Summary

Receivers of charged residential property were entitled to interim injunctive relief granting unrestricted access to the property and relevant documents in circumstances where their access had been obstructed by a purported lessee, who had possibly acted unlawfully in collecting substantial amounts of rent as a result of granting sub-tenancies.

Facts

The applicant receivers (R) applied for interim injunctive relief against the respondent property management companies (F) to gain access to property sub-leased by the second respondent lessee (L).

R had been appointed receivers of a large commercial and residential property after the registered proprietors (M) of the property failed to pay sums that had been due under a legal charge taken over the property to secure a loan to a construction company in which M had an interest. R had encountered difficulties in seeking to recover and obtain access to the residential part of the charged property and had health and safety, and insurance concerns in relation to the property. L claimed that it had been a lessee of the property under a 24-month lease that had been purportedly granted to it by a company, which held the beneficial interest in the property pursuant to a deed of trust that had been executed by M. L claimed that in the exercise of its rights under that lease, it had validly granted sub-leases to residential tenants who were currently occupying the property. R also had concerns over substantial rents L had collected, the majority of which had been paid over to M. That activity had occurred since the commencement of the receivership. F had previously been ordered to provide copies of keys and fobs, and to pay £250,000 into an escrow account, which was duly paid. Taking advantage of a seven-day adjournment granted in order to allow F to file evidence in support of its defence, the controller of F (K) filed a second affidavit in which he had outlined the events said to give rise to the grant of a lease to L, including the incorporation of L to take the leasehold interest. R in turn claimed that F's defence was hopeless; the lease had not been validly executed and was a sham, as indicated by the fact that the stipulated rent due under the purported lease had never been paid and aspects of K's evidence that were not commercially credible. The issues to be determined were whether R ought to be granted (i) the interim declarations sought; (ii) the interim injunction sought.

Held

(1) It was almost common ground that there was a serious issue to be tried. On the material before the court, the case for R was very strong. F had urged the court to accept that the people working for them were decent, responsible business people who had entered into a commitment with a substantial annual rent pursuant to a standard form lease. However, despite being professional people, F had failed to take advice and in a potentially complex transaction, there was very little if anything to support F's case. Accordingly, the court reached the high degree of assurance necessary in relation to R's prospects of success. Although that was an important factor to take into account, R's application for interim declarations was refused as there remained only a short period before the commencement of the trial. Although the sought declarations would have given R the perceived advantage of a document that spelled out their rights, that was not a sufficiently good reason for taking that unusual course in all the circumstances. (2) The case for an interim injunction was very strong. There was a real evidentiary basis for asserting that access to the property had been interrupted and that there had been prevarication in allowing access. Additionally, R's health and safety concerns had not been directly contradicted by F. Given the ready availability of the £250,000 that F had paid into the escrow account, the court hesitated in relation to K's evidence over concerns for F where it had been common ground that it had been valued at approximately £30m. The court had reservations about the quality of F's evidence and was unconvinced by what had been said on F's behalf. F's reliance on the maintenance of the status quo had not been a decisive factor where there had been force in R's submission that the current status quo had been the result of F's possibly unlawful actions. Another important factor was the fact that F's conduct in dealing with R was not in a manner one would expect of legitimate professionals engaged in a proper business, where F had prevaricated in granting access. F's vulnerability to pressure from others meant that justice could not be done by leaving F in control for even a short period given the history of the receivership. Accordingly, an injunction was granted in R's preferred strong form giving unrestricted access to the property and all relevant documents.

Judgment accordingly