England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		23 May 2007

1. MR JUSTICE BRIGGS: This is an application for summary judgment or judgment in default or interim injunctions pending trial in proceedings seeking the cancellation of notices registered by the first defendant Anderson Wharf (Hull) Limited against the registered titles to a development site in Kingston Upon Hull, of which the claimant, Anderson Antiques (UK) Limited is the registered proprietor. The site is known as Anderson's Wharf. I will describe it as "the site".
2. The claimant also seeks an injunction restraining the defendants from applying for registration of any other entries at HM Land Registry in relation to the site and secondly, damages to be assessed for registration without reasonable cause, contrary to the statutory duty in section 77 of the Land Registration Act 2002.
3. The second defendant, Phillip Robert Akrill, is the sole shareholder and director of the first defendant, which is a single purpose vehicle company with nominal assets, formed for the acquisition and development or beneficial exploitation of the site.
4. The first defendant seeks to justify its notices on the basis of an alleged oral agreement to purchase the site from the claimant for £2 million made on 12 or 13 September 2006 in the course of a visit by the claimant's sole director, a Mr Anderson, to the home of the second defendant, Mr Akrill, and subsequent detrimental reliance on that agreement by the first defendant, sufficient to give rise to a proprietary estoppel or constructive trust in the first defendant's favour, relying upon the exception to the requirement for written contracts in section 2(5)(c) of the Law of Property (Miscellaneous Provisions) Act 1989.
5. The claimant submits, firstly, that the defendant's case is, when measured against the contemporary documents (mainly those emanating from the first defendant's own professional advisors), simply incredible, so that under CPR rule 24 the defendants have no reasonable prospect of succeeding in their defence, i.e. no more than a fanciful prospect. Secondly, the claimant submits that even if the defendants' assertions were to be believed, the first defendant's conduct after September 2006, in particular, in bidding £1.55 million and later £2 million for the site when the claimant put it out to tender, is such that there is no reasonable prospect that the court would find a constructive trust or proprietary estoppel in its favour.
6. I must now describe the incontrovertible facts and those factual matters which are in dispute. Prior to 2006 there had already been an abortive written contract for the purchase of the site by the first defendant from the claimant for £1.2 million, leading to a notice to complete, and rescission proceedings by the claimant in April for the unpaid balance of the deposit from the defendant. There had also been proceedings instituted in May 2005 by the claimant for redemption of a charge of the site by the claimant to the first defendant as security for a loan. Both those sets of proceedings were compromised by a Tomlin Order on 2 August 2005, providing for redemption of the charge and its cancellation and for removal by the first defendant of certain entries at HM Land Registry, which had been put there to protect the contract.
7. I turn to the meeting which it is now common ground occurred on 12 September. It is also common ground that a late night meeting did occur on that day between Mr Anderson and Mr Akrill, when Mr Anderson arrived unannounced at Mr Akrill's house. It is also common ground that drink flowed on that occasion. There is a complete conflict, otherwise, as to what happened. The defendant's case is that there was an oral agreement for the first defendant to buy the site from the claimant for £2 million less an informal discount of £100,000 referable to the added value contributed by the first defendant's works on development plans to date, with a formal written contract to follow after the first defendant had done further work on the development and its funding was in place.
8. In that context, I read the following extract from Mr Akrill's witness statement, describing that event at paragraph 29 of his first witness statement, where he says:

"I explained [that is, to Mr Anderson] that there was further work to be done in reviewing the previous scheme, to bring it into line with the new legislation that had come into effect to provide for disabled access to all parts of new buildings. In the previous tender drawings and specifications disabled access was only required to the ground floor areas. In addition, new Building Regulations standards had come into effect which required amendments to the specification. There were further discussions to be had with the Harbour Master regarding the instruction of the river wall under the building agreement with the Local Authority. I told Mr Anderson that there would therefore need to be more significant investment before we could contract, as AWHL would want to get this all organised, and to get its funding in place before AWHL could enter into a formal written contract at that level.

"At that level", of course, means for £2 million.

