Balevents Ltd v Sartori

This action concerns the ownership of a strip of land (“the Land”) in front of the Rocket Club in Birmingham. The Land is registered under title number WM951202 in the name of the defendant, Mr Allan Sartori (“Mr Sartori”).

The Rocket Club is a lap dancing establishment which is operated from the ground floor premises at units 3 to 5, Ground Floor, Quayside Tower, 258 Broad Street (“the Units”) which it occupies under a lease dated 27 February 1992 between P&O Holdings Limited and Jazz Enterprises Limited (“JEL”) for a term of 25 years from 24 June 1991 (“the Lease”). On 7 February 2002 the Lease was assigned by JEL to Broomco (2540) Limited (“Broomco”) and on 28 May 2003 it was assigned by Broomco to the claimant (“Balevents”).

The Units and the Land originally formed part of a freehold held by the Governors of the Schools of King Edward the Sixth in Birmingham. On 11 May 1964 the Governors granted a lease of the Units together with the Land to Prudential Assurance Company Limited (“the Prudential”) for a period of 99 years. On 26 May 1966 the Prudential surrendered a strip of land the subject of the lease, bordering Broad Street and including the Land, to the Governors and, the following day, the Governors conveyed it to the Lord Mayor, Aldermen and Citizens of the City of Birmingham, now the Birmingham City Council (“the Council”) to facilitate road improvement. It was duly registered under title number WK34407.

On 26 May 2009 Mr Sartori applied in his own name for freehold possessory title to the Land. He made the application in the appropriate way and supported it with a number of statutory declarations. The Council, as proprietor of the freehold estate of which it formed part, was notified of the application but did not object. The Land Registry was evidently satisfied on the evidence that Mr Sartori had made out his claim and duly registered him as freehold proprietor with possessory title with effect from 28 May 2009.

In this action Balevents claims that it, and not Mr Sartori, should be the registered proprietor of the Land. It says that Mr Sartori was never in adverse possession; that JEL, Broomco and Balevents were sequentially in adverse possession; and that Mr Sartori made his application in breach of his fiduciary duty and duty of good faith to those companies. These claims and Mr Sartori’s answers to them are founded on a factual narrative, much of which is hotly disputed. There follows an outline of its essential elements and the parties’ respective contentions.

Mr Sartori’s case begins in 1974 at which time he says that his father, Mr Bernard Sartori, took possession of the Land when he started a take-away food business which he ran from a catering trailer located on the pavement outside 258 Broad Street. In addition to the trailer, he put out tables and chairs and enclosed the area with a low picket fence. In about 1986, Mr Bernard Sartori retired and Mr Sartori took the business over and, with it, possession of the Land. As a result, by 1991, paper title to the Land had been extinguished by the adverse possession of Mr Sartori and, before him, his father.

All of these matters are disputed by Balevents. It says the existence of a catering trailer is doubtful, that such a business was never in possession of the Land, that if it was in possession of the Land, it was not for the requisite period and, in any event, any title that Mr Sartori may have had was subsequently extinguished by the adverse possession of JEL, Broomco and, finally, Balevents.

Mr Sartori continues that, in or about October 1991 he and Mr Alan Sherwin began to operate the Ronnie Scott’s nightclub from the Units through their corporate vehicle, JEL, of which they were both directors. Mr Sartori says that at this time the catering trailer continued to operate and that, with his permission, JEL enclosed the remainder of the Land which became part of the front of the club and, after a while, known as the Ronnie Scott’s Terrace and Bar. In about 1994 Mr Sartori decided to allow a Mr Christopher Timms to operate the catering trailer and he installed a new catering unit, described throughout the proceedings as a burrito bar. Mr Timms paid a weekly rent, initially of £50, which Mr Sartori contends was paid to JEL by way of a loan.

Balevents accepts aspects of this account but disputes that the catering trailer was in operation from 1991 until the time that Mr Timms began to run his burrito bar. It also contends that Ronnie Scott’s was a new enterprise and its operation was the first actual enclosure of the Land. It says that JEL provided the staff and the services to the outlet and that it did receive the rent, but not by way of a loan. Accordingly, JEL, if anyone, was in possession.

In 2000 JEL fell into acute financial difficulties and went into liquidation on 10 August 2001. The operation of Ronnie Scott’s was thereupon transferred to Broomco. Mr Sartori was a director from 17 July 2001 to 13 August 2001, at which time he entered into an individual voluntary arrangement (“IVA”) with his creditors. Mr Sartori’s wife, Lynn, remained a director but the business carried on essentially as before. It was run by Mr Sartori and Mr Sherwin and the rents from Mr Timms’ catering unit were paid into the business. Unfortunately Broomco fared no better than JEL and by early 2003 it too was in serious financial difficulties. Mr Sartori approached Mr Laurence Reddy (“Mr Reddy”), a successful businessman, for assistance but he was reluctant to become involved because he had lent about £50,000 to JEL in 1998 which had never been repaid. However, he was eventually persuaded by his wife, Diane, who was a friend of Mrs Sartori, to change his mind and, after investigation, he bought all the shares in Broomco and proceeded to invest about £360,000 in the business in order to clear the majority of its debts.

Matters did not improve and Mr Reddy evidently felt a change of direction was required. On about 28 May 2003 the Lease was assigned to Balevents which, after appropriate fitting out of the Units, opened for business as the Rocket Club. Mr Reddy funded the setting up of the business but, until 2010, its sole director was his brother, Mr William Reddy, who was also registered as the owner of its two issued shares. Mr Sartori was employed as the general manager of the business. Meanwhile, on 23 September 2003, Broomco went into liquidation.

Here I must mention another dispute of fact. Mr Sartori says that Mr Reddy agreed to fund the new venture at a meeting at the offices of DLA Piper in Birmingham so long as Mr Sherwin and a third shareholder in Broomco, Mr Christopher Kelly, were not involved. More importantly for present purposes, it was Mr Sartori’s evidence that, at that meeting, he made it clear to Mr Reddy that the Land and the associated income, which now amounted to about £1,000 per week, belonged to him but that he was prepared to pay it into the business to stabilise its finances. It was also Mr Sartori’s evidence that, in the presence of Mr Kelly and Mr Sherwin, Mr Reddy agreed that the Land belonged to him. Needless to say, this account was rejected by Mr Reddy.

The Rocket Club rapidly became very profitable. Mr Reddy was repaid all of the money he had invested, together with all the moneys he had invested in or lent to JEL and Broomco in support of the earlier Ronnie Scott’s business.

In the summer of 2006 Mr Reddy and Mr Sartori approached Mr Martin Edwards, a partner in the firm of Martineau Johnson, for advice about the ownership of the Land. The ban on smoking in enclosed public areas was about to come into effect and the Rocket Club needed to establish a designated smoking area. In addition, they were concerned about a possible dispute with their landlord or the Council. By letter dated 11 August 2006, addressed to Mr Sartori and Mr Reddy at Mr Sartori’s home address, Mr Edwards recorded that they had discussed the matter at a recent meeting and recommended that he be instructed to prepare an application to the Land Registry for possessory title. It seems he also wrote a second letter of advice which I was told is no longer available. It is clear, however, that no further action was taken upon that advice at that time, save that Mr Sartori told me that he agreed to the erection of a smoking shelter on the Land.

