[2025] EWHC 2750 (Ch)

The Facts

The Judge set out a factual chronology of the background to the issues which he had to decide in the Judgment, at [1] to [24]. It is difficult to improve on this and Ms Coyle accepted that it was accurate. I gratefully adopt it together with the defined terms and abbreviations which the Judge used in those paragraphs:

“1.The Claimant in this case is Kin Fan Ip, a resident of Hong Kong.

2.

The Defendant is Wilton Student Development (Egerton) Limited, a property development company.

3.

The case concerns Units 705 and 709 Nebula Apartments, Egerton Street, Sheffield (“the Apartments”). Nebula Apartments is a development of student flats.

Chronology

4.

In 2014, the Claimant paid 80% deposits on the Apartments to the then developer, Pinnacle Student Developments Ltd. The flats were about £55,000 each (the Land Registry entries say £55,995), so the Claimant paid approximately £88,000 - £90,000 at that time.

5.

Pinnacle Student Developments Ltd had financial difficulties and were unable to complete the development of the apartments.

6.

A company called Spectrum Buyers Limited was set up to protect the investors. It was granted a charge over the freehold. The Claimant was one of the directors of this company.

7.

In November 2017, the Claimant paid the £22,000 balance of the purchase price (£11,000 per apartment) and was granted long leaseholds of the two flats, albeit without physical possession, as the development had not been completed. The Land Registry documents show that on 3rd November 2017, the Claimant became the owner of 999 year leases of the Apartments from 31st January 2015.

8.

Spectrum Buyers Limited then took possession of the freehold of the block as mortgagees in possession.

9.

On 25th October 2019, following negotiations with potential new developers, the Defendant purchased the freehold from Spectrum Buyers Limited for £1. It was a condition of the Defendant taking over the development that the leaseholders either sold their leases to the Defendant for £22,000 or invested a further £16,000 per apartment towards the cost of completing the development.

10.

On 27th January 2020, the Claimant entered into: i) a loan agreement (“the Loan”) with Simon Roue, Naseema Roue, Adrian Todd, Tak Chai and Anthony Byrne (“the Lenders”) whereby he borrowed £33,087.80 over 5 years to be repaid 25% after 2 years from the drawdown date and 75% after 5 years from the drawdown date; and ii) a mortgage (“the Mortgage”) with Simon Roue, Naseema Roue and Adrian Todd (“the Mortgagees”) to secure the Loan. By this document, the Claimant granted a charge over the Apartments “by way of a legal mortgage” (Clause 3.1.1).

11.

The Defendant’s case is that the loan was drawn down on the same day (27th January 2020) by payment of the amount loaned into an escrow account held with Harborough London. Mr Roue’s evidence was that Harborough London were managing the properties.

12.

On 27th January 2022, on the Defendant’s case, the first instalment was due on the loan. The Claimant didn’t pay.

13.

On 4th March 2022, the Lenders/Mortgagees assigned the loan and mortgage to Cirrus Property Group Limited (“Cirrus”). They had given notice to the Claimant of this assignment by email sent on 3rd March 2022.

14.

On 14th March 2022, Cirrus’ solicitors Birmans wrote to the Claimant advising that, as he had defaulted on the Loan, the full amount of the loan, together with interest and other charges, totalling £43,281.81 was payable. The letter advised that if this sum was not paid by 5pm on 18th March 2022, Cirrus would take possession of the Apartments as mortgagees in possession.

15.

On 18th March 2022, Cirrus took possession of the Apartments and changed the locks.

16.

On 7th July 2022: i) Two Deeds of Surrender were purportedly entered into in respect of the lease relating to apartment 709: a) One signed by the Defendant as both the landlord and tenant; and b) One signed by Cirrus as the tenant and the Defendant as the landlord. Mr Monks signed both documents as a director of the Defendant and the latter document as a director of Cirrus. ii) The Defendant granted a long lease of apartment 709 to Kestutis Mazutavicius for £60,000.

17.

On 11th July 2022: i) Two Deeds of Surrender were purportedly entered into in respect of the lease relating to apartment 705: a) One signed by the Defendant as both the landlord and tenant; and One signed by Cirrus as the tenant and the Defendant as the landlord. Again, Mr Monks signed both documents as a director of the Defendant and the latter document as a director of Cirrus. ii)

18.

On 21st July 2022, the Defendant granted a long lease of apartment 705 to Gabriel Ijomor for £60,000.

19.

On 30th August 2022, Unit 705 was rented to a Kudzai Chuma on an assured shorthold tenancy.

20.

On 6th September 2022, Unit 709 was rented to Sophie Lowe on an assured shorthold tenancy.

The Claim

21.

When the Defendant applied to HM Land Registry to change the register to show that the leases had been surrendered and to withdraw the restriction in favour of the Claimant, the Claimant was given notice by HMLR. This prompted the Claimant to commence proceedings.

22.

On 6th December 2022, the Claimant sought an injunction to prohibit any alteration to the Register in respect of the Apartments.

23.

On 14th March 2023, HHJ Robinson granted this injunction against the Defendant and gave directions for the issue of a Part 7 claim.

24.

