HSBC Trust Company (UK) Ltd. v Quinn

Joan Mary Bray (“Mrs Bray”) was born on 1 August 1911 and died, aged 92, on 13 January 2004. Probate of her last will, dated 29 October 2002, was granted on 16 April 2004 to the Claimant, HSBC Trust Company (UK) Limited (“HSBC”) and it brings this action as her executor. One of the assets of her estate is a freehold property at 324 Upper Richmond Road, Putney, London SW15 (“the Property”), which is, and for many years has been, used as a pharmacy. At the time of Mrs Bray’s death it was let to the Defendant, Mr Gabriel Quinn (“Mr Quinn”) under a Lease dated 23 December 1990 (“the 1990 Lease”); although the term expressed to be granted by the 1990 Lease expired in 2006, it continues under the Landlord and Tenant Act 1954.

In this action HSBC claims that Mr Quinn has no interest in the Property save for his rights under the 1990 Lease (and his interest as a residuary beneficiary of Mrs Bray’s estate under her will). Mr Quinn has two alternative claims. First, that shortly before she died Mrs Bray granted him an option to acquire the freehold of the Property for £375,000 which he has exercised, and that he is entitled to enforce this as a binding contract for sale; and second, that in 1984 Mrs Bray and he came to an arrangement the effect of which was that if he improved the Property by building an extension he would in due course be offered the opportunity to acquire the freehold at a suitably discounted price, and that he is entitled to the benefit of this by way of the doctrine of proprietary estoppel. These are only very brief summaries of the claims which are considered below.

I heard from a number of witnesses. HSBC called Mr Graham Marr, formerly a Private Client Manager for HSBC; Ms Jacqueline Butcher, a Probate Services Manager for HSBC; and Mrs Elizabeth Lardner, a friend of Mrs Bray’s. Mr Quinn, as well as giving evidence himself, called his daughter Ms Paula Quinn; and two valuers as witnesses of fact, Mr Jeffrey Francis and Mr Ian Ailes. I will leave aside for the moment the question of Mr Quinn’s reliability which is a matter that I will have to consider in detail; I have no hesitation in accepting that all the other witnesses were doing their best to assist the court, and unless otherwise specifically commented on, I accept their evidence.

I also heard from two experts in geriatric medicine, Dr Phillips and Professor Hodkinson: I will deal with their evidence when I come to the particular issue with which they were concerned. A single joint expert valuer, Mr Nigel Smith, gave a written report on the joint instructions of the parties but did not give oral evidence.

I will first set out the facts as I find them, but without at this stage seeking to resolve some of the more controversial issues.

The Property is part of a small terrace of properties originally built in about 1870 as a row of houses and later mainly converted to retail shops. It now consists of a ground floor and basement used as a pharmacy and ancillary storage, with two upper floors above: these are residential but not currently in use. Mrs Bray acquired it in 1959; it appears from an entry in the Charges Register on the registered title that she had inherited it, as until it is sold it is liable to such death duties as may be payable on the death of a Lucy Thurston who died in November 1958 and whose address (at 392 Upper Richmond Road) was the same as that given for Mrs Bray when she was registered as proprietor in 1959.

Mr Quinn is a qualified pharmacist. He was born in Ireland in 1935 and qualified there in 1956. He moved to England in 1970. He initially worked for a Swiss pharmaceuticals company, but in the mid-1970s he happened to go into the shop at 324 Upper Richmond Road, where at that stage there was a pharmacy run by a Mrs Malkiewicz. He found a long queue and offered to help out, and ended up working for Mrs Malkiewicz. He puts this at 1974 in his pleading and 1974/75 in his witness statement, but in oral evidence could not be more precise than the 1970s; the exact date does not matter.

In due course he joined Mrs Malkiewicz in the business. His pleaded case is that he remained an employee until October 1984. This reflects the facts as recorded in an Opinion of Richard Wilson QC (who was formerly acting for him), an extract of which was adduced in evidence, to the effect that Mr Quinn was employed by Farmer & Co. Ltd, which was owned by Mrs Malkiewicz, up until October 1984. In his witness statement he corrected this by saying that he and Mrs Malkiewicz had formed Farmer & Co. Ltd on 5 March 1984 and had both become directors; in oral evidence he reiterated that he thought that he had only become a director in 1984, shortly before the events of May 1984 mentioned below.

In fact the records from Companies House show that he was mistaken: Farmer & Co. Ltd was incorporated by company formation agents in August 1981 under the name Prosecrest Ltd, and Mr Quinn and Mrs Malkiewicz became directors on 25 September 1981. 5 March 1984 (the date mentioned in Mr Quinn’s witness statement) was the date on which it changed its name to Farmer & Co. Ltd.

On 9 May 1984 there was an explosion at the Property. This both injured Mr Quinn and damaged the Property. Mr Quinn had to take some time off work to recuperate, and he says that it was then that he first really got to know Mrs Bray. Until then she had simply been the person to whom they sent a rent cheque every month, but while convalescing he took a rent cheque round to her home (she was by then living at 33 Fairdale Gardens, 500 or 600 yards from the Property, where she continued to live until she died); she invited him in for a drink and their friendship developed from there. They used to go out together: in particular she used to take him to lunch, usually on Sundays, at the Hurlingham Club where she was a member.

The damage to the Property meant that the pharmacy was closed for some time (Mr Quinn said between May and September 1984) for refurbishment. This was probably paid for by insurers, but the details are neither available nor important.

At about the same time Mr Quinn concluded that a new extension was required. This was because changes in the way in which medicines were dispensed (with pre-prepared foil packs of pills and small bottles of liquid medicine instead of large bottles of pills or medicine) meant that far more storage space and a different type of shelving were required. In addition the advent of computerisation meant that new computers and software were required.

Mr Quinn therefore instructed an architect, Christopher Jolly. His fee note shows that he had been instructed by 21 July 1984; and by 10 August 1984 he had produced a detailed drawing for submission for planning permission and building approval.

Planning permission was granted on 3 January 1985. In October 1985 Mr Quinn obtained an estimate from a firm of builders, Star Property Maintenance Co Ltd, of £46,000, which he accepted. Their final invoice in February 1986 shows that the total price was in fact £48,000 (the district surveyor having required £2,000 of extra works), and that it was paid by stage payments of £5,000 between October 1985 and February 1986. Mr Quinn says he also spent a further £30,000 on fitting out (which was carried out by Leroy Bryants Co) and the installation of computers and software. There is no documentary evidence to confirm this figure, and in a letter of 28 May 2004 Mr Quinn had put the total at £69,000. Mr Quinn said he personally borrowed £30,000 from his daughter Paula Quinn, who was then earning good money in the USA, on the basis that he would repay her when he sold the pharmacy. She gave evidence before me supporting this, which I accept. Mr Quinn however did not pay for the works direct: he put the money through the company so as to be able to reclaim the VAT. This means that in law he lent the money to the company and it was the company which paid for the works, in part with the £30,000 and the balance out of profits of the business.

