Tiffany Investments Ltd and another v Bircham & Company Nominees Ltd and Others (No 2)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lindsay |
| Judgment Date | 07 February 2003 |
| Neutral Citation | [2003] EWHC 143 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No FTC 02 C |
| Date | 07 February 2003 |
[2003] EWHC 143 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Royal Courts of Justice
Strand London WC2A 2LL
Mr Justice Lindsay
Case No FTC 02 C
Timothy Dutton (instructed by Amhurst Brown Columbotti) for the Claimants
John McGhee (instructed by Bircham Dyson Bell) for the First and Second Defendants
Edward Denehan (instructed by Williams Sturgess & Co.) for the Third and Fourth Defendants
Hearing dates : Monday 27th January 2003 Tuesday 28th January 2003 Wednesday 29th January 2003
APPROVED JUDGMENT
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.
The Alexander Estate holds the freeholds of a number of properties in South Kensington which it lets for residential purposes on long leases. The Estate uses a common form for its leases which include, at clause 5,a right in favour of the Lessors concerning the residue for the time being of the lease, a right variously called one of first refusal or of pre-emption and which is triggered upon certain events. Clause 5 has been the subject of recent attention in the Court of Appeal � Bircham & Co. Nominees (No. 2) Limited and Anor �vWorrell Holdings Limited [2001] EWCA Civ 775; (2001) 82 P & C.R. 34. The action now before me once again raises questions as to the meaning and effect of clause 5but in circumstances different to those dealt with in Worrell. The questions arise between, firstly, as lessees, the 3rd and 4th Defendants, the Rt. Hon. Robin John Bailie and his wife Margaret Frances Bailie ("the Bailies") who are represented by Mr Denehan, secondly, the claimants, Tiffany Investments Limited and Coral Chantry (respectively "Tiffany" and "Mrs Chantry") who are represented by Mr Dutton and who assert claims against the Estate deriving from dealings with the Bailies and, thirdly, the 1st and 2nd Defendants, Bircham & Co. Nominees (No. 2) Limited and S.F. Stowell, the Alexander Estate Lessors ("the Lessors"), who are represented by Mr McGhee.
When the hearing began there was also a counterclaim by the Bailies against Tiffany and Mrs Chantry but that settled and a separate order in Tomlin form has been made such that I need not refer further to the counterclaim. In the event there was no need, either, to refer me to any witness statements so the only evidence I received consisted of undisputed documents and correspondence.
In broadest outline Tiffany and Mrs Chantry claim that in the events which have happened clause 5has the effect that they are now entitled to be assigned the remainder of the term of a lease of No. 1 Thurloe Close. The Lessors resist that and the Bailies are content to abide by the decision of the Court on the issue without themselves adding to the argument.
THE FACTS
On the 22i~ August 1979 a lease ("the Lease") was granted by the predecessors in title of the Lessors to Mr J.J. Hemingway. The Lease was of No. lThurloe Close, South Kensington. The term was to run until the 25th December 2026. Until the 24th December 2003 the yearly rent was to be �40. Amongst the lessee's covenants was this provision in clause 2 (9) (iii): "Subject as aforesaid and subject also to due compliance by the lessee with the terms of clause 5 hereof: -
(a) not to assign part with or share the possession of the whole demised premises without the prior written consent of the lessors such consent however not to be unreasonably withheld in the case of a respectable and responsible person who shall enter into a direct covenant with the lessors to observe and perform all the covenants on the part of the lessee and the conditions herein contained"
If an assignment were to be made a certified copy was to be registered with the Lessors' solicitors � Clause 2 (10) The premises were to be used only as a private dwelling house and for single occupation � Clause 2 (14). There was a conventional provision for re-entry including that it should arise "if any covenant on the lessee's part herein contained shall not be performed or observed". So long as the lessee remained in occupation the effect of the Lease, as is common ground, was that the protection afforded by the Landlord and Tenant Act 1954 to tenants of long residential leases at low rents was conferred upon the lessee.
