Dr. Vikram Bhat v Mrs. Smruti Patel
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fancourt |
| Judgment Date | 05 November 2021 |
| Neutral Citation | [2021] EWHC 2960 (Ch) |
| Year | 2021 |
| Docket Number | Case No: CH-2021-000143 |
| Court | Chancery Division |
[2021] EWHC 2960 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
THE HON. Mr Justice Fancourt
Case No: CH-2021-000143
Oluwaseyi Ojo (solicitor advocate of Taylor Wood Solicitors) for the Appellants
Antonia Halker (instructed by Rainer Hughes Solicitors) for the Respondents
Hearing date: 26 October 2021
Approved Judgment
Introduction
This is an appeal by the defendants, Dr and Mrs Bhat, against an order of Recorder Geraint Jones QC made in the County Court at Basildon on 11 June 2021, following the trial of two actions. The first action was a claim by Dr and Mrs Patel for possession and arrears of rent in respect of 105 Calcutta Rd, Tilbury, Essex. That property is registered at the Land Registry under title EX 857254 and I will refer to it as “the Property”. The second action – which was consolidated as a counterclaim at trial – was a claim by Dr and Mrs Bhat claiming a beneficial interest in land adjoining the property and damages. The “Adjoining Land”, as I will refer to it, was purchased in the names of the Patels in August 2017. The Adjoining Land has since been developed by the construction of a building, which is an extension of the building on the Property.
The building on the Property is the original surgery premises from which Mrs Patel and Dr and Mrs Bhat practised for a time as partners under the name Sai Medical Centre. Dr Patel had previously been a partner, but he retired from practice in 2014. Mrs Patel remained a salaried partner. Dr and Mrs Bhat were from 2017 the only equity partners. Although Dr and Mrs Patel bought the adjoining land from Thurrock Borough Council (“the Council”) for £100,000, the extension that was built on it was funded as to one-third by the Bhats and as to two-thirds by a grant from NHS England. The grant was repayable in defined circumstances, in particular, proportionately, if the development was not used for the purposes of general medical services for 15 years from completion of the works.
The Recorder held that an agreement for occupation of the Property by the partnership created a lease, not a licence, and that there were substantial arrears of rent. He held that the lease was validly forfeited by the issue of the first action. In the exercise of a general discretion, he refused the Bhats relief against forfeiture. The Recorder also dismissed the Bhats' claim to a beneficial interest in the Adjoining Land. Accordingly, he ordered the Bhats to give the Patels possession of the Property and the Adjoining Land by 28 August 2021 and to pay arrears of rent amounting to £98,000 plus interest of £2,430.26 by 25 June 2021. He ordered the Bhats to pay the Patels' costs of claim and counterclaim and ordered a payment on account of £40,000 within 14 days.
The Bhats appeal against all the above conclusions (other than the quantum of the arrears of rent and interest) with permission granted by Mellor J on 25 June 2021.
The trial in the lower court proceeded, by agreement of the parties and the Recorder, by reference to a list of issues needing to be decided, rather than the pleaded cases of the parties. It will be necessary to refer to that list at a later stage in this judgment.
The Grounds of Appeal
The grounds of appeal of the Bhats are, regrettably, not a model of clarity. Like too many so-called grounds of appeal these days, they are a narrative of complaint about the outcome of the trial rather than properly drafted grounds for saying that the judge was wrong, in law or in making findings of fact, or that the process of the trial was unfair.
For example, although Ground 1 starts by contending that the Recorder erred in law, the true ground that emerges is (principally) that the Recorder was wrong to find that there was no representation or assurance given to the Bhats by the Patels as to the Bhats having a beneficial interest in the Adjoining Land, on which the Bhats relied by spending their money on the building works. Although the basis for saying that the Recorder was wrong in that respect is not clearly identified, the essence of the criticism gradually emerged in the course of submissions at the hearing of the appeal and was in reality in two parts:
a. There was no evidence capable of supporting the Recorder's finding that the Bhats incurred expenditure on the Adjoining Land in reliance on an understanding that they would have the ability to buy the Property and the Adjoining Land from the Patels at some future time;
b. The Recorder should have inferred that in all the circumstances there was a common intention or understanding that the Bhats would own a beneficial share in the Adjoining Land, as a result of the agreement to acquire it and the Bhats' expenditure on the building of the extension.
