England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(MR JUSTICE JACOB)

		Royal Courts of Justice Strand London WC2 Tuesday 11th September 2001

1. LORD JUSTICE CHADWICK: This is a renewed application for permission to appeal against part of an order made by Jacob J on 1st May 2001 in proceedings brought by Mr Alan Parry against Edwards Geldard, a firm of solicitors.
2. Mr Alan Parry farms land near Usk in the county of Gwent. On 31st March 1989 he entered into an agreement with his brother, Mr Rhys Parry, who farmed neighbouring land, under which he, Mr Alan Parry, was to have a right of pre-emption over some 61.5 acres of that neighbouring land, part of Gweneth Farm, if Mr Rhys Parry desired to sell it.
3. The 1989 agreement provided for Mr Rhys Parry to give notice of his desire to sell within a period of 21 years; for Mr Alan Parry to give notice of his desire to purchase and for the brothers to seek to agree a price. No binding obligation to sell or to purchase came into being at that stage. If the brothers were unable to agree a price then the price was to be determined by a valuation made by an independent qualified surveyor. But clause 4 of the agreement was in these terms:

"Once such valuation has been agreed or made in the manner stated the Grantee [that is Mr Alan Parry] shall have one month in which to decide whether he wants to proceed with his intended purchase of the property at that valuation and if he shall within that month serve written notice on the Owner [that is Mr Rhys Parry] of his desire to proceed then he shall be entitled on paying the amount of the valuation to the Owner to a conveyance of the property free from all incumbrances."

4. Clause 5 provided that if Mr Alan Parry did not serve the written notice required under clause 4 within the time of 1 month there prescribed, Mr Rhys Parry could deal with the property free from any rights of pre-emption; that any entry made under the Land Charges Act or Land Registration Act 1925 would be cancelled. So the right of pre-emption was exercisable in two stages. First, there was a notice of desire to purchase in principle; and then, after a price had been agreed or fixed by valuation, Mr Alan Parry had the right to decide whether or not he wished to proceed at that price.
5. In February 1995, Mr Rhys Parry gave notice of his desire to sell and Mr Alan Parry responded with notice of his desire to purchase. But it seems that the brothers could not agree a price between themselves. They appointed Mr Robert Thomas, a consultant with the firm Herbert Thomas of Cowbridge, to make a valuation. On 18th July 1995, Mr Thomas made and signed his valuation report. Without disclosing the amount of that valuation, Mr Thomas wrote to the agents then acting for Mr Alan Parry to inform them that the valuation report would be made available on payment of his fees. The fees were paid within a week or so, and the report itself was received by Mr Alan Parry's agents on 4th August 1995. On 7th August those agents wrote to Mr Alan Parry, a letter which contained this paragraph:

"From the option agreement you will note that there is a period of one month during which time you must make up your mind whether or not you wish to purchase the land at the valuation figure given, and if so, we must give written notification to your brother of your intention to purchase. I would suggest that you speak to the solicitors who initially drew up the option agreement, to confirm with them that the period of one month will start from the 3rd August, 1995, as we believe is the case. The period of one month is inflexible, and obviously we do not wish to be out of time and therefore barred from purchasing at the figure stated."

6. On receipt of that letter Mr Alan Parry telephoned Edwards Geldard who had drawn up the 1989 agreement, and asked for advice as to the date upon which time began to run under clause 4. Edwards Geldard advised that it was their view, also, that time ran from the date of Mr Thomas' letter sending the valuation; that is to say, from 3rd August 1995. Relying on that advice, Mr Alan Parry waited until 29th August 1995 before giving notice to his brother of his desire to proceed with the purchase. That date was, of course, within the period of 1 month from 3rd August 1998, but it was outside the period of 1 month from 18th July; the date upon which the valuation had been made and signed. So, if 18th July was the date from which the period under clause 4 of the 1989 agreement began to run, Mr Alan Parry's notice of 29th August was out of time.
7. Mr Rhys Parry took the point that the notice of 29th August 1995 was out of time. He refused to execute a conveyance. He commenced proceedings against Mr Alan Parry in which he sought a declaration that the land was free from any obligation to convey under the 1989 agreement; and for vacation of the land charge which Mr Alan Parry had registered.
8. Mr Alan Parry went to new solicitors. He was advised not to defend those proceedings. He commenced the present proceedings against his former solicitors, Edwards Geldard, alleging negligent advice as to the operative date.
9. These proceedings have already been before this Court (Lord Bingham CJ, Swinton Thomas LJ and Mummery LJ) on the issue whether or not the advice given by Edwards Geldard in August 1995 was negligent. In a judgment delivered on 9th February 1998 this Court held that it was. This Court held that the operative date was the date upon which the valuation was made (18th July) not the date upon which it was sent (3rd August 1995). So the issue of liability has been determined in favour of Mr Alan Parry.
10. The proceedings were then remitted to the Cardiff County Court for damages and interest to be assessed. On 27th September 1999, Mr Alan Parry amended his statement of claim to add an additional head of damage. The additional claim is in respect of the loss of the value of the milk quota formerly attaching to the land which was a subject of the 1989 agreement. The claim - which appears under subparagraph (iii) of paragraph 16 of the amended statement of the claim - was in these terms:

"Had the Plaintiff been able to purchase the Option Land, the milk quota attached to the Option Land would inevitably have fallen into the hands of the Plaintiff. Once the Plaintiff had occupied the Option Land the milk quota would have been reregistered in the Plaintiff's name."

11. That plea reflects the well-known principle that milk quota passes with the land and can be re- registered in the name of the person who is occupying the land; in principle milk quota cannot be detached from the land. But, as is also well-known, in practice milk quota is alienable by a device which is frequently adopted. The device adopted is for the owner of land to which milk quota is attached to grant a 10 month tenancy of that land to a dairy farmer who wishes to acquire that quota. The tenancy agreement will provide that the land is not to be used for dairy farming during the term of the tenancy. When the short tenancy comes to an end, the quota does not revert back to the owner or landlord of the land which has been tenanted. The reason is that, during the preceding 10 months, that land has not been used for dairy farming; accordingly, the quota accrues to the other land of the tenant or purchaser, which has been used for dairy farming.
12. It seems that, in the present case, Mr Rhys Parry had decided, shortly after February 1995, to alienate the milk quota from the land which was the subject of the 1989 option agreement. He had granted 10 month tenancies for that purpose. If, therefore, the land had been conveyed to Mr Alan Parry, prima facie he would have received it burdened with the tenancies which his brother had granted. But the obligation on Mr Rhys Parry, under the terms of the clause 4 of the 1989 agreement, was to convey free of all incumbrances. Mr Alan Parry would have asserted that he was entitled to take free from those tenancies, on the ground that the tenants had notice of his rights which had been protected by a land charge.
13. What would have occurred in that situation is not a matter which I need to decide. But that there would have been some dispute, it seems to me, inevitable. There would have been some dispute because the purchasers would have paid money for milk quota which, if Mr Alan Parry was correct, they were not going to get.
14. On 22nd September these proceedings came before His Honour Judge Masterman, sitting in the Cardiff County Court for an assessment of damage. As he records, two of the four heads of claim were agreed. These were (1) loss of the marriage value; that is to say, the increased value which the combined holding would have had if the land to be purchased under the 1989 agreement had been added to Mr Alan Parry's existing land; and (2) the cost thrown away in defending proceedings brought by Mr Rhys Parry to vacate the land charges, to which I have already referred.
15. In relation to the third head of damage - that is to say, the additional farming costs (arising from Mr Alan Parry's need to continue farming land some distance from his main farm) which could have been saved if he had purchased the land subject to the 1989 agreement - the judge awarded an amount which he assessed in the sum of £24,250. For convenience that is called "the travelling costs claim". But the judge rejected the claim, added in September 1999, in respect of the loss of milk quota.
16. The amount of that claim had been agreed (subject to liability for any damage under that head) at the sum of £125,365. The way in which that claim arises is this: it represents the difference (or part of the difference) between the value of the land with milk quota which, as Mr Alan Parry asserts, should have been conveyed to him under the 1989 agreement, and the £90,000 which Mr Robert Thomas had placed on the land in his valuation report. The claim arises because it is plain that Mr Robert Thomas did not take the value of milk quota into account when valuing the land in July 1995.
17. The factual background is described by His Honour Judge Masterman in a passage which begins at page 4D of the transcript of his judgment. The judge said this:

"The factual background is that in 1984, when milk quotas were introduced, there was an allocation to the option land which was at that time in the ownership of the father, Mr Albert Parry. In 1989 Albert Parry gifted the land to his son Rhys and the milk quota passed with it. Rhys Parry therefore acquired the benefit of the quota for nothing. One of Alan Parry's arguments is that six years later in 1995 he likewise should have got the quota for nothing.

