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
BROMLEY COUNTY COURT
(HIS HONOUR JUDGE DAVID MITCHELL)

		Royal Courts of Justice Strand London, WC2
		12 June 2003

Thursday, 12 June 2003

1. LORD JUSTICE SCHIEMANN: Buxton LJ will deliver the first judgment.
2. LORD JUSTICE BUXTON: As the judge observed this case is an object lesson in what happens when friends fall out and when legal advice is not sought at a time when complex legal transactions are being entered into.
3. The case concerns three acres of land at Detling in Kent, which were purchased by the claimant (now respondent) Mr Alfred Lewis Wilkie in 1972 for the sum of some £2,000. Mr Wilkie conducted there a pig farming business. At least in its latter condition the land also contained a number of buildings, many of them derelict. In about 1982 Mr Wilkie discontinued that business and met Mr Redsell, the appellant in this court (defendant in the court below). Although the factual history is in a number of respects obscure or disputed, it does seem possible to say that Mr Redsell used the workshop on the premises for repair of vehicles (it is disputed as to whether or not he paid rent or merely provided services in kind to Mr Wilkie for that purpose). The activity on the site appears to have been conducted in breach of the planning requirements; and for a time Mr Redsell lived on the site in a caravan, again apparently in breach of planning regulations. It is a feature of this case throughout that neither of the protagonists have paid any regard whatsoever to the requirements of planning law or to their responsibilities to the Local Authority or the local community.
4. In 1988 an agreement was entered into between Mr Wilkie and Mr Redsell. They did not have professional advice and the agreement was not documented. It was a substantial matter of dispute at the trial what the terms of that agreement had been.
5. Mr Redsell contended that he agreed to buy a substantial and defined part of the land extending to about 90 per cent of it, and described as the red land, for the sum of £30,000. The position taken by Mr Wilkie varied during the litigation but his eventual position was that the agreement was that he and Mr Redsell should "share" the red land, whatever that expression might mean, again for a consideration of £30,000.
6. It may appear surprising that Mr Redsell was willing to pay £30,000 either for an outright interest or for a share in land which was agreed in the evidence to be only worth some £4,500. His explanation at trial was that he intended to build a house on the land and, by concealing its existence from the planning authorities for a period of four years, obtain de facto planning permission for that building. Thereby the value of the land would be enhanced, a matter that enters into the issues in this appeal at a later stage.
7. I should, however, perhaps say, though only by way of footnote since the matter was not explored before us, that there was some disposition in the exchanges earlier in these transactions (though not before this court) to assume that once the four years had expired whoever it was who controlled the land would have a more or less free hand in altering or replacing the building without the inhibition of planning permission. That view, if it was held, was a misunderstanding of the requirements of planning law, requirements have most recently been explored in the House of Lords in Sage v Secretary of State [2003] UKHL 22.
8. The judge found in terms (to which I shall have to return) that the agreement had been as Mr Wilkie claimed for the sharing of the red land - the consideration being the payment of £30,000, as both men alleged.
9. That was in 1988. Between January and November 1990 Mr Redsell was in prison for offences of handling stolen vehicles, offences apparently committed during his occupation of the land.
10. Soon after Mr Redsell's release from prison Mr Wilkie pressed for payment under the agreement. The judge found that the position was as set out by him in paragraph 21 of his judgment:

"Soon after release from prison in November 1990, Mr Redsell promised to pay the £30,000 by means of a car at an agreed valuation of £3000 and the balance at £500 per month. After 2 instalments he paid no more, and was in breach of the agreement as to payment. Subsequently and as [a] result the Claimant treated the agreement as at an end."

11. At about the same time Mr Redsell constructed a house on the land, using as its basis a disused pig-sty. How much he is expended in that building and what the amenities of the house were, and indeed are, are all in dispute. As a result of that action Mr Wilkie, as the judge found in paragraph 17 of the judgment, asked for rent in the sum of £60. The judge was not clear whether it was per week or per month. However Mr Redsell said that he could not afford to pay any rent and no rent was ever paid.
12. The judge's findings as to the arrangement between the two men were set out by him in paragraph 14 of his judgment. He said this:

"I find that the agreement reached by the parties was to share the land as joint owners with Mr Wilkie retaining the land shaded white..."

