The Property Law Blog

The co-founder of ready meals giant Bakkavör [see the fetching tulip day float above] is being chased in the High Court for the repayment of a loan used to purchase a £12m home in Knightsbridge.

London-based Icelandic tycoon Lydur Gudmundsson is being sued over a £12.8m loan from Kaupthing Bank, which he took out in April 2006 to buy the property in Cadogan Place, London SW1.

Pillar Securitisation, one of two companies that emerged from the collapse of Kaupthing in 2008, alleges that the loan, which was secured through Gudmundsson's British Virgin Islands-based company Barello, included a personal guarantee from the tycoon.

Pillar claims that it demanded the repayment of the loan in November 2009 but has not yet received any moneys.

It is seeking a payment of £9.3m, which comprises the remainder of the £12.8m plus interest.

Gudmundsson denies that the amount is due.

In his defence, he claims that no reasonable notice has been given for repayment and that "no valid demand has been issued in respect of the amounts alleged to be due". Further, he maintains that he is "not obliged to pay any sum under the alleged guarantee" and that Barello had not defaulted on the loan.

Photo by stargazeruk via Flickr.

Gerald Ronson's business empire has joined the wave of companies taking legal action against HM Revenue & Customs (HMRC) because they believe they have paid too much tax.

Ronson's Heron Corporation, Heron Land Developments and Heron Motor Group have filed a joint legal claim for "in excess of £300,000" of overpaid VAT and interest, relating to tax paid between 1973 and 1994.

The claim, signed off by Heron's deputy chief executive, Jonathan Goldstein, argues that interest on the overpaid VAT should be calculated on a compound basis at a commercial rate, taking in all interest accrued, rather than on a simple basis.

It is one of many similar claims that have been made by UK businesses, for which the government department has made a £7.2bn provision.

Last year, HMRC said that it had received 13,000 claims following a series of defeats in legal disputes with taxpayers.

Photo by Amorette Dye via Flickr.

It could have been a very inauspicious start to international law firm Pinsent Masons' occupation of Greycoat's entire 197,000 sq ft City development, 30 Crown Place, EC2.

Pinsent had been searching for three years for a prominent City base for its 600 London-based staff and operations, and negotiations had been protracted.

But when it looked like the deal was getting a bit wobbly last month the firm decided to act. Only one week before the lease was due to be signed, it filed a high court claim against its prospective landlord which it said was "to seek clarification of some technical points".

The action worked, and the deal went ahead without a further hitch.

Photo by Nick Treby via Flickr.

Not a week goes by at the winding-up court in London without one or more football teams being summoned to answer winding-up petitions from their creditors [far more often than not - HMRC].

However, could property deals be their saviour?

League One football club Southend United and Championship side Cardiff City FC were this morning granted extensions to pay their debts after the High Court heard that property deals could save them from being wound-up.

Southend was granted a 35-day extension by High Court Registrar Ms Christine Derrett, in the Winding-up Division of the Companies Court, after she was told that the club's development partner Sainsbury's would be providing funds which would clear all debts.

Sainsbury's plans to build a store on the site of the club's current stadium with that development providing the funding needed for a new 22,000-seat stadium.

In a separate application, Cardiff City FC was granted a 56-day extension after the court heard that a Malaysian investor was committed to providing substantial funds to clear the £1.9m debt to HMRC.

Last month club shareholders backed plans to sell two plots of land around its stadium to rescue the club from its financial difficulties.

Unfortunately for poor Chester City, which has a 126-year history but was recently kicked out of the Football Conference league, there were no property deals on the horizon to woo Registrar Derrett and a winding-up order was granted.

It has been noted that the Registrars have seemed quite soft on football clubs - however with the threat of kidnap by unhinged mascots ever present in such cases I can see why.

Photo by Karen Blaha via Flickr.

Here is an interesting letter Estates Gazette recently received from the president of the National Association of Estate Agents on OFT proposals to provide legal exemptions for Tesco to encourage its involvement in the UK property market.

"The Office of Fair Trading's proposals (20 February, p30) to change the laws under which properties are sold in the UK, to favour the involvement of Tesco, both negates and brings into question the OFT's role of consumer protection in the UK.

Under the Property Misdescriptions Act 1991, it is a criminal offence for estate agents to make false or misleading statements regarding properties on the market. The OFT is advocating a change in this law to allow certain corporations, such as Tesco, to be exempt.

This would place the burden of responsibility on the seller to ensure that all information on the marketing of the property is accurate.

Presumably, the OFT will also excuse the supermarket chain the bother of complying with the Money Laundering Act and having to provide an energy performance certificate or home information pack.

For a senior director of the OFT to advocate the sweeping aside of carefully considered legislation - aimed at consumer protection, energy conservation and anti-money laundering - defies belief.

The average homeowner cannot be expected to have the skills to assess the state of their own property, nor navigate their way through the complex regulations that they would need to abide by to sell a property.

The National Association of Estate Agents has always been in favour of protecting consumer rights. But these OFT proposals have been ill-thought-through and do not take into account the complexities of the buying and selling process.

