Graham Wilson Gonthier and Michele Moira Gonthier and Orange Contract Scaffolding Ltd
| Jurisdiction | England & Wales |
| Judge | LADY JUSTICE HALE,Mr Justice Lindsay,Lord Justice Kay,Lord Justice Waller |
| Judgment Date | 25 June 2003 |
| Neutral Citation | [2003] EWCA Civ 245,[2003] EWCA Civ 873 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B2/2002/1990,Case No: B2/2002/1990 |
| Date | 25 June 2003 |
[2003] EWCA Civ 245
Lady Justice Hale
B2/2002/1990
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CARDIFF COUNTY COURT
(Mr Recorder Thom)
Mr J Sharples (instructed by Messrs Berry Smith, Bridgend) appeared on behalf of the Applicant Claimants
The Respondent Defendant did not appear and was not represented
This is an application for permission to appeal on further grounds from part of the order of Mr Recorder Thom in the Cardiff County Court on 12th September 2002. He gave judgment for the defendant for £19,500 plus interest and declared that the defendant was entitled in equity to a charge to secure the payment of that sum, not to be enforced until after 12th January 2003.
The claimants own land in Cardiff. They carry on business on part of the land. In late 2000 they entered into negotiations to let another part of the land to the defendant company. They agreed terms in a letter of 27th October 2000. These included the rent to be paid for five years, and an option to purchase at a particular price at the end of the first year, to be exercised before the end of the second. The lease was to be drawn up by their solicitors. The defendant entered into possession and carried out works on the land. Negotiations about the lease continued, but broke down after the option was no longer included in a draft sent out in April 2001. It is clear that there was a major falling out between the parties around that time. The defendant ceased paying rent in July 2001 and was given notice to quit. The claimants brought proceedings and the defendant went out of possession at the end of April 2002.
The claimants claimed additional relief in respect of the occupation of the land and the Recorder gave judgment for that for £7,795 plus interest. There is, as far as I am aware, no appeal against that. The defendant counterclaimed for specific performance of an agreement for a lease, or for the recoupment of its expenditure on the land, or for the value added to the premises by that expenditure. The claim was variously particularised, I am told, at various times, but a schedule of the monies spent, which was an appendix to the defence and counterclaim, listed works totalling some £51,846.33 —a very precise figure.
The Recorder rejected the claim for specific performance, but gave judgment for £19,500 to reflect the defendant's expenditure on the land. It will be immediately apparent that that sum is very considerably less than the sum which had initially been claimed. The Recorder took an extremely conservative approach to valuing the work done on the land. This was because he acknowledged that he had to be extremely cautious about the defendant's evidence. A great deal of the work done by the defendant had been paid for in cash, which would enable the person doing the work to evade payment of tax; and, more importantly, because this affected the defendant just as much as the contractor, in some cases a lower price was negotiated specifically on the basis that Value Added Tax would not be charged. The defendant had not kept detailed records, although the judge said that this was because the defendant believed that he was spending money on what would be his own property, so that was not necessary. The defendant had not been frank and straightforward in his evidence about what had been done. In particular, he had persisted way into the proceedings in his assertions that these sums had indeed been expended on the property. The judge therefore assessed the cost of the work at very considerably less than the defendant had claimed. He allowed £10,000 for concrete; £1,000 for electrical works; £500 for drainage; £3,500 for a lean-to; £2,000 for fencing; and £2,500 for miscellaneous items. He disallowed other items which were not for the benefit of the land.
The claimants sought permission to appeal. Three of their grounds referred to a point of law on the effect, if any, of the application of the term "subject to contract" during the solicitors' exchanges about the draft lease. As I pointed out when giving permission to appeal on those grounds on paper, this is not a case of using the doctrine of estoppel to enforce a "subject to contract" agreement, because the judge specifically refused to do that, but rather of using the doctrine to achieve restitution for improvements carried out on the claimants' land after the claimants had allowed the defendant into possession to spend money on developing. Therefore, it is open for debate about whether the words "subject to contract" had any effect upon that claim whatsoever. But I acknowledge that there is a debate to be had, and for that reason I gave permission to appeal.
The claimants now wish to appeal on the remaining grounds. Ground 4 deals with the quantum of the claim and in particular argues that the judge had no evidence in relation to two items, the lean-to and the miscellaneous unspecified work. These are completely matters of fact on which it was for the Recorder to assess the evidence before him and I refuse permission to appeal on ground 4.
The remaining grounds, 5 to 9 (because 10 is simply a sweep-up), deal with what might be called the "clean hands" element in the claimants' case. Ground 6 is no longer proceeded with and so I refuse permission to appeal on ground 6.
Ground 5 deals with how the Recorder approached the factual elements in the argument, and is essential background to considering the "clean hands" position in totality. Mr Sharples accepts that this was a matter for the discretion of the learned Recorder, although he does say that, in the light of the observations of this court in Willis v Willis [1986] 1 EGLR 62, especially at p.63L, the Recorder had very little choice about how to exercise his discretion. He argues that the matters to which he wishes to refer (i.e. the tax evasion, misleading of the court, and the breach of planning control and the Environment Agency's byelaws in some of this work) were such that the Recorder should not have permitted the counterclaim at all.
I was initially not persuaded that there was a real prospect of this court interfering with the exercise of the judge's discretion on that basis. These matters did not affect the value of what the claimants had received, and were taken into account when assessing the costs of the work. The judge's overall conclusion was that it would be disproportionate to deprive the defendant of what would otherwise have been a valid claim on the basis of these various matters. However, I have reached the conclusion that, although this is the exercise of a discretion with which this court is usually most reluctant to interfere, there is a sufficiently real prospect of the court taking a different view from that taken by the learned Recorder to justify the grant of permission on grounds 5, 8 and 9.
Ground 7 is really swept up in ground 8. In the interests of simplicity I will make no observations about ground 7 and Mr Sharples will no doubt take his own course when he presents this appeal to the full court.
Order: permission to appeal allowed to extent set out in judgment; stay of execution granted, with liberty to defendant to apply.
[2003] EWCA Civ 873
Lord Justice Waller
Lord Justice Kay and
Mr Justice Lindsay
Case No: B2/2002/1990
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CARDIFF COUNTY COURT
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr J. Sharples (instructed by Messrs Berry Smith) for the Appellants
Mr Horrigan acting on behalf of the Respondent
This appeal, from a decision of the 12 th September 2002 of Mr Recorder Thom sitting in the Cardiff County Court, concerns proprietary estoppel and deals, in particular, with the questions that arise when the estoppel is asserted as between prospective landlord and tenant but where the phrase "subject to contract" had been used and where it was argued, also, that the prospective tenant asserting the estoppel did not have the "clean hands" required of a claimant seeking the assistance of equity.
The class of proprietary estoppel that required to be examined at the trial was that which had origins not later than Lord Kingsdown's dissenting judgment in Ramsden -v- Dyson (1866) LR 1 H.L. 129 at 170 where he said:-
"If a man, under a verbal agreement with a landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation."
In Willmott -v- Barber (1880) 15 Ch D 96 Fry J. described five elements which were, in his view, required to be shown if a person's legal rights were to be overborne by such an estoppel. However, adoption of the five probanda in later cases led to a somewhat mechanistic approach such that, if, upon...
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