That was a comparatively small part of the premises that was not contained within the red land. The judge continued.

"I agree Mr Wilkie allowed Mr Redsell to build a house and once built allowed Mr Redsell to treat it as his own. In my judgment that is because neither of them had thought through the consequences of their agreement and neither of them, Mr Redsell in particular, had taken steps to have the matter regularised in a proper legal manner."

13. These present proceedings arose after the two men had fallen out with each other, a situation that appears to have commenced in 1995.
14. Mr Redsell in 1998 sought to impose a caution on the land to protect his own alleged interest. That is again something to which I shall have to return. As a result of that Mr Wilkie brought these proceedings in which he claims possession of the land. His position is that so far as any contract existed it had been repudiated by reason of non-payment on the part of Mr Redsell.
15. Mr Redsell counterclaims for the enforcement of an agreement, preferably of the agreement alleged by him, but if not, then of the agreement found by the judge. The judge rejected all the claims on Mr Redsell's part and granted possession to Mr Wilkie. It is Mr Redsell who now appeals to this court.
16. I should first deal with the complaints made by Mr Redsell about the factual findings of the judge. Although not clearly so stated in the grounds of appeal, these claims sought to attack the judge's conclusion as to the terms of the contract, which I have already cited from paragraph 14 of the judge's judgment. That attack took the form of seeking to demonstrate that the judge was mistaken on some of the separate points on which he found in favour of Mr Wilkie's version; and therefore that his overall conclusion was vulnerable. The judge had said in introducing his conclusion:

"From all the above evidence I found that Mr Wilkie's case was supported by other evidence whereas on the whole Mr Redsell's was out of step with other evidence."

We were taken in detail, at least on paper, through the matters of which complaint was made. I trust that I will not be thought discourteous if I do not address each of those instances. I take that course because I am quite satisfied that overall the judge's conclusion cannot be interfered with; and, because of the view that I take of the law, the dispute as to the terms of the agreement between Mr Wilkie and Mr Redsell does not in the end affect the outcome of the appeal. Thus, first, there was evidence, albeit secondary evidence, directly about the terms of the agreement in the shape of letters written by Mr Wilkie to Mr Redsell when the latter was in prison, the terms of which were plainly inconsistent with Mr Redsell being absolute owner of the land. Mr Redsell retained those letters and did not protest about their terms. He claimed in his evidence before the judge that the position between the men that the letters presented was untrue, and in particular asserted that he had never paid any rent for the land. The judge did not believe that evidence.

17. Second the judge, having heard witnesses on both sides, including both the protagonists, formed a general view of the veracity of Mr Redsell. He said this, at paragraph 18 of the judgment:

"With regard to the honesty or otherwise of the Defendant he said he pleaded not guilty to the charges of handling stolen motor cars he was asked by [counsel for Mr Wilkie] whether he gave evidence. His first reaction was to say he could not remember then he said he refused to answer. [Counsel] then suggested his defence to the charge was he was one of a number of persons taking advantage of the land and in spite of being pressed all he would say was 'No Comment.' Whilst that may be within an accused's rights in a police station it is not open to a Defendant to refuse to answer a question properly asked in a civil court. It was just one of a number of pieces of evidence, to most of which I have already referred which leads me to the conclusion that Mr Redsell will say whatever is in his best interests at any given time with scant regard for the truth."

It is important to note that that latter conclusion was not based solely on deduction from the items of evidence which are challenged in this appeal, but first upon Mr Redsell's answers in relation to his crown court trial; and also on other matters, for instance his evidence about the letters (which is not a matter of challenge for us) and also his evidence about the statutory declaration that he entered into when he sought to impose a caution on the land. About that the judge said this, at paragraph 11 of his judgment:

"In it [the accused's] said his interest in the land went back to approximately 1980. He then goes on to say 'I first worked on the land paying rent to Mr Wilkie.' When asked about that, which was inconsistent with his testimony, he said it was a mistake on the part of Mr Lowe [the solicitor concerned with taking the declaration]. The Statutory Declaration continues 'We then became partners in the land.' When asked by me what he understood by that phrase he said he understood it to mean sharing the ownership of the land. When he was asked about that he said he and Mr Wilkie had never been partners in the land and he was not taking much notice whilst [the solicitor] was writing this down. It continues: 'Approximately five years ago we agreed orally between ourselves that in view of the money I have spent he would transfer title. I gave him a further cash sum of £5,000.' [Counsel] asserted in cross-examination that was a completely different account from the one now being advanced."

