Green Parks (Holdings) Limited, Re [2026] EWHC 1868 (Ch)
[2026] EWHC 1868 (Ch)Case No CR-2019-004174Case No CR-2021-002354
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Venue The Rolls Building, 7 Rolls Buildings, Fetter LaneDate Thursday, 25th June 2026
London, EC4A 1NL
Before
HIS HONOUR JUDGE HODGE KCSitting as a Judge of the High Court
Between
Landinvest LimitedApplicant
IN THE MATTER OF GREEN PARKS (HOLDINGS) LIMITED (IN LIQUIDATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
– and –
Between
Christopher John FergusonRespondent(as the Liquidator of Green Parks (Holdings) Limited )Respondent(2) Green Parks (Holdings) LimitedRespondentOliver Daniel Whitefield and 62 othersRespondentAND BETWEEN:ApplicantOliver Daniel Whitefield and 62 othersApplicant– and –
Between
Christopher John Ferguson(as the Liquidator of Green Parks (Holdings) Limited )
Between
Landinvest LimitedRespondentsMR. MARTIN HUTCHINGS KC (instructed by Trowers & Hamlins LLP) appeared for Whitefield ApplicantsMR. KAVAN GUNARATNA (instructed by Property Management Legal Services Limited) appeared for Landinvest Limited for The Liquidator did not appear and was not representedAPPROVED JUDGMENTHearing Hearing dates: 15-18 June 2026Digital Transcription by Marten Walsh Cherer Ltd2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HPTel No: 020 7067 2900. DX: 410 LDEEmail: info@martenwalshcherer.comWeb: www.martenwalshcherer.com
[1]This is my extemporary judgment on four issues arising in the insolvent liquidation of Green Parks (Holdings) Limited (‘the company’). The first of those issues raises a novel point of law concerning the proper apportionment of ground rent following the disclaimer of a 125 year development underlease of land intended to form part of Westbeach Holiday Resort at Westward Ho! near Bideford in the county of Devon, and the consequent making of a vesting order in respect of only part of the land comprised in that underlease. Background and the proceedings[2]The company was the freehold owner of the intended holiday resort. It proposed to develop the resort in phases, comprising seven blocks of residential, and commercial units, and amenity and communal leisure facilities, including a swimming pool. Blocks 1 and 2, comprising 48 residential units, were the subject of a development lease to a company now known as Rockwell (FC101) Limited. Those two blocks were duly developed, and 48 occupational subleases were granted out of that headlease. The ownership structure of the remainder of the development land was rather more complex. On 4 April 2016, the company granted a 999 year headlease to Landinvest Limited (‘Landinvest’), a company incorporated in the British Virgin Islands, with the same beneficial ownership and control as Rockwell.[3]On the same day, Landinvest granted a 125 year development underlease back to the company. The subject matter of this development underlease was intended to be developed as five blocks. The terms of both the headlease and the underlease reserved an annual ground rent of £142,000. This was to be subject to five yearly, RPI-related rent reviews. The terms of both the headlease and the development underlease were subsequently varied by two deeds of variation, both dated 14 July 2016. Blocks 3 and 5 together comprise a total of 58 two-bedroom flats, which are the subject of separate completed sub-underleases, at initial ground rents of £1,000 a year. These are subject to what it is common ground are onerous 10 yearly rent reviews by reference to the Retail Price Index. There are a further four three bedroom duplex flats which have been similarly let out at initial ground rents of £2,000 per annum, subject again to RPI-related rent reviews. Those flats therefore yield a total rental income of £66,000 a year. In total there are 62 occupational underleases.[4]Block 5 also contains a further two duplex flats which are still in uncompleted shell condition, with only external walls. These were also originally intended to be let out upon two separate sub-underleases, each at ground rents of £2,000 per annum. These two uncompleted duplex flats have not yet been sold; and any future sub-underlessee can now only be granted at peppercorn ground rents because of the provisions of the Leasehold Reform (Ground Rent) Act 2002, which came into force on 30 June 2022.[5]The occupational sub-underleases had been sold as a passive investment by the company, whereby on the grant of each occupational sub-underlease to an individual purchaser by the company, the sub-underlessee, would immediately grant to the company a 10 year leaseback. That would be on terms whereby the company would then manage the lettings of the individual residential unts, and would provide the occupational sub-underlessee with an investment yielding 10% per annum on their purchase. In fact, although the agreements for sale provided that the leasebacks would be to the company, the 10 year leasebacks were in fact granted to a separate company, Green Park (Holidays) Limited, owned and controlled by the company. Green Park (Holidays) Limited is also now in liquidation.[6]The headlease, the development underlease, the occupational sub-underlease, and the 10 year leaseback structure was intended to operate as a ‘pass-through’ whereby the rents payable up to the head lessee, and the reversioner on the development underlease, namely Landinvest, were broadly to reflect the ground rents received by the company from the occupational sub-underleaseholders. The company was therefore to pay £142,000 under the development underlease in respect of blocks 3 and 5, and blocks 4, 6 and 7, with that figure being reviewed over the development underlease’s term every five years, starting on 15 February 2017, in accordance with the rent review provisions contained within clause 8 of the development underlease.[7]Mr Martin Hutchings KC, who appears for the occupational sub-underlessees, points out that it is apparent that even if the £142,000 initial rent was implicitly calculated by reference to a breakdown of the ground rents received by the company from the occupational sub-underleaseholders, the rent review provisions contained within the development underlease do not, in fact, match that original intention. That is because the definition of annual rent in the development underlease includes a provision whereby rent is reviewed to the higher of fixed RPI increases and “the rents received under the occupational leases”.[8]Furthermore, and whether by design or not, it is apparent that there is also a mis-match between the development underlease and the occupational sub-underleases in terms of the frequency and the dates of rent reviews. This, according to the occupational sub-underleaseholders’ expert, Mr. Justin Bennett, negatively affects the holder of the development underlease. That is because under the development underlease, rent is adjusted in accordance with RPI on 15 February 2017, and thereafter every five years; whereas, the same RPI indexation of rent under the occupational sub-underleases occurs only once every 10 years, and on different dates, with the first review under the occupational sub-underleases taking place on 1 January 2021, and thereafter every 10 years.[9]The construction of blocks 4 and 6 has not yet been completed, and they are effectively dilapidated shells. They were intended to comprise a total of 48 standard residential units, paying a ground rent of £1,000 each. In fact, a further four residential units have been constructed, in place of two intended lower ground floor office or shop units. This is in breach of planning control. Block 7 was intended to comprise commercial and leisure facilities, including a swimming pool. It is a derelict steel shell which is open to the elements.[10]Joint administrators were appointed to the company on 27 June 2019. On a petition presented by the joint administrators, the company was wound up by the court on 21 May 2021. One of the joint administrators, Mr. Christopher Ferguson, was appointed the sole liquidator of the company. He disclaimed both the freehold estate and the development underlease vested in the company by notices dated 23 June 2021.[11]On 21 September 2021, the 62 occupational sub-underlessees, led by Mr. Oliver Whitefield, and also the company they had formed to complete the development of blocks 3 and 5, (MyWestbeach Limited) together applied for a vesting order in respect of all or part of the freehold and the underleasehold property. A couple of days later, on 23 September 2021, Landinvest applied for a vesting order in respect of the freehold property in its capacity as the head lessee.[12]On 17 March 2023, ICCJ Prentis handed down his judgment on those applications, following a hearing which had taken place on 14 and 15 March 2023. An approved transcript of Judge Prentis’s judgment, extending to some 25 pages, is available. Reference should be made to that judgment for further details of the background to the making of the vesting orders.[13]On 24 March 2023, Judge Prentis made his freehold vesting order. Having recited the various applications, and that the hearing had attended by counsel for the occupational sub-underlessees and separate counsel for Landinvest, Judge Prentis’s order recorded that he had delivered judgment orally on 17 March 2023 on various of the issues arising on the applications, and that his order gave effect to that judgment in relation to the vesting of the freehold property, with the court’s order in respect of the vesting of part of the leasehold property in what were termed the ‘Whitefield applicants’, and ancillary matters, to be addressed in a separate order.[14]The order provided (at paragraph 1) for the freehold property to be vested in Landinvest, pursuant to section 181 of the Insolvency Act 1986. By paragraph 2, provision was made for Landinvest to do all that was reasonably practicable to install, as soon as possible, a permanent, and separately metered, mains electricity supply, connected to phases 3 and 5 (in which the Whitefield applicants owned the residential properties), or a permanent mains electricity supply connected to phases 3 and 5 and the other parts of the estate. Paragraph 3 made provision for the costs incurred by Landinvest with unconnected third parties for the purpose of complying with those electricity obligations to be borne by the Whitefield applicants and Landinvest proportionately, with such proportions, if not agreed by 24 June 2023, to be determined upon application to the court, to be made on notice. Paragraph 4 of the order provided that the Whitefield applicants were, within 14 days of any written request by Landinvest for a reasonable sum on account of such costs, to pay to Landinvest's solicitors such reasonable sum for the purposes of Landinvest complying with the electricity obligations.