Wilton Student Developments (Egerton) Limited v Kin Fan Ip

Mr Justice Leech: I. The Appeal

1. By Appellant’s Notice dated 24 September 2024 the Appellant, Wilton Student Developments (Egerton) Ltd applied for permission to appeal against the judgment of His Honour Judge Baddeley (the “ Judge ”) dated 4 September 2024 in the Sheffield County Court (the “ Judgment ”) in which he held that certain deeds of surrender were ineffective to extinguish the Respondent’s equity of redemption in the leases of two flats. After handing down the Judgment, the Judge heard submissions on costs and delivered an ex tempore judgment.

2. By Order dated 25 September 2024 (the “ Order ”) the Judge gave directions for the continuation of an injunction which His Honour Judge Robinson had granted on 14 March 2024 (the “ Injunction ”) and for the determination of the outstanding issue, namely, the assessment of the value of the Respondent’s equity of redemption. He ordered the Appellant to pay two thirds of the Respondent’s costs which he assessed at £11,923.33. He also refused permission to appeal against both of the substantive orders which he had made and the costs order.

3. On 21 October 2024 the Judge vacated the trial which had been listed for 9 January 2025 and on 28 October 2024 His Honour Judge Gargan stayed enforcement of the costs order and the further directions for assessment. On 11 November 2024 Bright J granted permission to appeal on Ground 1 of the Grounds of Appeal (below) but refused permission in relation to Ground 2 which related to the judgment and order for costs which the Judge had made.

4. Given the nature of the issue, the Appeal was transferred to the Chancery Division and I heard it on 7 October 2025. Ms Rachel Coyle, instructed by Glenville Walker & Partners Ltd (“ Glenville Walker ”), appeared on behalf of the Appellant (as she had done so below). Dr John Brown appeared on behalf of the Respondent. He did not appear at the trial below where the Respondent represented himself although I was also told that other counsel settled the Particulars of Claim and appeared at a number of earlier hearings. II. Background A. The Facts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

7. The Mortgage is dated 27 January 2020 and is expressed to be made by deed and between the Respondent (1) and the Lenders as “ Security Trustees ” (2). Clause 1 contained the definitions and clause 1.1 defined the “ Act ” as the Law of Property Act 1925 . It also contained the following definitions which I adopt: “ Charged Assets all properties, assets and rights of the Borrower charged by this deed;” “ Disposal includes any charge, sale (whether subject to this deed or otherwise), lease, sub-lease, assignment or transfer, or any agreement to enter into any of the foregoing, the grant of an option or similar right, the creation of a trust or other equitable interest in favour of a third party and a sharing or parting with possession or occupation whether by way of licence or otherwise and Dispose and Disposition shall be construed accordingly;” “ Properties means each of the properties described in the Part I of the Schedule together with all buildings thereon and all Fixtures subject to and with the benefit of all rights, easements, covenants, restrictions, stipulations, agreements, declarations and other matters affecting and/or benefiting the same, each a Property ;” “ Secured Liabilities all monies, obligations and liabilities, whether actual contingent, now or hereafter due, owing or incurred by the Borrower, in whatever currency denominated, under clause 2 of this deed or under any other provision of this deed and references to the Secured Liabilities include references to any of them;”

8. Clause 1.2.7 provided that the Borrower, Lenders and the Security Trustees included their respective successors in title and, as Ms Coyle pointed out to me, the Mortgage was assignable by the Security Trustees. Clause 2 contained the covenant for payment and by clause 3 the Respondent as borrower charged the Properties by way of legal mortgage as a continuing security for the payment and discharge of the Secured Liabilities and by way of assignment the proceeds of any Disposal of the Charged Assets. Clause 7 set out the powers of the Security Trustees, clause 8 set out the powers of a receiver and clause 9 dealt with the effect of the Mortgage (my emphasis): “7. Powers of the Security Trustees 7.1 The statutory powers of sale and of appointing a Receiver (as extended by this deed) shall arise at any time after the execution of this deed. 7.2 At any time after the Borrower has failed to pay the Secured Liabilities when due, or if requested by the Borrower ， the Security Trustees may exercise without further notice on and without the restrictions contained in section 103 of the Act all the powers conferred mortgagees by the Act as varied by this deed and all the powers and discretions conferred by this Charge either by themselves or by a Receiver appointed by them , without first appointing a Receiver or notwithstanding any such appointment. 7.3 The Security Trustees shall have the power to lease, make agreements for and accept surrenders of leases and to grant options on such terms as it may consider expedient and without the need to observe any of the provisions of sections 99 and 100 of the Act . 7.4 The Security Trustees may in their absolute discretion release from this Charge any part of the Charged Assets. 7.5 The Security Trustees may at any time obtain, at the Borrower's expense, an up to date professional valuation of any of the Properties and/or the Business and the Borrower and any Surety shall give the valuer all reasonable assistance to enable it to carry out the valuation and permit it such access to any of the Charged Assets, the assets used in any Surety as it the Business and the records and accounts of the Borrower reasonably requires to conduct the valuation.

8. Receiver 8.1 At any time after the Security Trustees have demanded repayment of all or any of the Secured Liabilities or if the Borrower requests that a Receiver be appointed then the Security Trustees may by writing under the hand of any director or manager or other authorised signatory for the time being of the Security Trustees appoint any person or persons to be a Receiver of the whole or any part or parts of the Charged Assets and of all the rights of the Security Trustees contained in or conferred by this deed. 8.2 Where two or more persons are appointed to be a Receiver the Security Trustees may in the appointment declare whether any act required or authorised to be done by a Receiver is to be done by all or any one or more of them for the time being holding office and subject thereto any such persons may act jointly and/or severally. 8.3 Any Receiver shall (subject to any limitations or restrictions expressed in the deed or other instrument appointing him but notwithstanding the winding up or dissolution or bankruptcy at any time of the Borrower) have: 8.3.1 all the powers conferred from time to time on receivers by law and/or statute (including the Act ); 8.3.2 power (without limitation) to: (a) take possession of, collect, get in and give receipts binding on the Borrower for all or any of the Charged Assets and all rents and other income in connection with the Charged Assets whether accrued before or after the date of his appointment in such manner as he thinks fit; (b) bring, defend or discontinue any proceedings (including arbitration proceedings) in the name of the Borrower or otherwise as may seem expedient to him; (c) carry on, manage and develop the whole or any part of the Business and/or the Charged Assets, and for this purpose to make use of any of the Borrower’s assets which may be on any of the Properties without being liable to compensate the Borrower for such use; (d) redeem any security, raise or borrow any money from or incur any liability to the Security Trustees or others on such terms and secure the payment of any money as he may think fit and so that any such security may be or include a charge on all or any of the Charged Assets; (e) without the restrictions imposed by section 103 of the Act or the need to observe any of the provisions of sections 99 and 100 of the Act sell, let, surrender or accept surrenders, grant licences or otherwise Dispose of or deal with all or any of the Charged Assets on such terms and conditions as he may think fit in the name and on behalf of the Borrower or otherwise. Any such sale, lease or Disposition may be for any form of valuable consideration and by payable immediately or by instalments spread over such period as he shall think fit and so that any consideration received becomes charged with the payment of all moneys, obligations and liabilities secured by this Deed. Plant, machinery, fixtures, fittings and equipment may be severed and sold separately from the premises containing them and the Receiver may apportion any rent relating to the premises sold without the consent of the Borrower; (f) carry out on any of the Properties any unfinished works of building reconstruction, maintenance, furnishing or equipment; (g) on behalf of the Borrower remove, store, sell or otherwise deal with any chattels not subject to this Charge without being responsible to the Borrower for any loss; (h) promote the formation and trading of companies and arrange for such companies to acquire all or any of the Charged Assets on such terms and conditions as he may think fit; (i) make any arrangement or compromise, allow time for payment or enter into, abandon, cancel or disregard any contracts in relation to the Charged Assets as he shall think fit; (j) purchase or acquire any land or other property and purchase, acquire, grant or release any interest in or right over land or the benefit of any covenants (positive or restrictive) affecting land; (k) make and effect such repairs and improvements to the Charged Assets as he may think fit and maintain or vary insurance cover; (l) make any arrangements or compromise which he thinks fit in relation to any lease of all or part of any of the Properties or to any covenants or restrictions relating to any of the Properties; (m) insure the Charged Assets and any works and effect indemnity insurance or other similar insurance and obtain bonds and give indemnities and security to any bondsmen; (n) appoint managers, agents, officers and employees; (o) without any further consent by or notice to the Borrower exercise on behalf of the Borrower all the power and provisions conferred on a landlord or a tenant by any legislation from time to time in force in respect of any of the Properties but without any liability in respect of powers so exercised or omitted to be exercised; (p) acquire, renew, extend, grant, vary easements, rights, privileges and licences over or for the benefit of the Charged Assets as he considers expedient; and (q) power to do all such other acts and things as may be considered by the Receiver to be incidental or conducive to any of the above matters or powers or to the preservation or realisation of the Charged Assets. 8.4 Any Receiver shall so far as the law allows be deemed to be the agent of the Borrower for all purposes and the Borrower shall be solely responsible for his acts, defaults contracts, engagements, omissions, losses, liabilities, misconduct and remuneration and the Security Trustees shall not be under any liability whatsoever in such regard… 8.8 Neither the Security Trustees nor any Receiver shall be liable to account: 8.8.1 as mortgagee in possession in respect of all or any of the Charged Assets nor be liable for any loss upon realisation whatsoever for which a mortgagee in possession may be liable as such; or 8.8.2 for any money or assets not actually received by it or him whether or not a better price might have been obtained by deferring or advancing any Disposal of the Charged Assets.

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

9. Clause 11 was headed “ Protection for Third Parties ” and it provided that no third party was bound to inquire whether any power exercised by the Security Trustee had become exercisable: “No third party dealing with the Security Trustees or any Receiver or its agents shall whether before, on or after any contract, Disposition or assurance in relation to any Charged Assets in such third party's favour be concerned to enquire whether the Secured Liabilities have become payable or whether the Receiver has been validly appointed or whether any power which the Security Trustees or Receiver purports to exercise has become exercisable or whether any of the Secured Liabilities remain undischarged or to see to the application of any money paid to the Security Trustees or any Receiver nor shall any such third party lending any money to a Receiver be concerned to enquire as to the propriety or purpose of the exercise of such power or as to the application of any money so borrowed.”

