Avon Grounds Rents Limited v Kirstie Ward
[2023] UKUT 88 (LC)
Robert Brown v Frazer Ulrick & Anor
16 July 2024
[2024] EWHC 2041 (Ch)
High Court
A landlord's tenant company, in liquidation, made major unauthorized changes to his house. The liquidator rejected the landlord's claim for repairs. A judge reviewed the evidence and ruled that the landlord could get the money to fix the house because the changes were big and important, not just minor issues. The judge also said the landlord could get money for the time he couldn't use his home, but not for other losses. The cost of the lawyer will be decided later.
Key Facts
- •Robert Brown (Applicant) appealed the liquidator's rejection of his £277,397 proof of debt against S.A.L. Holdings Ltd (Respondent 2), the only creditor in its liquidation.
- •The debt stemmed from S.A.L.'s breach of lease covenants, resulting in substantial alterations to Brown's property.
- •S.A.L.'s director and sole shareholder, William Wells, used the company as a vehicle to rent the property and did not inform Brown of the liquidation.
- •The alterations significantly changed the property's style, and Brown sought the cost of restoration.
- •The liquidator rejected the proof of debt due to insufficient evidence, unreasonable cost, and non-recoverable losses.
- •Brown also applied to remove the liquidator under Section 171(2) of the Insolvency Act 1986.
Legal Principles
In appeals under Insolvency Rule 14.8, the court reconsiders the proof of debt de novo.
Insolvency (England and Wales) Rules 2016, Rule 14.8; McCarthy v (1) Tann (2) Stevens
Liquidators act in a quasi-judicial capacity when deciding on proofs of debt.
Menastar Finance Limited [2003] BCC 404
The burden of proof lies with the appellant.
Re a Company no 004539 of 1993
The usual measure of damages for breach of contract is expectation loss, but diminution in value may apply if reinstatement costs are disproportionate.
Ruxley Electronics and Construction Ltd v Forsyth [1996] A.C. 344; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8
A contractual entitlement to costs takes precedence over rules preventing cost recovery.
Chaplair Ltd v Kumari [2015] EWCA Civ 798
Untested paper evidence can be disregarded if manifestly incredible.
Long v Farrer [2004] EWCH 1774 (Ch); Re Burden Group Ltd: Fielding v Hunt [2017] EWHC 245 (Ch)
Outcomes
The liquidator's rejection of the proof of debt was set aside.
The court found Brown's evidence credible, demonstrating S.A.L.'s responsibility for the alterations and the reasonableness of the restoration costs.
The proof of debt was approved for £156,845 (remedial works), £31,369 (VAT), and £10,500 (loss of amenity during works).
The court accepted the cost of remediation as reasonable, considering the significant stylistic changes and Brown's intention to carry out the work. Loss of rental income and other claims were rejected.
Costs recoverable under the Lease will be assessed separately.
The court found that costs incurred by Brown in enforcing the lease were recoverable as a debt, subject to a review of their reasonableness.