England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NORWICH COUNTY COURT
(His Honour Judge Barham)

		Royal Courts of Justice Strand London WC2 Monday, 22nd April 2002

Monday, 22nd April 2002

1. LORD JUSTICE PETER GIBSON: The defendant, Ernest Russell Kemp, seeks permission to appeal out of time from that part of the order made by His Honour Judge Barham on 31st January 2002 whereby the judge dismissed the defendant's counterclaim for rent for the occupation by the late Cecil Kemp ("Cecil") between 18th June 1974 and 1st March 1985 of part of 89 Rackham Road, Norwich. That property consists of an end of terrace house and some outbuildings and half an acre of land. Judgment was given in the absence of counsel but in the presence of the respondent's solicitors. The judge indicated that the parties should agree and draw up an order within 14 days. The order was drawn up on 19th February. The defendant then sought permission to appeal from the judge on 22nd February. The judge refused permission to appeal on 5th March without a hearing, his order being received on 11th March. The Appellant's Notice was lodged on 19th March. The delay is comparatively short, and in the circumstances I would not hold it against the defendant if there was substance in the proposed appeal.
2. The claimant is the widow and the executrix of Cecil. Cecil is the brother of the defendant and of two other brothers, Arthur and Leonard. Their father owned the property from which was run the family dairy business. When the father died the property was left to the four brothers subject to a life interest for the mother. Cecil continued the business, running it for his own benefit, but he employed the defendant and Arthur in that business. The mother and Arthur lived in the house.
3. In 1973 the mother died. The interest of Leonard was bought out by the three other brothers. The property was vested in them as tenants in common. Cecil continued to run the business until 1985. Arthur continued to live in the house until he died in 1996. His share then passed to the defendant. Cecil died in 1991, leaving his one-third share in the property to the claimant, his widow. The result is that the defendant holds the legal estate in the property as to two-thirds for himself and as to one-third for the claimant.
4. The claimant on 13th July 2000 brought proceedings for an order for the sale of the property under section 14 of the Trusts of Land and Appointment of Trustees Act 1996. The defendant resisted the claimant's claim and counterclaimed for an occupation rent.
5. The judge found that Cecil never paid rent and that the defendant never took steps to make him pay or to demand payment, notwithstanding the fact that in 1974 solicitors had written to the defendant suggesting that Cecil should pay a rent to the defendant and Arthur. Those solicitors were the family solicitors acting for the estate.
6. On 12th August 1997 the defendant for the first time formally claimed an occupation rent. The judge said that it was obvious that Cecil was never going to pay rent and that in cross-examination the defendant had agreed that Cecil refused to pay rent when asked to do so. I take it that when the judge said that the defendant never took steps to demand payment, he meant that there was no formal demand until 1997. The judge recorded the defendant's evidence that Cecil refused to enter into a written agreement, the defendant saying, "I could not pin him down". The defendant's state of mind was that Cecil would not pay rent unless he signed a written agreement. The judge also referred to the defendant's evidence that the issue of whether Cecil should pay rent for his occupation was "up in the air", as was the issue whether Arthur should pay rent for his occupation of the house. The judge regarded it as very significant that Arthur occupied the house rent free and was never pressed for payment. The judge concluded that the defendant was well aware that Cecil was not going to pay rent, but did nothing about it. The judge also noted that there was no evidence of any significant benefit to Cecil from his occupation for the purposes of the business, and that the defendant, like Arthur, was employed within the business. The judge is recorded in the note of judgment which I have as saying this:

"40.The principle I apply to determine whether occupation rent is payable is whether it is fair and equitable in all the circumstances of the case. In my judgement it is not fair and equitable for the occupation rent to be paid and I reject the Defendant's claim for an occupation rent."

7. The judge then went on to consider the question of laches. He said this:

"41.Even if the Defendant is entitled to an occupation rent I consider the claim to be barred by laches. The delay in pursuing the claim is substantial.

42.The Defendant's counter claim was raised for the first time 26 years after the Defendant alleged that Cecil agreed to pay rent and 15 years after Cecil ceased to occupy the property. There is a clear and substantial prejudice to the Claimant - she is unable to dispute the facts alleged by the Defendant that go to the heart of the case as both Cecil and Arthur are dead.

43.I reject the Defendant's submission that there is no prejudice suffered by the Claimant.

44.It follows that the Claimant is entitled to judgment."

8. Thus the judge gave judgment for the claimant on her claim and dismissed the counterclaim.
9. The application for permission to appeal was refused on paper by Sedley LJ. He said that he accepted that it was arguable that the judge applied a test more stringent than that indicated in two authorities. Those authorities, which had been referred to in the defendant's skeleton argument for permission to appeal, were Dennis v McDonald [1982] Fam. 63 and Re Pavlou [1993] 1 WLR 1046. In Dennis v McDonald. Purchas J at pages 70 to 71 held that

"only in cases where the tenants in common not in occupation were in a position to enjoy their right to occupy but chose not to do so voluntarily, and were not excluded by any relevant factor, would the tenant in common in occupation be entitled to do so free of liability to pay an occupation rent."

10. In Re Pavlou at page 1050 Millett J held that an occupation rent was payable both in cases of ouster and also

"in any other case in which it is necessary to do equity between the parties that an occupation rent should be paid".