The Claimant issued this claim on 25th April 2023 seeking (amongst other things): i) A declaration that the basis in which the Defendant sought to register the change of title was misconceived. ii) A declaration that the surrenders were invalid. iii) A declaration that the Defendant had no right in law to take possession in the manner it did. iv) A declaration that the Defendant has breached the Claimant’s property rights in seizing control of his properties. v) Damages for breach of those property rights and of his quiet enjoyment. vi) An account of rents. Vii) Possession of the Apartments.”

I will refer to the two deeds of surrender dated 7 July 2022 in relation to apartment 709 as “Surrender 1” and “Surrender 2” and to the two deeds of surrender dated 11 July 2022 in relation to apartment 705 as “Surrender 3” and “Surrender 4”. I will also refer to the four deeds of surrender collectively (as the Judge did) as the “Deeds of Surrender”. Finally, I will refer to each apartment as a “Property” and both together as the “Properties”).

The Mortgage

The Mortgage is dated 27 January 2020 and is expressed to be made by deed and between the Respondent (1) and the Lenders as “Security Trustees” (2). Clause 1 contained the definitions and clause 1.1 defined the “Act” as the Law of Property Act 1925. It also contained the following definitions which I adopt:

“Charged Assets all properties, assets and rights of the Borrower charged by this deed;”

“Disposal includes any charge, sale (whether subject to this deed or otherwise), lease, sub-lease, assignment or transfer, or any agreement to enter into any of the foregoing, the grant of an option or similar right, the creation of a trust or other equitable interest in favour of a third party and a sharing or parting with possession or occupation whether by way of licence or otherwise and Dispose and Disposition shall be construed accordingly;”

“Properties means each of the properties described in the Part I of the Schedule together with all buildings thereon and all Fixtures subject to and with the benefit of all rights, easements, covenants, restrictions, stipulations, agreements, declarations and other matters affecting and/or benefiting the same, each a Property;”

“Secured Liabilities all monies, obligations and liabilities, whether actual contingent, now or hereafter due, owing or incurred by the Borrower, in whatever currency denominated, under clause 2 of this deed or under any other provision of this deed and references to the Secured Liabilities include references to any of them;”

Clause 1.2.7 provided that the Borrower, Lenders and the Security Trustees included their respective successors in title and, as Ms Coyle pointed out to me, the Mortgage was assignable by the Security Trustees. Clause 2 contained the covenant for payment and by clause 3 the Respondent as borrower charged the Properties by way of legal mortgage as a continuing security for the payment and discharge of the Secured Liabilities and by way of assignment the proceeds of any Disposal of the Charged Assets. Clause 7 set out the powers of the Security Trustees, clause 8 set out the powers of a receiver and clause 9 dealt with the effect of the Mortgage (my emphasis):

“7.

Powers of the Security Trustees

7.1

The statutory powers of sale and of appointing a Receiver (as extended by this deed) shall arise at any time after the execution of this deed.

7.2

At any time after the Borrower has failed to pay the Secured Liabilities when due, or if requested by the Borrower，the Security Trustees may exercise without further notice on and without the restrictions contained in section 103 of the Act all the powers conferred mortgagees by the Act as varied by this deed and all the powers and discretions conferred by this Charge either by themselves or by a Receiver appointed by them, without first appointing a Receiver or notwithstanding any such appointment.

7.3

The Security Trustees shall have the power to lease, make agreements for and accept surrenders of leases and to grant options on such terms as it may consider expedient and without the need to observe any of the provisions of sections 99 and 100 of the Act.

7.4

The Security Trustees may in their absolute discretion release from this Charge any part of the Charged Assets.

7.5

The Security Trustees may at any time obtain, at the Borrower's expense, an up to date professional valuation of any of the Properties and/or the Business and the Borrower and any Surety shall give the valuer all reasonable assistance to enable it to carry out the valuation and permit it such access to any of the Charged Assets, the assets used in any Surety as it the Business and the records and accounts of the Borrower reasonably requires to conduct the valuation.

8.

Receiver

8.1

At any time after the Security Trustees have demanded repayment of all or any of the Secured Liabilities or if the Borrower requests that a Receiver be appointed then the Security Trustees may by writing under the hand of any director or manager or other authorised signatory for the time being of the Security Trustees appoint any person or persons to be a Receiver of the whole or any part or parts of the Charged Assets and of all the rights of the Security Trustees contained in or conferred by this deed.

8.2

Where two or more persons are appointed to be a Receiver the Security Trustees may in the appointment declare whether any act required or authorised to be done by a Receiver is to be done by all or any one or more of them for the time being holding office and subject thereto any such persons may act jointly and/or severally.