It should be noted in connection with the timing stated by Mr Redsell in that declaration that the statutory declaration was made in 1998; so his dating of the agreement of sale was, on any view, wrong by some five years.

18. The judge reached this conclusion about the statutory declaration in paragraph 18:

"So far as the statutory declaration is concerned I have formed the view that the first part represented the truth of the situation and the second part was entirely dishonest to bolster Mr Redsell's case and ensure a caution was registered."

Mr Redsell's case was that he did not really attend to what the solicitor was putting in the statutory declaration. But the solicitor must have had instructions from Mr Redsell, and the judge was fully entitled to disbelieve Mr Redsell's account in respect of the statutory declaration that he gave in the witness box.

19. In these various circumstances it is clear to me that it is quite impossible for this court to go behind the findings made by the judge.
20. Third, and in any event, all of this complaint only goes to the question of whether the agreement was for the transfer of the whole interest in the red land to Mr Redsell, or only that Mr Wilkie and Mr Redsell should share an interest in the red land. For reasons which I shall develop, on neither basis can Mr Redsell obtain relief, as indeed the judge found.
21. The relief sought in this court by Mr Redsell is set out in section 9 of his grounds of appeal. He seeks the following:

"1. A Declaration that the claimant holds the red land on trust for the defendant absolutely.

2. Alternatively, a declaration that the claimant holds the red land on trust for himself and the defendant in equal shares on terms that the defendant and his family have and enjoy exclusive possession of the dwelling thereon and its curtilage unless and until the defendant disposes of his interest in the red land.

3. Further or alternatively, an order that the contract made between the parties in 1988 whereunder the claimant would convey the red land to the defendant be specifically performed, the defendant paying the balance of the purchase price, namely £26,000 and the claimant transferring title to the red land to the defendant.

4. Further or alternatively, an order that the contract made between the parties in 1988 whereunder the claimant would convey a half share in the red land to the defendant be specifically performed, the defendant paying the balance of the purchase price, namely £26,000 and the claimant transferring title to the red land in to their joint names to be held on trust for them in equal shares on terms that the defendant and his family have and enjoy exclusive possession of the dwelling thereon and its curtilage unless and until the defendant disposes of his interest in the land."

It will be observed that declarations 1 and 3 depend upon the version of the contract contended for by Mr Redsell; and declarations 2 and 4 depend upon the version of the contract contended for by Mr Wilkie and found by the judge.

22. All of the relief seeks a proprietary interest, either as a beneficial owner under a trust or as legal owner. The judge rejected such relief, even on the basis of a contract as found by him for the sharing of the land, on two grounds. First, in order to obtain specific performance Mr Redsell must show he is ready willing and able to complete his side of the contract, by paying the purchase price, as indeed the relief sought by him as just set out asserted that he would do. In truth, however, he has never offered to do so, has not done so now, and there is no evidence that in fact he could have performed that part of the contract. Second, to seek an equitable remedy (as these remedies are) Mr Redsell must come to the court with clean hands.
23. I deal with those contentions in turn. First, as to completion, the judge found that there had been no initial payment and that Mr Redsell had only paid a small amount later and under pressure. I have already set out the findings the judge made in his paragraph 21 to that effect.
24. Mr Denman, counsel for Mr Redsell, argues before us first, that there was no evidence that Mr Wilkie did in fact treat the agreement as being at an end; and secondly, that in any event he waived any right to treat the agreement as at an end because of non-payment. He agreed to the small amounts by permitting Mr Redsell to build the house on the red land. There is, with respect, some force in both of those arguments, but they are beside the point so far as the issues in this court are concerned. What Mr Redsell claims is specific performance now by order of the court. He must be able now to provide the counterparty to the conveyance that he wants the court to order. The judge specifically asked him about that and got no satisfactory answer. The judge said this in paragraph 23:

