S Franses Limited & Anor v Block 6 Ashley Gardens Roof Gardens Limited & Ors
[2023] EWHC 2880 (Ch)
Valbonne Estates Limited v United Homes Limited
18 April 2024
[2024] EWHC 876 (Ch)
High Court
A company tried to buy a pub but the seller secretly sold it to another company. The court said the first company might still win because the seller messed up and should have gotten permission from the landlord for the sale. The judge wasn't sure who was right, so there will be a full trial.
Key Facts
- •Valbonne Estates Ltd (Valbonne) contracted to buy the Beckton Arms from Cityvalue Estates Ltd (Cityvalue) in 2015, subject to the landlord's (London Borough of Newham) consent.
- •Cityvalue subsequently sold the property to United Homes Ltd (UHL) for a significantly higher price without obtaining Newham's consent.
- •A Beth Din arbitration awarded the property to Valbonne, but the transfer didn't happen due to unresolved consent issues.
- •Valbonne sued UHL, claiming UHL holds the property on trust for Valbonne.
- •The main legal question: Can a contract for lease assignment, requiring landlord consent, be specifically enforced before consent is given?
Legal Principles
A constructive trust arises in favor of a purchaser of land if and only if a court would grant specific performance of the contract.
Howard v Miller [1915] AC 318
Landlord's consent to lease assignment is a condition subsequent; the contract is binding immediately but terminable if the condition isn't met.
Megarry and Wade, The Law of Real Property, 10th edn at 14-007, 14-008; Lehmann v McArthur (1868) 3 Ch App 496
Specific performance may be granted even without landlord consent if the court is satisfied the landlord would have no grounds to object.
Hyde v Warden (1877) 3 Ex D 72
The court won't enforce a doubtful title; the test is whether the landlord's objection is so unreasonable that litigation is unlikely.
Re Marshall and Salt's Contract [1900] 2 Ch 202
A purchaser acquires an equitable interest in land upon exchange of contracts, even if subject to a condition subsequent; but this interest isn't coterminous with the right to specific performance.
London and South Western Railway Company v Gomm (1882) 20 Ch D 562; Gordon Hill Trust Ltd v Seagall [1941] 2 All ER 379; Chattey v Farndale (1998) 75 P & CR 298
For specific performance, a claimant must be ready, willing, and able to perform their obligations.
Mugalsingh v Juman [2015] UKPC 38
Outcomes
UHL's application for summary judgment dismissed.
Valbonne has a realistic prospect of showing specific performance would have been granted as at 4 November 2020, considering the objective facts and Cityvalue's defaults.
Valbonne's application to amend particulars of claim granted (except for claims in unlawful means conspiracy and procuring breach of contract which need further particularization).
The amendments are justified except for the insufficiently particularized claims.
Beckton to be joined as a party.
UHL did not oppose this given the dismissal of their summary judgement application.