ON APPEAL FROM BIRMINGHAM DISTRICT REGISTRY
( HIS HONOUR JUDGE HAMILTON )
Royal Courts of Justice
Strand
London, WC2
B E F O R E:
LORD JUSTICE WALLER
(Vice-President of the Court of Appeal Civil Division)
LORD JUSTICE CARNWATH
MR JUSTICE MAURICE KAY
UPPAL
Appellant
-v-
UPPAL AND ANOTHER
Defendant
(Computer-Aided Transcript of the Stenograph Notes of
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
CATHERINE ROWLANDS (instructed by Messrs Silks) appeared on behalf of the Appellant
MR TIMOTHY BECKER (instructed by Charles & Co) appeared on behalf of the Defendant
J U D G M E N T
LORD JUSTICE WALLER: I am going to ask Lord Justice Carnwath to give the first judgment.
LORD JUSTICE CARNWATH: The most striking feature of this case before the judge was the dearth of credible evidence on either side. There was very little documentary evidence and such as there was was heavily disputed, and there was very little reliable oral evidence. As the judge would readily concede, he was making bricks with very little straw.
The essential facts can be shortly stated. The claimant ("the son") is one of seven children of the defendants ("the parents"). He is claiming possession against them of a house owned by him, 7 Arden Road, Smethwick. He bought it in 1985 with a mortgage. He owned another property at 36 Vicarage Road bought in 1989.
Shortly after he bought 7 Arden Road his parents sold their own house and came to live with him there. Sometime in the 1990s they all moved to the Vicarage Road property. But after the son's second marriage in 1998 relations broke down, and in September 1999, the parents moved back on their own to 7 Arden Road. The son claims that that was a temporary arrangement which he was entitled to terminate. The parents say that he had promised to allow them to remain there for the rest of their lives.
An important element in the case was a document allegedly signed by the son at the end of September or the beginning of October 1999 described as a "Letter of Consent". He denied having signed it, or, in any event, that it had any legal effect. The judge decided that it had been signed by him. He also decided that the parents had, between 2000 and 2002, spent a total of more than £7,000 on improvements to the house in the form of double-glazing and central heating. He concluded that these two factors were sufficient to create a "promissory estoppel" in their favour, which should be given effect by allowing them to remain in the house for the remainder of their lives but subject to their assuming responsibility for the interest element of the mortgage payments.
In reaching that view, the judge may have been influenced by the view of the only reliable witness in the case, a Mr Surjit Singh Uppal, who was not a member of the family. The judge said at paragraph 56 of his judgment:
"He is a prominent member of the Sikh community to which the parties belong. He and other leaders of that community had been distressed by the rift in this family (to which he is not related) and had attempted to bring about a resolution of their difficulties."
The judge went on:
"Whatever its deficiencies as a legal document, I am satisfied that the Letter of Consent was drawn up in an honest attempt to record a solution which had been reached."
The judge's conclusion is challenged by Miss Rowlands for the son on two main grounds: first, that the finding that the letter was signed by the son was unsustainable on the evidence before the judge; and secondly, that in any event, the legal basis on which the judge decided in the parents' favour had not been pleaded. In the way the case has developed before us we have heard argument only on the second point, and for my part I am satisfied that the son is entitled to succeed on that point.
It is convenient to start with the letter itself and the way it was originally pleaded. The document is headed "Letter of Consent", and is typed. It bears the typed date, 27th September 1999, and, it is signed in the name of the son, Jasbinder Sigh Uppal. It says that he being the rightful owner of 7 Arden Road
"gives full consent for both my father and mother to reside in 7, Arden Road, Smethwick, as long as they both should live."
It purports to be signed also by the father and by a "witness", Mr Surjit S Uppal (to whom I have already referred) who is a Justice of the Peace. It is dated by him on 5th October 1999.
In the original pleading the defence and counterclaim at paragraph 4 said:
"The defendants have a right of occupation in respect of 7 Arden Road as they have been granted a life tenancy by the Claimant. A copy of the tenancy is annexed hereto."