9. The defendant's case as to what happened is supported by Mr Akrill's then fiancée, now his wife, who said she overheard the conversation, although she was not in the same room at the time. The claimant says that the only discussions about the site on that occasion consisted of Mr Akrill saying he could match a £1.55 million offer which he had heard the claimant had been offered for the site and after being told by Mr Anderson that the claimant would never sell the site to the first defendant, Mr Akrill said he believed that the first defendant had a hold over the development for two years. Mr Anderson, in his evidence, says that Mr Akrill told him that his fiancée was asleep in bed upstairs.
10. A contemporaneous attendance note made by a Mr Matthew Fletcher, a partner in the claimant's solicitors, Messers Gosschalks, suggests that Mr Anderson described the meeting to him on the following day in a manner consistent with the claimant's case. Mr Akrill says that he immediately told both his solicitors, Messers Blacks, and his property agent, Scotts, about the discussion. No contemporaneous note was made by either firm but this is what Mr Malcolm Scott of Scotts said about it:

"I was contacted by telephone by Mr Akrill on 14 September 2006 regarding a visit made by Mr Anderson to his home in North Ferriby late the previous evening. I was informed that Mr Anderson was generally friendly to Mr Akrill, and was in confident mood regarding his ability to sell the subject site. I clearly recall Mr Akrill confirming to me that Mr Anderson would sell the site to Anderson Wharf (Hull) Limited at a price of £2 million. Mr Akrill anticipated further contact from Mr Anderson following the meeting that ended in the small hours. Although I was asked to make a record of the meeting, the conversation was so significant in the context of what has been a fairly troubled scheme that I did not feel that a note was essential. The upshot of the meeting was the Anderson Wharf (Hull) Limited was confident that the site could be purchased at the agreed price of £2 million once the scheme had been updated, and the arrangements made for onward sale and funding of the development."

11. I note that Mr Scott speaks in terms of being told that the claimant would sell and that he first defendant could purchase, rather than being told that a deal to that effect had, in fact, been done, and a handshake occurred to conclude it.
12. Messers Blacks' understanding of what they had been told by Mr Akrill appears in a series of letters, the earliest of which is dated 16 October 2006 and was written to Hull Legal Services at the Guildhall in Kingston Upon Hull, in connection with an outstanding and continuing dispute arising from a building agreement entered into between the first defendant and the Hull Council, dated 5 July 2005, in which the first defendant had asserted in a recital that the site was in its ownership or development control but where Hull had in the meantime being told by the claimant that this was not the case.
13. The relevant passage of the letter is as follows:

"It would seem that your stance in this matter hinges to some extent to the purported attitude of the vendor of the adjacent land [that is a reference to the claimant and the site] as represented in the letter from Gosschalks to the Hull Economic Development Agency dated 14 July 2006.

The suggestion is that the vendor would not be prepared to enter into a legal agreement to sell the land to our client. That may indeed have been his position at that stage. However, matters have moved on.

Mr Akrill of our client and Mr Anderson of Anderson Antiques Limited met recently (in mid September) and had discussions regarding the site, following which a social engagement was proposed.

In view of the nature of those discussions, it is clear that the door is not jammed tight shut against our client, so that there is a real possibility that this issue can be resolved. Indeed, this reflects the commercial reality of the position that our client has maintained in our correspondence with you. It would be an unusual vendor that would reject a sale, purely on the basis of personalities where the consideration is right."

14. The defendants say that the oral agreement for a sale of £2 million was confirmed in a telephone conversation between Mr Anderson and Mr Akrill on 23 October 2006, in which Mr Akrill said that the defendant needed until the end of the year to complete its preparations and told Mr Anderson of the cost being incurred by the first defendant for that purpose. Mr Anderson recalls a telephone call but denies giving any indication that the claimant would sell the site to the first defendant. He also says that he told Mr Akrill that the claimant would be putting the site back on the market, to which Mr Akrill did not protest or object.
15. The claimant did, indeed, put the site back on the market for sale by informal tender through its agents Clark Weightman in late November or December 2006 at a guide price of £1.75 million. The first defendant's response, again, through Blacks, was to make written complaint in a letter dated 4 December, not about that fact that the property was being marketed for sale but about aspects of the particulars of sale. The thrust of the complaint was that the particulars failed properly to reflect the fact that, as alleged, only the first defendant could develop the site under the existing planning permission, due, for example, to having ownership of the copyright and the development plans.
16. The claimant's response through its agents, Clark Weightman, took the form of a short letter dated 5 December 2006, acknowledging receipt of Blacks letter and continuing:

"Your client has no legal interest in this matter. We are satisfied our sales particulars do not misrepresent the situation. If you report the matter to Trading Standards we will be pleased to liaise with them on the matter."