The NAEA has been calling for more stringent regulation of estate agents, to offer additional and necessary protection for consumers - which is why we will be introducing our own licensing scheme for NAEA members later in the year."

Gary Smith, president, National Association of Estate Agents, Arbon House, 6 Tournament Court, Edgehill Drive, Warwick, Warwickshire CV34 6LG

Photo by Jordi Martorell via Flickr.

In the 9 March 1863 edition of Estates Gazette was included this call by barrister Tenison Edwards of Inner Temple for everyone to give the then recently enacted Land Registry Act 1862 a good cuddle:

"Mr Tension Edwards' book is written to meet the opposition which the legal profession have, as he alleges, made to the Act brought in and passed by Lord Westbury.

We must notice, as most important, the objections which Lord St Leonards, the greatest legal authority of the day, makes: 1st, that registration will be attended with great expense both to the public and to individuals; 2nd, that it will cause a full disclosure on the record of every man's dealing with his estate; and 3rd, that no man can safely apply for registration who does not first ascertain that he has such a title as an unwilling purchaser could be compelled to accept.

Mr Edwards says: 'Every one must admit that certainty of title to land, facility of dealing with it and economy in dealing with it are three objects most desirable ... against which no sound reasons can be urged, except the dictates of blind prejudice and short-sighted self-interest.

'That the Act will not become a dead letter I have no fear.'"

Unfortunately the Act, the first attempt at a system of land registration, was later proved to be seriously flawed and ineffective and, following further attempts in 1875 and 1897, the present system was brought into force by the Land Registration Act 1925 as amended by the Land Registration Act 2002 [well, that is what wikipedia says].

Photo by Neil Howard via Flickr.

This week in Practice & Law we have Ricahrd Hanson, Damian Hyndman and Peter Williams of Evershed warning that in the light of disability discrimination legislation service providers must take positive action to ensure that disabled people can access services.

That is followed by Nora Gillen and Peter Williams [again!] of Eversheds considering the implications for property and investment of upward-only rent reviews being neutralised in Ireland and a close look at the Tory Planning Green Paper in two articles by Michael Gallimore of Lovells LLP and Richard Bull of Winkworth Sherwood respectively.

A really interesting decision in the Court of Appeal was handed down yesterday on the fallout from the Buncefield oil depot explosion in 2005.

Lord Justices Waller, Longmore and Richards ruled that Shell is entitled to claim for its "pure economic loss" of lost profits after fuel stored at the depot was destroyed in the explosion, which occurred as a result of French oil group Total's negligence.

Total argued that Shell was not entitled to compensation because it was not the legal owner of the pipelines and storage facilities it used at Buncefield and therefore fell foul of the received legal wisdom that only the legal owner of a property can claim compensation for damage to property caused by negligence.

Overturning the March 2009 decision of high court judge Mr Justice David Steel dismissing Shell's claim, the Court of Appeal ruled that Shell was the "beneficial owner" of the facilities, which is sufficient ground to claim damages for loss of business caused by the fire.

With a potential claim by Shell of around £100m I imagine this decision will be flittering its way towards the Supreme Court in the not too distant future.

Photo by James Butler via Flickr.

Another story this morning illustrating the damage that litigation can wreak was the news that Mission Capital could face AIM expulsion unless it buys new investment properties before the end of the year.

Announcing a loss before tax of £1m in preliminary results today, the company said its listing would be suspended for up to six months on 31 July and cancelled on 31 December if it failed to implement an investment strategy.

Chairman Philip Goldenberg said: "The board has been actively investigating potential investments, but has not yet identified one which it considers appropriate to recommend to shareholders. It will continue its efforts in this regard and in doing so will be mindful of the foregoing deadlines."

Goldenberg said the sale of subsidiary Karspace Management for £1.3m last July provided an impetus for the settlement of its dispute with former executive directors Neil Sinclair and Emma Sinclair who had sued Mission in early 2008, claiming that they had been ousted in a "sudden and brutal coup".

However, Goldenberg said the company would have "readily agreed" to settle the dispute a year earlier with "far less destruction of shareholder value".

In the year to 30 September 2009 the company saw its asset value per share fall to 1.32p, from 3.19p in 2008.

Photo by destempsansciens via Flickr.

The news this morning that Cipriani London, the Italian restaurant frequented by celebrities including Sir Elton John and Naomi Campbell, has gone into administration illustrates just how high the stakes can be when you take on the risk of litigation.

The administration follows soon after the family lost a Court of Appeal battle with Orient-Express Hotels, owners of the Hotel Cipriani in Venice, over the Cipriani trademark earlier this month.

The Cipriani family said in a statement: "Cipriani (Grosvenor Street) Ltd, a successful enterprise free of any debt outside the liabilities resulting from the Orient-Express Hotel litigation, is filing for administration to protect its assets."

"The administration process will continue while the company pursues any appeal to the Supreme Court in the UK litigation and trademark dispute against Orient Express Hotels at OHIM, the Office of Harmonization in the Internal Market (EU).

"Service will continue as usual at our renowned London restaurant, which will operate under a new name by April 24. Operations around the world remain unaffected."

Photo by Brooke-Lynn via Flickr.