Souglides v Tweedie and another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 12 March 2012 |
| Neutral Citation | [2012] EWHC 561 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC11C01152 |
| Date | 12 March 2012 |
[2012] EWHC 561 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
The Rolls Building, Royal Courts of Justice,
7 Rolls Buildings, London, EC4A 1NL
Mr Justice Newey
Case No: HC11C01152
Miss Marilyn Kennedy-McGregor (instructed by B.D. Laddie) for the Claimant
Mr David Holland QC (instructed by Howes Percival LLP) for the Defendants
Approved Judgment
Hearing dates: 24 and 28 February 2012
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 John Souglides, the Claimant, is a sub-lessee of a flat at 53 Ennismore Gardens, London SW7. The Defendants, who are brothers, are the freehold owners of 53 Ennismore Gardens. By these proceedings, the Claimant seeks to enforce an option which the Defendants granted to the First Defendant when he was the sub-lessee of the flat in which the Claimant now lives. Among other things, the case raises issues as to the interpretation of section 9(1) of the Perpetuities and Accumulations Act 1964.
The facts
In the 1940s the then freeholder leased 53 Ennismore Gardens to a company called Rosennis Properties Limited for a term of 80 years from 25 December 1948. That lease ("the Head Lease") is now vested in the residents' association for the building, 53 Ennismore Gardens Residents Association Limited ("the Head Lessee").
In 1981 the First Defendant, Mr Thomas Tweedie, was registered as the proprietor of an underlease of one of the flats at 53 Ennismore Gardens (Flat 5). The underlease ("the Underlease"), which had been entered into in 1975, related to the fourth floor of the property and was for a term of 55 years less three days from 25 December 1973. It would thus expire three days before the Head Lease.
The First Defendant presumably borrowed money from Alliance Building Society to fund his purchase of the Underlease. At all events, the First Defendant entered into a charge dated 20 February 1981 ("the Charge") under which the Underlease was charged by way of legal mortgage with the payment of all moneys payable to the Alliance Building Society by the First Defendant.
In 1985–1986 the First Defendant added a further floor to his flat by extending into the roof space of the building. He also built a roof terrace.
On 2 October 1986 the Head Lessee and the First Defendant entered into a deed varying the Underlease. The deed, which was expressed to be supplemental to the Underlease, confirmed that the demised premises included the recently-constructed fifth floor, but no reference was made to the roof terrace. The Underlease, as varied, was afterwards re-registered at HM Land Registry.
The option at issue in the present proceedings ("the Option") was granted by a deed dated 10 April 1987. The Defendants by now having acquired the freehold title to 53 Ennismore Gardens, the parties to the deed were the Defendants as "the Freeholders" (an expression which was stated to "include the successors in title of the Freeholders") and the First Defendant as "the Lessee" (an expression which was stated to "include the successors in title of the Lessee"). A recital to the deed explained what was intended in these terms:
"The Lessee is desirous of extending the term of the Lease and the Freeholders are agreeable to granting such extension but, in view of the intermediate interest of the Residents Company, the Freeholders are unable to do so as at the date hereof and accordingly it has been agreed between the parties hereto that the Lessee shall be granted an option to require the grant of an extension lease on the terms hereafter set out".
The deed proceeded to provide as follows by clause 1:
"In consideration of the sum of one pound (£1.00) now paid by the Lessee to the Freeholders … the Freeholders hereby grant to the Lessee the right to require that the Freeholders shall grant to the Lessee an extension lease for a term of 60 years from 25th December 2028, such right not to become exerciseable (subject to Clause 4 below) until the 25th day of December 2008 and to cease to be exerciseable if not exercised by the 20th day of December 2028".
Clause 2 explained as follows:
"The consideration payable on the grant of the said extension lease shall be one red rose and the Lessee shall pay and indemnify the Freeholders against any costs incurred by the Freeholders in effecting the grant of the said extension lease".
Clause 3 stated that the extension lease was to be "on the same terms mutatis mutandis as the Lease" subject to minor modifications with regard to rent (which was to be £75 per annum) and maintenance costs. Clause 4 dealt with the position if the Head Lease was surrendered.
