Barrington v Lee
| Jurisdiction | England & Wales |
| Judge | THE MASTER of THE ROLLS,LORD JUSTICE EDMUND DAVIES,LORD JUSTICE STEPHENSON |
| Judgment Date | 27 October 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J1027-1 |
| Date | 27 October 1971 |
| Court | Court of Appeal (Civil Division) |
[1971] EWCA Civ J1027-1
In The Supreme Court of Judicature
Court of Appeal
Appeal of defendant from order of Mr. Justice Chapman on 20th May, 1971, dismissing his application.
The Master of the Rolls (Lord Denning),
Lord Justice Edmund Davies and
Lord Justice Stephenson
Mr. S. J. SHER (Instructed by Messrs. Lovell White & King, agents for Messrs. Townsends of Swindon) appeared on behalf of the Appellant Defendant.
Mr. P. H. NORRIS (Instructed by Messrs. Ambrose Applebe Partners) appeared on behalf of the Respondent Plaintiff.
In August 1964 Mr. Peter Lee owned a house, 21 Coats near Swindon. He wished to sell it and instructed Mr. W. G. Adams, an estate agent of Swindon, to try to affect a sale. Mr. Adams put a notice outside the house "For Sale" with his name on it. No one came forward at once. So Mr. Lee put it into the hands of two or three other estate agents also. One of these was F. J. Elliott (Estate Agents) Ltd., also of Swindon.
In December of 1964 a Mr. Bohner went to Mr. Adams and offered £2,400 for the house. Mr. Adams agreed it, subject to contract. He asked Mr. Bohner to pay a deposit of £100. (It was the practice of Mr. Adams to ask for a deposit of £100 regardless of the sale price.) On 8th December, 1964, Mr. Bohner paid the £100 to Mr. Adams. Mr. Adams told Mr. Lee's solicitor, Townsends of Swindon, that he had negotiated a sale of the house to Mr. Bohner at a price of £2,400, subject to contract, and had received a deposit of £100: and that Mr. Bohner's solicitors were Pothecary and Barrett of Gracechurch Street, London. Townsends prepared a draft ccntract and sent it to Mr. Bohner's solicitors. It contained a condition: "A deposit of 10% on the amount of the purchase money has been (shall be) paid to Townsends as stakeholders."
On 16th December, 1964, Mr. Bohner paid 140 to the other estate agents - Elliotts. Mr. Bohner is dead and Elliotts have disappeared. There is no evidence as to the reason for this payment of £140 and no receipt has been found. But it is obvious that £140 is the balance of 10% deposit. It is the sum which, together with £100 paid to Mr. Adams, makes up £240, that is, 10% of the purchase price of £2,400. Elliotts did not tell Mr. Lee that they had received this £140, nor did they tell his solicitors, Messrs. Townsends.
Although Elliotts have disappeared, we do know that when Elliotts received a deposit, it was their practice to receive it"as stakeholders". This appears from the printed forms which they sent to solicitors. These forms were headed: "Proposed Property Transaction, Subject to Formal Contract": and after the various particulars contained the words:
"Deposit £…… has (has not) been received by the agents as Stakeholders."
It is obvious that when Elliotts received a deposit from a proposed purchaser, they inserted the figure and struck out the words "(has not)", leaving the words "Deposit £.…. has been received by the agents as stakeholders".
In February 1965 the proposed sale fell through. Mr. Bohner withdrew. On 10th February, 1965, his solicitors wrote to Mr. Adams, asking for the return of the £100 deposit. Mr. Adams returned it at once. Mr. Bohner's solicitors also wrote to Elliotts, asking for the return of the £140 deposit. But Elliotts did not return it. Shortly afterwards, in 1965, Mr. Bohner issued a writ against Elliotts and obtained judgment against them for £140 and costs. It was not paid. So Mr. Bohner petitioned for the winding up of Elliotts. An order was made. Mr. Bohner proved as a creditor. There was nothing forthcoming. The Official Receiver reported: "Mo dividend will be distributed to creditors."
On 21st November, 1966, Mr. Bohner died. Mrs. Barrington is the executrix of his will. Neither Mr. Bohner nor Mrs. Barrington thought of making a claim against Mr. Lee, but in 1967 a case was reported called Goding v. Frazer (1967) 1 W. L. R. 286, in which Mr. Justice Sachs was reported as saying in regard to a deposit received by an estate agent "subject to contract":
"If an estate agent does receive such a deposit as stakeholder, the vendor must bear the risk of his insolvency and would be liable for the return of the deposit to the potential purchaser."
This obiter dictum was seen by many lawyers and at the end of1969 it got back to Mr. Bohner's executrix. So on 29th December 1969 (five years after the deposit was paid) she wrote to Townsends (who had acted for Mr. Lee in 1964) asking for the £140 back. Townsends had lost touch with Mr. Lee, as he had moved. The executrix instructed Ambrose Applebe Partners, solicitors, who eventually found out Mr. Lee's address. He had moved to Wootton Bassett. On 19th November, 1970 (just within the six year's period of limitation) they issued a writ against Mr. Lee claiming the £140 from him. On 23rd November, 1970 they served it on Mr. Lee. This was the first he had ever heard of £140 being paid, or of any of the circumstances giving rise to the claim. He explained this to the process server, who suggested that he should write to Messrs. Ambrose Applebe. He did so, but unfortunately he did not keep a copy of his letter. No doubt he told them that this was the first he had ever heard of such a claim. He ought to have entered an appearance also, but unfortunately he did not do so. The solicitors did not communicate with him but signed judgment against him in default of appearance. They then issued a writ of fi. fa. The sheriff's officer went to levy on Mr. Lee's goods. Mr. Lee at once consulted Townsends, who applied to set aside the judgment. Affidavits were filed setting out the facts as I have stated them.
