Davies & Ors v Jones & Anor

This is an application for permission to appeal against two paragraphs of the order of Wyn Williams J dated 7 January 2008. The terms of his order, for which permission to appeal is sought, were as follows:

“(1)

That the Claimants be given leave to amend the Particulars of Claim in the form annexed to this order

(2)

That the First Defendant do have summary judgment against the claimants.”

There is no need for permission to appeal against (1), but permission to appeal is sought in respect of the order made that the first defendant, Mr Jones, should have summary judgment against the claimants.

Now the claimants, who are the appellants, are a small private pension fund, and by a sale and purchase agreement dated 20 October 1999 they agreed with Mr Jones to sell a parcel of land and garage premises to Mr Jones. This agreement was conditional on planning consent being obtained for the conversion of the property into a supermarket for the benefit of the second respondent, and this was obtained in July 2000. Clause 18 of the sale and purchase agreement provided that ₤100,000 was to be retained from the purchase monies until certain outstanding works, known as the “purchases works”, had been completed by Mr Jones. The total purchase price was ₤660,000, and a deposit of ₤30,000 was duly paid.

Immediately prior to completion, the appellants’ solicitors were contacted by Bevan Ashford for the second respondent, and it is important I think to go to the correspondence in the relevant period to show what happened. The material parts of the correspondence are contained in the amended pleading. Ungoed-Thomas & King were acting for Mr Jones. Richard James & Co were acting for the appellants. On 13 July 2000 Ungoed-Thomas sent Richard James the draft transfer, stating:

“You will note that the transfer is now in the name of LIDL U.K. GmbH. We trust that your clients will have no objection. It is proposed that completion should take place on or before 28 July 2000.”

On 19 July Richard James replied to Ungoed-Thomas, returning requisitions on title, returning the draft transfer approved, save as slightly amended -- and it is not suggested that those amendments are material for today’s purposes -- and agreeing to treat the top copy as the engrossment. They explained that there would be some delay in execution, but that they would come back as soon as they were able to complete the transaction. They added that they had had a call from their client -- that is, one of the appellants:

“…who informs us that having spoken to Mr Gibbons [Mr Gibbons being an officer of LIDL] who has informed Mr Davies that the full excavation costs [that is, the purchaser’s work] are to be borne by Lidl. This is not in keeping with the terms of the Contract and we should be obliged if you could please shed any light on the matter.”

There was no reply to that response at any material time. The letter concluded by confirming that two of the appellants had no objection to the transfer being in the name of LIDL.

The next letter is 2 August 2000 from Bevan Ashford. This is the letter from Bevan Ashford to which I referred a moment ago. I need to read the first two paragraphs in full:

“We understand from Mr Jenkins of Ungoed-Thomas and King that you are instructed to act on behalf of Mr and Mrs Davies in connection with the sale of the above land and we confirm that we are instructed to act on behalf of Lidl GmbH UK in connection with same.

We confirm that we have agreed with Mr Jones’ Solicitors that we will forward the completion monies direct to yourselves. Therefore we will be grateful if you would sign the Requisitions on Title and return the same to us. In addition we will require an undertaking to forward the Transfer and Deeds direct to ourselves at completion along with the letter from Mrs C A Walker of National Mutual which relates to Entry number 3 of the Proprietorship Register of the Vendor’s Title. It would appear from your letter of the 1^st August 2000 that this may have been sent to Mr Jones’ Solicitors and therefore we will obtain the appropriate undertaking from him to forward the same to ourselves, if this is the case.”

Following that letter, Bevan Ashford sent Richard James by fundsflow the sum of ₤660,000, which was duly received on 3 August 2000.

Meanwhile on 2 August Richard James had written to Bevan Ashford thanking them for their letter and confirming that they had received a letter from Ungoed-Thomas with their authority for Richard James to deal with Bevan Ashford and agree arrangements for completion. The letter goes on:

“In the circumstances you have our undertaking that upon receipt of the sum of ₤630,000.00 in our firm’s client account we will forward to you the engrossment of the Transfer executed by the Sellers together with the Land Certificate for WA815876, the original of the letter from Mrs Walker and also the bundle of pre-registration Deeds and Documents. Mr Jenkins has a copy of Mrs Walker’s letter, not the original.”