The work that was carried out can be seen from a combination of Mr Jolly’s drawing and the schedule to Star’s estimate. It involved the digging out of new foundations and the building of a new two-story extension at the rear of the Property at basement and ground level. It also involved the removal of a staircase leading to the upper floors and its replacement by a new staircase in the extension. This means that access to the upper floors can now only be gained by going through the shop into the extension.

It was part of HSBC’s case as presented to me by Mr Wonnacott that the work also involved moving the front door from its original position at the right of the Property (looking at it from the road) to its current position in the centre of the shopfront so that before the work was carried out, access to the upper floors could be obtained from the front door without going through the shop. Mr Schmitz, who appeared for Mr Quinn, disputed this and I think he is right. I accept that as built the Property had a front door at the side leading to an entrance passageway and a staircase; this is the typical layout of a 19^th century terraced house, and the next door property (322 Upper Richmond Road) which retains its original appearance has its front door in this position. But Mr Jolly’s drawing of August 1984 has a plan of the existing layout which clearly shows that the Property already had a central front door leading into the shop, that the shop extended across the whole width of the Property at the front and that access to the upper floors was then via a staircase behind a partition in the back half of the shop. In addition Star’s schedule of works includes the demolition and carting away of the existing staircase but says nothing about moving the front door or the installation of a new shopfront. I therefore find that the works carried out in 1985/6 did not include moving the front door and that it was already impossible to gain access to the upper floors except through the shop before these works were done.

There remain two other factual matters concerning this period which are in dispute:

On 4 March 1986 Farmer & Co. Ltd was struck off the register. Mr Quinn gave oral evidence that it was struck off for one day and then reinstated, but (even if it were legally feasible) there is no indication of this on the records at Companies House and I think he must be wrong.

On 15 May 1989 Mrs Malkiewicz died. Mr Quinn and his wife acquired a new company, Padhelm Ltd. This was incorporated by company formation agents on 14 March 1989 and at some stage Mr Quinn and his wife became directors and equal shareholders; this was probably on or shortly after 9 May 1989 when the company’s objects were amended to include dispensing and pharmaceutical business as its first object, and therefore just before Mrs Malkiewicz’s death. Padhelm Ltd took over the pharmacy business, and Mrs Malkiewicz (or her estate) was paid for her remaining interest in the business.

On 7 June 1989 Mrs Bray executed a will, which is the first of several wills and drafts which are in evidence and which have come from HSBC’s files. She left a number of pecuniary legacies (30 in all) of amounts ranging from £500 to £12,000. One of the larger ones was a legacy of £8,000 to Mr Quinn; this was only exceeded by one of £12,000 to Mrs Elizabeth Lardner, (an old friend of hers who gave evidence before me) and three of £10,000 to her god-daughter Vanessa Harrison, her nephew Brian Wood and a Miss Pamela Mayers. She left the Property to her nephew, and the residue of her estate to be divided among her pecuniary legatees in the same proportions as their legacies. The fact that she was leaving a substantial legacy to Mr Quinn tends to confirm that she and Mr Quinn had by then become good friends.

A further draft will was prepared for Mrs Bray in December 1990. This is in similar form, although it adds some specific legacies of chattels, including a picture and a clock for Mr Quinn, and specifies the share of residue for each beneficiary – in Mr Quinn’s case 80 parts out of 1071. The Property was again left to Mrs Bray’s nephew.

On 23 December 1990 Mrs Bray granted the 1990 Lease to Mr Quinn. Unlike the disputed 1984 lease, this is available. It appears to have been professionally drafted and since Mrs Bray’s signature was witnessed by a solicitor at Russell-Cooke, Potter & Chapman, it may well have been drafted by that firm. It demises the Property to Mr Quinn for the term of 15 years and 10 days from 23 December 1990. The rent is £11,000 subject to 5-yearly upward only rent reviews with a disregard of the matters set out in s. 34(a)-(c) of the Landlord and Tenant Act 1954. This includes (by s. 34(c)) any effect on rent of certain improvements – broadly those voluntarily carried out by a tenant of the premises in the previous 21 years. The user covenant limits user to the business of a chemist, druggist or pharmacist.

There is one curiosity about the lease. It is drafted as a lease between three parties, namely landlord, tenant and surety, and contains a covenant by the surety in familiar form. But the schedule which sets out the parties gives “Gabriel B Quinn of 324 Upper Richmond Road” as the tenant and “Gabriel Bernard Quinn of 324 Upper Richmond Road” as the surety. Mr Quinn’s actual name is Gabriel Bernard Peter Quinn, although he is known as Brian, and Mr Wonnacott invited me to conclude that he had given a slightly different version of his name as the person who was going to stand surety for him. If, as I think it is, this is intended to suggest that Mr Quinn pretended that there were two different individuals who were tenant and surety, then I reject the suggestion. If Mr Quinn had really wished to pretend that he had someone else as surety he would scarcely have chosen his own name and address, and if Mrs Bray had really wanted a separate surety, she would scarcely have been content with this. It is indeed odd that the Lease was entered into with Mr Quinn expressed to be surety as well as tenant, a provision which would have no legal content at all; this must remain unexplained although a possible explanation is that the provisions of the Lease were copied unthinkingly from a previous lease under which Mr Quinn was indeed a surety, the tenant being a limited company.

In July 1992 HSBC took instructions from Mrs Bray for a new will, partly because her nephew had died. Her instructions were that the devise of the Property to her nephew should be replaced by a direction that it be sold. This was duly incorporated in a new will executed by her on 21 October 1992.

In 1995 Mr Quinn and his wife acquired a further company, Coombedean Ltd, to run the pharmacy in place of Padhelm Ltd, on the advice of his accountant. Heads of terms were drawn up for the transfer of the business (still carried on under the name of “Farmer & Company”) from Padhelm Ltd to Coombedean Ltd, and Coombedean Ltd, of which Mr Quinn and his wife are directors and equal shareholders, continues to run the business to this day.

In December 1997 Mr Quinn instructed a surveyor, Mr Jeffrey Francis of J C Francis & Partners Ltd (who practised from the next door property, 322 Upper Richmond Road) to value the Property. In a letter of 11 December 1997 recording the basis of his instructions Mr Francis referred to the purpose of the valuation being

“to advise you as to the value of the property with vacant possession and subject to your existing tenancy (as a property investment) for your proposed discussion as to possible purchase with the current owner of the freehold.”

On 6 March 1998 Mr Francis duly produced a valuation (“the 1998 valuation”). This valued the open market value of the property on two alternative bases, with vacant possession at £160,000, and as an investment subject to the 1990 Lease at £110,000. Mr Francis added:

“We would suggest that you are in a position to bid up to £160,000 (as a maximum) for the purchase of the property because, immediately following completion of the purchase you are in a position to re-offer the property in the market with complete vacant possession. If, on the other hand, the vendor wishes to dispose of the property she is unlikely to obtain a price (other than to you) and in the market place in excess of the property’s value as an investment. In theory it should be possible, providing that the freeholder wishes to sell the property and you wish to purchase for a price to be struck at a midpoint between the two values.”

