Arrowgame Ltd & Anor v Wildsmith & 11 Others

The High Court dismissed the appeal against HHJ Dight's order that the court execute a TR1 transfer under a Consent Order made in long-running landlord and tenant litigation. The central legal principle decided was that, in the context of a deed executed by a company, "execution" in paragraph 5 of the Consent Order required not only compliance with the Companies Act 2006 signature requirements (s.44) but also delivery as a deed (s.46 and the common law). Because the transfer had been signed but not delivered, the first defendant was in default and the court was entitled to execute the transfer under the Consent Order paragraph 6 (and s.39 Senior Courts Act 1981 provides analogous power).

The judge rejected the appellants' argument that "execute" was limited to signing and that delivery was a separate subsequent completion step; he also rejected subsidiary arguments about the interpretation of "forthwith" and about liability of the second defendant for costs. Permission to appeal was granted but the appeal was dismissed.

This was a rolled-up appeal to the High Court from an order of HHJ Dight in the County Court. The background is a claim by lessees under the Landlord and Tenant Act 1987 to acquire the headlease; the First-tier Tribunal fixed the purchase price and approved a TR1 transfer form. The parties entered a Consent Order (8 July 2015) which required the Claimants to pay a balance into court and required the first defendant to "execute a transfer" forthwith, with a provision that the court could execute the transfer in default.

The dispute before HHJ Dight and on this appeal concerned the meaning of "execute" in paragraph 5 of the Consent Order: whether it meant simply signing in accordance with the signature rules for companies (Companies Act 2006 s.44) or whether it required delivery so as to constitute execution as a deed (Companies Act 2006 s.46 and the common law). The factual matrix showed the TR1 had been signed by the company (director and secretary) after notification of the payment into court, but the parties disagreed whether the signing amounted to execution and completion.

The High Court framed the issues as (i) the legal meaning of "execute" in the Consent Order, (ii) whether the first defendant was in default of paragraph 5 by the time the court exercised paragraph 6, and (iii) related points about the meaning of "forthwith", the presence of a transferee covenant in the TR1 and costs allocation. The court reasoned that, as a technical matter, execution of a deed by a company requires both due signing under s.44 and delivery as a deed under s.46; although s.46(2) creates a presumption of delivery on execution, the surrounding circumstances and normal conveyancing practice can show a contrary intention. Given the long-running litigation, the inclusion of paragraph 6 (court execution in default) and the correspondence, the Consent Order was intended to require delivery so that the transferee could register the headlease. The TR1 had not been delivered by the time the judge exercised paragraph 6, so the first defendant was in default and the court validly executed the transfer. The court dismissed the appeal but granted permission to appeal to preserve the theoretical right to seek leave to appeal to the Court of Appeal.

Appeal dismissed. The High Court held that in the context of the Consent Order the term "execute" required not only signature in accordance with Companies Act 2006 s.44 but also delivery of the deed (s.46 and common law). Because the transfer had been signed but not delivered by the time the court acted, the first defendant was in default under paragraph 5 and the court properly executed the transfer under paragraph 6; subsidiary points including "forthwith" and costs did not alter that conclusion.

County Court (Central London): HHJ Dight made a Consent Order 8 July 2015; on 27 October 2015 HHJ Dight executed the TR1 under paragraph 6 and later (27 February 2016, drawn 7 March 2016) dismissed the defendants' application to set aside that step and refused permission to appeal. Proudman J (High Court) made a rolled-up hearing direction on 10 June 2016. This is the High Court (Nugee J) determination, [2016] EWHC 3608 (Ch).