On 2 August Bevan Ashford had themselves written to Mr Jenkins, saying they had had confirmation from Richard James that Richard James could deal with Bevan Ashford when agreeing the arrangements for completion of the transfer.

Now on 4 August Mr Richard James of Richard James & Co had discussions with Bevan Ashford and dictated a letter which was sent on 7 August. That later letter stated that the firm had received ₤667,000, but continued as follows:

“…we already held a deposit of ₤30,000. We therefore confirm that on the morning of Friday the 4^th we instructed our bank to return to you via the CHAPS system the sum of ₤30,000. Would you please confirm safe receipt.”

Then there is an asterisk which is appended to the “₤30,000”, and there is added in manuscript:

“We refer to our further discussion and confirm that we instructed our bank to return to you the sum of ₤130,000.”

That transfer was duly made, and Bevan Ashford on the same date confirmed that completion had taken place, that they had released the sum of ₤530,000, and looked forward to receiving the documents due at completion.

On 9 August Richard James wrote to Bevan Ashford asking for confirmation of receipt of the sum of ₤130,000. They then say:

“Your letter refers to a release of ₤530,000.00 and we assume this to mean ₤560,000.00 less the deposit and taking into account the retention of ₤100,000.00. Please confirm.”

And then there is a reference to the conversation between the clients with Mr Gibbons:

“Prior to completion we were instructed that our clients had spoken direct with the effect that our clients would not be involved with the costs of excavation. We wrote to Messrs Ungoed-Thomas & King on 19^th July and we are instructed to send a copy of that letter to you which we enclose herewith. We would refer you to the pre-penultimate paragraph, to which we did not receive a response.”

And the letter then terminates.

So what happens is that completion takes place, completion is in favour of the second defendant, the sum of ₤100,000 is deducted from the purchase price. Mr Richard James understood that to be a retention, and that he was also querying whether in fact there ought to any retention, on the footing that LIDL would bear the costs of the excavation themselves so that the sum could be returned to the purchaser.

Bevan Ashford in a later letter of 11 August gave the required confirmation that they had received the sum of ₤100,000, and they confirmed:

“…we released the balance of the completion monies being ₤530,000.00 which under the Terms of the Contract is the purchase price, less both of the deposit of ₤30,000.00 which was paid at exchange and the retention of ₤100,000.00.”

Now it is important to record that what has happened in the meantime is that the second defendants have, it is said, carried out certain works, but certainly refuse to return any part of the ₤100,000. The appellants say that some or all of that sum should be returned, and that not all that amount would have been required for the purposes for the works. Neither side says that the agreement of 20 October was made by Mr Jones’s agent for LIDL. There appear to have been separate agreements between Mr Jones and LIDL for the sale of the land. The second defendant says that it was not a party to the sale and purchase agreement, and that it obtained an assignment of the benefit of that agreement but not the burden under a separate document. LIDL contends that they did not make any agreement with the appellants under which they were required to carry out the outstanding works, and they were not a party to the agreement containing clause 18, and did not retain any monies under that agreement.

Now Mr James has put in a witness statement in which he deals with the return of the retention monies. He says:

“I spoke to Ms Clarke [that is, Ms Clarke of Bevan Ashford] on 4^th August and she demanded that in addition I should return the sum of ₤100,000 under clause 18 of the sale and purchase agreement. I understood that on completion of the works the balance of the retention monies held by Bevan Ashford would be repaid to my client. I was therefore content to forward the ₤100,000 to be held by Bevan Ashford.”

Before going to the judgment, I should refer to the allegations in the pleading. The allegations against the first defendant were that the retention monies were held by Mr Jones on trust for the claimants on the terms set out in clause 18; and secondly, that in breach both of trust and the terms of the agreement, the first defendant has permitted the second defendant to continue to hold and retain the retention monies or any balance payable under clause 18.3 after the period prescribed in clause 18.2 of the agreement, alternatively after completion of the purchaser’s works, and the claimant has suffered loss and damage.

