Court finds defendants liable for property income and a remortgage sum after accounting breaches
Rental income account proceedings have resulted in a High Court order requiring defendants in a property dispute to account for more than £326,000 to an LLP, after they failed to comply with an order requiring them to make and verify an account.
Master Teverson, sitting in retirement, handed down judgment in Helen Ross on behalf of HRP Complete Solutions LLP v Andrew John Phillips and others [2026] EWHC 2227 (Ch) on 26 August 2026.
The case concerned the beneficial ownership of three properties in Chatham, Kent: 28 Grange Hill, 130 Castle Road and 44 Albany Road. An earlier judgment had found that a declaration of trust made in 2015 was invalid and that beneficial ownership of the properties had never left HRP Complete Solutions LLP, referred to in the judgment as the Old LLP.
The court had subsequently ordered the defendants to provide a verified account of the properties’ income and expenditure from 31 October 2015. They were required to file and serve a witness statement with supporting documents by 4pm on 2 December 2025.
They did not comply with that deadline.
The judgment highlights the importance of complying with an order requiring an accounting party to make and verify an account. Master Teverson found that the defendants’ failure was “plainly serious and significant” and that they had provided no reason for failing to comply. The order provided that evidence filed late could not be used without permission and required an on-notice application for relief from sanctions.
The court nevertheless granted limited relief from sanctions so that it could consider previously disclosed Haart Statements and bank statements. Master Teverson said it would have been artificial to determine the account without reference to those documents, but stressed that they were not equivalent to a properly verified account.
The court assessed the net income attributable to the three properties at £251,849.74 up to and including July 2026, before any deduction for mortgage interest. Interest at 4% per annum is to be paid on the full balance found due from 1 January 2021.
The judgment also dealt with a remortgage of 130 Castle Road. Fleet Mortgages disclosed that the property had been remortgaged in June 2023 for £157,373.06, compared with previous borrowing of £83,000. The court found that the remortgage appeared to have released an additional £74,373.06.
The defendants had been ordered to make and verify an account concerning the remortgage by 5 February 2026. They did not do so. Master Teverson refused relief from the resulting sanction and ordered the defendants to account to the Old LLP for the £74,373.06, together with interest at 4% from 1 July 2023.
The court has not yet finally determined the amount of mortgage interest that may be deducted from the £251,849.74. The First Defendant must file and serve a witness statement, verified by a statement of truth and supported by relevant documents, by 4pm on 4 September 2026 concerning two monthly NatWest payments of £557.89 and £163.
If that evidence is not provided, no mortgage deductions will be permitted in relation to 28 Grange Hill or 44 Albany Road. The account will then return before the court for determination of the mortgage interest deductions and consequential matters.
For solicitors, the judgment underlines the need to comply precisely with court orders requiring accounts and supporting evidence. Where an accounting party misses a specified deadline, previously disclosed documents do not automatically amount to compliance with an obligation to make and verify the account, and relief from sanctions remains a matter for the court’s discretion.
The judgment also states that a party seeking an account on the basis of wilful default would normally be required to plead that case or expressly apply during or after trial for an account to be directed on that basis. The court rejected the argument that permission to rely on estate-agent evidence following non-compliance automatically converted the account into one based on wilful default.
The restored hearing will determine the remaining mortgage interest issue and consequential matters. Any application for permission to appeal is to be made at that hearing, with the time for filing an appellant’s notice extended until 14 days afterwards.