What in fact happened was that Rhys Parry decided to sell up and purchase a larger farm elsewhere, so I have been told, although he has not given evidence in this case. He found buyers for the milk quota and sold them in nine tranches in February and March of 1995. At the same time he served notice on Alan of his intention to sell the option land and Alan served notice of his desire to purchase it. The description of the land in the option agreement makes no reference to the milk quota which by then attached. One would therefore have expected that Robert Thomas would have valued the land together with its attached milk quota, but he did not and, it seems to me, for good reasons. The reason is that Alan Parry's agent, Mr John Lewis, from whom I heard in evidence and whose evidence I accept, received instructions from Alan that he was to value only the land. Subsequently, Rhys Parry told him (told Mr John Lewis that is) that there was no milk quota with the land, so Mr Lewis's report reflects that position.

In his submission to Mr Robert Thomas, which is dated 12th June 1995, he clearly states on the second page, 'No quotas are attached to the land or being transferred with the land'. That was a report that was also sent by Mr Lewis to his principal, Alan Parry, who agreed in cross-examination that when he read it he thought that statement was probably right. Alan Parry certainly took no steps to correct it, and the inference must be that he accepted that it was a correct statement. If there were any doubt about this it is, to my mind, dispelled by Alan Parry's evidence of his reaction when he realised that he had lost the opportunity to buy the option land.

As a dairy farmer himself he knew that, if he had lost the land, he had also lost any quota attached to it; but he told me that he thought Edward Geldard's negligence had lost him the land but he did not even think about the lost milk quota."

18. Later, the judge said this, at page 6B-D:

"I can further infer that, if Alan had insisted on having the quota, Rhys would have insisted on the valuation reflecting that fact, that is to say Alan would have had to pay a fair price for it. But I am also satisfied that Alan never believed he was acquiring the land with its quota. His evidence to me that he thought he would be paying £90,000 for the land and getting the quota on top simply does not ring true when set against the other evidence that I have referred to. He knew the value of the quota and he never expected to get something for nothing, which is why this head of loss did not emerge until a late stage."

19. The position, therefore, as it appeared to the judge, was that the agreement of 1989 - which referred to an open market valuation with vacant possession at the time of the service of the option notice - did not make it plain, in terms, whether the valuation was to include any milk quota attaching to the land at the time of the valuation or was to leave milk quota out of account. If the value of the milk quota was to be left out of the valuation, then there were tow possible reasons for that: either (i) it was a term of the agreement made in 1989 that Mr Alan Parry should have the right to purchase the land with milk quota, but without paying anything for the milk quota; or (ii) it was contemplated by that applicant that he was to have the right to purchase the land on the basis that Mr Rhys Parry could, if he wished - by using the device which I have described - alienate the milk quota in advance and obtain the value of the milk quota in that way. Mr Alan Parry clearly takes the view that the agreement was intended to take effect in the first of the ways. Mr Rhys Parry, by his actions, appears to have taken the view that the agreement was intended to take effect in the second way. The matter should have been, but was not made clear by the agreement. What was clear was that Mr Robert Thomas had valued on the basis that milk quota was not passing.
20. By notice given shortly after Judge Masterman's decision, Mr Alan Parry sought permission to appeal to this Court against so much of the County Court judge's order as dismissed his claim in relation to the milk quota. That application came before the Deputy Master of Civil Appeals, who pointed out that, under the Civil Procedure Rules - and in the light of a decision of Henry LJ, in Millwood v Three Rivers District Council - an appeal from a county court judge, in a case which was not allocated to the multi track until after the decision under appeal, lay to the High Court and not to this Court.
21. So it was that the appeal from His Honour Judge Masterman came before Jacob J in the High Court. It was heard together with a cross appeal by Edwards Geldard against the award of damages under what I have called the travelling costs claim. Those matters were heard by Jacob J on 1st May 2001.
22. Jacob J allowed the cross appeal in relation to the travelling costs claim. In the appellant's notice dated 22nd May 2001, there is no indication that Mr Alan Parry seeks to appeal against that part of the judge's order allowing the cross appeal. The appellant's notice was settled by solicitors. That the order made on the cross appeal is not the subject of challenge is expressly confirmed by a skeleton argument lodged on Mr Parry's behalf prepared by counsel. That appears to have come as a surprise to Mr Parry; who told me that he thought that he was also seeking permission to appeal against the order in relation to the travel costs claim. It is quite plain on the documents that that was not the subject of the present application. Mr Parry, I think, would wish to apply to amend his appellant's notice so as to raise that issue; but, for reasons which I shall give, that application, if made, is one which must be refused.
23. The matter on which Mr Parry plainly does wish to appeal is Jacob J's decision upholding His Honour Judge Masterman's order in relation to the milk quota claim. Jacob J, in the judgment which he gave on 1st May gave a number of reasons why he took the view that the appeal before him should fail.
24. There are two principal reasons. First, he clearly thought that Mr Alan Parry had contributed to the basis on which Mr Robert Thomas has mad his valuation; that is to say, had valued the land without regard to milk quota. If Mr Alan Parry was correct in his assertion that it had always been understood since 1989 that he was to have the opportunity to purchase the option land without paying for any milk quota, then it is quite understandable that he should not have been surprised when he found that Mr Thomas was valuing on that basis. But, there is no material upon which it could be held that the 1989 agreement required a valuation to be made without taking account of whether milk quota was attached to the land at the relevant time.
25. Secondly, the judge took the view that Mr Rhys Parry could have applied to have the valuation set aside if the true position was that land ought to be valued with the benefit of milk quota. On that hypothesis, the valuer had proceeded on a basis which was false.
26. It will be plain from the account of proceedings that I have given so far that this is an application for permission to appeal to which section 55(1) of the Access to Justice Act 1999 applies. The section is in these terms:

"Where an appeal is made to a County Court or High Court in relation to any matter and on hearing the appeal the court makes a decision in relation to that matter, no appeal may be made to the Court of Appeal from that decision unless the Court of Appeal considers that-

(a) the appeal would raise an important point of principle or practice; or

(b) there is some other compelling reason for the Court of Appeal to hear it."

27. This is an application to appeal in a matter where there has already been an appeal from the County Court to the High Court.
28. In those circumstances, Mr Alan Parry must persuade me either that the appeal which he seeks to bring raises an important point of principle or practice; or that there is some other compelling reason for the Court of Appeal to hear it. The threshold is, of course, a higher one than that which would apply in a case where there had been no previous appeal from the County Court to the High Court. In such a case it would be sufficient if this Court were persuaded that the appeal would have a real prospect of success.
29. Mr Alan Parry has made his application in person. But, as I have said, the application was previously supported by a skeleton argument prepared by counsel. The skeleton argument recognises - frankly and at paragraph 2 - that there is no important point of principle or practice raised by the proposed appeal. But it is said that there is a compelling reason why the Court of Appeal should entertain a second appeal. First, because the decision of the learned judge was wrong, and there is a high prospect of it being reversed if an appeal is permitted to take place; and second, because the appeal is of a substantial financial value to the claimant, Mr Alan Parry.
30. I would accept, in principle, that if this Court were satisfied that the order appealed from was plainly wrong - so that there was a high prospect of it being reversed on appeal - then that might well afford a compelling reason why a second appeal should be entertained. But it is plain from the distinction between the test applicable to a first appeal and the test applicable to an appeal to which section 55 of the Access to Justice applies to the fact that a second appeal has a real or realistic, in the sense of not being hopeless, prospect of success is not a compelling reason why the Court of Appeal should entertain a second appeal. The Court must be persuaded that to allow the existing orders to stand would, in effect, be to condone an injustice.
31. In my view, despite Mr Alan Parry's obvious commitment to his cause, that test simply is not satisfied in the present case. It seems to me that there is no material upon which it could be held that the 1989 agreement requires that the option land should be valued without taking account of the value of any milk quota that attached to it. If that is correct, then, to the extent that milk quota did attach to the land, the valuation made by Mr Thomas in 1995 was plainly made on a false basis. It was made on the basis that there was no milk quota, in circumstances in which Mr Alan Parry, at least, now says that he knew that there was milk quota which should be transferred to him.
32. In those circumstances, it seems to me impossible to say that Jacob J was plainly wrong to reach the view that there was a strong prospect that the valuation could have been set aside.
33. Further, as it seems to me, had the matter proceeded by the service of a notice in time, Mr Alan Parry would, in effect, have been buying a lawsuit. A court faced with that position would have had to have form a view as to the chances of his success in litigation which would undoubtedly have involved both his brother and the milk quota purchasers from his brother. The court could not, in my view, have come to the conclusion that the measure of loss was simply the value of the milk quota. Again, it is impossible, as it seems to me, to say that either Judge Masterman or Jacob J were plainly wrong when they rejected the claim as presently formulated.
34. Further, unless it were established that from 1989 the common intention was that Mr Alan Parry should be able to purchase this land without paying anything for the value of any milk quota attached to it, his success, in this claim, would lead to a position in which he acquired a valuable asset for nothing. I find it impossible to say that in those circumstances there is a compelling reason why the Court of Appeal should entertain an appeal in order to achieve that result.
35. For those reasons, I dismiss the application for permission to appeal. I dismiss the application for permission to amend the notice of appeal, so as to include the travel costs claim, on the grounds that that claim raises no point of principle. Nor is there any compelling reason why this Court should entertain it.