"... I asked Mr Redsell during his evidence whether he had the funds available to complete the purchase, expecting him to give some indication that he had approached the bank, for example, but he gave no indication as to how he might raise the money and simply insisted he would be in a position to complete the purchase. That assertion without any evidence to support it in the context of the findings I have made about Mr Redsell's veracity is not sufficient for me to be satisfied he ready, willing and able to complete."

We also asked Mr Denman if his client was in a position to complete. He was not able to give us that assurance.

25. The best that Mr Redsell can do is to say that, if he is granted specific performance, then he expects to be able, because of the enhanced value of the land, to raise funds to meet the balance of the £30,000. I leave aside the question whether £30,000, or some sum considerably enhanced by interest, would now be the right price. Mr Denman argued that there were no terms or expectations in the contract as to when the £30,000 would be paid. I have to observe that that certainly was not the evidence of Mr Wilkie in a passage that I shall quote, who was pressing for payment as early as 1991. But in any event the claim cannot stand. First, the assertion that the money will be available is speculative. There is no evidence to support it and the judge was right to reject it. Second, in any event, the claim was of a bootstraps nature: the court, it is said, should give relief so that Mr Redsell can fulfil what is a precondition to obtaining that relief in the first place.
26. The inability to complete now, quite apart from the sequential refusal to make any attempt to complete over the 15-year term of the contract, is fatal to any claim for a specific performance. It is also in my view fatal to the alternative way in which the claim is put, in terms of a trust for the benefit of Mr Redsell. First, that is only another way of expressing the substance of the specific performance claim. Second, recognition of a trust would itself be an equitable remedy, which demands that he who seeks equity should do equity, by being ready to perform his part of the bargain on which he relies.
27. Before the judge Mr Denman sought to resist these conclusions by relying on the building of the house, and the judge's finding that:

"Mr Wilkie allowed Mr Redsell to build a house and once built allowed Mr Redsell to treat it as his own."

He relied then and before us on two cases relevant to this contention. The first was Crabb v Arun [1976] 1 Ch 179. That case applied the well-known, but far from easy, principle in Ramsden v Dyson, where Scarman LJ, adopting the statement of Lord Kingsdown in Ramsden v Dyson, said at Ch 194:

"'The rule of law applicable to the case appears to me to be this: If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord,' - my italics - 'that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation.'"

28. This doctrine cannot, however, be used to support the relief that Mr Redsell claims in terms of a proprietary interest. First, Mr Wilkie's evidence was always that he "stood by" only on terms that he will indeed receive his £30,000. That is apparent from a short passage of evidence, in fact drawn to our attention by Mr Denman, when Mr Wilkie was being cross-examined on the first day of the trial. At page 22 of the transcript he gave this answer:

"He asked me then if he can carry on and build a house. I said, 'yes.' But I still wanted my money."

Counsel then asked him:

"Once you got the £30,000, presuming he paid you the £30,000, who was going to own the land then?"

Answer: "We were in joint partnership."

Mr Wilkie went on to say:

"The actual building would be his because he put it up".

That, in my judgment, is a layman's reply in circumstances where Mr Wilkie had made it quite clear in an earlier reply that he still wanted the £30,000, house or no.