On the back page of the 1998 valuation is a handwritten endorsement by Mr Quinn, in these terms:

“I Gabriel B Quinn agree to purchase 324 Up. Richmond Rd. for the sum of £160,000 as set out in attached valuation drawn up on 6/3/98. Mrs. M. J. Bray agrees to sell at this figure with the proviso that £4000 be added each year on the 10^th March starting 1999 until the sale is completed. This contract to hold good for the term of the lease drawn up on the 23 Dec. 1990.”

Underneath this are Mr Quinn’s and Mrs Bray’s signatures, both dated 23 March 1998, and the names and addresses of two witnesses, Brian Armagh and Mrs J Snowden. I will refer to this as “the 1998 agreement”.

Mrs Bray dealt with a number of managers in HSBC’s Private Client department. By September 2002 the relevant manager was Mr Graham Marr, who gave evidence before me. He remained responsible for Mrs Bray’s affairs until her death and got to know her quite well. He first met her on 12 September 2002 and on the next day wrote to her with another draft will. She noted on it “Farmers Chemist Shop 324 Upper Richmond Road Putney to be sold” and in two further places that her house at 33 Fairdale Gardens and the shop were to be sold. After further amendments (including the reduction of Mr Quinn’s pecuniary legacy from £8000 to £5000), the will was executed by her on 29 October 2002. It contains in clause 2(g) an express direction reflecting the note she had made on the draft “Farmers Chemist shop 324 Upper Richmond Road Putney to be sold”. She left Mr Quinn a pecuniary legacy of £5,000, some chattels (a picture, travelling watch and the badge bar and badges from her car) and a share of residue of 80/470 parts.

In November 2003 Mr Quinn asked J C Francis and Partners for another valuation of the Property. The valuation was handled on this occasion by Mr Ian Ailes, who also gave evidence before me. He produced two separate reports. On 9 December 2003 he produced a valuation of the freehold subject to Mr Quinn’s tenancy of £375,000. On 30 December 2003 he produced a further valuation of the freehold with full vacant possession of £475,000.

The valuation report of 9 December 2003 also has an agreement endorsed on it in Mr Quinn’s handwriting as follows

“We agree to the conditions + price set out in J. C Francis report on the 9^th of Dec. 2003 to hold for 6 calendar months.”

This is followed by the signatures of Mrs Bray and Mr Quinn, the date 30/12/03 and the signatures of two witnesses, S Elouazani and (again) Mrs J Snowden. I will refer to this as “the 2003 agreement”.

A further agreement in Mr Quinn’s handwriting was signed by him and Mrs Bray on a separate piece of paper in early January 2004. After giving both parties’ addresses, it continues:

“We the undersigned Mary Joan Bray and Gabriel Brian Quinn agree to the sale/purchase of the property known as 324 Up. Richmond Road (The Chemist’s Shop) for the sum of £375,000 (three hundred + seventy five thousand pounds stg) based on the valuation made by the Chartered Surveyors J. C. Francis & Partners on the 9^th Dec. 2000 [sic – this is an error for 2003] making allowance for the extension completed in 1986 + fully funded by Gabriel B Quinn. We both have a copy of the agreement which is to be valid at £375,000 until 13^th September 2004.”

It is signed by Mr Quinn and Mrs Bray and again has 2 witnesses, in this case Dr A Shariff and (again) Mrs J Snowden. Despite the reference to both parties having a copy of the agreement, no copy was found with Mrs Bray’s effects and Mr Quinn has the only copy which has been found. I will refer to this as “the 2004 agreement.”

The 2004 agreement is undated. Mr Quinn in his witness statement puts the occasion of the signing of the 2004 agreement as “a New Year’s Day celebration” at Mrs Bray’s home. But this cannot be right. In a letter to Irwin Mitchell, HSBC’s solicitors, written in May 2004 (and therefore much closer in time to the event) Mr Quinn said that three days after signing the 2003 agreement he received a memo from the local family practitioner committee advising him that the two nearest surgeries to the Property were due to move, which would make his business unsaleable. That would have been on Friday 2 January. He then says that he discussed it with Mrs Bray the next time she came into the shop and she agreed to extend the period of the agreement. It was only after that that the document was signed at her house; Mr Quinn thought that this was when he took the prescription up to her, and accepted that this was probably on 3 January at the earliest.

Mrs Bray was found dead at her home on the morning of 14 January 2004 by her gardener. She probably died the previous day and this is the date recorded on her death certificate.

HSBC’s Probate Services centre is based in Sheffield and the administration of the estate was handled from there, the manager responsible being Mr Robert Herve. Mr Herve did not give evidence before me but documents from his file including attendance notes of telephone calls with Mr Quinn are in evidence. HSBC also uses local Probate Services Managers who are the first point of contact for the family on the ground. In the case of Mrs Bray the relevant manager was Ms Jacqueline Butcher, who did give evidence. She was told of the death on 19 January 2004, and went to Mrs Bray’s house the next day where she met Vanessa Harrison, Mrs Bray’s god-daughter. In the next few days she spoke to most of the beneficiaries on the telephone, including Mr Quinn. He told her (according to a note she made on 26 January) that “he and Mrs Bray were discussing him buying the property very recently.” This was a very short discussion and he did not at that stage mention any agreement, although he did refer to the fact that he had a valuation.

On 29 January 2004 there was a meeting at Mrs Bray’s house attended by both Mr Marr from the Private Client department and Ms Butcher from the Probate Services department of HSBC. The purpose of the meeting was among other things to deal with specific bequests and many of the legatees were there, including Mr Quinn. Mr Marr does not recall him saying anything about the Property. Nor does Mr Quinn mention anything about this in his witness statement. Ms Butcher however remembers him telling Mr Marr that there had been a gas explosion and that he already owned part of the property because he had built an extension to it and paid for some repairs, and Mr Marr replying that it did not necessarily mean that he owned it. I see no reason to doubt her evidence despite the fact that Mr Marr did not remember it; as he said, it was a small house with a lot of people asking a lot of questions.

On 4 February 2004 Mr Herve in Sheffield sent Mr Quinn what appears to be a fairly standard form letter with a copy of the will, and explaining the course of the administration.

On 5 February 2004 Mrs Bray’s funeral took place. There was a reception afterwards at the Hurlingham Club. Mr Quinn says that he spoke to Ms Butcher and told her he was going to retire, exercise his option and sell the business and premises. Ms Butcher remembers meeting him at the funeral but not really discussing any business there. She does remember him mentioning at some stage, she thinks in a telephone conversation after the meeting at the house, that he had an agreement because she remembers telling him that they had not found anything and if he had a copy he should send it to them.

On 24 February 2004 Mr Herve wrote to Mr Quinn to tell him that he had arranged for two valuations of the Property for probate purposes, one from Townends and one from Scotts. On 15 March 2004 Mr Andrew Sinclair of Townends provided a Marketing Report to Mr Herve recommending that the Property be marketed at £525,000 with a view to obtaining offers between £475,000 and £500,000. In the section of the report dealing with the terms of the lease Mr Sinclair said:

“The tenant [ie Mr Quinn] was not present at my inspection due to illness, but I telephoned him from the shop and he advised me that he had carried out major improvements to the property as a result of the gas blast and these improvements were to be disregarded until late 2005.”