[15]Paragraph 5 provided, in terms, that, save for paragraphs 2 to 4 (relating to the electricity connection), the order was not, as between the Whitefield applicants and Landinvest, to affect any pre-existing rights granted by or reserved under any lease of any land comprised within the estate. Paragraph 6 provided for Landinvest to keep the Whitefield applicants informed of all material developments in relation to its compliance with the electricity obligation, and to afford their solicitors access, at reasonable times, to all relevant non-privileged documents for the purposes of enabling the Whitefield applicants to assess Landinvest’s compliance with the electricity obligations.[16]Paragraph 7 of the order provided that if there were no electricity connection by 24 June 2023, the Whitefield applicants were to have permission to apply, on notice to Landinvest, for an order, if the court saw fit:(a) permitting the Whitefield applicants to step into the rights of Landinvest as freeholder for the purposes of achieving that connection;(b) determining how the cost of that exercise should be apportioned between the parties; and(c) granting expedition for that application. Paragraph 8 made provision for the costs of the vesting applications. Paragraph 9 gave the parties permission to apply as to the working out of the order.[17]It was not until 9 May 2024 that Judge Prentis made his leasehold vesting order. This was intended to give effect to the judgment delivered orally on 17 March 2023 in relation to the vesting of the leasehold property in the Whitefield applicants and ancillary matters. Paragraph 1 ordered that that part of the leasehold property shown in grey on the plans at schedule 2 to the order was to be vested in Mr. Whitefield and three other named individuals, as trustees for the Whitefield applicants, pursuant to section 181 of the Insolvency Act 1986, on the terms set out in paragraph 2. Paragraph 2 of the order provides: Pursuant to section 182(1) and (2) of the Insolvency Act 1986, the Trustees are subject to the same liabilities and obligations as the company was subject to under the lease at 21 May 2021 (the date of commencement of the company's winding up) as if the lease comprised only the vested leasehold property (including as to an apportioned part of the rent payable under the lease).[18]Paragraph 3 of Judge Prentis’s order identified three issues, namely:(1) the appropriate apportionment of the rent as noted at paragraph 2 of the order;(2) the liability (if any) of the trustees on behalf of the Whitefield applicants to Landinvest pursuant to the obligations under the vested lease, for any accrued costs of insurance for the vested leasehold property; and(3) whether (and, if so, to what extent) Landinvest is liable to the company for any unpaid part of the premium which was payable by it for the grant of the 999-year headlease dated 4 April 2016 and, if so, the extent to which any such liability, and any liability owing to Landinvest for rent or other arrears under the lease prior to commencement of the company's winding up, was subject to insolvency set-off. Those issues were either to be agreed between the relevant parties (which, as to issues 1 and 2, meant Landinvest and the Whitefield applicants, and, as to issue 3, meant Landinvest, the Whitefield applicants and the company’s liquidator) by 4 p.m. on 29 March 2024 or, in default of such agreement, were to be determined by the court, in which case paragraph 4 was to apply.[19]Paragraph 4 of the order provides that in the event that any of the issues has not been subject to agreement between the relevant parties, they should jointly inform the court of the issues remaining in dispute between them and request that a directions hearing be listed on the first available date after 26 April 2024, before Judge Prentis if possible, whereupon such a hearing was to be listed.[20]Paragraph 5 of the order provides for what was to happen pending agreement or determination of those issues. An escrow account was to be opened to receive payment from the trustees of £312,843.82, which (with any interest accruing thereon) was either to be paid to Landinvest and/or released back to the trustees, either pursuant to the written agreement of those parties or further order of the court.[21]Paragraph 6 provides that pending agreement or the determination of issue 1, and in relation to the rent payable by the trustees in respect of the vested leasehold property from time to time following commencement of the company’s winding-up, the trustees were to pay to Landinvest (without prejudice to the determination of issue 1) 45.07% of the contractual rent provided for by the lease, in the manner provided for by the lease, on account of their liability for such rent.[22]Subject to the leasehold vesting order, by paragraph 7 the disclaimer of the leasehold property was to take effect. Paragraph 8 again gave the parties permission to apply as to the working out of the order.[23]The reasoning of Judge Prentis which underlies the making of those two vesting orders is to be found in the approved transcript of his judgment. Having summarised the effect of all three judgments in the Court of Appeal in what Judge Prentis described as the ‘primary’ case of Re Carter & Ellis [1905] 1 KB 735, at paragraph 66 of his judgment, Judge Prentis said this: Each judge therefore is balancing the effect of the order on the parties’ existing rights. No judge is suggesting that the terms of the order are in some way at large. Instead, they are constrained by the terms of what was then section 13 [of the Bankruptcy Act 1890] … But whether any order is made, and if so, whether that order is under [sections 182(1)] (a) or (b), is a matter of discretion tempered by the guiding principle of non-interference with rights.[24]Having referred to the judgment of Registrar Jones in the case of Re Cadmus Management Limited [2016] EWHC 3330 (Ch), reported at [2017] BPIR 317, Judge Prentis observed (at paragraph 70 of his judgment) that: … it is not the case that there must be no improvement in position to either side, whether the applicant for a vesting order or those others who might be interested. An improvement in position is almost inevitable where one is talking about an applicant underlessee because the application will, unless the terms of the lease are modified [so as] to be shorter, give an advantage [in terms of] the [term of] years granted.[25]At paragraph 82 of his judgment, Judge Prentis recorded that: Everybody is also agreed that whatever rent would run … from … 21 May 2021. That is a matter of expediency, acknowledged by counsel, but on the figures and when the rent falls due it makes no difference. Unquestionably, Landinvest was entitled to rent under the company lease of £142,000 per annum to be paid in two tranches per year from the date of that lease, 4 April 2016. That was notwithstanding that the site, by which I mean the area of the estate excluding blocks 1 and 2, had not yet been developed fully so as to generate rent into the company to be passed up in order to meet this.[26]At paragraph 83, Judge Prentis added: It can therefore be seen that the applicants’ principal answer to this, which is that they have been ex-contractually forced to complete 3 and 5 themselves at substantial cost, is an answer which is already catered for in the contractual scheme. The works were never a matter which affected the payment of rent under the company’s lease. Further, the failings of the company are not failings which are attributable to Landinvest: it was simply an investor.[27]At paragraph 84 of the judgment, Judge Prentis noted that the applicants, as underlessees, had chosen to take their underleases on the particular terms: Landinvest, in the lease which it had with the company, by which I mean the company lease, did provide for non-assignment, and while that does not in terms address vesting, by Carter & Ellis it is a relevant factor coming as it does with the assumption that consent to assignment would be on the basis that arrears were met as the condition.[28]At paragraph 89, Judge Prentis concluded that any vesting ought to be in accordance with section 182(1)(a) of the Insolvency Act 1986.[29]At paragraphs 106 to 108, Judge Prentis considered the particular position of the two unsold units. Should they revert to Landinvest, the judge considered that the impracticalities would be such as to amount to an almost nonsensical position. All the rest of blocks 3 and 5 would be vested in the applicants and managed by MyWestbeach. Separating out rights in respect of a mere two units would cause confusion and unnecessary additional expense. Examples would be the service charges on an ongoing basis, and on an existing basis as to what charge ought to be made for the works done to the blocks which have benefited those two units, because undoubtedly they would have benefited. Moreover, Landinvest’s position is that it is not interested in being, nor did it acquire its interest in the estate, as developer or proprietor. It acquired it in order to receive rents. If the two units vest in the applicants, then rent would be paid; indeed, even though the units have not yet been completed, there would be back rent paid in respect of them. Nor would Landinvest be deprived of anything which it had identified as being of monetary value. The units were undeveloped, and any value in them must be entirely speculative. Notwithstanding the brave submission that the rents of the two units were, under statute, capable of having a capitalised value attributed to them, there was no evidence as to that, nor as to whether either Landinvest or, indeed, the applicants would exploit that value and, if so, how. Further, that capital value was, on the evidence, itself attributable to the applicants’ works. It was also hard to believe that there would be any interest in the market for two such units, subject to these difficulties of ownership and of the treatment of past and ongoing expenditure.[30]The judge’s conclusion (at paragraph 108 of the judgment) was as follows: It seems to me perfectly clear that the vesting in the applicants through the trustees ought to be the entirety of the blocks 3 and 5, by which I mean the footprints of those blocks. Otherwise the applicants can rely, as I say, on the rights which they will acquire by the vesting of the company lease.