Top 3 Cases August 2024 02 September 2024
In this series of articles, we aim to highlight 3 of the most interesting cases in our field decided in the past month. This month: when a common intention constructive trust prevails over an express declaration; errors in the right to manage procedure; and strike out for abuse of process.
Our readers in the telecoms world are likely to already have come across the Upper Tribunal’s decision in EE v AP Wireless II (UK) Ltd [2024] UKUT 216 (LC) (‘Vache Farm’), in which the Tribunal reconsidered the approach to greenfield rents, so this month’s digest features some other cases you might have missed. A brief note on Vache Farm can be found here.[1]
1. Ann Nilsson v Collette Cynberg [2024] EWHC 2164 (Ch)
Summary
The High Court refused an application for permission to appeal against a finding property was beneficially owned entirely by a former wife.
A husband and wife bought a property together and expressly declared that they held it on trust for themselves as joint tenants. They separated, and reached an informal agreement that the property would be the wife’s. The husband moved out and the wife took over all expenditure, including paying for renovation works.
Approximately ten years after they had separated, the couple formally divorced. Shortly thereafter, the ex-husband became bankrupt. His trustees in bankruptcy claimed that they had an interest in the property, including on the basis that no common intention constructive trust entitling the former wife to the full beneficial interest in the property could have arisen in a situation where there was an express declaration of trust.
At first instance, the trustees’ claim was unsuccessful. The High Court refused permission to appeal on the constructive trust point, and determined other grounds of appeal against the trustees.
Why it’s important
This case provides helpful clarity on a point arising out of the judgment in Stack v Dowden [2007] UKHL 17, in which Baroness Hale stated that ‘an express declaration of trust is conclusive unless varied by subsequent agreement or affected by proprietary estoppel’. It is now apparent that ‘subsequent agreement’ can include an informal common intention constructive trust, and need not comply with the provisions of s.2 Law of Property (Miscellaneous Provisions) Act 1989.
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2. A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd [2024] UKSC 27
Summary
The Supreme Court determined that the procedure for claiming the right to manage had not been invalidated for failure to serve the notice of claim on an intermediate leaseholder.
The notice of claim had been served on the freeholder and on a management company which had underleases of various communal areas. However, the notice was not served on the appellant, which held intermediate leases of those communal areas but without any management responsibilities.
The Court determined that the effect of the failure to comply with the statutory provisions was that the transfer of the right to manage was voidable (not void) at the instance of the non-served party. In this case, the other substantive arguments by which the appellant had sought to resist the transfer of the right to manage had already been determined against it at first instance; the appellant having therefore lost nothing by reason of the non-service, and the matter having otherwise been determined by the Tribunal, the transfer would stand.
Why it’s important
This case is significant in the context of right to manage claims: while it is always desirable to comply with every statutory requirement, there will inevitably be cases where that has not been achieved, not least where (as here) it may not be possible to identify relevant interests from the register. The Supreme Court’s decision in favour of the RTM company gives effect to the policy behind the legislation, which was intended to make it as simple as possible for leaseholders to take over management.
The effect of the decision is to approve the outcome (but not all of the reasoning) of the decision in Elim Court RTM Company Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89, in which the freeholder resisted the transfer of the right to manage on the basis that another interest holder had not been served. This case shows that the judgment in favour of the RTM company was correct (because the transfer would have been voidable at the instance of the freeholder, not the RTM company), but not on the basis that, as the Court of Appeal had suggested, the non-served party had no management responsibilities.
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3. Craig Lloyd v Richard Hayward [2024] EWHC 2033 (Ch)
Summary
The High Court dismissed an application to strike out a claim for abuse of process on the grounds that the claimant had no genuine intention of taking the claim to trial (known as ‘Grovit abuse’, after Grovit v Doctor [1997] 1 WLR 640).
The underlying claim related to a joint venture for development of a business park. The Claimant made an application for pre-action disclosure in 2018, which was then followed by an 18-month period of quiet. Proceedings were issued in 2020 and proceeded until directions questionnaires were filed in January 2021. The matter was then stayed for a month, after which the court took no further action. There followed odd pieces of correspondence between the parties, with long silences in between, until the Claimant wrote to the court in December 2023 asking it to progress the matter, whereupon the court listed a CCMC. The Defendant applied to strike out the claim for abuse of process.
HHJ Keyser KC dismissed the application. There was no abuse of process in this case, but even if there had been, the appropriate response would not have been to strike out the claim.
Why it’s important
HHJ Keyser KC’s judgment contains a comprehensive review of the pre- and post-CPR authorities relating to Grovit abuse, and would be a useful starting point for any practitioner considering making or resisting a similar application.
The judge emphasised that while Grovit abuse is a serious matter, strike out is neither the normal sanction, nor a rare one; the court should consider all of the circumstances and the proportionality of the available responses. On the particular facts of this case, having regard in particular to the existence of a counterclaim (in respect of which similar accusations of delay could be levelled against the defendant) as well as to other factors, there was no abuse, nor would strike out have been appropriate.
[1] Please link - https://www.falcon-chambers.com/news/upper-tribunal-revalues-greenfields
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