At this time Mr Sartori continued to manage the day to day business of the club. He was paid a salary of £35,000 to £45,000 per annum and, in September 2006, his IVA came to an end. As he told me, he then started to think about “getting some of his money back”. He therefore asked Mr Reddy for a partial refund of the rental income from the Land and, in 2007, he was paid a gross sum of £100,000 and, in 2008, a further gross sum of £10,000. Mr Reddy disputed that these sums had anything to do with rental income and maintained they represented a bonus for Mr Sartori’s hard work.

In early 2008 Mr Reddy decided to manage the business of the Rocket Club through a new company set up for the purpose called Broad Street Entertainments Ltd (“BSEL”). Mr Sartori was made a director and given one third of the issued shares. Mr Reddy’s daughter, Alison, was also a director but, as Mr Reddy explained, she was a nominal office holder. She and Mrs Joyce Reddy, Mr William Reddy’s wife, held the balance of the shares.

At about this time the fortunes of the Rocket Club began to take a downturn. Mr Reddy’s son, Mathew, became actively involved in the running of the business but he had a poor relationship with Mr Sartori. As a result, in 2009, Mr Sartori decided to make Mr Reddy an offer to buy the business. They arranged to meet at the Green Man public house in Middleton. Mr Sartori said in evidence that in the course of the meeting Mr Reddy agreed to sell him the business for £400,000 and they shook hands on the deal. For his part, Mr Reddy accepted that a conversation took place and that Mr Sartori offered him £400,000 for the business but said that he did not agree to sell it there and then.

Meanwhile, in about February or early March 2009, it came to Mr Sartori’s attention that the manager of the Rococo Bar, which traded from premises next door to those of Rocket Club, had received a letter from a local agent indicating that his client wished to buy from the Council the land in front of their various premises. Mr Sartori reported this information to Mr Reddy and proposed discussing the matter with Mr Michael Olley, an Honorary Alderman. Mr Reddy agreed and Mr Sartori duly did so. Mr Olley suggested that a solicitor be instructed and recommended Mr Harry Cottam of Cottam’s Solicitors.

On 2 March 2009 a meeting took place at the Rocket Club attended by Mr Sartori, Mr Reddy, Mr Cottam and Mr Olley. There is a major dispute as to the basis upon which the meeting took place and the substance of what was said. Mr Sartori contends that Mr Cottam was instructed on his behalf to make an application in his name for freehold possessory title to the Land; that this is exactly what Mr Cottam proceeded to do; and that Mr Reddy agreed to Mr Sartori taking this course, and doing so for his own benefit. All of these matters are disputed by Mr Reddy. He contends that Mr Cottam was instructed on behalf of Balevents and that he understood that the application for possessory title was being made on its behalf.

The Land Registry raised various queries in connection with the application which led Mr Cottam to request a second meeting. This took place on 1 May 2009, once again at the Rocket Club, and was attended by Mr Sartori, Mr Cottam and Mr Reddy. Mr Sartori contends that at this meeting he related to Mr Cottam details of his father’s occupation of the Land from the 1970s and that Mr Reddy fully supported his application. Mr Reddy again disputes this version of events. He maintains that the application was made in Mr Sartori’s name without his knowledge or consent, and was made in breach of his duty of fidelity to BSEL and Balevents.

In October 2009 the Land was registered in Mr Sartori’s name. Negotiations between the parties for the sale of the business continued through the rest of 2009 and into 2010 but their relationship finally broke down completely in February 2010 and, not long thereafter, these proceedings were issued.

The Land forms a narrow strip extending between the frontage of the Units and the pavement of the highway. It is now enclosed by planters which extend linearly along its boundary with the pavement until they form a curve leading to but stopping short of the entrance to the Rocket Club which is situated at the corner of Broad Street and Berkeley Street. A smoking shelter is located in the centre of the Land and is partly shielded from the view of pedestrians by two signs and various plants. The catering trailer is located at the opposite end of the Land to the Rocket Club entrance and it occupies an area approximately 5 metres long by 3 metres deep.

I heard a good deal of evidence as to the existence and nature of the take-away business which Mr Sartori maintained his father, Mr Bernard Sartori, began on the Land in the spring of 1974. In his witness statement and in cross examination, Mr Sartori explained that his father bought a catering trailer and located it outside 258 Broad Street on the forecourt of the pavement. It had wheels and was, on occasion, moved for cleaning and maintenance purposes. Over the ensuing years it was, to the best of Mr Sartori’s recollection, replaced twice with a more updated version. Mr Bernard Sartori traded from it from early morning until mid afternoon. In addition, he worked shifts at the local Ansell’s Brewery. After a few years, Mr Bernard Sartori put out tables and chairs next to the trailer and enclosed the area with a low wooden picket fence which he painted white. At night, the tables and chairs were stacked and secured with a chain to the side of the trailer.

Mr Sartori continued that, in the mid 1980s, he and Mr Sherwin opened a café called the Rep Café Bar in the Repertory Theatre on Broad Street. It seemed to him to be logical to take over his father’s catering trailer and take-away food business which by then had become well established and was a focal point in the area. His father then retired and came to work for him as a handyman around his other catering outlets.

Mr Sartori’s evidence was supported by that of a number of other witnesses. Mr Tim Dixon explained to me that he was a window cleaner for a year or so in the mid 1970s and used to buy a sandwich at lunchtime from the trailer. He recalled that it was owned and run by an Italian family and that it had tables and chairs beside it with a white fence around them. He also remembered the Italian owner taking sandwiches, cake and drinks to the local shops and offices.

Mr Mark Jones gave evidence that in the 1980s he ran a restaurant on Broad Street and became friendly with Mr Bernard Sartori, known to him as Enrico. He and others in his restaurant used to keep an eye on the trailer to make sure it was not vandalised. He thought that Mr Bernard Sartori had a good sandwich business and was also aware that he would take his sandwiches around to the local offices at lunchtime. He recalled it as at the first continental style café that Birmingham had seen and that it proved quite a novelty with its tables and chairs and little wooden fence.

Mr Euan Rose told me that from 1974 onwards and throughout the 1980s he directed many productions at the Crescent Theatre off Broad Street and was often there in the day time for various meetings, rehearsals and the like. He thought Broad Street was a very bleak place in those days and it had very few outlets from which it was possible to buy take-away food. As a result, he, his Chairman, Mr Barber, or Production Manager, Mr Harrison, would often organise sandwiches and rolls from Mr Bernard Sartori’s trailer for the cast, crew and helpers. Sometimes they would take a break and sit at one of his tables. If they were particularly busy, Mr Bernard Sartori would come and take orders and then deliver sandwiches to them at the theatre.

Another witness, Mr Keith Williams, was rather less clear in his recollection. He ran a café called the Tow Rope said he could remember Mr Bernard Sartori running his sandwich business from his trailer on the opposite side of Broad Street. Although Mr Williams seemed to remember the trailer well because of the tables and chairs and the little fence around the site, it became clear in the course of his cross-examination that he believed it was located some distance away from the Units and Land.

