Prescott Place Freeholder Ltd v Constantin Batin

JurisdictionEngland & Wales
JudgeMr Justice Richards
Judgment Date03 March 2023
Neutral Citation[2023] EWHC 435 (Ch)
CourtChancery Division
Docket NumberCase No: BL-2020-002144
Between:
(1) Prescott Place Freeholder Limited
(2) Thomas Philip Threlfall
(3) Ben Freeman
(4) Elena Blanca Baccini
(5) Kimberley Sum
(6) Esther Carragher
(7) Anne Camilla Frances Darling
(8) Edwina Mary Gillian Barker
Claimants
and
(1) Constantin Batin
(2) Joseph Donovan
Defendants

[2023] EWHC 435 (Ch)

Before:

Mr Justice Richards

Case No: BL-2020-002144

IN THE HIGH COURT OF JUSTICE

BUSINESS & PROPERTY COURTS OF ENGLAND AND WALES

PROPERTY, TRUSTS & PROBATE LIST (Ch)

Rolls Building

Fetter Lane

London, EC4A 1NL

Michael Walsh (instructed by Judge & Priestley LLP) for the Claimants

Nathaniel Duckworth (instructed by Ashurst LLP) for the Second Defendant

The First Defendant did not appear and was not represented

Hearing dates: 24–27 January and 30 January 2023

APPROVED JUDGMENT

This judgment was handed down remotely at 10am on 03 March 2023 by circulation to the parties or their representatives by email and by release to the National Archives.

Mr Justice Richards
1

C2 to C8 are tenants of a property at 34–36 Prescott Place, Clapham, London (the “Property”). D1 is the registered proprietor of the freehold, having acquired that freehold from Stephen Donovan (D2's brother) in 2014. The tenants have exercised their right under the provisions of Part I of the Landlord and Tenant Act 1987 (the “1987 Act”) to acquire the freehold of the Property. On 25 October 2019 they obtained an order (the “Section 19 Order”), made by HHJ Lethem sitting in the County Court of Central London pursuant to s19 of the 1987 Act, that ordered D1 by way of injunction to transfer the freehold to C1, the company that C2 to C8 have nominated for the purpose.

2

D2 asserts that, notwithstanding the Section 19 Order, he has rights in respect of the Property as a consequence of the following:

i) a trust that was created at or around the time SD acquired the Property in 2004 which was evidenced in an express declaration of trust (the “2004 Trust Deed”);

ii) the circumstances surrounding D1's acquisition of his interest in the Property in 2014 (the “2014 Transfer”) which, D2 asserts, involved D1 acknowledging that he would hold the Property on trust for D2;

iii) an express declaration of trust made in 2014 (the “2014 Trust Deed”) under which D1 declared that he held the Property on trust for D2; and

iv) two leases of part of the Property that D1 granted to D2 whose date of execution is expressed to be in 2014 (the “Equitable Leases”). Although these leases have not been registered at HM Land Registry by the applicable deadline to take effect as legal estates, D2 says that they take effect in equity pursuant to s7(2)(b) of the Land Registration Act 2002 (the “ LRA”).

3

After the Section 19 Order was made, the Claimants became concerned that D1 and D2 might take steps to dispose of interests in the Property. They issued Part 8 proceedings seeking injunctive relief. D1 has indicated that he will play no active part in the Part 8 proceedings and will simply abide by whatever order the Court makes. D2 has filed a Defence and Counterclaim asserting that he has the rights summarised in paragraph 2.

4

Accordingly, the present proceedings are concerned with the Claimants' claims for injunctive and other relief and D2's Defence and Counterclaim. The parties have helpfully produced an agreed List of Issues and at the end of this judgment, I will relate my conclusions to those issues.

5

I had witness statements from the following. All witnesses were cross-examined, except as specifically stated below:

i) D1 and D2;

ii) SD, D2's brother, who gave evidence about the initial acquisition of the Property and the circumstances in which it was transferred in 2014;

iii) Imran Ahmad, an English solicitor who undertook property work for D2. He had prepared documents associated with the 2014 Transfer and said that he had witnessed signatures on the 2014 Trust Deed and the Equitable Leases;

iv) Igor Dandara, who lives in Moldova and is a friend of D1. He gave evidence that he witnessed D1's signature on the 2014 Trust Deed. Arrangements were put in place to permit him to give evidence from Moldova from video link but, for reasons that are not material, he did not do so with the result that his witness statement was not tested in cross-examination;

v) Tatiana Batin, D1's wife, who lives with D1 in Moldova. She gave evidence that she witnessed D1's signature on the Equitable Leases;

vi) Kieran Griffin, a retired solicitor qualified in the Republic of Ireland, who gave evidence that he witnessed the signatures of both SD and of D2 on the 2004 Trust Deed. Mr Griffin was on holiday in Thailand at the time of the trial. Arrangements were made to permit him to give evidence remotely, but in the event he did not attend for cross-examination.

vii) Fergus Appelbe, a retired solicitor qualified in the Republic of Ireland, who gave evidence, by way of video-link from Ireland, that he witnessed D2's signatures on the Equitable Leases.