17. This provoked a reply by Blacks on behalf of the first defendant, dated 11 December acknowledging receipt of Clark Weightman's letter and continuing:

"We were not intending to suggest at any stage that our client has any legal interest in the land being sold by your client. We are well aware that it has no such interest.

However, our client does have a legal interest in that land adjacent to that of your client which is required for the implementation of the planning permission referred to in your sales particulars."

18. It was submitted on behalf of the defendants that a reference to "legal interest" meant "legal" rather than "equitable". That is not the correct or even tenable construction of the correspondent's exchange. The assertion by Clark Weightman that the first defendant had no legal interest in the matter plainly was, and was understood to be, an assertion that the first defendant had no rights of any kind known to the law in relation to the site sufficient to give it grounds to intervene in the manner in which Clark Weightman's client, the claimant, wished to market it for sale. A statement in those terms is amply wide enough to comprehend rights as the beneficiary under a constructive trust. Blacks' reply frankly and unreservedly acknowledged that their client had no such rights known to the law, legal or equitable, of any kind.
19. On 18 December the defendant, still without any protest at the fact that the property was being marketed by informal tender, entered the tender process by offering £1.55 million for the site through its agent, Scotts. This was acknowledged by Clark Weightman on 24 January in a letter stating that there had been (and I derive this by implication) at least four higher offers.
20. On 28 January the defendants say that they sought and obtained advice from Blacks as to whether the first defendant had any rights arising from the earlier conversation. Privilege has not been waived as to the contents of the advice which the defendants received on that occasion.
21. On 29 January after receiving advice, the defendant raised its offer to £2 million in a letter which made no mention of any earlier oral agreement or equities of any kind.
22. On 31 January Blacks wrote another letter to Hull Council in which the following extract is relevant:

"It has been suggested by the vendor of the adjoining site [again a reference to the claimant and the site] that they would not deal with our client, when that is not in fact the position at all. The adjoining owners have recently put the sale of the blue land out to competitive tender. With the full knowledge and approval of the vendors, Anderson Wharf [that is the first defendant] is participating in that tender process on the basis of its position as the sole purchaser with the capacity to develop the site promptly on the basis of the existing planning permission. Its unconditional offer to purchase now stands at a price of £2 million, subject to contract, a figure more than double that payable by Anderson Wharf under its previous contract, when the land itself remains unchanged. Following some further negotiations we are confident that Anderson Wharf will be the successful purchaser."

23. On 1 February the defendants said they instructed Blacks to prepare notices for lodging at HM Land Registry. On 2 February Clark Weightman rejected the first defendant's £2 million offer and on 5 February, a Monday, notices were lodge at HM Land Registry in relation to the, I think it is four, registered titles together, constituting the development site, each of which containing a statutory declaration made by Mr Akrill in the following terms:

1. "I am the Director of Anderson Wharf (Hull) Limited ("AWHL") which has an equitable interest in the land in this title, and in land held in three adjacent titles together forming a site at Wincolmlee, Hull. This interest arises by virtue of a proprietary estoppel in favour of AWHL, for the reasons set out below.

2. On 23 October 29006, following a series of discussions Mr Anderson the director of Anderson Antiques (UK) Limited agreed to sell to AWHL the whole of the site of which the land in this title forms part, for a sum of £2 million. It was well known to the proprietor at that time that the existing planning approval (obtained by AWHL in 2005) could not be implemented as a result of both statutory changes (to Building Regulations and Disabled access), and of practical changes occasioned by the proximity of the site to the River Hull (which it abuts). It was well known to the proprietor that it would be necessary to spend substantial sums with professional architects, engineers, and to invest a great deal of time in adapting the scheme to provide a workable development, and that this work would be required before the funds for the purchase or subsequent construction could be raised. The proprietor encouraged AWHL to expend those sums in order to progress the purchase, and thereby to enhance the value of the land.

3. In reliance on the agreement, AWHL has since spent more than £60,000, and has formally requested the proprietor to enter into contract for sale of this land (and the other land) at the agreed price.

4. Contrary to the agreement, the proprietor has declined to contract with AWHL at the agreed price, and seeks to sell the improved site at a higher price. In the circumstances in which AWHL has abided by the terms of the agreement, and carried out substantial works and expenditure on the strength of it, it would be unconscionable for the proprietor to deny the existence of the agreement.

