Shepherd v Collect Investments Ltd

Raymond Shepherd appeals against an award of damages of £285,700 for the unlawful occupation of land for periods totalling 51 months between January 2009 and September 2014. The award was made by HH Judge Raeside QC, sitting as a Deputy High Court Judge in the Leeds District Registry, in proceedings brought by the Respondent, Collect Investments Limited (CIL). The Appellant appeared in person before the Judge but has been represented by solicitors and counsel before us. CIL appeared both in this court and below by one of its two directors, Mrs Susan Gelley. The second defendant, a company controlled by Mr Shepherd called Albert Hill Skip Hire Limited (Albert Hill), was the subject of a winding-up order made in September 2014 and played no part either in the trial or in this appeal.

The land is a 7.2-acre industrial site at 630 Whessoe Road, Darlington, County Durham (the Land). The Appellant went into occupation of the Land in 2007 under the terms of licence granted by Alan Blair. Mr Blair was the beneficial owner of CIL, a company incorporated in the British Virgin Islands (the BVI). CIL was the registered freehold proprietor of the land. By a letter dated 15 December 2008, Mr Blair terminated the licence and gave notice to quit. The Appellant did not comply with the notice and remained in occupation of the Land. Mr Blair died in 2009 and letters of administration were issued in October 2011 appointing his two daughters, Mrs Gelley and Mrs Helen Christine Cail, as joint administrators of his estate.

There have been earlier proceedings between, among others, the parties to this litigation concerning the ownership and right to occupy the Land. In Shepherd v Gelley (Case No: ONE90046), Mr Shepherd and his company Albert Hill made claims against persons who are not parties to these proceedings, but CIL was one of two Part 20 claimants. Following the trial of preliminary issues, HH Judge Walton, sitting as a Deputy High Court Judge in the Newcastle Upon Tyne District Registry, made an order dated 2 November 2012, which was varied in part by this court on appeal: see [2013] EWCA Civ 1172.

For present purposes, the significant features of the order, as varied, were as follows. First, CIL was at all material times the legal and beneficial owner of the Land. CIL had been dissolved in 2001, having been struck off the register of companies in the BVI in 1991, but it was restored to the register by an order of the BVI Court made on 11 January 2011. The effect of the order was that CIL was deemed never to have been dissolved or struck off the register. Second, the notice given by Mr Blair in December 2008 was effective to terminate the Appellant’s right to occupy the Land, so that his occupation after expiry of the notice period of seven days was as a trespasser. Third, in breach of the licence terms and of planning controls, the Appellant used the Land as a waste disposal site and caused or permitted very large quantities of waste to be dumped there. For these activities, the Appellant was prosecuted by the Environment Agency and convicted on eight counts of acting contrary to environment regulations, for which he was sentenced to a term of 18 months’ imprisonment (less time already served).

The claim form in the present proceedings, with particulars of claim attached, was issued in July 2014. The relief claimed was an order for immediate possession and damages for trespass. A summary order for possession was made on 12 September 2014.

Damages were claimed under two heads. The first head was for the costs of removing the waste that had been unlawfully tipped on the Land, estimated at about £500,000. The second head was “the lost revenue to the Claimant of leasing or licencing the Land from 1 January 2009 at the rate of £12,000 per annum to the date hereof, making a total of £78,000 and continuing at the rate of £2,000 per month until vacant possession is given or taken”.

On 18 February 2015, pursuant to directions given in October 2014, CIL served an expert report of Gary Boardman, a chartered surveyor. He gave evidence as regards both heads of the claimed damages. He estimated that the total loss of rental income over the relevant period was £285,700. I will return later to this report, when considering the grounds of appeal. On 24 February 2015, CIL served a witness statement of Mrs Gelley. In paragraph 17, Mrs Gelley stated that if the Appellant had not tipped unlawfully and refused to vacate the Land, the expert report showed that CIL could have earned around £285,000 in rental income over the relevant period.

By an order made on 11 March 2015, the Appellant was granted permission to put questions to Mr Boardman pursuant to CPR 35, such questions to be answered by 22 April 2015. He was also given permission to obtain and rely on expert evidence, including on rental valuation, to be disclosed by 29 May 2015. On 7 July 2015, the Appellant applied for an extension of time for service of an expert’s report, to which CIL did not object. On 7 September 2015, an extension was granted to 18 September 2015. In the event, the Appellant did not file an expert report. He had, however, sought information from Mr Boardman by a letter dated 31 March 2015, to which Mr Boardman responded on 22 April 2015.