29. "Standing by" was therefore distinctly on terms. Even if that was not so, in the absence of any evidence of a positive waiver of his contractual rights by Mr Wilkie it would necessarily still be a condition of the relief sought under the doctrine of Ramsden v Dyson, in terms of proprietary interest in the land, that Mr Ramsden would be able to complete.
30. The other case relied on by Mr Denman is William v Greatrex [1957] 1 WLR 31. The case itself in fact is nothing to do with the issue with which we are concerned because it is a case on laches, a complaint that is not taken in this case against Mr Redsell. It concerned a contract for the sale of building plots and it is the nature of the use of the plots that is of importance. The purchaser went into possession having paid his deposit, started the work, built a house as the contract envisaged, but was then ordered off. Ten years later he sought specific performance of the contract. Paragraph 3 of the headnote reads as follows:

"... the purchaser, having paid the deposits on and having entered into possession of the land, became the equitable owner of the land under a contract binding on the vendor such that the vendor could not now object to specific performance on the ground of laches unless he could show that he had not acquiesced in the purchaser's acts of possession or that the purchaser had abandoned the contract; and that the evidence showed sufficient acquiescence by him and no abandonment by the purchaser. Accordingly, despite the lapse of time, the purchaser was entitled to specific performance on payment of the balance of the price and interest thereon for the intervening years."

The latter part of that headnote is not, so far as I can see, to be found specifically set out anywhere in the judgments. But I have no doubt that the learned editor extracted, and correctly extracted, it from the judgment of Lord Denning at page 36 of the report where he said this:

"Once the purchaser went into possession of the land, having the contractual right to be there, he not only had an equity to be there, but also the benefit of a contract to sell him these two plots. That was not only an equity: it was an equitable interest in the land. He was in a sense the equitable owner of the land. So long as he was in possession of the land, he does not lose his rights simply by not proceeding at once for specific performance."

As equitable owner the purchaser has the right to have the contract completed; but that means completion of the contract on both sides, as Lord Denning quite clearly envisaged. That again is something that Mr Redsell cannot do, or at least is not offering to do, and therefore he is in a completely different position in that respect from the claimant in Williams v Greatrex.

31. Those considerations suffice to dispose of the relief that is sought before the judge and before us, but the judge also relied on a further ground - lack of clean hands on the part of Mr Redsell.
32. The judge's findings of fact in relation to that point are not separately expressed and it would have been, I have to say with respect, more helpful to the court if they had been, but I am prepared to assume that he accepted the submissions reported by him in paragraph 18 of the judgment, which I have already read, that Mr Redsell had been evasive about the defence which he offered at the crown court, and further it was to be assumed that he had there sought to distance himself from any ownership of or responsibility for the land on which the various vehicles in respect of which he was prosecuted were to be found. There was nothing in Mr Redsell's evidence or in the submissions in this court to counter that assumption.
33. It is accepted in this connection that a relevant formulation of the rule is that to be found in the judgment of Scrutton LJ in this court in Moody v Cox [1917] 2 Ch 71. Scrutton LJ said at pages 87-88:

"...equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an immediate and necessary relation to the equity sued for."

