Srinivasan Sampathkumar v Wildwood CR Ltd
| Jurisdiction | England & Wales |
| Judge | Mullen |
| Judgment Date | 11 December 2020 |
| Neutral Citation | [2020] EWHC 3753 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2020-003502 |
| Date | 11 December 2020 |
[2020] EWHC 3753 (Ch)
INSOLVENCY AND COMPANIES COURT JUDGE Mullen
Case No: CR-2020-003502
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
The Rolls Building
Royal Courts of Justice
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr Ojo appeared on behalf of the Claimants
The First Defendant did not appear and was not represented
Mr Rose appeared on behalf of the Second Defendant
ICC JUDGE This is an application to strike out a claim, or for reverse summary judgment upon it, and for the removal of a unilateral notice on the Land Registry register entered to protect a contract for the grant of a lease. I refer to the underlying application as a “claim” because it was commenced by a Part 7 claim form filed on 21 st August 2020 accompanied by particulars of claim. The claimants are Dr Srinivasan Sampathkumar and Dr Anil Kumar Gopalil Sivadas, both of whom, as I understand it, are consultant anaesthetists. The claim names as defendants Wildwood CR Limited and Slough Development Limited. The second defendant's name is slightly incorrect (it is actually Slough Developments Limited) but nothing turns on that. The brief details of claim say as follows:
“This is a claim for an order of the court to set aside and/or unwind the transaction between the first and second defendants relating to the transfer of the property known as Flat 8, Princes House, 15 High Street, Slough, SL1 1DY, pursuant to section 423 of the Insolvency Act 1986.”
On 25 th August 2020, ICC Judge Burton, having identified that these proceedings should have been commenced by an insolvency application notice with accompanying evidence, directed that the claim form would be treated as an application notice and that the particulars of claim were to be treated as the evidence in support, thereby deeming the documents to satisfy the requirements of the Insolvency Rules as to the making of applications to the court. As service of particulars of claim in Part 7 proceedings triggers an obligation to file a defence, she also gave a direction that the defendants need not file a defence before the first hearing but were entitled to file and serve evidence at least seven days before the hearing. On 15 th October 2020, the second defendant made this application. On 19 th October 2020, agreed directions were given for the filing and exchange of evidence on it.
That is the background that brings us to the hearing today and, pursuant to those directions, I have before me the witness statement of Michaela Story in support of the application, together with the statement of Arron Kendall, who is one of the receivers appointed in respect of the development that is at the heart of this dispute, I also have the statement of Mr Strange and two statements from Dr Sampathkumar. I have read those statements and I have also had the benefit of the written submissions and oral arguments of Mr Rose and Mr Ojo.
The background that the evidence shows is that the origin of this dispute is the purchase of Flat 8 off-plan at a development that was to be carried on by the first defendant in Slough. It is, I think, not disputed that the person behind both the first defendant and the second defendant is a gentleman called Mr Reiner Chaim, although it might not be that he is the only person with significant control in relation to those companies. The claimants decided to purchase Flat 8 and, on 21 March 2017, contracts were exchanged for the grant of a lease for the sum of £229,000. The contract provided for the payment of two tranches of deposit. On 15 th May 2017, a unilateral notice was entered on the freehold title to the property that was to be developed in order to protect the contract. The exchange of contracts confers an interest in the property but, in order to ensure that any other purchaser takes subject to that interest, it is usually necessary to record that on the register.
It is not in dispute that, by 2 nd June 2017, the claimants had paid all of the sums that the contract required them to pay up until that point. That was a sum totalling some £68,700. They anticipated that completion would take place in October 2017 when the remainder of the purchase monies would fall due. Completion of the building was very delayed but, by September 2018, the first defendant, as developer, had formed the view that the obligation to pay the outstanding monies had arisen. It is not clear, as I have not been taken to any documents relating to this, how matters proceeded and whether a notice to complete was served but, in any event, on 5 September 2018, the first defendant purported to rescind the contract and to exercise a right to retain the deposit monies.
What happened in the following year was that the first defendant sought to refinance the development and approached a lending broker. That led, on 11 th March 2019, to a secured bridging loan being provided by Funding 365 Capital Limited. That loan was not made to the first defendant, but to the second defendant, and the reason for that is explained in the witness statement of Ms Story, who is the solicitor for the second defendant, in support of the application. Her evidence is that the first defendant was required to form a special purpose vehicle, to which leases were to be granted, and that the lender would then take security over the whole of the property. The freehold and certain flats and car parking spaces were retained by the first defendant. The evidence is that that is what happened and that no stamp duty was payable by virtue of the grants of the leases being made to a company within the same group of companies. Ms Story says that, in her experience, it is commonplace for that to happen. She cannot, of course, give expert evidence but I think one can take judicial notice of the fact that SPVs are sometimes used to insulate and encapsulate particular assets for the purposes of the granting of loans. The process led to a valuation of each of those flats in the development in respect of a lease was to granted to the second defendant being obtained. A valuation report appears in the bundle and is dated 15 th March 2019. The loan and the grant of the lease of Flat 8 to the second defendant took place on 11 th March 2019 and the unilateral notice was carried over to the leasehold title.
On 5 April 2019, the second defendant sought to remove the unilateral notice that had been created to protect the contract. That was resisted by the claimants and there is thus now an application before the first-tier tribunal to remove the notice. In December 2019, the claimants made a claim against the first defendant. While the particulars of claim said that the purported rescission of the contract of sale was wrongful, the only relief sought was the return of the deposit. There was no application for specific performance of the contract on the basis that it remained extant and enforceable. On 14 th February 2020, default judgment was entered in favour of the claimants for the return of the deposit, plus interest.
The claimants' application is for relief pursuant to section 423 of the Insolvency Act 1986 in relation to the grant of a lease of Flat 8 to the second defendant. It is alleged that the arrangements between the first and second defendants were a “sham” but the only relief that is sought is pursuant to section 423. That is what the second defendant seeks to strike out. The application to strike out introduces an additional element in that the second defendant also asks that the court order that the unilateral notice registered by the claimants be removed from the register. The two matters that I therefore have to deal with were dealt with by counsel in reverse order, that is to say the application for removal of the notice was dealt with first, and so I will approach it in the same way.
Mr Rose has drawn my attention to the court's inherent jurisdiction to order the removal of a unilateral notice referred to by Morgan J in Nugent v Nugent [2013] EWHC 4095 (Ch). In that case, at paragraph 49, Morgan J said:
“I conclude that the jurisdiction, recognised and developed by the courts, in relation to the vacation of cautions registered under the Land Registration Act 1925, applies also in relation to unilateral notices registered under the 2002 Act. That jurisdiction applied in different ways in relation to cautions to protect...
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