Valbonne Estates Ltd v United Homes Ltd
| Jurisdiction | England & Wales |
| Judge | Master Brightwell |
| Judgment Date | 18 April 2024 |
| Neutral Citation | [2024] EWHC 876 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: PT-2021-000144 |
[2024] EWHC 876 (Ch)
Master Brightwell
Case No: PT-2021-000144
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Jennifer Meech (instructed by Howard Kennedy LLP) for the Claimant
Edward Levey KC and Jonathan Chew (instructed by Lennons Solicitors Ltd) for the Defendant
Hearing dates: 13 and 14 November 2023
Final written submissions: 21 December 2023
Approved Judgment
This judgment will be handed down remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:00am on Thursday 18 April 2024
The principal issue raised on the applications before the court is the circumstances in which a contract for the assignment of a lease, containing a requirement for the consent of the landlord to any such assignment, is capable of being specifically enforceable before that consent has been given.
The claim concerns the leasehold interest in the property known as the Beckton Arms, Beckton Road, London E16 1PY (“the Property”). The freeholder is the London Borough of Newham (“Newham”). By a contract of sale dated 14 January 2015 (“the 2015 Contract”), Cityvalue Estates Limited (“Cityvalue”) entered into a contract for the sale of the Property to the claimant (“Valbonne”), for the price of £495,000. The contract provided for a deposit of £24,750, with a stipulation that 10% of the purchase price at all times remained due. The stated Completion Date was 27 February 2015.
Clause 11 of the 2015 Contract provides that the agreement is subject to four documents being provided at least 5 days before the Completion Date. The third of these documents is ‘Consent in writing from the London Borough of Newham to the sale of the Property to the Buyer’. It is common ground that this consent was required under the terms of the lease concerning the Property but no copy of that lease is before the court. Clause 12 gives a right to rescind the agreement if the required documentation (i.e. to include Newham's consent) was not provided by [ blank] 2015. It was Valbonne's position in the Beth Din proceedings referred to below that this date is to be read as 31 December 2015.
The background was further explained by Bacon J in a judgment dated 9 March 2021 ( [2021] EWHC 544 (Ch)), in which she set aside an injunction obtained by Valbonne against the defendant (“UHL”) for material non-disclosure:
‘4. Valbonne and Cityvalue are both companies owned by members of the ultraorthodox Jewish community in North London. The leasehold interest in the disputed property was until at least November 2020 owned by Cityvalue.
5. …. One of the conditions for completion [of the contract for the sale of the Property] was, however, that consent to the assignment should be obtained from the freeholder, the London Borough of Newham. Due to difficulties in obtaining that consent the purchase was not completed, and there was then a dispute as to whether the contract had been rescinded. Among other things, the dispute raised the issue of whether Cityvalue had exercised reasonable endeavours to obtain the consent of Newham. In August 2015, with the dispute unresolved, Valbonne registered a Unilateral Notice on the title of the property, which provided notice that there was a contract for sale between Valbonne and Cityvalue.
6. In 2018, having failed to negotiate a settlement of their dispute, Valbonne and Cityvalue agreed that the dispute would be subject to arbitration before the Beth Din of the Union of Orthodox Hebrew Congregations (also known as the Kedassia Beth Din; for convenience I will simply refer this as the “Beth Din”). The arbitration agreement was signed by Mr Halpert, a director of Valbonne, and Mr Haut on behalf of Cityvalue. The Beth Din arbitration panel consisted of three Jewish halachic judges known as Dayanim, one of whom was Dayan Schwarcz.
7. Meanwhile it appears that in 2017 Cityvalue entered into an option agreement with UHL (a non-Jewish buyer) giving the latter an option to purchase the property for a far higher sum of over £2m. Valbonne discovered this in 2019 during the course of the Beth Din arbitration process.
8. On 1 October 2020 the Beth Din concluded the arbitration with a decision finding that Valbonne was entitled to complete on the purchase; that it had to provide the completion funds within 28 days; and that Cityvalue was then to transfer the property to Valbonne. That decision was provided in writing to the parties in Hebrew, and has subsequently been translated into English. I will refer to this as the First Award.