Mr Herve having received this report was able to write to Mr Quinn (and no doubt the other beneficiaries) on 18 March 2004 confirming that he now had enough information to apply for probate. He enclosed a schedule of assets and liabilities of the estate and estimated that Mr Quinn’s share of residue would be worth £190,000 (this appears to be based on his share being 80/420, or about 19%, of a net estate of about £1m after payment of inheritance tax and fees). He also enclosed copies of the marketing appraisals from Townends and Scotts and said he proposed to instruct Townends to market the Property.

This led to Mr Quinn telephoning Mr Herve on 23 March 2004. Mr Herve’s note of that call is as follows:

“Mr Quinn called following receipt of my letter and confirmed that he had a written agreement to purchase the shop at a price of £375k. He said that this had been prepared by an agent (J P Francis).

I asked him to forward a copy which he agreed to do as soon as he returns to the UK from Ireland at the week-end.”

On 1 April 2004 Mr Herve wrote to Mr Quinn asking him for evidence of the agreement. It appears from a subsequent letter of 16 April that what Mr Quinn sent was the valuation of 9 December 2003 with the 2003 agreement endorsed on it. Mr Herve referred this to HSBC’s solicitors, Irwin Mitchell, who wrote directly to Mr Quinn on 27 April 2004 saying that this document did not create either an agreement or an option as it simply confirmed that the parties agreed to the information contained in the valuation.

On 5 May 2004 Mr Quinn telephoned Mr Herve again. Mr Herve’s note of that call so far as relevant is as follows:

“he stated that he had a later agreement to purchase the shop and agreed to forward this directly to our solicitors.”

After a reminder on 12 May, Mr Quinn sent the 2004 agreement to Irwin Mitchell with a letter explaining the circumstances of its execution. They replied on 19 May saying that the document did not create a binding contract and was only an agreement in principle as it did not set out all the terms.

On 28 May 2004 he faxed a letter to Mr Herve asking him to reconsider the position. The response was a letter of 1 June 2004 from Irwin Mitchell telling him that HSBC intended to sell the property subject to his tenancy very soon; Townends were instructed by 14 June. They received offers of £325,000 and £350,000, and Mr Quinn was informed of this by letter of 13 July; on 16 July he wrote to Mr Sinclair at Townends saying “I would like to confirm my original offer of £375,000” and asking to be advised of any higher offers. By 9 August Mr Quinn had increased this to a verbal offer of £475,000; on 13 August he had submitted a written offer of £525,000, which Townends recommended HSBC to take; and on 18 August Townends confirmed to Mr Quinn that they had instructions to accept this offer.

However this proposed purchase did not proceed. On 1 February 2005 Townends were writing to HSBC informing them that Mr Quinn had called saying that he was still intending to purchase and was following his solicitor’s advice regarding the contract he thought he had with the late owner; and that he intended to purchase the property whether at the lower price, as per the agreement, or at £525,000. However in March HSBC gave instructions to Townends to accept an offer from another purchaser. Mr Quinn lodged a unilateral notice at HM Land Registry and these proceedings followed.

Mr Quinn’s contractual claim is based on the 2004 agreement. It is common ground that although expressed to be an agreement “to the sale/purchase”, it does not impose any obligation on Mr Quinn to proceed with the purchase and therefore takes effect, if at all, as the grant by Mrs Bray to Mr Quinn of an option to purchase the Property, which could be taken up by him at any time up until 13 September 2004. The same is true of the 1998 and 2003 agreements which it is agreed took effect if at all as the grant of options.

Although HSBC’s pleaded case makes no admissions about the 2004 agreement and Mrs Lardner in her evidence disputed whether the signature on it was really that of Mrs Bray, Mr Wonnacott for HSBC did not suggest that it was not a genuine document signed by her. He did however take three points which he said meant that it did not create any enforceable rights. First, as the grant of an option, it required either to be supported by consideration or be made by deed, and neither was the case; second, Mr Quinn did nothing that amounted to the exercise of the option before it expired; and third that Mrs Bray did not have the requisite mental capacity when she signed it and it was not binding on her.

Mr Schmitz accepted that the option would only be valid if supported by consideration or made by deed; and did not in the end feel able to submit that there was any consideration. He therefore accepted that the option was not enforceable unless made by deed.

The formalities for a document to qualify as a deed are now found in s. 1 of the Law of Property (Miscellaneous Provisions) Act 1989, which replaced the common law rules with effect from 31 July 1990. It has subsequently been amended for instruments executed after 15 September 2005, but as originally enacted it provided, so far as relevant:

“(2)

An instrument shall not be a deed unless –

(a)

it makes it clear on its face that it is intended to be a deed by the person making it or, as the case may be, by the parties to it (whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise); and

(b)

it is validly executed as a deed by that person, or, as the case may be, one or more of those parties.

(3)

An instrument is validly executed as a deed by an individual if, and only if –

(a)

it is signed –

(i)

by him in the presence of a witness who attests the signature…”

Mr Wonnacott says that the 2004 agreement does not make it clear on its face that it is intended to be a deed. It does not describe itself as a deed; it is not expressed to be executed or signed as a deed; and it does not otherwise make it clear that it is intended to be a deed.

I accept this submission. Mr Schmitz showed me a passage from the Law Commission Report which led to the 1989 Act (Law Com No 163 on Deeds and Escrows dated 29 June 1987) in which at paragraph 2.16 the Law Commission explained that they considered that documents should not acquire the different status of being deeds unless this was patently intended by the parties and hence that this should be clear on the face of the document; that this would generally be clear because the word deed would appear somewhere on the document, but that it was not intended that such words should be essential so that the provision

“would still leave a court free to decide whether or not a document was intended to be a deed where a different formula was used, but only where there was evidence for such a finding within the document itself.”

I accept that this was the intention, which I think is plain enough from the wording of the Act itself (which on this point at any rate follows the wording of the draft bill annexed to the Law Commission Report). But it does not help to identify what other indications in a document might suffice to persuade a court that it was intended to be a deed. Mr Schmitz also referred me to what the Lord Chancellor, Lord Mackay of Clashfern, said when moving the second reading of the bill in the House of Lords, which was to the effect that it was undesirable to lay down just one method of indicating that a document is intended to be a deed “because to do so would invalidate what would otherwise be perfectly acceptable deeds merely for failure to include one vital word.” I am not at all sure that this is strictly admissible, but it was not objected to; it too however takes the matter no further than what is apparent from the wording of the Act. It seems to me plain that the Act provides that documents can be deeds without using the word “deed”; but on the other hand that a document is only to be held to be a deed if it is clear from the wording of the document itself (“on its face”) that it was intended to be a deed.