5. I humbly request that AWHL's interest in the land be protected by Notice."

24. I pause at this point to note as follows. Firstly, at no time prior to 5 February did the first defendant or its advisors make any mention of an oral agreement for sale or of any equities arising from the first defendant having relied upon any such oral agreement. Secondly, on the contrary, the first defendant participated in the tender process without protest that it must have been a plain dishonouring of any such oral agreement, and, by offering £1.55 million, disregarded what must, on its case, have been its own obligation (presumably binding in honour, thought not in law) to buy the site for £2 million. Thirdly, the statutory declaration makes no mention of the first defendant's participation in the tender process and falsely described its offer of £2 million as being "a request to contract at the agreed price".
25. I turn to the question of detrimental reliance. When challenged to make good the assertion in the notices that the first defendant had spent in excess of £60,000 in reliance on the oral agreement, the defendants have produced evidence, not of any expenditure at all, but of having arguably incurred liabilities up to £32,000, none of which has been the subject, so far, of any invoice.
26. I must now state my conclusions on the summary judgment application. Dealing first with the relevant law, the doctrine of proprietary estoppel is, of course, well settled. Where the combination of a promise by the defendant that the claimant will be given an interest in property, and detrimental reliance by the claimant on that promise makes it unconscionable for the defendant to resile from it, the court has a broad equitable power to give effect to it by any appropriate method, ranging at one end from restitutionary compensation for the detrimental expenditure, to the conferring of a beneficial interest under a constructive trust, and, if necessary, in order to convey the relevant legal estate at the other end.
27. Two recent cases explain the relationship between the doctrine of proprietary estoppel and section 2 of the Law of Property (Miscellaneous Provisions) Act. The first is Yaxley v Gotts, [2000] Ch 162, in which the claimant had been promised a ground floor flat in a building being purchased by the defendant if he did the works to convert the building into flats and then managed it. The claimant did the works and the defendant then resiled from his promise. The Court of Appeal found that the combination of the defendant's promise and the claimant's performance of his side of the bargain gave rise to a constructive trust within the natural meaning of section 2(5) of the Act. At page 180 at letter (d), commenting on section 2(5), Walker LJ said this:

"I cannot accept that the saving should be construed and applied as narrowly as Mr Laurence contends. To give it what I take to be its natural meaning, comparable to that of section 53(2) of the Law of Property Act 1925 in relation to section 53(1), would not create a huge and unexpected gap in section 2. It would allow a limited exception, expressly contemplated by Parliament, for those cases in which a supposed bargain has been so fully performed by one side, and the general circumstances of the matter are such, that it would be inequitable to disregard the claimant's expectations, and insufficient to grant him no more than a restitutionary remedy."

28. The second case is Yeoman's Row Management v Cobbe [2006] EWCA Civ 1139, a decision of the Court of Appeal on 31 July 2006. There the defendants orally agreed to sell the claimant a block of flats for £12 million if he first obtained planning permission for it on terms as to a sharing of subsequent development profits. The claimant spent over £100,000 and gained planning permission, whereupon the defendant resiled from the oral agreement and demanded £20 million instead of £12 million as the purchase price. The Court of Appeal, upholding the trial judge, granted the claimant a lien secured on the property for 50 per cent of the development value attributable to the obtaining of the planning permission.
29. As for the objection taken in relation to section 2 and pursued in the Court of Appeal, Mummery LJ said this:

"It is, however, clear from the Law Commission Report, especially paras 5.4 and 5.5, that the continued availability of proprietary estoppel was contemplated, as was explained by Beldam LJ in his judgment in Yaxley v Cotts [2000] Ch 162 at 188E-190H, [2000] 1ALL ER 711, [1999] 3 WLR 1217. See also Snell's Equity (31st Ed) para 10-20. Its availability does not infringe the public policy underlying section 2(1) of the 1989 Act by either directly or indirectly enforcing the Second Agreement so as to frustrate the purpose of section 2.

The estoppel here did not rest merely on the existence of the Second Agreement. It was founded on the fact the Mr Cobbe was induced and encouraged to believe that YRML regarded the Second Agreement as binding in honour and would not withdraw from its terms if Mr Cobbe obtained planning permission; that Mr Cobbe relied on that inducement and encouragement; and that it was unconscionable for YRML to rely on its strict legal rights.

