Thane Investments Ltd & Ors v Tomlinson & Ors

A document deliberately bearing a false execution date may amount to a forgery, but that does not automatically make the underlying lease void. Where the false date does not affect the substantive entitlement relied upon, the court may allow the tenant to rely on the lease unless authority or principle requires avoidance.

A director’s grant of a lease is not necessarily a breach of duty merely because it benefits an existing occupier. The court must assess whether the transaction harmed the company and whether the director failed to pursue a better bargain. A third party is liable as a constructive trustee only where its knowledge makes retention of the benefit unconscionable.

Astim, a subsidiary within the Thane group, acquired The Grant Arms Hotel and allowed GAHL, controlled by Mr Wagner, to continue operating it. A later lease purportedly dated 26 June 2000 was assembled by Mr Tomlinson, then a director of Astim, but the court found that it was executed in late July or early August and deliberately back-dated.

Astim sought possession and contended that the lease was a forgery and a nullity. Alternatively, it alleged that Mr Tomlinson had acted in breach of duty and that Mr Wagner and GAHL were sufficiently complicit to be liable as constructive trustees. The issues were whether the back-dating invalidated the lease and whether the alternative fiduciary-duty case succeeded.

1. The claim failed. The court found that the 2000 lease was executed in late July or early August 2000 and deliberately back-dated. Under sections 1 and 9(1)(g) of the Forgery and Counterfeiting Act 1981, the document was a false instrument for forgery purposes because it purported to have been made on a date when it was not made.
2. That conclusion did not make the lease void. This was not a case involving an unauthorised alteration after execution. The parties’ execution of the lease in its existing form involved illegality, but the date was irrelevant to GAHL’s substantive entitlement to possession. In the absence of authority compelling avoidance, GAHL could rely on the lease.
3. The letter of 27 November 1998, read as a whole, was not a binding commitment by Astim to grant a 21-year lease. Its commercial purpose was to preserve GAHL’s operation of the hotel while alternative purchasers or lessees were sought, with a lease contemplated as a fall-back arrangement.
4. The alternative fiduciary-duty claim also failed. The evidence did not establish that Mr Tomlinson had acted in breach of Astim’s duties by agreeing the £225,000 payment required to secure GAHL’s cooperation in the Devonshire sale, or that a better bargain was available.
5. Applying the unconscionability test discussed in Criterion Properties plc v Stratford UK Properties LLC [2002] EWCA Civ 1783, [2003] 1 WLR 2108, Mr Wagner bona fide believed that GAHL was entitled to the lease and had no reason to think that Mr Tomlinson was acting outside Astim’s commercial interests. It was therefore not unconscionable for him to retain the benefit. The court did not need to decide affirmation, periodic tenancy or proprietary estoppel.