10. Clause 14 was headed “ Power of Attorney ” and clause 14.1 conferred an irrevocable power of attorney upon the Security Trustees to execute any deeds which the Respondent was required to execute as borrower under the Mortgage: “The Borrower by way of security and in order more fully to secure the performance of the Borrower's obligations under this deed irrevocably appoints the Security Trustees and the persons deriving title under it and separately with any Receiver jointly and severally to be its attorney for and in its name and on its behalf and as the act and deed otherwise of the Borrower, at any time after the Security Trustees has demanded payment or discharge by the Borrower of the Secured Liabilities, to execute as a deed or under hand (as applicable) and deliver and do all such which the Borrower is required to execute and do under the covenants and provisions contained in this deed and to make any demand upon or to give any notice receipt or discharge to any person owing monies to the Borrower comprised in the Charged Assets and to execute as a deed or under hand (as applicable) and deliver any charges, legal mortgages, assignments or other security and any transfers of securities required to be executed hereunder and generally in its name and on its behalf to exercise all or any of the powers authorities and discretion conferred by or pursuant to this deed or by which may be required or which the Security or statute on the Security Trustees or which may be required or which the Security Trustees or any Receiver shall deem fit for carrying any sale, lease, charge, disposal other dealing by the Security Trustees or any Receiver into effect or for giving the Security Trustees or any Receiver the full benefit of this deed and generally to use the name of the Borrower and to do anything (without prejudice to the generality of the foregoing) which it or he may reasonably deem proper in or for the purpose of exercising any of such powers authorities and discretion.”

11. Finally, clause 19 was headed “Re-assignment” and it provided that upon payment and discharge of the Secured Liabilities, the Security Trustees would re-assign it to the Borrower: “Subject to clause 19.1, upon the payment and discharge of the Secured Liabilities the Security Trustees will at the request and cost of the person then entitled to them discharge this Charge and re-assign to such person the Property Rights or such of the same as remain in existence and vested in the Security Trustees.

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

13. By a deed of assignment dated 4 March 2022 (the “ Assignment ”) the Lenders assigned the benefit of the Loan and the Mortgage to Cirrus. I was not taken to an executed copy of the Assignment but there was no dispute that it was executed in the form in which it appeared in the Appeal Bundle and Dr Brown relied upon its terms. The consideration for the assignment was £1 together with the amount owed by the Respondent to the Lenders at the date of completion (including costs and interest). Clauses 2.4, 2.6 and 2.7 provided as follows: “2.4 The Assignee shall pay any Realisations to the Assignor within 3 Business Days of receiving the same in payment of the Consideration in accordance with Clause 2.5 below until the Consideration is paid in full. “2.6 The Assignee shall provide the Assignor within 5 Business Days of the end of each 3 month period following completion with a written summary of all Facilities collected in the preceding 3 months. 2.7 If the Assignee receives any payment in respect of any Facility or any other sum due to the Assignor by way of Consideration or otherwise, it shall hold the payment on trust for the benefit of the Assignor and remit it to the Assignor forthwith on receipt in accordance with clause 2.4 above.”

14. Ms Coyle told me on instructions from Mr Monks that Cirrus had paid the Lenders £23,657.15 for each of the Properties as Consideration for the assignment. Dr Brown did not contest these figures and I accept them. Ms Coyle did not suggest that Cirrus received or paid any further sums to the Lenders under clause 2.7 and, in particular, that it received the balance of either premium of £60,000 which the Appellant received on the grant of the new leases in July and August 2022. As Ms Coyle pointed out, these were not sums which Cirrus received. C. The Deeds of Surrender (1) Surrender 1

15. Surrender 1 was expressed to be made by deed and by the Appellant in its capacity as “Landlord” with itself in its capacity as “Tenant”. The deed recited the lease of apartment 709, that the reversion was vested in the Landlord, that the lease itself was vested in the Tenant and that it had been agreed between the Landlord and Tenant that the term created by the lease would be surrendered. Clause 1 then provided as follows: “The Tenant with full title guarantee hereby surrenders unto the Landlord the residue of the term of years created by the Lease to the intent that the same shall forthwith merge and be extinguished in the reversion immediately expectant on the term.”

16. Surrender 1 made no reference to the Respondent and he was not expressed to be party to the deed. Nor did the Appellant purport to execute the document or surrender the lease on the Respondent’s behalf or by exercising the power of attorney or pursuant to any power under the Mortgage. The deed was executed by Mr Niall Monks on behalf of the Landlord in his capacity as a director of the Appellant and on behalf of the Tenant in the same capacity. (2) Surrender 2

17. Surrender 2 was in the same form except that it was expressed to be made by the Appellant as “Landlord” and Cirrus as “Tenant”. It was executed by Mr Monks on behalf of the Landlord in his capacity as a director of the Appellant and again by him on behalf of the Tenant this time in his capacity as a director of Cirrus. Again, Surrender 2 made no reference to the Respondent, he was not expressed to be a party to it and Cirrus did not purport to execute the document or surrender the lease by exercising the power of attorney or pursuant to any power under the Mortgage. (3) Surrender 3

18. Surrender 3 was in the same form as Surrender 1 save that it related to the lease of apartment 705. Mr Monks executed the deed on behalf of both Landlord and Tenant and the Respondent was not a party. (4) Surrender 4

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

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

21. There was no evidence before the Court that the Appellant paid any money to Cirrus in return for the surrender of both leases. When I asked for a rough account of the sums received and paid by the Appellant for the Properties, I was initially told that the Appellant paid £6,970 in service charge to a management company called “ Cloud ” and £500 in ground rent. When I pointed out that the Appellant was entitled to the ground rent as the freeholder and Cirrus itself was liable for the service charges, I was told that there was some sort of holding arrangement. Given the absence of any proper evidence in relation to this issue, I am not prepared to accept that the Appellant paid any sums to Cirrus in consideration for the surrender of the leases of the Properties. D. Procedural Chronology (1) The Third Party Disclosure Application

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

23. On 31 August 2022 Deputy Master Arkush heard the Third Party Disclosure Application and made an order for disclosure against Knights. On 9 September 2022 Knights sent two bundles of documents to the Respondent which contained the applications to register the Deeds of Surrender. The Applicant did not challenge this evidence at trial or before me and I accept it. (2) The Injunction

24. On 14 March 2024 the Respondent applied for an injunction to restrain Knights from applying to alter the register of the title to each of the Properties. At the hearing he was represented by Mr Richard Buston of counsel and Knights were represented by Ms Shaylla Shabbir. In his Order dated 23 March 2004 His Honour Judge Robinson granted the Injunction and gave directions for the continuation of proceedings as if begun by claim under CPR Part 7 including a direction to join the Appellant as Defendant. He recorded that a Claim Form had been issued and that the parties had identified the following issues in paragraph 8: “(1) Whether the legal charges are valid; (2) Whether the benefit of the loan agreements and legal charges have been validly assigned and if so when and to whom; (3) Whether the person(s) entitled to the benefit of the legal charges has/ have entered into possession of the properties as mortgagee(s) and if so when; (4) What has happened to the rents in respect of the properties from the student sub-tenants; (5) Why it is proposed to surrender the head leasehold interests in the properties to Wilton Student Developments (Egerton) Ltd for (apparently) zero consideration.” (3) The Original Claim

25. On 25 April 2023 the Claim Form was issued and I will refer to it as the “ Original Claim ”. The Respondent no longer pursued any relief against Knights personally and the Appellant was identified as the sole Defendant. On the same day the parties entered into a consent order which recorded that the Respondent had discontinued his claim against Knights and the Injunction was lifted as against them. The Claim Form was indorsed with Particulars of Claim in which the Respondent pleaded as follows in relation to the Deeds of Surrender and claimed the following relief: “27. The deeds of surrender filed by the 1st Claimant were both signed by the Defendant as the Landlord and also by the Defendant as the tenant.

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

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

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

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

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

33. In the circumstances described the Claimant seeks the following: i) A declaration that the basis in which the defendants sought to register the change of title were misconceived. ii) A declaration that the failure of the Defendant to provide details of the documents it attempted to register was unreasonable. iii) A declaration that the deeds of surrenders were invalid. iv) A declaration that the Defendant had no right in law to take possession in the manner it did. v) A declaration that the Defendant has breached the Claimants proprietary rights in seizing control of his properties. vi) Damages for breach of those proprietary rights. vii) Damages for breach of quiet enjoyment of property. viii) An account of rents. ix) Possession of the property. x) Interest on damages pursuant to section 69 of the County Courts Act 1984 at such a rate and for such a period as the court thinks fit. xi) Costs.”

26. I was told that the Particulars of Claim were settled by counsel and on 6 February 2024 the Respondent served Amended Particulars of Claim which involved him making a very minor amendment. On 22 May 2023 the Appellant served a Defence settled by counsel (who was not Ms Coyle). The Appellant positively averred that the effect of Cirrus’s actions was to extinguish the Respondent’s title: “12. Based on the foregoing paragraphs 2-11 above, Cirrus, as mortgagee by assignment, extinguished the Claimant’s interest in the Units when it lawfully took possession of the same on 18 March 2022 and/or from the surrender of the long leases by Cirrus back to the Defendant (as described below).

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

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

27. In answer to the Particulars of Claim, paragraph 27 (above), the Appellant accepted that it had entered into Surrenders 1 and 2 by mistake but pleaded that this mistake was corrected in Surrenders 3 and 4: “In relation to paragraphs 26 and 27, it is admitted that Knights were seeking to alter the register by virtue of deeds of surrender over the Units (by virtue of the matters detailed in paragraphs 4-14 and 44 herein). It is, however, denied that the relevant deeds of surrender referred to the Defendant as both Landlord and Tenant. The relevant deeds dated 11 July 2022 (in respect of Unit 705) and 7 July 2022 (in respect of Unit 709), refer to the Defendant as the landlord and Cirrus as the tenant. Copies of the same are appended to the Defence. It is admitted that there were erroneous deeds which referred to the Defendant as both counter-parties thereto, but this issue was rectified with the relevant deeds referred to in this paragraph and appended to this Defence – those deeds being the operative ones which surrendered the leases of the Units.”

