Hardy & Ors v Fowle & Anor

The first and second defendants, who have lived at Trelan since about March 1994 but members of whose family have been connected with the property since 1963, resist this on the basis of their claims first, to have the benefit of the leasehold interest under a 30 year lease of Trelan in favour of the second defendant’s paternal grandparents, Hulbert and Millicent Saunders (“the grandparents”), also dated 9^th June 1988; second, that such lease has priority over the said charge by virtue of the shared subjective intention of the individuals who participated in the completion on 9^th June 1988 that it should be so; and third, that the intentions and actions of one of those individuals, a solicitor named Mr O’Connor, were for all relevant purposes those of, or to be attributed to, the bank.

Proceedings were first commenced in Penzance County Court, which has geographical jurisdiction over Trelan. On 8^th March 2005 they were transferred to the High Court, Chancery Division, Bristol District Registry. Although various documents since served and issued have been confusingly or in some cases inaccurately headed, that is where it remains, albeit that Truro has been chosen as the trial venue to accommodate the convenience of the first defendant, who has mobility difficulties. It is common ground that no immediate problem arises because of that, but that before any possession order could be made, the proceedings must first be transferred back to the Penzance County Court: see sections 21(3) and 40(1) of the County Courts Act 1984 and Yorkshire Bank v Hall & Others [1999] 1 All ER 879, esp. at 889.

In 1963, Hulbert, Millicent and Max purchased Trelan, the grandparents taking up residence there whilst Max continued to live elsewhere with his own family. In about 1970, it seems there was a serious fire at Max’s family home, in consequence of which the second defendant came to live with her grandparents at Trelan for a while. In October 1972, the grandparents gifted their interest in Trelan to Max, probably with a view to estate duty avoidance. However, it was the grandparents who continued to live there. In the same month, the defendants married. The only bank account either of them had was a current account with overdraft facilities in the sole name of the second defendant.

Their two children were born in 1973 and 1975. In 1974, the grandparents bought the defendants a home, 5 Polgarth Close, Carbis Bay. In spring 1983, Max and Myra separated and apparently rather bitter divorce proceedings ensued. It seems that over the period of the separation, the second defendant felt particular loyalty to her father’s cause, whilst her sister, Jackie, felt particular loyalty to her mother’s cause. On 29^th May 1986 Max died, pre-deceasing both his parents. By then, the divorce proceedings were well-advanced, though apparently no decree absolute had been granted. In consequence of his death, some properties which had been vested in him and the grandparents jointly passed to them by survivorship. However, by his will, which was dated 19^th August 1985, a portfolio of 18 properties, one of which was Trelan, fell into residue subject to a trust for sale. He gave quarter shares in residue to each of his two daughters and to the children of each. Thus, there were minor beneficiaries; indeed, I am told that Jackie’s youngest child was only one year old at the time.

Having explored the possibility of themselves purchasing Trelan from the estate and concluding that they could not manage that, the defendants put together a proposal for the possible purchase, with the assistance of significant borrowing, of the entire portfolio of 18 properties from the estate. The logic in that was that they believed there to be considerable hidden value in those properties, and in particular they believed, rightly or wrongly, that several had valuable development potential. In this, as in all the defendants’ business dealings, the first defendant very much took the lead, although the second defendant was involved, was aware of what was being proposed, albeit not of all the details, and attended at least most of the key meetings.

The first discussion with Mr Riley about this possible proposal took place on 12^th August 1987, and his file-note of that meeting is in evidence. He recalls that he called at the defendants’ house at their request and “as usual her husband did most of the talking.” He was provided with a list of the properties within Max’s estate, incorporating valuations, no doubt for probate purposes, supplied by the Inland Revenue valuation office as at May 1986. After some discussion about the properties, it was explained to him that the defendants proposed to make an offer to the executors to purchase, as he recorded it, “the remaining 75% share” (I take that as a reference to the fact that the second defendant herself had a 25 per cent beneficial interest in residue) in the portfolio on the basis of the probate valuation of just over £300,000. After some discussion of particular properties within the portfolio, Mr Riley records that, “Trelan is a very substantial property in large grounds, occupied by Mrs Fowle’s grandparents, aged 79 and 81, with free occupancy for life. Mr Fowle considers that the property would be worth £250,000 with vacant possession and provides further development potential. They are considering a number of possibilities including the forming of a company finding investors to introduce capital and various borrowing schemes.” Mr Riley indicated that the Bank would be pleased to discuss possible lending assistance to the defendants if they were successful in their bid and “observed that my initial reaction to the Development of Nancledra” [another of the properties in the portfolio] “was that they should consider the immediate sale of this Land rather than develop it themselves.”

A written proposal was then put together by the first defendant on the defendants’ behalf, and professionally typed up and bound. The proposal document, though dated August 1987, was presented to the Bank at a meeting held on 8^th September. I must quote passages from it. It was headed, “Proposal from Mr and Mrs Fowle to acquire the estate of Mr G M Saunders from the executors.” There followed a section headed ‘Background and Outline of Proposal’, which, having recited the death and the beneficial interests in residue, went on to record that, “The Estate … has now been valued for probate purposes at £406,250” in accordance with the attached first schedule. It continued, “The properties form an attractive mix of housing, flats, development and speculative land which would, from an executors viewpoint, be difficult to split up and/or administer. It is for this reason that it is felt that the executors will accept an offer for the entire package at probate valuation...” It then went on to give some details of the various properties comprised in the portfolio.

The next section was headed ‘Land’ and opened with this: “The site at Nancledra already has planning permission for 15 dwellings which could be sold for a developer for approximately £150,000 to generate immediate funds to repay borrowings.” I would interpolate at this point that, in so stating, Mr Fowle was picking up on the suggestion made by Mr Rockey at the meeting of 12^th August. In any event, he then went on to point out the attraction of the possible alternative of the defendants themselves developing that property.

The final section of text was headed ‘Summary’ and commenced, “Mr and Mrs Fowle are requesting a borrowing of £406,250 which would be secured by the properties themselves together with a charge over Mrs Fowle’s entitlement from the estate (approx. £100,000).”

