tactic. He was, in my judgment, an honest witness. However, although he gave his evidence carefully, I consider that some of it was reconstruction rather than real recollection. There is, I think, some force in Mr...

To continue reading

Request your trial
25 cases
  • Alpstream AG and Others v PK Airfinance Sarl and Another
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 31 Julio 2013
    ...not be adjudged to be in default unless he is plainly on the wrong side of the line". 81 Similarly, whereas Lewison J in Meretz Investments NV v ACP Limited [2007] Ch 197 at 271–2, addressing cases such as Farrar v Farrars Limited [1888] 40 Ch D395 and the statements in Fisher & Li......
  • PK Airfinance SARL and Another (Appellants/Cross Respondents) v Alpstream AG and Others (Respondents/Cross Appellants)
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 21 Diciembre 2015
    ...is a trustee: Parker Tweedale v Dunbar Bank PLC [1991] Ch 12; or the holder of an option to take a tenancy of the property: Meretz Investment NV v ACP Ltd [2007] Ch 197 [293]; or an unsecured creditor of the mortgagor: Burgess v Auger [1998] 2 BCLC 468, 481H-482B, none of whom have any inte......
  • Yukos Capital S.a.r.L (a company incorporated in the Luxembourg) v OJSC Rosneft Oil Company (a company incorporated in the Russian Federation)
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 14 Junio 2011
    ...cannot. — Spencer Bower and Handley on Res Judicata (4 th edition) at para. 8.23 (cited by Lewison J in Meretz Investments NV v ACP Ltd [2007] Ch 197, revsd. on other grounds [2008] Ch 244). 66 51. In this connection Rosneft drew attention in particular to the following authorities; (1) T......
  • Saltri III Ltd v MD Mezzanine SA SICAR and Others
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 7 Noviembre 2012
    ...in particular, upon the passage in Fisher & Lightwood's Law of Mortgage, 13 th Ed. at paragraph 30–22 and Meretz Investments v. ACP [2007] Ch 197 at 271–2, where Lewison J said: "The cases do support the proposition that a power of sale is improperly exercised if it is no part of t......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT