USAF Nominee No. 18 Ltd v Watkin Jones & Son Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Waksman |
| Judgment Date | 26 July 2023 |
| Neutral Citation | [2023] EWHC 1880 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | Claim No: HT-2021-000281 |
[2023] EWHC 1880 (TCC)
Mr Justice Waksman
Claim No: HT-2021-000281
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Fenner Moeran KC, Jonathan Selby KC and Alexandra Bodnar (instructed by Walker Morris LLP, Solicitors) for the Claimant
Fiona Parkin KC, Nicole Langlois and Omar Eljadi (Instructed by DLA Piper UK LLP, Solicitors) for the Defendant
Hearing dates: 27–29 March 2023
Table of Contents
| INTRODUCTION | 4 |
| CHRONOLOGY OF RELEVANT EVENTS | 5 |
| THE ISSUES BROADLY STATED | 8 |
| The Trust Element | 8 |
| The Claimant's position | 8 |
| WJ's position | 9 |
| The Security Element | 10 |
| THE EVIDENCE | 11 |
| THE PRELIMINARY ISSUES | 11 |
| THE TRUST ELEMENT | 12 |
| A127G, TRUSTEESHIP, PROPERTY AND RIGHTS | 12 |
| PI 1 | 27 |
| PI 2 | 29 |
| PI 3 | 29 |
| PI 4 | 29 |
| PI 5 | 30 |
| PI 6 | 30 |
| PI 7 | 31 |
| PI 8 | 31 |
| PI 9 | 31 |
| PI 10 | 31 |
| PI 11 | 31 |
| CONCLUSIONS ON THE TRUST ELEMENT OF THE QUESTION OF TITLE TO SUE | 32 |
| THE SECURITY ELEMENT | 32 |
| PI 12 | 32 |
| PI 13 | 33 |
| The Law | 33 |
| Relevant Provisions in the Security Agreement | 39 |
| The Position of WF | 41 |
| Analysis 1: PI 13 (A) and (B) — the CW and the Claims | 42 |
| Analysis 2: PI 13 (C) — the Lease | 45 |
| Conclusions ON PI 13 | 48 |
| PI 14 | 48 |
| PI 15 | 49 |
| PI 16 | 49 |
| PI 17 | 49 |
| CONCLUSION | 50 |
INTRODUCTION
In this case, there are three Claimants, USAF Nominee No. 18 Limited, USAF Nominee No. 18A Limited and Apex Group Trustee Services Limited, to which I shall refer individually as C1, C2 and C3 or collectively, “the Claimants.” No distinction is made between the Claimants in terms of the claims they make. They are all, or purport to be, trustees of one kind or another. The Defendant, Watkin Jones & Son Ltd (“WJ”) is a building contractor.
The claims concern what is said to have been the defective design and construction of the external façade of a building known as Jennens Court in Birmingham (“the Property”). The contract under which WJ was engaged was a JCT 1998 Edition with Contractor's Design, with bespoke amendments, dated 4 July 2007, for the design and construction of 586 ensuite student bedrooms in cluster flats, some retail units and a dance studio (“the Development”). The cost of the Development was £17.98m. Practical Completion occurred on 27 July 2009 with a Final Certificate issued on the same day.
On 22 February 2008, WJ provided a collateral warranty (“the CW”).
In mid-2020, following an inspection of the Property, concerns were raised about the suitability of the cladding which was later replaced. The total cost of the replacement works was £3.797m.
C1 and C2 are the present registered title holders to a long lease of the Property (“the Lease”). Its duration is 150 years from 24 August 2007.
The claims made by the Claimants against WJ are for damages for breach of the CW (“the CW claim”) and/or negligence (“the Negligence claim”) and/or under the Defective Premises Act 1972 (“the DPA claim”). The latter was recently added by amendment in the light of the extension to the limitation period provided for by section 135 of the Building Safety Act 2022.
The trial of these claims is set down for 10 days commencing on 15 January 2024.
However, apart from the substantive dispute on the claims, which has been fully articulated in detailed statements of case, WJ has also taken a number of points as to whether any of the Claimants has title to sue at all (“the Title to Sue Dispute”). If WJ were to succeed on its core points here, none of the Claimants will have title to sue in the way in which they do at present. Depending on the extent of WJ's success, amendments would at least be required and other parties might have to be joined, without which the action would fall to be dismissed. The Claimants deny that there is any impediment to their ability to bring these proceedings.
On 16 February 2023, I ordered that there be a 3-day trial of Preliminary Issues, all relating to the Title to Sue Dispute. This is my judgment on those Preliminary Issues following that trial.
Although there are 17 Preliminary Issues in total, there are two core disputes between the parties:
(1) The first is whether, by reason of a merger in 2009 under Jersey law, of the companies referred to below as B1 and B2, there was a defect in the appointment of trustees thereafter which adversely affected the ability of each of C1, C2 and C3 to bring these proceedings. I refer to this as the Trust Element of the Title to Sue Dispute;
(2) The second is whether, in any event, the Claimants, or any of them, disposed of their interests in the Long Lease and the CW to Wells Fargo Bank NA London Branch (“WF”) by way of absolute assignment pursuant to a security agreement with WF. I refer to this as the Security Element of the Title to Sue Dispute. No application to join WF has thus far been made.
CHRONOLOGY OF RELEVANT EVENTS
In order to make sense of the Title to Sue Dispute, and which parties are involved, I need to set out the somewhat complex chronology of documents and events and in doing so, I will introduce the relevant parties. There are two parts to this chronology. The first part deals with the Trust Element while the second part is concerned with the Security Element.
On 31 March 2006, a Trust Instrument, governed by Jersey law, was executed between RBSI Trust Company Limited and RBSI Custody Bank Ltd (both Jersey companies) as trustees, and Cordea Savills Fund Managers (Jersey) Limited (“Cordea Limited”), another Jersey company, as Manager (“the TI”). The TI related to the establishment of a unit trust scheme pursuant to Article 7 (3) of the Trusts (Jersey) Law 1984 (“the TJL”) to be known as the Cordea Savills Student Fund (“the Fund”) to make investments in what was described as the Seed Portfolio and other property. It is common ground that the Fund was to and did invest in the Development.
The trustees referred to above changed their names on 2 July 2007 to BNP Paribas Services Trust Company (“B1”) and BNP Paribas Securities Services Custody Bank Ltd “(“B2”).
On 16 January 2007, the freeholder of the Property, Advantage West Midlands (“Advantage”) agreed to grant the Lease (which is presently vested in C1 and C2), to WJ. Pursuant to that agreement, Advantage executed the Lease in favour of WJ on 24 August 2007. However, by a Supplemental Agreement made on the same day between Advantage, WJ, and B1 and B2 as trustees, WJ agreed to assign the lease to B1 and B2.
In fact, the actual assignment to B1 and B2 occurred some time later, on or around 22 February 2008. This followed an initial assignment to an English company called Pureluck Limited (“Pureluck”) which was the original developer and which had made the original JCT contract (referred to above) with WJ. That earlier assignment was made on or about 30 January 2008 and the price paid for it was stated in the Property Register to be £5.76m. The price paid shortly thereafter by B1 and B2 for the onward assignment to them was £5.96m. The interposition of Pureluck in this respect is not material for present purposes.
There was also, on 22 February 2008, the execution by WJ of the CW. In fact, the CW was initially in favour of Pureluck. But at or about the same time, the benefit thereof was transferred to B1 and B2.
Accordingly, going forwards, B1 and B2 now held the legal title to the Lease as well as the benefit of the CW. It is not in dispute that they held both of them as trustees of the Fund.
On 27 March 2009, Advantage transferred its freehold interest in the Property to Birmingham City Council (“Birmingham”).
However, there then occurred an event which lies at the heart of the Trust Element of the Title to Sue Dispute. This was the merger, under Jersey law, of B2 and a different BNP company called BNP Paribas Services Trust Co. (Jersey) Ltd (“B3”), another Jersey company (“the Merger”). I will need to explore the detail of the Merger below but at this stage, it is sufficient to note the following:
(1) The key statutory provision is Article 127G of the Companies (Jersey) Law 1991 (“the CJL”) as inserted by the Companies (Amendment No. 6) (Jersey) Law 2002 (“the 2002 Amendment”). It reads as follows:
“127G Completion of merger
(1) Upon the delivery to the registrar in accordance with Article 127F of the documents to which that Article refers the registrar shall, if those documents comply with that Article, register the merged company and issue to it a certificate of incorporation under Article 9.
(2) Upon the issue of the certificate of incorporation —
(a) the merging companies are merged and continue as one company as provided in the merger agreement or, in the case of a merger under Article 127C, the resolutions approving the merger;
(b) all property and rights to which each merging company was entitled immediately before the certificate of incorporation is issued become the property and rights of the merged company;
(c) the merged company becomes subject to all criminal and civil liabilities, and all contracts, debts and other obligations, to which each of the merging companies was subject immediately before the certificate of incorporation is issued; and
(d) all actions and other legal proceedings which, immediately before the certificate of incorporation is issued, were pending by or...
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Trust Essentials: December 2023
...trustee mergers: the Jersey perspective The recent English case of USAF Nominee No. 18 Limited & Ors v Watkin Jones & Son Limited [2023] EWHC 1880 (TCC) considered a number of preliminary Jersey law related issues. This included whether, by reason of a merger in 2009 under Jersey law, there......