Sabrina Soon Duck Park Kim and Another v Chasewood Park Residents Ltd (Respondent/Claimant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lord Justice McCombe,Lord Justice Kitchin |
| Judgment Date | 26 March 2013 |
| Neutral Citation | [2013] EWCA Civ 239 |
| Docket Number | Case No: B5/2012/1891 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 March 2013 |
[2013] EWCA Civ 239
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
Sitting at THE MAYOR'S AND CITY OF LONDON COURT
Mr Recorder Hill-Smith
1CL10224
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Lord Justice Kitchin
and
Lord Justice McCombe
Case No: B5/2012/1891
Edwin Johnson QC and Piers Harrison (instructed by Ashley Wilson Solicitors LLP) for the Appellants
Paul Letman (instructed by Mellins Garson Law) for the Respondent
Hearing date : 25 th February 2013
Introduction
The appellants, Mr and Mrs Kim, are the tenants of flat 26, Chasewood Park, Sudbury Hill, Harrow ("the Flat") under a lease granted on 7 th December 1988 for a term of 125 years from 29 th September 1987. They purchased the leasehold interest on 5 th October 2001. Under the lease, the tenants covenant to pay an annual ground rent together with a service charge. The ground rent is set at £100 per annum for the first 33 years of the term but then becomes £200 per annum and doubles to £400 after a further 33 years.
Chasewood Park comprises some 97 residential flats with ancillary parking. Until 2007 the reversion (which consisted of a long superior lease) was vested in the Nationwide Building Society. In 2006 they indicated an intention to dispose of the reversion and an opportunity therefore arose for the residents to acquire it. Before taking the matter any further the Residents' Association needed to gauge the level of support for any purchase. On 24 th August 2006 they therefore sent a letter to each of the tenants asking them to indicate on the form attached to the letter whether they would or would not like to participate in the acquisition of what was described as the freehold. It is common ground that this was inaccurate, although the length of the leasehold reversion was such as to make it a virtual freehold. The error may, however, have contributed to Mrs Kim's misunderstanding of what was being offered to her. I shall return to that a little later.
The first part of the letter itself read as follows:
"Dear Chasewood Resident,
As many of you already know, from the previous two Residents' Meetings, your Committee has been keen to pursue the acquisition of the Freehold of Chasewood Park.
The benefits of owning the freehold can be summarised as follows:
• Absolute control over the management of Chasewood Park including choosing the Managing Agents
• No ground rent to pay (currently £100 per annum per flat)
• No ongoing concern about diminishing leases. Once we own the freehold, whilst technically the leases will still be running, we can decide to extend these to say 999 years whenever we choose. There will be no additional cost for this apart from a small legal fee to amend our individual leases to reflect such a change.
• The immediate increase in the value of our properties by owning "A Share of Freehold" should at least cover the cost of the Freehold acquisition. In the future it will undoubtedly add value higher than this sum as the leases get shorter.
The situation is that Nationwide has informed us that they are going to sell the Freehold. Their remaining interest of 17 flats in Chasewood Park are also currently up for sale. Allsops have been engaged by Nationwide to dispose of their interests in Chasewood Park. The Committee have been informed by Allsops that in order to establish a price for the Freehold it will be put into auction in February or March of next year.
….."
The letter went on to explain that the price of the freehold would be based on the capitalised value of the ground rents and that the cost per tenant would obviously depend upon how many of the tenants wished to participate in the acquisition. The Residents' Association had calculated that at least 50% of the tenants needed to participate in order to make the purchase affordable. On that basis, the cost to each tenant ought not to exceed £4,000. The letter went on:
"If we do manage to acquire the Freehold, those owners that have not participated will continue to pay ground rent to a Company formed to acquire the freehold. In addition when lease extensions are required by non participators, they will need to be paid for, again to the Company owning the freehold. These collected sums will be distributed back to the original freehold acquisition participators, who will have equal shares in the holding company.
Whilst February/March next year seems a long way off there is much to do before then in preparation. Can we therefore please ask that as a matter of urgency you reply using the second page attached to give us an initial indication of your interest in pursuing the Freehold acquisition."
Although there was nothing in the letter to indicate the existence of such a disagreement, Mr Abe Tibbett, the chairman of the Residents' Association, said in evidence that the reference in the second bullet point to "No ground rent to pay" was not something which had been agreed to by the committee. The circular had been drafted by one of the committee members, Mr Stavronidis, and sent out before its contents could be further considered.
Having read the circular letter, Mrs Kim returned the form indicating that she and her husband would like to participate. The next document which she received was a circular letter of 9 th February 2007 headed "Freehold Purchase Update". Copies of this letter were sent to each of the tenants who had previously expressed an interest in participating in the purchase of the "freehold". By this time events had moved on. The Residents' Association had set up the respondent company ("the Company") to acquire the reversion and, if successful, to act as the managing agent for the block. Mr Tibbett was one of the first directors and Mr Stavronidis became the company secretary. The 9 th February letter (although in the name of the Residents' Association) was sent with the authority of Mr Tibbett and the other directors and they accept that the Company is responsible for its contents.