There were schedules which followed. The first, headed ‘Details of properties within the Estate of G M Saunders’, set out 22 properties; I should interpolate that the portfolio is generally referred to as comprising 18 properties, although they are grouped in different ways in different documents and valuations. The first column of figures was headed ‘Probate Value’ and gave figures totalling £406,250. The second column was headed, ‘Open Market Value (conservative estimates)’ and gave figures totalling £967,500. The largest figure by some distance was the figure for Trelan, £250,000, which, by reference to the note of the conversation of 12^th August 1987, we know was Mr Fowle’s valuation of that property with vacant possession. When questioned as to the origin of the open market value figures shown, Mr Fowle said that they were figures from his own head. The second schedule showed a calculation of borrowing requirements represented by the proposal and showed a starting figure of £500,000, allowed for its reduction by two possible sales, firstly of the land at Nancledra for £150,000 and secondly of plots at Trelan for another £150,000, gave a net capital requirement of £200,000, and then allowed for computed figures for interest (at 13%), rental income, and overhead costs, suggesting therefore a net borrowing requirement of £256,000. When questioned, the second defendant explained that his accountant had assisted him in producing these figures. As to his approach to the preparation of this document generally, I can do no better than repeat the first defendant’s own words in answer to questions in cross-examination. “The whole document is an invitation to treat. I was painting with as broad a brush as I could as pretty a picture as I could.” He agreed that the effect of the proposal was to offer all properties in the portfolio as security without qualification. He agreed that the document had to be taken as a whole and meant what it said.

Although the first defendant initially denied that he was being assisted by professional advisors at this stage, it became quite clear in cross-examination that two or three weeks before 8^th September 1987, so pretty quickly after the first meeting with Mr Riley on this topic on 12^th August, first an accountant, a Mr Fisher, second some financial advisors, third, an architect, Mr Wells, fourth, a surveyor, Mr Manasseh of Fox & Sons and fifth, a solicitor from Crosse & Crosse, were all instructed to assist the defendants in this regard. At the meeting of 8^th September, the defendants were accompanied by the architect, Mr Wells. It is noteworthy that one day beforehand, on 7^th September, Mr Manasseh of Fox & Sons had signed a valuation as at 2^nd September of the 18 properties. It is headed, ‘Schedule of Properties and Valuation prepared on behalf of Mrs S G Fowle as at [2^nd September 1987]’. It bears Mr Manasseh’s reference, his office address in Penzance and the date 7^th September 1987. There is then set out a schedule listing 18 properties, with a very similar heading, showing one column of valuation figures. The highest valued property was Trelan, and the caption in respect of it read thus: “Trelan, Lelant – subject to the occupancy of Mr and Mrs Saunders”. At the foot of this listing, the following caption appears: “We hereby value the above properties as at [2^nd September 1987] in the sum of £388,860.” It will be observed that no basis of valuation is specified, not open market value, forced sale, probate, or indeed anything else. The document is signed by Mr Manasseh, FRICS. There is no direct evidence as to when this document was received by the defendants, but as it is dated 7^th September it is noteworthy that the figures put to the Bank one day later with regard to the value of the properties bore no relation to those set out in this document; rather, they were the first defendant’s own thoughts as set out in the right hand column on the first schedule which I have mentioned, totalling £967,500, alongside the apparent probate valuations in the left hand column, totalling £406,250. The first defendant’s total of £967,500 was two and a half times that which Mr Manasseh had given in his valuation signed off one day earlier.

I accept Mr Riley’s evidence that Mr Manasseh’s £388,000 valuation was never shown to or given to the Bank, and I reject the first defendant’s contrary evidence from recollection. This document is nowhere to be found on the Bank’s files which evidently have been found after the searches described in the witness statement of Mr Warman, and in any event it would make no commercial sense whatever that such a document would have been shown to the Bank, as it would have immediately undermined the credibility of the figures in the proposal document shown to the Bank on 8^th September, copies of which were retained by the Bank. Further, the Bank’s subsequent request for a professional valuation - see the letter of 29^th September 1987 – contains no indication that it was to replace or revise an earlier valuation, which would be odd indeed if the Bank had already seen a £388,000 valuation from the same valuer who produced the valuation upon which they ultimately relied. The first defendant accepted as much in cross-examination.

I also note that, notwithstanding the terms of the witness statement of the first defendant, neither defendant put to Mr Riley in cross-examination, even after a gentle reminder from me, that he had in fact received the £388,000 valuation. At one point in his submissions, Mr John MacDonald QC, who appeared with Mr Philip Coppel on behalf of the second defendant, speculated that Mr Manasseh’s £388,000 valuation was a probate valuation. There is no evidential support for that. The valuation is addressed to Mrs Fowle, not to the executors, and it says nothing whatever about probate. Nor do the figures in it match up to any of the various probate valuation figures mentioned by the first defendant to the Bank.

Both Mr and Mrs Fowle accept in evidence that the proposal was put to the Bank in essence as a business proposal, rather than as a proposal to provide accommodation for her grandparents, and I find that it was indeed put to and understood by the Bank as such. However, that said, a feature built into the proposal was Mr and Mrs Fowle’s intention that the grandparents would continue to live at Trelan for the remainder of their lives. This is clear from first, the Bank’s file-note of 12^th August 1987, second, the proposal document itself and third, Mr Manasseh’s second valuation, to which I shall come.

Mr Riley’s initial response to the proposal is recorded in his file-note of the 8^th September meeting. It records the production of the proposal, that “their advisor is suggesting that they should form a development company to exploit the possibilities”, and goes on to record that Mr Riley “confirmed that we are prepared to consider the matter further on production of detailed costings and a cashflow forecast. Initially, they will produce forecasts based on immediate development of the Nancledra land and an alternative forecast assuming immediate sale of the Nancledra land to a developer...customers have been asked to provide us with a detailed breakdown of the rental income together with approximate ages of the various tenants.” This is as convenient point as any to deal with the question of whose idea it was that a company be bought to take the conveyance of the portfolio of the properties. In the light of the contemporaneous notes made by Mr Riley on 12^th August and 8^th September, the relevant passages from which I have already quoted, I find that the idea came from the defendants’ advisers, not the bank manager. It is clear that the defendants’ company Bramridge had been formed by 29^th September 1987. I so find, notwithstanding that the first defendant told his solicitor on 14^th January 1988 that the purchase was going to be in a company’s name on the advice of his bank manager. I do not believe that to have been accurate. I also notice that, in later discussion with their solicitor in March of 1988, the defendants are recorded as having told him that they would wish to take all the properties in the name of their company Bramridge, “subject to contrary advice from their accountants.”

