Case No: B2/2011/0960, 1409-1411, 1440, 1417-18, 1414

Neutral Citation Number: [2011] EWCA Civ 1781
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BODMIN COUNTY COURT
(HIS HONOUR JUDGE VINCENT)
Royal Courts of Justice
Strand, London, WC2A 2LL

Tuesday 22 November 2011

Before:

LORD JUSTICE PILL
LADY JUSTICE ARDEN
and
LORD JUSTICE MCFARLANE

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Between:

	KERDENE LTD	
Respondent	
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WATKINS & ORS 	

Applicants	

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(DAR Transcript of 
WordWave International Limited
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Mr Elliott appeared on behalf of Mr Hancock.
Mrs Weston appeared on behalf of Mr Wilkinson.
Mr Morland and Mr Turner appeared in person

Mr A Johns (instructed by Shoosmiths Solicitors) appeared on behalf of the Respondent.
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Judgment

Lady Justice Arden:

1.	We have before us a number of appeals against the order dated 14 December 2010 of HHJ Vincent sitting in the Bodmin County Court.  That order concerns the payment of charges by owners of bungalows in the Merryn Holiday Village.  The covenants to pay charges are contained in the conveyances of their predecessors in title, or indeed in some cases in their own conveyances.  The appellants fall into roughly three groups: (1) the original purchasers from Mr Berrin, the original vendor, namely Mr and Mrs Bone, Miss Belton, Mr Russell and Mr Rabey; (2) the subsequent purchasers whose predecessors in title purchased a plot from St Merryn under a form of conveyance known form A: Mr Waiton and Miss Sell and Mr Morland as to part of his holding; and (3) the subsequent purchasers whose predecessors in title purchased a plot from St Merryn under a form of conveyance known as form B, namely Mr Hancock (represented by Mr Elliott of counsel), Mr and Mrs Turner, Mr Wilkinson and as to other properties Mr Morland again. 

2.	Mr Johns, who also appears before us, represented the respondent, Kerdene, which has succeeded to the rights of St Merryn, before the judge.  There were a number of the owners of particular bungalows.  The judge had to hear a number of different claims together.  In this difficult situation the judge decided to deal with the matter as he saw in the best way available to him by hearing a preliminary issue relating to the position of purchasers who were not original purchasers from Kerdene or its predecessor in title and he resolved that preliminary issue utilising the benefit and burden doctrine for positive covenants sought to be enforced against subsequent purchasers.  He made no findings of fact about the availability or non-availability of the facilities mentioned in the conveyances before him.  Furthermore, he took those conveyances to be in the form which I have called form A.  In fact as it turned out there was also form B as I have mentioned.  The judge took the view that there was no difference of substance between that form and form A.  He invited submissions on that basis from all the individual appellants.  Needless to say, the parties before him with form B conveyances put no points to him.  Indeed, as we understand it, they may not have appreciated that they had form B conveyances and certainly not appreciated whether there was any point arising out of the wording of form B.  The judge, having conceded a further argument on form B, proceeded to make orders for the payment of charges or in some cases for further hearings to fix the scale of charges.  He did not make findings as to what facilities were available, and accordingly this court does not know whether the appellant would be able to resist the charges or the argument that they have had the benefit of the covenant to which the payments were related. 

3.	Lord Justice Patten has given permission on paper in the same form to each of the appellants in this case with respect to “correlation and non-use or non-availability of all the first schedule rights”.  I am not going to go into two sets of conveyances to set out those rights, as they can be found in the conveyances and this judgment is dealing only with procedural matters.  The appellants who received permission and who remain in these proceedings with a live appeal were Mr Hancock, Mr Wilson, Mr Morland, Mr and Mrs Turner, Mr and Mrs Russell, Mr Rabey, Mr Dalton, Mr and Mrs Bone, Mr Waiton and Miss Sell.  There were other appellants to whom permission was given who have since settled, namely Mr Watkins, Mr and Mrs Walker and Mr Lyndon.  