Mr Schmitz relies on a number of factors as indicating that the parties intended it to be a deed. First, the language is appropriate to a formal document, beginning for example with “We the undersigned” and giving the price in both numbers and words; second the parties have given their full names and addresses, and in Mrs Bray’s case signed it with her full name “Joan Mary Bray”, which is a more formal signature that she used, for example, on her will, as opposed to “Mary Bray” which was how she signed her cheques; and third, that care was taken to see that the signatures were witnessed and the witnesses gave their names and addresses. I fully accept that these are all indications that the document was intended to be a formal one and no doubt intended to have formal legal effect. But I do not regard any of them, singly or together, as any indication that the parties intended it to take effect as a deed, let alone as making it clear on the face of the document that they did. All that they show is that the parties intended it to be legally binding, and in my judgment this is plainly not enough; what is needed is something showing that the parties intended the document to have the extra status of being a deed. It is perhaps unlikely that a document drawn up by non-lawyers would happen to do this (although not impossible – one can envisage a layman following a pre-1989 precedent that was clearly a deed but did not use the word) – but whether or not this is so, in my judgment the document signed by Mrs Bray in early 2004 does not qualify as a deed. Nor do the earlier documents signed by her in March 1998 and December 2003 to which similar considerations apply.

That means that Mr Quinn’s contractual claim fails and makes it strictly unnecessary for me to deal with the other points relied on by HSBC. But in case I am wrong on that, I will set out my conclusions on them.

First, Mr Wonnacott says that Mr Quinn has not proved that the 2004 agreement was duly witnessed, which is a further requirement for it to qualify as a deed, under s. 1(3)(a) of the 1989 Act. It is the case that although all three agreements have the names of two witnesses on them, none of these were in the event called, and Mr Wonnacott was able to point to a number of oddities that were not fully explained:

Mr Wonnacott suggested that I should not in these circumstances find that the agreements were duly witnessed; he submitted that Mr Armagh and Dr Shariff might not even exist. I accept that the evidence in relation to the witnesses was nothing like as clear, comprehensive and accurate as it could have been and there remain some queries which have not been fully explained. But I do not believe Mr Quinn invented Mr Armagh or Dr Shariff, or had any reason to pretend that the agreements were witnessed if they were not – he produced at least the 2003 and 2004 agreements before he can have been aware of the potential significance of the fact of their being witnessed for their status as deeds – and I find no reason not to accept what appears on the face of the documents themselves. I therefore find that each agreement was witnessed by those whose names appear on it; and hold that this is sufficient to satisfy the requirements of s. 1(3)(a) of the 1989 Act in each case.

Mr Wonnacott’s next point was that assuming the 2004 agreement created a valid option, Mr Quinn did nothing that amounted to the exercise of it before it expired on 13 September 2004. So far as the law is concerned, it is common ground that, unless an option itself lays down a particular method by which it can be exercised, no particular formality is required, so that it can for example be exercised by giving notice orally.

In deciding whether a notice has been duly given, the test is whether the relevant communication is such as to leave the reasonable recipient in no doubt that the right reserved is being exercised: this was the test applied by Henderson J in the recent case of Rennie v Westbury Homes Ltd [2007] EWHC 164 (Ch) to which Mr Schmitz referred me and which concerned the question whether the grantee of an option had validly extended its period by serving a notice. Henderson J took this test from the well-known decision in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 768G-H per Lord Steyn; and there was no dispute before me that it was correct. In the present case this means that in order to exercise the putative option Mr Quinn had to make it clear to HSBC (or the hypothetical reasonable recipient) that he was exercising his right to buy the Property. To put it another way this requires him to have gone beyond asserting that he had a right to acquire the Property if he chose, and to have communicated that he had decided to do so with the result that he and HSBC were then respectively bound to buy and sell.

The facts relied on by Mr Schmitz were as follows:

Mr Schmitz also claimed that HSBC is estopped from relying on the non-exercise of the option. He relied on the letters from Irwin Mitchell of 27 April and 19 May 2004 denying the validity of the 2003 and 2004 agreements respectively, and argued that Mr Quinn had done all he could do in face of HSBC’s refusal to accept that any agreement was in force. Since I have held that HSBC were in fact right to refuse to accept this, there is an inevitable artificiality in addressing this point, but even if I had concluded that the agreements were valid, I do not think the conclusion follows. The fact that Irwin Mitchell told Mr Quinn he did not have an agreement (on this hypothesis inaccurately) does not mean that they were somehow also telling him that if he did have an agreement he need not do anything more to exercise his rights under it. And there was nothing in their letters to prevent him from sending a reply saying that he did not accept what they said and was determined to proceed with exercising his rights. They were not giving him advice but explaining why they had advised HSBC not to accept the agreements as valid; and in any event they in terms suggested he take his own advice. In the first letter the author said “I appreciate that you may wish to take independent legal advice”; in the second she said “I would appreciate if you would take independent legal advice” which goes a bit further. (Mr Quinn in fact did so – not from his present solicitors – but it did not lead to the service of any document that is relied on as a notice.) In my judgment there is nothing in these letters that would have estopped HSBC from relying on the lack of a notice exercising the option if the agreements had validly created one.

That brings me to Mr Wonnacott’s final point in answer to the contractual claim, which is that Mrs Bray did not have sufficient mental capacity to enter into either the 2003 or 2004 agreement. Since I have already held that the claim fails both because the agreements were not deeds and because there was no valid exercise of any option, I will deal with this comparatively briefly. Mr Wonnacott accepts that the onus is on him both of showing that Mrs Bray did not really understand what she was signing and that Mr Quinn must have known this.

I heard evidence from Dr Geoffrey Phillips, a Consultant Physician in Geriatric Medicine at Broadgreen Hospital in Liverpool, called by HSBC, and Professor Hodkinson, an emeritus professor of geriatric medicine, called by Mr Quinn. Each was clearly well qualified; but neither had met Mrs Bray during her lifetime so that each was being asked to express an opinion on her mental capacity solely on the basis of her medical notes.

These indicated no reason to doubt that Mrs Bray had full capacity in 1998: an elderly health assessment in 1999 recorded her state of mind as normal. The first indications of problems with her mental state start in November 2002 when she is described as having “terribly impaired short term memory”; from then onwards the records paint a very variable picture. In December 2002, she was referred to occupational therapy showing signs of early memory loss and possible alcohol abuse; on 6 January 2003 there was said to be “no evidence of significant dementia” although some concern over alcohol, but the occupational therapist who saw her on 13 January thought she had possible signs of early memory loss aggravated by a long standing high alcohol intake and recommended she be referred to the psychology service for further psychometric testing. On 27 February she took a test called the Mini-Mental State Examination (“MMSE”) which is specifically designed to test for cognitive impairment; although the doctor examining her recorded that she “gets muddled up in the modern world” – and that she drank “3 large gins or more, more or less every day” – she scored 25 out of 30 on the MMSE, which is a relatively high score, scores of lower than 24 being increasingly suggestive of significant cognitive impairment. She took another MMSE test on 26 June 2003 and scored even higher, 27 out of 30, which the experts were agreed indicated that she very probably had mental capacity on that day.