A letter dated 18^th September 1987, written by the first defendant but in the sole name of the second defendant, provided the information which Mr Riley had requested at the meeting on 8^th September. It referred to the intention that Mrs Fowle’s full entitlement under her father’s will would be paid direct to the Bank and “will be available – subject to my private loan – for further reduction of the borrowing.” Later, it stated, “I am prepared to agree that the proposed loan be taken on the basis that we sell Nancledra as shown in the projection provided that, during the four month period allowed, we are unable to convince you of the viability of any alternative to direct sale of the site. I will do my best to show you, if I possibly can, that we can make more money by using Nancledra in a way other than by direct sale of site but if we cannot convince you of the rightness of developing Nancledra – either ourselves or with a developer – then we will accept your guidance and decision and sell the site.” The letter goes on to mention that the ages of the tenants, shown in one of the accompanying schedules, were an informed guess.

As I have just mentioned, the defendants gave at least initial instructions to Crosse & Crosse on 14^th January 1988. Following this, Mr Over of that firm wrote to Stephens and Scown for the executors on 20^th January 1988. The letter included the following passages: “We also understand that our clients’ initial offer to purchase the portfolio was rejected but that your surveyor, Mr Newey, stated to Mr Manasseh of Messrs Fox and Sons retained on behalf of our clients that he would recommend acceptance of an offer in the sum of £500,000. We are pleased to say that subject to contract we are now able to make that offer formally and look forward to receiving your acceptance...Please note that prior to exchange, all correspondence is strictly subject to contract...” In their response, dated 25^th January 1988, Stephens and Scown stated, “The executors have sought confirmation from their Surveyor as to that they should accept your clients offer, but there are immediate matters which should be raised with you, in order that you may have clear instructions before the matter can proceed any further... (2) the sale of the property to your clients would be subject to some considerations, which may or may not be known to you: (a) One of the Trust properties is known as “Trelan”. This is occupied by the deceased’s parents, Rent free, and we understand that it is your clients wish that some document be prepared and agreed between the Executors and themselves, guaranteeing continued Rent free possession for the duration of the lives of the grandparents... (3) The Executors are also concerned that they should seek formal advice from Counsel assuring them that they may properly sell to your clients imposing restrictions upon the dealings with the property known as “Trelan”...”

Mr Over spoke to one or both of the defendants on 28^th January. His note records that the executors had counsel’s advice saying that the grandparents had no right to reside, that the Fowles had asked that a Mr Inglis-Jones QC should be asked to advise further on the matter and that Jackie was agreeable to the grandparents remaining at Trelan. The following day, he wrote again to Stephens and Scown. His letter, headed “Subject to Contract,” included the following: “(2) (a) We are aware of the conditions as they relate to “Trelan”. The view taken by our clients is that the proposed document would merely recognise an existing state of affairs rather than create a new one. Whatever may be the case we do understand that both Mrs Fowle and her sister are keen to preserve their grandparents’ rights of occupation which are wholly acceptable to us. We understand that papers have already been prepared seeking the advice of Mr Inglis-Jones on this point and we trust that you will be able to obtain a speedy advice from him. We understand that he is already aware of some of the family background to this matter...” I would here interpolate that it appears from the oral evidence that Mr Inglis-Jones QC had been involved in advising Max in relation to his divorce. “(3) We note the position and fully accept that “Trelan” will be sold subject to the restrictions.”

In the course of his oral evidence, the first defendant was asked about statements in that letter to the effect that both sisters were keen to preserve the grandparents’ rights of occupation. The first defendant, whose general stance had been that he and his wife were keen to protect the grandparents’ position but that Jackie’s stance had been that she was unconcerned about that and much more anxious to get as much money out of the estate as possible, responded that the letter, “perhaps misleads, but for a good purpose.” In the light of the whole run of correspondence, including further letters to which I will come shortly, I do not accept that answer. The tone of the correspondence in both directions indicates that by this time the executors were quite willing to cooperate in some proposal designed to protect the grandparents’ occupation, and it seems to me unlikely that they would have taken such a stance against the wishes of one of the two adult residuary beneficiaries. The contrary position, as stated by the defendants’ own solicitors and the letter I have just read, makes much more sense, and I find the true position to have been as stated in the letter of 29^th January 1988.

The next material letter from Stephens and Scown was dated, by manuscript correction, 24^th February 1988. It enclosed a draft contract for approval and stated, “With regard to the dwelling house known as Trelan, in order to safeguard the position of Mr and Mrs Saunders’ parents who are living there, we are preparing a Lease in their favour for a term of thirty years, terminable nevertheless by notice of the death of the survivor of them. We will let you have sight of the draft shortly”,and a manuscript note is there added “enclosed herewith.” The letter enclosed a draft lease, then in the form of the type-script without the manuscript alterations which were endorsed on it later, to be found in CB3 at pages 324 to 329. It provided for the executors, as landlords, to create a lease in favour of the grandparents, as tenants, for a term of 30 years at a rent of £1 per annum. It included tenants’ covenants to keep the demised premises, and fixtures and additions thereto, in tenantable repair throughout, and not to assign, underlet or part with the possession of the demised premises or any part thereof. It had a provision for determination in the following terms: “The term hereby granted may be determined by the Landlords at any time after the death of the survivor of the Tenants by giving one month’s notice in writing terminating on one of the usual quarter days to the person then entitled to the leasehold interest hereby created and may be determined by the Tenants at any time by giving three months notice in writing.” It further contained a covenant for quiet enjoyment and a power of re-entry.

A draft contract was also enclosed with the same letter, and may be found in the same bundle, CB3, between pages 308 and 319, again in the form of the type-script without the manuscript alterations which were endorsed on it later. The contract was between the executors as vendors and Bramridge as purchasers. It provided for the sale of the property listed in the first schedule for the sum of £500,000, all being freehold and all being sold by the vendors as Max’s personal representatives. The property was to be sold subject to the leases and tenancies set out in the second schedule thereto, which at that stage was typed up so as to refer to the lease which was then intended first to be granted by the executors to the grandparents, the draft of which I have just described. Clause 7 provided for the property to be “sold together with except and reserved and subject to as is more particularly specified in the Fourth Schedule hereto”. The listing of properties in the first schedule includes Trelan in the passage starting “Thirdly”, which I need not quote in full. The equivalent paragraph relating to Trelan in the fourth schedule is that numbered (3) which, understandably, made no reference to any interest of the grandparents, that being intended to be covered by the grant of a lease prior to the sale taking place.