6

Since the evidence of Mr Dandara and Mr Griffin went to matters that were in some dispute, and that evidence has not been tested by cross-examination, I have given little weight to their witness statements.

7

Later in this judgment, I will set out specific conclusions that I have drawn from the witnesses' evidence. It suffices at this stage to say that I have concluded that D1 and D2 have not always told the truth particularly on the question of when the 2014 Trust Deed and the Equitable Leases were executed. That, obviously, has affected my assessment of their credibility generally. I have found Mr Ahmad's evidence unsatisfactory in a number of respects and characterised by an apparent wish to support D2's account uncritically without taking proper care to ensure that his evidence was correct. I have not accepted the account that D1, D2 and SD put forward of circumstances surrounding the transfer of the Property to D1 in 2014 and I have concluded that, in that account, they were providing an after-the-event rationalisation as to a basis on which D1 might have taken the Property on trust rather than an accurate explanation of the circumstances in which D1 actually acquired his interest. Mrs Batin was mistaken about the date on which she said she witnessed signatures on the Equitable Leases, but I am prepared to accept that was because her memory had been “refreshed” by sight of documents bearing that date rather than a wish to deceive. Overall, I have not accepted that the evidence of D1, D2, Mr Ahmad, SD or Mrs Batin was reliable in a number of respects albeit for somewhat differing reasons.

8

Mr Appelbe was appropriately careful in his oral evidence and took care to ensure that he did not “over claim” so as to mislead. The result, though, was that he was not able to assist greatly as to the date on which the Equitable Leases were executed.

9

At various points in his evidence, D2 sought to explain an absence of disclosed contemporaneous documentary material relevant to factual issues on his strong desire for secrecy or confidentiality. He maintained that he sought to avoid, where possible, creating a “digital footprint” of his business affairs. I am prepared to accept that D2 liked to keep his business dealings appropriately confidential but I do not accept that D2 was anywhere near as reticent about “digital footprint” as he claimed. The evidence showed numerous instances of him emailing business contacts. I regarded his evidence in this regard as an attempt to explain away some of the more implausible aspects of his evidence, including his assertions as to how the Equitable Leases and 2014 Trust Deed were created.

PART A — THE LEGISLATIVE BACKGROUND

10

In broad terms, the 1987 Act gives “qualifying tenants” of blocks of flats a right of first refusal when their landlord proposes to dispose of their reversionary interest. That is achieved at a most basic level by s1 of the 1987 Act which provides that a landlord cannot make a “relevant disposal” affecting premises to which the 1987 Act provisions apply unless the landlord first gives qualifying tenants a notice under s5 offering to dispose of the interest to them on the same terms. It is common ground that the Property in this case is within the scope of the 1987 Act and that the Claimants are “qualifying tenants” and so I do not need to set out how the legislation deals with those matters.

11

The concept of a “relevant disposal” is broadly defined by s4. Most disposals of an estate or interest (whether legal or equitable) are, on the face of it, embraced within the definition, except the grant of a tenancy over a single flat. However, s4(2) contains some exceptions. In particular, s4(2)(g) provides that the following is not a “relevant disposal”:

(g) a disposal consisting of the transfer of an estate or interest held on trust for any person where the disposal is made in connection with the appointment of a new trustee or in connection with the discharge of any trustee.

12

The 1987 Act deals with the possibility that a landlord might simply breach its obligations by making a relevant disposal to a purchaser without making the requisite offer to qualifying tenants. Section 10A provides for criminal sanctions. Section 12B(2) also seeks to give effect to the tenants' right of first refusal by permitting a majority of qualifying tenants to call for a conveyance from the purchaser. Section 12B(2) provides as follows:

(2) The requisite majority of qualifying tenants of the constituent flats may serve a notice (a “purchase notice”) on the purchaser requiring him to dispose of the estate or interest that was the subject-matter of the original disposal, on the terms on which it was made (including those relating to the consideration payable), to a person or persons nominated for the purposes of this section by any such majority of qualifying tenants of those flats.

13

In this case, there is no question as to...

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1 cases
  • Joseph Donovan v Prescott Place Freeholder Ltd & Others
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 27 March 2024
    ...this matter is complex. Richards J sets it out at [24] to [52] of his first judgment in this matter, the neutral citation of which is [2023] EWHC 435 (Ch) (the “First Judgment”). Reference should be made to those paragraphs. What appears below is a summary only. The references in this judg......

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