Sainsburys Supermarkets Ltd and Olympia Homes Ltd and Transco Plc and Westpac Banking Corporation and National Westminster Bank Plc and Alan Hughes
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE MANN |
| Judgment Date | 17 June 2005 |
| Neutral Citation | [2005] EWHC 1235 (Ch) |
| Docket Number | Case No: HC05C00379 |
| Court | Chancery Division |
| Date | 17 June 2005 |
[2005] EWHC 1235 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Mann
Case No: HC05C00379
MR. R. TAGER Q.C. and MR. M. WARWICK (instructed by Addleshaw Goddard) for the Claimant.
MR. J. GAUNT Q.C. and MR. J. DE WAAL (instructed by Thursfields) for the First Defendant.
MR. J. ALDRIDGE (instructed by Herbert Smith) appeared for the Third Defendant.
Hearing dates: 18 th, 19 th, 20 th, 21 st, 22 nd and 25 th April 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Mann:
Introduction and the parties
This is an action seeking rectification of the register in respect of land at Matlock in Derbyshire. The first defendant ("Olympia") is the registered proprietor of the relevant land, which I shall call the gas board site. Until 12 th August 1998 the land was unregistered and was owned legally and beneficially by the second defendant, then known as British Gas but now known as Transco plc ("Transco" or "BG" in this judgment). On that date BG sold the gas board site to the 5 th defendant, Mr Alan Hughes. Just over a month later, on 16 th September 1998, Mr Hughes entered into an agreement with the claimant ("Sainsbury's") and Chelverton Properties Ltd ("Chelverton"), in which he agreed to convey or make available such part or parts of the gas board site as were required for certain works, which works have, in the event, come to mean the construction of a roundabout. It is said that this agreement gave rise to an obligation on Mr Hughes which was potentially enforceable against third parties as an option. The relevant agreement was described as a deed of novation, and I shall refer to it as such in this judgment, though it is the option (or alleged option) which is the crucial feature of that deed. Although one of the issues in this case was whether or not the relevant obligation was indeed an option (as that term is usually understood) I shall (for ease of exposition) refer to it as though it was wherever it is convenient to do so without prejudging the questions that arise as to its actual effect.
The sale to Mr Hughes attracted compulsory registration, and Mr Hughes duly applied for registration. However, his registration application was cancelled for non-response to certain requisitions. It is said by Sainsbury's that the effect of that is to cause the legal estate to revert to BG. On 24 th February 2000 the third defendant Westpac Banking Corporation ("Westpac") obtained a charging order over Mr Hughes' interest in respect of a judgment exceeding £3.75m. In due course they sold the gas board site under that charging order on 11 th February 2004 (having obtained an order from Master Bragge for the vesting in them of a term for that purpose under section 90 of the Law of Property Act 1925), and the sale was to Olympia. On the same date the property was charged to the fourth defendant ("Natwest"). Sainsbury's and Chelverton had sought to protect their interests under the deed of novation initially by cautions, and then by cautions against first registration, and not by registration under the Land Charges Act 1972. In due course Sainsbury's was invited by the Land Registry to justify its claim that its option bound Olympia, and when Sainsbury's failed to respond to a time limit for providing a response Olympia were registered as proprietors of the freehold title free from Sainsbury's' interest under the option in the deed of novation. In those circumstances Sainsbury's has commenced this action in which it seeks rectification of the register so as to delete the title completely or so as to ensure it is subject to the option. It also seeks specific performance of the option and damages against Olympia, though those last two claims were not the subject of the actual hearing before me and are to be adjourned if I am otherwise in Sainsbury's' favour. In the alternative Sainsbury's runs a trust or estoppel claim, seeking a declaration that in the light of certain dealings between Olympia and Sainsbury's, Olympia holds the gas board site on trust to give effect to the option arrangements. For its part, Olympia counterclaims for an order removing a unilateral notice entered against Olympia's title to the site; that is merely a natural counterpart to Sainsbury's' claims. In addition to this action (and indeed before this action was commenced) Sainsbury's made an application under CPR 40.9 for the setting aside of the order vesting a term of years in Westpac (for the purposes of sale), or alternatively for a variation of that order to include a provision making it plain that the sale to be effected under it was to be subject to the rights under the deed of novation. That application has come on for hearing at the same time as the trial of this action. A speedy trial was ordered by Peter Smith J on the occasion of an application for injunctive relief on 18 th February 2005.