The letter of consent was so annexed. Paragraph 7 said:
"The defendants claim that they have a beneficial and/or life interest/tenancy in 7 Arden Road and hence a right to remain at the property."
The particulars were then given, which set out the history of the matter and included a reference to the letter.
That case of a life tenancy was not, no doubt sensibly, pursued at the trial. The judge recorded at paragraph 30(1) that:
"from the very beginning of the hearing it was conceded on behalf of the defendants that this document was not in itself capable of giving rise to a life tenancy or, indeed, any interest in land."
Accordingly at the trial Mr Becker, who appeared for the defendants and has appeared before us, applied for permission to amend. There were two attempts. The first was rejected but the second was permitted against objections from Miss Rowlands.
It is worth noting how the matter arose in the transcript which we have. Apparently, I think at the end of the first day, the suggestion of a need to amend the pleadings arose. Mr Becker is recorded (at page 104 of our core bundle) as wanting to mention the question of "promissory estoppel". There is discussion about that and the judge says:
"I I am not going to hear the evidence of the claimant until I know what the case is about. You are seeking leave to amend to plead a promissory estoppel. I would require that to be fully pleaded because there is a lot of material averments required to set that up."
Then Miss Rowlands is recorded, objecting, "This is a very late amendment", and commenting:
"It is a well known fact that promissory estoppel or any kind of estoppel needs to be pleaded and the facts giving rise to it need to be set out, and I would need to consider the position very carefully and to do some research into the relevant case law before you."
There was then produced an amended defence and counterclaim. The previous allegation of a life tenancy represented by the letter of consent was deleted. Instead it was pleaded, by virtue of paragraphs 6-10 of the counterclaim, that the defendants had a right of occupation. In those paragraphs the case was put in this way:
"7. At the time when 7 Arden Road ('the property') was to be purchased in the Claimant's own name it was agreed between the Claimant and the Defendants that upon them paying the sum of £3,000 towards the purchase price the Defendants would be entitled to reside at the property for the rest of their lives.
8. In reliance upon the said agreement the defendants did so contribute the said £3,000 towards the deposit of the property.
9. Further in or about December 1987 the Defendants paid the mortgage in respect of the property for a period of 4½ months whilst the Claimant was in prison. The Defendants also cleared mortgage arrears on the property the approximately £1,500.
10. Further or alternatively the Defendants claim that they have a beneficial interest in the property and in a property situated at 36 Vicarage Road."
Particulars were then set out, including allegations about what was agreed at the time the property was purchased. There was a reference to various payments being made towards the purchase of the price subsequently. There was also a reference at paragraph (h) of the particulars to the defendants making further contributions towards the maintenance and upkeep of 7 Arden Road, including utility bills. In the subsequent history there was a reference to disagreements between the parties, and to the letter of consent being drawn up by the sister of the claimant and being signed by him, but no specific legal significance was attached to that in the pleading. Then at paragraph 13 it was said:
"In the premises there was an express or alternatively an implied intention between the parties that the Claimant should hold the properties on trust for himself and the First and Second defendants as to 50% to the Claimant and 50% to the Defendants and that in relation to 7 Arden Road the Defendants are entitled to the aforementioned life tenancy."
So that was the considered case for the parents, albeit somewhat late in the day. One notes the absence of any reference to estoppel in any form.
We have a note of the closing submissions on the part of Mr Becker for the defendants, which make it quite clear how his case was put. At paragraph 4 he said:
"The right to occupy 7 Arden Road was made on two grounds:
(a) That at the time of purchase it was expressly agreed between the Defendants and the Claimant that upon them paying the sum of £3,000 towards the purchase price they would be entitled to have a beneficial share in the property; or alternatively
(b) that at the time of purchase it was agreed that upon them paying the said £3,000 they would be entitled to a life tenancy in the property.
5. In addition, the Defendants counterclaim for a beneficial interest in another property situated at 36 Vicarage Road ..."