8.3

Any Receiver shall (subject to any limitations or restrictions expressed in the deed or other instrument appointing him but notwithstanding the winding up or dissolution or bankruptcy at any time of the Borrower) have: 8.3.1 all the powers conferred from time to time on receivers by law and/or statute (including the Act); 8.3.2 power (without limitation) to:

(a)

take possession of, collect, get in and give receipts binding on the Borrower for all or any of the Charged Assets and all rents and other income in connection with the Charged Assets whether accrued before or after the date of his appointment in such manner as he thinks fit;

(b)

bring, defend or discontinue any proceedings (including arbitration proceedings) in the name of the Borrower or otherwise as may seem expedient to him;

(c)

carry on, manage and develop the whole or any part of the Business and/or the Charged Assets, and for this purpose to make use of any of the Borrower’s assets which may be on any of the Properties without being liable to compensate the Borrower for such use;

(d)

redeem any security, raise or borrow any money from or incur any liability to the Security Trustees or others on such terms and secure the payment of any money as he may think fit and so that any such security may be or include a charge on all or any of the Charged Assets;

(e)

without the restrictions imposed by section 103 of the Act or the need to observe any of the provisions of sections 99 and 100 of the Act sell, let, surrender or accept surrenders, grant licences or otherwise Dispose of or deal with all or any of the Charged Assets on such terms and conditions as he may think fit in the name and on behalf of the Borrower or otherwise. Any such sale, lease or Disposition may be for any form of valuable consideration and by payable immediately or by instalments spread over such period as he shall think fit and so that any consideration received becomes charged with the payment of all moneys, obligations and liabilities secured by this Deed. Plant, machinery, fixtures, fittings and equipment may be severed and sold separately from the premises containing them and the Receiver may apportion any rent relating to the premises sold without the consent of the Borrower;

(f)

carry out on any of the Properties any unfinished works of building reconstruction, maintenance, furnishing or equipment;

(g)

on behalf of the Borrower remove, store, sell or otherwise deal with any chattels not subject to this Charge without being responsible to the Borrower for any loss;

(h)

promote the formation and trading of companies and arrange for such companies to acquire all or any of the Charged Assets on such terms and conditions as he may think fit;

(i)

make any arrangement or compromise, allow time for payment or enter into, abandon, cancel or disregard any contracts in relation to the Charged Assets as he shall think fit;

(j)

purchase or acquire any land or other property and purchase, acquire, grant or release any interest in or right over land or the benefit of any covenants (positive or restrictive) affecting land;

(k)

make and effect such repairs and improvements to the Charged Assets as he may think fit and maintain or vary insurance cover;

(l)

make any arrangements or compromise which he thinks fit in relation to any lease of all or part of any of the Properties or to any covenants or restrictions relating to any of the Properties;

(m)

insure the Charged Assets and any works and effect indemnity insurance or other similar insurance and obtain bonds and give indemnities and security to any bondsmen;

(n)

appoint managers, agents, officers and employees;

(o)

without any further consent by or notice to the Borrower exercise on behalf of the Borrower all the power and provisions conferred on a landlord or a tenant by any legislation from time to time in force in respect of any of the Properties but without any liability in respect of powers so exercised or omitted to be exercised;

(p)

acquire, renew, extend, grant, vary easements, rights, privileges and licences over or for the benefit of the Charged Assets as he considers expedient; and

(q)

power to do all such other acts and things as may be considered by the Receiver to be incidental or conducive to any of the above matters or powers or to the preservation or realisation of the Charged Assets.

8.4

Any Receiver shall so far as the law allows be deemed to be the agent of the Borrower for all purposes and the Borrower shall be solely responsible for his acts, defaults contracts, engagements, omissions, losses, liabilities, misconduct and remuneration and the Security Trustees shall not be under any liability whatsoever in such regard…

8.8

Neither the Security Trustees nor any Receiver shall be liable to account: 8.8.1 as mortgagee in possession in respect of all or any of the Charged Assets nor be liable for any loss upon realisation whatsoever for which a mortgagee in possession may be liable as such; or 8.8.2 for any money or assets not actually received by it or him whether or not a better price might have been obtained by deferring or advancing any Disposal of the Charged Assets.

9.

Effectiveness of Security

This Charge: 9.9.1 shall remain in full force and effect as a continuing security unless and until the Security Trustees discharge it and shall extend to cover the ultimate balance due from the Borrower to the Lenders notwithstanding there may have been at any time a balance to the credit of the Borrower on any account between the Borrower and the Security Trustees or any other matter or thing whatsoever; 9.1.2 in addition to and shall be independent of every other security which the Security Trustees may at any time hold for any of the Secured Liabilities and may be enforced without the Security Trustees first having recourse to any such security and without taking steps or proceedings against any person; and 9.3 shall not merge with any prior security held by the Security Trustees over the whole or any part of the Charged Assets.”

Clause 11 was headed “Protection for Third Parties” and it provided that no third party was bound to inquire whether any power exercised by the Security Trustee had become exercisable:

“No third party dealing with the Security Trustees or any Receiver or its agents shall whether before, on or after any contract, Disposition or assurance in relation to any Charged Assets in such third party's favour be concerned to enquire whether the Secured Liabilities have become payable or whether the Receiver has been validly appointed or whether any power which the Security Trustees or Receiver purports to exercise has become exercisable or whether any of the Secured Liabilities remain undischarged or to see to the application of any money paid to the Security Trustees or any Receiver nor shall any such third party lending any money to a Receiver be concerned to enquire as to the propriety or purpose of the exercise of such power or as to the application of any money so borrowed.”