The trial took place over four days in October 2015, at the end of which the Judge immediately gave judgment. Mr Shepherd cross-examined the witnesses called by CIL, including Mr Boardman. In the course of the trial, CIL abandoned its claim for damages for the costs of removing the unlawfully dumped waste, so limiting its claim to lost income rental. The judgment, as transcribed, runs to 37 pages and 167 paragraphs. It sets out the procedural history and summarises the earlier proceedings, the statements of case and the factual and expert evidence at length. The discussion and conclusions on the issues in the case are, as the Judge put it, set out “quite shortly” – in four paragraphs at the end of the judgment, although he had made findings on the evidence in the course of summarising it.

At [165], the Judge records the appellant’s objection that CIL should have been confined to its pleaded case of lost rental income at a rate of £12,000 per annum. While the Judge noted that CIL had not applied to amend its particulars of claim in this respect, he regarded that as a formality. He took the view that, in the light of the expert report and Mrs Gelley’s witness statement, it had been perfectly clear to the Appellant that CIL was claiming about £285,000 and the case had been opened on that basis. On the basis of Mr Boardman’s report, which he accepted, the Judge awarded damages of £285,700.

The Judge refused permission to appeal, but Floyd LJ granted permission to appeal on three out of the four grounds advanced by the Appellant. The grounds of appeal for which permission was given centre round the Judge’s acceptance of the rental values put forward by CIL’s expert witness.

In its Respondent’s Notice, CIL applied for permission to adduce fresh evidence as to the proceedings brought against the Appellant by the Environment Agency under the Proceeds of Crime Act 2002. The proceedings were heard in February 2017 and by a judgment given on 23 February 2017, the Appellant was ordered to pay £980,207, including £316,232 directly attributable to his activities on the Land.

We refused permission to adduce this evidence. CIL’s pleaded case, and its case as advanced in its evidence and at trial, has consistently been for damages representing the rent it lost as a result of the Appellant’s unlawful occupation of the Land. The benefits that the Appellant obtained through his criminal tipping on the Land are irrelevant to that claim or its quantification. Moreover, the argument to be made on the strength of this evidence would appear to involve a claim to share in the Appellant’s proceeds of crime, which might well be open to objection in principle.

The first ground of appeal advanced by the Appellant is that the Judge was wrong to allow CIL to increase its claim for lost rent from £12,000 pa to £78,000 pa without an application to amend its particulars of claim “where the defendant was taken by surprise and prejudiced by the unexpected increase in the value of the claim”.

If indeed the Appellant had been taken by surprise by the increase in the claim and prejudiced by it, it plainly would not have been fair to permit CIL to run a claim for the increased amount, without at any rate an adjournment to allow the Appellant to answer it. The Judge, however, considered that the Appellant was not taken by surprise. At [165], he said that, in view of the expert report and CIL’s witness statements, “it has been perfectly clear to Mr Shepherd as he well knows from the documents, that he is meeting that case, namely it is apparent from the witness statement of Susan Galley that she is claiming the sum of about £285,000 as she seeks in paragraph 17 of her witness statement”.

In my judgment, the Judge was plainly right to take this view. Not only had the Appellant been served with the expert report and Mrs Gelley’s witness statement over seven months before the trial, but the Appellant had raised questions with the expert in March 2015, six months before the trial, on the figure for lost rent put forward by him. The Appellant submits that, because the expert’s opinion related to industrial land in general and not specifically to the Land, he was entitled to proceed to trial in the expectation that the relevant sum was that claimed in the particulars of claim. This is wholly unconvincing, particularly as the Appellant directed questions to the sum put forward by the expert.

As there was no unfairness in permitting CIL to proceed with its claim for lost rent at a rate of £78,000, it was well within the case management powers of the Judge not to require a formal amendment of the particulars of claim.

I therefore reject the first ground of appeal.

The second ground of appeal raises six issues with respect to the expert evidence on lost rent. It reads:

The expert had not visited the land.

The expert was unaware of or failed to take into account the significant issues of historical tipping on the land which rendered it incapable of being rented out or sold.

The expert had been instructed to and had provided an average rental income figure not for the specific land in question but for industrial land in general which figure was irrelevant.

The expert had provided no proper justification for the figures in his report which were completely lacking in any explanation or comparables to support them.

The expert’s figures were wholly inconsistent with the historical evidence as to rental values for the land.

