Alan Douglas Greenwood T/A Alan Greenwood & Sons v Crown United Group Ltd (Respondent/Claimant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Beatson |
| Judgment Date | 14 March 2014 |
| Neutral Citation | [2014] EWCA Civ 492 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2013/2509 & 2497 |
| Date | 14 March 2014 |
[2014] EWCA Civ 492
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON CIVIL JUSTICE CENTRE
(MR RECORDER HILL-SMITH)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Beatson
Case No: B2/2013/2509 & 2497
Mr Graeme Kirk (instructed by Davitt Jones Bould) appeared on behalf of Greenwood
Mr Lauren Godfrey (instructed by Engleharts Solicitors) appeared on behalf of Crown United
These are two renewed applications for permission to appeal against the order of Mr Recorder Hill-Smith, made following the judgment handed down on 12 August 2013 following the refusal of permission by Floyd LJ on 18 November 2013. The learned recorder found that a transfer and leaseback transaction concerning 119 London Road, Kingston upon Thames had been induced by fraudulent misrepresentation. As to his order, neither the parties nor this court have been able to extract a copy of a sealed order from the Central London County Court, but Mr Godfrey, who appeared on behalf of Crown United today, stated, with no dissent from Mr Kirk, that the order at page 19 of the bundle before me was an agreed order reflecting the decision and so I rely on its terms.
The recorder ordered first that the entry in the Land Register in respect of the London Road property be altered by substituting as registered proprietor of the freehold Mr Alan Greenwood in the place of Crown United Group Limited (paragraph 1). Secondly, he ordered that there be judgment for Crown United Group Ltd in the sum of £54,600 plus interest of £7,786.80, making a total of £62,386.80. Thirdly, he ordered that Crown United should pay 25 per cent of Mr Greenwood's costs. Fourthly, he required Mr Greenwood to serve a copy of the judgment on his trustee in bankruptcy.
I will first outline the material facts which I take from the findings of the recorder. I will then consider the application of each party for permission to appeal and then give my conclusions.
The facts
Mr Greenwood acquired the freehold title of 119 London Road in 1987. Mr Storrow is a business consultant who has done accountancy work and freelance work for insolvency practitioners and who had a 50% interest in Crown United and in another company, Teamsign, which comes into the picture in the way that I shall explain.
In March or April 1996, Mr Greenwood, who had first met Mr Storrow in the 1970s, asked Mr Storrow for advice and assistance with difficulties that had arisen for his businesses, in particular a transport company, as a result of cash flow problems. Mr Storrow agreed to help and began working from the London Road property. He devised schemes to raise money using the London Road property and other property (see paragraph 47 of the judgment). In July 1996 the transport company was liquidated and a number of limited companies were incorporated by Mr Storrow (see paragraph 46). In relation to the London Road property, a valuation was obtained by Teamsign on 30 April 1996.
Teamsign was an Isle of Man company owned by family trusts belonging to Mr Storrow and his business partner, Mr Poole, who died in 2002 and who the judgment states provided the funds for the transaction entered into concerning the London Road property in 1996. Mr Storrow was a 50% beneficial owner of Teamsign. Teamsign's assets, at any rate the London Road property, were transferred to Crown United, a BVI company, at a later stage, apparently for tax reasons.
As to the valuation Teamsign obtained in April, the recorder held (see paragraph 48) that was there was nothing sinister in Teamsign obtaining that valuation. Mr Storrow contemplated a transaction involving the London Road property and Teamsign. He engaged a single firm of lawyers to act on behalf of Mr Greenwood and on behalf of Teamsign, albeit using different personnel at two different branches. The recorder was critical of this arrangement, which apparently was justified to him on the ground of the urgency of the situation.
The recorder found that Mr Storrow arranged things so that letters about the transaction were sent to the London Road address rather than the address from which Mr Greenwood operated (see paragraphs 59, 65, 74 and 84). He also found that Mr Storrow used other ploys to exclude Mr Greenwood from the transaction and that he forged or procured the forgery of a letter to Lloyds Bank, which held a charge over the property, in order to authorise the release of the deeds, and similarly forged or procured the forgery of Mr Greenwood's signature on the transfer on 22 August 1996.
Before the recorder, Crown United accepted that it did not stand in a better position than Teamsign vis-à-vis Mr Greenwood in relation to the transaction. It contended that the transaction was a routine sale and leaseback arrangement under which a deposit of £100,000 for the transaction would be used to discharge the charge to Lloyds Bank, leaving a sum of about £150,000 less the transaction costs available for Mr Greenwood's business purposes. Crown United's case was that Mr Greenwood would thereafter pay £36,400 per annum rent for a lease, which the recorder held was for a period of 15 years. Mr Greenwood contended that he had no intention of divesting himself of his interest in the London Road property and that he believed that it was being held offshore, and in effect on trust for him, by Teamsign. After the transfer and execution of the lease, Mr Greenwood made payments to Teamsign, possibly through Mr Storrow. Jumping ahead, after 28 September 2005 the payments were made to Crown United, to which Teamsign's assets had been transferred for no consideration.
From 1998, Mr Greenwood used the London Road premises for an undertaker's business, and in about 2001 he constructed a chapel of rest at the premises. The next significant development occurred on 3 August 1999. On that date a bankruptcy petition was presented against Mr Greenwood by Begbies Traynor, the liquidators of the transport business he had run which had been put into liquidation in 1996. A bankruptcy order against Mr Greenwood was made on 22 February 2000.
The trustee in bankruptcy was not told the position concerning the London Road premises or about the payments in respect of it that had been made to Teamsign (see paragraphs 89 to 91). Mr Storrow accompanied Mr Greenwood to a meeting with the trustee in bankruptcy and the recorder found (see paragraph 90) that it was "likely that it was at the instigation of Mr Storrow that Mr Greenwood did not inform the trustee in bankruptcy about what he considered to be his interest in Teamsign". Mr Greenwood's evidence was that Mr Storrow had advised him that he did not need to refer to his interest in the property because it was held offshore and not relevant for the bankruptcy. The recorder also found that neither Mr Greenwood nor Mr Storrow informed the trustee in bankruptcy about the lease and that both were involved in not giving the trustee full information about the property. Mr Greenwood in fact continued to make the payments to Teamsign in the period that he was bankrupt. He was discharged from his bankruptcy on 4 May 2005.
In August 2008 Her Majesty Revenue and Customs began an enquiry into Mr Greenwood's tax position. At some stage the position of the London Road property and the fact that it had been transferred from Mr Storrow to Teamsign and then to Crown United (the latter of no value) came to light. After Mr Storrow left Mr Greenwood's businesses and after Mr Greenwood's discovery that he was not the registered proprietor of the London Road property, he ceased making payments to Crown United. His last payment was made in November 2009. Crown United then brought proceedings for rent arrears. Mr Greenwood counterclaimed for rectification and damages for alleged fraudulent misrepresentation.
Crown United's grounds of appeal include the contentions that the fact of any fiduciary duties owed to Mr Greenwood and the breach of the...
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