An appeal to remove restrictions on registration, on the basis that rights of pre-emption and overage had expired, has failed in Fairhaven Shipping Company (UK) Ltd v Rolf Hugo Munding [2022] UKUT 260 (LC) a decision which underlines the need for parties to abide by their agreements.
The case concerned the sale of shares in the appellant company, Fairhaven, which were owned equally by the respondent, Mr Munding, and Mr and Mrs Alford. In December 2015 Mr Munding agreed to sell his shares to the Alfords subject to their agreement not to either sell any shares or, within 15 years, to dispose of the property or part of it without offering him a right of first refusal and, if he refused, to dispose of the property on terms no less favourable to Fairhaven than those offered to him. There was also an agreement that if, within 15 years, planning permission was obtained, the Alfords would pay Mr Munding 20% of the net uplift in value of the property. Detailed terms were agreed including restrictions to be placed on the title to the property so that a transfer or lease of the property could only be registered if the terms of the various agreements had been complied with or did not apply.
Fairhaven attempted to cancel the restrictions relating to the pre-emption and overage rights, which it claimed had expired, in order to register a transfer of the property to Southern Wharfage Ltd, a company under the same control. Fairhaven had offered to sell the property to Mr Munding but he had not accepted it within the required period. He argued that the transfer to SWL was not a disposal under the terms agreed, or alternatively that it was not a disposal on terms no less favourable than those offered to him. He was obliged to pay a 10% deposit and the balance of the purchase price on completion. SWL was only required to pay the full purchase price on registration.