Mr Sartori’s case was also supported by two witnesses who did have a particular connection with him. The first, Mr Julian Oddy, met Mr Sartori in the early 1980s and was employed by him as Business Development Director of a company which he owned called Iceford Catering Limited (“Iceford”). He recalled that from 1981 or 1982 the trailer had tables and chairs around it, although these were gathered up in the evening. From about 1985 he and Mr Sartori began to run the business and they supplied it with sandwiches and other food from the Rep Café Bar. The chefs would prepare the food and carry it across to the trailer, and they continued to do so after the opening of the Ronnie Scott’s nightclub in or about October 1991.

Mr Sherwin gave evidence to much the same effect, which I also accept. He told me that he met Mr Sartori in about 1981 and they became business partners the following year. They jointly owned and operated a number of businesses, including the Rep Café Bar from August 1985 to April 1994. He recalled Mr Sartori and, before him, his father, Mr Bernard Sartori, running a take-away food business from a trailer located on the Land with a number of loose tables and chairs along side. Indeed it was as a result of this business that Mr Sartori came to hear of the availability of the Units as a location for the Ronnie Scott’s nightclub. Mr Sherwin was also clear that when Ronnie Scott’s opened the take-away food business continued to operate from the trailer and served food to members of the public passing by and also to customers sitting on the terrace. Indeed, Mr Sherwin believed that the fact that the operation was in place, and the area of pavement effectively cordoned off by the seating area and display hoarding around it, was instrumental in securing a licence to sell alcohol on the Land and creating the famous Ronnie Scott’s Terrace and Bar.

On behalf of Balevents I heard evidence from three witnesses on this issue. The first was Mr Christopher Dunkley. In his witness statement he explained that he is the Managing Director of a company called More Secure Limited (“More Secure”), which specialises in the provision of door and premises security throughout the West Midlands and provides security at the Rocket Club. He said that he was working in Broad Street in the early 1990s and remembered very well that when the club opened it incorporated a small strip of land at the front of the premises which became an outdoor café area with tables and chairs. He continued that from the mid 1980s to the early 1990s he was working as a doorman at Burberry’s in Broad Street and so visited the area on a daily basis but could not recall seeing any type of food outlet operating from that strip. He also said that about six months ago he received a telephone call from Mr Sartori in the course of which Mr Sartori asked him if he would do him a favour by coming to court and giving evidence to the effect that he remembered his father running a sandwich bar from the Land. I have to say I did not find Mr Dunkley a very satisfactory witness. It emerged in the course of his cross-examination that he was not only Managing Director of More Secure but also a director of and one third shareholder in a company called Berkeley Leisure Limited which now manages the Rocket Club. He maintained that he had no recollection of seeing any type of food outlet operating from the Land but accepted that he had no particular reason to remember any such outlet which may have been there.

I also heard evidence from Mr Jan Watkins. Since 2010 he has been the joint proprietor with Mr Timms of the business conducted from the catering trailer. Indeed he now has the day to day conduct of the business because Mr Timms moved to Australia in January 2011. In his witness statement Mr Watkins explained that from 1988 to November 2010 he was co-proprietor with Mr Timms of a baguette and sandwich bar at Fiveways, at the end of Broad Street. He said that since 1988 he has been very familiar with the food outlets operating in and around the Broad Street area but had no recollection of any catering trailer or take-away food business outside Ronnie Scott’s prior to Mr Timms setting up his burrito bar in 1994. Mr Watkins maintained this position in cross-examination. He gave his evidence in a straightforward and clear manner and I have no doubt he was doing his best to assist the court.

I also heard evidence on this issue from Mr Ray Hassall, a councillor of the Birmingham City Council. He explained to me that in or about 1975 he became an instructor, trainer and sales support member of staff for British Telecom based at Granville House in Broad Street, only a very short distance from the Rocket Club. In about 1988 he moved to another building occupied by British Telecom which is adjacent to the Rocket Club and is now known as the Jurys Inn. He was employed there as a Telex representative and Manager of the Business Centre. He told me that in those days sandwich bars were uncommon and he is sure that he would not have missed one had it been there. He worked opposite the Units and his office was on the ground floor with windows overlooking the site. He was absolutely sure that there was never a take-away food business operating from a trailer on the Land before 1990.

Reconciling the evidence of these various witnesses is not at all easy. In the end, however, I have come to the clear conclusion that Mr Bernard Sartori did indeed start a take-away food business from a catering trailer on the Land in the mid 1970s; that the trailer had wheels and could be and was occasionally moved for the purposes of maintenance, repair or refitting and, over the years, was replaced on a number of occasions. Further, I am satisfied that, after a year or two, Mr Bernard Sartori put out tables and chairs during the day time and surrounded them with a low wooden picket fence. I also accept Mr Sartori’s evidence that, in the mid 1980s, he took the business over and serviced it from the Rep Café Bar. After the 1970s, I found the description by Mr Rose and Mr Dixon of the way they had patronised the business compelling. Their recollection was clear and precise and, to my mind, very convincing and entirely supportive of Mr Sartori’s own evidence. As for the 1980s and early 1990s, I was persuaded by the evidence of Mr Jones, Mr Oddy and Mr Sherwin and have no doubt that the accounts they gave me were true. I recognise the difficulty presented by the evidence of Mr Hassall and Mr Watkins, both of whom I found to be entirely truthful and straightforward witnesses. In my judgment the explanation for their evidence is that they were simply unable to recall the presence of the take-away food business and that this is entirely understandable bearing in mind how long ago these events took place.

There was no dispute between the parties as to the relevant principles I must apply in considering whether Mr Sartori and his father were in adverse possession of the Land for any complete period of twelve years before 1991. I must be satisfied first, they had a sufficient degree of physical control and second, an intention to exercise such control on their own behalf and for their own benefit.

As for factual possession, in J A Pye (Oxford) Ltd v Graham [2002] UKHL 30, [2003] 1 AC 419, the House of Lords approved the following statement by Slade J in Powell v McFarlane [1977] 38 P&CR 452:

“(3)

Factual possession signifies an appropriate degree of physical control. It must be a single and [exclusive] possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed… Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.”

As for intention to possess, the House of Lords explained in Pye that this requires:

“An intention, in one’s own name and on one’s own behalf to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow.”

Applying these principles in the context of the present case, and despite my acceptance of Mr Sartori’s evidence that he and, before him, his father, Mr Bernard Sartori, operated a take-away food business from a catering trailer located on the Land outside the Units, I do not believe this business was ever in factual possession of the Land. The trailer was never fixed to the Land; it was, as I have said, removed, for cleaning and maintenance purposes and, indeed, was replaced on two or three occasions. Further, the tables and chairs were gathered up in the evenings and chained to the side of the trailer and, as Mr Sartori accepted in his cross-examination, the installation was not permanent. Neither Mr Sartori nor his father ever had effective control of the Land.