[31]On 5 March 2024, the applicants applied under the terms of paragraph 7 of the freehold vesting order on the basis that there was no existing electricity connection, whether by 24 June 2023 or at all. That led to the making, on 6 June 2024, of what has been termed the ‘step-in order’. By paragraph 1, the applicants were to be permitted to step in and perform all of the obligations, and to assume and exercise all the rights, of Landinvest, in respect of and relating to all matters regarding the making of an electricity connection to phases 3 and 5, including the performance of the electricity obligation. Detailed provisions to facilitate that were set out in paragraph 2 of the order. Paragraph 3 made further consequential provisions. Paragraph 4 provided that, save as previously provided, the step-in order should not, as between the applicants and Landinvest, affect any pre-existing rights granted by or reserved under any lease of any land comprised within the estate, nor should it affect any of the parties’ other rights or obligations, whether as set out in the order or otherwise. There were further consequential provisions in paragraphs 5 and 6. Paragraph 7 of the step-in order provided that the issue between the applicants and Landinvest as to a final apportionment of the costs and disbursements of procuring the electricity connection should be adjourned to a further hearing in the event that the parties could not agree between themselves the apportionment of those costs and disbursements. Once again, liberty was given to the parties to apply as to the working out of the order. Paragraph 10 ordered Landinvest to pay the applicants’ costs of the application on the indemnity basis. Such costs were summarily assessed in the sum of £24,750 (plus VAT, should it be payable on the costs).[32]There is one further relevant order. That is Judge Prentis’s directions order of 9 May 2024. After various recitals as to the past history of the matter, paragraph 1 of the order provided as follows: The following issues (together ‘the issues’) shall be determined at a hearing to be listed in accordance with paragraph 13 below, with a time estimate of two and a half days, plus half a day's judicial pre-reading;(1) issues 1, 2 and 3, as defined in paragraph 3 of the leasehold vesting order;(2) the issue of the proper apportionment of costs and disbursements incurred in complying with the electricity obligation, as defined in or pursuant to paragraphs 2, 3 and 7 of the leasehold vesting order and paragraph 7 of the step-in order.[33]Subsequent paragraphs of the directions order provided for the filing and service, in a single document, of brief statements of case as regards each of those issues, verified by statements of truth. There was then provision for disclosure and witness statements. Paragraph 7 gave permission to both the Whitefield applicants and to Landinvest to adduce expert evidence in the form of written reports and oral testimony from:(1) one surveyor each on matters of expertise pertaining to the appropriate apportionment of rent in connection with issue 1, as defined in paragraph 3 of the leasehold vesting order; and(2) one surveyor each on matters of expertise pertaining to issue 4. For the avoidance of doubt, the parties had permission (if so advised) to adduce expert evidence from one surveyor, rather than two, in relation to the specified matters.[34]There were then consequential directions as to the simultaneous exchange of experts’ reports and the administration of questions to the experts on those reports. Paragraph 11 provided that: If not agreed, the experts should hold a without prejudice discussion for the purpose of identifying the issues, if any, between them and, where possible, reaching agreement on those issues. The experts should, in any event, by 11 November, prepare and file with the court a statement showing those issues on which(1) they agree; and(2) they disagree, with a summary of their reasons for disagreeing.[35]Paragraph 13 of the directions order provided for the hearing to determine the four issues to be listed before Judge Prentis (if possible), with a time estimate of two and a half days, plus half a day’s judicial pre-reading, on the first available date after 12 January 2026. There were then further directions given to lead to an effective hearing.[36]In the event, the Whitefield applicants elected to rely upon the report of a single expert, Mr Justin Bennett, on both issues 1 and 4. By contrast, Landinvest instructed Mr. Michael Lee to address issue 1 and Mr. Richard Barnes to address issue 4. There was no provision within the order for any Scott Schedule in relation to issue 4. I do not criticise Judge Prentis for this omission because at that stage he did not know the nature of the issues that were to surface in relation to the costs of the electricity connection. With the benefit of hindsight, however, it is regrettable that there was no Scott Schedule ever produced.[37]Further, the provision within the order for the usual without prejudice discussions between experts, for the purpose of identifying and reaching agreement on particular issues, has proved productive of further difficulties. The experts took paragraph 11 of the order as an invitation to put in further substantial evidence, in addition to their original experts’ reports. This further evidence totals slightly over an additional 150 pages. In total, the expert evidence now extends to some 870 pages; and the oral evidence of the experts extended to some three and a half hours of court time. The hearing[38]The hearing was listed before me at 2 o’clock on the afternoon of Monday 16 June 2026, with an estimated hearing time of two and a half days, preceded by a half day’s pre-reading. In the event, the hearing lasted three and a half full court days, ending just after 5 p.m. on day 4 (Thursday, 19 June 2026).[39]The Whitefield applicants were represented by Mr. Martin Hutchings KC. Landinvest was represented by Mr. Kavan Gunaratna (of counsel). The liquidator attended the first two days of the hearing pursuant to a witness summons served upon him by the Whitefield applicants. He was cross-examined, but he took no direct part in the hearing. I was told that the owner/occupiers of the residential units within blocks 1 and 2 have agreed to be bound by the court's decision.[40]Mr. Hutchings KC’s pre-reading list was realistic in terms of timing; but it omitted any reference to the witness statements of three of the Whitefield applicants’ witnesses. It also omitted any reference to any of the 870 pages of the expert evidence of the three expert witnesses. They were to give evidence before me for about three and a half hours in total, on the afternoon of day 3 and the morning of day 4 of the hearing. There were no less than six lever-arch files of documentation, amounting to over 2,400 pages. In addition, there was an A4 supplemental witness evidence bundle.[41]I heard from four witnesses of fact for the Whitefield applicants. The first, very briefly, was Mr. Dudley Joiner, who gave formal evidence on the morning of day 2 about the lawful acquisition of the right to manage blocks 3 and 5, by a company established by the occupational leaseholders, on 27 December 2020.[42]The second witness was Mr. Christopher Ferguson, one of the joint administrators and, later, the sole liquidator of the company. His witness statement is dated 8 July 2025. He gave evidence for about 50 minutes on the morning of day 2. It emerged from Mr Ferguson’s evidence that he was holding just under £310,000 in an interest-bearing, liquidation account. He indicated that it was not so much a lack of funds that had inhibited any investigation into whether the full premium had been paid on the grant of the headlease to Landinvest by the company. Rather, Mr Ferguson had considered it to be an inappropriate use of company monies to investigate matters about which he had inquired some four years earlier, and which were not going to create any further value for creditors. It emerged during his evidence that Mr Ferguson had assigned certain claims to a litigation funder called Certus in May of 2022. A claim against the company's legal advisers had been settled in 2023. That had not been mentioned in Mr Ferguson’s witness statement. He was not asked for any details of the settled claim.[43]The next witness was Mr. Oliver Whitefield, the lead applicant. He has made seven witness statements in total in these proceedings. The most relevant to the present application are his sixth witness statement, dated 4 July 2025, and his seventh witness statement, dated 5 June 2026, for which I gave permission on the afternoon of the first day of the hearing.[44]In his oral closing submissions, Mr. Hutchings KC acknowledged that Mr. Whitefield feels emotional about the situation attending the development. Indeed, in re-examination, he had said that he was very emotive. It had been a very stressful six to eight years. It had been a very uncomfortable time throughout. In his witness evidence, Mr Whitefield had exhibited an e-mail of 4 June 2021, responding to an earlier e-mail from Mr. Simon Gubbay. What he did not exhibit was the e-mail to which he was responding, which can be found at page 838 of the hearing bundle. That made it clear that the e-mail to which Mr Whitefield had been responding on 4 June 2021 had, in fact, been sent by Mr. Simon Gubbay to Mr. Whitefield over two months earlier, on 1 April 2021. Mr. Simon Gubbay had then sent Mr Whitefield an e-mail about insurance on 21 June 2021 (at page 839 of the hearing bundle) to which I am satisfied that Mr. Whitefield never replied. Mr Whitefield accepted in cross-examination that although he could not precisely recall, it seemed as though he had never replied to that e-mail. He explained that the situation had been very confrontational, and very tense, between the owners of the individual units in blocks 3 and 5 and Landinvest. Mr Whitefield acknowledged that maybe he had not replied. I find that he did not reply to Mr Simon Gubbay’s later e-mail.[45]Mr Whitefield explained that the intention of the trustees for the Whitefield applicants was to let the two vacant, albeit presently incomplete, duplex units in block 5 on short-term lets once their construction has been completed and they have been fitted out.[46]Mr. Hutchings KC submitted in closing that Mr. Whitefield’s evidence had been designed to help the court. He said that he had not shied away from answering difficult questions, and he had been patently honest. I accept that characterisation of Mr. Whitefield, although I also acknowledge the difficult situation between the Whitefield applicants and Landinvest, which has tended to give his evidence an anti-Landinvest bias. That is not from any wish to mislead the court, but simply that, as Mr. Whitefield himself says, he is very emotional about the way in which Landinvest has treated the Whitefield applicants. Mr. Whitefield gave evidence in total for a little under two hours.[47]The final witness for the Whitefield applicants was Mr. Greg Morrish, who gave evidence for about 30 minutes. I agree with Mr. Hutchings KC that similar considerations apply to Mr. Morrish’s evidence as apply to the evidence of Mr. Whitefield. Mr. Morrish is the owner of a unit in block 3. He was a member of the creditors committee at the time the company was in administration, and he is a member of the creditors committee for the company now it is in liquidation. Mr. Morrish is also the chair of the investors group action committee. Mr. Morrish explained that in about November 2022, there was a litigation proceeding against the company’s legal advisers, PG Legal. He said that this was a very specific claim about unpaid premiums. He explained that some monies came in as the result of a settlement of that claim. Mr Morrish was not aware of any claim against Landinvest concerning any unpaid premium on the grant of the headlease. Mr. Morrish said that there had been extensive discussions in correspondence about the liquidator pursuing particular claims, but they had never got to the stage where the liquidator had considered any claims to be worth pursuing.