High Court dismisses appeal in sale and rent back case

25 Feb 2025Court Report

The High Court dismissed an appeal concerning an alleged illegal sale and rent back arrangement

High Court Dismisses Appeal in Sale and Rent Back Case

The High Court of Justice, presided over by Mr Justice Fancourt, dismissed an appeal brought by Ms Priti Odhavji against a decision made by His Honour Judge Parfitt in the County Court at Central London. The appeal concerned the alleged unenforceability of a sale and rent back arrangement under the Financial Services and Markets Act 2000 (FSMA).

The case revolved around the sale of 129 Long Elmes, Harrow, Middlesex, by Ms Odhavji and her husband to Ms Caroline Tighe, and a subsequent tenancy agreement. Ms Odhavji contended that these transactions constituted an illegal sale and rent back arrangement, contravening section 19 of FSMA.

At the heart of the appeal was whether the lower court erred in concluding that Ms Odhavji had not proved her case. The primary issue was whether an arrangement existed that met the statutory criteria of a regulated sale and rent back agreement, which would render the transactions unenforceable.

Mr Justice Fancourt upheld the lower court's findings, noting that the evidence presented by Ms Odhavji was inconsistent with her pleaded case. The court found no sufficient evidence of an arrangement between Ms Odhavji and Ms Tighe that satisfied the statutory conditions for a sale and rent back agreement.

The court also addressed the secondary issue concerning the alleged agreement that Ms Odhavji and her husband would retain £100,000 of equity in the property. The court found no basis for this claim, as it was not supported by the evidence presented.

In his judgment, Mr Justice Fancourt highlighted the importance of objective evidence in establishing claims of illegal conduct under FSMA. He noted that the lack of documentary evidence linking the transactions to an unlawful arrangement was a significant factor in the decision.

The judgment serves as a reminder of the complexities involved in sale and rent back cases and the high evidential burden required to prove such claims. The case underscores the need for clear and cogent evidence when alleging regulatory breaches in financial transactions.

Ultimately, the appeal was dismissed, and the original decision of the County Court was upheld, leaving Ms Odhavji and her husband with no continuing interest in the property beyond their status as periodic assured shorthold tenants.