For much the same reasons, I do not believe that Mr Sartori or his father ever had an intention to exercise effective and exclusive control of the Land or any part of it. The activities to which I have referred do not reveal that either of them had any intention truly to occupy and use the Land as their own.

In 1991 Mr Sartori and Mr Sherwin established Ronnie Scott’s nightclub through JEL, the company they jointly owned and controlled. JEL took a lease of the Units and the club opened that autumn.

Mr Sartori, Mr Sherwin and Mr Oddy all told me, and I accept, that the trailer and Mr Sartori’s take-away food business were still located on the Land at this time. Indeed, the Rep Café Bar continued to service the trailer after Ronnie Scott’s had opened because the kitchen facilities at the Units did not have the capacity to supply both it and the club restaurant. As I have mentioned, Mr Watkins suggested that there was no take-away food business on the Land before 1994 but I prefer the evidence of Mr Sartori, Mr Sherwin and Mr Oddy on this issue. Their evidence was consistent and, to my mind, entirely convincing.

Mr Sartori and Mr Sherwin also decided to enclose the Land by placing boarding and planters around it, and in this way it became the Ronnie Scott’s Terrace and Bar. Mr Sartori’s catering trailer, standing at one end of the Land, had two service hatches, one at the side serving customers sitting in the terrace and bar area, and another opening onto the pavement, serving members of the public passing by.

Mr Sartori also applied for a licence to sell alcohol both from the Units and the Land. Customers sitting on the terrace could therefore enjoy drinks served from the club and food bought from the trailer. This arrangement was evidently a great success and Ronnie Scott’s Terrace and Bar rapidly became very popular.

I do not believe there was any real dispute between the parties that the Land was enclosed from 1991, and I am satisfied that it was. Part of it was occupied by the trailer and the rest by the club. In these circumstances Balevents contends that Ronnie Scott’s was a new enterprise and that JEL, if anyone, was in possession of the Land. Mr Sartori contends that he was in possession of the Land and that in so far as JEL took possession, it did so with his permission.

I have no doubt that Ronnie Scott’s Terrace and Bar would have been seen as an integral part of the Ronnie Scott’s club. The club had one set of staff and the whole was operated as a single business. However, Mr Sartori and Mr Sherwin both told me, and I accept, that JEL took possession of that part of the Land which formed the terrace and bar with the consent of Mr Sartori. I do not believe that Mr Sartori and Mr Sherwin turned their minds to the question whether, as a matter of law, Mr Sartori had, by his time, acquired title to the Land by adverse possession but, as a practical matter, Mr Sartori and his father before him had for many years run a take-away food business from a catering trailer on the Land and it was therefore entirely understandable that Mr Sartori and Mr Sherwin should proceed, as I am satisfied they did, on the agreed basis that this was Mr Sartori’s land and that JEL’s use of it was permissive.

In about 1994, and consistently with this agreement, Mr Sartori decided that he wished to find a tenant for his trailer and take-away food business, so allowing him to focus his attention on JEL and the development of the Ronnie Scott’s business. He therefore allowed Mr Timms take possession of that part of the Land on which the trailer stood, initially rent free but then for a weekly rent of £50. Mr Timms installed a new trailer which was rather smaller than that which currently stands on the Land, and he opened his burrito bar which was supplied with water and electricity from the Units.

Mr Sartori paid the rent he received from Mr Timms to JEL. Mr Sherwin described this as being by way of a loan. Under cross examination he provided a rather confused explanation of how this was dealt with from an accounting perspective but remained unshaken in his evidence that the money was treated as coming from Mr Sartori’s land, just as they had agreed.

For the next few years Ronnie Scott’s prospered, as did Mr Timms’ burrito bar, and his rent gradually increased to about £300 per week. Unfortunately this success proved relatively short lived and, by the late 1990s, Ronnie Scott’s was experiencing a downturn in its popularity and so also its profitability.

In about 2000 the central entrance to the club over the Land was closed off and a corner entrance opened. At about this time JEL ran into severe financial difficulties. It borrowed around £50,000 from Mr Reddy, whose wife was, as I have said, very friendly with Mrs Sartori, but unfortunately matters did not improve.

On 10 August 2001 JEL went into liquidation and its assets were transferred to Broomco. The shares in Broomco were owed by a Mr Christopher Kelly who, in Mr Sartori’s words, came up with a rescue package, Mrs Sartori and Mrs Sherwin. But, as Mr Sartori and Mr Sherwin explained to me, the business was run by Mr Sartori and Mr Sherwin just as before, by which I understood them to mean that they and their wives accepted and agreed that Mr Sartori owned the Land but that he continued to pay the rent he received from Mr Timms into the business. Although I did not hear evidence from Mr Kelly, he was intimately involved with the rescue of the business and I consider it overwhelmingly likely that he too accepted and agreed the Land belonged to Mr Sartori.

Balevents contends that the rent from Mr Timms was paid to Broomco as successor to both the business and the lease and that it was not in Mr Sartori’s gift. This contention is supported by the documents Mr Sartori produced for the purposes of his IVA. In particular, an “Estimated Summary of Statement of Affairs as at 3 September 2001”, a “Comparison of Estimated Outcomes as at 3 September 2001” and an “Estimated Schedule of Monthly Income and Expenditure as at 3 September 2001”, all dated 5 September 2001, do not mention the Land as one of Mr Sartori’s assets and do not mention Mr Timms’ rent as one of his sources of income. When these were put to Mr Sartori in cross examination he was unable to provide a satisfactory explanation for their omission. I am therefore driven to the conclusion that Mr Sartori was being untruthful in his evidence to me or in these documents in his IVA.

In my judgment the latter is the correct explanation. Throughout his evidence before me Mr Sartori was frank and candid and I believe he answered all questions put to him honestly and to the best of his recollection. He had no explanation for the documents he prepared in connection with his IVA because there was none to offer.

The fortunes of Ronnie Scott’s did not recover and by early 2003 Broomco was experiencing acute financial problems. Mr Sartori approached Mr Reddy and asked him if he would lend to Broomco £100,000 to assist in paying the rent on the club premises. Mr Reddy explained to me that he refused this request because he had not been repaid the £50,000 he had earlier lent to JEL. However, a few days later Mrs Reddy told him that the club’s premises were about to be repossessed and that upon such repossession Mr Sartori and his family would lose their homes. Mr Reddy therefore reconsidered his refusal and decided to investigate Broomco’s financial position. He initially lodged with DLA Piper, then Mr Sartori and Broomco’s solicitors, the sum of £100,000 to be held to his order and he began to look into Broomco’s affairs. The following week he decided to purchase all of the shares in Broomco and proceeded to invest about £360,000 in the business to clear the majority of its debt.

Within a few months Broomco was again insolvent and it was clear to Mr Sartori that Ronnie Scott’s did not have a viable future. However, he had an idea that a lap dancing club might prove more popular. He suggested this to Mr Reddy who agreed with him. A meeting took place at the offices of DLA Piper in Birmingham which he and Mr Reddy attended and at which Mr Reddy agreed to fund the new venture provided that Mr Sherwin and Mr Kelly were not involved.