The parties and the issues
Sainsbury's and Olympia are natural parties and opponents in this action. Westpac was joined because it was an inevitable party to the application under CPR 40.9, and presumably because it was the vendor under the order for sale. Natwest was joined because it had an interest which would be affected by the claim, if successful. Westpac appeared before me, represented by counsel (Mr Aldridge). On the footing that no relief was sought against it (which it was not) and on the footing that its sale was not impugned (which was less clear, but in the end it was not, or not materially), and on the footing that no criticism was made of the evidence on which it obtained Master Bragge's order (which it was, though not in a manner which Westpac thought it necessary to respond to) it took no part in the proceedings other than to provide the court with assistance and to be prepared to defend itself against attack by Mr Hughes. Mr Aldridge's skeleton argument provided very material assistance to me in terms of the legal analysis of the situation, and he addressed me shortly in a final speech (which was equally helpful). Other than that, Westpac did not take any part and did not take a position in relation to the relief sought. Natwest has reached an agreement with Sainsbury's under which its interests as chargee were adequately protected, and it took no part in the trial whatsoever.
Mr Hughes' position was different. He was not originally joined, or to be joined, to the present action (though he was, of course, a party to the proceedings in which the order for sale was made and in which the application under CPR 40.9 was made), but was joined at the direction of Peter Smith J. He filed a Defence which was highly critical of the making of the order for sale, and alleged that the order of Master Bragge ought to be set aside and the sale to Olympia "nullified". It also raises other complaints against Westpac, including a complaint of sale at an undervalue, though it does not counterclaim. Mr Hughes claims to have no funds to represent himself (as a result, he says, of a freezing order procured at the behest of Westpac), and has been assisted by one or more Mackenzie advisers. On the afternoon of the working day before the trial started I received a lengthy communication from one of those advisers, on behalf of Mr Hughes, enclosing a medical certificate. It explained that Mr Hughes needed 2 months to recover from the cumulative effects of this and other litigation, and asked for an adjournment of about that length of time for that purpose. Mr Hughes did not attend the trial. Having heard the other parties, having considered the matter carefully, and having considered the carefully worded terms of the medical certificate, I determined at the outset of this trial that the trial should continue. I do not intend to repeat here what I said in my short judgment at the time. It was not a wholly satisfactory state of affairs, but bearing in mind the costs incurred, the need for a speedy trial, the extent to which Mr Hughes' legitimate concerns were likely to be covered anyway, the lack of prejudice to Mr Hughes of continuing and the poverty of the medical evidence, together with all other relevant factors, it seemed to me right to let the trial go ahead. He had served a witness statement, and I treated it as evidence in the case.
In those circumstances issues arise as to the effect of the non-registration of Mr Hughes' purchase, the nature of the option obligation in the deed of novation, the effect of Master Bragge's order (whether it entitled Westpac to sell a legal estate), whether the interest of Sainsbury's (if any) under the deed of novation was capable of surviving that sale, whether the dealings between Sainsbury's and Olympia give rise to a Pallant v Morgan equity or an estoppel, and whether the conditions required for rectification of the register are made out. These issues are factually detailed and legally complex.
The facts
Matlock lies in a valley through which the River Derwent and railway tracks run in a roughly east-west direction. A large part of the town lies to the north of the river, and there is bridge crossing the river which gives access to the station and to that part of the town lying to the south. The A6 runs through the town along the north side of the river. At one time it was a busier road than it now is, but it is still busy. To the south of the river, opposite part of the town, is an old quarry called Cawdor Quarry. Mr Hughes acquired this quarry and on 23 rd December 1996 he agreed to sell...
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