Jacob Beake & Ors v Jamie Richard Chapman & Ors (Re London South West SW Limited)

Where a company’s director and shareholder controls a management company whose signature is required to complete an interlocking lease transaction, the court may compel execution where refusal is an improper use of corporate control. A director who uses execution of the lease as leverage in a personal dispute breaches fiduciary duties owed to the relevant companies. The court may grant relief through its inherent jurisdiction to assist administrators, its jurisdiction to restrain breach of trust, or both. In deciding whether to adjourn, the court must apply the overriding objective, balancing participation and equality against expedition, fairness and proportionate use of court resources.

The applicants were the joint administrators of London South West SW Limited, a property development company in administration. Twenty-five flats had been sold, but completion of the sale of the final flat required the execution of a lease by Bodman House Management Limited, the property management company.

Jamie Chapman was Bodman’s sole director and shareholder. He refused to execute the lease, apparently seeking leverage in connection with personal claims and a bankruptcy petition. The administrators sought an order requiring him to execute the lease on Bodman’s behalf. At the hearing, he sought a further adjournment, but advanced no substantive defence.

1. Adjournment refused. The matter was sufficiently urgent for immediate disposal. Further delay created a significant risk that the buyers would withdraw, causing loss to the insolvent estate and potentially reducing recoveries. Applying the overriding objective under CPR 1.1(2)(a), CPR 1.1(2)(d) and CPR 1.1(2)(e), the court balanced effective participation and equality against expeditious and fair determination and proportionate use of court resources. No good purpose would be served by an adjournment.
2. Absence of arguable defence. Chapman had known since March 2023 that execution was required. He had signed the other leases, agreed the material terms of the final sale and instructed solicitors to prepare the documentation. Despite warnings, the application and representation by counsel, he identified no legitimate basis for refusal.
3. Trust and fiduciary duties. Chapman’s single issued share in Bodman was held on trust for the Company pending completion of the final sale and the issue of shares to leaseholders. His attempt to use execution of the lease as leverage in a personal dispute was a plain breach of fiduciary duties owed to the Company and Bodman.
4. Jurisdiction and relief. The court had jurisdiction to grant the order either under its inherent jurisdiction to assist administrators as officers of the court in getting in and dealing with company property, as recognised in Re Sabre International [1991] BCC 694, or under its jurisdiction to restrain a trustee from committing a breach of trust, reflected in Lewin para 40-016 and Marshall v Sladden (1851) 64 ER 916. The relief was appropriate on the evidence.
5. Order. Chapman was ordered to execute the lease on Bodman’s behalf and deliver the original executed lease to the applicants’ solicitors by 4pm on 26 June 2023. He was ordered to pay costs summarily assessed at £20,000 plus VAT.

First-instance application. The judgment records an earlier hearing on 16 June 2023 at which an adjournment was granted on Chapman’s undertaking, which he failed to perform. The application was reheard and finally determined on 22 June 2023.