Mr Sartori also told me that in the course of these discussions he made it clear that the Land and the associated income, now about £1,000 per week, belonged to him, but that he was prepared to pay it into the business in order to stabilise its finances and on the basis that it would be paid back to him in due course. Mr Sartori continued that, in front of Mr Sherwin and Mr Kelly, Mr Reddy accepted that the Land belonged to him. All these matters were disputed by Mr Reddy. He said that the land in front of the club was never discussed at any meeting and there was never any discussion about Mr Sartori paying money into the business in order to stabilise its finances.

I accept the evidence of Mr Sartori on this issue. He is an emotional man and he clearly found the process of giving evidence in this case very upsetting. Perhaps more importantly, his recollection of details such as precise dates was, on occasion, poor. Nevertheless, as I have said, I found him to be a truthful and generally reliable witness. Moreover, his account of events is entirely credible in light of his association with the Land for some 25 years. It is also consistent with events which followed. By contrast I did not find Mr Reddy a candid witness. His evidence on other crucial events which followed was unsatisfactory, as I shall explain. Where his evidence and that of Mr Sartori conflict, I therefore prefer the evidence of Mr Sartori.

Mr Reddy duly funded the refitting and refurbishment of the Units. A decorated boarded front and flood lighting were installed on the Land. The Lease was assigned to Balevents in the course of May 2003 and the Rocket Club opened for business.

Mr Sartori was responsible for the day to day running of the Rocket Club and was earning between £35,000 and £45,000 per annum. He prided himself on his marketing and public relations skills and he deployed them to good effect because, over the next few years, the club thrived.

Mr Reddy described himself as being a “consultant” to the business and there is no doubt that he left the routine aspects of the business to Mr Sartori. However, I am satisfied that he was the person responsible for making all the key financial and corporate decisions for the company. He arranged for its financial and corporate affairs to be managed through his highly successful First Personnel group of companies and within a relatively short time had recovered from the business all of the money he had invested together with all the money he had lent to JEL. He and Mr Sartori were very good friends throughout this period and would meet at the Rocket Club once or twice each week to discuss the business and how it was progressing.

Mr William Reddy was, as I have said, the sole director of Balevents and he was registered as the owner of the two issued shares. However, he lived in Spain and I am satisfied he played no part in the running of the business or in managing its financial or other corporate affairs. He came over to England on only one or two occasions a year and, although he did visit the Rocket Club, it was only to enjoy its facilities and to socialise with Mr Sartori.

It is therefore not surprising that in 2006 it was Mr Reddy and Mr Sartori who jointly attended a meeting with Mr Edwards of Martineau Johnson for advice about the Land. The smoking ban was about to come into effect and Mr Reddy was concerned about a possible dispute with their landlord or with the Council about ownership of the Land. Accordingly they discussed the possibility of making an application to the Land Registry for possessory title. It is clear from Martineau Johnson’s letter to Mr Sartori and Mr Reddy of 11 August 2006 that a second letter of advice was sent but unfortunately it was not available at the trial and no one was able to assist me as to its contents, save that Mr Reddy suggested that Martineau Johnson had some doubts about the strength of the case. Mr Reddy paid Martineau Johnson’s account. Nevertheless, I am satisfied that Mr Reddy and Mr Sartori both considered that the Land belonged to Mr Sartori. Mr Sartori explained that he was told by Mr Reddy on many occasions that the frontage to the club was his and I accept that evidence.

In 2006 Mr Sartori’s IVA came to an end and this brings me to another issue of fact. Mr Sartori’s evidence was that he asked Mr Reddy for a partial refund of the rental income from the Land and, over the course of the next two years, was paid first, a gross sum of £100,000 and then a further gross sum of £10,000. Mr Reddy said the business was cash rich and that he and William Reddy decided to pay Mr Sartori a bonus in recognition of his hard work and success. But, he continued, these payments had nothing to do with rent.

Resolving this issue is not easy. It was contended on behalf of Mr Reddy that the sums paid to Mr Sartori are simply not referable to rent because by this time Balevents had received far more than this. Further, it continued to receive rent for some time thereafter and, until 2010, Mr Sartori took no steps to retain that rent for himself. There is considerable force in these points but, having heard Mr Sartori’s evidence, I believe he did consider the rent was properly his, that he expressed this to Mr Reddy and that he considered the payments he received went some way to reimbursing him. Moreover, I do not believe he was ever as familiar with the true finances of the business as Mr Reddy.

In 2008 Mr Reddy engineered another important change to the business with the incorporation of BSEL for the purpose of managing the Rocket Club. Mr Sartori was made a director and given one third of the shares. However, the majority of the shares were held by other members of Mr Reddy’s family; and importantly, Balevents retained the Lease.

It was at about this time that the fortunes of the Rocket Club began to deteriorate. It was hit by the economic downturn. Further, Mr Reddy was taking less of an interest in the business and he arranged for his son, Mathew, to take an active part in its day to day trading activities. Unfortunately he developed a poor relationship with Mr Sartori and other members of staff. All these matters led Mr Sartori to arrange the meeting with Mr Reddy at the Green Man and to make him the offer to purchase the business to which I have referred.

This brings me to the crucial events concerning the steps taken by Mr Sartori to register the Land in his own name on the basis of adverse possession. As I have said, this was prompted by the letter received by the manager of the Rococo Bar and led to the instruction of Mr Cottam.

The first meeting with Mr Cottam took place at the Rocket Club on 2 March 2009. It was attended by Mr Sartori, Mr Reddy, Mr Olley and Mr Cottam. Mr Sartori had a clear recollection of the meeting because, as he explained to me, Mr Cottam arrived late on his motorbike. He also told me that he instructed Mr Cottam to make an application to the Land Registry to secure for him the land in front of the club and that for that purpose he gave to him some old plans. They walked over the site together and Mr Cottam took notes. Mr Cottam explained to him that he would have to make a statement in support of the application and the discussion proceeded on the basis that the land belonged to him and that he was entitled to be registered as its owner.

Mr Cottam gave evidence which supported that of Mr Sartori. He was clear that he received instructions from Mr Sartori and was at all times acting for him. He understood Mr Reddy to be a successful businessman who was present as a friend and confidante of Mr Sartori and in order to assist him. In the course of his cross examination he elaborated that Mr Reddy actively participated in the discussion and was keen to protect the land in front of the club.

Mr Reddy also told me that he was keen to protect the land in front of the club, but to do so on behalf of Balevents. He continued that it was agreed that Mr Cottam would be retained by Balevents to act on its behalf in securing possessory title and that he was asked and thereafter did supply as much documentation as possible in support of its application. He maintained that he had no idea the application was to be made by Mr Sartori on his own behalf.

Mr Olley broadly supported Mr Reddy’s account of the meeting. He gained the firm impression that Mr Cottam considered that the land needed to be registered to prevent a third party from buying it from the Council. He also understood Mr Cottam to say this was a simple and straightforward matter which he could handle on behalf of the Rocket Club for the benefit of its business interests.