The expert had, in answer to questions raised of him, failed to provide copies of the comparable assessments which he alleged he had used in forming his opinion and had merely asserted that he had professional qualifications, which, it is submitted, was no proper answer to the reasonable questions raised of him.

The expert admitted under questioning that he had ignored any impact on the rental value of the land which might be as a result of tipped waste as it was not part of his instructions.”

Sub-paragraph (a) does not, by itself, raise a valid objection to the expert evidence. Whether it is necessary for a valuer to visit the land in question depends on the circumstances. It may be perfectly possible to provide a reliable opinion on rental values without a visit.

Sub-paragraph (a) is linked to sub-paragraphs (b) and (g). The presence of substantial quantities of dumped waste on a site is likely to depress rental values, if it is not removed before letting, and a physical inspection may well be required before a reliable opinion can be given. This is not, however, in the circumstances of this case an objection on which the Appellant can rely. I referred earlier to the finding in the previous proceedings between the same parties that it was the Appellant who had permitted or caused very large quantities of waste to be dumped on the Land. That finding is binding on him as against CIL. He cannot seek to reduce the amount of lost rental by reference to the presence of waste for which he is responsible. If the Appellant’s case was that there was a significant amount of waste present on the Land before he went into occupation, it was for him to lead evidence of it and to prove its effect on rental values. He did not do so.

Sub-paragraphs (c) to (f) can be taken together. The Appellant complains that the expert was instructed to value industrial land in the North East, not the Land itself, and he produced no evidence, such as comparable rents, to support his opinion, despite the Appellant’s request.

The report states simply “average rental income for 7.2 Acres (2.92 Hectares) of industrial land (excluding development or hope value)” for the relevant periods between January 2009 and September 2014, without further explanation or support. In his letter dated 31 March 2015, the Appellant asked the expert to “forward a copy of the documents sourced and assessed in support of the criterion used that was instrumental in arriving at the valuation”. Mr Boardman replied, “Our figures are based on comparable assessments and I would refer you to paragraph 1.04 and 1.05 of our report as to our professional qualifications in this regard”. Paragraph 1.04 stated Mr Boardman’s professional qualifications and employment history and that he specialised in commercial work throughout the North East. In paragraph 1.05, Mr Boardman stated that every effort had been made to prepare the report in accordance with the relevant practice statement and guidance notes issued by the RICS and that the report was based on the information supplied by CIL and included all relevant matters known to him.

The Appellant did not write further to request details of the comparable rents on which Mr Boardman had relied.

Mr Boardman gave oral evidence at the trial and was cross-examined by the Appellant.

In his judgment at [120] – [138], the Judge summarised the written and oral evidence given by Mr Boardman. Having set out the question asked of Mr Boardman by the Appellant in his letter dated 31 March 2015 and the answer given by Mr Boardman, the Judge said at [131]: “That, in this court’s judgment, is an answer to that question, I have referred to that part, it is a standard way experts deal with their report as common to these courts, over very many years of this sort of expert evidence”.

At [132], the Judge summarised questions put to Mr Boardman in cross-examination by the Appellant, dealing with the state of the land. At [133], the Judge continued:

It does not appear from the judgment that the Appellant either asked Mr Boardman any questions about the comparable rents he had used or requested copies of documents evidencing those comparables. While I would not support the Judge’s view that it is common, or indeed appropriate, for an expert valuation report to give no information on the comparable values on which the expert’s opinion is based, this was a matter for the Appellant to pursue in cross-examination, if not before. Having not done so, it is not open to him either to submit in closing at the trial, or on an appeal, that the expert opinion should be rejected for the lack of such information.

The same is true of the closely linked objection that Mr Boardman had, in accordance with his instructions, provided a rental figure not for the Land but for industrial land in the North East. This would be inappropriate if there were material differences in rental values depending on the location within the North East of similar industrial sites. Mr Boardman must be taken to have proceeded on the basis that it was appropriate to provide rental figures on this basis, and the Appellant provided no evidence to the contrary nor does it appear that he cross-examined Mr Boardman on this issue. For the reasons already given, the Appellant could not rely on the poor condition of the Land to justify a lower figure.

As to sub-paragraph (e) (the expert’s figures were wholly inconsistent with the historical evidence as to rental values), this was put to Mr Boardman and his answers are summarised in the judgment at [134] – [136]. He did not consider that they affected his opinion on rental values for a period beginning in January 2009, and the Appellant has provided no basis for arguing that the Judge was plainly wrong to accept Mr Boardman’s evidence on this.

For these reasons, I would reject this ground of appeal.