The receipt by Crosse & Crosse of the draft contract and indeed draft lease seems to have precipitated, or at least coincided with, Mr O’Connor taking over conduct of the matter at that firm. Following a telephone conversation with the first defendant, he wrote the defendants a detailed letter of report about the draft contract, dated 16^th March 1988. Included within that letter of report are the following passages: “I also enclose a copy of the proposed Lease in favour of Mr. and Mrs. Saunders relating to Trelan. The effect of this Lease is to entitle Mr. and Mrs. Saunders to remain in occupation of Trelan rent free for the rest of their lives. It is determinable by the Landlord following the death of the survivor of them...When you have had the opportunity of considering this letter and its enclosures, it might be as well for us to meet to go through the draft contract together to clarify any points which you may be concerned about.” Mr O’Connor met the defendants later that month on 25^th March 1988. I have already made reference to one passage at the outset of his related attendance note. Later in the note, at the end of a passage concerning the property, Trelan, Mr O’Connor recorded this: “So far as the proposed lease in favour of Mr. and Mrs. Saunders is concerned, the clients would prefer to grant this themselves rather than allow the executors to grant it.” When asked in cross-examination the reason for this, the first defendant, Mr Fowle, stated, “Vanity, I suppose.” He went on to explain that the executors who had originally wished, as he put it, to ‘evict’ the grandparents from Trelan, were now posing as those protecting the grandparents. That, Mr Fowle, stated in evidence, “pissed us off,” and he explained that he and his wife wished (rightly) to be seen to be the ones who had made her grandparents safe and protected their interests. I accept that evidence as a correct, indeed strikingly frank, statement of the reasons underlying the instructions recorded by Mr O’Connor in his note. It is a matter of some irony that, had the original proposal of the executors been pursued (as, but for the vanity factor, it presumably would have been), and had it been agreed by or on behalf of the Bank, it would on the face of things have been legally effective in a way which would have precluded at least much of the debate within this trial.

On 28^th March 1988, Mr O’Connor duly wrote to Stephens and Scown on behalf of his clients. The passage dealing with the matter which I have just recited in respect of the meeting with his clients comes at the end of the letter: “So far as the proposed Lease in favour of Mr. and Mrs. Saunders is concerned, our clients wish, for personal reasons, to grant this Lease themselves immediately upon completion of the contract. We suggest, therefore, that the following clause be added to the draft contract:- ‘The Purchasers shall forthwith upon completion execute a lease in favour of Hulbert Gordon Saunders and Millicent Helena Saunders relating to the premises known as Trelan, Lelant, Hayle in the County of Cornwall in the form of the draft Lease annexed hereto.’ Please confirm that this is agreed.” This proposal is reflected in a rider which was added to the draft contract as Clause 14, and is in the following terms: “The Purchaser shall prior to completion sign seal and deliver in escrow a Lease in favour of Hulbert Gordon Saunders and Millicent Helena Saunders relating to the premises known as Trelan Lelant Hayle Cornwall in the form of the draft Lease annexed hereto on the condition that such Lease shall take effect immediately upon completion of this Contract.” It is agreed that there were no material differences between the draft lease annexed to the contract ultimately exchanged and the Lease completed on 9^th June 1988.

On 5^th May 1988, Mr O’Connor rang Stephens and Scown and later the Bank, apparently at the Bank’s request conveyed via the first defendant. By letter dated 6^th May, and received by Mr O’Connor on 9^th May, Stephens and Scown belatedly replied to his letter of 28^th March 1988. It included the following: “... Finally, on the subject of the Lease, it is of course our client’s chief concern that the Lease should be granted. We would therefore wish to be satisfied before completing the proposed sale that the new lease has been executed by your clients and delivered to Mr and Mrs Saunders senior on the basis that it would take effect as from the date of completion.”

One day later, on 10^th May, Mr O’Connor received the Bank’s letter of instruction dated 9^th May. The most immediately relevant passages read as follows: “With reference to our recent conversation concerning our above-mentioned customers [Bramridge] we now enclose the Bank’s one Legal Mortgage document to be completed contemporaneously over the various properties which are being conveyed on one Conveyance into the Company’s name.

We would like you to act on our behalf in taking the mortgage over the properties and protecting our interests at all times. We would ask you to attend to the following:-

Please complete the mortgage form where necessary prior to execution...

We also enclose the Bank’s standard form of Undertaking and we shall be obliged if you will sign and return the top copy for noting in our records.

Counsel for the second defendant invited me to make certain findings as to the knowledge of the Bank, in the person of Mr Riley, its then manager, at the time of completion. The findings which I am prepared to make in this regard are as follows: first, that Mr Riley knew that the grandparents were then occupying Trelan and knew or suspected that they had done so for some time; second, that the defendants did not wish the grandparents to have to vacate the house at Trelan; third, that Mr Riley knew that one objective or expectation of the defendants was that the grandparents would remain in the house at Trelan for as long as they wished, and that that was a matter of importance to the second defendant; fourth, that Mr Riley was content that the grandparents’ assumed rights of occupation should subsist for the remainder of their lives notwithstanding the sale from the executors to Bramridge and was not concerned with the detailed legal arrangements to that end; and fifth, that Mr Riley knew that the value attributed to Trelan in the 9^th October 1987 valuation of Mr Manasseh took into account an assumed right of occupancy in the grandparents, and believed that, on the basis of that same valuation, the charged properties in total more than sufficiently secured the amounts to be loaned.

That said, it is also right that I make certain further findings as to what the Bank, as opposed to Mr O’Connor whose role I shall examine later, did not know. The Bank did not know: first, that the executors had received advice to the effect that it was at best questionable whether the grandparents already enjoyed any legal rights of occupation over Trelan; second, that the creation of some new right of occupation was proposed or intended by vendor and purchaser; third, that the executors had proposed the grant of a new lease by them to the grandparents prior to the sale and purchase between the executors and Bramridge, let alone that its proposed terms including a primary term of 30 years; fourth, that the ultimate proposal between vendor and purchaser was the immediate grant by Bramridge of a new lease to the grandparents upon completion, let alone its (very similar) proposed terms; and a fortiori fifth, that there was any proposal that such a lease should take priority over the Bank’s legal charge.