Clause 14 was headed “Power of Attorney” and clause 14.1 conferred an irrevocable power of attorney upon the Security Trustees to execute any deeds which the Respondent was required to execute as borrower under the Mortgage:

“The Borrower by way of security and in order more fully to secure the performance of the Borrower's obligations under this deed irrevocably appoints the Security Trustees and the persons deriving title under it and separately with any Receiver jointly and severally to be its attorney for and in its name and on its behalf and as the act and deed otherwise of the Borrower, at any time after the Security Trustees has demanded payment or discharge by the Borrower of the Secured Liabilities, to execute as a deed or under hand (as applicable) and deliver and do all such which the Borrower is required to execute and do under the covenants and provisions contained in this deed and to make any demand upon or to give any notice receipt or discharge to any person owing monies to the Borrower comprised in the Charged Assets and to execute as a deed or under hand (as applicable) and deliver any charges, legal mortgages, assignments or other security and any transfers of securities required to be executed hereunder and generally in its name and on its behalf to exercise all or any of the powers authorities and discretion conferred by or pursuant to this deed or by which may be required or which the Security or statute on the Security Trustees or which may be required or which the Security Trustees or any Receiver shall deem fit for carrying any sale, lease, charge, disposal other dealing by the Security Trustees or any Receiver into effect or for giving the Security Trustees or any Receiver the full benefit of this deed and generally to use the name of the Borrower and to do anything (without prejudice to the generality of the foregoing) which it or he may reasonably deem proper in or for the purpose of exercising any of such powers authorities and discretion.”

Finally, clause 19 was headed “Re-assignment” and it provided that upon payment and discharge of the Secured Liabilities, the Security Trustees would re-assign it to the Borrower:

“Subject to clause 19.1, upon the payment and discharge of the Secured Liabilities the Security Trustees will at the request and cost of the person then entitled to them discharge this Charge and re-assign to such person the Property Rights or such of the same as remain in existence and vested in the Security Trustees.

Schedule 1, Part 1 identified the Properties as apartment 705 and apartment 709 and Ms Coyle submitted that the effect of the Mortgage was to create a first legal charge over both of them. Dr Brown did not dispute this contention. The Mortgage also annexed the official copy of title no. SYK 194507 and the Schedule of Notice of Leases recorded that the leases of both Properties had been registered under separate titles.

By a deed of assignment dated 4 March 2022 (the “Assignment”) the Lenders assigned the benefit of the Loan and the Mortgage to Cirrus. I was not taken to an executed copy of the Assignment but there was no dispute that it was executed in the form in which it appeared in the Appeal Bundle and Dr Brown relied upon its terms. The consideration for the assignment was £1 together with the amount owed by the Respondent to the Lenders at the date of completion (including costs and interest). Clauses 2.4, 2.6 and 2.7 provided as follows:

“2.4

The Assignee shall pay any Realisations to the Assignor within 3 Business Days of receiving the same in payment of the Consideration in accordance with Clause 2.5 below until the Consideration is paid in full.

“2.6

The Assignee shall provide the Assignor within 5 Business Days of the end of each 3 month period following completion with a written summary of all Facilities collected in the preceding 3 months.

2.7

If the Assignee receives any payment in respect of any Facility or any other sum due to the Assignor by way of Consideration or otherwise, it shall hold the payment on trust for the benefit of the Assignor and remit it to the Assignor forthwith on receipt in accordance with clause 2.4 above.”

Ms Coyle told me on instructions from Mr Monks that Cirrus had paid the Lenders £23,657.15 for each of the Properties as Consideration for the assignment. Dr Brown did not contest these figures and I accept them. Ms Coyle did not suggest that Cirrus received or paid any further sums to the Lenders under clause 2.7 and, in particular, that it received the balance of either premium of £60,000 which the Appellant received on the grant of the new leases in July and August 2022. As Ms Coyle pointed out, these were not sums which Cirrus received.

The Deeds of Surrender

Surrender 1

Surrender 1 was expressed to be made by deed and by the Appellant in its capacity as “Landlord” with itself in its capacity as “Tenant”. The deed recited the lease of apartment 709, that the reversion was vested in the Landlord, that the lease itself was vested in the Tenant and that it had been agreed between the Landlord and Tenant that the term created by the lease would be surrendered. Clause 1 then provided as follows:

“The Tenant with full title guarantee hereby surrenders unto the Landlord the residue of the term of years created by the Lease to the intent that the same shall forthwith merge and be extinguished in the reversion immediately expectant on the term.”

Surrender 1 made no reference to the Respondent and he was not expressed to be party to the deed. Nor did the Appellant purport to execute the document or surrender the lease on the Respondent’s behalf or by exercising the power of attorney or pursuant to any power under the Mortgage. The deed was executed by Mr Niall Monks on behalf of the Landlord in his capacity as a director of the Appellant and on behalf of the Tenant in the same capacity.

Surrender 2

Surrender 2 was in the same form except that it was expressed to be made by the Appellant as “Landlord” and Cirrus as “Tenant”. It was executed by Mr Monks on behalf of the Landlord in his capacity as a director of the Appellant and again by him on behalf of the Tenant this time in his capacity as a director of Cirrus. Again, Surrender 2 made no reference to the Respondent, he was not expressed to be a party to it and Cirrus did not purport to execute the document or surrender the lease by exercising the power of attorney or pursuant to any power under the Mortgage.

