Skelwith (Leisure) Ltd and Others v Alan Armstrong and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 08 October 2015 |
| Neutral Citation | [2015] EWHC 2830 (Ch) |
| Docket Number | Case No: HC-2015-000615 |
| Court | Chancery Division |
| Date | 08 October 2015 |
[2015] EWHC 2830 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Justice Newey
Case No: HC-2015-000615
Ms Brie Stevens-Hoare QC and Mr Thomas Bell (instructed by Lewis Silkin LLP) for the Claimants
Mr Mark Warwick QC (instructed by PCB Litigation LLP) for the First, Second and Fourth to Sixth Defendants
Mr Thomas Fletcher (instructed by Newtons Solicitors Limited, Knaresborough) for the Third Defendant
Mr Thomas Grant QC and Mr Duncan McCombe (instructed by Barker Gillette LLP) for the Seventh Defendant
Approved Judgment
In February of this year, the sixth defendant, Polar Holdings Limited ("Polar"), entered into contracts for the sale of a property now known as the Flaxby Golf Club ("the Club") to the seventh defendant, Flaxby Park Limited ("Flaxby Park"). The first claimant, Skelwith (Leisure) Limited ("Skelwith"), is the registered proprietor of the Club, but it has charged the property in favour of the first defendant, Mr Alan Armstrong ("Mr Armstrong"), and he has executed a deed assigning his rights to Polar.
In the present proceedings, the claimants challenge the validity of the contracts that Polar has made with Flaxby Park. The applications before me, by which the claimants and Flaxby Park each seek to have matters disposed of summarily in their favour, raise issues as to, among other things, the interpretation of the Land Registration Act 2002 ("the LRA 2002") and the remedies available to mortgagees.
Basic facts
By an agreement dated 4 April 2008, the first to fifth defendants (to whom I shall refer as "the Flaxby Partnership") contracted to sell the Club to Skelwith, whose shareholders and directors are the second and third claimants, Mr Paul Ellis and Mr Darren Broadbent. The price was given as £7 million, but completion was not to take place immediately.
The sale agreement was varied in relatively minor respects in July 2008 and much more significantly by a deed of variation dated 31 July 2009. It was agreed that completion should happen at once, without Skelwith having paid the full purchase price. The remaining £3.525 million was to be paid by instalments between August 2009 and the end of 2012. The payments were to be secured both by a debenture and, more importantly for present purposes, by a charge over the Club.
Completion took place that same day. The Club was transferred to Skelwith, but charged by a deed made between Skelwith and Mr Armstrong as "the Security Agent" ("the Charge"). By the Charge, Skelwith charged the Club "by way of legal mortgage" to "the Security Agent" as security for its obligations to the "Secured Parties", who were the members of the Flaxby Partnership. Mr Armstrong, as "the Security Agent", declared that he held as trustee for the "Secured Parties".
The Charge included the following provisions:
i) Clause 1.2 stated:
"The expressions 'Security Agent', 'Secured Parties' and 'Company' include, where the context admits, their respective successors, and, in the case of the Security Agent and the Secured Parties, their respective transferees and assignees, whether immediate or derivative";
ii) Clause 7 provided for the Security Agent to be entitled to demand payment and, if the demand was not met in full, to enforce the security in certain events (including non-payment by Skelwith);
iii) Clause 7.2 was in these terms:
"At any time on or after the Enforcement Date [an expression which referred to, among other things, the date of a demand] the Security Agent may, without further notice, without the restrictions contained in section 103 Law of Property Act 1925 and whether or not an Administrator or a Receiver shall have been appointed, exercise all the powers conferred upon mortgagees by the Law of Property Act 1925 as varied or extended by this deed and all the powers and discretions conferred by this deed on a Receiver expressly, by law or by reference";
iv) Clause 8.3 provided:
"A Receiver shall have power to do or omit to do on behalf of the Company [i.e. Skelwith] anything which the Company itself could do or omit to do if the Receiver had not been appointed, notwithstanding the liquidation of the Company. In particular (but without limitation) a Receiver shall have power to:
…
(b) sell or otherwise dispose of the Receivership Assets by … private contract …";
v) Clause 9.3 explained:
"No purchaser or other person shall be bound to see or enquire whether the right of the Security Agent or any Administrator or Receiver to exercise any of the powers conferred by this deed has arisen or be concerned with notice to the contrary or with the propriety of the exercise or purported exercise of such powers";
vi) Clause 11.1 stated:
"The Company [i.e. Skelwith] by way of security hereby irrevocably appoints the Security Agent and any Receiver severally to be its attorney in its name and on its behalf:
(a) to do all things which the Company may be required to do under this deed;
…
(d) otherwise generally to sign, seal, execute and deliver all deeds, assurances, agreements and documents and to do all acts and things which may be required for the full exercise of all or any of the powers conferred on the Security Agent or a Receiver under this deed or which may be deemed expedient by the Security Agent or a Receiver in connection with any disposition, realisation or getting in by the Security Agent or such Receiver of the Receivership Assets or in connection with any other exercise of any power under this deed and including, but not limited to a power in favour of any Receiver to dispose for value of any of the assets of the Company over which such Receiver may not have been appointed and which are located at Property over which he has been appointed, without being liable for any losses suffered by the Company, or any part thereof"; and
vii) Clause 15.5 stipulated:
"Any appointment or removal of a Receiver under clause 8 and any consents under this deed may be made or given in writing signed or sealed by any successors or assigns of the Security Agent and accordingly the Company [i.e. Skelwith] hereby irrevocably appoints each successor and assignee of the Security Agent to be its attorney in the terms and for the purposes set out in clause 11".
