Pathway to Relief & Anor v Shvan Abbas Ali & Anor
[2024] EWHC 1284 (Ch)
South Bank Hotel Management Company Ltd v Galliard Hotels Ltd & Ors
14 October 2024
[2024] EWHC 2484 (Ch)
High Court
A hotel owner sold rooms but kept the annex, claiming it wasn't part of the deal. The court said the contract included the annex, but the case was too old for most claims to succeed. The annex rent was fixed, and the owner has to pay back rent.
Key Facts
- •Dispute centers on an annex building to the Park Plaza County Hall Hotel.
- •Lodgeshine Limited claims rent arrears from South Bank Hotel Management Company Limited (SBHMC) under a 2008 underlease.
- •SBHMC counters that the underlease was part of a fraudulent "Annex Lease Scheme" by the Galliard group.
- •Galliard developed the hotel, selling individual rooms to investors and promising eventual freehold ownership.
- •The scheme's structure involved a freehold sale contract (FSC) between Galliard Hotels and SBHMC.
- •The dispute hinges on whether the FSC included the annex.
- •Galliard Hotels granted a 999-year lease of the annex to Lodgeshine, who then underleased it to SBHMC.
- •SBHMC claims the Annex Lease Scheme was fraudulent interference with its property rights.
- •SBHMC brings eight claims against various defendants, including breach of trust, breach of contract, and conspiracy.
- •Defendants argue the FSC was never intended to convey the annex to SBHMC.
Legal Principles
Contractual interpretation considers both wording and factual background to determine objective intention.
ABC Electrification Ltd v Network Rail Infrastructure Limited [2020] EWCA Civ 1645
Subjective intentions are inadmissible, but the overall aim of the transaction is relevant.
Wood v Capita Insurance Services Ltd [2017] AC 1173
Strong presumption that commercial parties do not intend "something for nothing".
Virgin Aviation TM Ltd v Alaska Airlines Inc [2024] EWCA Civ 622
Corrective construction corrects mistakes in a contract's wording if a clear mistake and the correction are evident.
Chartbrook v Persimmon Homes Ltd [2009] 1 AC 1101
Rectification requires a shared common intention at the time of contract execution, mistakenly omitted from the document.
FSHC v GLAS Trust Corp Ltd [2020] Ch 365
Deliberate concealment of a fact relevant to a claim postpones the limitation period.
Limitation Act 1980, s32(1)(b)
Actions against trustees for fraud or recovery of trust property are not subject to limitation periods.
Limitation Act 1980, s21(1)
Dishonesty is assessed by first determining the individual's subjective belief and then applying objective standards of ordinary decent people.
Ivey v Genting Casinos (UK) Ltd [2018] AC 391
A tenant is estopped from disputing their landlord's title.
Woodfall on Landlord & Tenant
For a company to validly execute a deed, it must be signed by authorized signatories.
Companies Act 2006, s44
Outcomes
The FSC is construed as transferring the entire freehold, including the annex.
The clear language of the FSC, combined with the factual background, indicates an intention to transfer the entire freehold. Corrective construction is not applicable as there is no clear mistake.
The Rectification Claim fails.
No outward expression of accord exists to support the alleged common intention to exclude the annex from the FSC.
The claims based on deliberate concealment fail.
No defendant deliberately concealed the Annex Lease Scheme or the FSC.
Most claims fail on limitation grounds.
The primary limitation periods expired before the claims were issued, and the statutory extensions do not apply.
The Room Lease Claim fails on limitation grounds.
While Clause 9 imposed a continuing obligation, the breach was not continuing.
The Lease and Underlease are validly executed.
Section 44(5) of the Companies Act 2006 deems the documents duly executed in favour of the purchasers.
The Underlease is rectified to correct the RPI calculation for rent increases.
Mr Conway acknowledged a mistake in the RPI calculation.
Lodgeshine’s claim for unpaid rent succeeds.
SBHMC's defenses based on the invalidity of the Lease and Underlease failed.
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