Surrender 3

Surrender 3 was in the same form as Surrender 1 save that it related to the lease of apartment 705. Mr Monks executed the deed on behalf of both Landlord and Tenant and the Respondent was not a party.

Surrender 4

Surrender 4 was in the same form as Surrender 2 save that it related to the lease of apartment 705. Mr Monks executed the deed on behalf of both Landlord and Tenant and the Respondent was not a party. It follows, therefore, that Mr Monks executed all four Deeds of Surrender on behalf of the Appellant and Cirrus.

The Appellant filed no positive evidence at trial about the relationship between the Appellant and Cirrus. The Judge recorded that Mr Monks was a director of both companies and that he was the sole director of Cirrus and owned over 75% of its issued share capital. He did so based on a Companies House search. In answer to a question from me, Ms Coyle confirmed that this was accurate. She also told me on instructions that at the date of the execution of the Deeds of Surrender Mr Monks owned 50% of the shares in the Appellant but that he was not the sole director. Finally, she told me that Mr Monks now owned only 25% of its shares.

There was no evidence before the Court that the Appellant paid any money to Cirrus in return for the surrender of both leases. When I asked for a rough account of the sums received and paid by the Appellant for the Properties, I was initially told that the Appellant paid £6,970 in service charge to a management company called “Cloud” and £500 in ground rent. When I pointed out that the Appellant was entitled to the ground rent as the freeholder and Cirrus itself was liable for the service charges, I was told that there was some sort of holding arrangement. Given the absence of any proper evidence in relation to this issue, I am not prepared to accept that the Appellant paid any sums to Cirrus in consideration for the surrender of the leases of the Properties.

Procedural Chronology

The Third Party Disclosure Application

On 17 August 2022 the Respondent applied for third party disclosure (the “Third Party Disclosure Application”) against the Appellant’s solicitors, Knights Professional Services Ltd (“Knights”). In his first witness statement dated 28 November 2022 he gave evidence that he had received alerts from HM Land Registry on 7 and 11 July 2022 that Knights had applied to register a document against the title to each Property and that this prompted him to make the Third Party Disclosure Application.

On 31 August 2022 Deputy Master Arkush heard the Third Party Disclosure Application and made an order for disclosure against Knights. On 9 September 2022 Knights sent two bundles of documents to the Respondent which contained the applications to register the Deeds of Surrender. The Applicant did not challenge this evidence at trial or before me and I accept it.

The Injunction

On 14 March 2024 the Respondent applied for an injunction to restrain Knights from applying to alter the register of the title to each of the Properties. At the hearing he was represented by Mr Richard Buston of counsel and Knights were represented by Ms Shaylla Shabbir. In his Order dated 23 March 2004 His Honour Judge Robinson granted the Injunction and gave directions for the continuation of proceedings as if begun by claim under CPR Part 7 including a direction to join the Appellant as Defendant. He recorded that a Claim Form had been issued and that the parties had identified the following issues in paragraph 8:

“(1)

Whether the legal charges are valid;

(2)

Whether the benefit of the loan agreements and legal charges have been validly assigned and if so when and to whom;

(3)

Whether the person(s) entitled to the benefit of the legal charges has/ have entered into possession of the properties as mortgagee(s) and if so when;

(4)

What has happened to the rents in respect of the properties from the student sub-tenants;

(5)

Why it is proposed to surrender the head leasehold interests in the properties to Wilton Student Developments (Egerton) Ltd for (apparently) zero consideration.”

The Original Claim

On 25 April 2023 the Claim Form was issued and I will refer to it as the “Original Claim”. The Respondent no longer pursued any relief against Knights personally and the Appellant was identified as the sole Defendant. On the same day the parties entered into a consent order which recorded that the Respondent had discontinued his claim against Knights and the Injunction was lifted as against them. The Claim Form was indorsed with Particulars of Claim in which the Respondent pleaded as follows in relation to the Deeds of Surrender and claimed the following relief:

“27.

The deeds of surrender filed by the 1st Claimant were both signed by the Defendant as the Landlord and also by the Defendant as the tenant.

28.

At no point did the Claimant consent to surrendering units 705 or 709. In any event as a matter of well-established law, an entity cannot be both the landlord and the tenant – there is no landlord tenant relationship if both parties are the same.

29.

The deeds of surrender are a sham, in that they purport to surrender the claimant’s properties when he has never consented and the party attempting to surrender them has no right in law to do so.

30.

In subsequent correspondence before and during proceedings it’s been averred that the Claimant has no interest in unit 705 or 709, which as a matter of fact is simply incorrect – he is the current leasehold owner and even when deducting the loan amount, he has a sizeable cash stake invested within the properties.

31.

Leaving aside the validity of the Defendant seizing the units, the Defendant has treated the properties and the revenue that flows from them as his. There has been no account for profits nor has the Defendant in any way attempted to market or sell the properties.

32.

It is averred that the Defendant: a) Unlawfully seized control of the Claimants Units. b) Prevented the Claimant or his agents’ from accessing, marketing, and letting the property. c) Unlawfully granted long leases to the Claimants units. d) Failed to account for any profits. e) Has treated the units as legally and beneficially his in an attempt to unlawfully steal the property from the claimant, perhaps taking advantage of the fact that the claimant is an expat, not residing within jurisdiction and perhaps not fully understanding his proprietary rights. f) Attempted to change the register using with documents that provided no basis to do so. g) Unreasonably failed to provide copies of documents that it attempted to use to change the title register which necessitated the need for the Claimant to issue a Pre -action Disclosure application. a) [sic] Unreasonably refused to undertake not to attempt to change the register until the matter had been resolved.