The letter began as follows:
"Dear Freehold Purchase Participator,
We are progressing well with the Freehold purchase. We lodged our formal interest in acquiring the Freehold with the Freeholder's solicitor in a timely manner. We have formed a company called 'Chasewood Park Residents Limited' in which all participators will hold one ownership share. Directors and a Company Secretary have been appointed. A few more participators have joined us so we are now at a total of 56 people who have submitted their completed forms and contributed the £50. As a reminder we actually need more than 40 participators in order to be able to proceed, which we clearly have. …"
It then referred to the auction date being set for 29 th March 2007 and what the arrangements for the payment of each tenant's share would be if the price set was affordable. The remainder of the letter was concerned with the possible participation of Talbot Residential Investment Partnership (the owners of 13 flats) in the purchase and how this should be managed in terms of voting rights at an EGM of the Company. None of this is relevant to the issues on this appeal.
The Company was ultimately successful in acquiring the reversion from Nationwide and Mr and Mrs Kim paid £3,095 (later reduced to £2,887.16) towards the cost in return for which they received a share in the Company. On 12 th June 2007 the participating tenants had each received a further circular letter containing an update of the position following the purchase. The letter explained that, in the end, some 82 tenants contributed to the purchase and that other tenants were being allowed to join in late but at an increased cost. The Company now proposed to grant extended leases to the participating tenants for a one-off fee of between £250 and £750. Most of the fee would relate to the cost of preparing a new lease. Although the circular letters had all referred to the tenant being granted an extension of their existing terms, this in fact necessitated the surrender of their existing leases and the re-grant of a new lease for the longer term.
The most significant aspect of the letter for present purposes was the third paragraph. This read:
"For the moment we have decided to continue to charge the £100 per annum ground rent from everyone in order to build up a fund within the Company to cover accountancy fees, legal fees etc. Please note that the Directors and the Company Secretary will not receive any remuneration."
At an EGM of the Company held on 26 th June the directors explained that the ground rent was to remain at £100 per annum for the time being in order to build up funds to deal with any eventualities.
Mr and Mrs Kim have refused to pay the ground rent due since the purchase by the Company of the reversion. They have been offered, but have also declined to accept, the grant of a new long lease at the current ground rent. In correspondence and in her witness statement in these proceedings Mrs Kim says that she was told in the letter of 24 th August that ground rent would not be payable following the acquisition of the freehold. In a letter of 8 th November 2007 to the Company she wrote:
"after I have become part of the commonhold and a member of [the Company] the previous lease is therefore no longer applicable. However you have no proprietary or contractual claim against me."
In paragraph 11 of her second witness statement she says that she noticed the...
To continue reading
Request your trial
- Closegate Hotel Development (Durham) Ltd v Mclean
-
Chong and Others v Alexander and another
...in 1997 or 2008) and if it was agreed by all the shareholders unanimously (in which regard Mr Carpenter-Leitch relied upon Kim v Chasewood Park Residents Ltd [2013] EWCA Civ 239, [2013] HLR 24 and Panayotov v Falmouth House Freehold Ltd [2012] EWCA Civ 1174, or, in the alternative, Banner H......
-
Spire Healthcare Limtied v Nicholas Brooke
...[1902] AC 117; BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783; and Kim and Kim v Chasewood Park Residents Limited [2013] EWCA Civ 239. The principles can be summarised as follows. 70 As regards estoppel by representation, where a person, by his words or conduct, causes another......
-
Closegate Hotel Development (Durham) Ltd and Another v Joseph McLean and Others
...it need not come up to 'alpha plus.'" 55 These authorities were recently considered by the Court of Appeal in Sabrina Soon Duck Park Kim v Chasewood Park Residents Limited [2013] EWCA Civ 239. Patten LJ did not in terms deal with the difference between Lord Hailsham LC and Lord Cross, but a......
-
Table of Cases
...Grammar School v Secchi (1999) 32 HLR 820, [1999] 79 P&CR D10, [1999] NPC 121, CA 170 Kim and Another v Chasewood Park Residents Ltd [2013] EWCA Civ 239, [2013] HLR 309, [2013] 2 P&CR D9, [2013] All ER (D) 296 (Mar), CA 96 Kintyre Ltd v Romeomarch Property Management Ltd [2006] 1 EGLR 67, [......
-
Collective Enfranchisement under the Leasehold Reform (Housing and Urban Development) Act 1993
...time being remain qualifying tenants of flats contained in the specified premises. 1 Kim and Another v Chasewood Park Residents Ltd [2013] EWCA Civ 239, [2013] HLR 309. 5.7 Qualification for collective enfranchisement is judged as at the date of the service of the initial notice. Section 14......