11. But Sedley LJ went on to say that the judge's conclusion on laches was unanswerable. The defendant now seeks permission to appeal from me in open court.
12. Mr Caddick for the defendant submits that the judge erred in principle on the defendant's claim for an occupation rent. He accepts that the judge correctly stated the test for requiring an occupation rent, that is to say whether such a rent was fair and reasonable in all the circumstances. But he submits that the judge erred in applying the test to the facts of the case and failed to take relevant circumstances into account. He relies on the fact that the defendant, as appears to have been accepted by the judge, asked Cecil for the payment of rent but that Cecil appears to have either refused or not to have given a positive answer. That, Mr Caddick submits, is sufficient to show that it would be reasonable in the circumstances, as well as fair, for an occupation rent to be paid by Cecil in respect of Cecil's occupation of the property, as Cecil took the benefit of the business, albeit paying the defendant, as well as Arthur, a salary. Mr Caddick submits that the judge took into account irrelevant considerations in finding that there was no evidence that Cecil derived any particular benefit for his occupation. The mere fact that Cecil had not profited greatly from his occupation, he submits, is irrelevant to the question of whether it is fair that he pay rent to those whom he has excluded. He points out that the claim is not one for a share of the profits of the business. The test of fairness is applied to the circumstances, he says, of one owner's occupation to the exclusion of the other.
13. For my part, I think it very questionable whether Mr Caddick's submissions on occupation rent are correct. What is required is that the court should look at all the circumstances to decide whether or not it is fair and reasonable that an occupation rent should be payable. It seems to me well arguable that there was no true exclusion of the defendant from the property. There is no evidence that the defendant ever sought to use the land for his own purposes. The fact that this was a family business which provided two of the brothers, the defendant and Arthur, with a certain salary, leaving Cecil to take the risk of running the business without, it appears, making much by way of profits, seems to me to be relevant to the consideration of fairness and reasonableness. But it is unnecessary to decide this application on the question of occupation rent in view of the further point, laches.
14. In my judgment it is hard to imagine a clearer case for laches. Mr Caddick accepts that the length of the delay in the defendant asserting his claim is a relevant matter. He points out that the number of years referred to by the judge in the passage which I have cited from paragraph 42 of the judgment is measured by reference to the commencement of proceedings as distinct from the first formal demand, but there can be no doubt that the delay is extraordinarily long. But delay in itself, he rightly says, is not enough. What must be shown is that it would be inequitable for the defendant to be allowed to assert his claim. He accepts that prejudice is the primary ingredient in considering whether it is inequitable, though he submits that that is not the only matter to be taken into account. He complains that the judge, when saying that the claimant was unable to dispute the facts alleged by the defendant that go to the heart of the case, did not set out what facts were alleged by the defendant which Cecil or Arthur could have disputed and what Cecil or Arthur could have said to dispute them. The force of this criticism is, in my view, lessened by the form of the judgment note which I have. Although the judgment is described as having been handed down, it is obviously an incomplete note of the judgment which was delivered orally by the judge and taken down by the claimant's solicitors. But no attempt appears to have been made to obtain the judge's approval of the note or to see whether the judge himself had a written judgment which he was reading. I cannot be certain that I have the full or accurate note of the judgment before me.
15. In any event, it is tolerably clear to my mind what the judge was saying. He was proceeding at this point on the footing that the defendant was entitled to an occupation rent. In other words previous findings did not necessarily apply to this part of the case. The judge was saying that the allegations by the defendant as to what he and Cecil and Arthur agreed, or what he or Cecil or Arthur said, or what each of them indicated would have happened, could not now be refuted by direct evidence from Cecil or Arthur, as they were dead. It is simply speculation as to what might have been said, and the judge could not, of course, make any findings to that effect. A person taking laches as a point by way of defence is not to be denied that defence merely because the judge made other findings which were dismissive of the claim being made.
16. In my judgment, it is plain that had proceedings been commenced promptly Arthur and Cecil might very well have given a full account of why it was that throughout this lengthy period between 1974 and 1985 no rent was paid by Cecil, notwithstanding, it appears, some request by the defendant for rent. The claimant was to my mind manifestly entitled to the dismissal of the counterclaim in view of the long delay, which continued until after both Arthur and Cecil were dead. Nor do the other factors which Mr Caddick submits should be taken into account seem to me to lead to the conclusion that there was no laches. He points to the fact that the property was in the ownership of the family and says that the time to make the claim was when the property was sold. I have to say that I do not agree. It seems to me that anyone seeking an equitable remedy such an as occupation rent must act promptly and must assert his claim in an effective way. He also points to the fact that the defendant in joining in the purchase of Leonard's interest bought a substantial investment for that time and received no benefit immediately. But it is to my mind clear that by acquiring a greater interest in the property, the defendant was in a position to benefit correspondingly. He was in a position to seek the sale of the property at any time. Cecil had no entitlement to continue to occupy the property alone, but the defendant did nothing.
17. I therefore conclude that none of the factors urged by Mr Caddick against the judge's conclusion that there was laches has any real prospect of succeeding on an appeal. It therefore follows that I must refuse this application.
Order: Application refused.