Donovan and another (Respondents) v Prescott Place Freeholder Limited and others (Appellants)

Hearing listed

Case summary
Appeal

Case summary

Case ID

UKSC/2024/0072

Parties

Appellant(s)

(1) Prescott Place Freeholder Limited (2) Thomas Philip Threlfall (3) Ben Freeman (4) Elena Blanca Baccini (5) Kimberley Sum (6) Esther Carragher (7) Anne Camilla Frances Darling (8) Edwina Mary Gillian Barker

Respondent(s)

Joseph Donovan

Together Commercial Finance Limited

Issue

Does a notice served by tenants to a landlord under section 12B of the Landlord and Tenant Act 1987 (“LTA 1987”) and/or an order issued under section 19 of the LTA 1987 confer to the tenants a proprietary interest in the property the subject of the notice or order? In proceedings to give effect to the service of a section 12B notice and/or the issuance of a section 19 order, when does the assertion by a third party of a beneficial interest in the property the subject of the notice or order constitute an abuse of process? Can a beneficial owner of a property which is subject to a section 12B notice and/or section 19 order be injuncted from disposing of the property other than in accordance with the notice and/or order?

Facts

On 5 July 2004 the respondent’s brother acquired the freehold of the property known as 34-36 Prescott Place, Clapham, London (the “Property”) and executed a deed declaring it to be held on trust for the appellant. The Property was redeveloped in or around 2006 into residential flats. In 2013 long leases of those flats were granted to various tenants (“the Tenants”). On 7 May 2014, the respondent’s brother executed a transfer of the freehold title to Mr Constantin Batin which was registered at HM Land Registry with a deemed date of registration of 29 May 2014. The respondent alleges that pursuant to a Deed of Trust allegedly exercised at the time, Mr Batin now holds the freehold on trust for him. In 2017 Together Commercial Finance Limited advanced £950,000 to Mr Batin and the respondent which was secured on the Property by way of first legal charge dated 29 August 2017 and registered at the Land Registry on 11 September 2017. On 9 November 2018, the Tenants served notice on Mr Batin under section 12B(2) of the Landlord and Tenant Act 1987 (“LTA 1987”) requiring him to transfer the freehold interest to their nominated entity, Prescott Place Freeholders Limited. After Mr Batin failed to comply, the Tenants applied to the county court to make an order pursuant to section 19 LTA 1987 requiring the transfer to be effected on such terms as the First-tier Tribunal (Property Chamber) (“the FTT”) orders. The respondent’s application to participate in those proceedings was refused on the basis that he had known about the proceedings for some time and had failed at various opportunities prior to that to make the necessary declarations of trust. The county court granted the section 19 order, after which the Tenants issued proceedings in the FTT to determine the terms of transfer. The respondent did not apply to be joined to those proceedings. Before the FTT proceedings were concluded, the Tenants noticed ‘for sale’ signs on some of the flats in the Property. Accordingly, the Tenants sought an injunction in the High Court restraining sale of the flats and restraining the registration of any purported interest in the Property which would prevent it from being transferred to the Tenants free of encumbrances. Interim injunctions were granted without notice to the respondent. When the respondent and Mr Batin were informed of the interim injunctions, the High Court ordered a return date for all parties to attend. Together Commercial Finance Limited, which has a charge over the Property, was joined to proceedings as it sought to enforce the respondent’s outstanding debt. At the substantive hearing in the High Court, the respondent sought to argue that the Property was held on trust for him but the judge found his arguments to be an abuse of process and concluded that the Property was not held on trust for him. The respondent’s appeal to the Court of Appeal was allowed and the injunctions were lifted. The Tenants now appeal to the Supreme Court.