Particulars of "the Lease" were given in a schedule to the deed. This was in the following terms:
"Fourth Floor Flat, 53 Ennismore Gardens, London SW7
The Lease: Date: 2nd June 1975
Parties: (1) Patrick Joseph Doherty
(2) Andrew Derrick John Farmiloe
as extended by a Supplemental Deed dated 2nd October 1986 and made between 53 Ennismore Gardens Residents Association Limited (1) and the Lessee (2)"
On 23 October 1987 the First Defendant entered into a further agreement with the Alliance & Leicester Building Society (as the Alliance Building Society had become). This agreement, which was embodied in a deed, provided for the Charge to be varied so as to incorporate the 1985 mortgage conditions of the Alliance & Leicester Building Society ("the Society"). Clause 7(1) of those conditions stated as follows:
"So far as he is able (but subject to redemption) the Borrower
(i) Assigns all Related Rights to the Society
(ii) Declares and agrees that he will hold all Related Rights in trust for the Society …."
The expression "Related Rights" was defined to include:
"(a) the benefit of any covenant agreement option guarantee undertaking charge right indemnity or remedy relating to the Property …
…
(c) all rights whether or not in being at the date of the Mortgage which may be or become exercisable by the Borrower and any sums which (under any statute or law or contract and whether as of right or ex gratia or otherwise) may be or become payable in respect of the Property or any damage or injury to it or depreciation of it …."
It seems that the First Defendant fell into arrears with his mortgage payments. The Society took possession of Flat 5 and arranged for it to be marketed with the benefit of a further 60-year lease pursuant to the Option. On 25 June 1993 the Society contracted to sell the Underlease to the Claimant and his then wife. Since, however, the Option had not been registered against the freehold title, the contract gave each party the right to rescind if the Society did not manage to achieve registration. The relevant clause (clause 13) was in these terms:
"This Agreement is strictly conditional upon the seller using their reasonable endeavours to register the Deed dated the 10th April 1987 made between:—
(a) Thomas Cunningham Tweedie and John Mathieson Tweedie
(b) Thomas Cunningham Tweedie and
(c) Lloyds Bank plc
a copy of which is annexed to this Agreement, against the Freehold Title number LN 100095, such registration to be effected within 28 days of the date of this Agreement, subject to the Buyer assisting in the lodging of the Freehold Charge Certificate as aforesaid at HM Land Registry.
In the event that the seller is unable to comply with the aforementioned condition, either party shall be at liberty to rescind this Agreement with written notice and upon rescission, the seller shall forthwith return the deposit paid on exchange … together with all accrued interest".
In the event, the transaction proceeded to completion in July 1993, and the Claimant and his wife were registered as the proprietors of the Underlease (as varied in 1986). The solicitors acting for the Claimant and his wife had obtained written or verbal consent to the Option being registered at the Land Registry from the Defendants, their solicitor and the Bank of Scotland, which was the Defendants' mortgagee.
In advance of completion, the Society had made an application for the registration of the Option at the Land Registry. By August 1993 the Defendants had objected to the Option being noted on the register, but the Land Registry nevertheless concluded that the Option should be noted against the freehold title to 53 Ennismore Gardens. An entry was made with effect from 26 July 1993.
In 1993–1994 steps were taken to confirm that the premises demised to the Claimant and his wife extended to the roof terrace. A letter of 13 September 1993 from the Claimant's wife to the Head Lessee recorded that it had been decided that it was "preferable to enter into a Deed of Variation which expressly incorporates the right of access to the roof, thereby corresponding with the actual position as a result of the works effected by Mr Tweedie" (i.e. the First Defendant). A deed ("the 1994 Deed") made between the Head Lessee of the one part and the Claimant and his wife of the other part on 20 May 1994 provided for a new plan to be annexed to the Underlease, for the areas marked on that plan to form the demised premises and for the repairing covenant to extend to the roof terrace. The deed was expressed to be supplemental to the Underlease, as varied by the 1986 deed. It also contained the following clause:
"5. SAVE as hereby modified the Lease [i.e. the Underlease] shall continue in full force and effect in all respects and every reference in the Lease to Lessee's covenants generally howsoever expressed including the proviso for re-entry, for breach or non-observance thereof shall be read and construed as including a reference to the said substituted...
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