The Clause 5to which Clause 2 (9) (iii) supra referred (identical to that ruled on in Worrell supra) needs to be set out in full -
"If at any time during the term hereby created the Lessee shall wish to dispose of the term hereby created in the demised premises he shall first offer the same in irritipg to the Lessors stating the price at which he is prepared to sell the same and the encumbrances (if any) subject to which the said term shall be assigned. if the Lessors shall not within twenty-one days of the receipt of such notice accept the offer therein contained the Lessee may within six months thereafter (subject to getting the Lessors' consent thereto as hereinbefore provided) assign the said term to an approved assignee at a price equivalent to or greater than that at which it was offered to the Lessors but shall not assign the same for any lesser sum than that at which it was last offered to the Lessors without again offering the same in writing to the Lessors at such lower figure. Any such renewed offer shall specify the encumbrances (if any) subject to which the said term shall be assigned. If any such renewed offer shall not be accepted within a period of fourteen days thereof the Lessee shall be free to assign the said term to an assignee (subject to getting the Lessors' consent thereto as hereinbefore provided) subject however to the obligation as aforesaid to offer the same to the Lessors again in the terms of this clause if such assignment shall be proposed for any lesser sum than that at which it was last offered to the Lessors.
The Lease was duly assigned to the Bailies, who occupied the premises.
On the 8th August 1986 the Bailies entered into a written agreement ("the 1986 Agreement") with Tiffany, a Jersey company, described as "the Purchaser", associated with Robert Leslie Nelson. At the time it was contemplated by either or both of Tiffany and the Bailies that the Bailies, described as "the Vendors", would soon be able to enfranchise under the Leasehold Reform Act 1967 Recital 1 of the 1986 Agreement provided -
"1. The Vendors have in mind to agree with the Purchaser for the sale to it of the leasehold interest in the property situate at No 1 Thurloe Close, London SW7 (hereinafter referred to as "the Premises") in the form of the Contract for Sale (hereinafter referred to as "Contract for Sale") annexed hereto which the Vendors and the Purchaser have signed for the purposes of identification"
The contract for sale there referred to ("the 1986 Contract of Sale) provided for an assignment of the residue of the Lease to Tiffany at �250,000 of which �25,000 was payable as a deposit Clause 4 of the 1986 Agreement provided -
"4. The Contracts for Sale shall be exchanged after the Vendors shall have served on their landlord a notice in the correct form of their wish to acquire the freehold and shall be completed in accordance with the provisions hereof or one year after the date of exchange, whichever shall first occur"
However, as it transpired, no notice of a wish to acquire the freehold by way of enfranchisement was ever served by the Bailies as they were advised that they were not entitled to enfranchise. There was, though, a fall-back clause in the 1986 Agreement; at clause 8 it was provided: -
"8. In the event that, having made their best endeavours so to do, the Vendors are unable to effect an enfranchisement of the Premises, the Purchaser agrees to accept the execution of the transfer of the leasehold Premises by the Vendors together with an assignment of the benefit of any notices served by the Vendors in respect of their claim to enfranchise in satisfaction of the Vendors' obligations to the Purchase hereunder."
Quite what versions of the 1986 Agreement and of the 1986 Contract of Sale were signed and exchanged I need not inquire into as it is common ground that the activity of August 1986 was or amounted to a binding contract of sale for the assignment of the residue of the Lease by the Bailies to Tiffany. The Lessors were not told of the 1986 Agreement or the 1986 Contract of Sale, nor were they given any notice under clause 5of the Lease. The Bailies continued to occupy the premises. A form of transfer of the Lease was executed by the Bailies and delivered to Tiffany. In it the transferee was left blank. I am told that the whole price of �250,000 had been paid by the 2nd September 1986.
At some date in late December 1986 or January 1987 the Bailies (who also owned the freehold or a lease of No.5 Thurloe Close) moved out of No. 1 and moved instead to No. 5. For some while before that Mr Nelson had been permitted by the Bailies to occupy No. 5. On the Bailies moving to No, 5 Mr Nelson moved into No. 1. Thereafter, as the lessee for the time being of No. 1 was no longer in occupation of the demised premises, the protection of the 1954 Act Part I ceased to be available to the Bailies or to anyone else claiming interest in No. 1. 13. It came to the notice of Cluttons, agents for the Alexander Estate, that the Bailies had ceased to occupy No. 1. Whilst the correspondence that I have seen is not categoric in this regard it is difficult to resist the conclusion that Cluttons came to know that either or both of Mr Nelson and Mrs Chantry occupied No. 1. There is, though, no suggestion that the Lessors or...
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