33.

In the circumstances described the Claimant seeks the following:

i)

A declaration that the basis in which the defendants sought to register the change of title were misconceived.

ii)

A declaration that the failure of the Defendant to provide details of the documents it attempted to register was unreasonable.

iii)

A declaration that the deeds of surrenders were invalid.

iv)

A declaration that the Defendant had no right in law to take possession in the manner it did.

v)

A declaration that the Defendant has breached the Claimants proprietary rights in seizing control of his properties.

vi)

Damages for breach of those proprietary rights.

vii)

Damages for breach of quiet enjoyment of property.

viii)

An account of rents.

ix)

Possession of the property.

x)

Interest on damages pursuant to section 69 of the County Courts Act 1984 at such a rate and for such a period as the court thinks fit.

xi)

Costs.”

I was told that the Particulars of Claim were settled by counsel and on 6 February 2024 the Respondent served Amended Particulars of Claim which involved him making a very minor amendment. On 22 May 2023 the Appellant served a Defence settled by counsel (who was not Ms Coyle). The Appellant positively averred that the effect of Cirrus’s actions was to extinguish the Respondent’s title:

“12.

Based on the foregoing paragraphs 2-11 above, Cirrus, as mortgagee by assignment, extinguished the Claimant’s interest in the Units when it lawfully took possession of the same on 18 March 2022 and/or from the surrender of the long leases by Cirrus back to the Defendant (as described below).

13.

After its lawful entry in the Units, utilising the powers available to it under clauses 7.3 and/or 7.4 of the Mortgage, surrendered the long leases over the Units back to the Defendant as freeholder.

14.

Based on the foregoing, the Claimant has absolutely no title or interest in the Units and has not had any such title or interest since Cirrus lawfully took possession of the Units and, as a result, has no standing as a Claimant in respect of the same and the Defendant has an unassailable defence to all of the matters claimed in the Particulars of Claim in this vein, the Defendant repeats paragraph 44 of the Defence.

In answer to the Particulars of Claim, paragraph 27 (above), the Appellant accepted that it had entered into Surrenders 1 and 2 by mistake but pleaded that this mistake was corrected in Surrenders 3 and 4:

“In relation to paragraphs 26 and 27, it is admitted that Knights were seeking to alter the register by virtue of deeds of surrender over the Units (by virtue of the matters detailed in paragraphs 4-14 and 44 herein). It is, however, denied that the relevant deeds of surrender referred to the Defendant as both Landlord and Tenant. The relevant deeds dated 11 July 2022 (in respect of Unit 705) and 7 July 2022 (in respect of Unit 709), refer to the Defendant as the landlord and Cirrus as the tenant. Copies of the same are appended to the Defence. It is admitted that there were erroneous deeds which referred to the Defendant as both counter-parties thereto, but this issue was rectified with the relevant deeds referred to in this paragraph and appended to this Defence – those deeds being the operative ones which surrendered the leases of the Units.”

For completeness, I should add that the Appellant also pleaded a case that the issues which the Respondent had raised in these proceedings were res judicata or that it was a Henderson v Henderson abuse of process to raise them again. Ms Coyle confirmed that this issue was not live at the trial and that the Appellant did not take this point either before the Judge or on the Appeal.

Case Summaries

Both parties produced case summaries and lists of issues for the trial. The Respondent’s case summary recorded that: “The defendant’s position is that the claimant has no interest now in those units or funds flowing from those units as they have been surrendered.” Under the heading “List of Issues” his counsel identified the following issues:

“1.

Was the loan agreement a regulated agreement for the purposes of the financial Services and Markets Act 2000 (Regulated Activities) Order (SI 2001/544)

2.

Was the Loan agreement properly assigned to the Defendant?

3.

Did the Defendant have the power to surrender the Claimants leases?

4.

If the Claimant did have the power to surrender the Claimants leases, was the surrender conducted lawfully?

5.

Does the Claimant have any interest in the units or the funds that flow from them?

6.

Does the Claimant have to account for profits?”

The Appellant’s case summary also recorded that its position was that the Respondent had no interest in the Properties. However, it only identified two issues for trial: “1) Was the Loan Agreement a regulated agreement for the purposes of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)?; and 2) Was the Loan Agreement properly assigned to the Defendant?” It is unclear whether these two issues were intended to be additional to those identified by the Respondent but I assume that it was (and it probably does not matter much either way).

The Evidence

Mr Monks made four witness statements which were in the Appeal Bundle before me. The first statement (“Monks 1”) was undated and the second statement (“Monks 2”) was dated 10 January 2023. Both of these statements were made in opposition to the Respondent’s application for the grant of the Injunction. The third statement (“Monks 3”) was dated 20 October 2023 and the fourth statement (“Monks 4”) was dated 3 September 2024 and was served and filed after the judge had circulated the Judgment in draft.