Three deeds were executed to complete the transaction on 9^th June 1988. First, the Conveyance between Pauley and Snell as vendors and Bramridge as purchaser (“the Conveyance”), which recited the death of Max, his being seized of the properties to be conveyed, that no prior assent had been made, and the agreement for the sale at £500,000. The first operative clause provided that in consideration for that sum, “the Vendors as personal representatives of [Max] … convey unto the Purchaser all those the several properties more particularly described in the Schedule hereto to hold the same unto the Purchaser in fee simple subject as mentioned in the said Schedule”. There were consequential covenants and acknowledgments, and the schedule then listed the various items of property comprising the portfolio. Trelan was dealt with in the third paragraph of the schedule, which included limited exceptions and reservations, but nothing whatever concerning a lease or other like interest in favour of the grandparents.

Second, a Legal Mortgage (“the Mortgage”) was executed, which was subsequently duly registered at Companies House. It was in a National Westminster Bank standard form (NWB 1015, May 1985 revision), unmodified save for completion of blanks where necessary. The mortgagor was Bramridge; the mortgagee was the Bank. It provided amongst other things: “2(a) The Mortgagor as beneficial owner charges by way of legal mortgage all and every interest in or over the property referred to in the Schedule hereto which the Mortgagor has power at law or in equity so to charge...and/or the proceeds of sale thereof as a continuing security to the Bank for the discharge on demand of:- (i) all present and/or future indebtedness of the Mortgagor to the Bank on any current and/or other account... 4 Section 103 of the Law of Property Act 1925 shall not apply to this Mortgage and the statutory power of sale and other powers shall be exercisable at any time after demand... 6 The statutory powers of leasing or of accepting surrenders of leases conferred on mortgagors shall not be exercised by the Mortgagor nor shall the Mortgagor part with possession of the Mortgaged Property or any part thereof nor confer on any person, firm, company or body whatsoever any licence, right or interest to occupy the Mortgaged Property or any part thereof without the consent in writing of the Bank, but the Bank may grant or accept surrenders of leases without restriction. 7 At any time after the power of sale has been exercisable the Bank or any Receiver appointed hereunder may enter and manage the mortgaged property or any part thereof...” The schedule thereto was completed simply with reference to “The several freehold properties situated in the county of Cornwall comprised in the following documents...” and the Conveyance identified. Companies House subsequently asked for a more detailed schedule of those properties to be provided, to enable it to identify the individual properties which were thereby charged. This was duly provided, faithfully following the first schedule of the Conveyance. The provision of this schedule to Companies House in no way altered or purported to alter the subject matter or any other terms of the Mortgage; it was a matter of clerical mechanics to meet the requirements of Companies House, which had no impact on the operation or effect of the Mortgage.

Third, the Lease was executed between Bramridge as landlords (a term which “shall where the context so admits include the person for the time being entitled to the reversion immediately expectant on the determination of the term hereby created”) and the grandparents as tenants. It provided that, “(1) The Landlords hereby demise unto the Tenants [the entirety of the property Trelan] to hold the same unto the Tenants from the 9^th day of June 1988 for the term of 30 years subject to the provision for determination hereafter contained paying therefor the yearly rent of £1.00 on the 9^th day of June in each year. (2) The Tenants hereby jointly and severally covenant with the Landlords as follows:-... (iii) To keep the demised premises and fixtures and additions thereto in tenantable repair throughout and in such repair to yield up the same at the determination of the term... (vi) Not to assign, underlet or part with the possession of the demised premises or any part thereof... (3) The term hereby granted may be determined by the Landlords at any time after the death of the survivor of the Tenants by giving one month’s notice in writing terminating on one of the usual quarter days to the person then entitled to the leasehold interest hereby created and may be determined by the Tenants at any time by giving three months notice in writing...” There followed a covenant for quiet enjoyment and a right of re-entry.

It will be observed that there was nothing in the contract of 13^th May or any of the three deeds executed on 9^th June which was in any way inconsistent with the Bank’s primary case in these proceedings. I should mention that title to Trelan (freehold or leasehold) is not registered at HM Land Registry, that the district of Penwith in Cornwall did not become an area of compulsory first registration under the Land Registration Acts until some six months later, namely on 31^st December 1988, and that the matter was treated by the parties throughout, and now has to be legally analysed by me, in accordance with the law of unregistered conveyancing.

A couple of weeks after completion took place, on or about 22^nd June 1988, the Bank received the first cheque from Stephens and Scown on account of Mrs Fowle’s share in the residue of Max’s estate. It was in the sum of £54,000. Notwithstanding what I have earlier recited as the originally intended use of these monies, namely to reduce the extent of Bramridge’s borrowing by introducing the same as a postponed director’s loan, in the event over £37,000 was owing on Mrs Fowle’s personal overdraft account and the funds were, in due course, used firstly to discharge that indebtedness – see the Bank’s file-note in relation to her own current account of that date – and secondly to provide a credit balance on that same account of just under £15,000 to be available for the defendants’ living expenses, rather than introduced into Bramridge – see the Bank’s file-note in relation to Bramridge’s account dated 5^th July 1988. There were reviews of the borrowing conducted later that year.

At some stage in the second half of 1988, the Bank, through its relevant records office, received copies of the various conveyancing documents which had resulted from the completion on 9^th June. The documents now available do not show exactly when that occurred, but a credible possibility identified by Mr Cawson was on or about 10^th October 1988. Crosse & Crosse’s letter of that date (at Bundle CB3, page 4) recorded that title deeds relating to the various properties were being sent under separate cover, each one with a separate schedule. The Bank was asked to acknowledge safe receipt by signing and returning a copy of the enclosed schedule. However, a post-script on the letter reads, “In view of the proposed sale of part of the land at Trelan, we are retaining the title deeds relating to that property against our undertaking sent to you under separate cover. In due course, we shall require the Conveyance dated 9^th June 1988 which is enclosed herewith, to be returned to us so that we may endorse a memorandum of the sale thereon.” So it may be, it can be put no higher, that a schedule in respect of Trelan without any of the accompanying backing deeds (other than the Conveyance itself, which the post-script suggests was sent with the above-mentioned letter), listing amongst other things a lease dated 9^th June 1988, was sent to the Bank’s Penzance branch either with, or under separate cover from, that letter. There is no issue that the deeds in relation to Trelan eventually reached the Bank and were held in its regional safe storage facilities, not least because in due course a copy of the Lease turned up, filed inappropriately with other documents, as described in the witness statement of Mr Rose. However, neither the detail nor even the fact of the Lease was specifically drawn to the Bank’s attention in any way, and it seems clear that it was only at some time much later that the Bank came actively to appreciate that some new lease had been created.