9. For various reasons – again apparently connected with the consents required from Newham – the funds were not transferred by Valbonne within the 28 day deadline, and on 19 November 2020 there was a further hearing of the Beth Din at which representatives of both Valbonne and Cityvalue were present. Those included Mr Margulies on behalf of Valbonne and Mr Haut on behalf of Cityvalue. In addition Mr Spitzer, the solicitor assisting Valbonne with the arbitration proceedings, attended remotely via video link. That hearing resulted in an oral decision which was not ever put in writing by the Beth Din. I will refer to this for convenience as the Second Award, although as I will explain below the effect of this decision is disputed in various respects. What is not disputed is that the Second Award purported to decide that Valbonne should pay over to the Beth Din the sum of £500,000 by way of completion funds for the purchase of the property, following which Cityvalue was required to provide Valbonne with a TR1 transferring the property to it.
10. The representatives of Cityvalue failed to disclose to the Beth Din, at the hearing on 19 November 2020, that Cityvalue had in fact already signed a TR1 form on 4 November 2020 transferring, or purporting to transfer, the property to UHL. The Beth Din was only informed of this subsequently, although the date on which it was told that is unclear.
11. Notwithstanding that signed TR1, on 20 November 2020 the solicitors for Cityvalue wrote to the solicitors for Valbonne saying “My client has informed me that your client must first send the deposit to the Beis Din and he will then honor his obligations”. On 23 November 2020 Valbonne duly deposited the £500,000 completion funds with the Beth Din. No TR1 was, however, forthcoming from Cityvalue; instead there was then an exchange of emails between the respective solicitors for the parties (Mr Spitzer for Valbonne and Mr Grunhut for Cityvalue) as to the conditions under which the completion funds would be released to Cityvalue.
12. On 29 November 2020, with that point still unresolved, Mr Halpert was told by Dayan Schwarcz that the Beth Din had learned that Cityvalue had purportedly transferred the property to UHL and had signed a TR1 making that transfer. The next day the solicitors for Valbonne requested the urgent return of the completion funds from the Beth Din. Those funds were returned to them on 1 December 2020.
13. The Beth Din then issued a further written decision on 3 December 2020 which I will refer to as the Third Award. Again, this was issued in Hebrew and was subsequently translated into English. The Third Award recorded that Cityvalue had informed it that a TR1 had been signed in favour of a non-Jewish buyer, and that the Beth Din therefore did not have the power to enforce “anything in this matter”. The Beth Din therefore stated that Valbonne could bring proceedings against both UHL and Cityvalue in the secular courts, but that any claim for damages against Cityvalue had to be pursued in the Beth Din.’
It further appears that, on 4 November 2020, UHL entered into an agreement with a company known as Beckton Development Limited (“Beckton”), for the onward assignment of the interest in the Property. Beckton is the current registered proprietor of the Property. An office copy entry for the registered title shows that it was registered as the proprietor on 15 April 2021, and paid £7 million for the transfer to it (whereas according to a TR1 in evidence UHL appears to have paid Cityvalue £1.1 million for its acquisition of the Property). UHL had first been registered as the owner of the Property, on 10 December 2020.
The issue of Newham's lack of provision of consent to an assignment of the Property from Cityvalue to Valbonne arose during the course of the Beth Din proceedings. After the making of the First Award on 1 October 2020, Valbonne's solicitors wrote to the Beth Din, saying that, ‘…at the heart of these proceedings was [Cityvalue's] failure to provide a licence to assign from the freeholder, who is the local council. We are now liaising with the council's lawyers in this regard on our client's behalf, and we cannot be sure that the licence will be provided to us in the coming days, or even weeks.’
It is common ground that, as at 4 November 2020, Newham had not given consent to the assignment of the Property to Valbonne. The effect of that lack of consent upon the equitable rights of the parties in the Property, and the (disputed) degree of uncertainty as to whether such consent would in due course be provided, are at the heart of the present application.
In these proceedings, issued on 17 February 2021, Valbonne seeks an order declaring that UHL holds the Property on trust for Valbonne, and setting aside the sale of the Property by Cityvalue to UHL which (purportedly) took place on 4 November 2020. A claim is also pursued against UHL for compensation for dishonest assistance with a breach of trust by Cityvalue, and for damages for an unlawful means conspiracy and for procuring a breach...
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