England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
SITTING AT EXECTER COMBINED COURTS
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRISTOL COUNTY COURT
(HIS HONOUR JUDGE BURSELL)

		Execter Combined Courts Castle Road Exeter Tuesday 30 October 2001

1. LORD PHILLIPS, MR:Lord Justice Tuckey will deliver the judgment of the court.
2. LORD JUSTICE TUCKEY: Mrs Averil Piranty appeals, with this court's permission, from the judgment of His Honour Judge Bursell QC, given in the Bristol County Court on 7 February 2001, in which he held that she could redeem her ex-husband's (Mr Parsons) charge over their former matrimonial home on payment of £33,750, and ordered her to pay him £21,000 as damages for breach of the repairing covenant in that charge. He also ordered the appellant to pay most of the costs of the proceedings. The appellant contends that the judge set the redemption amount too high and should not have made any award of damages.
3. The story goes back many years. The parties were married about 30 years ago. 31 Heathville Road, Gloucester ("the house") became the matrimonial home in 1974. It was purchased in the respondent's name alone. Their three children were born in the following five years. The parties separated in 1980 and the respondent moved out. They were not divorced until 1991.
4. On 19 September 1990 the Family Court ordered the respondent to transfer his entire interest in the house to the appellant, but that she should execute a charge in his favour to secure 37.5 per cent of the gross value for the time being of the house. The charge was not to be enforced until the youngest child was 17 or had completed her full-time education, or the house was sold. We are told that such orders are often made on the breakdown of a marriage. They secure the house while the children are growing up, but also to secure the other spouse's beneficial interest in the former matrimonial home in a way which reflects rises and falls in its value.
5. By the time that this order was made the respondent had been living in the house for the best part of ten years with Mr Douglas Bailey, by whom she had two more children and whom she later married. Their relationship was stormy and she says he made it impossible for her to live with him. She moved out and he stayed in the house. The children lived with the appellant for a time but then returned to live with Mr Bailey in the house until mid-1998 when they all left.
6. There is some dispute as to when the appellant finally left Mr Bailey, but she certainly was not living with him at the time she executed the charge in favour of the respondent on 10 June 1993. In this deed she is shown as living at another address and her covenants are all expressed to run from the time she actually had possession of the house. The repairing covenant said that she:

"Will from a date two years from the date when [she] actually has possession of the [house] at all times keep the [house] in good repair and condition in accordance with the covenant in that regard contained in the Mortgage."

7. The mortgage referred to was from a building society and required the borrower to keep the house in good and tenantable repair.
8. At the hearing before the judge it was agreed that the appellant did not actually have possession of the house until 17 July 1998. She said she had not felt able to evict Mr Bailey because this would have made her children homeless. He badly neglected the house. With her new partner the appellant has done what she can to put it in good repair, but it needs major structural repairs which she cannot afford without a further mortgage. It was agreed before the judge that this work would cost £56,000.
9. As well as trying to raise money to repair the house, the appellant also tried to redeem the charge. On 8 April 1999 her solicitor wrote to the respondent, "to see if we can reach agreement over this". The letter went on to refer to a valuation of £50,000 and continued:

"It may well be that in real terms that house, if sold, would fetch less. In any estimate of the true value of the house one has to take into account the costs of sale which might be around £3,000. In net terms, therefore, it is possible that as little as £40,000 might be realised were the house to be sold on the open market.

On this basis Averil Piranty is able to offer you the sum of £15,000 payable within two months of your acceptance of the offer."

10. The respondent did not reply to this letter and refused to discuss the matter with the appellant when they met two months later. She started proceedings on 29 July 1999 in the Bristol County Court. She claimed that she was entitled to redeem the charge relying on the case of Popat v Popat [1991] 2 FLR 163 and that she had had the house professionally valued at a gross value of £50,000 and saying:

"Accordingly the Claimant seeks an order whereby in consideration of a suitable payment (as ordered by the Court) she should be entitled to redeem the Defendant's charge."

11. The respondent's acknowledgement of service, dated 7 September 1999, said:

"I dispute that Claimant's valuation of the property and have appointed a surveyor/valuer.

There will be an issue over whether the Claimant has failed to keep the property in good repair and condition as a result of which its value has decreased.

This application should have been issued ... in the Gloucester County Court."

