Lloyd and Others v Dugdale and Another
| Jurisdiction | England & Wales |
| Judge | Sir Christopher Slade.,Lord Justice Mummery,Lord Justice Kennedy |
| Judgment Date | 21 November 2001 |
| Neutral Citation | [2001] EWCA Civ 1754 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2000/3235 |
| Date | 21 November 2001 |
[2001] EWCA Civ 1754
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM H.H. JUDGE HOWARTH
Chancery Division, Manchester.
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Kennedy
Lord Justice Mummery and
Sir Christopher Slade
Case No: A3/2000/3235
Anthony Elleray QC and Ian Foster and Mr Brightwell (for Judgment) (instructed by Latimer Lee, Prestwich for the appellants) Mark Cawson QC and Mrs Jane Evans (for Judgment) (instructed by Temperley Taylor Chadwick, Manchester for the respondents)
This appeal raises a number of inter-related questions concerning the law of proprietary estoppel and constructive trusts and the construction and effect of section 70(1)(g) of the Land Registration Act 1925 ("the 1925 Act").
The Facts
The claimants, who are the trustees of the John Lloyd Heywood Pension Scheme, appeal with the leave of the Judge from a judgment of His Honour Judge Howarth, sitting as a judge of the High Court, given on 15 th August 2000.
The history of the matter begins in 1987, when James Ingham ("Mr Ingham") acquired a long leasehold interest (999 years from 24.03.1835) at a yearly rent of £37. 14s.9p in a property known as Moorcroft Mill, Hall Street, Heywood, Greater Manchester ("Moorcroft Mill"). This property included an area, ("the Unit"), comprising an office/warehouse, a fire-damaged former weaving shed, and an access and landscaped area. Mr Ingham's title to this property was registered at HM Land Registry.
At this time in 1987, the respondent to this appeal, Mr Joseph Anthony Dugdale ("Mr Dugdale"), was the major shareholder (75%) and managing director of a company known as JAD Flooring Company Limited ("JAD"). His wife was the company secretary and the other director. She held the remaining 25% of the shares. His son Ian worked for JAD. Mr Dugdale owned shop premises at 91/93 York Street, Heywood, at which JAD carried on its business, which was that of supplying flooring such as carpets and linoleum. It also rented adjacent storage premises, but the owner of these had required it to vacate them by the end of August 1987. JAD was therefore in urgent need of new accommodation.
Against this background, in June 1987 a meeting took place between Mr Dugdale, his son Ian and Mr Ingham. The Judge made the following findings of fact in regard to what took place at this meeting:
i) Mr Ingham orally accepted an offer by Mr Dugdale to purchase the Unit for £20,000.
ii) "Mr Dugdale told Mr Ingham that he [emphasis added] wished to move into the Unit urgently and that he was concerned about the inevitable delay whilst the conveyancing process was completed."
iii) "Mr Ingham said he would tell his solicitors to treat the matter as being urgent,and that in the meantime Mr Dugdale and his company, JAD could move in."
iv) "Mr Ingham even offered to allow Mr Dugdale's contractors to use the water and electricity supply to the other half of Moorcroft Mill, which was not affected by the fire damage, so as to carry out the work which was going to be needed to be done to the Unit in order to render it fit for use once again."
v)
"Mr Ingham said that he and his employees could do the building work at competitive prices. Mr Dugdale said to Mr Ingham that he was concerned about spending large sums of money on the Unit before he had become the owner of it. Mr Ingham replied by saying that he was a man of his word and that Mr Dugdale had no need to worry."
Four or five weeks after this conversation, JAD, with the permission of Mr Ingham, moved its stock into the office part of the Unit which was not damaged by fire. Mr Ingham gave Ian Dugdale the key to the padlock on the office door, so that JAD could gain access to the Unit for the purpose of putting its stock in there to store it.
Building work proceeded at the Unit for the rest of 1987 and part of 1988. The business of JAD was moved to the Unit in about September 198The building work was paid for by JAD. The precise sums spent are immaterial, but the Judge found that the total sum expended on the Unit exceeded £15,000. He had no doubt that Mr Ingham knew that money was being expended.
Meanwhile, correspondence regarding the conveyancing aspects of the transaction had been passing between the parties' respective solicitors, Chadwick & Co for Mr Dugdale and JAD, and Russell & Russell for Mr Ingham. The Judge summarised the course of this correspondence in some detail. It is not necessary to repeat that summary. At present it will suffice to say that at the time when Chadwick & Co wrote their first letter relating to the transaction to Russell & Russell, on 3 rd August 1987, they plainly envisaged that JAD rather than Mr Dugdale personally would be the purchaser of the Unit, and all the subsequent solicitors' correspondence was headed "Ingham to JAD Flooring Co Ltd Property in Hall Street, Heywood".