In February 1989, Mr Riley took early retirement from the Bank and his successor was Mr Rockey. It seems that Mr Rockey was introduced to the defendants by Mr Riley in that month, perhaps at a lunch on 22^nd February. Be that as it may, the following month, on 13^th March, Mr Rockey, as the new manager, was summoned urgently to visit the defendants to discuss an increase in borrowing for a property acquisition pending sale of one of the lots of development land. Mr Rockey was taken around, as he recorded it, “the empire” and referred to the Fox and Sons valuation “dated 9^th October 1987.” This provoked him as new manager to assemble a really quite lengthy and detailed note (he was unkind to himself in describing this as verbose), reviewing the whole position generally. Certain passages under the heading Security I should perhaps quote. “I would be rather hesitant to place customer to the [expense] of a ReValuation of all his properties, but it is perhaps, in the circumstances, not unreasonable that we obtain a Professional View of the various Plots of Land. On a general basis, having seen all the tenanted properties, I feel that Fox’s Valuation is extremely low given movements in property prices over the last 18 months. Indeed even a 40% across the board increase, which is far and away below the actual for this part of the world, the domestic properties would increase to £786,800, say £750,000 realistically. This, for instance, would place Trelan at £210,000 - a laughably low figure even including the Tenancy - 4 upmarket Building Sites would easily produce that much... Total Security Value, therefore, on this very basic and conservative outlook £1,625,000 or 120% cover on a very conservative basis.”

In the course of cross-examination, Mr Coppel put to Mr Rockey that the words “the tenancy” in the passage from his file-note which I have just quoted, were a reference to the Lease and Mr Rockey, as he often did while being questioned, agreed. Mr Cawson did not re-examine on the point. Notwithstanding Mr Coppel’s apparent forensic success, I am quite satisfied that Mr Rockey inadvertently went too far in giving that affirmative answer. There is absolutely no indication whatever that Mr Rockey, or indeed his predecessor, had in any way become aware of the existence of a 30 year lease, and Mr Macdonald realistically conceded that it was extra-ordinarily unlikely that Mr Rockey had ever seen the Lease, which was somewhere in the Bank’s vaults. I find (notwithstanding the answer to which I have referred) that he had neither seen it nor become aware of it. I am satisfied that a correct understanding of the evidence which Mr Rockey was intending to give is simply an acceptance on his part that the words “the tenancy” at this point in his file-note were a cross-reference to the assumed life tenancy, on apparently ill-defined but perhaps rent-free terms, which the parties had assumed existed in favour of the grandparents at the time of the dealings between Mr Riley and the defendants in 1987, and which was referred to in Mr Manasseh’s valuation of 9^th October 1987 (to which we know, from the start of Mr Rockey’s file-note, he was making reference at the time).

Later that year, on or about 22^nd September 1989, the Bank received a further cheque for £21,000 from Stephens and Scown being a second payment on account of Mrs Fowle’s interest in residue in Max’s estate. Once again, this sum, indeed this time in its entirety, was needed to reduce overdraft borrowing on her personal current account which stood at £21,119: see the Bank’s file-note of the same day. A file-note of 20^th October 1989 records the fact that this current account continued to be used for personal expenditure including, amongst other things, private school fees for the defendants’ children. There is no need for me to set about casting judgment on the question of whether or not the expenditure at a jeweller’s referred to in this file-note was of an extravagant or unreasonable nature in order to decide this case, and I therefore do not propose to go into that question. The Bank continued to review the borrowing from time to time, and suffice it to say that valuations were obtained which, for the time being, seemed to indicate the Bank had adequate security cover for the ever-growing lending in respect of the portfolio of properties, notwithstanding that contrary to the terms of the proposal, contrary to the terms of the cash-flow document, and contrary to the terms of noted discussions between the defendants and the Bank, not a single property, nor a single lot forming part of a property, had been sold, nor had any money from the second defendant’s residuary interest in her father’s estate in fact been applied to reduce the company’s borrowing. The first indication which we have, on the documents at least, that the Bank was becoming concerned about the position on Bramridge’s account is to be found in its letter to Mr and Mrs Fowle from Mr Rockey dated 5^th August 1991. It is not necessary for me to quote at any length from this letter, but it records the Bank’s disappointment with the position, concern at the reduction in its security (which I take to be a reference to the adverse state of the property market at that time), and the company’s inability to meet even the interest accruing on the borrowings. The key phrase used is “The position gives cause for serious concern.”

On 4^th December 1991, the second defendant was involved in a serious car accident. It has undoubtedly had serious physical and psychological consequences for her. Without going into all the detail which she volunteered from the witness box at various stages, it seems that another motorist involved in the same collision was burnt to death, and the second defendant herself suffered extensive physical injuries including a head injury, the consequences of which I have mentioned earlier in my judgment. As if that was not bad enough, one month later, on 1^st January 1992, her grandfather Hulbert died. As Mr Rockey records, Hulbert’s widow, Millicent, was by then 82 years of age and not in good health. I accept the second defendant’s evidence that she, or occasionally her husband, stayed overnight at Trelan from time to time (I am not satisfied that she “moved in”) to look after Millicent over this first period of her widowhood, i.e. up until when she moved out of Trelan to the property, Beaver Lodge, in order to provide support and reassurance to her. I note that this is something which Mr Rockey was told at the time. However it started some months after Hulbert’s death. The second defendant suggested 6 months’ later in her witness statement, and in the first part of 1992 she herself was recovering from the serious injuries she had sustained in the car accident.

During 1992 Mr Rockey had a number of relevant discussions with the defendants about Trelan and its availability for realisation as security on this, by now, very unsatisfactory account. They are referred to in particular from paragraphs 25 to 29 of his witness statement, each of which is in fact supported, albeit that no express reference to them has been included in the text of the witness statement, by one of Mr Rockey’s contemporaneous file-notes. In particular, on 13^th March 1992 the directors of Bramridge, i.e. the defendants, were proposing piecemeal sales to reduce reliance on the Bank and to enable them to capitalise on potential. Mr Rockey’s note of that date includes this passage: “Furthermore, Granny, who resides at Trelan, wants to move and is seeking a smaller property with her daughter, Mrs Fowle’s mother. As soon as she vacates, Trelan will be available to sell and Mike Fowle tells me that Harding Laity’s, St Ives know of a potential purchaser by the name of “Hypbein–Rothschild” who possibly would pay £550,000 for the lot. Alternatively, they would sell the House at £300,000, retain the South and South-West corners of the garden for potential future Planning Enhancement...”