On the other hand, she performed noticeably less well when Dr Dooley, a consultant clinical psychologist, carried out a lengthier and more elaborate test called CAMCOG (Cambridge Cognitive Assessment for the Elderly) about a month later on 28 July 2003. She scored 65 out of a possible 105, which generates an MMSE score of 19 out of 30, Dr Dooley finding her to show severe difficulties in memory and new learning, and particular problems in abstract thinking and conceptualisation. Her score is well below the recommended cut-off point of 80/81 which would generally be indicative of significant cognitive impairment; and the experts were agreed that she would almost certainly not have had capacity on that day.

On 1 October 2003 her GP recorded that she had got lost on the way to the surgery (which is at 327D Upper Richmond Road), did not know why she was there and had difficulty understanding simple words. She had in fact called into Mr Quinn’s shop, and he said that she had come in with the wrong part (the white part) of the prescription and he had sent her on to the surgery to get the right (green) part, but was not otherwise confused.

Both experts were agreed that this variable pattern of mental state over the last year or so of her life did not fit the picture of Alzheimer’s disease which typically results in a long history of steady gradual memory impairment over many years. They disagreed however over the most likely cause. Dr Phillips thought it most probable that she suffered from a vascular dementia (caused by tiny little strokes) which can have an abrupt onset and exhibit some variability but would overall deteriorate over time. Professor Hodkinson thought it more likely that the confusion she exhibited was due to alcohol.

Both experts are clearly eminent and gave their evidence in a careful and considered fashion and it is invidious to have to choose between them. I remind myself that ultimately I am not concerned with which I think is right, but whether HSBC has discharged the onus of persuading me that Mrs Bray did not have capacity on the days in question, and it is open to me to say that it has not and that I do not know what her capacity was. In the end however I have decided that HSBC has discharged this burden. The one certainty about Mrs Bray’s mental state in the last few months of her life was that when Dr Dooley tested her in July 2003, she was well below the level at which one would expect if she were not suffering from any form of cognitive impairment. I find it unlikely that this was due to Mrs Bray being confused by alcohol: Dr Dooley had a copy of the report from Terri Glover, the occupational therapist who had seen her in January and had referred Mrs Bray to Dr Dooley, which referred to long standing high alcohol intake; Dr Dooley’s own report referred to a history of heavy drinking in the past. I would have expected in those circumstances that Dr Dooley would have been alert to the possibility that Mrs Bray’s performance might be affected by her drinking and if she thought this was a possible explanation for her poor performance, she would have mentioned it in her report. But not only did she not do so, she noted that Mrs Bray generally worked well and attended well, and concluded that Mrs Bray was indeed suffering from some form of dementia (albeit not a vascular one).

Professor Hodkinson also explained that he preferred a much shorter test, the Abbreviated Mental Test, because a study had shown that people using the longer test did not stay the course because they were fatigued. Again however I would have expected Dr Dooley to be alert to signs of fatigue and her report suggests the contrary.

I am conscious that Dr Dooley did not give evidence before me; but I consider that Mrs Bray’s poor score in July was far more likely to be due to a dementia as Dr Dooley herself thought than either the length of the test or her use of alcohol. There are no occasions after July on which she is recorded as having a normal mental state – the only relevant entry thereafter in her medical notes is the occasion in October when she was noted as confused. In these circumstances I find on a balance of probabilities that she was suffering from dementia; and that she did not have sufficient capacity to understand the agreements signed on 30 December 2003 and in January 2004.

That leaves the question whether Mr Quinn was aware of this. Again the onus is on HSBC and here I find that it has not been discharged. Dr Phillips agreed in cross-examination that those with dementia are sometimes able to fool others, including professionals, into thinking they are normal and that this was the reason for specialised diagnostic tests. He also agreed that it was possible, and even probable, that whatever understanding Mrs Bray may have had, a person dealing with her might not have noticed. Mr Wonnacott submitted that Mr Quinn must have realised that she did not really understand what she was signing, but I do not think that that is a safe inference. He did see her on 1 October 2003 when she came into the shop with the wrong part of the prescription, but he said that he did not regard her on that day as confused or he would have taken her down to the surgery himself and I see no reason not to accept this evidence. It is noticeable also that Mr Marr who knew her quite well – he saw her on some 12 occasions between September 2002 and October 2003 – said that he saw her for the last time on 2 October 2003 when it seemed to him that she was becoming very frail, but he did not say that she was becoming confused and agreed in evidence that that he did not himself notice any mental deterioration.

I therefore find that although Mrs Bray was suffering from mental incapacity at the time of signing the 2003 and 2004 agreements, HSBC has not established that Mr Quinn was aware of this, and if they had otherwise been valid agreements they would not be voidable as against him on this ground.

That brings me to Mr Quinn’s second claim, which is put on the basis of proprietary estoppel or constructive trust. The essence of the claim is that he and Mrs Bray reached an express understanding that he would be able to acquire the Property when he wanted to at a price which took account of the fact that he had paid for the building of the extension.

His case is that when in 1984 the need for improvements to the pharmacy became apparent neither Mrs Malkiewicz nor Mrs Bray was willing to put money into the property; that it was in these circumstances that he and Mrs Bray agreed that he would pay for the extension and in return Mrs Bray agreed he should not have to pay rent for it, that there would be no increase in rent under the new lease or during its term, and that she would sell him the freehold when he could buy at the discounted price; and that in reliance on this agreement or assurance he spent the money on building the extension. Thus he incurred a detriment which is said to give rise to an equity in his favour under the doctrine of proprietary estoppel and which should be satisfied by requiring the estate to allow him to purchase the Property at a suitably discounted price. The alternative claim in constructive trust is based on there being an agreement, arrangement or understanding between him and Mrs Bray which he relied on to his detriment and which is said to give rise to a trust in his favour under which Mrs Bray holds the property on trust to give effect to the agreement, with the same practical result.

I have no difficulty in accepting that Mr Quinn and Mrs Bray did reach some understanding or agreement about the extension: he no doubt needed her consent as landlord to carry out the alterations, and it was only natural that she should agree not to charge rent for the extension (even if this had been open to her). But the central question is whether their understanding included an agreement or assurance by Mrs Bray that Mr Quinn would be able to buy the Property at a discounted price. Mr Wonnacott had a number of answers to this claim, but his first was that I should find that Mrs Bray made no such agreement and gave no such assurance. The onus is squarely on Mr Quinn to satisfy me of this; I am not so satisfied, for a number of reasons.

First, it is well established that the Court must scrutinise with particular care a claim advanced, on the basis of oral testimony alone, against the estate of a deceased person where the other party to the transaction is necessarily dead and cannot give his own account: a famous example is the claim to ownership of the original manuscript of Under Milk Wood (Thomas v Times Book Co Ltd [1966] 1 WLR 911). I was not in fact cited any authority to this effect but as I say it is well established and it is in any event no more than obvious common sense.

