Cornish leasehold forfeiture ‘Ponzi scheme’ claims to be heard in High Court

A district judge in Truro County Court has decided that two lease forfeiture claims currently being case managed and listed together will be heard in the High Court.

Simon Dinnage & Anor v SMCFO Holdings Limited & Anor concerns the forfeiture of long commercial leases of units within a building known as 75 Truro Road, St Austell, Cornwall, PL25 5JQ. 

The claimants in both claims each took a 125 year lease of a unit within that building. Mr Simon Dinnage and Ms Amanda Yeates paid a premium of £89,950, Mr Jui-Pin Wu paid £115,400. 

The leases were sold on the basis that they would function as an investment producing a return for the sub-leasees, once the building was redeveloped as a care home.

The landlord and freeholder of the building was CHF 8 Ltd. The building was never re-developed and CHF 8 Ltd entered into administration on 28 November 2019 and liquidation on 2 December 2020.

The investment has been characterised by the parties to the litigation as a ‘Ponzi scheme’, a form of fraud where money from new investors is used to pay investment returns to earlier investors.

The building was sold by the liquidator and then subsequently sold to SMCFO Holdings Ltd, the first defendant in the claim, in late 2023.

A year later, in 2024, Auckland Hotel Trading Ltd, the second defendant, purchased the freehold of the building from SMCFO Holdings.

Both SMCFO and Auckland Hotel Trading have common directors and shareholders but are not said to have any association with CHF 8 Ltd.

Both defendants contend that the claimants’ claim for unlawful forfeiture has no real prospect of success. The defendants also claimed that the terms of the lease were breached and that annual rent went unpaid.

However, the judge dismissed the defendants’ application for a summary judgement and has referred the case to the High Court, Business and Property Courts.

DJ James Field concluded: “Only the High Court has jurisdiction to hear the claim for relief from forfeiture.”

He added: “The defendants purchased the properties knowing their history and knowing that history brought with it a risk of litigation. Transferring the proceedings to the High Court would simply allow them to proceed as they always should have done.”