Reid Minty founder wins appeal over Mayfair block deposit

The founder of Reid Minty has won his appeal for the return of a £105,000 deposit that he paid for the headlease of a Mayfair apartment block. Lawyers for Andrew Reid, who set up the litigation boutique 28 years ago, successfully argued before the Court of Appeal that the deposit should be returned because the freeholder of the block at 13–17 Clarges Street, London W1, had unreasonably withheld consent for the assignment of the lease. At an auction sale held on 13 July 2006, Landlord Protect, a company owned by Reid and his family, agreed to purchase the head leasehold interest in the block from St Anselm Development for £1.05m and paid a deposit of £105,000. However, in view of the fact that Landlord Protect was a dormant company and had never traded, the freeholder argued that it would allow the assignment of the interest only if Reid personally guaranteed the company’s obligations under the headlease. Reid offered to provide a guarantee, but that was not acceptable to the freeholder, which insisted that, on any future assignment, it would release him only if “reasonable alternative security” were provided. Landlord Protect subsequently gave notice to St Anselm that it was backing out of the sale contract and asked for the return of the deposit on the ground that the freeholder had made unreasonable requirements. St Anselm refused and asserted that Landlord Protect had breached the sale contract by failing to provide the guarantee. In the High Court, in July 2008, rejecting Landlord Protect’s claim for the return of the deposit HH Judge Hodge QC held that the freeholder’s requirement was reasonable and proper and that Reid’s refusal to comply with it was a breach of the sale contract. Allowing Reid’s appeal, Stanley Burnton J said: “It is, in general, unreasonable for a landlord to require a guarantee of the liabilities of an assignee to extend beyond the period during which the assignee is liable to the landlord.” Landlord Protect Ltd v St Anselm Development Co Ltd Court of Appeal (Waller Wilson and Stanley Burnton LJJ) 20 February 2009. John Furber QC (instructed by McGrigors LLP) appeared for the appellant; Martin Rodger QC (instructed by Guy Clapham & Co) appeared for the respondent.