[48]That was the factual evidence for the Whitefield applicants. The sole witness of fact for Landinvest was Mr. Michael Gubbay. His relevant witness statement is his fourth. He gave evidence for a little over four hours, starting on the afternoon of day 2, and continuing over until the afternoon of day 3. Mr. Michael Gubbay is the sole director and ultimate beneficial owner of Landinvest. Simon Gubbay is his brother.[49]In closing, Mr. Hutchings KC submitted that Mr. Michael Gubbay’s evidence was to be contrasted with that of Mr. Whitefield. Where issues of credibility are concerned, the court should take account of the way in which Mr. Gubbay had given his evidence. In some respects, so Mr. Hutchings KC submitted, Mr. Gubbay had been brazenly honest. He was quite prepared to ignore Landinvest’s legal obligations, and also statutory notices served upon that company, in a shocking and inappropriate manner. Many parts of his evidence were said to be incredible. Mr. Hutchings submitted that Mr. Michael Gubbay would stop at nothing to protect Landinvest’s own interests.[50]In relation to Mr Gubbay’s evidence, Mr. Hutchings KC invited the court to take the view that unless it was supported by a clear and reliable contemporaneous document, any dispute over his evidence should be resolved in favour of the Whitefield applicants. I found Mr. Michael Gubbay to be a forceful witness, who was firm in his evidence. That evidence was superficially considered, well-reasoned, and plausible. But I am satisfied that, in certain respects, Mr Gubbay’s evidence was, at best, economical and less than frank. That applies, in particular, to the evidence that was contained within his first witness statement, presented to Judge Prentis in support of the applications by Landinvest for the freehold vesting order, and also for a vesting order in respect of the development underlease.[51]At paragraph 41 of his first witness statement, dated 23 September 2021, Mr. Michael Gubbay had stated that Landinvest was “voluntarily undertaking completion of the development in respect of blocks 4, 6 and the commercial block at its own up-front expense.” Mr. Gubbay acknowledged that the development of those blocks was no further advanced now than it had been at the time of his first witness statement almost five years ago. He gave an explanation for that on the footing that circumstances had changed, and Landinvest had been put in a difficult situation by circumstances outside its own control.[52]I found that during the course of his evidence, Mr. Gubbay had a tendency to make speeches rather than giving evidence. I am satisfied that I should view Mr. Michael Gubbay’s evidence with caution, and that I should test its reliability carefully against contemporaneous documents which I find to be reliable.[53]I have already mentioned that the court heard some three and a half hours of evidence from the expert witnesses. The extent of that expert evidence curtailed to some extent the time available for oral closing submissions. That was of course on an additional day that had to be set aside for the hearing, over and above its original time anticipate. It was against that background, and my other sitting commitments, both in Manchester and in London, that at just after 5 o’clock on day 4 of the hearing last Thursday I reserved to deliver this oral judgment at 12 noon today. Issue 1: Apportionment of ground rent[54]This issue is addressed at paragraphs 46 through to 74 of Mr. Hutchings KC’s skeleton argument and paragraphs 30 through to 62 of Mr. Gunaratna’s skeleton. A number of matters, albeit disappointingly few, are agreed between the relevant valuation experts, Mr. Lee for Landinvest, and Mr. Bennett for the Whitefield applicants.[55]It is agreed that two duplex flats in block 5 had not been sold to purchasers prior to the lease being disclaimed on 23 June 2021 and were in the hands of the Whitefield applicants. These flats are in an unfinished, shell condition, with only an external finish to the external walls. It is agreed between the parties that on 21 May 2021, the commencement of the liquidation, there were no statutory restrictions on ground rents, although onerous ground rents were the subject of ongoing public debate, and had been for some time. There was a public pledge for leaseholders on the website of the Ministry of Housing, Communities and Local Government, last updated on 27 June 2019, although this was optional for landlords. The Leasehold Reform (Ground Rent) Act 2022 was enacted on 8 February and came into force on 13 June 2022. This removed the ability to grant new leases at a ground rent other than at a peppercorn. This was after the date of assessment, 21 May 2021. However, prior to 21 May 2021, the then government had already announced its intention to abolish ground rents in all new leases.[56]Blocks 3 and 5, being the vested leasehold property, comprise the following actual underleases and ground rents: 58 x 2 bed flats at £1,000 per annum ground rents = £58,000; 4 x 3 bed duplex flats at £2,000 per annum ground rents = £8,000; total £66,000. The Whitefield applicants also have possession of two duplex flats in shell condition, as noted above. There is agreement as to the rents payable on review, both in respect of the occupational lease ground rents, and also in respect of the review of rent under the development underlease.[57]I turn to the respective legal submissions concerning the apportionment of the ground rent under the development underlease. In Mr. Hutchings KC’s skeleton argument the legal principles are addressed at paragraphs 47 to 52. Mr. Hutchings KC cites from paragraph 73 of ICCJ Jones’s judgment in Re Cadmus Management Limited (previously cited). At paragraph 73, the judge affirmed that the law establishes that the court has an unfettered discretion, subject to the limitations of section 182 of the Insolvency Act 1986; but it should ensure, so far as practical, that tenants do not improve their position, and/or that the freeholder, or any other person with a proprietary interest, does not suffer any injustice.[58]That citation should be read subject to the qualification recognised by Judge Prentis in his judgment in this case at paragraph 70, which I cited earlier in this judgment. However, it is clear that any injustice to Landinvest, as the reversioner under the development underlease, should be avoided in so far as that is at all possible. Mr. Hutchings KC submits that a landlord’s position should not be improved by virtue of the vesting of only part of the leasehold term, at the expense of the party in whose favour the vesting order is granted.[59]Mr. Hutchings KC acknowledges that the court has a wide discretion as regards the terms of a vesting order, subject to obedience to the strictures in section 182(1)(a). In oral submissions, Mr. Hutchings KC accepted that the court’s discretion was not open-ended. He submits that there is no reason for this court not to apply ordinary common law principles when making the apportionment of rent ordered by the leasehold vesting order. The appropriate apportionment required by paragraph 3 (1) of that order should therefore follow the common law principles. Mr. Hutchings KC submits that it is an exercise in determining the appropriate apportionment. There is no guide in the Insolvency Act as to the application of that discretion so one is driven to apply common law principles.[60]Mr. Hutchings KC submits that the apportionment of rent when a reversion is split, as in the case of the development underlease, is made by reference not to quantity, but to the relative value of the land at the time the apportionment falls to be made (and not to its value at the relevant lease date). Mr. Hutchings KC refers the court to two case law and one textbook authority.[61]The first case to which Mr Hitchings KC refers is the decision of Cozens-Hardy J in Hartley v. Maddocks [1899] 2 (Ch) 199. The headnote includes the statement “that the rent charge must be apportioned according to the value of the land”. That was in response to an argument recorded at page 202 of the report, where counsel was arguing in reply that “the apportionment ought to be according to the acreage”. In a reserved judgment, Cozens-Hardy J stated, at the end of the judgment (at page 203), as follows: The result is, that in my opinion, the rent must be apportioned. I understand that the parties have agreed or will agree upon the figures; but I may state that in my view the apportionment ought to be not according to acreage, but according to the respective values of the properties at the date of the eviction. The defendant must pay the costs of the action.[62]Mr. Hutchings KC accepts that that statement is obiter. He relies upon it, however, as authority for the proposition that in apportioning a rent, the court ought to look to the respective values of the land in question, and not simply to their size in terms of their square footage or acreage. If anything, the decision in that case tends to run counter to Mr. Hutchings KC’s submission that the apportionment should be made by reference to values current at the time of the court hearing. I note that Cozens-Hardy J referred to the apportionment being made according to the respective values of the properties at the date of the eviction. I note that in that case, the eviction had been on 24 February 1898, and the hearing was in May 1899.[63]Mr. Hutchings KC refers also to a short statement in the 8th edition - the most recent - of Foa's General Law of Landlord and Tenant (1957), at paragraph 179, dealing with apportionment in respect of estate. The editors state as follows: The basis of apportionment should be one of value and not of mere quantity; and where premises under demise have been assigned in part, the value is calculated not at the time of the demise, but of the severance.[64]Again, that seems to me to run counter to Mr. Hutchings KC’s submission that the apportionment should be made at the date of the hearing, and not at the time of the commencement of the liquidation, or the later date of the disclaimer, or the still later date of the vesting order. It seems to me that that is consistent also with the general scheme of section 182 of the Insolvency Act 1986. Section 182(1) requires the court to make an order on terms, making the person in whom the leasehold estate is vested subject to the same liabilities and obligations as the company in liquidation had been subject to under the lease at the commencement of the winding up.