Shortly after the meeting Mr Cottam wrote two letters to Mr Sartori at Balevents. The first, dated 4 March 2009, confirmed that Mr Cottam was delighted to act for Mr Sartori in connection with the possessory title application and set out details of his fees. The second, dated 5 March 2009, enclosed a note of Mr Cottam’s initial charges and continued:

“I would point out that I have made the invoice out to Balevents Limited and I presume they are able to recover VAT on it and I would point out that my contract of agreement is with you personally and not with any other party.”

By a further letter dated 5 March 2009 Mr Cottam wrote to the Land Registry stating that he acted for Mr Sartori in connection with the land adjacent to the Rocket Club. He enclosed an application for possessory title and a supporting declaration of Mr Sartori of the same date. In that declaration Mr Sartori stated that he was the general manager of the Rocket Club which occupied its premises under a lease made in 1991, that he was originally a joint tenant under that lease, that since 1991 he had always considered the land adjacent to the Rocket Club to be his property, and that he had no knowledge of anyone else asserting ownership of that land.

The application and supporting declaration contained a number of errors and omissions. Mr Sartori was never a tenant under the lease. He and Mr Sherwin were sureties. More importantly, the land the subject of the application extended way beyond the front of the Units and along the whole frontage of Quayside Tower. Accordingly, on 10 March 2009, Mr Sartori made a second declaration restricting his application to that area immediately in front of the Units, that is to say the Land.

The Land Registry began to process the application and very quickly sought answers to a number of questions which led Mr Cottam to arrange the second meeting with Mr Sartori at the Rocket Club on 1 May 2009, which Mr Reddy again attended.

Mr Sartori told me that at this meeting he explained to Mr Cottam that he and, before him, his father, had occupied the Land since the mid 1970s and that for much of that time it had been fenced off. Further he was in no doubt that Mr Reddy understood the position very clearly because, as the meeting came to an end, he told Mr Sartori that the Land would provide his pension.

Mr Cottam’s evidence was again consistent with that of Mr Sartori. He said it was clear to him that the claim could only be made by Mr Sartori in his individual capacity and not by Balevents, and that Mr Sartori had the historical entitlement to the Land by reason of its use and occupation by him and his father. He also recalled Mr Reddy got quite cross because he considered all this information should have been included in the application from the outset.

Mr Reddy made no mention of this meeting in his statement and seemed to have no particular recollection of it in the course of his cross examination. However, he maintained that he had no knowledge of the application being made in Mr Sartori’s name and never made any comment to the effect that the Land would provide his pension.

Shortly after this meeting Mr Cottam prepared for Mr Sartori a third declaration which he made on 11 May 2009 and was duly submitted to the Land Registry. In this declaration Mr Sartori stated:

“3)

…. It is not true that I have only considered the area of land the precise extent of which is in fact shown on the annexed plan hereto as being my property simply since 24^th June 1991 when I became joint tenant with Balevents Limited but I in fact first acquired the land concerned from my father Bernard Enrico Sartori who retired in the 1970s and transferred the business occupied by him on the land at the Kiosk thereon selling sweets and sandwiches. I now continue to operate and occupy this land with a Kiosk similar to the one occupied by my father and continue to sell similar items in addition to chicken wraps. I would say that in the 1970s the building now occupied by The Rocket Club was a furniture outlet and HM Stationery Office Book Shop with a storage facility operated by British Rail above these premises. Next to these premises there was a casino and a disabled centre run by the Government. Most of the office block was occupied by British Rail Police.

….

7)

Possession has been without the consent licence or permission of anyone at any time including possession since the 1970s.”

On 11 July 2009 Mr Sartori made a fourth and final declaration in support of his application and, in the course of October 2009, Mr Sartori was telephoned by Mr Cottam to say it had succeeded. By this time the hitherto warm friendship between Mr Reddy and Mr Sartori was definitely cooling and so Mr Cottam had begun to communicate with Mr Sartori at his home. Nevertheless Mr Sartori telephoned Mr Reddy to tell him the news. His response, according to Mr Sartori, was to say “job done”.

Before expressing my conclusions on the factual issues which arise from all this evidence, it is convenient to explain how the negotiations for the sale of the business progressed and to describe certain other events which occurred during this period.

Following the meeting at the Green Man public house in Middleton which took place in the second quarter of 2009 and to which I referred at the outset of this judgment, Mr Sartori instructed his accountant, Mr Marcus Daly, and Mr Cottam to act for him in connection with the purchase of the Rocket Club. Thereafter Mr Daly made contact with Mr Griffin, Mr Reddy’s accountant, and Mr Cottam made contact with Mr Reddy’s solicitors, Keeley Beedham.

In July 2009 Mr and Mrs Reddy were invited by Mr and Mrs Sartori to their home for dinner. Mr and Mrs Sartori’s daughter, Joanne, was also present. Mr Sartori told me, and I accept, that Mr Reddy brought with him a draft sale and purchase agreement and told Mr Sartori that he would have to pay £400,000 for the business but that it had accrued various debts which Mr Sartori would also have to discharge. This came as something of a surprise to Mr Sartori because he thought they had agreed a price and he had no knowledge of any such debts.

Before dinner began, and as they were having a drink, Mr Reddy asked Mr Sartori how his application for registration of the Land was coming on. Mr Sartori responded that he had not heard anything for some time. Mr Reddy then made a comment to the effect that if the application was successful it would provide Mr Sartori’s pension. This was the evidence of both Mrs Sartori and Ms Joanne Sartori which they maintained under vigorous cross examination and, though their account was disputed by Mr Reddy, I formed the clear view that they were telling me the truth. Moreover, as will be seen, Mr Reddy made similar comments on a later occasion too.

Unfortunately, the evening did not end happily. Over the course of the meal Mrs Sartori asked Mr Reddy where all the money in the business had gone. At this point Mr Reddy became aggressive and abusive and stormed out of the house, taking Mrs Reddy with him. Mr Sartori followed Mr Reddy back to his home where they continued to drink and Mr Sartori ultimately spent the night.

In August 2009 Mr and Mrs Reddy and Mr and Mrs Sartori went out together for dinner but once again the evening ended with Mr Reddy losing his temper, on this occasion after Mr Sartori raised the issue of the sale of the business.

In or about September 2009 Mr Sartori gained access to the management accounts of the business and it appeared to him that Mr Reddy and other members of his family were drawing substantial sums of money from it. In particular he formed the view that First Personnel was being paid a management charge of about £91,000 per annum; Mr Reddy’s daughter, Alison, was being paid about £40,000 per annum although she had not, to Mr Sartori’s knowledge, carried out any work for the business; Mr William Reddy was being paid about £20,000 per annum; and he, Mr Reddy, was said to be owed about £40,000. All these matters were raised by Mr Sartori with Mr Reddy at a meeting at the premises of Keeley Beedham but they failed to reach agreement.

The relationship between Mr Reddy and Mr Sartori was plainly deteriorating. Nevertheless in October 2009 the two of them went on a sailing holiday in the Mediterranean with two other friends, Mr Paul Fendick and Mr George Brown. I heard evidence from both of them. I found them to be straightforward and honest witnesses and I accept their evidence.