Nevertheless, by 19 th August 1988 the terms of a lease of the Unit in favour of Mr Dugdale personally had been agreed between the parties' solicitors. On that date Russell & Russell, on behalf of Mr Ingham, wrote to Chadwick & Co saying: "We now enclose the engrossment counterpart for execution by your client. We are arranging for our client to execute the original". The parties to that engrossment were expressed to be Mr Ingham as lessor and Mr Dugdale personally as lessee. The proposed lease provided for the grant of a long sub-lease of the Unit to Mr Dugdale for a term of 799 years from 24 th March 1835 in consideration of a premium of £20,000 and a ground rent of £25 per annum.
This sub-lease was never executed. Shortly afterwards Chadwick & Co were informed that Mr Ingham had decided not to proceed with the transaction. It would appear that he had received a better offer. On 20 th October 1988 Russell & Russell responded, asserting that counsel advised them that the circumstances of the case gave rise to "a classic case of estoppel".
On 15 th May 1989 Mr Ingham's solicitors wrote a letter purporting to terminate the licence of JAD and/or Mr Dugdale to occupy the Unit.
On 18 th August 1989 Mr Ingham issued proceedings 1989 I No.323 ("the first action") against Mr Dugdale and JAD seeking possession of the Unit. It was alleged that in late July and early August 1987 there were discussions between Mr Ingham and Mr Dugdale with a view to Mr Dugdale [emphasis added] purchasing the office part of the Unit from Mr Ingham and that it was agreed that JAD might take up temporary possession of that part and use it in conjunction with its business. It was alleged that keys were handed over on 16 th August 1987; that a gratuitous licence arose for Mr Dugdale's and JAD's [emphasis added] occupation of the office part; that from 3 rd August 1987 to 15 th May 1989 negotiations took place for the grant by Mr Ingham to Mr Dugdale [emphasis added] of a lease of the whole Unit, but were subject to exchange of lease parts; that on 15 th May 1989 28 days notice was given to Mr. Dugdale requiring him to vacate the Unit. Possession was claimed against both defendants alleging that they remained in wrongful occupation of it.
On 30 th August 1989 a defence and counterclaim was served in the first action alleging that at the end of July or the beginning of August 1987, Mr Ingham orally agreed to sell to Mr Dugdale [emphasis added] the whole Unit for the whole term which Mr Ingham had therein or substantially the whole of such term at a price of £20,000 and on the occasion of such agreement declared that Mr Dugdale could consider the premises as his and could rest assured that Mr Ingham's word was his bond. It was pleaded: "The plaintiff made this declaration knowing that the First Defendant intended to take possession of the said premises through the Defendant company . and knowing also that the Defendant intended to restore the premises by making good the fire damage and knowing also that the Defendants would not be willing to incur the costs of the necessary work unless they believed that the First Defendant was assured of becoming the owner of the premises". It was alleged that early in August 1987 Mr Ingham gave JAD [emphasis added] possession of the Unit because Mr Dugdale was its purchaser. It was admitted that JAD remained in possession of the Unit and it was alleged that Mr Ingham was estopped from acquiring possession of it. Mr. Dugdale and JAD counterclaimed:
(1) A declaration that in equity Mr Ingham was bound to grant a lease to Mr Dugdale in the terms of the engrossment;
(2) An order that Mr Ingham do execute a lease upon payment to him by Mr Dugdale of the £20,000 together with arrears of rent calculated from 19 th August 1987.
On 5 th June 1990 a reply and defence to the counterclaim was served in the first action.
On 25 th August 1992 Mr Ingham died. After his death, on 24 th March 1993, his executors purchased the freehold title to the whole of Moorcroft Mill, including the Unit. Up to about June 1993, JAD had paid rent to Mr Ingham for its occupation of the Unit, but this payment then ceased, when on the advice of his accountant Mr Dugdale began instead to take increased directors' fees.
On 23 rd August 1994, Mr Ingham's executors entered into a contract with the claimants ("the 1994 Agreement") by which the claimants agreed to purchase the freehold of Moorcroft Mill and adjoining property for £155,000. Clause 4(b) provided:
"Vacant possession of the lands coloured blue on the plan annexed hereto (the Unit) shall not be given on completion and such parcels of land are sold subject to such...
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