Brake and Others v The Chedington Court Estate Ltd

JurisdictionEngland & Wales
JudgeLord Justice Lewison,Lady Justice Asplin,Lord Justice Arnold
Judgment Date10 October 2022
Neutral Citation[2022] EWCA Civ 1302
Docket NumberCase No: CA-2022-000488
CourtCourt of Appeal (Civil Division)
Between:
Brake & Ors
Appellant
and
The Chedington Court Estate Ltd
Respondent

[2022] EWCA Civ 1302

Before:

Lord Justice Lewison

Lady Justice Asplin

and

Lord Justice Arnold

Case No: CA-2022-000488

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

His Honour Judge Paul Matthews (sitting as a Judge of the High Court)

[2022] EWHC 366 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

Alexander Learmonth KC and Jon Colclough (instructed by Direct Access) for the Appellant

Andrew Sutcliffe KC and William Day (instructed by Stewarts Law LLP) for the Respondent

Hearing dates: 26 July 2022

Approved Judgment

Lord Justice Lewison

Introduction

1

This appeal concerns West Axnoller Cottage (“the cottage”) near Beaminster in Dorset. The parties are, on the one hand, Mr and Mrs Brake, and, on the other The Chedington Court Estate Ltd (“Chedington”), which is a company ultimately controlled by Dr Guy. The parties have been in litigation for many years and this is only the latest round in that ongoing dispute. The issues we have to decide are:

i) Whether Mr and Mrs Brake are entitled to relief on the ground that they were unlawfully evicted from the cottage on 18 January 2018; and

ii) Whether Mr and Mrs Brake are now entitled to recover possession of it.

HHJ Judge Paul Matthews, sitting as a High Court Judge in the Business and Property Courts in Bristol, decided both questions against Mr and Mrs Brake. This was one of a large number of actions between these parties that the judge has tried. The trial of this action took place over many days between 12 and 29 October 2021. The judge's judgment is at [2022] EWHC 366 (Ch).

The background facts

2

The judge set out the facts in great detail, but for the purposes of this appeal the following summary (largely taken from the skeleton argument filed on the Brakes' behalf) will suffice.

3

In September 2004, Mrs Brake bought West Axnoller Farm, Dorset which included a substantial dwelling-house known as Axnoller House. Adjoining West Axnoller Farm, on the other side of the drive to Axnoller House, is the cottage. In February 2010 the Brakes entered into a partnership with Patley Wood Farm LLP, whose principal was Mrs Lorraine Brehme. The Brakes contributed West Axnoller Farm as partnership property. The partnership was in the business of holiday lettings and events such as weddings. The partnership was regulated by means of a partnership deed. The trading name of the partnership was Stay in Style.

4

The partnership acquired the cottage after the date of the partnership agreement, on 8 April 2010. It was registered in the names of Mr Brake, Mrs Brake and Mrs Brehme; but it was partnership property, as contemplated by the partnership deed itself. Until 2012, the cottage was used by employees. From 2012 onwards, it was used by the Brakes when Axnoller House was let.

5

A partnership dispute arose, which was referred to arbitration. Mr and Mrs Brake were the unsuccessful parties. Following a failure to pay costs orders, they were made bankrupt on 12 May 2015. The appointed trustee in bankruptcy was Mr Swift. He has since been replaced by Ms Kicks and Mr Nimmo, but since he was the trustee at the time of the events in question, that does not matter; and I will continue to refer to him as if he had remained the trustee. Mr Swift did not grant the Brakes any licence or consent to occupy the cottage. The partnership went into administration in 2016 and liquidation in 2017. Because the cottage was partnership property, the three registered proprietors held their legal title on trust for the partnership and, after its liquidation, on trust for the partnership's creditors. On 6 January 2016 Chief Master Marsh made an order which recorded that the three partners had agreed that the cottage be sold as part of the winding up of the partnership.

6

Adam & Co, the mortgagee of West Axnoller Farm, appointed receivers in October 2014. West Axnoller Farm (but not the cottage, which was not mortgaged) was sold to a company called Sarafina Properties Ltd in July 2015. The sole shareholder of Sarafina was Saffron Foster, a friend of Mrs Brake, who was also its director.

7

Mrs Foster sold the single share in Sarafina to Chedington, a company owned and controlled by Dr Guy. Sarafina's name was changed to Axnoller Events Limited (“AEL”). The Brakes operated the business at West Axnoller Farm and continued to stay at Axnoller House; and at the cottage when Axnoller House was let out for weddings.