[65]The final authority to which Mr. Hutchings KC refers is a decision of the Master of the Rolls in Ireland, the Right Honourable Edward Sullivan, in O’Connor v. O’Connor (1870) 4 I.R. Eq. Series 483. The headnote records that the rent in that case fell to be apportioned in the proportion of the value of the 20 acres in question to the value of the whole farm. At page 489 of his judgment, the Master of the Rolls asked how the proportion of the rent of the 20 acres was to be ascertained. He said that the law was perfectly clear, that: … if lands are subject to an entire rent, and there is a devise of part of them or an eviction by title paramount of part, the rent is apportioned according to the respective value of the part which is separated and the part which remains. Later on the same page, the Master of the Rolls in Ireland referred to the proportion “which the rule of law awards” as being “a proportion, according to the value of the respective divisions”. The Master of the Rolls concluded his judgment (at page 490) thus: I shall, therefore, declare that the proportion of rent which the twenty acre division given to the defendant is to bear, is to be ascertained according to the proportion which the value of these twenty acres bears to the value of the whole farm. The language of the testator seems to me not only to fall short of what would be required to alter the rule of law as to the apportionment of rent consequent on the division of a farm subject to a high rent, but to work out by its own expressions, when rightly understood, the fair and equitable proportion of the rent which the law would declare such division of the farm subject to.[66]Mr. Hutchings KC submits that it must also follow that improvements made to the land by the tenant before the time of apportionment should not be rentalised for the purposes of ascertaining that correct apportionment. He refers to a further authority, the case of Lester v. Ridd [1990] 2 QB 430, as authority for the apportionment to be on the basis of the part of the whole rent which the court thinks is “fairly attributable” to the severed part. Mr. Hutchings KC submits, however, that the court is bound to take account of facts and matters as regards value that are relevant and known at the date that the apportionment is made. Thus, he says, by way of example, where a landlord resumes possession of part of leased agricultural land, necessitating an apportionment in respect of the remainder, section 33 of the Agricultural Holdings Act 1986 provides that any loss in value to the tenant caused by the severance of the part, or by the use made of the part severed, is to be taken into account in calculating the rent of the tenant.[67]I do not consider that that statutory provision is of any assistance, even by way of guidance, in the present case. It seems to me that section 182(1)(a) of the 1986 Act is quite clear in directing the court to subject the disclaimed lease to the same liabilities and obligations as the company was subject to under the lease at the commencement of the winding up as if the lease comprised only the property to which the relevant vesting order relates.[68]In his skeleton argument, Mr. Gunaratna takes the court to the provisions of the leasehold vesting order and of section 182(1)(a), section 182(2), and also section 178(4) of the Insolvency Act 1986. He submits that the vesting order jurisdiction exists to help achieve the primary statutory goals of:(1) assisting in the beneficial winding up of a company by permitting the disclaimer of the insolvent company's onerous property; and(2) ensuring that any such disclaimer interferes only to the minimum extent necessary with the rights and liabilities of others. He says that in the exercise of the vesting order jurisdiction, the court is mandated to interfere to the minimum extent, or to do so with as little disturbance as might be. This is what he describes as the ‘overarching minimum interference’ principle or mandate. He cites from the speech of Lord Nicholls in the case of Hindcastle Limited v. Barbara Attenborough Associates Limited [1997] AC 70, at page 87, between letters B and C: Disclaimer will, inevitably, have an adverse impact on others: those with whom the contracts were made, and those who have rights and liabilities in respect of the property. The rights and obligations of these other persons are to be affected as little as possible. They are to be affected only to the extent necessary to achieve the primary object: the release of the company from all liability.[69]Mr Gunaratna goes on to point out that those who are prejudiced by the loss of their rights are entitled to prove in the winding up of the company as though they were creditors. Mr. Gunaratna submits that the minimum interference principle applies to the court’s approach to its vesting order jurisdiction under section 182. In the context of a leasehold vesting order, the court should, so far as possible, avoid any improvement in the position of a subtenant, and any detriment and injustice to the lessor, beyond that which is strictly necessary to release the insolvent company from liability. He says that the statute aims to achieve an outcome which is as neutral as possible, maintaining so far as possible the status quo established by the contract and property rights which the parties had bargained for, in a manner consistent with the lessor’s fundamental Convention rights, including his rights to the protection of property (embodying the right to peaceful enjoyment of possessions) under article 1 of the First Protocol. He cites from the judgment of Mr. Registrar Jones in Re Cadmus Management Limited at the paragraphs described in the judgment as paragraphs 70.4 to 70.6. Mr. Gunaratna therefore submits that:(1) the court’s jurisdiction for the purposes of Issue 1 does not engage a discretion ‘at large’, but one which is subject to the specific statutory constraints in section 182 of the 1986 Act and the mandate for minimum interference as explained in the case law;(2) it is important to identify and (so far as possible) follow the pre-existing scheme of liabilities which the parties have bargained for; and(3) the Whitefield applicants must (so far as possible, beyond what is necessary to release the company from liability) remain subject to the same negotiated terms of the lease to which the company was itself subject at the commencement of its winding up.[70]Conversely, Mr. Gunaratna submits that:(1) The court is not required to commercially re-evaluate (that is, to assume a hypothetical commercial re-negotiation of) the relevant rents, and nor is there any warrant for such an approach.(2) Neither is the court required, in working out the exercise of this vesting order jurisdiction, to undertake any sort of roving enquiry as to ‘fairness’ more generally, and there is no warrant to assess an apportioned rent by reference to such ‘broader notions of fairness’.[71]Mr. Gunaratna submits that decisions in other contexts where the courts have occasionally had to consider the need for rents to be apportioned under leases are of no material assistance here.[72]Both counsel developed their submissions in their written skeleton arguments and in oral submissions in closing. From the authorities, I derive the following propositions:(1) The overarching principle is that a person taking the benefit of a vesting order is to be made subject to the same liabilities and obligations as the company in liquidation was subject to under the disclaimed lease at the time the winding up commenced.(2) The court has no jurisdiction to adjust or to reassess those liabilities and obligations by reference to considerations of fairness, equity or otherwise.(3) Where a vesting order extends to only part of the premises demised by the disclaimed lease, the court must apportion the rent payable under the disclaimed lease.(4) The person entitled to the benefit of the disclaimed lease of part should be required to pay such apportioned part of the rent as was originally reserved by the disclaimed lease.(5) That apportioned rent is to be taken to be that part of the rent originally reserved by the disclaimed lease which is fairly attributable to the value of that part of the entire leasehold property which is the subject of the vesting order.(6) There is no binding authority as to the relevant valuation date where a liquidator disclaims a lease vested in the company in liquidation. However, in order to give effect to the overarching principle in proposition (1), the values fairly attributable to the vested part and to the remainder of the original leasehold estate should be determined by reference to facts known, or which are reasonably foreseeable, as at the commencement of the winding up.(7) Factors extraneous to the relationship of landlord and tenant under and by virtue of the disclaimed lease should be disregarded as irrelevant to the apportionment exercise.[73]Applying those principles to the resolution of the issue (1), I prefer the submissions of Mr. Gunaratna to those of Mr. Hutchings KC. I agree with Mr. Gunaratna's submission that Mr. Hutchings’s approach to the apportionment exercise of looking to the failure of the developer to provide the facilities which it had promised to the occupational sub-underlessees is not a relevant and proper consideration when apportioning the rent payable under the development underlease. I agree with Mr. Gunaratna that any such argument conflates the complaints of the Whitefield applicants under their own agreements for lease, and their occupational sub-underleases with the position of the company in its capacity as the underlessee under the development underlease, into whose shoes the Whitefield applicants’ trustees have now stepped. As was noted by Judge Prentis, the payment of the annual rent under the development underlease was not conditional on any or all of the proposed development works being undertaken, or completed and capable of being enjoyed. I agree with Mr. Gunaratna that the submissions of Mr. Hutchings KC seek to subvert the requirements of section 182 of the Insolvency Act 1986, offend the principle of minimum interference, and wrongly assume that the court should embark upon an exercise of commercially re-evaluating, or assuming a hypothetical re-negotiation, of the rent payable under the development underlease with reference to broader arguments of fairness, such as the wider impact of the company’s insolvency, the failure of the company to deliver a completed development. and the consequent difficulties to the occupational sub-underlessees that have resulted.[74]The court, in my judgment, is not engaged in reassessing the rent payable under the development underlease. Rather, the task before it is to apportion such rent. That apportionment exercise is, in my judgment, not affected by the failure of the company to provide the leisure and communal facilities, including a swimming pool within block 7. In that context, it is important to remember that the purchasers of units in blocks 4 and 6, and also Landinvest, as the freeholder of those units, have been equally affected by the failure of the development. That was a point made by Mr. Lee in cross-examination. Nor do I consider that the fact that the frequency of the rent reviews, and the dates of such reviews, differs as between the development underlease and the occupational sub-underleases is a factor that is relevant to the apportionment exercise.