Saleslease Ltd v Davis
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER,LORD JUSTICE SCHIEMANN,LADY JUSTICE BUTLER-SLOSS |
| Judgment Date | 30 March 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0330-7 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | QBENF 97/0036/1 |
| Date | 30 March 1999 |
[1999] EWCA Civ J0330-7
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
SHEFFIELD DISTRICT REGISTRY
(DISTRICT JUDGE OLDHAM)
Royal Courts of Justice
Strand
London WC2
Lady Justice Butler-Sloss
Lord Justice Schiemann
Lord Justice Waller
QBENF 97/0036/1
MR M E COLES (Instructed by Dixon & Templeton, Hampshire, SP61 1AU) appeared on behalf of the Appellant
CYRIL KINSKY (Instructed by Cartwright Cunningham Haselgrove, Walthamstow, London, E17 9PL) appeared on behalf of the Respondents
The issue raised by this appeal relates to the assessment of damages for conversion. The facts fall within a fairly short compass and the sums involved are not great by modern standards, but the answer to the problem raised is not that straightforward.
On 22 September 1993 the plaintiffs leased to Mr Campbell a MOT Testing machine. Mr Campbell was a tenant of the defendant. It seems that the defendant was forced by Mr Campbell's contract to terminate the lease of the premises. That led to Mr Campbell repudiating the lease for the equipment, by letter dated 19 November 1993, from Mr Campbell's solicitors to the plaintiffs.
The correspondence shows a dispute as to the precise circumstances in which over the period November 1993 to April 1994 the equipment remained on the defendant's premises. However, it seems to be common ground that at or about the end of March 1994 there was agreement that the equipment should be left on site in the hope that the defendant would be able to persuade an incoming tenant to take on the equipment to the benefit both of the plaintiff and the defendant. Indeed, on 6 April 1994, it seems the defendant offered £5,000 for the equipment on behalf of a prospective tenant, saying that he would like to offer the premises and the equipment as a package. This offer the plaintiffs turned down. The defendant asserts that the plaintiffs counter-offered a sale of the equipment for £6,000 to the defendant. That offer was not accepted and on 8 April 1994 according to the defendant in his affidavit he was told that the plaintiffs "now wanted £12,500.00".
Unbeknown to the defendant it seems that on 8 March 1994 a Mr Gyles had sought a Saleslease facility for certain new equipment corresponding very closely to that which had been leased to Mr Campbell. Mr Gyles' application had however in March 1994 effectively been turned down by the plaintiffs because they were only prepared to offer £5,000 by way of a facility against the capital value of equipment of £15,000. Within the plaintiffs there seems however to have been a change of personnel and a Mr Griva, who swore an affidavit which was before the District Judge, had further thoughts in relation to Mr Gyles. Having had words with a Mr Haydon who had previously turned down Mr Gyles the contemplation was that Mr Gyles might be persuaded to take the second-hand equipment at this stage at the defendant's premises. In his affidavit Mr Griva says:-
"Accordingly, I contacted the Brokers acting for Mr Gyles,…and on the 8th April 1994 they confirmed to me that Mr Gyles was interested. I thereafter had a number of telephone conversations with Mr Gyles over the next few days and it was agreed on the 11th April 1994 that he would lease the equipment from us for a deposit of £2,000.00 plus vat, to be followed by 24 monthly instalments of £446.41 plus vat. [It seems that this figure should be £466.41] Mr Gyles was extremely anxious to get his hands on the equipment as soon as possible and was quite happy to enter into the deal without inspecting the equipment; he also agreed to bear the costs of collection from the Defendant's premises. As far as I am concerned, this was a finalised and binding agreement between our company and Mr Gyles, subject only to collection of the equipment and completion of the necessary documentation."
By letter dated 3rd May 1994 the defendant gave notice that the plaintiffs could remove the equipment but stated:-
"If you wish to remove them which you appear eager to do, I will require a full reinstatement of the building to its original condition or the cost of such. This has been quoted as £1,350.00. In addition, I require storage fees of £650…and a sum of £150 to cover my time telephone calls and general expenses. On receipt of payment you may remove your goods by appointment. You have seven days to make payment and remove the goods. Alternatively if you wish to carry out the reinstatement yourselves the goods will remain on the premises until the work is carried out to my satisfaction and payment of the storage and other costs is made. There will be an additional cost under these circumstances for attendance and supervision. I await your reply."
