UKPC 22
Privy Council Appeal No 0028 of 2013
Prime Sight Limited (A company Registered in Gibraltar) (Appellant) v Edgar Charles Lavarello (Official Trustee of Benjamin Marrache a Bankrupt) (Respondent)
From the Court of Appeal of Gibraltar
JUDGMENT DELIVERED BY
9 JULY 2013
Heard on 10 June 2013
Isaac Ellis Jacob
(Instructed by Charles Gomez & Co., Gibraltar)
(Instructed by Cruz & Co. Gibraltar)
"The Assignor [Mr Marrache] has agreed to sell and the Assignee [the company] have agreed to purchase the Premises … … for all the unexpired residue of the Term for the sum of £499,950 and on terms hereinafter appearing."
"In a consideration of the sum of £499,950 now paid by the Assignee to the Assignor (receipt and payment of which the Assignor hereby acknowledges) the Assignor as beneficial owner hereby assigns under the Assignee all and singular the Premises … to hold the same unto the Assignee for the unexpired residue of the Term …"
"Mr Marrache procured our client to issue two mortgages in favour of Barclays Bank plc to secure a maximum liability of £3,483,000 loaned to Marrache & Co of which Benjamin Marrache was one of two partners. Accordingly our client (with Mrs Marrache its helpless beneficiary) at Marrache's request on the face of the charges made itself liable for a sum greatly in excess of the amount shown as consideration in the assignment. On any basis, the firm of Marrache and Co would have a liability to our client in respect of the £3,483,000. This sum greatly exceeds the amount shown in your statutory notice."
"The flaw in this argument as I see it is that it ignores that by operation of law a company is a fully recognised legal persona. I know of no authority and there is none before me that would support the submission that from a legal perspective the company is the same person as its ultimate beneficial shareholder. Of course, the owner of a property is entitled to transfer that property to another. When that transfer is effected by deed of assignment for consideration it becomes a legally binding transaction. If that consideration is unpaid it becomes actionable."
"A party to a deed is not estopped in equity from averring against or offering evidence to controvert a recital therein contrary to the fact, which has been introduced into the deed by mistake of fact, and not through fraud or deception on his part."
"As the statement of principle approved by Lord Maugham in Greer v Kettle makes clear, equity will not prevent a party to a deed who has, by mistake, allowed the deed to state that purchase money has been paid when in fact it has not from asserting the true position. Mr Jacob tries, in effect, to turn that principle on its head in order to create an estoppel in the instant case. In the instant case, however, the only inference that can be drawn from the parties' decision to include statements in the Deed of Assignment which they knew at the time to be untrue is that the statements were so included in order to conceal the true position. In such circumstances, I can conceive of no principle of law or equity which could prevent the court from recognising the truth of the matter and giving effect to it."
"Instinctively, the concept that parties to a Deed are entitled to include information that they know to be completely false and untrue on a fundamental issue such as consideration, size of property or number of rooms, feels entirely wrong in law and equity, and indeed contrary to any moral principle. This unbelievable proposition cannot, it is submitted, be understood by lay persons and legal professionals alike, or indeed the judiciary."
In his submission, the Court of Appeal was right to say that there was no principle of law or equity which would prevent the court from recognising the truth of the matter and giving effect to it.
"If a distinct statement of a particular fact is made in the recital of a bond, or other instrument under seal, and a contract is made with reference to that recital, it is unquestionably true, that, as between the parties to that instrument, and in an action upon it, it is not competent for the party bound to deny the recital, notwithstanding what Lord Coke says on the matter of recital in Coke Littleton, 352; and a recital in instruments not under seal may be such as to be conclusive to the same extent … By his contract in the instrument itself, a party is assuredly bound, and must fulfil it. But there is no authority to show that a party to the instrument would be estopped, in an action by the other party, not founded on the deed, and wholly collateral to it, to dispute the facts so admitted, though the recitals would certainly be evidence."
"When a recital is intended to be a statement which all parties to the deed have mutually agreed to admit as true, it is an estoppel upon all. But, when it is intended to be the statement of one party only, the estoppel is confined to that party, and the intention is to be gathered from construing the instrument."
"The meaning of estoppel is this – that the parties agreed, for the purpose of a particular transaction, to state certain facts as true; and that, so far as regards that transaction, there shall be no question about them."
"If it appears … that, by express agreement between the parties, a bill was drawn and indorsed by procuration in the name of a fictitious or dead person, and the position of one of the parties has been altered, as in the present case, by giving up certain goods to the other, that other is not at liberty afterwards to say that the fact which was assumed as the basis of the contract or arrangement, and upon which the other party acted, and thereby altered his position, was really untrue and that the bill is void."
"We all agree with the Court below that there may arise an estoppel by agreement, and that such an estoppel arises here. The parties agreed that the transaction should have this character, viz, that the defendant should appear to have bought the goods of John Peto, and that therefore the bill should be drawn and indorsed in the name of John Peto, and it was afterwards accepted by the defendant on the basis of that agreement. The defendant having accepted the bill after it had been drawn and indorsed in that name, and having promised payment of it, now says that it was not drawn and indorsed by John Peto; but he is estopped from doing so."
"The justice of an estoppel is not established by the fact in itself that a state of affairs has been assumed as the basis of action or inaction and that a departure from the assumption would turn the action or inaction into a detrimental change of position. It depends also on the manner in which the assumption has been occasioned or induced. Before anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it. But the law does not leave such a question of fairness or justice at large. It defines with more or less completeness the kinds of participation in the making or acceptance of the assumption that will suffice to preclude the party if the other requirements for an estoppel are satisfied."
"It is important to notice that belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs. … Parties to a deed sometimes deliberately set out an hypothetical state of affairs as the basis of their covenance in order to create a mutual estoppel."
"The ground on which His Honour put the estoppel simply was that the parties adopted a conventional basis for the transaction. They impliedly agreed that, when the promissory note should be completed by other indorsements, it should be assumed to have been issued and indorsed by the parties in due order. From this assumption the indorsee was not permitted to depart, although all parties had been aware of the actual state of affairs."
"… an estoppel by convention need not involve any misleading of a representee by a representor, nor is it essential that the representee shall be shown to have believed in the assumed state of facts or law. The full facts may be known to both parties; but if, even knowing those facts to the full, they are shown to have assumed a different state of facts or law as between themselves for the purposes of a particular transaction, then a convention will be established. The claim of the party raising the estoppel is, not that he believed the assumed version of facts or law was true, but that he believed (and agreed) that it should be treated as true."
"The line between estoppel, which precludes a person from proving and relying upon a particular fact, and waiver which involves an abandonment of a right by acting in a manner inconsistent with the continued existence of the right, is not always clearly drawn."