The third ground of appeal reads as follows:

Sub-paragraph (a) raises an issue of fact and expert opinion that, if it had merit, should have been dealt with by evidence adduced by the Appellant and put to Mr Boardman in cross-examination. It is not a matter that can be raised on an appeal.

The valuation report by George F. White was dated 8 July 2010, on instructions provided in December 2009. At the time of the instructions, there was an outstanding enforcement notice issued by the local authority in August 2009 as a result of the use of the Land by the Appellant for unlawful waste tipping. The valuation was prepared expressly on the basis that the enforcement notice was in force and that the Land was in need of remediation, the costs of which had not been ascertained, and that it was unlawfully occupied by the Appellant and could not therefore be sold with vacant possession. It was not therefore relevant to a rental valuation of the Land with vacant possession and without the damage caused by the Appellant’s unlawful tipping.

In giving permission to appeal for the third ground of appeal, Floyd LJ referred only to the expert evidence and did not refer to the issue raised in sub-paragraph (c). In my judgment, there is no merit in it. The appellant suggests that the Judge should have disregarded in his award of damages for trespass the period after the grant of an injunction on 3 May 2011 restraining him and Albert Hill from entering the Land until trial or further order or, alternatively, the period after the judgment of the Court of Appeal in October 2013. It is asserted that, while the appellant and Albert Hill were still in legal possession of the Land, they had not been in actual occupation of it in those periods.

This does not appear to have been a submission made to the Judge, as it is simply not dealt with in his judgment and he was not, after giving judgment, asked to deal with it. There are therefore no findings as to any relevant facts. In any event, the appellant continued to assert a right to possession of the Land right up to the hearing of CIL’s application for a possession order in September 2014, thereby preventing CIL from letting the Land. As Sales J, with whom Richards and Floyd LJJ agreed, said in his judgment in this court in October 2013 at [3] the appellant and Albert Hill “are in occupation of the Land”. Likewise, the Judge in his judgment at [162] said that the appellant unlawfully retained possession of the Land until he gave up possession following the making of the possession order on 12 September 2014.

Accordingly, I would also reject the third ground of appeal.

Very shortly before the hearing of this appeal, the Appellant’s solicitors gave notice by a letter dated 15 November 2017 that the Appellant wished to re-open the application for permission to appeal so far as it concerned part of Ground 2 in his original Grounds of Appeal. So far as relevant, this Ground reads as follows:

Floyd LJ refused permission to appeal by an order dated 12 January 2017, having considered the application on the papers. As the appeal was filed before the rule changes made with effect from 1 October 2016, the Appellant was entitled to request that the refusal of permission be reconsidered at a hearing. Such a request had to be filed with the court within seven days after service of the notice of Floyd LJ’s decision.

In seeking to justify the very substantial extension of time required for the refusal of permission to be reconsidered, the Appellant’s solicitors state that at the time that Floyd LJ’s decision was received, the Appellant was heavily engaged in defending the proceedings under the Proceeds of Crime Act, to which I have earlier referred, and had limited funds. They continue: “Neither he, nor we, perhaps appreciated at the time the potential importance of this ground of appeal and given the Appellant’s other distractions and his limited funds, he did not seek to pursue it”. None of this provides, in my judgment, a justification for the Appellant’s failure to request a hearing. The proceedings under the Proceeds of Crime Act were heard in February 2017 and judgment was given on 23 February 2017. There followed almost ten months before this application was made. The truth appears to be that there was a re-evaluation of the importance of this ground of appeal. This is not a sufficient reason for the delay to permit an extension of time.

In any event, the proposed ground appears to be without merit. It raises issues of fact as well as law and should therefore have been pleaded, supported by evidence and put before the trial judge for decision. None of this was done and it is too late to raise it on appeal. Further, the Appellant relies on an affidavit dated 17 August 2010 made by Mrs Cail in other proceedings. Apart from stating that she believed that she was “listed” as a director of CIL, it provides no evidence that she was a director nor does she state the grounds of her belief. She does not in the affidavit give her consent, or purport to give the consent of CIL, to the occupation of the Land by the Appellant. She states only that the Appellant currently had the right to be on the Land “until such time as his term expires and the appropriate notices served”. This statement of the Appellant’s legal rights was wrong, as established by the order of this court in October 2013.

For these reasons, we refused to extend the time for a re-consideration of the refusal of permission to appeal on this Ground.

For the reasons given in this judgment, I would dismiss the appeal.

I agree.

I also agree.