In Monks 1, 2 and 3 Mr Monks stated that he was a director of both the Appellant and Cirrus and that he was authorised to make each statement on behalf of both companies. He gave evidence, therefore, with the authority of Cirrus and on its behalf. He also gave the following evidence about the Deeds of Surrender in Monks 3 which largely repeated evidence which he had given in Monks 1 and 2:

“Registration of the assignment and surrender with HMLR

27.

As above, the Lenders and Security Trustees assigned the Loan Agreement and the Mortgage to Cirrus on 4 March 2022. As matters stand, the Security Trustees remain the registered holders of the Mortgage on the title registers of both of Mr Ip’s former units (see office copy entries at pages 99-106). Cirrus is currently unable to apply registration of the assignment at HM Land Registry, due to the terms of the interim injunction which Mr Ip obtained against Knights in these proceedings on 14 March 2023 (which was before the Company was added as a party to the Proceedings), which essentially prevents alterations being made to those titles whilst these proceedings are determined.

28.

Cirrus applied, via its solicitors (Knights) for registration of the deeds of surrender at HMLR on 11 July 2022. That application has been delayed (and as such has not been processed by HMLR) because HMLR raised requisitions which Knights have been unable to respond to, due to the terms of the interim injunction referred to above.”

Mr Geoffrey Buck, who was at the time a Senior Associate at Knights, also gave evidence on behalf of the Appellant. It is clear from his evidence that Knights originally submitted Surrenders 1 and 2 for registration but only entered into Surrenders 3 and 4 when the Land Registry raised a requisition asking Knights to explain how the Appellant had become the owner of the long leases. It also appears that Cirrus was not the registered proprietor of the Mortgage when it entered into the Deeds of Surrender and was still not the registered proprietor by the date of trial:

“9.

I understand from Wilton that the Claimant's leasehold interest came to an end when Cirrus Property (“Cirrus”) took possession of the Apartments as mortgagee in possession due to a failure by the Claimant to pay sums due under a loan agreement (“the loan agreement’) entered into between Mr Ip (as borrower) and Simon Francis Roue, Naseema Roue and Adrian Todd (as security trustees) which loan was secured by a charge over the Apartments (‘the legal charge”). The source of my knowledge in this regard is the witness statement of Mr Niall Monks (pages 120-494) in opposition to a claim for possession of the Apartments made by Mr Ip to which I refer further below at paragraphs 18 et seq and in particular paragraph 8 of Mr Monks’ statement. I further understand from Mr Monks’ statement that by a Deed dated 4 March 2022 the security trustees assigned all of their rights, title, interest and benefits in the loan agreement and legal charge to Cirrus.”

“11.

Knights is now instructed by Wilton in relation to the sale of the Apartments, which includes closing the Claimant's leasehold title and removing his entry at the Land Registry. I understand from the instructions given to my colleagues in Knights that it was agreed between Wilton and Cirrus that Cirrus would enter into Deeds of Surrender with Wilton to terminate the existing leasehold interests of the Claimant (that now vest in Cirrus as the mortgagee in possession and as permitted under the terms of the loan agreement). Knights accordingly filed an application to the Land Registry to i) remove the restrictions on the titles of the Apartments and ii) surrender the leases (pages 3-94) (the "Application").

12.

Knights received various requisitions from the Land Registry seeking evidence of how the leasehold title for the Apartments has vested in Wilton. Knights responded to the requisitions accordingly and provided evidence (pages 95-107). I understand from my colleagues in Knights that the application in respect of apartment 709 has been cancelled because according to the Land Registry a requisition raised by them on 18 October 2022 was not fully answered. That requisition (pages 95-97) raised two issues: firstly, as to how the leasehold interest became vested in Wilton (which has been addressed by submitting a further deed of surrender naming Cirrus as the tenant) and secondly, that no consent of the lender has been provided. It is my understanding from my colleagues that we are now waiting for the lender's solicitors to provide a TR4 (a transfer of charge) from the original lender to Cirrus, upon receipt of which my colleagues will submit a further application to the Land Registry. The application in respect of apartment 705 is still pending, albeit my colleagues are now anticipating a similar requisition from the Land Registry to that received in respect of apartment 709.”

The Trial

The Judge recorded that the trial took place over two days and that the Respondent, Mr Roue (one of the Lenders) and Mr Monks gave evidence: see the Judgment, [25] to [29]. He did not suggest that Mr Buck of Knights was called to give evidence and Ms Coyle confirmed in her Skeleton Argument for the Appeal that the Respondent, Mr Roue and Mr Monks were the only witnesses. No transcript of Mr Monks’ cross-examination was obtained although he gave critical evidence in answer to a question from the Judge. The Judge also recorded that a number of pleading points arose and that he had dealt with them in the following way:

“30.

After the evidence and before submissions, Miss Coyle asked me to give a preliminary judgment on whether I was going to consider and therefore needed to hear submissions on three issues. The Defendant’s case was that the Claimant was raising issues at trial that had not been pleaded.

31.

I gave an ex-tempore judgment in which I decided that I did not need to hear submissions on two issues that had not been pleaded, as it would be unfair to the Defendant for me to consider them, namely: i) whether the Loan had been drawn down on 27th January 2020; and ii) whether the Claimant had a claim in misrepresentation.