Second, I must deal with Mr Quinn’s credibility as a witness. I do not think, despite the suggestions put to him, that his case is a fabricated one or that he is guilty of any deliberate deception. I was not for example persuaded that he pretended there was another Gabriel Quinn to stand as surety for the 1990 Lease, nor that Mr Armagh or Dr Shariff were fictitious. Nor do I think he took deliberate advantage of Mrs Bray in persuading her to sign the 2003 and 2004 agreements: Mr Wonnacott made some play of the fact that whereas the 1998 valuation of the Property showed both the vacant possession and tenanted values and the price agreed had been the former, in 2003 he obtained separate valuations and only showed Mrs Bray the lower tenanted value. This is true, but there are two answers. The first is that he did have the benefit of the 1990 Lease and Mrs Bray could only have sold it on the open market subject to his rights, so she could not have obtained the higher vacant possession value. The second, which to my mind there is no real answer to, is that Mr Quinn thought in 2003 that he had the benefit of an enforceable agreement in the form of the 1998 agreement. It is not suggested that this was invalid due to incapacity, which means that the only obstacle to it being a valid agreement is the technical one that it was neither made for consideration nor made as a deed; but Mr Quinn was plainly unaware of this point or the 2003 and 2004 agreements would have taken a different form. As far as he was concerned therefore he was still in a position in 2003 to acquire the Property for the price agreed in 1998, namely £160,000 together with five annual increments of £4,000 or £180,000. It follows that far from taking advantage of Mrs Bray he was voluntarily agreeing that if he bought it he should pay roughly double what he believed he was strictly bound to pay. I accept his evidence that he did this because he thought it was only fair on her, prices having increased very rapidly. I also accept that he had no idea of how much Mrs Bray was worth and thought she was of fairly modest means. He said that apart from her jewellery she never showed any signs of wealth, that she drove a 20-year old Ford Escort and that he thought she was probably short of funds. Between July and November 2003 she gave him five cheques of £50 each to cover shopping that he did for her; he never cashed them and I accept that this was because he thought she was probably not in funds.

I therefore acquit Mr Quinn of any suggestion of taking unfair advantage of Mrs Bray, and I was not persuaded that he had made up his case or was trying to mislead the Court in his evidence or had acted in any dishonest or underhand way. On the other hand, there were numerous examples where his evidence turned out to be unreliable. The most striking of these was his initial assertion that he had sold 44 Jessica Road before the 1998 agreement and that Mr Armagh gave it as his address because he was renting a bedsit there; this was easily shown to be quite false. Mr Wilson QC in his Opinion also recorded a number of facts which must have derived from Mr Quinn’s account to him; but where these can be checked they can be shown to have contained a number of demonstrable errors: Mrs Malkiewicz was not the owner of Farmer & Co Ltd up until October 1984; nor was Mr Quinn an employee of it until that date; nor was he an employee until the two of them formed Farmer & Co Ltd in March 1984 which was the correction given in his witness statement and repeated by him in oral evidence: he and Mrs Malkiewicz acquired the company and became directors of it in 1981. Nor did the two of them form Padhelm Ltd in October 1984 to take over the business; it was formed in 1989 by Mr Quinn and his wife. There were other inaccuracies in Mr Quinn’s witness statement: the 2004 agreement was not signed on New Year’s Day, Miss Elouazani had not returned to Morocco, and this was not one of the reasons for getting the 2004 agreement signed.

I therefore accept that Mr Quinn was in general an unreliable witness and I approach his evidence with considerable reserve. This means that I start with a degree of hesitation in accepting his account of an oral conversation which took place over 20 years ago unless there is other evidence which tends to confirm it, or it is inherently probable.

Mr Quinn’s own account of the conversation has not been entirely consistent. What he appears to have told Mr Wilson QC is that between May and September 1984 he agreed with Mrs Bray that he would buy the property at some point in the future when he could afford to, that he would build the extension using his own funds but would be compensated by having the value of the extension deducted from the market value of the property. His initial defence dated 30 June 2005 reflected these instructions. But in his witness statement dated 28 February 2007 he said that in the light of the existing lease being due to come to an end in 1990, he and Mrs Bray agreed that no rent would be charged for the extension, there would be no increase in rent under the new lease, and that she agreed to sell as soon as he could afford to buy at a fixed price and to discount that price to reflect the cost of the extension. In his Amended Defence produced on Day 1 of the trial, what was pleaded was that Mrs Bray agreed that she would sell the freehold as soon as he could afford to buy it at the market price less a fair reduction to reflect the fact that the extension was to be built and funded by Mr Quinn. In oral evidence in chief he said that they never actually used the word “discount” but simply said that he would buy the premises for the cost of the old building and disregard the cost of the new building which he had paid for; in cross-examination he said he honestly could not say whether he used the word cost or value.

This rather imprecise account is reflected in his evidence on another aspect, namely whether he was granted a new lease in 1984 or only in 1990. His pleaded case has always been that Mrs Bray granted him a new lease in 1984 in his own name (the existing lease being held by Farmer & Co. Ltd). He reiterated this in oral evidence, saying that he needed to have it in his own name as security for the cost of the works; but his evidence was that he did not borrow any of the funds for the cost of the works from a bank, £30,000 being borrowed from his daughter and the rest being paid out of the business. And not only has this lease never been found, in his witness statement he says nothing about it at all, saying instead that the existing lease was due to expire at the end of 1990 and part of his agreement was that the new lease would be granted to him personally and its terms would be similar to those of the existing lease. One of those specifically mentioned is a term of 15 years 10 days. This is plainly a reference to the 1990 Lease – a lease granted in 1984 would only have lasted for some 6 years. I am wholly unpersuaded that a lease was granted to Mr Quinn in 1984, and find it more probable that the lease in favour of Farmer & Co. Ltd lasted until replaced by the 1990 Lease.

I therefore find that Mr Quinn’s evidence of precisely what was agreed in 1984 is somewhat confused and unreliable. This may not be surprising given how long ago it was, but it does make it all the more important to examine critically whether it is supported by other evidence. But there is no such supporting evidence. Mr Quinn never asked Mrs Bray to confirm the position in writing (unless one counts the 2004 agreement which I will come to), which is surprising given that by his own account he and Mrs Bray had only recently met and it was a matter of importance to him. Nor is there any suggestion in Mr Quinn’s own witness statement that he ever mentioned again to her that he was hoping in due course to buy at a price which did not entail him paying for the extension. He does refer to a conversation in 1992 in which she told him that she wanted him to have the premises but could not bequeath the property to him as it would have to be sold to meet bequests, and a conversation in 1995 in which he said he planned to retire in 2000 and wished to pursue buying the premises, and various other later occasions when the idea of his buying the premises came up. I have no difficulty in accepting that he told her that he wanted to buy the Property eventually, and that she was sympathetic to this. She told Mr Marr in 2002 that she hoped Mr Quinn would be able to buy it and was leaving him a bequest that might help. This is all consistent with her will under which she directed that it be sold but left Mr Quinn a substantial legacy. But none of it is support for her having already agreed with Mr Quinn that he could buy it when he could afford to, let alone that she had agreed that he could buy it at a discounted price; and I accept Mr Marr’s evidence both that she never suggested to him that she had given a promise to this effect to Mr Quinn, and that he would have expected her to mention it if she had. I accept too that Mrs Lardner asked her if she had left the shop to Mr Quinn and that she said she had not and that everything was to be sold, without saying anything about having promised Mr Quinn he could buy it at a discounted price. This is entirely consistent with the various versions of her will and the drafts for them, none of which lends any support to the idea that she had agreed back in 1984 to sell the Property to Mr Quinn at a discounted price: her 1989 will left the Property to he nephew, and after his death she simply directed (with some insistence) that it be sold.

