Official Custodian for Charities v Parway Estates Developments Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE KERR,LORD JUSTICE STEPHENSON |
| Judgment Date | 18 April 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J0418-2 |
| Docket Number | 84/0165 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 April 1984 |
[1984] EWCA Civ J0418-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR. VIVIAN PRICE QC SITTING AS
DEPUTY HIGH COURT JUDGE)
Royal Courts of Justice
Lord Justice Stephenson
Lord Justice Kerr
and
Lord Justice Dillon
84/0165
1982 R No. 1607
MR. W. J. MOWBRAY QC and MR. GEORGE LAWRENCE (instructed by Messrs. Lee Bolton & Lee, Solicitors, London SW1P 3JT) appeared on behalf of the Plaintiffs (Appellants)
MR. E.G. NUGEE QC and MR. THOMAS SEYMOUR (instructed by Messrs. Travers Smith Braithwaite & Co, Solicitors, London EC1A 2AL) appeared on behalf of the Defendants (Respondents)
This is an appeal against a decision given on 27th July 1983 by Mr. Vivian Price Q.C. sitting as a Deputy High Court Judge in the Chancery Division.
The appellants, who are the plaintiffs in the action, are the present trustees of the Campden Charities and as such they are the owners of the freehold of a substantial and no doubt very valuable area of land known as the Charecroft Estate situate at Shepherd's Bush in London. The respondent to the appeal is the sole defendant in the action, Parway Estates Developments Ltd ("Parway"); it is the lessee of the Charecroft Estate under a lease dated 10th August 1961 granted to it by the then trustees.
In the action the plaintiffs claimed forfeiture of that lease under the re-entry clause because Parway has gone into compulsory liquidation. Parway asserted by way of defence that the right to forfeit because of the liquidation had been waived; alternatively it counterclaimed for relief against forfeiture. The deputy judge held that there had been no waiver but he granted Parway unconditional relief against forfeiture and ordered the plaintiffs to pay all Parway's costs of the proceedings. In this court the plaintiffs appeal against the grant of relief against forfeiture, and they contend not merely that the learned deputy judge erred in the exercise of his discretion but also that in the circumstances to which I shall refer he had no jurisdiction to grant any such relief. Conversely Parway by a respondents' notice assert that the learned deputy judge was wrong in holding that the plaintiffs' right to forfeit had not been waived. The issues in this appeal are therefore relief from forfeiture and waiver, and logically waiver falls to be considered first.
By the lease, which was a form of building lease, the Charecroft Estate was demised to Parway for a term of 107 1/2 years from 25th March 1961. Parway agreed to spend not less than £750,000 at prices current at the date of the lease in erecting new buildings on the demised land, and Parway entered into full repairing and painting covenants in respect of those new buildings. There was, not unexpectedly with such a lease, no restriction whatsoever on assignment or underletting until the last 7 years of the term. The rent was to be £15,000 per annum from 29th September 1963, subject to review in 1968, 1988, 2016, and 2042, and on each review the landlords were to be entitled to one-fifth of any increase in the rack rental value of the non-residential parts of the demised premises. At the date of the trial the rent was £25,000 per annum payable quarterly.
The re-entry clause in the lease provided that the landlords might re-enter
"if and whenever the said rents or any part thereof shall be in arrear and unpaid for 21 days next after any of the days upon which the same ought to be paid…..or if the Tenant shall enter into liquidation whether compulsorily or voluntarily save for the purpose of reconstruction or amalgamation or if the Tenant for the time being is an individual and shall become bankrupt or insolvent or enter into an arrangement or composition with its creditors or if and whenever there shall be a breach of any of the covenants and conditions herein contained and on the Tenant's part to be observed and performed".
Parway duly erected the new buildings as required by the lease and—not surprisingly in view of the outlay involved—Parway charged its leasehold interest under the lease by way of legal mortgage by several documents in favour of three separate mortgagees or groups or mortgagees. It is unnecessary to go into detail. It is sufficient to say that in point of priority of security the London and Manchester Assurance Company Ltd. and a wholly owned subsidiary of that company are the joint first mortgagees, the Royal Bank of Scotland are the second mortgagees and Slater Walker Ltd. are third mortgagees.