32.

In my ex-tempore judgment, I concluded that I would hear submissions and would consider the Claimant’s case against the Defendant that he has an “equity of redemption.” I shall not repeat my reasons here. A transcript of the judgment will have to be obtained if required.

33.

Miss Coyle sought permission to appeal against this decision, which I refused.

34.

I asked the Claimant whether he wished to apply to amend his pleadings in any way or whether he wished to apply to join in any additional parties (for example Cirrus) as Defendants. He indicated that he did not. I do not know the reasons why the Claimant has not brought a claim against Cirrus. I do not know whether it has assets and could satisfy a judgment.

35.

The Claimant raised a further issue in his submissions, namely that the Loan was an unfair agreement engaging Section 140A Consumer Credit Act 1974. This was not a pleaded issue and I consider that it would be unfair to the Defendant for me to consider it further.”

The Appellant did not apply for permission to appeal against the Judge’s decision that he was prepared to consider the Claimant’s case that he had an equity of redemption. Nor was I taken to the Judge’s reasons for reaching that decision. But in any event, his decision is entirely explicable. The Appellant was advancing a positive case that the effect of the Deeds of Surrender was to extinguish any interest which the Respondent had in both Properties. If this case failed, and the Deeds of Surrender were ineffective to extinguish the Respondent’s interest in the Properties, then it follows that he retained an equity of redemption. I consider in greater detail below what follows from such a conclusion.

On 23 August 2024 the Judge circulated the Judgment in draft and on 29 August 2024 Ms Coyle submitted a table of suggested typographical corrections and errors. She submitted that the Judge had not taken into account Clause 8 of the Mortgage (above) in deciding whether the Security Trustees had power to surrender the leases of both Properties. She also submitted that the Judge had failed to give adequate reasons for his decision:

“The Defendant was deprived of the opportunity to address “collateral purpose”, it not being raised by any party at trial. The nearest reference was when the director of the Defendant stated: “had we sold the leasehold and accounted to the Claimant for his equity, we could have ended up in litigation.” This has been misinterpreted. The Claimant was making threats of litigation from the outset. It was not deemed appropriate to do anything given that we were going to end up in court regardless.”

Monks 4

On 3 September 2004 the Appellant also filed Monks 4 in which Mr Monks expressed his concern at the suggestion that he had been held to have a “collateral purpose” in entering into the Deeds of Surrender. He also gave evidence that the development had been fraught with difficulty. He also gave the following evidence:

“10.

At the time of surrender of the Claimant’s former leases, the Claimant was in arrears of ground rent and service charge in the sum of £8,641.01 per lease (so, £17,282.02 in aggregate), which Cirrus settled with Wilton in order that the ‘slate be wiped clean’ ahead of the grant of new leases of those units. Accordingly, any assessment of ‘equity’ allegedly belonging to the Claimant in these units must take account of those sums. It is also worth mentioning that the Claimant’s leases could legitimately have been forfeited for his failure to pay those sums.

11.

Although the Defendant sold new long leases of these units to third parties for the sum of £60,000 each, the Defendant incurred sale costs of £7,000 plus VAT per unit (commission payable to the sales agent). The Defendant also incurred legal costs on those sales in the sum of around £3,000 plus VAT per unit.

12.

It is worth adding that units in the Nebula development are not, in reality, worth close to what the Claimant appears to believe. Attached is a schedule of purchases which Wilton completed of other units in the development in 2022, together with completion statements for each.

13.

The list is a true reflection of the value of the leaseholds for units within Nebula. The average price paid by Wilton for those units was just over £29,000.

14.

The Claimant’s former units were sold at an increased rate (i.e. Wilton achieved a higher-than-usual sum for those units) because they were sold with a sub-lease in place and with an assured yield guaranteed to the purchaser. Those sub-leases place all obligations for payment of service charge costs (including any extraordinary costs) back on the Defendant. The Defendant has, accordingly, assumed liabilities as a result of having sold long leases of those units at those prices, and I submit that a proper assessment of those liabilities would be required in order to properly determine any question of alleged equity in the units.”

“17.

Any sums that remained following sale of the new leaseholds and the aforementioned deductions, were reinvested in their entirety into completing the build of Nebula. Therefore the Defendant has not benefitted from any alleged equity in unit 705 and/or unit 709. The development as a whole has been a loss making development for the Defendant due to the extensive works and costs that were required to finish the build in addition to the untimely decline in demand for student accommodation.”

Ms Coyle took me to Monks 4 during her oral submissions and Dr Brown did not object to me looking at it. But he pointed out that it was not available at the trial and Mr Monks could not be cross-examined about it. The Appellant did not seek the permission of the Court to rely on Monks 4 under CPR Part 52.21(2) and Monks 4 was strictly speaking inadmissible on the Appeal. I return to this evidence below.

The New Claim

On 23 January 2025 the Respondent issued a Claim Form against the Lenders and Cirrus together with a Second Claimant, Megnan Liu. I will refer to it as the “New Claim” and both Claimants claim relief under section 140B of the Consumer Credit Act 1974. By Order dated 17 June 2025 District Judge Hill stayed the New Claim pending the determination of this Appeal.