Leasehold interest — Forfeiture — Foreign company with lease of agricultural estate in England — Provisional liquidator appointed — Lease forfeit if company wound up — Foreign court applying for assistance of English court — Notice to quit — Effect — Whether administration order should be made to preserve leasehold interest — Administration order granted
Dallhold Estates (UK) Pty Ltd (“DE”) was a company incorporated under the Companies (Western Australia) Code 1981 and was a wholly-owned subsidiary of Dallhold Investment Pty Ltd (“DI”). A significant asset of DE was a leasehold interest in an agricultural and sporting estate in England known as the Upphall Estate, comprising some 940 acres in Hertfordshire and including a large Elizabethan manor house occupied by Miss Suzanne Bond, the daughter of a director of DI and former director of DE, Mr Alan Bond. In July 1991 DI was placed in liquidation by order of the Federal Court of Australia. The liquidator demanded a payment from DE and when it was not made obtained the appointment of provisional liquidators in respect of DE. The court refused to make a winding-up order at that stage. The landlord of Upphall Estate was a Panamanian company, Lindsey Trading Properties Inc (“L”), which claimed to be a creditor of DE. On August 4 1991, on the application of DI, the Companies Court in London appointed a provisional liquidator of DE. He made a report pointing out that in 1989 DE had executed a deed of surrender on the occasion of a mortgage by L of the freehold interest. A bank claiming to be the assignees of the mortgage asserted that the surrender had become effective. Further, on October 9 1991, L had served a notice to quit on the grounds that DE had failed to comply with a notice to pay rent said to have been served on August 7 1991. Miss Bond, the occupier of the house, also made certain proprietary claims which, if made good, would devalue the interest of DE under its lease from £1m to around £300,000. The liquidator said that if a winding-up order were made, whether in England or Australia, the provisions of the lease would enable the landlord to determine the tenancy by re-entry and the provisions of section 146 of the Law of Property Act 1925 would not apply — it being an agricultural lease. Consequently, there would be no power to relieve from forfeiture. Agricultural valuers had valued the leasehold interest at £1m and that value would be lost if the lease were forfeit on a winding up. In those circumstances, DI did not wish to press for a winding-up order in Australia. Instead it obtained from the Federal Court a letter of request for the English court seeking its assistance to make an administration order in England.
Held The administration order was made.
1. The English court was empowered by section 426 of the Insolvency Act 1986 to give assistance at the request of a foreign court by making an administration order provided that the conditions in section 8(1)(a) and (b) were satisfied, namely that the company would be unable to pay its debts and that the making of an administration order would result in a more advantageous realisation of the company’s assets than would be effected on a winding up.
2. In this case the request required the court to consider whether the making of an administration order would be likely to result in the administrator’s preserving, for the benefit of DE, the interest in Upphall Estate.
3. On the evidence, it was likely that the administrator would succeed against the claim by Miss Bond; and even if he were not to, the evidence suggested that her claim would devalue but not extinguish the value of the leasehold interest so that the administrator would be left still with a more advantageous realisation of the company’s assets than would be effected on a winding up.
4. The deed of surrender had the effect of excluding the tenant’s entitlement to compensation under section 70 of the Agricultural Holdings Act 1986 and that was repugnant to the provisions of section 78 of the Act: see Parry v Million Pigs Ltd (1980) 260 EG 281. On the present evidence it was difficult to see what answer there could be to a challenge based on section 78. Therefore it was likely that that issue would be resolved in favour of DE.
5. As regards the notice to quit, section 26 of the Agricultural Holdings Act 1986 required that, where a notice to quit was given to the tenant, the tenant could serve on the landlord a counternotice. That had the effect of requiring the matter to go to an agricultural land tribunal — save in certain specific cases in Schedule 3 to the Act, Case D of which required notice in writing by the landlord to the tenant to pay rent due. The notice to quit of October 9 was served just over two months after a notice dated August 7 requiring payment of rent and so the question was whether at the date of the August notice, rent was due. Further, section 48 of the Landlord and Tenant Act 1987 required the landlord to give notice furnishing the address for the service of notices by the tenant on the landlord. Such notice served by the landlord had to be in writing (section 54). No such notice had been identified in the evidence before the court. The August 7 notice itself could not be such a notice in relation to rent described within it as having already fallen due; because even if that notice would otherwise satisfy the conditions of section 48, rent which had accrued prior to that notice could not be said to have been due on the earlier dates specified in it. Accordingly, the October 9 notice was not a notice within Case D.
6. On the evidence, the administrator would have sufficient funds. Accordingly the conditions for the granting of an administration order were satisfied and the court would make an administration order to give the assistance requested by the Australian court.
Edward Bannister QC and Peter Arden (instructed by Mills & Reeve) appeared for Dallhold Estates (UK) Pty Ltd; Paul Girolami (instructed by Nabarro Nathanson) appeared for Dallhold Investments Pty Ltd; and Charles Purle QC and Elspeth Ross Crail (instructed by Franks Charlesly & Co) appeared for the landlord, Lindsey Trading Properties Inc.
