Claim to interest which would be a breach of lease, fails

The test for applications to amend a statement of case is the same as for applications for summary judgment: there must be a real as opposed to a fanciful prospect of success. The High Court has considered this issue, rejecting amendments to a defence in Together Commercial Finance Ltd v Fay of London Ltd [2025] EWHC 12 (Ch). The claimant mortgagee sought a possession order against the defendant tenant of a ground and lower-ground floor flat in Eaton Square, SW1, for its failure to repay a bridging loan of £3.15m granted in November 2016 and secured by a legal charge over the property. By a deed of settlement in March 2008, a discretionary family trust was set up by Vasily Peganov, the discretionary objects of which were his wife, Tatiana Peganova, and her children. FOL claimed that at Peganov’s instigation, the trustee acquired the shares in FOL, which owned the flat, to provide a permanent home for the family; that the acquisition was made with the benefit of a loan from a Russian bank and that Peganova had occupied the flat as her principal home since September 2013. Peganova claimed a beneficial interest in the flat either through proprietary estoppel or common intention constructive trust and that her interest bound the claimant. She sought to be joined to the proceedings. FOL sought to amend its defence and to counterclaim that because of Peganova’s beneficial interest in the flat when the loan was made, the loan was a regulated mortgage contract under the Financial Services and Markets Act 2000, and since the claimant was not suitably authorised, the loan agreement, charge and related security were void, subject to the court’s power to allow them to be enforced. The court decided there were two connected and fatal points to Peganova’s claim; a common intention to acquire the flat as a family home threw no light on the intention as to its beneficial ownership; and title to the flat lease – and beneficial ownership of it – remained with FOL, the tenant. Purchase of the shares in FOL conferred an ability to occupy the flat. The lease prohibited assigning, underletting or parting with possession of the flat but FOL could use it for the personal occupation of a director, shareholder or representative, as licensee only. The consequence of Peganova having any beneficial interest in the lease or in occupying the flat other than as a nominee of FOL was that an event of forfeiture would arise. There was no reason why a possession order should not be made. Louise Clark is a property law consultant