[75]As Mr. Lee states, at paragraphs 14 and 15 of his summary of reasoning dated 30 April 2026, the rent review patterns between the vested underlease and the sub-underleases differ ,and are out of synchronisation. But he does not consider this to be relevant in apportioning the ground rent as, in accordance with the vesting order, the trustees are subject to the same liabilities and obligations as the company was subject to under the development underlease as at 21 May 2021. Mr. Lee goes on to say that any reference to the main fraud judgment, in his opinion, goes outside the scope of the directions and the instructions to the expert valuers. The valuers have been asked to give their opinion on the appropriate apportionment of rent, and not on issues of collection or enforcement.[76]In my judgment, the fallacy of the Whitefield applicants’ approach is apparent from Mr. Bennett’s statement of reasons following the without prejudice meeting between experts, dated 29 April 2026. At paragraph 2.3, Mr. Bennett opines: Simply apportioning, as the expert instructed by solicitors acting for Landinvest does, in my opinion, puts the Whitefield applicants in a worse position than they already are under their occupational leases, which themselves are the subject of onerous rents.[77]But “simply apportioning” is the exercise on which the court is engaged. At paragraph 7.4, Mr Bennett states: The poor drafting of the review clauses and leases is onerous and by apportioning the rent based on the development lease would leave the Whitefield applicants in an even worse position than they were before. I believe that this would be inequitable. It may be “inequitable”, but apportioning the rent is the exercise on which this court is engaged. In my judgment, the fallacy underlying the Whitefield applicants’ argument lies in focusing upon units 3 and 5 in isolation from the other areas demised by the development underlease, and in isolation from the provisions of that document, in so far as it applies to that part of the subject-matter of the development underlease as it has been vested in the Whitefield applicants. The Whitefield applicants, in my judgment, fall into error in viewing the apportionment exercise through the prism of the occupational sub-underleases as they have been granted, rather than by focusing upon the apportionment of rents reserved by and payable under the development underlease.[78]So for those reasons, I accept the arguments advanced on behalf of Landinvest. Subject to the rent review provisions incorporated therein, the apportioned part of the annual rent originally reserved by the disclaimed underlease should be £70,000, being the apportioned part of the rent attributable to blocks 3 and 5, which are now vested in the Whitefield applicants.[79]I have given anxious consideration to whether the relevant annual starting rent should be £66,000 rather than £70,000. The justification for that would be the attribution of nil value to the two vacant, uncompleted duplex units within block 5, which can no longer be let otherwise than at a peppercorn ground rent. I am satisfied that attributing nil value to those two units would not offend against the requirement to undertake the valuation exercise as at the date of the commencement of the winding up. That is because it is clear from the agreed joint statement of the experts that the likely provisions of the new legislation that came into force only in June 2022 would have been in the minds of anyone familiar with this area of landlord and tenant law as at the date of the liquidation of the company. That much is clear from what is said in the agreed joint statement. It is, therefore, a matter to which the court can have regard when apportioning the rent as at the commencement of the winding up on 21 May 2021. However, although no more than a peppercorn ground rent can now be extracted on the grant of any new long lease of the two units, if and when they are completed, nevertheless they will be capable of generating a rental income from holiday lets. The position is the same in relation to the other areas demised by the development underlease in blocks 4 and 6, which are not the subject of any vesting order.[80]It therefore seems to me that it would be wrong in principle to ignore the value that was notionally attributed to those two duplex units when the parties were fixing the aggregate rent of £142,000 that was reserved by the development underlease. In those circumstances, it seems to me that the court should not ignore the £4,000 rental value that was originally attributed to those two duplex units, even though ground rent at that level is no longer exigible.[81]That concludes my judgment on issue 1. Issue 2: The insurance issue[82]The insurance issue has become further complicated since the conclusion of the hearing. Landinvest’s case on this issue is contained at paragraphs 39 and 40 of its statement of case, as follows: 39. Amongst other things, Landinvest effected and paid for insurance for Blocks 3 & 5 for:39.1 the year commencing 1 April 2020 at a cost of £33,459.38 (plus an additional £1,792 premium for contract works insurance); and39.2 the year commencing 1 April 2021 at a cost of £37,346.46. 40. GHPL [i.e. the company[ was obliged to reimburse such costs, pursuant to clauses 17 and 18 of the 125 Year Development Underlease and/or the agreement or arrangement noted at paragraph 38 above (as requested of it and/or its Liquidator), but it failed to do so and remained liable to Landinvest in respect of those payments as at the commencement of its liquidation. Paragraph 38 pleaded an agreement between the company and Landinvest (at the company’s request) that Landinvest would effect the insurance of the demised property and that the company would reimburse its cost of doing so.[83]I am satisfied, on the evidence, that no such agreement was ever concluded between the company and Landinvest. Mr. Michael Gubbay accepted in cross-examination that Mr. Ferguson, as liquidator, or (previously) as one of the joint administrators, had not requested Landinvest to effect any insurance on the property. I find on the evidence that there was no agreement with the company, or with the Whitefield applicants, or their management company, for Landinvest to effect insurance and pay any premium.[84]The matter is addressed in the witness evidence at paragraphs 30-36 of Mr. Whitefield’s sixth witness statement and at paragraphs 22 through to 38 of Mr. Gubbay’s fourth witness statement. On the issue of the insurance, I have no hesitation in accepting Mr. Gubbay’s evidence on this point. The documentary evidence seems to me to be clear that Landinvest did effect insurance in respect of blocks 3 and 5, and, indeed, all of the area covered by the development underlease, during each of the years commencing 1 April 2020 and 1 April 2021, at the costs pleaded at paragraphs39.1 and39.2 of Landinvest’s statement of case.[85]At page 830 there is the AXA policy certificate for the period 1 April 2020 to 31 March 2021. The insured is stated to be Filey Bay Limited and its subsidiaries. I accept Mr. Michael Gubbay’s evidence that Landinvest is one of those subsidiaries. There is no reason why insurance should be being effected for Westbeach units 3 and 5 if it were not intended to protect Landinvest’s interest under the development underlease. There is a folio name referring to Landinvest Developments Limited (and also MyWestbeach Limited). MyWestbeach Limited was the management company formed, or to be formed, by the Whitefield applicants. Mr. Michael Gubbay could not explain the reference to Landinvest Developments Limited as an associated company; but he explained that the folio name was simply the name of an interested party. The insured party was Filey Bay Limited and its subsidiaries, which I am satisfied included, or was intended to include, Landinvest.[86]I bear in mind the e-mail at page 762 of 4 February 2020, from Mr. Ferguson, the liquidator (and then one of the administrators) to Mr. Morrish and others. That was summarised in a conversation between Mr. Ferguson and Simon and Michael Gubbay of Landinvest. The last bullet point stated: They are aware that 3 to 5 have taken steps to insure their own properties but stipulated that this was the obligation of the long leaseholder or management company. They would continue to insure the properties upon renewal at the end of March.[87]Mr. Gubbay did not dispute the terms of that conversation. Although reference was made to Blocks 3 to 5 having taken steps to insure their own properties, as at February 2020, not a thread of documentary evidence has been produced to show that that was done. The e-mail makes it clear that Landinvest was intending to continue to insure itself, as the long leaseholder under the headlease.[88]There are exchanges of e-mails during April 2020. On 1 April, at 17.53, there is an e-mail from Bridge Insurance Brokers Limited to Simon Gubbay confirming certain terms, based on new sums insured. There is a quote for 3 and 5 Westbeach in a total sum of 38,594.61 (including insurance premium tax), and a further £1,792 (including insurance premium tax) for contractors’ all risks. At 7.27 that evening Simon Gubbay wrote to Oliver Whitefield stating that as that insurance covered the entire site, he was proposing to go ahead with it. He was proposing to apply a £10,000 excess for Blocks 4, 6 and 7, and inquired of Oliver Whitefield whether he would wish Landinvest to do the same for Blocks 3 and 5. Oliver Whitefield replied at 8.31 asking Simon Gubbay what it is that he was asking him. Simon Gubbay replied at 9.24 - something must have gone wrong with the timing of the e-mails - inviting Mr. Whitefield to give him a call in the morning to discuss. Mr. Whitefield indicated that he would do so. There was clearly a conversation because on 3 April at 5.55 p.m. Oliver Whitefield e-mailed Simon Gubbay asking whether he had received a response back from AXA following their conversation. On 6 April, at 5.38 p.m., Simon Gubbay replied to Oliver Whitefield saying: Yes the buildings premium for 3 and 5 will be 33,459.37 and a further 1,792 will be the contractors’ all risk policy. Total premium will be 35,251.37. I will send the documentation later this week.[89]Oliver Whitefield replied at 6.12 p.m. seeking clarification about a number of matters, including that MyWestbeach Limited should be named on the policy as an interested party, being the legal entity representing all of those investors in Blocks 3 and 5. In an e-mail on 6 April at 6.45 p.m., Simon Gubbay confirms that; and so, at 6.46 p.m., Mr. Whitefield sends an e-mail to Mr. Simon Gubbay saying:
“I’ll wait to hear from you.”