On 20^th May 1992, Mr Rockey had another discussion with the defendants. At that time, to quote his note, “Trelan remains occupied by Mrs Fowle’s Grandmother, although she is actively looking for an alternative property... Ultimately when vacant Trelan will be Marketed at £350,000 and if [the planning permissions discussed above are] granted, the Two Plots at £125,000 Each...” It was in about June 1992 that Mr Rogers of Waycotts Surveyors, a witness in this case, was first retained by the Bank. On 13^th August 1992, Mr Rockey met again with the defendants, their accountant and their estate agent/valuer. Again, Mr Rockey’s note is quite detailed, but the essential passages for immediate purposes read as follows: “Essentially the Company accepts the Waycott’s [valuation] Report. They have already reduced the price of various properties in line with Waycott’s valuation and whilst they delay marketing some of the individual properties awaiting vacant possession (with which Waycott’s concur at least in the short-term) they have instructed their agents with regard to the remainder. They accept also the need for them to appoint Waycotts as agents for sale of all the properties, acknowledging that Waycotts themselves will “sub-contract” this to local agents where appropriate... Trelan:... it seems that Mrs Saunders has bought another property in Lelant allowing Trelan House itself to be placed on the market when it becomes vacant.”

The next reference to Millicent’s occupation or vacation of Trelan comes in a later file-note of Mr Rockey’s dated 21^st December 1992. On this occasion, he saw both defendants and Mr Rogers at the branch and they, on behalf of Bramridge, confirmed to Mr Rockey its ongoing cooperation. His note outlines their discussions on a property by property basis. I shall quote only passages under the heading Trelan: “Property now vacant and because of its exposed position and traditional construction, probably with little insulation, is deteriorating rapidly... Martin [Rogers] agrees that is it not right to Market until the Spring, at which time the matter of the garden will need to be reviewed. In the meantime, however, Mike Fowle has it available for sale and has some interest in the £250,000 area subject to the remedial works, which in any case are necessary, being completed. Turning more to these works the place needs to be tended to prevent it deteriorating into a state which will only attract minimal offers...” So, as ultimately the parties before me agreed, the evidence indicates that Millicent vacated Trelan, moving to the bungalow, Beaver Lodge, at some time which cannot be more specifically identified between 13^th August and 21^st December 1992, and I so find. It may be that Mrs Fowle, the second defendant, continued to occupy Trelan for a short period after her grandmother moved out, but, notwithstanding suggestions to the contrary at some points in the evidence, I am quite satisfied that any such period of continued occupation was very short. After all, given the descriptions of the very poor state into which Trelan had fallen and the availability of the defendants’ own longstanding family home at Carbis Bay, not far away, it would have made little sense for Mrs Fowle to have remained alone at Trelan, notwithstanding its relative proximity to her mother’s new place of residence, Beaver Lodge. Certainly, by December 1992, Trelan is noted as having been vacant. I shall deal with the suggested oral gift of the Lease at about this time when resolving issue (ii) later in this judgment.

A note in the intervening period of 28^th October 1992 shows Mr Rockey even then in discussion with Mr Fowle as to the relative merits of marketing Trelan effectively immediately or in the spring (i.e. the spring of 1993), with a need for some works of repair and renovation being done prior to the sale. Ultimately, on the basis, as much as anything, of Mr Roger’s recommendation in favour of such works being done, the Bank agreed that marketing should be postponed until the following spring and that the Bank would extend limited further funds sufficient to finance those works being undertaken.

By May of 1993, works on Trelan were underway but not complete. Some short extracts from Mr Rockey’s note of 10^th May gives a sufficient flavour of the position. “Visit ‘Trelan’ in company with Martin Rogers and with customers to see progress. Whilst Martin [Rogers], and obviously the Fowles, seem very pleased with progress, I remain horrified as to the state of the property must have been in at the outset.... All the money has been spent and much work has been done. Having looked over it fully today, I confirm it still to be an impressive, old (probably between the wars) property, but I am not entirely convinced that the improvements will achieve the sort of price Mike Fowle has in mind...in order to finish, Mike Fowle needs another £2,000, to be drawn under the existing managed basis and both he and Martin Rogers are convinced that the Property can be fully completed within that... The need to market is accepted, but in discussions on price, there would seem, I read, to be some difference. Mike Fowle seems to think it should be marketed at £330,000 perhaps to sell at £300,000 and I cannot see any market at that price in this area. We have, therefore, agreed that once the alterations have been completed by the end of the month, two National Firms should be introduced to draw-up a Marketing Strategy and advise on price...”

The following month a meeting took place at Trelan at which there were discussions between Mr Rogers, Mr Derek Elliott, the architect and the defendants as directors of Bramridge. The customary detailed note made by Mr Rockey includes a lengthy section with regard to Trelan from which I will quote only extracts. “This led into some long and hard discussions concerning Marketability with my becoming somewhat forthright in pointing out that if they effectively don’t comply with our request, then our patience will not continue. I have, therefore, persuaded that the House at Trelan plus one plot be marketed at an Asking Price of £250,000 inclusive, with the acquisition of the Plot remaining optional and price adjustment (perhaps to £200,000) in the event that the plot is not required. This seems to find favour with Martin Rogers, although quite evidently not with the Fowles. I make the point that we have yet seen no sales completed, and that if we are to remain with this continually pumping in additional funds, then something must be sold. The Fowles may well regard Trelan as the Family property and the jewel in the crown but it is the only sellable asset and therefore must be marketed effectively. Towards the end of our discussions, it seemed that the agreement was watered down to the effect that it would be marketed as Open to Offers, but with our negotiated price as a guideline. I regret to say that I fear the worst, in that the Fowles have a grossly inflated aspiration of the value and that they will stick out for this unrealistically. It is therefore in my opinion, imperative that an element of control regarding the marketing remains with the Bank and that all offers, however low, are communicated direct to us by the agents...”

In the latter part of 1993, Mr and Mrs Fowle incorporated a new company for the purposes of applying for planning permission on some undeveloped land. The purpose, in general terms, appears to have been to try and achieve a situation whereby the applicant company was not associated with Mr Fowle, apparently for some reputational reasons which have not been explored before me and as to which I say no more.