So the case for 7 Arden Road was based clearly and specifically on what was agreed at the time of purchase.
Later in those submissions Mr Becker explained that what he was relying on was the law of constructive trust as recently reviewed by the Court of Appeal in Oxley v Hiscock [2004] EWCA Civ 5466. It is fair to say that later in his submissions he referred to "proprietary estoppel", noting that Chadwick LJ in his judgment in Oxley v Hiscock suggested that the analysis of the facts may not be much influenced by whether it is put in terms of constructive trust or proprietary estoppel. But that is not suggesting any departure from the basis of the case which relied on an assumed agreement at the time the property was purchased. Then at paragraph 53 of the submissions there was a reference to the letter of consent:
"Finally, though it is conceded that the letter of consent has no legal effect as a document it could be possible for the court as part of its duty to do what is fair in the circumstances to construe or imply that the Defendants enjoy a contractual licence to occupy the premises."
It is clear from those extracts, as Mr Becker fairly conceded before us, that the case at the trial was based on the allegation of an agreement (express or implied) at the time of the purchase of the property, not on the letter of consent, although that might possibly be some evidence in support of the primary case.
The judge rejected that pleaded case. He did not accept that there was any such agreement. He did not accept that the parents had made the contributions they claimed to the purchase of the house or to the mortgage or to maintenance or utilities. That is all very clearly explained in paragraph 35-39 of his judgment, and there is no appeal against those findings.
So, where did the promissory estoppel case come from? In the judgment early on the judge referred to what he called the preliminary skirmishing between the parties, between whom unfortunately relations were not good, and he mentioned, at paragraph 20, Mr Becker's wish to invoke the doctrine of promissory estoppel, and it being pointed out to him that no such case had been pleaded. The judge then referred to the amended pleading, but not to the fact that the amended pleading said nothing about promissory estoppel.
Having disposed of the case as pleaded, at paragraph 40 he dealt with the question of the allegation of money having been spent on improvements. There is no reference in the pleading to improvements. The reference I have said was to maintenance and utility payments. The judge recognised at paragraph 40 that improvements were "different in kind". However it is clear from the closing submissions that both parties were conscious that part of the case being made was about allegations that money had been spent on improvements, and they both dealt with it as a matter of fact. The judge dealt with that in paragraphs 40 and ultimately concluded in paragraph 49:
"Taking the evidence as a whole, and notwithstanding the absence of any convincing explanation of the source of the funds used to pay for these works, I accept the defendants' claim to have carried them out at their own expense."
However, he did not accept that the works were carried out in pursuit of any intention that they should have a beneficial interest in 7 Arden Road,
"Rather, I think that the defendants carried out these works for their own comfort and because they believed that they would enjoy the benefit for the remainder of their days. Despite the difficulties in their relationship with the claimant, the Defendants may also have taken some satisfaction in the thought that, in the end, he would benefit from the enhancement to the value of the property."
He then turned to the very contentious evidence about whether the letter of consent was in fact signed. In the circumstances I do not need to look at that in any detail. He concluded that it had been signed:
"59. In short, therefore, I find that the Letter of Consent, executed on 5 October 1999, led the defendants to think that they would be permitted to live out their days at 7 Arden Road: on this basis, they proceeded to install double glazing. A few months later (February 2000) and central heating two and a half years later after that (July 2002). Notwithstanding the estrangement between the claimant and the defendants, it is inconceivable that he was unaware of what they were doing.
60. In my judgment, therefore, this is not and never has been a case of acquisition of a beneficial interest or of a life tenancy but a case of promissory estoppel. That conclusion seems to me to come (just) within the terms of the defendants' amended pleading."
He went on to consider how the equity thus created should be satisfied. He decided that it should be done by giving the defendants the right to remain at 7 Arden Road but subject to taking over responsibility for the interest element of the mortgage payments.