Landinvest then effected the insurance; and the policy certificate at page 830 (to which I have already made reference) was sent from 24 April to Mr. Whitefield at 11.37: Please see attached documentation. As agreed, the invoice for 3 and 5 of £33,459.37 can be paid in 10 full instalments. Apologies but I cannot put the CAR policy on an instalment plan. This totals £1,792 and I will be grateful if you could pay this next week, along with the first instalment for 3 and 5. Bank details were given.[90]On 24 April, later that morning, Simon Gubbay sends an e-mail to the liquidator saying that: MyWestbeach will settle the 3 and 5 invoice. Landinvest have covered 4, 6 and 7 on a separate cover note and will settle out of our own funds and seek to reclaim later on once we have agreed the path forward.[91]So, I am satisfied that the insurance for the year 2020 to 2021 was effected by Landinvest on terms whereby the Whitefield applicants, or their management company, were to settle the invoices. Mr. Michael Gubbay’s evidence, which is not contradicted by the Whitefield applicants, is that this was never done.[92]The position in relation to the following year is somewhat different. At page 331 of the supplemental bundle, there is an e-mail to Oliver Whitefield from an insurance broker, forwarding property owner’s insurance cover confirmation, stating that Blocks 3 and 5 were on cover from 24 March 2021. Various insurance documents follow up to page 340. There is also a document from Allianz to the insurance brokers, dated 24 March 2021, naming the Westbeach right to manage company as the client, at pages 844 to 845. On 1 April 2021, Simon Gubbay sends an e-mail to Oliver Whitefield *at page 838) stating: We took out two policies last year to cover blocks 3 to 5 and 4 to 6. These policies expired on 31 March. We have extended cover to 30 April, at which point we will extend to 31 March 2022. We also have a contractors’ all risk policy, which may or may not be required depending on the responses to the questions below. The questions concerned the state of the outstanding development works, and a likely completion date; and, when the works were complete, the letter of occupancy. There was no response to that e-mail until 4 June 2021. That response appears, together with the e-mail to which it was responding, at page 838. The response is from Oliver Whitefield, on 4 June 2021. I have already mentioned that, as part of his evidence, Mr. Whitefield exhibited only his response of 4 June, at page 727 of the hearing bundle. The response reads: Simon, in response to your e-mail, I can confirm that the full insurance for the apartment buildings and common areas associated with Westbeach phases 3 and 5 has been sourced, paid for, and put in place, meeting all relevant legal and other requirements. This provides cover until 31 March 2022. The hearing bundle contains, at pages 840 to 843, documentation evidencing both the inception of the cover, and the cost of the premiums.[93]Mr. Simon Gubbay replied on 21 June at page 839: As per my e-mail below, insurance has been taken out for all blocks. Copy attached for your records. On what basis are you insuring the property?[94]In cross-examination of Mr. Whitefield, it was put to him that he had not replied to that e-mail. His response was: I can’t recall, it seems that way. It was very confrontational between ourselves and Landinvest. It was very tense. Maybe I did not reply.[95]The position, therefore, is that the Whitefield applicants’ management company had effected the insurance. They had been told that Landinvest was doing so as well. They waited two months before telling Landinvest that they had effected the insurance; and when it was pointed out to them that Landinvest was already insuring, Mr. Whitefield did not respond.[96]Mr. Gubbay accepted in cross-examination that it looked as though, on the face of the documents, the management company, or right to manage company, had taken out insurance cover. Mr. Michael Gubbay’s attitude was: Well, if you can provide me with evidence of the cover, and payment of the premium, then I can recover the premium back from the insurers with whom we took out the policy.[97]In opening, Mr. Hutchings KC told the court that the only dispute appeared to be in relation to the insurance year 2020 to 2021,:
"We will produce a cover note and invoice for 2021 and 2022."
As far as I am aware, both those documents have not yet been produced.[98]I am satisfied that Landinvest has made out its claim for the recovery of the insurance for the 2020 to 2021 year. On the evidence, however, I am satisfied = as Mr. Gubbay appeared content to accept - that the right to manage company had taken out the insurance for 2021 to 2022. Landinvest had also done the same. However, the basis of Landinvest’s claim is founded upon the insurance provisions in the development underlease, and the corresponding indemnity at clauses 18 and 17 respectively. If the right to manage company had incepted the insurance, then that indemnity does not apply. It is a pity that both the cover note and the invoice for 2021/2022 have not been provided, as Mr. Hutchings KC indicated would be done. But I am not satisfied that the claim for the indemnity has been made out in relation to the insurance year 2021/2022. I am satisfied that it has been made out for 2020/2021.[99]In the course of e-mail exchanges following the conclusion of the hearing, however, and for the first time, Mr. Hutchings KC raised a new point. This was done, effectively, as a postscript to an e-mail concerning the resolution of Issue 4. In an e-mail, timed at 12.55 this Tuesday, 23 June, Mr. Hutchings KC added, quite separately: There is one point in relation to Issue 2 that I wish to raise in reply in case it was not clear. It relates to the first deed of variation of 14 July 2016, at page 342 of the supplemental bundle, to which you were taken in opening. It is to point out that clause 4 of that deed deleted clause 18 of the development lease, which is the insurance provision.[100]Unsurprisingly, that provoked a detailed response from Mr. Gunaratna, by way of an e-mail timed at 17.21 on 23 June. Mr. Gunaratna stated that Mr Hutchings KC’s new submission was controversial, and, on his client’s position, objectionable. He invited the court to note as follows:(1) When reading the deed of variation, it is necessary to read the recitals at clauses 2.2 and 2.3, which make clear its purpose regarding the intended deletion of the forfeiture clauses in the two leases (the 999 year headlease and in the 125 year development underlease). The court should then note the plain typographical error whereby the forfeiture clauses were identified as clauses 18 in both of those two leases, whereas they were in fact to be found in clause 18 in the 999 year headlease and clause 20 (not 18) in the 125 year development underlease.(2) This typographical error was corrected in manuscript in clause 2(3) of the deed of variation in question, although the writer appears to have omitted to make the very same manuscript amendment a few lines below, at clause 4, where reference was again made, in error, to clause 18, rather than 20.(3) There was no suggestion of any intention to ever delete the covenant for insurance in the 125 year development underlease. Indeed, the Whitefield applicants’ pleaded case in these proceedings was never that the tenant’s insurance covenant had been deleted, but rather was directly to the opposite effect. So in the Whitefield applicants’ statement of case, at paragraph 36, they expressly acknowledge that there is a provision for the tenant to insure (clause 18). Paragraphs 75 and 76 of the Whitefield applicants’ skeleton argument also included the following express acknowledgments: Issue 2 - The Trustees liability pursuant to the obligations under the vested development lease for accrued costs of insurance (claimed at £72,597.84) 75. The development lease relevantly provides: 17. [the Company] shall keep [Landinvest] indemnified against all liabilities, expenses, costs ... claims, damages and losses incurred by [Landinvest] arising out of or in connection with any breach of any [of the Company’s] covenants in this lease, or any act or omission of [the Company] 18. The Tenant [i.e. the Company] ... shall ensure that the property and all the buildings constructed thereon from time to time are insured to the full reinstatement costs … 76. It is acknowledged that the Company did not comply with that obligation in the relevant years 2021 and 2022.(4) The Whitefield applicants confirm (see Mr. Whitefield’s oral testimony) that their case remained as set out in their statement of case.(5) If the Whitefield applicants had sought and obtained permission to amend their case, so as to plead that the company was no longer obliged by clause 18 of the 125 year development underlease to insure the premises by virtue of clause 4 of the deed of variation, Landinvest could, and would, have dealt with the matters noted in points (1) and (2) above in evidence and in submissions at trial.(6) It is not appropriate for the Whitefield applicants to seek to raise such a case now, and they should not be permitted to advance such a position.[101]So, that is the position. There is no application before the court to amend the Whitefield applicants’ statement of case.[102]In those circumstances, it seems to me that any reliance upon the deed of variation to say that there was a deletion of the insurance covenant in clause 18 of the development underlease cannot be pursued in answer to the insurance claim. If it were to be pursued, then it would be open to Landinvest to raise a case of rectification by construction, on the footing that the relevant deletion in respect of the development underlease was to clause 20, not clause 18; and that, as a matter of construction, the reference to clause 18 should be treated as having been made in error for a reference to clause 20. Alternatively, it would have been open to Landinvest to advance a case of equitable rectification for common mistake.