28. For completeness, I should add that the Appellant also pleaded a case that the issues which the Respondent had raised in these proceedings were res judicata or that it was a Henderson v Henderson abuse of process to raise them again. Ms Coyle confirmed that this issue was not live at the trial and that the Appellant did not take this point either before the Judge or on the Appeal. (4) Case Summaries

29. Both parties produced case summaries and lists of issues for the trial. The Respondent’s case summary recorded that: “The defendant’s position is that the claimant has no interest now in those units or funds flowing from those units as they have been surrendered.” Under the heading “List of Issues” his counsel identified the following issues: “1. Was the loan agreement a regulated agreement for the purposes of the financial Services and Markets Act 2000 (Regulated Activities) Order (SI 2001/544)

2. Was the Loan agreement properly assigned to the Defendant?

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

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

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

6. Does the Claimant have to account for profits?”

30. The Appellant’s case summary also recorded that its position was that the Respondent had no interest in the Properties. However, it only identified two issues for trial: “1) Was the Loan Agreement a regulated agreement for the purposes of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)?; and 2) Was the Loan Agreement properly assigned to the Defendant?” It is unclear whether these two issues were intended to be additional to those identified by the Respondent but I assume that it was (and it probably does not matter much either way). (5) The Evidence

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

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

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

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

33. Mr Geoffrey Buck, who was at the time a Senior Associate at Knights, also gave evidence on behalf of the Appellant. It is clear from his evidence that Knights originally submitted Surrenders 1 and 2 for registration but only entered into Surrenders 3 and 4 when the Land Registry raised a requisition asking Knights to explain how the Appellant had become the owner of the long leases. It also appears that Cirrus was not the registered proprietor of the Mortgage when it entered into the Deeds of Surrender and was still not the registered proprietor by the date of trial: “9. I understand from Wilton that the Claimant's leasehold interest came to an end when Cirrus Property (“Cirrus”) took possession of the Apartments as mortgagee in possession due to a failure by the Claimant to pay sums due under a loan agreement (“the loan agreement’) entered into between Mr Ip (as borrower) and Simon Francis Roue, Naseema Roue and Adrian Todd (as security trustees) which loan was secured by a charge over the Apartments (‘the legal charge”). The source of my knowledge in this regard is the witness statement of Mr Niall Monks (pages 120-494) in opposition to a claim for possession of the Apartments made by Mr Ip to which I refer further below at paragraphs 18 et seq and in particular paragraph 8 of Mr Monks’ statement. I further understand from Mr Monks’ statement that by a Deed dated 4 March 2022 the security trustees assigned all of their rights, title, interest and benefits in the loan agreement and legal charge to Cirrus.” “11. Knights is now instructed by Wilton in relation to the sale of the Apartments, which includes closing the Claimant's leasehold title and removing his entry at the Land Registry. I understand from the instructions given to my colleagues in Knights that it was agreed between Wilton and Cirrus that Cirrus would enter into Deeds of Surrender with Wilton to terminate the existing leasehold interests of the Claimant (that now vest in Cirrus as the mortgagee in possession and as permitted under the terms of the loan agreement). Knights accordingly filed an application to the Land Registry to i) remove the restrictions on the titles of the Apartments and ii) surrender the leases (pages 3-94) (the "Application").

12. Knights received various requisitions from the Land Registry seeking evidence of how the leasehold title for the Apartments has vested in Wilton. Knights responded to the requisitions accordingly and provided evidence (pages 95-107). I understand from my colleagues in Knights that the application in respect of apartment 709 has been cancelled because according to the Land Registry a requisition raised by them on 18 October 2022 was not fully answered. That requisition (pages 95-97) raised two issues: firstly, as to how the leasehold interest became vested in Wilton (which has been addressed by submitting a further deed of surrender naming Cirrus as the tenant) and secondly, that no consent of the lender has been provided. It is my understanding from my colleagues that we are now waiting for the lender's solicitors to provide a TR4 (a transfer of charge) from the original lender to Cirrus, upon receipt of which my colleagues will submit a further application to the Land Registry. The application in respect of apartment 705 is still pending, albeit my colleagues are now anticipating a similar requisition from the Land Registry to that received in respect of apartment 709.” (6) The Trial

34. The Judge recorded that the trial took place over two days and that the Respondent, Mr Roue (one of the Lenders) and Mr Monks gave evidence: see the Judgment, [25] to [29]. He did not suggest that Mr Buck of Knights was called to give evidence and Ms Coyle confirmed in her Skeleton Argument for the Appeal that the Respondent, Mr Roue and Mr Monks were the only witnesses. No transcript of Mr Monks’ cross-examination was obtained although he gave critical evidence in answer to a question from the Judge. The Judge also recorded that a number of pleading points arose and that he had dealt with them in the following way: “30. After the evidence and before submissions, Miss Coyle asked me to give a preliminary judgment on whether I was going to consider and therefore needed to hear submissions on three issues. The Defendant’s case was that the Claimant was raising issues at trial that had not been pleaded.

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

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

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

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

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

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

36. On 23 August 2024 the Judge circulated the Judgment in draft and on 29 August 2024 Ms Coyle submitted a table of suggested typographical corrections and errors. She submitted that the Judge had not taken into account Clause 8 of the Mortgage (above) in deciding whether the Security Trustees had power to surrender the leases of both Properties. She also submitted that the Judge had failed to give adequate reasons for his decision: “The Defendant was deprived of the opportunity to address “collateral purpose”, it not being raised by any party at trial. The nearest reference was when the director of the Defendant stated: “had we sold the leasehold and accounted to the Claimant for his equity, we could have ended up in litigation.” This has been misinterpreted. The Claimant was making threats of litigation from the outset. It was not deemed appropriate to do anything given that we were going to end up in court regardless.” (7) Monks 4

37. On 3 September 2004 the Appellant also filed Monks 4 in which Mr Monks expressed his concern at the suggestion that he had been held to have a “collateral purpose” in entering into the Deeds of Surrender. He also gave evidence that the development had been fraught with difficulty. He also gave the following evidence: “10. At the time of surrender of the Claimant’s former leases, the Claimant was in arrears of ground rent and service charge in the sum of £8,641.01 per lease (so, £17,282.02 in aggregate), which Cirrus settled with Wilton in order that the ‘slate be wiped clean’ ahead of the grant of new leases of those units. Accordingly, any assessment of ‘equity’ allegedly belonging to the Claimant in these units must take account of those sums. It is also worth mentioning that the Claimant’s leases could legitimately have been forfeited for his failure to pay those sums.

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

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

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

14. The Claimant’s former units were sold at an increased rate (i.e. Wilton achieved a higher-than-usual sum for those units) because they were sold with a sub-lease in place and with an assured yield guaranteed to the purchaser. Those sub-leases place all obligations for payment of service charge costs (including any extraordinary costs) back on the Defendant. The Defendant has, accordingly, assumed liabilities as a result of having sold long leases of those units at those prices, and I submit that a proper assessment of those liabilities would be required in order to properly determine any question of alleged equity in the units.” “17. Any sums that remained following sale of the new leaseholds and the aforementioned deductions, were reinvested in their entirety into completing the build of Nebula. Therefore the Defendant has not benefitted from any alleged equity in unit 705 and/or unit 709. The development as a whole has been a loss making development for the Defendant due to the extensive works and costs that were required to finish the build in addition to the untimely decline in demand for student accommodation.”

38. Ms Coyle took me to Monks 4 during her oral submissions and Dr Brown did not object to me looking at it. But he pointed out that it was not available at the trial and Mr Monks could not be cross-examined about it. The Appellant did not seek the permission of the Court to rely on Monks 4 under CPR Part 52.21(2) and Monks 4 was strictly speaking inadmissible on the Appeal. I return to this evidence below. (8) The New Claim

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

40. The Judge identified six issues for determination at the trial. The first two related to the questions whether the Loan and Mortgage were regulated under the Consumer Credit Act 1974 , the third was whether the Assignment was valid, the fourth was whether the Appellant was entitled to terminate the Loan and the fifth whether it was entitled to possession. The Appellant succeeded on all five issues and there was no cross-appeal by the Respondent against any of the Judge’s conclusions on those issues.

41. The sixth issue which the Judge identified was whether Cirrus was entitled to surrender the leases of both Properties and, if so, what the Respondent’s rights were and whether they bound the Appellant. The Judge described this issue as the “most troubling issue of this case” see the Judgment, [93]. He framed the issue at [94] to [107] as follows: “94. Cirrus had taken possession of the Claimant’s two apartments, for which he had paid £110,000 or so to the initial developer together with a further £32,000 to the Defendant using the Loan. Long leases of the Apartments were sold by the Defendant shortly after possession was taken for £120,000.

95. The amount due under the charge was £43,281.81, together with a few days further interest.

96. So, what happened to the Claimant’s equity?

97. Rather than sell the apartments as mortgagees in possession, Cirrus surrendered the 999-year leases to the Defendant. The Claimant’s pleaded case is that these surrenders were a “sham”.

98. As I indicated during the hearing, this looked like a “kamikaze” move on Cirrus’ part. I said that I could see why the Claimant felt that he had been “ripped off.”

99. As the Claimant put it in his skeleton: “ D somehow thinks that as a result of the alleged “breach” he can just pocket the difference and walk away with the £85k extra. D has exploited the fact that most of the investors are foreign and would be unsure of their rights and the law and has unlawfully “extinguished” dozens of investors’ interests and retained illegally significant sums… Even if D had a right as mortgage (sic) in possession, that right does not extend to D retaining all assets and income over and above what was owed…”

100. The Claimant’s barrister put it even more strongly in the skeleton argument that he filed prior to the hearing on 4th – 5th March 2024 – “As mortgage (sic) in possession D has a duty to realise the assets and discharge the debts with the (significant) remainder being returned to C. This has not happened in C’s case nor dozens of other cases and the manner in which D has dealt with the assets is tantamount to a wholesale criminal enterprise.”

101. A Companies House search reveals that Mr Monks is the sole director and majority (more than 75%) shareholder in Cirrus. I asked Mr Monks why Cirrus had surrendered the leases on the apartments, rather than selling them, as the Defendant had effectively done shortly afterwards by granting new leases. His answer was that he had signed the documents that were presented to him by his lawyer and that “had we sold the leasehold and accounted to the Claimant for his equity, we could have ended up in litigation.”

102. At this point, Miss Coyle, representing the Defendant interjected to advise that Mr Monks was giving evidence as a director of the Defendant and not Cirrus and that it would be unfair to Cirrus, who are not a party to this litigation and have not been able to take legal advice to pursue the line of enquiry further. Miss Coyle specifically advised that she has no instructions from Cirrus.

103. Miss Coyle’s submission was that there is no fetter on a mortgagee in possession’s powers.

104. She referred me to clause 7.3 of the Charge, which read: “The Security Trustees shall have the power to lease, make agreements for and accept surrender of leases and to grant options on such terms as it may consider expedient and without the need to observe the provisions of sections 99 and 100 of the [ Law of Property Act 1925 ].”

105. Her submission was that this provision gave Cirrus the power to surrender the lease and that, whilst it might seem harsh, the Claimant had signed up to the terms of the lease and must face the consequences of that following his default on the Loan.

106. She agreed with me when I summarised her submission as saying that the Defendant’s case was “Tough. It is a windfall for us, but you signed up for it and you lose.”

107. Miss Coyle also submitted that, as Cirrus is a separate corporate entity, the Defendant cannot be liable for any rights that the Claimant may have as against Cirrus. She submitted that I could not fairly adjudicate upon matters relating to Cirrus’ actions, as they are not a party to the litigation and have not had the chance to defend their actions or protect their interests.”

42. The Judge then cited a number of authorities and textbooks for the proposition that a mortgagee may only exercise the remedies under a legal charge for the purpose of securing payment or satisfaction of the debt a number of which I consider below. He then set out his conclusions at [111] to [124]: “111. I am not satisfied that clause 7.3 of the charge gave Cirrus the right to surrender the lease. My reading of that provision is that it gave the mortgagee the power to i) Lease; ii) Make agreements for leases; and iii) Accept the surrender of leases.