On 4 September 2009, Skelwith was registered at the Land Registry as the proprietor of the Club and Mr Armstrong was registered as the proprietor of the Charge.
On 21 January 2015, Skelwith having failed to fulfil payment (and, perhaps, other) obligations under the Charge, Mr Armstrong formally demanded £4,010,037 from Skelwith, citing clause 7 of the Charge.
On 5 February 2015, a deed of assignment ("the Deed of Assignment") was executed in favour of Polar. The parties were the members of the Flaxby Partnership (as "Creditor"), Mr Armstrong (as "Security Trustee") and Polar (as "Assignee"). The Deed of Assignment recited that the "Creditor" had agreed to assign to Polar its right, title and interest in, among other things, the debt owing by Skelwith and the Charge and that the "Security Trustee" had agreed to assign to Polar his right, title and interest in, among other things, the Charge. Clause 2 of the Deed of Assignment was in these terms:
"1. The Creditor hereby as beneficial owner assigns absolutely to the Assignee all the right, title benefit, and interest of the Creditor in and to the Debt [i.e. the debt owing by Skelwith] and the underlying contracts under which the Debt arose ….
2. The Creditor hereby as beneficial owner assigns absolutely to the Assignee all the right, title benefit, and interest of the Creditor in the Security [including the Charge] with immediate effect.
3. The Security Trustee hereby as trustee assigns absolutely to the Assignee all the right, title benefit, and interest of the Security Trustee in the Security with immediate effect.
4. Both the Creditor and the Security Trustee hereby assign to the Assignee all rights already vested in them under the Security which shall include without limitation the right to rely upon the Demand Letter [i.e. the letter of demand of 21 January 2015] and the Events of Default as listed in that Demand Letter.
5. For the avoidance of doubt and without limitation there shall not be included in this assignment any other asset of the Creditor nor covered by the terms of this deed."
A TR4 transfer form ("the Transfer") was also executed. This provided for the transfer of the Charge by Mr Armstrong to Polar. The transfer has not, however, been registered at the Land Registry.
Polar had been incorporated in the Isle of Man on 27 January 2015. Mr Armstrong and the fourth defendant, Mr Simon Armstrong (one of Mr Armstrong's sons), have been the company's directors since 26 February. It was, it seems, always intended that the company should be owned and controlled by the Armstrong family. Mr Simon Armstrong has given this explanation of the assignment to Polar:
"The reason for taking this latter step was that the dispute was (and still is) taking an increasingly heavy toll on both my mother and father (who are 78 and 80 respectively). We hoped that by transferring our interests to [Polar], this would remove at least some of the stress in having to directly deal with Mr Ellis and Mr Broadbent, in whose promises we can no longer trust."
The defendants allege that Mr Ellis was handed a form of notice of assignment at about 3pm on 11 February 2015....
To continue reading
Request your trial
-
Beulah Adeogun v Beulah Adeogun (Personal Representative of the Estate of Emily Pilgrim)
...of their property rights without adequate compensation. 34 Counsel further relied on the decision in Skelwith (Leisure) Ltd. v Armstrong [2015] EWHC 2830 (Ch.) ( “Skelwith”) and submit that a landlord can only convey a freehold interest in the land to a ‘qualified tenant’ if he is the holde......
-
Stodday Land Ltd and Another v Pye
...notice retrospectively.38 This analysis is consistent with that adopted by Newey J in Skelwith (Leisure) Ltd vArmstrong [2015] EWHC 2830; [2016] Ch 345; [2016] 2 WLR 144. The registered proprietor of acharge assigned it, but the assignee did not register the transfer of the charge. The assi......