I agree with the judge that section 2 has no application to this proprietary estoppel claim. No concluded agreement was made. There can be no question of an action of enforce the Second Agreement. The section is irrelevant to an action to enforce a cause of action for propriety estoppel which does not depend on the existence of a concluded agreement for sale or on the enforcement of it, but on the inducement and encouragement to get Mr Cobbe to apply for and obtain planning permission in the belief and expectation that he would get a binding contract for the sale of the Property for £2 million plus overage."

30. Constructive trust is not mentioned in the analysis in Yeoman's Row v Cobbe as the route whereby section 2 could be said to be satisfied in that case. It may be debatable whether a lien for a monetary payment giving rise to an equitable charge is strictly realised by way of constructive trust. The Court of Appeal's analysis was simply that there had been a promise of an interest in land conditional upon the claimant doing something for the benefit of the defendants, which he then did, rather than an attempt simply to enforce an oral agreement for sale. That case is currently pending on appeal to the House of Lords.
31. In the present case, a pure enforcement of an oral agreement is precisely what the first defendant seeks, as is apparent from the statutory declaration which I have already read. The first defendant performed no promise beneficial to the claimant, such as the obtaining of planning permission or the conversion of a house into flats, for which a sale of the site to him was to be the quid pro quo. The first defendant merely claims to have acted in detrimental reliance on an oral agreement by doing things which he needed to do before buying the property. The quid pro quo was, on the first defendant's case, simply the purchase price of £2 million, and that lay entirely in the future.
32. While, in theory, detrimental reliance of that kind is, in an appropriate case, sufficient to give rise to a propriety estoppel, even where the reliant acts do not themselves benefit the defendant, it is very far removed from the full performance of a bargain described by Walker LJ in Yaxley and in relation to the obtaining of planning permission exemplified by the Yeoman's Row case, although there the Court of Appeal made it clear that full performance was not a necessary condition.
33. The difficulty with the present claim is that if the defendant's case here was unaffected by section 2, it is hard to see how any oral contract for the sale of land cannot be enforced by way of proprietary estoppel once the promisee spends some time or money in reliance on the oral agreement, such as, for example, instructing solicitors to investigate title or surveyors to carry out a survey.
34. As a consequence, I have grave reservations whether this case, even if credible, and ignoring for the moment the defendant's participation in the tender process, really avoids the difficulties created by section 2 as a matter of law. But the precise boundaries of the proprietary estoppel or constructive trust exception to section 2 are still are matter of uncertainly. The boundaries have widened in Yeoman's Row by contrast with Yaxley v Gotts and the matter may shortly be reviewed in the House of Lords. Accordingly, I do not decide this case upon the basis that, as a matter of law, the defendant's case is bound to fai,l but I express grave reservations as to whether, in particular, when the law as to the relationship between proprietary estoppel and section 2 has been clarified, it would, after careful analysis at trial, be proved to be maintainable in law.
35. I turn to the question whether the defendant's evidential case as to the existence of an oral agreement is credible, so as to give Mr Akrill a reasonable prospect of being believed at trial, and therefore to give the first defendant a reasonable evidential case for the obtaining of some relief. The evidential case as to an oral agreement is not credible. Plainly, the dispute as to what was said on 12 December is prima facie suitable for cross-examination and I remind myself that summary judgment is not an occasion for a mini trial on the documents. But it is well settled that the court is not compelled to accept evidence as disclosing a triable issue if, for example, it is wholly incompatible with the contemporaneous documents.
36. The defendant's case that there was a deal done on 12 September, encapsulated in Mr Akrill's witness statement to the effect that "We shook hands on the deal" confirmed on 23 October by telephone conversation is wholly incompatible both with the contemporaneous documents and with the defendant's conduct thereafter, and, indeed, with the overwhelming probabilities of the matter. My reasons are as follows. Firstly, the background is the collapse of a previous deal between the parties and hostile litigation.
37. Secondly, Mr Akrill says that he told Mr Anderson in September that he, Mr Akrill, could not commit the first defendant to a contract at that stage, before taking the preparatory steps necessary to get funding. As I have said, the first defendant is a single purpose vehicle company with nominal assets.