112. I do not read the provision as entitling Cirrus to surrender its own lease.

113. After I circulated a draft of this judgment, Miss Coyle sent a “Table of Suggested Typographical Corrections and Obvious Errors” referring me to Clause 8.3.2(e) of the charge, which gives any receiver the power to surrender as well as accept surrenders of leases and goes on to provide that any consideration received then becomes charged with the payment of monies etc secured by the deed. There was no evidence as to the consideration paid by the Defendant for the surrenders, although Miss Coyle did tell me (after having confirmed this with Mr Monks) that consideration was paid.

114. Even if Cirrus had the power to surrender the leases, by the circuitous route suggested by Miss Coyle, namely by Clause 7.2 giving Cirrus the receiver’s powers under clause 8 even if it did not appoint a receiver, the same principle applies – enforcement must be to secure satisfaction of the debt and no other purpose.

115. I need to tread carefully here, given that Cirrus has not been joined as a party to this litigation, but it is blindingly obvious that Mr Monks had a collateral purpose when signing the surrender of the lease, that purpose being to eliminate the Claimant’s equitable rights following the taking of possession of the Apartments.

116. From Cirrus’ point of view, the surrender of the leases was madness. It can only have been to benefit the Defendant – a linked company – or its owners. As well as being the sole director and 75%+ shareholder in Cirrus, Mr Monks was one of two directors and an owner of between 25% and 50% of the shares in the Defendant.

117. I find that the deeds of surrender were ineffective to extinguish the Claimant’s equity.

118. The Defendant clearly had actual knowledge of the Claimant’s equity in the apartments. The Defendant’s initial attempt to get rid of the leases by signing deeds of surrender itself shows that Mr Monks thought that the actions of the two companies were interchangeable.

119. It would be completely unjust and contrary to any principles of equity for the Defendant to take the surrenders of the leases free from the Claimant’s equity when its director was fully aware of the transactions.

120. The Defendant, having full knowledge, could not take any greater interest in the apartments than Cirrus had to convey.

121. I find that the Defendant is bound by the Claimant’s equity, notwithstanding the deeds of surrender. The fact that the Defendant took subject to the Claimant’s equitable interest is the reason why, in my judgment, the Claimant succeeds, notwithstanding that he has not brought proceedings against Cirrus. The Claimant does not seek any remedy from Cirrus.

122. In the circumstances, it would be unjust for HMLR to register the surrender of the leases until such time as the Claimant’s equity has been satisfied.

123. We know that long leases of the apartments were sold for £120,000 within days of the surrender of the lease. I can understand therefore why the Claimant values his equity at £85,000 (£120,000 minus £43,281.81 or so). For the avoidance of doubt, I am not making any findings about this.

124. I will hear further submissions as to how to conclude matters at the hearing when I formally hand down this judgment.”

43. The Judge recorded in the final paragraph of the Judgment that he declined Ms Coyle’s invitation to provide further reasons for his conclusions at [114] onwards: see [124]. In the Order itself he continued the Injunction until the conclusion of the proceedings or further order and gave further directions for the assessment of the Respondent’s equity in the Properties. The Appellant appeals against the Judge’s findings in relation to the sixth and final issue and against the Order for the following reasons: “ Ground 1 The learned judge erred in law and procedure when concluding that the Appellant, a Freeholder, does not take the surrenders of the leases free from the Respondent’s equity, and that notwithstanding the deeds of surrender, the Freeholder Appellant is bound by the Respondent’s equity because of an alleged collateral purpose: a. The learned judge relies on the fact that the Freeholder happens to have a director that is the same as the mortgagee in possession. This, and that the said director was fully aware of the transactions, is the alleged collateral purpose relied upon. Not only is this ill-defined, this position is not supported in law. There does not need to be purity of purpose. The right to enforce a security interest was a legitimate exercise undertaken by Cirrus, the mortgagee in possession, as was the subsequent surrender – there was no “wholly collateral purpose” to render the enforcement and surrender void, see Quennell v Maltby [1979] 1 WLR 318 , 322h, per Lord Denning MR; Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 , 312g, per Lord Templeman; Çukurova No 2 [2013] UKPC 2 ; [2016] AC 923 , para 73, Meretz Investments NV v ACP Ltd [2007] Ch 197 , paras 300–314, Çukurova No 2 [2013] UKPC 2 ; [2016] AC 923 , paras 77–78 and ABT Auto Investments Ltd v Aapico Investment Pte Ltd and Others [2022] EWHC 2839 (Comm) ; b. Without prejudice to the foregoing, there is nothing in law (nor in the Mortgage Deeds itself) that supports the contention that the equity of a defaulting leaseholder travels from his/her mortgagee that has gone into possession, to a freeholder on a valid surrender by the mortgagee in possession, see Clause 11 of the Mortgage Deeds and the protection to third parties; c. The learned judge did not hear evidence about nor was it put to the Appellant’s director in evidence as to whether and what was the collateral purpose of the Appellant and/or Cirrus.”

44. Ground 1 (above) contains three separate sub-grounds upon which the Appellant relies in support of its case that the Judge was wrong to hold that it remained bound by the Respondent’s equity of redemption. I will refer to them below as “ Ground (a) ”, “ Ground (b) ” and “ Ground (c) ” respectively. IV. The Law E. The Power of Sale

45. Section 101 of the Act sets out the statutory powers which are incident to the estate or interest of a mortgagee where (as here) the mortgage was made by deed (“ S.101 ”). It provides as follows (so far as relevant): “(1) A mortgagee, where the mortgage is made by deed, shall, by virtue of this Act , have the following powers, to the like extent as if they had been in terms conferred by the mortgage deed, but not further (namely): (i) A power, when the mortgage money has become due, to sell, or to concur with any other person in selling, the mortgaged property, or any part thereof, either subject to prior charges or not, and either together or in lots, by public auction or by private contract, subject to such conditions respecting title, or evidence of title, or other matter, as the mortgagee thinks fit, with power to vary any contract for sale, and to buy in at an auction, or to rescind any contract for sale, and to re-sell, without being answerable for any loss occasioned thereby; and (ii) A power, at any time after the date of the mortgage deed, to insure and keep insured against loss or damage by fire any building, or any effects or property of an insurable nature, whether affixed to the freehold or not, being or forming part of the property which or an estate or interest wherein is mortgaged, and the premiums paid for any such insurance shall be a charge on the mortgaged property or estate or interest, in addition to the mortgage money, and with the same priority, and with interest at the same rate, as the mortgage money; and (iii) A power, when the mortgage money has become due, to appoint a receiver of the income of the mortgaged property, or any part thereof; or, if the mortgaged property consists of an interest in income, or of a rentcharge or an annual or other periodical sum, a receiver of that property or any part thereof; and (iv) A power, while the mortgagee is in possession, to cut and sell timber and other trees ripe for cutting, and not planted or left standing for shelter or ornament, or to contract for any such cutting and sale, to be completed within any time not exceeding twelve months from the making of the contract. (2) Where the mortgage deed is executed after the thirty-first day of December, nineteen hundred and eleven, the power of sale aforesaid includes the following powers as incident thereto (namely):— (i) A power to impose or reserve or make binding, as far as the law permits, by covenant, condition, or otherwise, on the unsold part of the mortgaged property or any part thereof, or on the purchaser and any property sold, any restriction or reservation with respect to building on or other user of land, or with respect to mines and minerals, or for the purpose of the more beneficial working thereof, or with respect to any other thing: (ii) A power to sell the mortgaged property, or any part thereof, or all or any mines and minerals apart from the surface:— (a) With or without a grant or reservation of rights of way, rights of water, easements, rights, and privileges for or connected with building or other purposes in relation to the property remaining in mortgage or any part thereof, or to any property sold: and (b) With or without an exception or reservation of all or any of the mines and minerals in or under the mortgaged property, and with or without a grant or reservation of powers of working, wayleaves, or rights of way, rights of water and drainage and other powers, easements, rights, and privileges for or connected with mining purposes in relation to the property remaining unsold or any part thereof, or to any property sold: and (c) With or without covenants by the purchaser to expend money on the land sold.”

46. S.101(3) provides that these powers may be varied by the mortgage deed and S.101(4) provides that the section only applies if and so far as no contrary intention is expressed in it. The section applies to all mortgages executed after 31 December 1881. Section 103 regulates the exercise of the power of sale (which is why mortgage deeds often include express powers). Ms Coyle accepted in oral submissions that S.101 did not confer an express power upon a mortgagee by deed to surrender the Properties and she relied upon the express powers in the Mortgage (as the Appellant had pleaded in the Defence). F. Collateral Purpose

47. In Quennell v Maltby [1979] 1 WLR 318 the landlord and mortgagor entered into an arrangement with the bank to pay off the mortgage and for his wife to take a transfer of the mortgage herself. Their motive for this arrangement was to bring possession proceedings against the sitting tenants who would otherwise have been protected under the Rent Acts. The landlord had not sought the bank’s consent before letting the property and his wife relied on the absence of consent justify taking possession. The Court of Appeal overturned the trial judge’s decision to make an order in her favour and Lord Denning MR (with whom Bridge and Templeman LJJ agreed) stated as follows at 322B-323A: “Now it has been held that, when the bank holds a charge and there is a clause in it whereby there are to be no tenancies granted or surrendered except with the consent of the bank in writing, then in those circumstances, if the mortgagor does thereafter grant tenancies without the consent of the bank, then those tenancies are not binding on the bank, and the tenants are not entitled to the protection of the Rent Acts. That was decided in Dudley and District Benefit Building Society v. Emerson [1949] Ch. 707 . Mrs. Quennell relies on that case. She says that, as transferee of the legal charge, she stands in the shoes of the bank and can obtain possession. The judge accepted that submission. His decision, if right, opens the way to widespread evasion of the Rent Acts. If the owner of a house wishes to obtain vacant possession, all he has to do is charge it to the bank for a small sum. Then grant a new tenancy without telling the bank. Then get his wife to pay off the bank and take a transfer. Then get the wife to sue for possession. That indeed was what happened here. In October 1977, when Mr. Quennell went to the bank, he told them about the tenancies. They said that they did not intend to take proceedings. So he got Mrs. Quennell to do it. In evidence, she said: “I paid £2,500. This was for my husband. I took the charge to make the debt to his bank less onerous. I was aware he wanted to obtain possession of the house to sell it. I merely paid off the charge. These proceedings have been brought to get possession to sell.” So the objective is plain. It was not to enforce the security or to obtain repayment or anything of that kind. It was in order to get possession of the house and to overcome the protection of the Rent Acts. Is that permissible? It seems to me that this is one of those cases where equity steps in to mitigate the rigour of the law. Long years ago it did the same when it invented the equity of redemption. As is said in Snell's Principles of Equity , 27th ed. (1973), p. 376: “The courts of equity left the legal effect of the transaction unaltered but declared it to be unreasonable and against conscience that the mortgagee should retain as owner for his own benefit what was intended as a mere security.” So here in modern times equity can step in so as to prevent a mortgagee, or a transferee from him, from getting possession of a house contrary to the justice of the case. A mortgagee will be restrained from getting possession except when it is sought bona fide and reasonably for the purpose of enforcing the security and then only subject to such conditions as the court thinks fit to impose. When the bank itself or a building society lends the money, then it may well be right to allow the mortgagee to obtain possession when the borrower is in default. But so long as the interest is paid and there is nothing outstanding, equity has ample power to restrain any unjust use of the right to possession. It is plain that in this transaction Mr. and Mrs. Quennell had an ulterior motive. It was not done to enforce the security or due payment of the principal or interest. It was done for the purpose of getting possession of the house in order to resell it at a profit. It was done so as to avoid the protection which the Rent Acts afford to tenants in their occupation. If Mr. Quennell himself had sought to evict the tenants, he would not be allowed to do so. He could not say the tenancies were void. He would be estopped from saying so. They certainly would be protected against him. Are they protected against his wife now that she is the transferee of the charge? In my opinion they are protected. For this simple reason, she is not seeking possession for the purpose of enforcing the loan or the interest or anything of that kind. She is doing it simply for an ulterior purpose of getting possession of the house, contrary to the intention of Parliament as expressed in the Rent Acts.”