12. He also referred to his long statement of the same date in which he complained of the damage done to the house by Mr Bailey. He said that its value should be taken at 25 per cent above valuations carried out for the purposes of the ancillary relief proceedings in 1990. This, he said, put its present value at £103,000. Although it is clear from his statement that the respondent felt unfairly treated by the appellant, it is clear that he did not dispute her right to redeem the charge or claim more than 37.5 per cent of the gross value of the house. The issues he raised were simply: what was the gross value and what was the relevant time at which it was to be established?
13. The appellant's claim should have been started in the Gloucester County Court to where it was transferred. Several months were lost in the process. The respondent started his own proceedings in that court claiming damages for breach of the repairing covenant and negligence. In January 2000 the court consolidated the two claims and gave directions for trial. However, instead of complying with the terms of this order, the appellant (no doubt on the advice of her solicitors) applied to strike out the respondent's claim because it was premature, and for an injunction to postpone the respondent's charge to enable her to give a proposed mortgagee a first charge over the house.
14. Both these applications were heard and dismissed on 8 May 2000 when the court gave further directions for trial, including the joint instruction of an expert to prepare an up-to-date valuation of the house. This was not obtained until 18 October 2000, at which time the respondent made a second claim identical to his first claim, no doubt intended to pre-empt the argument that the first claim was premature.
15. The three claims were heard by Judge Bursell over two days at the end of September 2000 but were adjourned until February 2001 to enable further evidence from the valuers to be obtained. It is not entirely clear what the issues were before the judge. The appellant was represented by her solicitor, Mr Burrows; the respondent then, as now, by counsel, Mr Gavyn Arthur. There appears to have been considerable debate about the meaning of the repairing covenant. That is not in issue before us. It is common ground that the covenant requires the covenantor to put the property into good repair if it was not in that state already (see Lurcott v Wakely & Wheeler [1911] 1 KB 905).
16. Having dealt with this point, the judge continued:

"The next question for my consideration is the date at which the valuation should be made. In so far as the value of the redemption is concerned, I do not see how the date can be other than when the redemption is ordered by the court; that is the day of the trial. That being so, it is agreed that the relevant value of the property as it presently stands is £90,000."

37.5 per cent of that value is £33,750. The judge continued:

"Fairness would also seem to suggest that the valuation of the property for the damages claimed should be at the same date."

17. He went on to refer to the fact that the present value of the property, if it had been in good repair and condition, would be £146,000 (that is £90,000 plus £56,000 being the cost of the repairs). The judge awarded the respondent the difference between 37.5 per cent of this value (£54,750) and the amount secured by the charge (£33,750): a total of £21,000.
18. The judge then considered and rejected various arguments advanced by Mr Burrows to the effect that the respondent had failed to mitigate the loss which he suffered as a result of the breach of the repairing covenant. These arguments were not pursued on appeal, although some of the respondent's conduct is still relied on in ways which we will explain. The arguments about mitigation were in our judgment misconceived.
19. In Popat v Popat where the wife tendered the value of the charge to her husband but he refused to accept it. On the wife's application the court ordered that on payment of tendered amount the house was to be transferred to the wife free of the charge. The husband appealed saying that the court's order amounted to a variation of the original order made by the Family Court securing his interest in the house. The court rejected this argument. Fox LJ, giving the first judgment, with which Johnson J agreed, said at page 165:

"The only purpose of the charge, or of any charge upon property to secure money, is to provide security. Once the amount which is secured by the charge has been properly ascertained and tendered to the person entitled to the benefit of the charge it seems to me that the person whose property is charged is on ordinary principles entitled to have the charge redeemed. That is a matter of ordinary principles of equity relating to the right of redemption and to the prohibition of a clog upon the equity of redemption.

....

The only function of the court, it seems to me, was to satisfy itself that the amount that was being offered was the proper amount in accordance with the terms of the charge. Nobody disputes that the amount which was offered was the correct amount in accordance with the terms of the charge."

20. So on the facts of Popat, there was no issue as to the value of the husband's interest, which had been correctly ascertained and tendered by the wife.
21. In our case it is common ground that the appellant did not ascertain or tender such an amount to the respondent. However, Mr Orr, counsel who now appears for the appellant, argues that it was not necessary for her to do so. He submits that the respondent's response to her offers to redeem contained in the letter of 8 April, her claim made on 29 July, and/or by his acknowledgement of service dated 7 September 1999, were so unreasonable that she was under no obligation to tender any amount. The court should, therefore, have taken the value of the house at one of these dates in order to quantify the value of the respondent's interest in it. In his oral submissions Mr Orr focused on the September date because at neither of the earlier dates was there any conduct on which he could rely to excuse the appellant from tendering.
22. In support of his proposition that the appellant was excused from tendering by the September date, Mr Orr relied on Albermarle Supply Company Ltd v Hind & Co [1928] 1 KB 306 where the issue was whether a garage had lost their repairer's lien because, among other reasons, they had originally claimed a lien for the wrong amount and for the wrong reason. At page 318 Scrutton LJ said:

"A person claiming a lien must either claim it for a definite amount, or give the owner particulars from which he himself can calculate the amount for which a lien is due. The owner must then in the absence of express agreement tender an amount covering the lien really existing. If he does not, unless excused, he has no answer to a claim of lien. He may be excused from tendering ... (2) if the person claiming the lien for a wrong cause or amount makes it clear that he will not release the goods unless his full claim is satisfied, and that claim is wrongful. The fact that the claim is made for more than the right amount does not matter unless the claimant gives no particulars from which the right amount can be calculated, or makes it clear that he insists on the full amount of the right claimed."