38. Thirdly, the second defendant Mr Akrill is a highly experienced property developer, on his own acknowledgment. He could not have thought that he had obtained an open-ended option to buy the property for £2 million at an unspecified future date, if he chose thereafter to commit the first defendant to a purchase, and, indeed, neither he, in evidence nor counsel, Mr Partington, put their case in that way. Either he had a deal, as he says he did, with obligations in honour on both sides, for the claimant to sell and for the first defendant to buy, or he had nothing capable of giving rise to any legitimate expectation. He evidence, therefore, that he declined to commit the first defendant before lining up funding, suggests that, in truth, he obtained nothing upon which he could base a legitimate expectation. If he and the first defendant could walk away from any purchase, if for example if it could not obtain funding, then so could the claimant.
39. Fourthly, the defendant's solicitors' correspondence with Hull Council and with Clark Weightman is wholly irreconcilable with those solicitors being told by Mr Akrill, as he says he told them, that a deal had been done on 12 or 13 December. Even on 31 January 2007, after obtaining full instructions and giving full advice on the presence or absence of any equities, no such deal was suggested in Blacks' letter of that date to Hull City Council. Furthermore, in December, as I have held, Blacks asserted, in ungarnished terms, that the defendants had no relevant legal interest in the site.
40. Fifthly, the defendants' lack of protest when the claimant did market the site is equally irreconcilable with the belief by the defendants that the claimant was in any sense honour bound or bound in conscience to sell the site to the first defendant for £2 million. On the contrary, the first defendant asserted through its solicitors in correspondence not some form of deal binding in honour but a form of development control arising, for example, from having copyright in relation to the drawings which led to the obtaining permission.
41. Sixthly, the statutory declaration made in support of the notices by Mr Akrill fails even to mention an agreement having been made in September 2006, that now being the cornerstone of the defendants' case.
42. There is, quite separately and distinctly from the question of credibility,. a separate reason why the defendant's case for a proprietary estoppel or constructive trust is bound to fail, and that is the inevitable consequence of the first defendants' participation without protest in the tender process initiated by the claimant in late November 2006. In relation to this, there is no relevant issue of fact which need be determined at trial. Mr Akrill acknowledges that he regarded the claimant's marketing of the property as a breach of the oral deal, not one which he regarded as binding in law but binding in honour, but chose to go along with the tender process in the hope, on advice, of enabling the first defendant to buy the property, not for £2 million but for something substantially less.
43. The contractual analogy is in point. Suppose that there had been a binding written contract for the sale of the property for £2 million by the claimant to the first defendant and the claimant had then put the property on the market for sale by informal tender. That would have been the plainest possible anticipatory repudiatory breach of the contract for sale, and, on learning of it, the first defendant would have been put to his election either to affirm the contract or to treat it as discharged by an accepted repudiatory breach. Participating in the tender process without protest would have plainly involved a consensual discharge of the contract by an accepted repudiatory breach, all the more so, since the first defendant's offer was to purchase the property at less than he had previously contracted to pay for it.
44. It is inconceivable that at trial the court would regard a claimant whose claim is based not upon contract but upon proprietary estoppel as being in any better position. Propriety estoppel is a doctrine of equity in which the question is always whether it is unconscionable for the defendant to resile from the conferring of a property interest which he has earlier promised.
45. Even if (suspending for the moment my disbelief at the first defendant's evidential case) it might have been unconscionable for the claimant to put the property on the market by way of informal tender, it was not unconscionable for the claimant to proceed with that process and to offer and then contract for the sale of property to the tenderer which it regarded as offering the best bid, once the first defendant had participated itself in that tender process without protest.
46. The result is that there must be summary judgement against the first defendant, first for a declaration as sought that the first defendant has no interest in the site, and secondly for an order leading to the cancellation of the notices. As to the precise terms of those orders, I will hear submissions.
47. The next question is whether there should be judgment for damages to be assessed against the first defendant for breach of the statutory duty in section 77 of the Land Registration Act, which is as follows:

"(1) A person must not exercise any of the following rights without reasonable cause: …

(b) the right to apply for the entry of a notice or restriction

… (2) The duty under this section is owed to any person who suffers damage in consequence of its breach."

48. The difficulty for the claimant at the moment is that it has not shown that the notices have yet caused it any loss. Plainly, the loss normally caused by such a notice is the delay in any subsequent sale of the property to a third party, or the loss of such a sale, in particular in a case where, as here, the property is mortgaged, an increase in the interest burden incurred by the intending seller during that period of delay. In the present case, the evidence before the court is only that a contract was entered into with a third party on 16 March of this year. For understandable reasons, the claimant has neither produced the contract nor identified its counterparty. There is no evidence that enables the court to know at this stage whether the completion of that contract has yet been delayed by the existence of these notices. Although this matter was not fully argued before me, the better view is that loss is of the essence of this particular tort, as it is of most torts, not least because section 77(2) focuses, for the purpose of identifying potential claimants, on those who suffer damage in consequence of a breach of duty.
49. It follows that it would not at this stage be appropriate for me to give judgment for damages to be assessed when it has yet to be proved that any loss has been suffered. Alternatively, it seems to me that it is appropriate for me to declare, as I propose to do, subject to hearing submissions as to the precise form of the declaration, that the notices in this case were applied for without reasonable cause within the meaning of section 77 of the Act, that is, by the first defendant, and to give case management directions for the further prosecution, if the claimant needs to do it, of a claim for damages if the existence of the notices until now has, in fact, caused a loss.
50. The next issue is as to the claims against the second defendant. The person owing the primary duty under section 77 is the person who, without reasonable cause, exercises a right to apply for the entry of a notice. In the present case, therefore, the person owing the duty identified by that formula is the first defendant rather than the second defendant. Nonetheless, as in other cases of tort, a person not being the person under the primary duty may incur a liability as the procurer of a tort by another. The question in this case is whether the second defendant Mr Akrill procured the commission of the unreasonable exercise of the right to apply for a notice in this case.
51. The leading authority on the question whether the activities of a shareholder or director of a company amounts to procurement, so as to give rise to a secondary liability as a joint tortfeasor with the company, is MCA Records Inc c Charlie Records Limited [2002] BCC 650. The relevant test for present purposes is whether Mr Akrill's activities would constitute procurement in the ordinary sense, even if he had not been a director or shareholder of the company. The facts show that the first defendant company was nothing more than a single purpose vehicle, with no separate staff, directors, shareholders or other relevant personnel other than Mr Akrill. The evidence shows, and there is no requirement to go to trial for this to be clear, that it was Mr Akrill who, on the first defendant's behalf, went to solicitors, gave instructions, took advice, made the decision to apply for the registration of the notice, and, indeed, made the statutory declaration upon which the notice was based. That discloses a clear case of procurement of the commission of the tort of the application for a notice without reasonable cause by the first defendant, sufficient to make the second defendant also liable.
52. The claimant also applies for relief in the form of an injunction restraining the application to the Land Registry for any other notices or restrictions in relation to the site. This is not a remedy which should lightly be given, in particular in a case where only one instance of what I will characterise as potentially abusive interference with the sale of land by an intending vendor has been proved. But in the present case, this is the second occasion upon which activities of the defendants have led to the claimant needing to take court proceedings in order to recover its ability to sell this site after dealings with the defendants.
53. The earlier occasion led to the two sets of proceedings in 2005, to which I have referred. Notices registered to protect the contract in that case also had to be removed as a result of the compromise of those proceedings.
54. This is therefore a proper case for an injunction against the defendants, restraining them from further applications to the land registry for the entry of notices or restrictions, provided that it is suitably confined in its terms so as to enable such application to be made either with the leave of the court or the consent of the claimant and so as to confine it in terms of time, at least to a period while the claimant remains the owner of the site. I will hear submissions on the precise form of an appropriate order. It is an order which should go against both defendants, since it is evident that Mr Akrill is an experienced property developer, capable of using any number of single purpose vehicles for his commercial purposes. I do not mean that critically in any way.
55. My conclusion that there should be summary judgment in this case makes it unnecessary for me to deal with the claimant's alternative claim for interim injunctions pending trial. But in case the matter goes further, I make it clear that if I have not granted summary judgment, I would have considered that the balance of convenience favoured an order for the removal of the notices now rather than leaving them in place until trial, on an undertaking by the claimant both as to damages and on an undertaking to put on deposit or pay into court not less than £42,000 of any proceeds of a sale of the property sufficient to protect at least a restitutionary claim by the first defendant in relation to its alleged expenditure if proved at trial.
56. My reason for concluding that the balance of convenience would have fallen that way is that it was evident that the first defendant could not demonstrate any basis for the court to conclude that it would be able to meet an order for damages under section 77 if the notices were left on during the much longer period between now and trial, whereas the evidence showed the probability that upon a sale of the site if freed from the present notices, the claimant would be likely to receive an equity, that is, proceeds of sale in excess of mortgage liabilities, in the region of £1 million, which, if appropriately secured, would be available to meet its liability on a cross undertaking and any restitutionary order made at trial.