48. In Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 the plaintiff held a second ranking debenture over a company’s assets and appointed a receiver and manager over its assets. The First Defendant took an assignment of the first ranking debenture from the bank and appointed its own receiver, the Second Defendant, for the purpose of disrupting the management of the security by the receiver appointed by the plaintiff. The trial judge found that he had acted for an improper purpose and held that he was liable for negligence. The Privy Council upheld his decision on the basis that the mortgagee and receiver were acting in breach of their equitable duties: see 317F-319C. Lord Templeman (who had been a member of the Court of Appeal in Quennell v Maltby and gave the judgment of the Board) stated that there was “overwhelming evidence” that the receiver’s conduct was “inspired by him for improper purposes and carried on in bad faith, ultimately verging on fraud”: see 317F. He articulated the general duty of a mortgagee and of a receiver appointed by a mortgagee at 312C-313A: “The next submission on behalf of the first and second defendants is that, even if a mortgagee owes certain duties to subsequent encumbrancers, a receiver and manager appointed by a mortgagee is not under any such duty where, as in the present case, the receiver and manager is deemed to act as agent for the mortgagor. The fallacy in the argument is the failure to appreciate that, when a receiver and manager exercises the powers of sale and management conferred on him by the mortgage, he is dealing with the security; he is not merely selling or dealing with the interests of the mortgagor. He is exercising the power of selling and dealing with the mortgaged property for the purpose of securing repayment of the debt owing to his mortgagee and must exercise his powers in good faith and for the purpose of obtaining repayment of the debt owing to his mortgagee. The receiver and manager owes these duties to the mortgagor and to all subsequent encumbrancers in whose favour the mortgaged property has been charged. The next question is the nature and extent of the duties owed by a mortgagee and a receiver and manager respectively to subsequent encumbrancers and the mortgagor. Several centuries ago equity evolved principles for the enforcement of mortgages and the protection of borrowers. The most basic principles were, first, that a mortgage is security for the repayment of a debt and, secondly, that a security for repayment of a debt is only a mortgage. From these principles flowed two rules, first, that powers conferred on a mortgagee must be exercised in good faith for the purpose of obtaining repayment and secondly that, subject to the first rule, powers conferred on a mortgagee may be exercised although the consequences may be disadvantageous to the borrower. These principles and rules apply also to a receiver and manager appointed by the mortgagee. It does not follow that a receiver and manager must immediately upon appointment seize all the cash in the coffers of the company and sell all the company's assets or so much of the assets as he chooses and considers sufficient to complete the redemption of the mortgage. He is entitled, but not bound, to allow the company's business to be continued by himself or by the existing or other executives. The decisions of the receiver and manager whether to continue the business or close down the business and sell assets chosen by him cannot be impeached if those decisions are taken in good faith while protecting the interests of the debenture holder in recovering the moneys due under the debenture, even though the decisions of the receiver and manager may be disadvantageous for the company.”

49. In Çukurova Finance International Ltd v Alfa Telecom Turkey Ltd [2013] UKPC 2 , [2016] AC 923 a mortgagee enforced its security in highly contentious circumstances by appropriating shares in a company called Turkcell Holding AS (“TCH”). Bannister J held that no event of default had arisen under the relevant loan documentation but also that the mortgagee had acted in bad faith in seeking to enforce its security for a collateral purpose. Both the Court of Appeal of the Eastern Caribbean and the Privy Council held that an event of default had occurred and that it entitled the lender to accelerate repayment of the loan and then call in the debt. They also held that the mortgagee’s purpose in seeking to obtain control over TCH did not vitiate the exercise of its powers. The Board of the Privy Council delivered a single judgment in which they stated as follows at [69] to [79]: “ The facts

69. ÇH and ÇFI contend that ATT's decision to appropriate the charged shares was void, even if there was an event of default, because it was vitiated by its improper and collateral reasons. The factual basis of this submission is as follows.

70. The judge found that ATT had originally entered into the facility agreement and its associated instruments in the expectation that ÇH and ÇFI would default, and with the aim of obtaining de facto shareholder control of Turkcell by enforcing the security.

71. As mentioned above, he also found that, in the autumn of 2006, ATT deliberately obstructed the declaration of dividends with a view to starving ÇFI of funds, in an attempt to prevent it from servicing the loan and thereby to provoke a default. He also found that after accelerating and calling in the loan, Mr Reznikovich painted an extremely unattractive picture of the Çukurova Group's financial situation at the press conference in Istanbul on 17 April, in order to hamper the Çukurova Group's attempts to refinance. ATT also issued unflattering and defamatory press releases on 30 April and 10 May at least partly with a view to making it difficult for the Çukurova Group to refinance.

72. The judge characterised the press conference and press releases as acts of bad faith on ATT's part, but found that they were irrelevant because the Çukurova Group succeeded in refinancing anyway. In every other respect, the judge considered that ATT could not be said to have acted in bad faith, because it was acting within its legal rights. He therefore rejected the defence raised by ÇH and ÇFI founded on the allegation of bad faith. The Court of Appeal agreed. Discussion

73. In the Board's opinion the judge's findings afford no basis for treating the appropriation of the charged shares as ineffective, for essentially the reasons which he gave. In equity, a mortgagee has a limited title which is available only to secure satisfaction of the debt. The security is enforceable for that purpose and no other: Quennell v Maltby [1979] 1 WLR 318 , 322H (Lord Denning MR); Downsview Nominees Ltd v First City Corpn Ltd [1993] AC 295 , 312G (Lord Templeman). It follows that any act by way of enforcement of the security (at least if it is purely) for a collateral purpose will be ineffective, at any rate as between mortgagor and mortgagee. The reason is that such conduct frustrates the equity of redemption which, as Stuart V-C observed in Jenkins v Jones (1860) 2 Giff 99 , 107, a court of equity “is bound to regard with great jealousy”.

74. In principle, this is straightforward enough, but the facts are rarely simple. The acceleration of the loan on 16 April 2007 in this case was not part of the process of realising the security. It merely brought forward the date of repayment of the loan and ascertained the amount. Given that there was an event of default, there was a contractual right to do this. It follows that the debt of $1·352 billion (plus interest) was repayable in full at the time when ATT satisfied it by appropriating the charged shares.

75. Under clause 9.3 of the charges, ATT was entitled to “appropriate any charged asset … in or towards satisfaction of the liabilities in accordance with the Regulations”, at its “fair price” (as defined). This means that, by virtue of regulation 18 of the Financial Collateral Arrangements (No 2) Regulations 2003 (“the Regulations”), the lender was entitled to appropriate the security at that price, any difference between the valuation and the liabilities being settled separately.

76. It necessarily follows from an arrangement on these terms that the lender may satisfy the debt by crediting the borrower with the Fair Value of the security and retaining the charged assets as their own property: see the advice of the Privy Council delivered by Lord Walker of Gestingthorpe: see Çukurova Finance International Ltd v Alfa Telecom Turkey Ltd [2009] Bus LR 1613 , paras 12–13. As Lord Walker also observed at para 27, this is a remedy new to English law which allowed what was “in effect a sale by the collateral-taker to himself, at a price determined by an agreed valuation process”.

77. ÇH and ÇFI do not dispute that ATT appropriated the charged shares in order to satisfy the debt. They hardly could do so, since appropriation is a mode of satisfying the debt. Their real complaint is that ATT only wanted to do so because that would enable it to obtain control over ÇFI and ÇTH and indirectly of Turkcell, instead of (say) selling the shares onto the market. Since this was the very thing that the contract and the Regulations permitted, it is impossible for them to contend that ATT was exercising its power of enforcement for a collateral purpose. The acquisition of control was a necessary incident of a permitted mode of satisfying the debt. The fact that it was an incident which was highly attractive to ATT does not mean that the right of appropriation was exercised in bad faith.

78. That is enough to decide this particular issue in the present case. More generally, however, the Board considers that if a chargee enforces his security for the proper purpose of satisfying the debt, the mere fact that he may have additional purposes, however significant, which are collateral to that object, cannot vitiate his enforcement of the security. If the law were otherwise, the result would be that the exercise of the right to enforce the charge for its proper purpose would be indefinitely impeded because of other aspects of the chargee's state of mind which were by definition irrelevant.”

50. Finally, in Meretz Investments NV v ACP Ltd [2006] EWHC 74 (Ch) , [2007] Ch 197 Lewison J rejected an argument that a mortgagee was only entitled to exercise a power of sale where it had “purity of purpose”, i.e. its only purpose was to recover the debt due in whole or in part: see [301] to [314]. He also held that one of the mortgagee’s purposes (and a significant purpose) was to recover what money it could out of the project and there was no appeal on this issue to the Court of Appeal: see [2007] EWCA Civ 1303 , [2008] Ch 244 at [35] (Arden LJ). The first instance decision is important in the present appeal because of the following statement of principle which Lewison J set out at [314]: “Drawing the threads together, it seems to me that none of the authorities to which I was referred gives unequivocal support to Mr Morgan's submission that the mortgagee must have “purity of purpose”. On the contrary, Nash v Eads 25 SJ 95 and Belton v Bass, Ratcliffe & Gretton Ltd [1922] 2 Ch 449 are inconsistent with it. So, too, is the statement in Fisher & Lightwood, Law of Mortgages , para 16.13. A dissection of a mortgagee's motives is likely to be difficult in practice. Moreover, unlike statutory powers conferred for the public benefit, or trustees' powers conferred for the benefit of beneficiaries (which were two analogies on which Mr Morgan relied) a mortgagee's powers are conferred upon him for his own benefit. In such circumstances “purity of purpose” may be difficult to achieve. The cases do support the proposition that a power of sale is improperly exercised if it is no part of the mortgagee's purpose to recover the debt secured by the mortgage. Where, however, a mortgagee has mixed motives (or purposes) one of which is a genuine purpose of recovering, in whole or in part, the amount secured by the mortgage, then in my judgment his exercise of the power of sale will not be invalidated on that ground. In addition I consider that it is legitimate for a mortgagee to exercise his powers for the purpose of protecting his security.”

