MS Padma Priya Pinisetty (Claimant and Appellant) v Mr Kishore Kumar Manikonda and Mrs Kaveri Manikonda (Defendants and Respondents)
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Langstaff |
| Judgment Date | 13 April 2017 |
| Neutral Citation | [2017] EWHC 838 (QB) |
| Docket Number | Case No: QB/2016/0223 |
| Court | Queen's Bench Division |
| Date | 13 April 2017 |
[2017] EWHC 838 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
On appeal from the Central London Civil Justice Centre
From order of HHJ Walden-Smith of 13 July 2016
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Langstaff
Case No: QB/2016/0223
Mr Edward Bennion-Pedley (instructed by The Bar's Public Access Scheme) for the Appellant
Mr David Sawtell (instructed by GPT Law Practice) for the Respondents
Hearing dates: 16 th March 2017
Judgment Approved by the court for handing down (subject to editorial corrections)
In April last year, HHJ Walden-Smith heard evidence and submissions in a claim seeking a declaration that the Defendants hold property on constructive trust for the Claimant and that the Claimant is entitled (subject to being in a position to discharge the mortgage or to procure its discharge) to call upon the Defendants to convey the legal title of the property to her or to such third party as she may nominate. In the alternative the Claimant sought the same or similar relief by reason of proprietary estoppel. In the event that these proprietary claims did not succeed, alternative claims were made for personal remedies together with other relief on the basis that the Claimant had paid the Defendants sums which it would be unconscionable for them to retain.
By a considered judgment, delivered orally, the judge held against the claim but accepted that the Claimant was entitled in principle to reimbursement or restitution of all sums paid by or on her behalf to the Defendants.
The Claimant appeals against that decision.
The Background Facts
The facts pieced together from the judge's judgment were these. The first and second Defendants owned property ("the property") at 33, 35 and 35A Countess Lilias Road in Gloucester. 33 was a 3 bedroom house. 35 and 35A, next door to 33, were a shop with a flat above. 33, 35 and 35A were together registered under the same title number.
By the summer of 2012, the first and second Defendants, who were then married, were struggling financially. The property was mortgaged, and it appears that they were finding payment of the mortgage debt difficult. Debts were accumulating. They needed to sell the property in order to stabilise their financial position. In the summer of 2012 it was agreed between the Defendants and a Mr Chirumamilla that they would sell the property to him. He paid a £71,000 deposit.
The proposed sale and purchase did not go smoothly. Toward the end of the year, the Defendants consulted a solicitor, a Mr Desari, who was part of the same Indian community as were they. On their behalf, he served a notice of rescission. He did so in what the judge described as "late 2012 or early 2013".
The transaction having collapsed, the Defendants were now desperate in their search for a fresh purchaser. Mr Desari, who was prominent in the community, agreed to help find one if he could.
In March 2013 a Mr Konverji agreed orally to buy the property. He offered the Defendants a cash sum of £120,000, agreed to discharge the mortgage; and to settle the dispute which had arisen with Mr Chirumamilla, who was seeking the return of his deposit or a substantial part of it, and to pay the legal fees. This would consequently leave the Defendants with £120,000 clear.
Once agreement had been reached, Mr Manikonda (the first Defendant) told Mr Konverji that he was in urgent need of some £80,000 in order to pay creditors in India, and that he also had to pay off the mortgage arrears, which had now reached £16,000, because Barclays Bank, the mortgagee, was not prepared to extend his credit facilities any more. Mr Desari took it upon himself to guarantee the repayment of the £80,000 to Mr Konverji, so as to enable Mr Konverji to pay that sum over to Mr Manikonda with confidence. The sum was paid, together with £16,171.12 to clear the mortgage arrears. Mr Konverji began to run the business through an employee of his, who was installed in the flat above. Nothing, however, had been put in writing. Mr Konverji was dissatisfied with the turnover from the shop. He considered that he had not been told the true position with regards to the profitability of the business.
