David Raymond Brierley v Frank Otuo
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Bacon |
| Judgment Date | 03 March 2021 |
| Neutral Citation | [2021] EWHC 644 (Ch) |
| Docket Number | Case No: CH-2017-000147 |
| Court | Chancery Division |
| Date | 03 March 2021 |
[2021] EWHC 644 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN ENGLAND & WALES
Rolls Building
Fetter Lane
London
EC4A 1NL
Mrs Justice Bacon DBE
Case No: CH-2017-000147
Adam Stewart-Wallace (instructed by HELIX LAW) for the Claimant
Steven Woolf appeared on behalf of the Defendants
The first issue before me at this hearing is the application of the first defendant, made in an application notice dated 12 October 2020, for a payment made by him to the claimant's solicitors to be appropriated in a specific way. In order to understand the nature of the application it is necessary to summarise the history of the payment and why it was made.
Background
The application arises from a long-running dispute between the parties arising out of a property partnership. Over the years, the claimant has been awarded sums in excess of £450,000 in respect of his costs. The costs payments are due from the first defendant, who has brought the application before me today, and his wife who is the second defendant. The costs orders have been secured against four properties in London in which the defendants have various beneficial interests. For today's purposes, two of those properties are relevant: 31B Oxford Road, SW15, and 311 Leigham Court Road, SW16. Oxford Road is owned by the first defendant alone and is the family house. Leigham Court Road is held between the two defendants as tenants in common.
Following a hearing in May 2019, Mr Nicholas Le Poidevin QC (sitting as a deputy judge of the High Court) gave judgment for the claimant. His order dated 2 August 2019 made various declarations as to the beneficial ownership and interests in the Oxford Road and Leigham Court Road properties, and ordered the sale of all four properties. 311 Leigham Court Road was to be sold at a price not less than £810,000, unless otherwise agreed between the parties or otherwise directed by the court. 31B Oxford Road was to be sold at a price not less than £875,000, again unless otherwise agreed or ordered. It was ordered that the claimant's solicitors would have conduct of the sale of both properties. The other two properties were to be sold at auction, with the reserved prices specified in the order.
The order of 2 August 2019 then made specific provision for the way in which the proceeds of sale of the properties were to be applied to discharge the indebtedness of the defendants. In particular:
i) The proceeds of the sale of 31B Oxford Road were to be applied to discharge the indebtedness of the first defendant alone, with any surplus paid to the first defendant.
ii) The proceeds of sale of 311 Leigham Court Road were to be applied to discharge the indebtedness of both defendants, out of their respective shares of the sale proceeds.
Mr Stewart-Wallace, for the claimant, has said that the purpose of these provisions was to maximise the security available to the claimant. Mr Woolf, for the first defendant, did not dispute that.
The defendants subsequently entered into negotiations with the claimant as to the terms on which they could retain the family home in Oxford Road. That resulted in a consent order made by Deputy Master Bowles on 12 March 2020. The order was drafted by the claimant and his solicitors, and was presented to the defendants on a “take it or leave it” basis. The defendants therefore had a choice either to accept the claimant's proposal, as embodied in the consent order, or to allow the sale of the house to go ahead as per the 2 August 2019 order of Mr Le Poidevin.
Clause 2.1 of the consent order provided that the defendants were to pay the claimant £250,000 by 5.00 p.m. on 2 March 2020. Clause 2.2 then continued as follows:
“With the sum reducing or discharging the indebtedness of the first defendant to the claimant and, insofar as that sum may discharge that indebtedness, to reduce or discharge the indebtedness of the second defendant to the claimant.”
If that was done – i.e. if the sum was paid to the claimant on those terms – then the remaining clauses of the order specified that the claimant was to remove the charges he held over Oxford Road and give the defendants vacant possession of that property.
The chronology of how the consent order came to be signed is of considerable importance, and was not entirely clear from the skeleton arguments but has become clear during the course of the hearing following further information provided by both counsel.
The starting point is that on 27 February 2020, after the consent order had been provided to the defendants but before it was agreed by them, the defendants' solicitors sent the claimant's solicitors an email saying that they had been instructed to remit the sum of £250,180.25 to satisfy a set of orders charged to their interests in the four properties. The email then set out a list of orders, with the relevant amounts that were to be discharged listed alongside each order. These included not only costs orders against the first defendant, but also orders against the second defendant. The effect of the email therefore, in plain terms, was that the sum was proposed to be remitted on the basis that it would be applied to the costs orders of both defendants in the amount specified in the email. The underlying effect of that proposed allocation – as was common ground before me, albeit not stated explicitly on the face of the email – was to extinguish the debts of the second defendant so that her share of the beneficial interest in the Leigham Court Road property would then be unencumbered.
The next day, 28 February 2020, at 10.05 a.m., the claimant's solicitors replied:
“The negotiations have now run their course and this is a take it or leave it offer it is of course entirely a matter for you to [sic] whether you accept it or not.”
The claimant's position was therefore that he was only willing to agree to the consent order as drafted, and was not prepared to renegotiate the way in which the sum of £250,000 would be allocated as between the various debts. That was therefore an unambiguous rejection of the defendants' proposals set out in the 27 February email.
A little less than an hour later, at 11.01 a.m., the first defendant again asked for the consent order to be amended incorporating the details of the various orders that were being discharged as set out in his solicitor's email of the previous day. At 11.29 a.m. the claimant's solicitors again refused. They said explicitly that the defendants' proposals would make “no commercial sense”, and concluded that:
“for obvious reasons given the last 10 years of litigation, our client will take no risks in his dealings with you and would rather just sell your properties with the risk of recovering slightly less but being assured that he will be paid these sums.”
At 11.59 a.m. the defendants' solicitors responded to that email saying merely:
“Please arrange a courier to deliver keys today or pick at KHF will be better. Signed consent order to follow shortly.”
One hour later, the claimant's solicitor sent another email saying they awaited receipt of the signed consent order and funds prior to the release of the keys to Oxford Road. They confirmed that they would instruct the courier “As soon as the requisite steps are completed in full and as per the draft order”. Their email continued:
“We await the signed consent order and the details of the firm that Frank and Ruth Otuo have instructed to remit the funds on their behalf as per the terms of the draft order.”
The consent order – as is now common ground before me – was finally sent on 28 February 2020 after this correspondence, although the precise time is not known. That was a Friday.
On the following Monday, 2 March 2020, the claimant's solicitors wrote to the defendants' solicitor noting that the signed consent order had been received from the defendants and that the amount to be remitted was £250,000 as per the consent order. The letter continued:
“Matters are now agreed between our respective clients … you will note the amount we have agreed you will send us under the consent order is £250,000, and the terms are as stated within the consent order.
Accordingly, we will accept payment of the sum of £250,000 by you in accordance with the enclosed consent order. Please pay...
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David Raymond Brierley v Frank Otuo
...notices. Background 3 The background is conveniently set out in the judgment dated 3 March 2021 of Bacon J: Brierley v Otuo [2021] EWHC 644 (Ch), to which reference should be made. It can be summarised as 4 The claimant and the first defendant were former partners in a property development......