Mr Fendick had been a friend of Mr Sartori and Mr Reddy for many years. He had a clear recollection of their holiday and how they berthed their yacht in the harbour on the island of Ischia. One evening, after dinner, the conversation turned to the Rocket Club and the state of its business. Mr Sartori mentioned that he had applied to register the land in front of the club in his own name, to which Mr Fendick observed that the council would never allow it. Mr Reddy responded that he thought Mr Sartori had an excellent chance of securing registration and that it would provide his pension.

Mr Brown, now Mr Sartori’s partner, had also known Mr Reddy for some time and had been on a number of holidays with them both. In the course of his evidence it became clear that he too had a good recollection of the same conversation. As he put it, Mr Sartori spoke of his application to register the land in front of the club but Mr Fendick said he did not think Mr Sartori’s application had much chance of succeeding. Mr Reddy, on the other hand, was much more positive and said that Mr Sartori had a very good chance of securing registration of the land in his name, that Mr Sartori’s family had a long association with the land and that it would provide Mr Sartori with a pension.

Over the course of the next few months Mr Sartori and Mr Reddy continued to negotiate over the sale of the business but Mr Sartori became ever more concerned at the state of its finances and what he perceived to be Mr Reddy’s increasingly unreasonable demands. In February 2010 the relationship broke down completely and Mr Sartori left the business.

In March 2010 Mr Sartori negotiated a 12 month lease with Mr Timms and began to retain the rent. Mr Reddy told me that it was only at this point that he realised that Mr Sartori had secured registration of the Land in his own name. These proceedings were commenced on 29 June 2010 and by order dated 5 April 2011 HH Judge Barker QC directed that all rent received by Mr Sartori from Mr Timms should be held by Mr Sartori’s solicitors pending judgment or further order.

I must now return to the conflict between the evidence of Mr Sartori and Mr Reddy as to whether Mr Reddy knew of and agreed to Mr Sartori making the application for registration of the Land in his own name.

I believe it must have been clear to Mr Reddy at the first meeting with Mr Cottam on 2 March 2009 that Mr Cottam was being instructed on behalf of Mr Sartori to make the application in his name and for his benefit. I have no doubt that Mr Reddy was concerned to protect the land in front of the club but at that stage he and Mr Sartori were still good friends and he had no reason to anticipate their subsequent falling out. He also well aware of the long association of Mr Sartori’s family with the Land. As for Mr Olley, I believe he was an honest witness but he had no reason to focus on this particular issue.

At the second meeting on 1 May 2009 the position was made absolutely clear. I accept Mr Sartori’s evidence that he explained to Mr Cottam how he and his father had occupied the Land since the 1970s. This was how Mr Cottam learned of the various facts and matters he included in Mr Sartori’s third declaration dated 11 May 2009. Indeed, I believe that Mr Sartori would have been as open and candid in giving instructions to Mr Cottam as he was in giving his evidence to me. Thus Mr Reddy must have been well aware that the application was being made by Mr Sartori on the basis of his family’s occupation of the Land. Indeed, as Mr Cottam said, Mr Reddy was concerned that this information had not been included in the application from the outset. I also believe that Mr Reddy consented to Mr Sartori making and pursuing the application for his own benefit, as revealed by his comment that the Land would provide Mr Sartori with a pension.

I am reinforced in this conclusion by the events which followed. I am satisfied on the basis of the evidence of Mrs Sartori, Ms Joanne Sartori, Mr Fendick and Mr Brown that on a number of occasions Mr Reddy made it plain that he knew that Mr Sartori was applying to have the Land registered in his own name. Nothing was concealed from Mr Reddy and he clearly approved of and consented to Mr Sartori so doing, as again confirmed by his repeated statements that the Land would provide Mr Sartori with a pension.

In summary, I believe that Mr Reddy well knew of and consented to Mr Sartori making the application to register the Land in his own name and for his own benefit. I reject Mr Reddy’s evidence to the contrary.

I have no doubt that JEL, Broomco and Balevents were successively in possession of the Land. From 1991 the take-away food business and catering trailer became, for practical purposes, a permanent fixture and the rest of the Land part of Ronnie Scott’s until 2003 and thereafter part of the Rocket Club.

Mr Sartori submits that nonetheless he was in possession of the Land through Mr Timms and JEL, Broomco and then Balevents because they were all his licensees. I did not understand Balevents to dispute that a squatter may be treated as being in possession of land through his licensee. However it contends that this principle has no application in the present case because Mr Timms, JEL, Broomco and Balevents were not at any time the licensees of Mr Sartori. It says JEL, Broomco and Balevents all took possession the Land in their own right and for their own benefit and Mr Timms was a licensee of each of them in turn. Moreover, Mr Sartori’s current position as registered proprietor of the Land derives from opportunities presented when he was a director or very senior employee of JEL, Broomco, Balevents and BSEL; that at all material times he owed a duty of fidelity and loyalty to each of these companies in turn; that any accrual by Mr Sartori of rights would have been contrary to the interests of the company of which he was at the material time a director or senior employee and a breach of his fiduciary duty and duty of good faith; and that, if and in so far as he was at any material time in possession of the Land, he must be treated as being in possession as agent of or otherwise on behalf of the company by which he was at that time employed or of which he was a director, and the interest in the Land that each company thus acquired has now passed to Balevents.

I have addressed many of the facts underpinning these rival submissions earlier in this judgment. It is convenient to begin with Mr Timms, JEL and Broomco. I am satisfied that since 1994 Mr Timms has occupied the land on which his take-away food trailer stands under licence from and with the permission of Mr Sartori. Further, from late 1991 to early 2003, JEL and then Broomco occupied the remainder of the Land under a licence granted by and with the permission of Mr Sartori. I also accept that Mr Sartori owed to JEL and then Broomco a fiduciary duty and a duty of good faith, but I believe they and their members knew of the long association that Mr Sartori and his family had with the Land, that he claimed ownership of it and that they were occupying the Land with his permission and thereby acquiescing in and agreeing to his claim to title. No director or member of either of these companies has ever asserted to the contrary. In these circumstances Mr Sartori’s claim to the Land and his assertion of ownership cannot be said to be a breach of any duty he owed to either company.

The position after 2003 is plainly more contentious. At the outset I must say a little more about the positions of Mr Sartori and Mr Reddy. As for Mr Sartori, he was employed by Balevents in a very senior position and had responsibility for the day to day running of the Rocket Club. Moreover, in due course he became director of BSEL which existed to service Balevents. In all these circumstances I am prepared to accept that at all material times Mr Sartori did have a fiduciary obligation and duty of good faith directly or indirectly to Balevents.