Before us, Miss Rowlands challenges that conclusion on the basis that it was simply different from the pleaded case. The review I have made of the pleadings does, in my view, make that contention unanswerable. In so far as estoppel was mentioned by Mr Becker in his submissions, though not in either of the pleadings, it was not different in kind from the constructive trust case and was based clearly on the allegation of an agreement at the time of the purchase of the property. Had he been able to establish such a case on the facts, it would have fallen within the principles enunciated by Chadwick LJ in Oxley v Hiscock . But a case based simply on the promise contained in the letter of consent was never pleaded. Mr Becker very frankly told us that it was not pleaded because his instructions would not have supported such a pleading. For the same reason, although he was invited to say whether he was seeking leave to amend in this court, he has not sought to pursue that. It has to be said that such an application in this court would in any event be wholly exceptional, and would not be granted unless it was clear no material could have been put before the judge which might have affected the case on the amended pleading. I have not gone through the points which Miss Rowlands has set out in her skeleton argument, both of fact and law, which she said she would have wished to raise had this case been pleaded. She was clearly entitled to detailed notice of the case as put. That need was flagged up at the very time when the possibility of an estoppel case was mentioned in the course of the hearing. Even if an application to amend had been made, it would in my view have been very difficult to sustain in the light of the points made by Miss Rowlands.
As a last resort I think, Mr Becker sought to rely on a somewhat general principle that the judge is entitled to do justice, as he sees it, between the parties. I have to say, however, that, even in the more relaxed post-Woolf world, the discipline of pleadings remains an important element of the procedure and an important safeguard for the parties. The defendants were given considerable latitude to reshape their case during the trial. In my view the judge should have stuck to the case as it was pleaded. I well understand his desire in the face of an extraordinarily difficult case to attempt to reach what he saw as a fair result. But in my view he was wrong to go outside the pleaded case.
Accordingly, in my view the appellants have established that there was a serious procedural failing which has caused them injustice. The question then remains, what should we do about it? It seems to me there is only one result which can follow. The pleaded case failed on the facts. The judge has made clear findings on the relevant points and there is no appeal against them. That case having failed, it seems to me that the defendants on whom the burden lay have failed to establish any grounds for defending the claim for an order for possession. Accordingly judgment should be given for the claimant.
LORD JUSTICE MAURICE KAY: I agree.
Taking the broadest possible view, promissory estoppel, as found by the judge, was not pleaded; nor did it feature in the submissions made to the judge on behalf of the parents. Indeed it was inconsistent with their case. Mr Becker frankly concedes that his instructions at trial and to this day would not enable him to plead the promissory estoppel found by the judge. I sympathise with the judge who was no doubt endeavouring to conjure a result which he saw as a fair one. However, it was an unpleaded and unargued result. It was, in the vernacular, not on the agenda.
I, too, would allow the appeal and make an order in the form proposed by Carnwath LJ.
LORD JUSTICE WALLER: I also agree.
It is sometimes said that reliance on a pleading point is to rely on a technical point. That can indeed sometimes be true, but the pleading point raised in this case is by no means a technical point.
It is clear that the basis upon which the judge found for the defendants in this case, the promissory estoppel, was not pleaded either in the original defence and counterclaim or in an amendment made at the end of the hearing to that defence and counterclaim. Mr Becker struggled for a short while to suggest that it might just have been pleaded but on being pressed had to accept that it was not. Perhaps more importantly, he accepted that it was not pleaded because he did not have the instructions from his client on which it could be pleaded. On the same basis he has not and could not apply to amend in this court. That, as it seems to me, is really the end of this appeal. The pleaded case failed. If the point on which the judge found in favour of the defendants could not be pleaded, it cannot be right that the judge can decide a case on the basis of that unpleaded case. I agree with the order that my Lord has proposed.
(Costs submissions)
LORD JUSTICE WALLER: In this court the respondent will be liable for the costs and there will be made the usual form of order which will enable the appellant to go into a district judge to decide whether the Legal Aid Board should pay those costs. As far as the costs of the trial are concerned, clear reflection has been taken on account of conduct matters of that sort. The appellant here should get two-thirds of the costs of the claim and counterclaim before the judge.