In 1976 the Royal Bank of Scotland appointed receivers, two partners in the firm of Whinney Murray & Co—Ernst and Whinney as it later became. They were appointed receivers of income under the Law of Property Act 1925, and not receivers under floating charges, since the relevant securities were all specific charges by way of legal mortgage. The trustees learned of the appointment, and by a letter dated 2nd November 1976 to which I will have to refer in greater detail later, they called on the receivers to pay the rent under the lease. This the receivers did regularly until July 1981. Rent demands were sent quarterly by the trustees to the receivers' firm and the quarterly instalments were paid by the receivers by cheques on their receivership bank account.
In the meantime Parway had gone into compulsory liquidation. On 26th February 1979 the usual compulsory order had been made against Parway in the Companies Court on a creditor's petition presented by the Commissioners of Inland Revenue for unpaid taxes, and official notificiation of that event, in accordance with s.9 of the European Communities Act 1972, was given in the London Gazette of 8th March 1979. On 22nd May 1979 a Mr. Auger, a partner in Stoy Hayward & Co., was appointed liquidation of Parway, and official notification of that appointment was given in the London Gazette of 14th August 1979.
In the second half of 1981, but after July, the plaintiffs caused a search to be made of Parway's file in the Companies Registry and they discovered that Parway was in liquidation. They therefore refused to accept further rent, and, after obtaining the necessary leave to bring proceedings from the Companies Court, they started this action claiming forfeiture of the lease and appropriate consequential relief because Parway had entered into compulsory liquidation.
Parway's defence that the right to forfeit had been waived is put on two separate grounds, firstly the letter of 2nd November 1976, which I have briefly mentioned, and secondly the official notifications under s.9 of the 1972 Act. It is not suggested that the plaintiffs had any actual knowledge of the winding up of Parway before their search in the Companies Registry in 1981 which was after their latest acceptance of rent from the receivers.
The letter, from the plaintiff's cleric to Mr. Mackey of Whinney Murray & Co who was one of the receivers, reads as follows:
"re: Associated Development Holdings Limited/Parway Estates Developments Limited.
"My Trustees have been notified of your appointment as Receiver in the matter of the winding-up of the above mentioned Group of Companies. As you know, the Trustees of the Campden Charities are the freeholders of Charecroft Estate, Shepherds Bush which was leased to Parway Estates Development Limited for a term of 108 years from 29th September 1960. The rent currently payable under the Lease is £17,500 per annum.
"I write now to inform you that the quarter's rent due in advance on 29th September 1976 and amounting to £4,375 remains unpaid. I should be grateful if you would kindly let me have a remittance at an early date".
As to the facts, Associated Development Holdings Ltd was the parent company of Parway, but whether it was in liquidation at the time of the letter we are not told. Parway itself was not in liquidation—it only went into liquidation over 2 years later in February 1979—and the appointment of the receivers had not given the trustees any ground for re-entry under the lease. There was no question therefore of the trustees' being put to their election at the date of the letter, either to affirm or forfeit the lease.
What is submitted on behalf of Parway is that the letter shows that the trustees believed that Parway was being wound up, and that a landlord who demands and accepts rent in the belief that his tenant is being wound up cannot assert a right to treat the lease as forfeited if the tenant is subsequently wound up. Alternatively it is said that the letter shows that the trustees believed that Parway was about to be wound up, and that a landlord who demands and accepts rent in the belief that the tenant is about to be wound up and continues to do so without making any inquiry until well after a winding-up order has been made cannot assert a right to treat the lease as forfeited on the ground that he had no actual knowledge of the making of the winding-up order.
It is not suggested that the letter raises any estoppel, as that term is usually understood, against the plaintiffs to prevent them from asserting that they did not know of the winding up when they accepted rent. Apart from any other difficulty there is no evidence at all that Parway or any one else acted to its or his detriment in any way in reliance on the letter. What is said is that the letter showed that the trustees were not concerned at the liquidation of Parway, and so the letter operated in a general way as a waiver of any present or future right to forfeit on the ground of the...
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