As for Mr Reddy, he was never appointed as a director of the Balevents; nor has he ever held legal title to any shares in the company. His brother, Mr William Reddy was, until recently, the sole director and legal owner of all its issued shares. But, as I have said, I do not believe that Mr William Reddy played any part in the running of the business or in managing its financial or corporate affairs. It was Mr Reddy who made all the financial and corporate decisions of the company. In addition to the matters to which I have referred in paragraph [59] above, it was Mr Reddy who agreed to pay Mr Sartori the sum of £100,000 in 2006 and the further sum of £10,000 in 2007; who attended the meeting with Martineau Johnson in 2006; who attended the meetings with Mr Cottam in 2009; who arranged for the business to be managed by BSEL; and with whom Mr Sartori negotiated the purchase of the Rocket Club in 2009 and 2010. At no time during the course of those discussions did Mr Reddy suggest he had to consult with his brother. In light of the evidence as a whole I formed the clear view that Mr Reddy was at all times a de facto director of Balevents and further, in so far as Mr William Reddy carried out any of functions as a director, he did so in accordance with Mr Reddy’s direction and instruction. Moreover, I believe Mr William Reddy held his shares in Balevents as nominee. Mr Reddy funded the establishment of the Rocket Club and decided to place the shares in Mr William Reddy’s name. There is no suggestion that Mr William Reddy invested any money whatsoever in the business. Thereafter the conduct of both Mr William Reddy and Mr Reddy to which I have referred indicates that Mr William Reddy held those shares for and on behalf of Mr Reddy or, at the least, that Mr William Reddy expressly or impliedly gave Mr Reddy authority to exercise on his behalf his rights as shareholder.

I come then to the question whether Balevents occupied the Land as Mr Sartori’s licensee and whether the accrual by Mr Sartori of rights in the Land was a breach of his fiduciary duty and duty of good faith. I have accepted Mr Sartori’s evidence that he made clear to Mr Reddy at the outset that he believed the Land and the rental income it was generating belonged to him and that Mr Reddy accepted that this was so. Mr Reddy then proceeded to establish the business of the Rocket Club through Balevents in the manner I have described. In my judgment it follows that Balevents did occupy the Land with Mr Sartori’s permission and under a licence granted by him. Was it thereafter a breach of Mr Sartori’s fiduciary duty and duty of good faith to Balevents for him to accrue rights in the Land as a squatter? I do not believe that it was. Mr Sartori was at all times entirely frank with Mr Reddy as to his belief that the Land belonged to him and the grounds for that belief. Mr Reddy accepted this and established the business of the Rocket Club through Balevents on that basis. Further, Mr Reddy was a de facto director of Balevents and the beneficial owner of the shares, alternatively was clothed with authority to exercise on Mr William Reddy’s behalf his rights as shareholder. Yet at no time did Balevents indicate to Mr Sartori that it did not recognise him as the owner of the Land. To the contrary, Mr Reddy made it plain that he considered the Land belonged to Mr Sartori and was content for Mr Sartori to apply for registration of it in his own name.

In summary, I am satisfied that Mr Sartori had been in adverse possession of the Land for more than ten years when he made his application to be registered as proprietor.

Mr Sartori also contends that if he was prima facie liable to account to Balevents in respect of his possessory title, he has been released from any such duty, alternatively any such breach has been consented to or acquiesced in or authorised.

As I have explained, I believe that Mr Reddy was the only person who was directing the affairs of Balevents in any meaningful way. Further, Mr William Reddy held his shares in Balevents for and on behalf of Mr Reddy or conferred on Mr Reddy authority to exercise all his rights as shareholder.

I am also satisfied that Mr Reddy was present at the meetings with Mr Cottam on 2 March and 1 May 2009 and was well aware that the application for registration was being made by Mr Sartori in his own name and for his own benefit and of the basis for it. These matters can have come as no surprise to Mr Reddy because, as I have said, Mr Sartori had always claimed the Land belonged to him and Mr Reddy had accepted this from the outset. Mr Reddy was fully supportive of the application, even to the extent of remonstrating with Mr Cottam at the second meeting for failing to include all the relevant information in Mr Sartori’s first declaration. And he told Mr Sartori and others that the Land would be Mr Sartori’s pension, by which he plainly meant that it would provide a source of income for Mr Sartori in his retirement.

Mr Reddy nevertheless submits that Mr Sartori’s defence is highly ambitious and must fail for a number of reasons. First, Mr Reddy contends that the burden of establishing consent lies on Mr Sartori and is a heavy one. I agree. It is well established that the law imposes exacting standards on fiduciaries and an extensive liability to account.

Second, Mr Reddy submits he did not consent to the application proceeding in Mr Sartori’s name and for his own benefit. In particular Mr Reddy says that he and Mr Sartori fell out in the summer of 2009 and thereafter Mr Sartori took steps to conceal progress from him by, for example, using his home address and paying his own bills. Moreover, Mr Sartori’s assertion that he called Mr Reddy in October 2009 was plainly a lie.

I accept that relations between Mr Reddy and Mr Sartori deteriorated over the course of the summer and autumn of 2009 and that is why Mr Sartori started to use his home address and pay his own bills. But relations did not break down completely until 2010, as evidenced by the fact that they continued to negotiate over the purchase by Mr Sartori of the Rocket Club, they and their wives met socially and, in October 2009, they went on a sailing holiday together. Further, I have no doubt that Mr Reddy consented to Mr Sartori pursuing the application in his own name and for his own benefit as shown by his observation to Mr Sartori that the Land would provide him with a pension. I also reject the submission that Mr Sartori lied about calling Mr Reddy in October 2009 to inform him that his application had been successful. I believe that Mr Sartori’s evidence on this point was truthful.

Third, Mr Reddy submits that Mr Sartori is seeking to excuse a conflict of interest and in the circumstances this requires authorisation of both the directors and the members of Balevents. I am content to proceed on the basis that this is so but, for the reasons I have given, I believe that Mr Reddy was the only person directing the affairs of Balevents and was the beneficial owner of the two shares or was authorised to exercise all the rights of Mr William Reddy as shareholder. In my judgment this is a case in which it is appropriate to apply the principle formulated by Buckley J in Re Duomatic Ltd [1969] 2 Ch 365 at page 373 C-D. Mr Reddy was at all times in a position to compel Mr William Reddy’s consent and, concerned as I am with the rule that a fiduciary must not profit from his office without the consent of the members, I believe it is appropriate to have regard to his position as beneficial owner of the shares. Moreover, and if Mr Reddy was not the beneficial owner of the shares, I am satisfied on the evidence that Mr William Reddy had given Mr Reddy full authority to exercise on his behalf his rights as shareholder.

Finally, Mr Reddy submits that consent has to be “fully informed” to be effective. Here, he continues, it was not. I accept that if a particular transaction which would otherwise fall within a person’s fiduciary duty is to be exempted from it, there must be a full and frank disclosure of all material facts. But I believe there was such a disclosure. Mr Reddy always knew of Mr Sartori’s long association with the Land, that he believed it to be his own and that it had been occupied by JEL and Broomco with his consent. Moreover, Mr Reddy was present at the meetings on 2 March and 1 May 2009 in the course of which Mr Sartori explained to Mr Cottam all the circumstances pertaining to his claim. Nothing was concealed. I am satisfied that Mr Reddy knew all the material facts when he consented to Mr Sartori making the application in his own name and for his own benefit.

For the reasons I have given I conclude that Mr Sartori is entitled to be registered as the proprietor of the Land. The claim therefore fails. I will hear argument as to the form of order if it cannot be agreed.