51. In both Quennell v Maltby and Downsview Lord Denning and Lord Templeman described the mortgagee’s equitable duty in positive terms as a single duty to act in good faith and for the purpose of enforcing the security in order to repay the debt rather than in negative terms or as two independent duties. In Çukurova (where the trial judge had found bad faith) the Privy Council described the equitable duty of a mortgagee in negative terms, namely, not to act for a collateral purpose. In Meretz Lewison J also expressed the content of the duty and in negative terms. He expressed the view that the exercise of a power of sale will be set aside if it is no part of the mortgagee’s purpose to recover the debt.

52. This is a familiar debate to company lawyers. Before the Companies Act 2006 came into force there was a question whether a director owed a single duty to act in good faith and not for any collateral purpose or two separate duties, the first to act in good faith and the second to act for proper purposes or, perhaps more accurately, not to act for an improper purpose. For example, in Hogg v Cramphorn [1967] Ch 254 Buckley J accepted that the directors had acted in good faith but also held that they had acted in breach of the proper purposes rule applying an objective standard to their conduct. The Companies Act 2006 adopted the same separation between the same duties.

53. Even if a mortgagee owes two separate duties, it does not follow that a breach of the duty to act in good faith should be assessed on a subjective basis and the duty not to act for an improper purpose should be assessed on an objective basis. In Eclairs Group Ltd v JXX Oil & Gas plc [2015] UKSC 71 , [2015] Bus LR 1395 Lord Sumption traced the proper purposes rule back to the original doctrine of “fraud on a power” and although the principle has nothing to do with fraud, it is concerned with the subjective motive of the directors. He stated this at [15]: “The important point for present purposes is that the proper purpose rule is not concerned with excess of power by doing an act which is beyond the scope of the instrument creating it as a matter of construction or implication. It is concerned with abuse of power, by doing acts which are within its scope but done for an improper reason. It follows that the test is necessarily subjective. “Where the question is one of abuse of powers,” said Viscount Finlay in Hindle v John Cotton Ltd (1919) 56 Sc LR 625 , 630, “the state of mind of those who acted, and the motive on which they acted, are all important”.”

54. I was not taken to any authorities in which a similar debate has taken place in relation to the exercise of a mortgagee’s powers. But in my judgment, the same principles ought to apply as they do in company law to the duty under section 171 of the Companies Act 2006 . Although the content of the duties of a mortgagee and of a company director are not the same, the source of the principle is the same. It follows, therefore, that the exercise of a power of sale by a mortgagee (or by a receiver appointed by a mortgagee) may be set aside where that power was exercised for an improper or collateral purpose and even though the mortgagee or receiver acted in good faith. Section 171(2) now imposes a duty to only exercise powers for the purpose for which they are conferred.

55. However, I agree with Lewison J in Meretz that the exercise of the power will not be set aside where the mortgagee or receiver has mixed motives or purposes one of which is the recovery of the debt or the protection of the security. It may be that there is a difference here between the law of mortgages and company law in that it may be sufficient to set aside the act of a director on the basis that the improper purpose was the dominant purpose or causative of the decision. But this is a difficult and unanswered question in company law: see Palmer’s Company Law (2025 release) Vol 2 at 8.2517.1. For present purposes, I am prepared to accept that in the absence of bad faith, the exercise of a mortgagee’s power will only be vitiated where recovery of the debt or protection of the security was no part of the mortgagee’s purpose. G. Third Parties

56. Section 104(2) of the Act provides protection for a purchaser where there has been an improper exercise of the statutory power of sale (“ S.104(2) ”). It provides as follows: “(2) Where a conveyance is made in exercise of the power of sale conferred by this Act , or any enactment replaced by this Act , the title of the purchaser shall not be impeachable on the ground— (a) that no case had arisen to authorise the sale; or (b) that due notice was not given; or (c) where the mortgage is made after the commencement of this Act , that leave of the court, when so required, was not obtained; or (d) whether the mortgage was made before or after such commencement, that the power was otherwise improperly or irregularly exercised; and a purchaser is not, either before or on conveyance, concerned to see or inquire whether a case has arisen to authorise the sale, or due notice has been given, or the power is otherwise properly and regularly exercised; but any person damnified by an unauthorised, or improper, or irregular exercise of the power shall have his remedy in damages against the person exercising the power.”

57. As Lewison J pointed out in Meretz , purchaser is defined by section 205(1)(xxi) as a purchaser in good faith for valuable consideration: see [316]. He also accepted that S.104(2) does not apply where the purchaser has actual knowledge of an impropriety in the exercise of a power of sale, that in this context “shut-eye” or “blind-eye knowledge” is the equivalent of actual knowledge and in a conveyancing transaction a solicitor’s actual or “shut-eye” knowledge should be imputed to the client: see [317] to [322]. On the facts, Lewison J found that the power of sale was not exercised by the mortgagee for an improper purpose. But he also held that even if it had been, the purchaser had no knowledge of the improper or collateral purpose. He stated this at [341]: “Mr Tamimi had actual or imputed knowledge of the various contractual documents. However, the allegation of improper exercise of the power of sale depends on the allegation that it was no part of FP's purpose in exercising the power to recover its debt. Mr Tamimi had no knowledge of the internal discussions by the boards of ACP and FP and only limited access to the privileged communications between Mr Olsson and Mr Hawkins. Mr Hawkins had told Mr Ware in terms on 29 April 2002 that FP was taking action “in order to protect its own position as first chargeholder”. I do not consider that Mr Tamimi had knowledge of FP's motivation, apart from what he was told. Nor did he have any suspicion of impropriety about which he decided not to inquire. If, as I think, the scheme devised by Mr Hawkins was capable of being properly used by a mortgagee, Mr Tamimi was entitled to assume that it would be.”

58. It is clear from this passage that a purchaser will take free of any impropriety if he has no actual knowledge of the motive of the mortgagee which gives rise to the improper purpose. But in my judgment, ignorance of the law should not be a defence. If the purchaser is fully aware of the terms of the documents and the motive of the mortgagee, it is no defence for the purchaser to say that they did not believe that the transaction was unlawful. H. Other Issues (1) The Burden of Proof

59. In the course of Ms Coyle’s submissions I raised three issues which had concerned me when reading into this Appeal. The obvious point for the Respondent to take was that the surrender of the lease involved transactions with a connected person and the burden of proof rested on the Appellant to demonstrate that “the sale was in good faith and that the mortgagee took reasonable precautions to obtain the best price reasonably obtainable at the time”: see Tse Kwong Lam v Wong Chit Sen [1983] 1 WLR 1349 at 1355 (Lord Templeman). This burden is a heavy one: see Emmet & Farrand on Title (Release 142, June 2025) at 25.110. If this point had been taken, it would have been unnecessary for the Judge to assess whether Cirrus had a collateral purpose for entering into the Deeds of Surrender because the Appellant had not pleaded or adduced evidence to discharge the burden.

60. In Tse Kwong Lam v Wong Chit Sen (above) Lord Templeman acknowledged that where the mortgagee fails to discharge the burden of proving that it has taken reasonable steps to obtain the best price reasonably obtainable or that the connected party purchased the property at such a price, the Court will as a general rule set aside the sale and restore to the borrower the equity of redemption of which they have been unjustly deprived: see 1359H-1360A. However, he also stated that the mortgagor would be left to their remedy damages if it was inequitable to set aside the sale and, on the facts of that case, the Privy Council upheld the trial judge’s decision that it was inequitable to set aside the sale for inexcusable delay: see 1360B-G. (2) Execution of the Deeds of Surrender

61. The second point which I raised was that Mr Monks did not purport to execute the Deeds of Surrender on behalf of the Respondent or in exercise of the power of attorney in clause 14 of the Mortgage. Cirrus was not registered as the proprietor of the Mortgage (and was restrained by the Injunction from registering the Deeds of Surrender). It is at the very least arguable that Cirrus could not surrender the lease of either of the Properties without exercising the power of attorney in Clause 14 and that they were ineffective because it failed to do so: see Skelwith (Leisure) Ltd v Armstrong [2015] EWHC 2830 (Ch) , [2016] Ch 345 at [69] to [75]. In that case, however, Newey J also held that the assignee of a mortgagee who had not been registered had the power to enter into contracts for sale because it was entitled to be registered as proprietor of the charge.

62. Ms Coyle submitted that unlike a sale by a mortgagee to itself, a sale by a mortgagee to a connected person is not automatically invalid or ineffective, that it was for Cirrus and not the Appellant to plead or prove that it acted in good faith and took reasonable precautions to obtain the best price reasonably obtainable and that since the Respondent had elected not to join Cirrus as a party, the issue did not arise. I agree that it might have been better for the Respondent to join Cirrus as a party. But I see no reason why the Respondent could not have put the Appellant to proof on this issue or why he would not have been entitled to have the transaction set aside if the Appellant had made no attempt to discharge the necessary burden. In those circumstances, the critical issue for the Judge would have been whether the Appellant was able to bring itself within either S.104(2) or clause 11 of the Mortgage.

63. Although there was a lively debate between both counsel and the Court in relation to both issues, I consider that it would be unjust for the Court to decide the Appeal on either of them. Although he pleaded that the Mortgage was ineffective, the Respondent did not plead that the burden of proof was on the Appellant to demonstrate that Cirrus acted in good faith and took reasonable precautions to obtain the best price reasonably obtainable. If he had done so, the Appellant could have addressed this in its Defence and might well have chosen to call additional evidence. In particular, it might have called Mr Buck and chosen to waive privilege. The Respondent might also have been put to his election to join Cirrus at a much earlier stage of the proceedings. Nevertheless, I make it clear that the Judge cannot be criticised at all for failing to address these points. He clearly took the view that the Deeds of Surrender excited suspicion and might well have reached the same conclusion by a different, and much simpler, route if the point had been taken.