Then there is the 1998 agreement. Mr Francis’ 1998 valuation was quite clearly of the whole premises, including the rear extension. He was aware, and recorded, that the extension had been built by Mr Quinn as a tenant’s improvement; but did not adjust his value of the freehold by discounting it by either the cost or the value of the extension. Mr Quinn suggested in evidence that he had instructed Mr Francis that he wanted a price for the old building without the extension, but I am unable to accept this: this would have been an unusual instruction, and Mr Francis agreed that he would have made express reference to it if he had been so instructed, particularly as the report shows that he knew that Mr Quinn wanted the valuation for the purpose of negotiating with Mrs Bray. I am quite satisfied that Mr Quinn simply asked for a valuation of the Property on the vacant possession and tenanted bases. When the former came out at £160,000, he agreed it with Mrs Bray. It follows that at that stage he was happy to pay a price that included the extension, and without even knowing what difference it might make.

The 2004 agreement does mention the extension when it refers to the price of £375,000 as being based on the valuation “making allowance for the extension completed in 1986 and fully funded by Gabriel B Quinn”. This might be thought to be some support for Mr Quinn’s account. But I regard it as equivocal at best. Mr Ailes’ valuation of 9 December 2003, on which the price was based, had based the tenanted value on the current market rental value being £27,150 “ignoring your rear extension”. This was correct as the 1990 Lease required a tenant’s improvement to be disregarded; and I think the reference in the 2004 agreement is readily explicable as being a reference back to that basis of valuation. What it noticeably does not do is to start with a market value figure and discount it either for the cost or value of the extension.

Even after Mrs Bray’s death, there is nothing in writing for some months to support Mr Quinn’s case of an agreement that he could purchase at a discounted price. Townends’ marketing report of 15 March 2004 records that Mr Quinn told Mr Sinclair that his improvements were to be disregarded “until late 2005”. This may support Mr Quinn’s case that he and Mrs Bray agreed that no rent would be paid for the extension under the new lease (treating this as the 1990 Lease) or it may reflect an understanding that he was entitled to a disregard for tenant’s improvements under the terms of that Lease; what it notably does not do is suggest that he had told Townends that Mrs Bray had also agreed that he could acquire the freehold at a discounted price.

It is not in fact until his faxed letter to Mr Herve of 28 May 2004 that one can find a clear written assertion by Mr Quinn that the extension should be left out of account in valuing the freehold of the Property, and the terms in which he does so are instructive. In that letter he wrote:

“I presume that Townends were given the amended deeds (or a copy) which show the location + measurements of the extension agreed to by Mrs Bray, Wandsworth Borough Council + myself. This is the only reason that I can see for them including the extension in their valuation which they were not entitled to do except as an addendum.”

And further on he wrote:

“Townends excessive figure results in ignoring the value of the extension which should not have been included. If you subtract the cost of building adjusted for inflation from the £475,000 – 500,000 suggested it brings the figures back into line and is I submit a fairer price.”

These read more naturally as Mr Quinn saying that it would be fair to leave the cost of the extension out because he had already paid for it rather than him saying that he had a longstanding agreement with Mrs Bray to that effect. I have not overlooked what Ms Butcher said that Mr Quinn said at the meeting at Mrs Bray’s house on 29 January 2004, but this is equally consistent with Mr Quinn asserting that because he had paid for the extension he had some rights to it, as with him asserting that he had reached an agreement to that effect with Mrs Bray.

Mr Schmitz submitted that there was evidence that the parties acted on the agreement made in 1984 in that Mrs Bray did grant Mr Quinn a new lease in 1990 without increasing the rent and that she thereafter never operated the rent review provisions in the lease. This does not in my judgment assist Mr Quinn. I am not sure I have any evidence confirming Mr Quinn’s statement that the rent agreed in 1990 of £11,000 pa was the same as the passing rent in 1984, and for reasons already given I have considerable reservations about acting on his unconfirmed evidence alone. And although it is true that Mrs Bray never invoked the rent review provisions in the 1990 Lease, I have no evidence that sheds any light on whether this was because she had agreed in 1984 not to do so, or because she was unaware that she was entitled to, or because she chose not to do so out of generosity to Mr Quinn. If anything the very inclusion of the rent review clause might tend to suggest that she did not regard herself as committed to never increasing the rent. I am not therefore persuaded that she did agree to this. But even if I had been fully satisfied that she had agreed in 1984 that the rent would never be reviewed under the 1990 Lease, I do not see that this gives any support for a further agreement as to Mr Quinn being able to buy the freehold at a discounted price.

Mr Schmitz also said that £78,000 was a large sum of money in 1985/6 and that it was unlikely that Mr Quinn would have spent that sum without having some assurance from Mrs Bray. I am unable to place any weight on this. His own evidence was that he could not carry on with the business without spending the money, and I have no evidence as to how valuable the business was or whether it was worth his spending that much money to preserve it. He has in fact been able to carry on the business for another 20 years or so without the cost and disruption of moving; and if he had moved he would have had to pay rent for whatever space he needed. By building the extension, he has therefore been able to have the space he needed without having to pay rent for it. I do not think in these circumstances that I can infer that he would never have done it without Mrs Bray’s assurance.

Taking the evidence as a whole, I remain unpersuaded that Mr Quinn only decided to pay for the building of the extension because of an agreement or assurance made by Mrs Bray that he would be able to acquire the freehold at a price which reflected the fact that he had paid for the extension. I find that she did not make any such agreement or give him any such assurance. She no doubt did discuss with him the fact that he wanted to acquire the freehold at some stage and she was quite happy with that idea, but there is no reliable evidence she ever said the price would be reduced. What may have happened is that Mr Quinn, who always planned to buy the freehold when he could, assumed that because he had already paid for it, he had some rights over it and would not have to pay for it again; and he may have persuaded himself that this is what Mrs Bray would have wanted too and come to believe that she had indeed promised it to him. But as I have said I am unable to accept that this in fact happened.

That is sufficient to dispose of Mr Quinn’s alternative claim whether it is put on the basis of a proprietary estoppel (based on the encouragement by Mrs Bray of a belief that Mr Quinn would be able to acquire the property at a discounted price) or a constructive trust (based on an agreement, arrangement or understanding between them).

That makes it unnecessary to deal with the other points advanced by Mr Wonnacott as a defence to this claim. Briefly:

For the reasons I have given Mr Quinn’s claims fail. I will hear counsel on the appropriate form of order and any consequential matters, unless these can be agreed. I am grateful to both counsel for their considerable assistance.