The plaintiffs, through Mr Griva, responded by letter dated 5th May setting out the full history of the matter. It is of relevance that in setting out the full history no reference was made to any contract made on 11th April 1994. That letter ended in the following way:
"I should advise you at this point that we are so incensed with the contents of your letter that we would sooner fund the costs of a Court Order to have these goods removed, and I should further advise you that if you continue to take obstructive measures with us in removing these goods and we are not able to assign this lease, our solicitors will be instructed to claim against you for damages and losses incurred as a result of the failed assignment.
This for your information will amount to some £12,303.74 plus VAT, plus any as yet unquantified damages. No doubt Mr Campbell's solicitor will counter claim any claims made by yourself against him in the event of us instigating proceedings against Mr Campbell.
I should advise you that you have 7 days in which to respond to this office to confirm a date for the removal of these goods, in order that I may contact the prospective assignee to conclude this matter for all."
That letter was followed by a letter from solicitors for the plaintiffs to the defendant which said:-
"Unless we hear from you by close of business Friday 20th May 1994 to arrange for our Clients to collect their equipment we shall issue proceedings in the High Court for delivery up of the equipment or its value to our Clients, and damages for retention. The valuation and damages will be to the extent of the rentals they would receive under a novation of the former agreement with Mr Campbell that is being arranged, in the region of £12,500.00. Any liability caused by the failure to novate the agreement to the proposed lessee will also be sought."
A writ was then issued on 13 June 1994. There would appear to have been further negotiations during July 1994. The defendant was not co-operative still claiming the cost of repairs if the equipment was removed and a charge that would be made for storage. That led to the solicitors for the plaintiffs' letter dated 22nd July 1994, in which it was stated:-
"Your client is behaving in an unreasonable and obstructive manner and notwithstanding the fact that we repeated an undertaking on our clients behalf to put right damage caused by removing the equipment in our letter of 17th May, has caused our clients severe loss by preventing our clients from arranging a novation of the former agreement with Mr Campbell that was worth approximately £12,500.00."
The language of that letter seems to indicate that by 22nd July 1994 the opportunity to assign to Mr Gyles had disappeared. Only on 1st August 1994 was the equipment released to the plaintiffs by the defendant.
An application for Order 14 judgment was then pursued and the plaintiffs obtained judgment on 27th February 1995 for damages to be assessed.
The plaintiffs' case on damages is in essence that leasing second-hand equipment of this type is hardly possible. Thus, in the result, once having retrieved the equipment they were only able to sell that equipment for the sum of £5,000 to an entity called Saturn Automotives Services. They say however that as of 11th April 1994 they had managed to persuade Mr Gyles to take the equipment on a leasing contract under which they would have received substantially more than £5,000 i.e. the sum of £13,194. Due to the delay in returning the equipment (so they argue) Mr Gyles made different arrangements thus the deal with Mr Gyles was lost and thus the plaintiffs have suffered damages being the difference between the sum of £5,000 and £13,194 which would have been achieved from Mr Gyles.
The defendant's case is that (a) there is serious doubt as to whether there ever was any deal done with Mr Gyles; (b) there is serious doubt as to whether Mr Gyles would have paid the full sum of £13,193.84 both because he was a risk which the plaintiffs had previously not been prepared to take on and because he in fact only stayed in the premises to which this equipment was to be delivered for a period of one year; and (c) in any event (the defendant asserts) he was not made aware that this special deal was available from Mr Gyles and Mr Gyles alone. Accordingly they say that the measure of damages should be the difference between the market value of the equipment and the sum for which the equipment was ultimately sold. It is conceded that there is in fact no difference between those figures and thus damages are asserted to be no more than £250 or nominal and I shall return to that aspect below.
That this bargain with Mr Gyles was exceptional is accepted by the plaintiffs. At least it is accepted in their evidence, if not accepted in the submissions of Mr...
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