In March 1994, steps were taken to have a plot from within Trelan released from the Bank’s charge to facilitate what ultimately became the only sale-off of any land or buildings within the entire portfolio that took place prior to the appointment of Law of Property Act Receivers on 11^th November 2003. A letter from Mr Rockey to Crosse & Crosse on 10^th March 1994 deals with this topic; the sale itself took place on 10^th June 1994 as indeed is referred to in the second defendant’s witness statement. However, in the meantime, an extremely important development occurred in March 1994. As Mr Rogers says in his evidence, which I have accepted, “On or around 15^th March 1994, the first defendant telephoned me and said that he and his family had decided to move into Trelan whilst it was being sold. He said that he thought it would look better if it was furnished than unfurnished. I telephoned Mr Rockey to tell him this.” Although Mr Rogers was unable to confirm the precise date, by virtue of his confirmation that such a thing only occurred on one occasion and the availability of Mr Rockey’s notes, I can say with confidence that this telephone conversation took place in mid-March 1994 (but no later than 15^th). For the avoidance of any doubt, in accepting Mr Rogers’ evidence I note that I am accepting something which the first defendant did not recall happening, and that I am, in effect, rejecting what Mr Fowle said in evidence was a reconstruction in his mind of what he would have said in such a phone-call if it had taken place, which he could not recall. I have no difficulty in accepting Mr Rogers’ evidence in this regard in full.

By reference to a file-note of Mr Rockey’s made on 15^th March 1994, but quite possibly referring to events a few days earlier than that, he records receipt of information from Mr Rogers, advising him “that there is a rumour that the Fowles have taken possession of Trelan.” Mr Rockey took the trouble to visit the property over the ensuing weekend and observed that it did indeed appear to be occupied. He prepared a letter, which in the event was not sent, to Bramridge, seeking, to summarise, an explanation. However, on or about 16^th March (which is the date of the relevant entry in his file-notes), Mr Rockey happened to meet Mr Fowle face to face. Picking the matter up from his file-note, “I gave him yet another opportunity to advise me that they had occupied “Trelan” an opportunity which he did not take. I was, therefore, able to look him in the eye and ask him directly “who was occupying “Trelan”, which after the briefest of moments to collect his thoughts, he confirmed that he and his Family had. Comparisons of his front and Southend’s came to mind!... Further enquiry of Mike Fowle discloses that they are occupying the property as “caretakers” in view of a number of break-ins. A further suspicion of mine is also confirmed in that their matrimonial home at Polmennor Drive, which I know to be held in a Family Trust, is now admittedly required by Granny who previously had occupied “Trelan”. The transaction whereby Granny vacated “Trelan” now seems much clearer!” I would interpolate here that I make no finding one way or the other as to whether those remarks about the property in fact required by Granny are correct and note, without resolving the matter, the contrary evidence of the second defendant. Mr Rockey’s note continues: “I have, therefore, made it quite clear to Mike Fowle that the Company has no authority by the Bank to grant any Lease or Tenancy and also suggest that we may well require them to sign an acknowledgment that they are occupying the property as “caretakers” and that they do not seek to gain any occupation, reservations or rights. Perhaps Region will consider and instruct….”.

We hereby irrevocably confirm that if at any future time the Bank seeks to enforce the charge over the property, we will immediately vacate the property on receipt of formal written notice from the Bank.” And each of them signed, dated 13^th April 1994. As the first defendant ultimately accepted under cross-examination, the second paragraph, being also the second sentence, of that document really is in absolutely clear and unambiguous terms, and the defendants chose to sign it.

Does the Lease subsist?

If so, is it vested in either Mrs Fowle or Mr and Mrs Fowle?

If so, did it take priority over the Bank’s Legal Charge?

If so, is/are Mrs Fowle, or as the case may be Mr and Mrs Fowle, estopped from relying on the same in answer to the claim for possession?

Mr Cawson submits not, on 2 grounds:

The first indication available to the claimants that these defendants were relying on the Lease as entitling them to occupy Trelan was (I am told) when such a plea (among many others) was included in the defence originally served on Mrs Fowle’s behalf. It was in response to that plea that the Bank took steps to determine the Lease in accordance with its express provisions;

The determination of the Lease is not, as Mr Cawson rightly submitted, an element of the claimant’s cause of action, but rather is a response raised to negate a defence raised. Thus its addition to the claimants’ pleadings by amendment does not bring about the addition of a cause of action which only accrued after the commencement of the proceedings;

Further, such an addition is not objectionable per se in any event. The editors of the 2007 White Book summarise the position thus (at 17.3.5, final paragraph):

“Although amendments take effect from the date of the original document which it amended (see para.17.3.4 above) there is no absolute rule of law or practice which precludes an amendment to rely on a cause of action which accrued only after the date of the original claim in circumstances where (but for the amendment) the claim could fail (Maridive & Oil Services SAE v CNA Insurance Co (Europe) Ltd [2002] EWCA Civ 369). In British Credit Trust Holdings v UK Insurance Ltd [2003] EWHC 2404 (Comm) , C was permitted to amend the particulars of claim in an insurance dispute in order to seek declaratory relief in respect of insurance claims arising after the proceedings had started.”

Insofar as it was put on the basis that such leasehold interest had become vested in the Defendants or either of them, or that the Defendants or either of them had become immediately entitled to have that interest vested in them, it fails for the reasons given in my determination of the next question, below;

Insofar as it was put on the basis that as a matter of construction of clause 3 the words “the person then entitled to the leasehold interest hereby created” should be construed broadly so as to include any person in actual occupation of Trelan at the time of the giving of notice, those words do not in my judgment bear such a meaning. In his oral submissions Mr Macdonald QC drew my attention to the provisions of CPR 55.10. Those provisions become relevant at a later stage, and are directed to ensuring that the Court does not make a possession order in favour of a mortgagee without the persons in actual occupation of the subject property (who may or may not be the mortgagors) first having had formal notice of the possession proceedings, and thus the opportunity to appear. They do not assist me in construing the words of clause 3. The clear and natural meaning of those words in the context of formal conveyancing documents dealing with matters of (leasehold) interests and title is the person in whom the leasehold interest is vested for the time being, and that was the persons on whom the Bank served its notices of determination, namely the two Personal Representatives of Millicent;

On my construction of clause 3, the words “the person then entitled to the leasehold interest hereby created” do not, as Mr Macdonald submitted, extend to a person beneficially (but not legally) entitled to the leasehold interest, whether in addition to or instead of the person legally entitled to the same. In any event, in my judgment neither of the defendants was beneficially entitled to the same in any event, for the reasons given in my determination of the next question, below.