Yeeles v Benton and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Maurice Kay,Lord Justice Hooper |
| Judgment Date | 29 March 2010 |
| Neutral Citation | [2010] EWCA Civ 326 |
| Docket Number | Case No: A3/2009/1377 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 March 2010 |
[2010] EWCA Civ 326
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Bernard Livesey QC
(Sitting as a Deputy Judge of The Chancery Division)
Before: Lord Justice Mummery
Lord Justice Maurice Kay
and
Lord Justice Hooper
Case No: A3/2009/1377
HC06C03873
MR ANDRE JUMABHOY (instructed by Saracens) for the Appellant
MR ROBIN HOWARD (instructed by Judge & Priestley) for the Respondent
Hearing date: 2 nd March 2010
Lord Justice Mummery :
Background
This appeal is from an order made on 8 June 2009 by Mr Bernard Livesey QC (sitting as a Deputy Judge of the Chancery Division) upholding a claim for procuring a breach of contract: [2009] EWHC 1259 Ch. Miss Jennifer Yeeles, a beauty therapist without any business experience, is the claimant. Mr Mayhew Lewis is a defendant. The other defendants are Mr Simon Benton, who is the alleged contract-breaker and has some experience of buying properties on buy-to-let mortgages, and Strand Corporation Limited (Strand), a company of which the two personal defendants are directors and shareholders. Judgment was given against the personal defendants jointly and severally in the sum of £73,784, together with interest, making a total of £90,492.16. They were ordered to pay 2/3rds of the claimant's costs and to make an interim payment on account of costs.
The litigation is an unplanned consequence of two ventures for the development by the parties of properties in the Sevenoaks area. In February 2003 Miss Yeeles and Mr Benton, without capital, without specialist knowledge of, or advice on, property development and without any financial projections or costings, orally agreed to enter into a profit-sharing venture for the purchase and development of a property. Mr Benton would fund the purchase costs not met by mortgage. Miss Yeeles would fund the development costs. Her partner, Mr Clive Taylor, is a builder by trade.
The property on which they finally settled as suitable for development was at 74 Seal Road, Sevenoaks (Seal Road). The purchase price was £175,000. Miss Yeeles provided the deposit of £42,500, as Mr Benton was unable to raise it. £32,500 of that sum was contributed by GT Building and Contractors Limited (GTBC), a construction firm for which Mr Taylor worked. The deputy judge found that Miss Yeeles acted as nominee for GTBC. The remaining £10,000 of the deposit was provided by Miss Anita Laban from her personal funds. She is Mr Taylor's sister, an accountant and sole director of GTBC. Miss Yeeles is Company Secretary of GTBC. Neither Miss Yeeles nor Miss Laban had even an elementary understanding of the building and construction business.
On 30 April 2003 contracts were exchanged for the purchase of Seal Road. Mr Michael Leach, a solicitor with the firm of Copley Clarke & Bennett, acted for both Miss Yeeles and Mr Benton in the joint purchase. The balance of the purchase price (£132,500) was obtained by Mr Benton by way of a mortgage advance from the Bank of Scotland. Completion took place on 9 May 2003. At the insistence of the mortgagee, Seal Road was transferred into the sole name of Mr Benton. Miss Yeeles, who was not made aware of that fact at the time, says that she had a beneficial interest and that Mr Benton held Seal Road on trust for himself and for her.
GTBC spent £35,629.59 on an “at cost” basis in developing and converting Seal Road into two flats. From 13 January 2004 the ground floor flat was let on an assured shorthold tenancy at £475 per month. On 14 May 2004 the upper floor flat was sold on a 999 year lease for £146,000. The mortgage was discharged. Mr Benton received the net proceeds of £1,482.38.
Between January and April 2004 Miss Yeeles and Mr Benton agreed upon a variation of their original agreement so as to provide that the ground floor flat would be transferred to her in partial payment of her share in the equity of Seal Road. Any balance due from her would be paid by her in satisfaction of the agreement to share profits equally. However, Mr Benton did not keep to his agreement to transfer the ground floor flat into her name. By letters dated 11 and 14 May 2004 he instructed his solicitors, Copley Clark & Bennett, to transfer the freehold title of the ground floor flat to Strand, but that transfer was not made either. Instead, the ground floor flat was ultimately sold on 7 March 2005 on a 999 year lease for £97,000. Strand received £69,972.97 and the balance of £22,725.44 went to Mr Benton personally. None of the proceeds went to Miss Yeeles.
Why were the proceeds of the ground floor flat at Seal Road paid to Strand? The answer lies in the circumstances that link Seal Road to the development of another property in the Sevenoaks area by GTBC, Mr Benton, and Mr Mayhew Lewis, who had worked with Mr Benton in the music business. Strand was the corporate vehicle formed in March 2003 and subsequently used by Mr Benton and Mr Mayhew Lewis for the purchase and redevelopment of Broadview House, a derelict property in Hadlow (Broadview). Broadview was purchased in late August 2003. The development was expected to yield a substantial profit. The redevelopment works were carried out by GTBC, which was paid a total of £112,650. Then they fell out. Strand terminated GTBC's contract because of significant defects in the building work. The work done was valued at £78,914.22. The costs of rectification of the defects amounted to £58,000. Strand took the view that it had overpaid GTBC by £26,336 and that GTBC was liable to Strand in the total sum of £69,586. Mr Taylor disputed overpayment and he denied liability for the cost of remedial works. GTBC were instructed to leave the site. The dispute between Strand and GTBC was unresolved. New building contractors were to be appointed.
Miss Yeeles says that Mr Mayhew Lewis procured Mr Benton to break his contract with her. He did so by persuading Mr Benton to sell the ground floor flat at Seal Road and then to pass the proceeds, in which she has a beneficial interest, to Strand. Mr Mayhew Lewis, she says, also dishonestly assisted in a breach of trust when Mr Benton directed the transfer of Seal Road to Strand.
The deputy judge found that Mr Benton intended to break his contract relating to the ground floor flat. During the first week of May 2004 he spoke to Mr Taylor and told him that, if he did not repay the money overpaid by Strand in connection with Broadview, they would withhold the transfer of the ground floor flat at Seal Road, deduct what was due and pay over only the balance. On 7 May Mr Benton made contact with Mr Brahams of Messrs Winemans, who were Mr Mayhew Lewis's personal solicitors. Mr Benton then wrote on 11 May to Mr Leach of Copley, Clarke & Bennett on Strand notepaper giving instructions that the deeds of the ground floor flat were to be registered in the name of Strand and held for collection by Mr Mayhew Lewis. By letter of 14 May Mr Benton instructed Mr Leach to send the paperwork to Winemans and informed him that Mr Mayhew Lewis was to receive full power of attorney in relation to any dealings or transactions occurring while Mr Benton was away in China from 15 May 2004.
The deputy judge quoted from a letter written by Mr Mayhew Lewis on Strand headed notepaper to GTBC on 26 May 2004, the day of Mr Benton's return from China. The letter, to which Mr Benton contributed some of the wording, said
“…it will come as no surprise that I have decided not to sell you the ground floor flat at 74 Seal Road and to recoup our losses and costs of rectifying the roof, plastering, windows and other items pertaining to Broadview House from the £42,000 deposit we hold and return you the balance…”
Mr Mayhew Lewis denies that he procured a breach of contract by Mr Benton. He says that he was given to understand by Mr Benton that the Seal Road deal was with GTBC. He had no knowledge of any rights or interests of Miss Yeeles over Seal Road, or of any contract between her and Mr Benton. He also says that, as regards the breach of contract, Mr Benton had made up his mind on his own without being persuaded to do so...
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