34. In my judgment this is to a large extent a matter of judgement for the trial judge, as to whether the conduct of the person who seeks the equitable remedy does indeed have an immediate and necessary relation to the equity sued for. In this case the judge did not fall into the trap of thinking that just because Mr Redsell had committed criminal offences that barred him from the relief. But for my part I would think that if the equity sued for is, as it is here, to cause the court to enforce an interest in land; and if the claimant has sworn to another court that he has no such interest in the land; then that latter step may disentitle him from seeking equitable relief to establish a position different from that which he has previously sworn to. The point is not that he has directly misbehaved towards Mr Wilkie, but that he has abused the facilities of the court in relation to the very matter in respect of which he seeks relief. In the circumstances of this case I consider that the judge was entitled to take the view that that in itself disabled Mr Redsell from equitable relief.
35. Further, the actual decision in Moody v Cox does not help Mr Redsell. The decision was that the fact that the contract sued on had been obtained by bribery did not disentitle a party from obtaining equitable relief under it. But the objection to Mr Redsell's claim was not in relation to the nature of the contract or to the circumstances in which that contract was entered into, but in relation to his own conduct in respect of the claim that he makes under the contract.
36. I therefore for my part would uphold the judge's view also on the clean hands issue; but as I have emphasised it is not necessary to do so in order to uphold his judgment on other grounds.
37. There is one further matter. The court was initially attracted to the view that it was unfair that Mr Redsell should lose his possession of the land, leaving behind a house that, however defective it was alleged to be, would enhance the value of the land in the hands of Mr Wilkie, when Mr Wilkie had, as the judge found, stood by and allowed the house to be built. We wondered whether those considerations might lead to the creation of an equity, not in terms of the proprietary interest sought by Mr Redsell, but at least in the nature of the licence to remain of the type broadly envisaged in Ramsden v Dyson. Careful scrutiny of the pleadings and of the submissions before the judge indicated that a plea to that effect had been included in the relief sought, though very much as a fall-back from the main relief. The judge did not refer to this in his judgment, and no complaint was made of his failure to refer to it in the grounds of appeal. We however invited Mr Denman to consider whether he wished to amend his grounds of appeal to bring that argument before this court, and he did indeed make such an application.
38. Having had the benefit of more mature consideration on the point, and of the submissions of Mr Baldock, we refused the application. We did so not merely on grounds of lateness, but for more substantial reasons. Those are as follows. First, the essence of Ramsden v Dyson is that the court will intervene to impose terms that do justice to both parties. It was conspicuous that the various orders suggested by Mr Denman to accommodate his client on the land made no reference to any payment on his part. A gratuitous licence plainly would not be equitable. Nor would it be an easy task, and certainly not one that this court could undertake, to determine what the proper charge should be for the right to remain in occupation.
39. Secondly, as Mr Baldock pointed out, although it could be said, and the judge found, that Mr Wilkie "stood by", his evidence already set out was that he stood by in the clear expectation and demand that his £30,000 was to be paid. Therefore in this case also equity could not be done between the parties unless Mr Redsell completed his side of the bargain, particularly bearing in mind that £30,000 was the price he had been prepared to pay for the land on which he was to build a house. Here again I was not attracted to the argument that equity would be served by Mr Redsell being given his rights now and paying for them later, particularly because, if he acquired only a personal licence to remain, his ability to raise finance against his interest would be even more problematical for him than his ability to raise finance against an ownership interest.
40. Third, even on the basis on which the case was put to him, the judge was sceptical as to whether specific performance was workable. He set out his doubts at paragraph 22 of the judgment. While that view might not necessarily have been correct in relation to a situation where there was to be a pure and clear-cut ownership relationship, it clearly raises very cogent considerations in regard to any sort of licence arrangement: with the need to negotiate a wide range of covenants; continued relations between two men between whom there is plainly a very high degree of friction; and potential problems with regard to land use and the enforcement of planning requirements. In that connection our attention was drawn to the fact that Mr Wilkie was in debt to the local authority in the sum of £14,000 incurred by the local authority when they cleared the land of the debris left by what was alleged to be Mr Redsell's unlawful car braking activities. That is but an illustration of the further problems that might await. There is no reason to think that any arrangement to be made, even if otherwise there was good reason for it, would be anything but unworkable.
41. Fourth, if, which is not appropriate, we were to investigate the overall justice of the matter, it is far from clear that Mr Wilkie will obtain a windfall so significant as to render it unjust that he should recover possession. We know nothing about the value of the house, save that the judge on the evidence that he had heard thought it of very poor quality. I have already pointed out that assumptions about the latitude granted to the owner of the land through the mere existence of the house with regard to further planning developments is extremely doubtful. What we do know is that Mr Redsell has been in possession of the land for nearly 15 years, paying off only a very small amount of his contract debts and rejecting Mr Wilkie's request for a separate rent in respect of the house. There would, at the very least, have to be a clear, indeed an overwhelming, case against a possession order for such a case to be raised at this very late stage. No such case has been demonstrated, and in my view it would be very unlikely to be demonstrable.
42. I would therefore dismiss this appeal, both in respect of the matters that were argued before the judge and in respect of the further matter that was gratuitously introduced into it on the initiative of this court.
43. LORD JUSTICE DYSON: I agree.
44. LORD JUSTICE SCHIEMANN: I also agree.
(Appeal dismissed; payment of costs by the appellant who was in receipt of services funded by the Legal Services Commission; no determination of the liability of the defendant; the amount to be paid by the defendant by the above order for costs should be determined by the Costs Judge within three months to the date of receipt of this order; possession to be granted six weeks from today).