64. Likewise, it would be unjust to decide this Appeal on the power of attorney point. The Appellant pleaded Skelwith in its Defence as authority for the proposition that Cirrus had the power to enter into the Deeds of Surrender even though it had not been registered as proprietor of the Mortgage: see paragraph 44. Ms Coyle also took this point in the context of the validity of the Assignment. It was incumbent, therefore, for the Respondent to serve a Reply and rely on the power of attorney point if he had wished to do so. In my judgment, however, it was (and remains) legitimate for the Court to attribute weight to the fact that Cirrus did not purport to be acting on behalf of the Respondent in entering into the Deeds of Surrender in considering whether any part of its purpose in doing so was either to protect its security or recover the loan. IV. Grounds of Appeal I. Ground (c)

65. I deal with Ground (c) first since it is directed at the evidence upon which the Judge relied in finding that Cirrus had a collateral purpose. In my judgment, the Judge did hear evidence about Mr Monks’ motive for entering into the Deeds of Surrender and upon which he could have reached a conclusion about Cirrus’s purpose. I have reached that conclusion for the following reasons: (1) The Judge asked Mr Monks directly why Cirrus had surrendered the leases on the Properties rather than exercising its power of sale, Mr Monks answered that question and the Judge quoted his answer at [101]: “had we sold the leasehold and accounted to the Claimant for his equity, we could have ended up in litigation.” (2) The Judge might have explored this answer further or assisted the Respondent to explore it further in cross-examination. But both before me and before the Judge, Ms Coyle took the point that Cirrus was not a party to the Original Claim or to this Appeal: see [102]. It is also clear that the Judge chose not to address it further for this reason: see [115]. In that paragraph he stated that: “I need to tread carefully here, given that Cirrus has not been joined as a party”. (3) But in my judgment, both the Respondent and the Judge were entitled to explore Cirrus’s motive with Mr Monks. In each of Monks 1, Monks 2 and Monks 3 the witness stated that he was authorised to give evidence on behalf of Cirrus and he was its sole director. He also volunteered evidence on behalf of Cirrus in Monks 3: see [32] (above). In my judgment, it is simply not open to the Appellant to state that there was no evidence on behalf of Cirrus before the Court. (4) Furthermore, even if the Judge had asked Mr Monks some more questions about his motives or Cirrus’s purposes, it is quite likely that he would not have got very much further. Mr Monks chose to rely on the legal advice which Cirrus had received and there had been no waiver of privilege. The Judge was not entitled to ask him any further questions about his instructions to Knights or the advice which they gave and he was not entitled to draw any adverse inferences from Mr Monks’ failure to waive privilege either on behalf of the Appellant or on behalf of Cirrus. It is quite possible, therefore, that the Judge would have been left with Mr Monks’ original answer even without Ms Coyle’s intervention and had he explored it further. J. Ground (a)

66. I turn, therefore, to the question whether there was sufficient evidence upon which the Judge was entitled to find that Cirrus had a collateral purpose in entering into the Deeds of Surrender. In doing so, I bear in mind that the correct legal test is not whether Cirrus had mixed motives or purposes for entering into the Deeds of Surrender but whether recovery of the debt or protection of the security was no part of the mortgagee’s purpose: see Meretz (above) at [314]. In my judgment, the Judge applied the correct legal test and there was sufficient evidence before him to make such a finding of fact. I have reached that conclusion for the following reasons: (1) The Judge directed himself correctly as a matter of law. He cited Çukurova at [73] (above) and directed himself that “enforcement must be to secure satisfaction of the debt and no other purpose”: see [114]. This statement was derived directly from that paragraph and accurately reflected the second sentence of the statement of principle which it contained. (2) I accept that the Judge did not direct himself in terms that this test did not require the Appellant to prove “purity of purpose” or that repayment of the Loan was Mr Monks’ sole and exclusive purpose. But in my judgment, it was unnecessary for him to do so. Ms Coyle did not submit that Mr Monks had mixed motives one of which was repayment of the loan. The issue which the Judge had to decide was whether it was improper to enter into the Deeds of Surrender on terms which provided for no payment to Cirrus. (3) In my judgment, the Judge was fully entitled to find that recovery of the debt which the Respondent owed to Cirrus and which was secured by the Properties formed no part of Cirrus’s purpose and to make that finding on the basis of the Deeds of Surrender alone. As the Judge observed, there was no commercial rationale for Cirrus to surrender a 999 year lease of a residential apartment with a substantial capital value for no consideration. In common sense terms this was “madness”: see [116]. (4) Although Ms Coyle tried to meet this point by telling the Judge that there was some consideration for the Deeds of Surrender, there was no admissible evidence before the Court to that effect and when I probed this issue I was not satisfied that the Appellant had paid any money to Cirrus for the surrender of the leases of the Properties far less that it paid Cirrus their market value. (5) There was no evidence before the Court either to justify the conclusion that Cirrus had credited the Respondent with any sums which the Appellant paid or lent to Cirrus. No statement of account was put before the Judge or before me to demonstrate that Cirrus treated the Deeds of Surrender as discharging the Loan (and any accrued interest or costs) either in full or in part. Nor was there any evidence to demonstrate that either the Appellant or Cirrus treated the Deeds of Surrender as discharging any arrears of ground rent and service charge. Mr Monks could easily have given evidence to this effect if this had been the case. But he did not. (6) I also tested this issue in argument. When I put it to Ms Coyle that the Respondent still owed the Loan together with interest and costs to Cirrus, she accepted that this must be right and that no part of the Loan had been paid off. It follows, therefore, that the Respondent is still legally liable to Cirrus for the full amount of the Loan notwithstanding that the Appellant has received two premiums totalling £120,000 for the grant of new leases. Ms Coyle’s realistic acceptance of this point was also reflected in her submission to the Judge (which he recorded at [107]) that in substance the Appellant’s case was: “Tough. It is a windfall for us, but you signed up for it and you lose.” (7) In any event, I am also satisfied that the Judge was entitled to find that repayment of the Loan formed no part of Cirrus’s purpose in entering into the Deeds of Surrender on the basis of Mr Monks’ oral evidence. His answer to the Judge’s question revealed that his motive for entering into the Deeds of Surrender was to avoid litigation and, as Ms Coyle confirmed in her submissions, the litigation which he had in mind was a claim by the Appellant against the Respondent to recover the unpaid service charge and ground rent. But the way in which he intended to avoid litigation was to direct Cirrus to surrender the leases rather than exercise the power of sale, repay the Loan and then argue or litigate with the Respondent over the net proceeds of sale and his equity in the Properties. (8) In my judgment, therefore, the Judge was entitled to find that Mr Monks effectively conceded that it was no part of Cirrus’s purpose to exercise the power of sale and repay the Loan but rather to extinguish the Respondent’s equity of redemption in each of the Properties: see [115]. Moreover, he was the trial judge and heard Mr Monks give evidence. I was not taken to a transcript of his evidence and Ms Coyle did not suggest that the Judge took his answer out of context or that this was not a proper interpretation of his answer. (9) The Judge’s conclusion was also consistent with the terms of the Deeds of Surrender themselves. None of the four Deeds of Surrender referred to the exercise of the power of sale and none of them was expressed to be made by Cirrus on behalf of the Respondent in exercise of the power of attorney in clause 14 of the Mortgage. If Cirrus’s purpose (or one of its purposes) had been to exercise the power of sale in order to repay the Loan, a professionally drafted deed could have been expected to record this fact. (10) Finally, it is clear from Surrenders 1 and 3 (which Knights originally submitted for registration) that Knights considered that they had been instructed to draft surrenders of the leases of the two Properties by the Appellant to itself. In my judgment, the Judge was entitled to take the view on the evidence that Mr Monks and his solicitors treated Cirrus and the Appellant as interchangeable and that the Deeds of Surrender amounted in substance to a collusive attempt between Cirrus and the Appellant to defeat the Respondent’s rights: see [115] and [118]. K. Ground (b)

67. Ms Coyle’s principal challenge to the Judgment was that the Judge was wrong as a matter of law to hold that the Appellant was bound by the Respondent’s equity of redemption even if he was correct to find that Cirrus had no power to enter into the Deeds of Surrender or that it had done so for a collateral purpose. In both the Grounds of Appeal and her Skeleton Argument she submitted that it was impossible as a matter of law for the equity of a defaulting mortgagee to “travel” to the freeholder on the surrender of a lease.

68. I agree that as a matter of law the valid surrender of the leases by Cirrus would have extinguished the Respondent’s equity of redemption in the Properties. However, this is not for the reason which the Appellant pleaded in the Defence, paragraph 14, namely, that Cirrus extinguished his interest in the Properties by taking of possession. A mortgagor does not lose their equity of redemption when the mortgagee takes possession of the security. If the mortgagor pays off the debt after the mortgagee has taken possession but before sale, they would be entitled to insist that the mortgagee go out of possession and discharge the mortgage.

69. It is the valid exercise by the mortgagee of its power of sale which extinguishes the equity of redemption: see Emmet & Farrand (above) at 25.090. Moreover, if the mortgagee exercises the power of sale the equity of redemption attaches to the proceeds of sale. It is unsurprising, therefore, that the Judge characterised the issue which he had to decide as whether the Appellant was bound by the Respondent’s equity of redemption rather than whether the Deeds of Surrender were invalid and should be set aside. But for reasons which I will explain, I am satisfied that the Judge properly addressed all of the relevant issues and that the Judgment cannot really be faulted. Further, although the Judge should have granted relief in different terms, I am satisfied that such relief would have amounted in substance to the Order which he made and that it is appropriate for an Appeal Court to vary the Order in those terms. (1) Power to surrender

70. The Appellant did not challenge the Judge’s conclusion that clause 7.3 and clause 8.3.2(e) did not confer power on the Security Trustees to surrender the leases of the Properties: see [111] to [113]. However, in both her Skeleton Argument and her oral submissions Ms Coyle submitted that they did have such a power. Dr Brown did not object to Ms Coyle taking this point and I heard her submissions. But in any event, the question whether the Security Trustees had power to surrender the leases is so closely related to Ground (b) that I would have granted permission to the Appellant to do so if it had been necessary.