4.	When Lord Justice Patten gave permission he was not aware of the differences in the forms of conveyance which have since emerged, and in those circumstances the grant of permission did not relate to the form B conveyance.  As I have said, the appellants, many of whom were not represented below, were not aware of the differences between the forms A and forms B conveyance.  Mr Elliott of counsel appears today for Mr Hancock.  He originally appeared for Mr Watkins, who had a form A conveyance and was originally going to rely on a skeleton argument that he had drafted on behalf of Mr Watkins for the purpose of putting Mr Hancock’s case on this appeal.  Having considered the matter, Mr Elliott wishes to take whatever points are available on form B.  So would other appellants who also have the form B.  The difficulty for this court is that there may be questions of fact involved since the major difference relates to the question of a further covenant by St Merryn in form B to paint the covenantees’ bungalow every three years.  We do not know whether this covenant was performed and, if so, how often.  Mr Johns, for the respondent, says that this extra covenant cannot make any difference, but it was certainly a covenant of some value.  If it was not performed, it may have some impact on the question whether the appellant was bound by the burden or repayment provided for in form B.  Mr Johns submits that that point could go only to the amount of the payment.  While he may be right on that, we have not been taken to any authority.  The extra wording created a positive covenant on the part of St Merryn.  The payment overall for all the services provided under the conveyance is a relatively small one for each year, but it is not clear how it could be discounted to allow for the breach of covenant to paint the bungalow every three years or indeed whether the appellant has the right to fail to perform or to decide not to perform part of its obligations and to impose a scaled down financial burden on the appellants.  Nor is it immediately clear how those with form B conveyances would enforce the positive covenant against Kerdene and, if so, whether the lack of mutuality or the lack of availability to give up this right matters in this context.  Mr Johns has not come prepared to argue the form B points.  Nor do we have any skeleton on the form B arguments from Mr Elliott, on whom naturally the unrepresented parties have relied.  In practical terms, as well as for the lack of a suitable grant of permission, we cannot deal with form B.  In my judgement if we cannot deal with form B we should not deal with form A either, since the arguments are necessarily interwoven.  

5.	The right order for this court to make in all the circumstances is in my judgement, in the complex situation that has emerged, to stay the appeals now brought before us by the subsequent purchasers whose predecessor in title purchased the property from St Merryn under the form of conveyance known as form A and indeed those who purchased under the other form.  I would direct that the persons who have the form B form of conveyance should be at liberty to apply to the judge, that is HHJ Vincent, to determine whether, in the events which have happened, any of those appellants is liable to Kerdene under form B.  I say this because, in my judgement, they did not have a proper opportunity to present their arguments on this point to the judge.  As I have said, the judge was faced with a very difficult situation and the position, as we can see it from the transcript, was that there was a long discussion between the judge and the defendants’ counsel and that is quite natural because the appellants with form B, if they had known they had form B, would not have seen the force of any argument which is available to them.  In my judgment, it is appropriate in those circumstances that the judge should look into the matter and, if this matter is to proceed, that we should have the benefit of his further judgement on the form B conveyances. 

6.	On any further hearing before the judge, the judge will be able to make such findings of fact as he thinks fit.  As I have said, I would specifically give liberty for the appellants to seek a ruling “in the events which have happened”. This will enable the appellants to place before the judge evidence as to the relevant factual matters on which they would wish to call evidence and to ask the judge to admit that evidence and to make findings on it.  The judge will then be in a position to decide what evidence he is prepared to hear and what findings he is prepared to make.  However, in my judgement, the judge should make findings which are relevant to the issue before him.  It is unlikely to be satisfactory that this court should be asked to determine some legal issue about form B in the future in circumstances where it has to make some assumptions as to the facts.  This court does not generally make decisions on matters which are speculative or academic.  Findings may sometimes have to be made, even though they only have a relevance if the trial judge was wrong on the legal conclusions which he draws.  Preliminary issues are often well-intentioned attempts to save costs and to come to a conclusion on a case, but sometimes they can also be treacherous.  When the judge is considering this matter, if he has to consider it in future, he should also consider whether it is necessary to come to any conclusion as to the true interpretation of any expression or part of a relevant covenant in the form B conveyance.  It may be that there are assumptions being made as to the meaning of some of the phrases in form B. 

7.	Now it may be that neither the judge nor this court need to be troubled by any further application in these matters.  There is a real risk - I cannot emphasise that too much - of substantial adverse orders of costs being made if these matters are not settled.  The respondent has informed this court today that it is prepared to undergo mediation of the appellants’ claim and we would strongly recommend that the appellant should take this course.  It is, of course, a form of dispute resolution which does not involve a court decision and the exact terms of the mediation would have to be agreed.  We understand that some of the other appellants have reached agreement with Kerdene as a result of mediation.  The Court of Appeal itself has an excellent mediation service and particulars can be obtained from the Court of Appeal Office or the associate in this court, but I would not exclude any more local or more convenient service of mediation which may be available in the West Country.  If the issue described above about form B has to be referred to the judge, the parties can seek to reduce or minimise the costs by seeking to agree relevant facts to be placed before the judge.  This matter obviously has a long history and the fact-finding could well be costly.  The parties should give every consideration to saving costs by coming to some reasonable agreement. 

