Spicer and Another v Tuli and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Toulson,Lord Justice Lewison |
| Judgment Date | 29 May 2012 |
| Neutral Citation | [2012] EWCA Civ 845 |
| Docket Number | Case No: B5/2011/3039 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 May 2012 |
[2012] EWCA Civ 845
The Master of the Rolls
Lord Justice Toulson
and
Lord Justice Lewison
Case No: B5/2011/3039
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON JUSTICE CENTRE
(HIS HONOUR JUDGE FABER)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr David Nicolls (instructed by Berlad Graham LLP) appeared on behalf of the Appellants.
Mr George Branchflower (instructed by LR Solicitors) appeared on behalf of the Respondents.
(As Approved)
Mr Spicer and Mr Shinners were appointed as Law of Property Act receivers under a charge over Flat 17, Stonehouse, 9 Weymouth Street in London. The charge had been granted by BRM Investments Ltd to Clydesdale Bank PLC. When they instructed solicitors to sell the property, they discovered that Ms Tonii Tuli and her two daughters were in occupation. On 21 May 2008 they brought proceedings for possession against her and persons unknown. The claim was a possession claim against trespassers, as defined by CPR Part 55.1. The claim form was in the form required by CPR Part 55.4, and Practice Direction 55A paragraph 2.6. Had the claim simply been a possession claim, as defined by CPR Part 55.1, and brought against the tenant, the claim form would have had to have been in the form required by paragraph 2.2 of the Practice Direction. Thus the claim form alleged that the claimants had a right to possession of the property occupied by the defendants, who had entered or remained on the land without their consent or licence. It also alleged that the defendant had never been a tenant or subtenant of the land. The relief claimed by the Particulars of Claim was an order for possession and payment of costs; there was no other money claim.
A hearing date was set for 17 June 2008. On 16 June 2008 Ms Tuli filed a defence. In her defence she alleged that she had been a tenant of the flat since 16 April 2003, under two successive tenancy agreements. This allegation came as a surprise to the receivers, who arranged for their solicitors to inspect the documents on which Ms Tuli relied. On 20 June the court gave directions intended to lead to a trial on 25 September. There were delays in Ms Tuli giving disclosure in accordance with the court's directions, and it was not until 24 September that the Receiver's solicitors, acting by Mr Sharpe, were able to inspect the original documents on which Ms Tuli relied. Late in the afternoon on the day before the inspection was due to take place, Mr Sharpe sent an email to Mr Berlad, Ms Tuli's solicitor. That email enclosed a draft order which Mr Sharpe had signed. Mr Sharpe added that on the assumption that the inspection was satisfactory he would telephone Mr Berlad to authorize him to submit the draft order to the court. The draft order provided that the proceedings "be withdrawn". This was a technical error. Under the CPR an action cannot be withdrawn. It may either be discontinued under CPR Part 38 or it may be dismissed. If an action is discontinued rather than dismissed, it is clear that a second action may be brought even if it arises out of the same facts as the discontinued action, although the permission of the court would be needed under CPR Part 38.7 if the action is discontinued after the defendant has served a defence.
The inspection duly took place on the following day. The inspection revealed nothing new, so one would have expected Mr Sharpe to authorize Mr Berlad to submit the order withdrawing the proceedings to the court. However, on 24 September 2008 Mr Sharpe and Mr Berlad spoke on the telephone to discuss the way forward. Mr Sharpe explained that he took the view that the tenancy agreements were not genuine and that he would seek every avenue to establish the truth. He also said that more time was needed, bearing in mind the lateness of disclosure, and that a court would take a number of factors into account. Mr Berlad then asked what he suggested, to which Mr Sharpe explained that there would be "a consent order withdrawing the proceedings". In that context, that could only have been understood as a withdrawal which did not preclude the further pursuit of the receivers' claim; in other words, a discontinuance.
Later that day the solicitors spoke again. Mr Sharpe and Mr Berlad discussed the order. Mr Sharpe explained that the Receivers needed more time to look into the position if Ms Tuli could maintain that she was not a trespasser. Mr Berlad said that he would take instructions. There was a third telephone call that day. Mr Berlad agreed to "a general consent order withdrawing the current proceedings with no order as to costs". Mr Sharpe was to draw up the order.
On the following day, 25 September 2008, a signed consent order was placed before the Central London County Court. It contained an order that the proceedings in this action "be dismissed". The reason for the change from "withdrawn" to "dismissed" is unclear, but both solicitors agreed the amendment. The underlying agreement, however, was that the proceedings would be withdrawn so as to give the receivers time to investigate the position, and on the basis that Mr Sharpe had stated his belief that the tenancy agreements were not genuine.
In his evidence, Mr Sharpe says that during the discussions between solicitors, it was made clear that the receivers' belief was that the tenancies were nothing more than a device to frustrate the attempt to gain possession, and they would be very much looking at a further set of proceedings on a very different basis to simple trespass in the future. He adds that at no stage did he encourage Ms Tuli or her solicitors to believe that the receivers would not be seeking possession in the future. Mr Berlad does not contradict this evidence, which in my judgment is borne out by Mr Sharpe's contemporaneous attendance notes, although he does say that the parties had agreed that if upon the inspection of the originals, the receivers were satisfied that the documents were genuine, they would agree to the dismissal of their claim.
The difficulty with this evidence is that it is clear from Mr Sharpe's attendance note following inspection that he stated clearly that he did not believe the documents were genuine. Thus, the prediction to dismissal was not satisfied. So the evidence does not establish an agreement that the proceedings would be dismissed.
As foreshadowed in the conversation between solicitors, the receivers did not let matters rest. On 25 November 2009, they began fresh proceedings. In their Particulars of Claim, they alleged (1) they had a right to possession of the property; (2) Ms Tuli remained in occupation without their consent or licence; (3) she had never been the tenant of the receivers, the bank or the mortgagors, nor had she held a sub-tenancy; (4) in the event that Ms Tuli were to be found to be a tenant, the tenancies do not bind the bank, because they were fraudulent and created after the charge had been entered into, or because the existence of the tenancies was fraudulently concealed from the bank; (5) the tenancies should have been granted by deed but were not, with the consequence that they created equitable interests only which the bank's legal interest overrode; (6) alternatively, the tenancy agreements were not intended to have any effect in law.
The relief sought this time round was an order for possession, charges for use of occupation at the rate of £1,500 per week, and payment of costs. Ms Tuli's response to the fresh proceedings was to apply to strike them out. Her application was based on two grounds. First, the fact that the first action was dismissed rather than discontinued meant that any further claim for possession on whatever grounds against Ms Tuli was barred as a result of cause of action estoppel. Second, even if that were not the case, the fresh action was an abuse of process. The application failed, both before District Judge Avent and HHJ Diana Faber in the Central London County Court. With the permission of Etherton LJ, Ms Tuli appeals.
I prefer to begin with the question of abuse of process. I approach this question on the assumption that there is no cause of action estoppel, because if there is the question of abuse of process does not arise on the main claim for possession. District Judge Avent decided that there was no abuse of process, essentially because it could not be said that Ms Tuli would be twice vexed, let alone harassed, by the fresh proceedings. He pointed out that late disclosure by Ms Tuli had in effect forced the receivers to abandon the first action. In the end, the question turned on a balance between conflicting interests, and that to compel the parties to remain in a continuing legal relationship without any judicial examination of the merits would amount to an injustice.
On appeal, HHJ Faber decided that the matters raised in the second action could have been raised in the first. However, she said that the terms of the tenancy were strongly suggestive of fraud, and that there was a public interest in the investigation of fraud. She weighed that against Ms Tuli's...
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