71. In my judgment, the Judge was correct to reject the Appellant’s case on this issue and to find that on their true construction clauses 7.3 and 8.3.2(e) did not confer on the Security Trustees the power to surrender the leases. Again, I have reached this conclusion for the following reasons: (1) Clause 7.3 only confers an express power to accept surrenders of leases and not to surrender them. It would have been necessary, therefore, for the Appellant to persuade the Judge that a term should be implied that the Security Trustees could surrender as well as accept surrenders of leasehold property. (2) Ms Coyle did not argue that such a term should be implied and I am satisfied that none of the standard tests for an implied term are met. I am prepared to accept that it was within the power of sale for the Security Trustees to enter into a contract to sell leasehold property to its landlord and to complete such a sale by entering into a deed of surrender. But I am not prepared to accept that a surrender of leasehold property which is not expressed to be made for any consideration could be treated as a sale. If it had been the intention to confer such a power, the Mortgage would have said so. (3) Ms Coyle correctly pointed out that clause 8.2(2)(e) confers a power upon a receiver appointed by a mortgagee to surrender leasehold property. But in my judgment, that is a reason to interpret clause 7.3 narrowly. The drafters of clause 7.3 fully understood the difference between the word “surrender” (a verb) and the phrase “accept surrenders” (a noun) and if they had wished to confer a similar power on the Security Trustees, there is no reason to doubt that they would have done so expressly. (4) But in any event, it is easy to see why such a power was conferred on a receiver. If the Security Trustees had appointed a receiver to manage leasehold property and the outgoings had exceeded the rents which the receiver achieved, it was important to enable the receiver to surrender onerous leasehold property. But it was unnecessary to confer such a power on the Security Trustees themselves who could appoint a receiver both before and after entering into possession of the property. (5) Ms Coyle submitted that the words which I have underlined in clause 7.1 (above) conferred the same powers on the Security Trustees as they did on a receiver. I do not accept that submission because, in my judgment, it involves a distortion of the syntax of that part of the clause. For ease of reference, I repeat the relevant words again and in doing so I break them down into three sections A, B and C: “…[A] the Security Trustees may exercise without further notice on and without the restrictions contained in section 103 of the Act all the powers conferred mortgagees by the Act as varied by this deed and [B] all the powers and discretions conferred by this Charge [C] either by themselves or by a Receiver appointed by them…” (6) Sections A and B set out the powers which the Security Trustees may exercise dividing them up into two categories, namely, the statutory powers and the express powers conferred by the Mortgage. Section C sets out how the Security Trustees may exercise those powers, namely, by doing so themselves or by appointing a receiver to do so. Ms Coyle’s construction involves running sections B and C together. But this requires section C to be read as “either on themselves or on a Receiver appointed by them”. But this is not what the clause says and this is not a case in which the literal meaning of the clause does not make any sense. (2) Knowledge

72. I have held that the Judge was right to conclude that the Deeds of Surrender were vitiated by two improprieties: first, Cirrus had no power to surrender the leases under clauses 7.1 or 7.3 of the Mortgage and, secondly, even if it did, Cirrus entered into the Deeds of Surrender for a collateral purpose or, perhaps better, Cirrus did not enter into the Deeds of Surrender for a proper purpose, namely, to repay the Loan or to protect its security. The critical question for the Judge, therefore, was whether the Appellant was entitled to rely on S.104(2) or, alternatively, clause 11 of the Mortgage on the basis that it did not have actual knowledge of either of those improprieties.

73. It is unfortunate that neither party pleaded this as a critical issue but the Judge clearly identified it himself. He held that the Appellant had actual knowledge of the Respondent’s interest in the Properties and that it would be completely unjust for the Appellant to take free of the Respondent’s interest when its director was fully aware of the transactions: see [118] and [119]. Finally, the Judge held that the Appellant was not entitled to take free of the Respondent’s interest when it had full knowledge of the relevant facts: see [120].

74. In my judgment, the Appellant was not entitled to rely on S.104(2) because it was not a purchaser for valuable consideration. Moreover, left to myself I would have construed clause 11 in the same way. That clause applies only to “any contract, Disposition or assurance in relation to any Charged Assets in such third party’s favour” and, in my judgment, the Deeds of Surrender do not fall within this description. But this was not a point which was argued before the Judge and the Respondent did not file a Respondent’s notice. In fairness to Dr Brown, he did seek to take this point before me. I am not prepared, therefore, to dismiss the Appeal on that basis.

75. But in any event, I am satisfied that the Judge was entitled to find that Cirrus acting by Mr Monks had actual knowledge that Cirrus did not enter into the Deeds of Surrender for the proper purpose of repaying the Loan or protecting its security. I have reached this conclusion for the following reasons: (1) Mr Monks was aware of the terms of all four of the Deeds of Surrender and that no consideration was to be paid by the Appellant to Cirrus for the surrender of both leases. It is also clear from his answer to the Judge’s question that Mr Monks knew that the Respondent had equity in both Properties and that he intended Cirrus to surrender the leases rather than exercise the power of sale, repay the Loan and account to the Respondent for his equity. (2) Mr Monks was aware, therefore, that Cirrus’s purpose was not to exercise the power of sale and use the proceeds to repay the Loan or protect its security but to extinguish the Respondent’s equity of redemption in each of the Properties. This was his purpose in acting both as a director of Cirrus and a director of the Appellant. (3) I accept that the Judge did not find that Mr Monks was acting in bad faith. But, as I have held, it was unnecessary for him to do so. I also accept that the Judge did not find in terms that Mr Monks knew that it was improper to enter into the Deeds of Surrender. But he received legal advice about the transactions from Knights before entering into them and he knew their purpose and what they were intended to achieve. In my judgment, there was sufficient evidence upon which the Judge was entitled to find that he had actual knowledge of the impropriety. (4) I also accept that the Judge did not take into account Mr Monks’ evidence in Monks 4 that each Property was sold at an increased price because it had a sub-lease in place and an assured yield guaranteed to the purchase and that the proceeds of sale of both Properties were reinvested in full into the development project. However, there was no appeal against his refusal to do so and no application to admit Monks 4 as fresh evidence under CPR Part 52.21(2). (5) But in any event, that evidence only serves to confirm that the Judge was correct and that Mr Monks had actual knowledge of Cirrus’s impropriety. Cirrus and the Appellant could have achieved the same outcome if Cirrus had properly exercised the power of sale. If it had sold the Properties to the Appellant for their market value after taking proper valuation advice, the Appellant could then have surrendered the leases, granted new sub-leases and sold them as investment properties at a higher price of £60,000 each. If Mr Monks’s evidence about their value was correct and they were only worth approximately £29,000 each, then the proceeds of sale would have been just about sufficient to discharge the Loan and repay the arrears of service charge and ground rent. (6) But it was no answer for Mr Monks to say that he believed that the Respondent had no equity in the Properties after taking into account their market values, the ground rent and service charge, sale costs and legal costs and that the Appellant only achieved a much higher price for each one because of the special circumstances of the sales. This is because no part of the premium which the Appellant achieved on the grant of the new leases was applied to discharging the Loan. If Cirrus had exercised its power of sale, it would have used the proceeds of sale for that purpose. (7) When the Judge asked Mr Monks why he had not taken this course, he had no real answer. Moreover, it must have been obvious to Mr Monks when he was asked this question that by entering into the Deeds of Surrender rather than exercising the power of sale, the Respondent had not been credited with the value of the Properties and the Loan remained outstanding in full. Indeed, he acknowledged in Monks 4, paragraph 17 that the Appellant (and not the Respondent) took the benefit of any equity in the Properties by reinvesting it in the development. (8) The Judge made no finding that Mr Monks was aware that Cirrus had no power to enter into the Deeds of Surrender and in one sense issue (1) (above) was a red herring. But the absence of any such power and, equally importantly, any reference to such a power in the Deeds of Surrender confirmed that Mr Monks could not have been acting under the mistaken belief that Cirrus was exercising its power of sale when he executed Surrenders 2 and 4 on its behalf. (3) Delay

76. Ms Coyle also relied on Tse Kwong Lam v Wong Chit Sen (above) and submitted that even if it were minded to do so, the Court should refuse to set aside the Deeds of Surrender and leave the Respondent to his remedy in damages because of his delay in challenging them. This was not a pleaded issue or one taken before the Judge or in the Grounds of Appeal. But in any event, I reject this submission. In Tse Kwong Lam the mortgagor took eleven years to bring its counterclaim to trial. There is no comparable delay in the present case either before the issue of proceedings.

77. In September 2022 the Respondent became aware of the Deeds of Surrender for the first time and then only because he made an application for third party disclosure. Indeed, it speaks volumes that the Appellant and Cirrus did not disclose the Deeds of Surrender or the applications to register them voluntarily to the Respondent. In March 2023 the Respondent applied for the Injunction in separate proceedings and on 25 April 2023 the Claim Form was issued challenging the validity of the Deeds of Surrender. In my judgment, the Respondent acted promptly in seeking to assert his rights and Ms Coyle did not rely on any particular delay in the conduct of these proceedings once the Claim Form had been issued. Indeed, the action had come to trial by July 2024. (4) Relief

78. The Judge held that the Appellant was bound by the Respondent’s equity and that it would be unjust to permit the Appellant to register the Deeds of Surrender until it had satisfied his equity of redemption: see [120] to [122]. But he granted no relief other than to continue the Injunction. At the subsequent hearing on 4 September 2024 Ms Coyle applied for permission to appeal and maintained the position that it was impossible for the Respondent’s equity to “travel” to the Appellant. The Judge refused permission to appeal and gave directions for the calculation of the Respondent’s equity and in doing so he stated that: “I have seen, Mr Ip, what you are looking for here is some money”.

79. Having found that Cirrus improperly entered into the Deeds of Surrender and that the Appellant had actual knowledge of the impropriety, the appropriate form of relief was to make a declaration to that effect and set aside the Deeds of Surrender. However, I see no reason why the Judge should not have made an Order setting aside the Deeds of Surrender on terms which reflected the Respondent’s primary interest in receiving his share in the proceeds of sale rather than retaining the Properties. The Appellant plainly took a risk that Mr Ip would not find out about the applications to register the Deeds of Surrender or oppose them. But it would have been harsh for the Judge to set aside them aside in the face of new leases and without the new owners and sub-tenants being joined as parties or, at the very least, without representation. V. Disposal

80. I will, therefore, vary the Order pursuant to CPR Part 52.20(2)(a) and declare (1) that the Cirrus had no power to enter into the Deeds of Surrender, (2) that it did not execute them for the proper purpose of enforcing its security to repay the Loan or to protect its security and (3) that the Appellant had actual knowledge that it did not execute the Deeds of Surrender for that purpose and is not, therefore, entitled to rely on S.104 and/or clause 11 of the Mortgage to enforce the Deeds of Surrender and register them at HM Land Registry.

81. I will also make an Order setting aside the Deeds of Surrender and ordering the Appellant to deliver them up to the Respondent for cancellation. However, I will suspend that Order until after the trial which the Judge ordered in paragraph 5 of his Order has taken place and on condition that the Appellant pays to the Respondent the amount (if any) of the proceeds of sale of the Properties to which the Judge finds that he is entitled and complies with any Order for payment made by the Judge.

82. Subject to this, I affirm the Order which the Judge made and, in particular, paragraph 1 in which he continued the Injunction until the conclusion of these proceedings. I will, however, give permission for the parties to apply to the Judge to vary the directions which he made in the Order if they consider it necessary to do so in the light of this judgment. I also stress that it will be a matter for the Judge at the further trial to decide what value (if any) to place on the Respondent’s “equity” and what (if any) proper deductions to make from the proceeds of sale (however calculated). Indeed, the Judge made it clear that he was not carrying out that exercise: see [123].

83. I leave it to the parties to agree the form of Order (including any order for costs). If they are unable to do so, I will resolve any issues on paper. I do not require them to do so before the hand down of this judgment. But if they are unable to agree, I direct that the parties submit any proposed form of order and any submissions in relation to its form by 4 pm on Friday 31 October 2024. Dr Brown told me that he was only instructed for the hearing of the Appeal. But I hope that Mr Ip will see the good sense of retaining Dr Brown to agree the form of Order or to make written submissions.