[103]At this late stage, it would not be just to Landinvest to allow an unpleaded case of variation to be advanced. So, the point made by Mr. Hutchings KC in his e-mail of 23 June at 12.55 is, in my judgment, no defence to the insurance claim in relation to the insurance year 2020 to 2021, in relation to which I am satisfied that the insurance claim has been made out. Issue 3: The alleged unpaid premium and insolvency set-off[104]Against that background, I turn to Issue 3. This is the allegation that part of the consideration for the grant of the headlease was unpaid by Landinvest. Mr. Hutchings KC, on behalf of the Whitefield applicants, seeks to raise a case of insolvency set-off in relation to the unpaid element of the premium, pursuant to Insolvency Rule 14.25. Landinvest's answer to that claim for insolvency set-off is to be found in Landinvest's statement of case, at paragraphs 42 through to 54. The matter is addressed by Mr. Michael Gubbay in his fourth witness statement, at paragraphs 33 to 38. Mr. Hutchings KC deals with the matter in his skeleton argument, at paragraphs 81 through to 90. In closing, Mr. Hutchings KC expressly accepted that the mutual financial dealings between Landinvest and the company, extending to Landinvest’s subsidiary and associated companies, were hugely complicated. Landinvest deals with the matter at paragraphs 66 to 72 of Mr. Gunaratna’s skeleton argument.[105]Mr. Ferguson, as one of the joint administrators, raised the matter in an e-mail addressed to Michael Gubbay on 14 August 2020 (at pages 789-790 of the hearing bundle). He sent a chasing e-mail on 30 September 2020. That provoked a response from Simon Gubbay later that same day, at page 788. His response was to direct Mr. Ferguson to comments in the body of Mr. Ferguson’s original e-mail. Mr. Ferguson sent a further e-mail on 15 July 2021, stating that he included comments within the reconciliation schedule which Mr. Simon Gubbay had provided where further information was said to be needed.[106]The liquidator’s questions were not answered for almost four years. Mr. Gubbay did not respond until 14 May 2025, at page 856 through to 857. The last piece of correspondence in this train of correspondence was a letter from Walker Morris dated 16 June 2025, written on behalf of the liquidator. The fourth paragraph of that letter reads: The liquidator has not and is not in a position to investigate the Landinvest responses. No agreement has been reached between the company and Landinvest in respect of the extent, if any, of any shortfall over the company by Landinvest in respect of the premium payable upon the grant of the headlease. There are insufficient funds available in the estate to enable the liquidator to further investigate matters and the liquidator does not consider that it is in the interests of all the creditors of the company to further investigate matters when such investigations are unlikely to create any real value for all creditors.[107]I have already mentioned, when addressing Mr. Ferguson’s cross-examination, that his emphasis was upon the second limb of that response - value to creditors - rather than the first limb. During the course of his cross-examination, Mr. Gunaratna had pointed to the money standing to the credit of the liquidator’s interest-bearing account, and had asserted that it had been sufficient to fund any further investigations.[108]The position, therefore, is that the liquidator is undertaking no further investigations. Mr. Whitefield accepted that he was aware of that. He also accepted, in cross-examination, that he did not ask the liquidator to undertake any further investigations.[109]Whilst I acknowledge that caution that must be applied when considering Mr. Michael Gubbay’s evidence, on Issue 3 I accept his evidence that the full consideration had been paid for the premium on the grant of the headlease. In the course of Mr. Hutchings KC’s closing submissions, I enquired whether, if I were to accept Mr. Gubbay’s evidence on this issue, that that would be an end to the insolvency set-off issue. Mr. Hutchings KC accepted that it would. As Mr. Hutchings KC says, the financial dealings are very complicated. However, it seems to me clear that the court should accept Mr. Gubbay’s evidence of a netting-off of the balance of the purchase premium against monies that were due from the company to Landinvest and its associated companies. Mr. Gunaratna addresses this in his skeleton, as does Mr. Michael Gubbay in his fourth witness statement. I accept Mr. Michael Gubbay’s evidence, and I accept Mr. Gunaratna’s submissions. It is unnecessary for me o repeat them here.[110]What I find compelling are really two matters. The first is an e-mail of 27 June 2018, at page 866. This is part of a much wider series of e-mails, which really concludes with an e-mail from Derek Kewley, one of the two people behind the company, dated 2 July 2018 (at page 864). During the intervening e-mails there had been various attempts to reconcile sums passing between Landinvest, and its associated companies, on the one hand, and the company on the other. The e-mail timed at 14.56 on 2 July reads: Thanks Michael. Previous outstanding amounts were £154,736 for WB1 and £44,552.32 for WB2. I have therefore deducted £72,557.73 from this sum which accounts for ground rent charged on WB2 at 1 July to 31 December 2018, and paid the balance of 1,000 and £26,694.95 through to Region this afternoon.[111]References to WB1 are to Blocks 1 and 2 and to WB2 are to Blocks 3, 4, 5, 6 and 7. I cannot conceive that Mr. Kewley would ever have sent that e-mail on 2 July had he thought that incomplete netting-off had been undertaken, and that any sum still remained outstanding in respect of the premium that had been payable by Landinvest to the company upon the grant of the headlease. It seems to me that that e-mail of 2 July is wholly inconsistent with any claim for insolvency set-off.[112]The second is that Mr. Kewley, together with Mr. Nicholas Spence, was one of the two individuals behind the company. As individuals, they were defendants to a fraud claim brought by, amongst others, the Whitefield applicants. That claim came before Foxton J. His judgment bears the neutral citation number [2024] EWHC 2434 (Comm). It was handed down on 27 September 2024, following a trial during April, May and June of that year, with further submissions at the end of July. Essentially, Mr. Spence and Mr. Kewley were found to have perpetrated a fraud against, amongst others, the Whitefield applicants in relation to the holiday resort development. It seems to me improbable in the extreme that they are the sort of people who would have left any substantial amount outstanding in respect of an unpaid premium for the grant of the headlease to Landinvest, having undertaken what was, quite clearly, a detailed reconciliation of various intercompany payments involving Landinvest and its subsidiary and associated companies.[113]So for those reasons, I am satisfied that the Whitefield applicants, on whom the burden lies, have not made out their case of insolvency set-off. During the course of the hearing, much was made of an anti-set-off provision in the headlease, and also in the development underlease. Such provisions do not, of course, prevent the parties to the agreements containing such a clause from agreeing between themselves that they will mutually net-off certain payments against other payments due under the instruments containing the anti-set-off provisions. That is clearly what happened in the present case. So, for those reasons, I am satisfied that the Whitefield applicants’ case has not been made out in relation to Issue 3. Issue 4: Electricity connection costs[114]So far as issue 4 - the electricity connection costs - is concerned, at the end of the hearing Mr. Hutchings KC made an open offer in court to compromise that issue. That offer was repeated in an e-mail sent by Mr. Hutchings KC to Mr. Gunaratna at 17.03 on the evening of Thursday 18 June. A modified form of offer was made by the solicitor for the Whitefield applicants at Trowers & Hamlins LLP just after 7.30 on the following evening, 19 June. The updated offer was for the Whitefield applicants to pay to Landinvest £80,001.60 gross, being £66,668 plus VAT of £13,360, in full and final settlement of Issue 4.[115]The response, on Saturday 20 June, at 10.24, from the solicitors for the Whitefield applicants, was that they had instructions to accept the updated offer. The writer pointed out that the offer did not set out payment terms. These were agreed by an exchange of e-mails on 20 and 21 June, so that payment was to be made within 28 days. I understand that an issue has now arisen as to whether the Whitefield applicants are now seeking to add a new term to the settlement agreement, whereby payment by them of the agreed sum is to be made conditional upon Landinvest first delivering to them a VAT invoice. Mr. Gunaratna’s position in relation to that, as expressed in his e-mail of 23 June 2026 at 5.21 p.m., is that this was a term which was never previously mentioned in the exchange of open correspondence; and that Landinvest considers that correspondence to constitute a binding settlement of Issue 4 on its stated terms. Mr. Gunaratna recognises that it may or may not be that the parties have an unfortunate dispute over the terms of their settlement agreement. To be clear, Mr. Gunaratna says that that is not an issue arising for determination within the framework of the existing directions orders. He anticipates that the parties will continue to liaise about it.[116]So, in relation to Issue 4, it is, I think, common ground that no determination is required by the court because this has been sensibly settled by agreement between the parties.[117]That concludes my extemporary judgment addressing all of the four issues that are before the court. Mr. Gunaratna had explained during the hearing that, unfortunately, he would not be available for the hand-down of this judgment. It has, therefore, been agreed that there will be a consequentials hearing arranged on a future date. Counsel’s clerks are seeking to identify suitable dates for that.[118]What I will do, therefore, is to extend the time for appealing until 21 days after the date of that consequentials hearing, so as to preserve everyone’s rights of appeal.[119]That concludes this extemporary judgment. - - - - - - - - - - - - (This Judgment has been approved by HHJ Hodge KC.) Digital Transcription by Marten Walsh Cherer Ltd 2nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Tel No: 020 7067 2900. DX: 410 LDE Email: info@martenwalshcherer.com Web: www.martenwalshcherer.com