In answer to the question from the court: “what beneficial share?”, Mr Oluwaseyi Ojo, who appeared for the Bhats, asserted for the first time in this case that the share was to be calculated taking into account the £100,000 purchase price paid by the Patels, the 34% of the build costs contributed by the Bhats and a rateable share of the funds granted by NHS England, for which, he said, all partners were responsible. Neither the statements of case nor the List of Issues prepared for the trial had identified any particular share for which the Bhats contended, and Mr Ojo, who did not appear at the trial, suggested that it had effectively been left to the Recorder to form a view about the extent of beneficial ownership, if any. Since the only case advanced in the Bhats' skeleton argument for the trial was that the Adjoining Land was held on resulting trust for them, I am not sure that this is quite right. The Bhats argued at trial that, in so far as the extension was not in some way incorporated into the lease of the Property, they were the beneficial owners or joint owners with the Patels of the Adjoining Land, but there was no submission made about the extent of ownership.
Mr Ojo's late supplementary skeleton argument for the appeal advanced a case based on proprietary estoppel. This had been raised at trial and was dismissed by the Recorder in short order, in paragraph 83 of his judgment, on the basis that there was no representation or assurance about ownership of the Adjoining Land or reliance on any such matter, in view of Dr Bhat's evidence that he believed he would have the opportunity to buy the Property and the Adjoining Land at a later time. I asked Mr Ojo to clarify the basis on which he sought to rely on proprietary estoppel and he said that he sought to rely on the “owner stands by with knowledge that a third party is expending money on the land in the belief that they have or will obtain a proprietary interest” type of proprietary estoppel. There was no ground of appeal raising any such argument, nor was it advanced at the trial. After hearing argument, I refused permission for the Bhats to add it as a ground of appeal because no such case had been put to Mrs Patel in cross-examination and it was now too late to raise it. Mr Ojo was therefore left advancing his challenge to the Recorder's factual findings and the argument that a common intention or understanding about shared ownership should have been inferred, as summarised in paragraph 7b above.
Ground 2 of the grounds of appeal asserts that the Recorder erred in law by concluding that representations or assurances cannot be imputed to parties. The ground recognises that inferences can be drawn about what was said or agreed, and contends nevertheless that representations or assurances can be imputed as well as inferred. That ground of appeal was not pursued and was in any event hopeless. The law is now clear that, in the absence of evidence of what was said or intended, a court can only infer that a statement was made or that a common intention existed, not impute to the parties something that did not in fact exist: see Megarry & Wade's The Law of Real Property (9 th ed.) at para 10–026, citing Capehorn v Harris [2016] 2 FLR 1026 and Barnes v Phillips [2016] 2 FLR 1292. There may be a residual role for imputing an intention where the issue is the quantum or extent of a beneficial share that has already been established: ibid
Those are the only two grounds of appeal advanced in relation to the dismissal of the claim to a beneficial interest in the Adjoining Land.
Ground 3 of the Grounds of Appeal contends, first, that the Recorder erred in law by refusing to grant the Bhats relief against forfeiture. Various errors in this regard are spelt out, but the sub-paragraphs of this Ground also raise additional points, ostensibly as particulars of the judge's error in refusing to grant relief, but which are really different points. These include that the Patels should not have been permitted to advance a case of forfeiture because they had contended that the partnership deed created a licence and not a lease. There is also a contention that the Patels have not complied with the notice requirement of the forfeiture provision in the lease and that they had waived their right to forfeit.
At all events, the Bhats claim that the Recorder was wrong to order possession of the Property consequential on a forfeiture of the lease.
Ground 4 relates to the costs of the beneficial interest counterclaim. I will deal with that ground separately at the end of this judgment.
The Recorder described the statements of case as “fairly lamentable” and considered that the issues identified on the agreed List of Issues and dealt with in the skeleton arguments bore little resemblance to them. I am sympathetic to the...
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