Part of the claim is therefore put on the basis of a Quistclose Trust. But I have read the relevant document with the manuscript amendment which appears at page 206 of the bundle, and in my judgment it could not be said that any condition was imposed on the particular monies returned, and therefore the contention that there was a Quistclose Trust in my judgment has no real prospect of success. But the pleading does go on to talk about “in breach of the terms of the agreement”, which is the sale and purchase agreement dated 20 October 1999.

Now Mr Jones did not come into the arrangements for completion directly; completion was conducted between Richard James and Bevan Ashford. Mr Richard James got the authority of Ungoed-Thomas & King to deal direct with Bevan Ashford, and to handle the arrangement for completion with them. Bevan Ashford state the terms on which they acted in their letter at page 197.

Before I go to that, I should go to the judge’s judgment. He dealt with the position very shortly. He said that the claim against Mr Jones was unsustainable:

“The Claimant voluntarily paid the ₤100,000 to the Second Defendant with the consent of the First and Second Defendant. The reality is that once the parties agreed amongst themselves that the transfer would be to the Second Defendant and that the ₤100,000 retention money would be used by the Second Defendant to carry out the outstanding works the First Defendant has had no dealing with what occurred which could possibly render him liable for breach of the agreement or in some way for the actions of the Second Defendant under the law of trusts.”

Now Mr Blackmore, who appears for the appellants, has analysed that passage in the judgment most carefully. He contends, for instance, that the claimant did not voluntarily pay the sum of ₤100,000 to the second defendant, and did not do so with the consent of the first and second defendants. He contends that the sum was paid to Bevan Ashford pursuant to the terms of the agreement of 20 October 1999. He further says that if there was any agreement that the sum of ₤100,000 would be paid to LIDL, and that it would be used by them to carry out the outstanding works, that would have not been an enforceable agreement because of provisions of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. He therefore criticises the judge’s reasoning.

In my judgment, the claim against the first defendant must depend on the appellants being able to say that Bevan Ashford acted for Mr Jones or was an agent for Mr Jones, so that he became responsible for the retention monies, because the allegation is that he permitted them to use those monies in violation of the agreement. The pleaded case is with reference to the monies actually returned. It could not be said that the first defendant has had any control over the retention monies, except as a result of what happened at completion, and as I have explained it was agreed that the monies payable on completion would be paid direct to the appellants, and they were not to be channelled through Mr Jones.

So in order to establish that there was a case against Mr Jones, as I have said, it seems to me -- and Mr Blackmore accepted this very fairly in his submissions -- that it has to be said that Bevan Ashford, when they received the retention monies, did so for Mr Jones, or in some way acted so that he retained some power of control over the monies. But when I go back to the letter which Bevan Ashford wrote on 2 August 2000, giving the terms on which they were acting, in my judgment it could not be said that they had authority to act on Mr Jones’s behalf; they state that they have authority to act on LIDL’s behalf, and that their authority from Mr Jones’s solicitors is to pay the completion monies direct to the appellants, and that is as far as their intervention in the transaction went. It would not be open to them to make a representation that they were the agents for Mr Jones, and that representation would have to have come from Ungoed-Thomas & King, or through Mr Jones himself.

Accordingly, as I see it, there is no way in which it could be said that Mr Jones was responsible for the ₤100,000 which was sent back to Bevan Ashford at completion, and thus that there is no prospect of success on appeal in showing that the judge was wrong to reach the conclusion that he did.

In those circumstances, I would refuse permission to appeal.

I have, of course, borne in mind that Mr Richard James has given evidence in his witness statement that he spoke to Ms Clarke, and he understood that the retention monies would be held by Bevan Ashford and repaid to the appellants in due course, but he does not suggest that he received any precise representation to that effect, or that it was a representation on behalf of Mr Jones.