8

Relations between the Brakes and Dr Guy broke down in November 2018. The Brakes' employment was terminated and they were ordered in a letter to leave Axnoller House. But the Brakes did not leave, and continued to stay in Axnoller House.

9

Until Mr and Mrs Brake's bankruptcies in May 2015, they used the cottage when Axnoller House was let, usually at weekends, in connection with weddings. It was relatively straightforward for them to move between the two as they had sufficient furniture, clothes and equipment in the cottage. Nearly all the Brakes' living expenses at the cottage were paid for by Sarafina apparently on the basis that the Brakes only stayed there in order to further the wedding and events business by making it possible to let the main house. Otherwise, they lived at Axnoller House. Following their bankruptcies in May 2015, the Brakes moved into the cottage and stayed there, rather than Axnoller House, with limited interruptions until at least October 2016. Thereafter, the Brakes moved back into Axnoller House and continued to use the cottage as they had done pre-2015, i.e. when Axnoller House was let. During the entire period (and, in fact, until the eviction on 18 January 2019), the Brakes had the only keys to the cottage. Initially, there were two keys, but one was lost and the remaining key was left in a variety of hiding places. Although the only people who stayed overnight at the cottage were the Brakes, the judge found that they stayed overnight, not when they wanted to, but “only when they absolutely had to”. Indeed, at [60] the judge found that the Brakes “hated having to stay in the cottage for weddings.” The Brakes' overnight stays at the cottage ceased on their dismissal on 8 November 2018. Although Mrs Brake's son Tom D'Arcy stayed overnight occasionally, those stays ceased on about 20 December 2018. Mrs Brake had had medical procedures which required her to take medication on a daily basis; but the judge found that she did not keep her medication in the cottage: it was kept in Axnoller House. As the judge found, she was living and sleeping entirely at Axnoller House. The Brakes did, however, make occasional daytime visits to the cottage and they continued to hold the only key. The judge also took into account (as he was entitled to do) statements made by or on behalf of the Brakes in related proceedings that Axnoller House was their sole residence. The judge concluded this section of his judgment at [50] by saying:

“Taking into account also the evidence of Mr Lyons as to what he found on entering the cottage (as to which, see below) I find that neither of the Brakes nor Tom D'Arcy occupied the cottage as a residence at the time that Chedington entered on 18 January 2019.” (Original emphasis)

10

On 2 January 2019 the liquidators of the partnership accepted an offer from Chedington to buy the partnership's interest in the cottage. But the liquidators were unwilling to take legal action (even if financed by Chedington) to take steps to remove the Brakes from the legal title. A new plan, which the judge described as Plan B, was then put into place. The judge described that plan at [70] as follows:

“In its final form, Plan B was as follows. Chedington would put Mr Swift in funds so as to enable him immediately to buy such right and title to the cottage as the liquidator could sell. Mr Swift would then enter into a back-to-back conditional sale to Chedington of such right and title to the cottage as Mr Swift then had, but also clean registered title as a result of an application to the court by him (financed by Chedington). In addition, and in order to demonstrate an appropriate benefit to creditors of the partnership a facilitation fee would be paid by Chedington to Mr Swift, of £30,000 (plus VAT) on the execution of the contract, together with £3000 (plus VAT) per month until completion of the transfer enabling full registration, with a maximum of 12 successive months.”

11

On 15 January 2019 two agreements were executed. The first was between the liquidators and Mr Swift by which the liquidators agreed to sell such right, title and interest (if any) as the partnership had and could transfer in the beneficial and/or equitable interest in the cottage. The second was a contract between Mr Swift and Chedington for the sale of the cottage. It was a conditional contract. The conditions were:

“all of: (a) the receipt of the Court Order pursuant to clause 3.1; (b) the execution of the Transfer by [Mrs Brehme] pursuant to clause 3.2; and (c) the execution of the Transfer by [Mr Swift] pursuant to clause 3.3”

12

That material terms of that agreement were:

2. Sale and Purchase

2.1. Subject always to the satisfaction of the Conditions Precedent, [Mr Swift] will sell and [Chedington] will buy the Property, for the Purchase Price on the terms of this contract.

[ … ]

3. Condition Precedent

3.1. [Mr Swift] agrees to make the Court Application as soon as is reasonably possible and thereafter use best endeavours to procure the Court Order.

3.2. Upon receipt of the Court Order:

3.2.1. [Mr Swift] shall supply a copy of the Court Order to [Chedington] within 10 working days of receipt; and

3.2.2. [Mr Swift] shall use best endeavours to procure [Mrs Brehme's] execution to the Transfer.

3.3. Once the Transfer has been executed by [Mrs Brehme] [the trustee] will execute it in such...

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