23. Mr Orr says that the respondent's response to the claim that the value of the house should be taken at its 1990 value plus an arbitrary percentage, was the assertion of a wrongful claim and/or an insistence that he would settle for nothing less than the full amount of that claim. In his skeleton argument Mr Orr also suggested that this amounted to a clog on the equity of the redemption.
24. We cannot accept any of these submissions. As we have already said, all that happened in this case was that the respondent disputed the appellant's valuation of the house and the time at which it should be valued. He did not insist on his valuation but, like the appellant, left the issue of value to be determined by the court. If he had denied the appellant's right to redeem or asked for more than 37.5 per cent, he would have been making a wrongful claim; but he did not do this.
25. It does not seem to us that the respondent's stance excused the appellant from tendering the correct amount. It follows that there was no conduct on the part of the respondent which required the court to find that the appellant's right to redeem had crystallised before trial. As the judge was asked to determine the value of the respondent's charge when the parties were unable to agree, it was logical for him to do so on the basis of the agreed joint valuation which had been done shortly before trial.
26. This disposes of the first part of the appeal. However Mr Orr contends that, in any event, the judge should not have awarded the respondent any damages for breach of the repairing covenant. His notice of appeal alleges simply that the breach occurred as a result of the clog on the equity of redemption caused by the respondent's conduct. In his submissions, however, he abandoned clogs and relied on the proposition formulated for him by the Master of the Rolls as follows:

"The respondent has behaved in an unconscionable way by denying the appellant her equitable right to redeem and cannot be permitted to profit from the extension of his interest in the property beyond the date when it should have come to an end."

27. This proposition is derived by analogy from what was said by the House of Lords in a contractual context in the case of Alghussein Establishment v Eton College [1988] 1 WLR 587. At page 594 Lord Jauncey said:

"Although the authorities to which I have already referred involve cases of avoidance the clear theme running through them all was that no man can take advantage of his own wrong. There was nothing in any of them to suggest that the foregoing proposition was limited to cases where the parties in breach were seeking to avoid the contract and I can see no reason for so limiting it. A party who seeks to obtain a benefit under a continuing contract on account of his breach is just as much taking advantage of his own wrong as is a party who relies on his breach to avoid a contract and thereby escape his obligations."

28. Mr Arthur did not quarrel with the Master of the Rolls' proposition. He simply submitted that the appellant's case fails on the facts. There was no inequitable or unconscionable behaviour on the part of the respondent which justified denying him the right to rely on the repairing covenant.
29. In support of his argument that there was unconscionable behaviour on the part of the respondent, Mr Orr relies on the respondent's response to the appellant's claim with which we have already dealt. He also relies on the fact that the delay in hearing the appellant's claim came about because the respondent made a premature claim. If no such claim had been made until the two-year period of grace allowed by the covenant had elapsed, the appellant's redemption proceedings would have been heard before the respondent could have relied on the covenant.
30. For the respondent, Mr Arthur says, in effect, that the appellant only has herself or her legal advisers to blame for what happened. After regaining possession of the house, she chose to wait for a year before starting proceedings which she based on a £50,000 valuation obtained in December 1998. After December 1988, but before she started the proceedings, she had done work on the house and obtained a more up-to-date valuation of £62,000 for the purposes of ancillary relief proceedings between herself and Mr Bailey. Her claim against the respondent was then started in the wrong court. When the court consolidated the proceedings at the beginning of the following year, instead of getting on with them further time was wasted by the unsuccessful applications to strike out and for an injunction. During this period she did not cooperate in the joint instruction of a valuer. On analysis, it was not the respondent's unconscionable behaviour which resulted in the delay, but the various orders of the court to consolidate etc and the finding of a suitable date in the court's calendar to try the various claims.
31. We accept Mr Arthur's submissions. It is not necessary to label the appellant's conduct but, for the reasons given by Mr Arthur, we do not think it can be said that the respondent behaved unconscionably or inequitably. He was entitled to say that he did not accept the appellant's valuation of £50,000, particularly if he knew, as he says he did, that she had obtained a higher valuation before she made her claim. The respondent had made it clear that he intended to complain about the state of repair of the house.
32. In order to avoid what happened, the appellant and her advisers should have concentrated their efforts on obtaining an up-to-date valuation of the house to enable them to make a proper Popat tender, failing which they could have applied for an expedited hearing of the appellant's claim. However, their efforts appear to have been directed or at least resulted in delay: proceedings were started in the wrong court, unsuccessful applications were made, they did not cooperate in obtaining a joint valuation and no attempt was made to make a proper Popat v Popat tender. One is left with the impression that the appellant and her advisers did not appreciate the significance of the fact that that the two-year period of grace came to an end in July 2000. The respondent certainly cannot be blamed for this.
33. For these reasons we do not think the respondent was precluded from claiming damages for breach of the repairing covenant.
34. It follows that the appeal from each of the judge's orders should be dismissed.
Order: Appeal dismissed with costs on standard basis up until such time as claimant received public funding. Thereafter appellant's costs to be subject to public funding certificate subject to detailed assessment by the Costs Judge. Detailed assessment of respondent's costs for the purposes of public funding.