Against this background, a critical meeting relevant to the issues in the case occurred. This was in a restaurant. Present were Mr Konverji, Mr Manikonda (Mrs Manikonda was not present but the judge was satisfied that at the time Mr Manikonda acted as her agent and with her authority: (para.51 of the judgment)), Mr Desari, and the Claimant. As to this meeting, the judge said (para.48):-
"At the meeting on 7 th April 2013… Mr Konverji complained that he had not been told the truth about the level of turnover of the shop, and that he had not been told the true position with respect to the profitability of the business. Mr Konverji made it clear that he did not want to proceed with the purchase of the property and the business and that there ought to be an alternative buyer. The Claimant agreed at that time to purchase the property. She was told by Mr Manikonda that he needed the monies because he was travelling to India shortly thereafter. She was told that the purchase price of £120,000, thus paying off the mortgage arrears, would remain the same; that she was to takeover the mortgage payments; and that she was to settle the dispute with Mr Chirumamilla, together with the legal fees. Because monies had already been paid by Mr Konverji, the Claimant was to pay the balance. She was further told that Mr Manikonda would assist her in her endeavours to build up the business. On that basis she agreed to purchase the property. None of this was put into writing. The only written documentation is that which records the meeting, but that does not amount to a written agreement to purchase. None of this was put into writing. The only written documentation is that which records the meeting, but that does not amount to a written agreement to purchase."
Mr Desari was in a relationship with the Claimant at the time. During the meeting he expressed concern as to his position because of this, a matter which he repeated in writing to his clients (the Manikondas) the next day.
Although Mr Desari described the transaction as relatively straightforward in that letter, with the Claimant stepping into the shoes of Mr Konverji, the judge regarded it as "anything but" (para.53).
Not all the findings of fact in respect of the agreement, and the extent to which it was performed, are to be found in the factual account which the judge set out. Many are interleaved with her conclusions of law. Thus, the judge was setting out the principle expressed in Herbert v Doyle in which Lady Justice Arden had said (para. 57):
"…if the parties intend to make a formal agreement setting out the terms on which one or more of the parties is to acquire an interest in property, or, if further terms of that acquisition remain to be agreed between them so that the interest in property is not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither party can rely on constructive trust as a means of enforcing their original agreement. In other words, at least in those situations, if their agreement (which does not comply with section 2(1) [ Law of Property (Miscellaneous Provisions) Act 1989]) is incomplete, they cannot utilise the doctrine of proprietary estoppels or the doctrine of constructive trust to make their agreement binding on the other party by virtue of section 2(5) of the 1989 Act".
when she commented (at her para. 93):
"In this case the parties did not deliberately leave matters on a speculative basis, but they did leave matters without certainty. It is an unfortunate consequence for the parties dealing with matters in the manner in which they were dealt with in this case, that is in a more free-flowing and vague basis, because these were arrangements between members of the community which were changing.
It is a not usual situation [sic] for a party who agrees to purchase a commercial property for the running of a business to enter into that commercial property and, after a short while, decide it is not really for them and therefore seek to pass on that property and the business to another.
94. …there was, …a lack of completeness to the agreement. That is an inevitable consequence of these matters being dealt with in the way that they were. First, there was a lack of agreement as to when completion of the purchase would, in fact, take place. Secondly, and potentially of more significance, there was a lack of ability on behalf of the Claimant to complete the agreement. One of the important matters in the agreement was for the mortgage to be taken over by the purchaser. There is no evidence in this case that the Claimant was in a position either to discharge the mortgage that was already outstanding on the property, or to obtain her own mortgage. That is not only because at the time she had a precarious immigration status, but also because of her questionable ability to service such a mortgage. Her purported intention has been to obtain a mortgage in the name of someone else. But that, of course, is fraught with all sorts of difficulties and not least the uncertainty of such an arrangement."
As a further matter of fact it is clear from the judgment that Mr and Mrs Manikonda received £121,480. The Claimant has settled the dispute between Mr Chirumamilla and the Defendants; and she has paid off the outstanding arrears of payments on the mortgage which has fallen due. She has not however, discharged the mortgage, nor does it appear that she has entered into any arrangement...
To continue reading
Request your trial