In order to set aside a judgment in default, the defendant should do two things:- (i) he should give an explanation of his default; (11) he should show that he has merits to which the Court should pay attention: see Evans v. Bartlam (1937) A. C. at page 489. Counsel for the plaintiff conceded that Mr. Lee satisfied the first requirement. He had given sufficient explanation of his default. But he contended that Mr. Lee had no merits. On 12th February, 1971, the Master upheld that view. He refused to set aside the judgment, presumably on the authority of Coding v. Frazer. On 2nd March, 1971,this Court decided Burt v. Clause Cousins & Co. Ltd. (1971) 2 W. L. R. 930. On 20th May, 1971, the Judge refused to set aside the judgment, holding that the case was covered by Burt v. Claude Cousins & Co. Ltd. The defendant appeals to this Court. It soon became clear to us that the defendant did have a defence on the merits and that the case would have to be tried out. But, as the facts were not in dispute and were all before us - and the amount involved is only £140 - both Counsel very sensibly invited us to deal with the case as if it were a final appeal. We are glad of this and proceed to decide the rights of the parties as we see them.
In Burt's case the vendor allowed estate agents to have his house on their books. The estate agents introduced it to a man who agreed to buy it "subject to contract". The estate agents asked him for a deposit of 10%. He paid it. The estate agents gave him a receipt for it, but told the vendor nothing about it. The purchaser delayed and delayed. Eventually after some months, he cried off altogether and asked the estate agents for his money back. The estate agents defaulted. The purchaser then sued the vendor. The majority of the Court held that the vendor was liable to repay the money, even though he had never received it from the estate agents and was never entitled to receive it. Their reasoning was that the vendor had employed the estate agents to find a purchaser, and thus "put it into the power of the estate agents to demand and receive deposits", see 1971 2 W. L. R. at pages 849B, 950H. So the vendor was answerable for the default of the estate agents. The majority claimed that this accorded with the justice of the case - a claim with which I disagreed.
Whatever may be said about Burt's case, there cannot be two views about the present case. In 1964 Mr. Lee put his house into the hands of estate agents for sale. An interested person, Mr. Bohner,paid Elliotts £140. My. Lee knew nothing of it. Nearly six years later he is faced with a claim for the return of it, and the bailiffs are put in to sell up his home. Yet he has never received the money, nor been entitled to receive it. It would be quite unfair that he should be held liable to pay it. Yet the Judge has felt compelled by Burt's case to order it.
It is possible to draw various distinctions between Burt's case and this one. Three distinctions were canvassed before us"-
(i) The estate agents here gave a receipt "as stakeholders", whereas in Burt's case they gave a simple receipt without more;
(ii) The estate agents (Elliotts) here were second in the field, and only received part of the deposit, whereas in Burt's case they were the first to Introduce the purchaser and received the whole of the deposit;
(iii) The purchaser here sued the estate agents to judgment, whereas in Burt's case he had not done so.
Those distinctions were put before the Judge; but he rejected them. He said! "I would not be doing a service to the purchaser or to agents generally if I sought to uphold distinctions based on detailed minutiae." I appreciate the force of this. So much so that I do not propose to rely on those distinctions. I prefer to tackle the reasoning in Burt's case. The discussion in the present case has convinced me, more than before, that it was wrongly decided. It has enabled me to add these new considerations:-
1. THE AUCTIONEER CASES
In Goding v. Frazer (1967) I W. L. R. at pages 290, 291; and in Burt v. Claude Cousins (1971) 2 W. L. R. at...
To continue reading
Request your trial
-
Sorrell v Finch
...deposits when, as here, the price was agreed. She agreed it was a usual thing". 20 That decision was considered a few months later in Barrington v. Lee [1972] 1 Q.B. 326, where the estate agent expressly received a pre-contract-deposit "as stakeholder". The facts differed in an important re......
-
Miliangos v George Frank (Textiles) Ltd
...or was "only weakly or inexpertly put forward"( Joscelyne v. Nissen (1970) 2 Q.B. at page 86); nor that the reasoning was faulty ( Barrington v. Lee (1972) 1 Q.B. at page 345 by Lord Justice Stephenson). To these I would add that a case is not decided per incuriam because Counsel have not c......
- George Wimpey & Company Ltd v Commissioners of Inland Revenue
-
Mears v Safecar Security Ltd
...decisions of this court, at least when that decision has considered earlier conflicting deci sions and resolved the conflict: Barrington v. Lee, (1972) 1 Queen's Bench, 326. If Marrison v. Bell had stood alone, I think I would have felt bound by it to follow Orman's case; in justice to the......