8.	One of the matters with which this court must now deal is the position of the original purchasers.  It is to them that I now turn.  They are not affected by the “correlation” argument for which Patten LJ gave permission.  In those circumstances Mr Johns invites us to dismiss the appeal brought by them, with no orders to costs.  However, Mr Morland points out that, if the matter goes back to the judge and the judge makes findings of fact about the non-availability of the facilities, it may be that even the original purchasers will wish to raise arguments with this court.  It is possible, without deciding this point, that those arguments would be within the second limb of the permission given by Patten LJ.  That would have to be considered if the matter arose.  In those circumstances I would not dismiss the appeal by the original purchasers today,, but I would strongly urge the original purchasers to consider their position as they do not have the benefit of the arguments raised by the first permission given by Patten LJ.  At the moment no costs are sought against them by Kerdene, but they may be sought if this matter goes further.  In addition, if the matter can be resolved the original purchasers as will the other purchasers would have the benefit of clarity as to their legal position, which would obviously be important should they wish to dispose of their bungalows.  I would emphasise the burden of costs.  Costs can always be a very substantial burden for individual litigants.  

9.	We are invited to order that Mr Hancock should pay the costs of today if my Lords agree we will not be able to have a full hearing of the appeal.  This application is made by Mr Johns on behalf of Kerdene.  Mr Elliott for Mr Hancock was originally about to argue the appeal on behalf of Mr Hancock on the basis of form A.  Mr Johns submits that Mr Elliott having changed his stance, Mr Hancock should pay the costs of today.  Because he changed his position the other appellants can no longer rely on his presenting the legal case on this appeal with respect to form A.  I do not consider that it would be just to deal with the costs thrown away today.  The background is undoubtedly complex.  Mr Johns made certain submissions to the judge about form B on the basis of which the judge gave a strong steer to the individual parties before him that there was no difference between form A and form B.  For the reasons given, I do not consider that this was very satisfactory, and in the circumstances I do not consider that the matter of costs is so clear-cut as to make it evident that we should deal with the costs of today’s hearing which have been thrown away.  I would reserve all the costs of these appeals until the next hearing unless there is a further order in the meantime.  I will come back to the question of costs at the end of this ruling. 

10.	The individual appellants have attended court today.  I would like to say that it may be that the matter can be dealt with in future without all of them making a personal attendance at any further court hearing in London.  I would certainly wish to save any expense that can reasonably be saved.  In some circumstances it is possible for this court to arrange a video-link hearing with some more convenient location.  In the circumstances I would direct that, if any of these appeals are to be restored to hearing, there should first be a case conference conducted either in open court or on paper or by video link with a single Lord or Lady Justice who can then give directions as to the conduct of the hearing of the appeal and consider whether some aspects of it can be dealt with on paper or by a video link hearing if that is sought.  

11.	In short, I would direct therefore that the appeals be stayed for the time being. It is unusual for this court to have pending any matter which has already been called on for hearing and it is not satisfactory to leave matters in that way for any extended period.  I would therefore direct that the respondent should make a written progress report to the court with copies to each of the other parties by not later than 7 April 2012 and that it should be addressed to myself so we can consider what further directions to give with respect to this matter if it is still outstanding.  If, however, the claims of any individual appellants are settled, I would direct the respondent to write to the court and inform the court of that fact as soon as it happens.  

12.	If matters progress so that the costs to date are the only outstanding matters, I would direct that the issue of who bears those costs should be dealt with on paper by this constitution.  If, however, there is a further oral hearing in this case on any of these appeals, obviously there will be further costs and that course will not necessarily be convenient.  In those circumstances I would direct that the costs be dealt with by the further constitution hearing these appeals.  I would further direct that some one or more members of this constitution today should, if possible, be members of the constitution for that further hearing. That is the end of my ruling

Lord Justice Pill:

13.	I agree and would only add this.  If I understand my Lady’s reasons, they all relate to the context within which this court is seized of these various cases, that is the narrow confines of judge’s ruling and the narrow grounds upon which Patten LJ gave permission to appeal.  I make that observation because, in the course of mounting the various appeals before us, a number of litigants in person have sought to visit other parts of the case to challenge the representation order, for example to raise matters of misrepresentation.  As I understand, what has fallen from my Lady in the course of her judgment this afternoon does not relate to these matters and for my part those are not matters we are referring back to HHJ Vincent.  The process that is now set in train deals with the effect and interaction of the clauses within the various conveyance and nothing more.  If further steps are to be taken about other points, that is a matter for the various litigants and not the substance of the ruling that I support today.

Lord Justice McFarlane:

14.	I agree with both judgments.

Order:  Application stayed