Case No: CH/2012/ 0255
Rolls Building
7 Rolls Buildings
London, EC4A 1NL
Before:
MR. JUSTICE ARNOLD
Between:
MRS. SIEWBASSEE SUKHLALL | Claimant |
- and - | |
MR. GOOROODEV BANSOODEB | Defendant |
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MR. JAMAL DEMACHKIE appeared for the Claimant
MR. TIM COWEN appeared for the Defendant
JUDGMENT
MR. JUSTICE ARNOLD:
This is an appeal from an order of His Honour Judge Dight sitting in the Central London County Court dated 30 March 2012 whereby he granted summary judgment to the defendant, Mr. Gooroodev Bansoodeb, in respect of the claimant's claim for some £350,000 arising out of the sale of a property at 22 Huron Road, Tooting, London SW17, which I will refer to as "the property".
The two named claimants in the claim were husband and wife but the first claimant, unfortunately, died on 16 May 2011, so the only active claimant is the second claimant, Mrs. Siewbassee Sukhlall. Mr. Bansoodeb is Mrs. Sukhlall's brother-in-law. It is relevant to note at this stage that the other key person involved in the claim is Mr. Ravi Bansoodeb, who is the son of the defendant and thus the nephew of Mrs. Sukhlall.
The background to the matter is as follows. The property was, as I understand it, the matrimonial home. The property was marketed by Mr. and Mrs. Sukhlall in about March 2007 with an initial asking price of £1.1 million. In April 2007 an offer was made to purchase it by a Mr. and Mrs. MacAndrew for the sum of £1.125. Subsequently, however, that transaction did not proceed and instead a different transaction came about.
The way in which that transaction came about is pleaded in the Amended Particulars of Claim in the following terms:
In or about late May 2007 the defendant approached the second claimant concerning the property. The defendant stated in the conversation that it would be a great shame if it were to be sold outside the family. He went on to explain that he wished to help his son Ravi Bansoodeb to purchase the family home as he was soon to return from the USA and as yet had nowhere to live. The defendant made an offer to buy the property for £1.1 million.
The second claimant discussed this proposal with the husband of the first claimant and they were persuaded by the defendant's arguments. The first and second claimants consequently accepted the defendant's offer to purchase the property from them for £1.1 million, notwithstanding this offer was significantly less than was apparently available on the open market.
Shortly thereafter the defendant notified the first claimant that he was only going to be able to raise £750,000 from the bank. He therefore asked whether the transaction could proceed with £750,000 being paid immediately and with the remainder of the purchase price, namely £350,000, being left outstanding upon completion. The defendant stated that his wife was due to receive £80,000 upon retirement in September 2007 and that this sum would be used to pay off the outstanding balance of £350,000. The defendant promised that the remainder of the outstanding balance would then be paid off at the rate of £50,000 per month.
The first and second claimants agreed to the defendant's proposal described at paragraph 8 above. They did so as they felt that they had agreed to the sale for £1.1 million and because they both wished to help their nephew Ravi Bansoodeb .... The agreement was oral and not reduced to writing. The first and second claimants therefore decided not to proceed with the sale to Mr. And Mrs. MacAndrew and, accordingly, removed property from the open market.
Notwithstanding the agreement described at paragraph 8 above, the agreement for sale from SAR1V and all other documentation pertaining to the sale, including correspondence from solicitors, stated the sale price as being £750,000. Throughout the sale the first and second claimants were represented by solicitors suggested to them by the defendant, Messrs. Stringvasans. Those solicitors did not explain the potential consequences of the omitting agreed terms from the contract of sale. Contracts were subsequently exchanged which wrongly stated the sale price was £750,000 when it had in fact been agreed at £1.1 million. ...
On 8th August 2007 Ravi Bansoodeb was registered as the new freehold owner of the property with the sale price being recorded as £750,000."
The account in the Amended Particulars of Claim is substantially supported by a witness statement made by Mrs. Sukhlall dated 6 December 2011, in paragraph 11 of which she says this:
"We have no problem in selling the property to the Defendant but at the agreed price of £1.1 million, of which £350,000 was to be paid by the Defendant after completion. In our naivety and with misplaced trust we did not ask that the loan, for that is what it was, be recorded in writing."
Save that she refers to the outstanding sum as being a loan, rather than an outstanding balance to be paid off, that evidence is essentially consistent with what is pleaded in paragraphs 8 and 9 of the Amended Particulars of Claim.
Mrs. Sukhlall also relies upon conversations that took place on 13 and 14 September 2009 which were recorded and which she contends contained statements by Mr. Bansoodeb which are supportive of the suggestion that additional money over and above the £750,000 ultimately recorded in the sale documentation was due to be paid thereafter.
The present proceedings were commenced by Mr. and Mrs. Sukhlall on 6 December 2010. At that time there was joined to the claim, as a second defendant, Ravi Bansoodeb, Mr. Bansoodeb's son, but on 8 July 2011 Mrs. Sukhlall withdrew the claim against Ravi Bansoodeb. On 16 September 2011 the matter was transferred to the Central London County Court. On 18 October 2011 Mr. Bansoodeb made an application for summary judgment. On 4 November 2011 Judge Dight gave directions for the hearing of that application. In accordance with those directions the matter came before Judge Dight on the hearing on 3 February 2012, on which occasion the upshot was that Judge Dight gave Mrs. Sukhlall permission to amend the Particulars of Claim and Mr. Bansoodeb permission consequentially to amend his Defence and re-listed the summary judgment application for 30 March 2012.
The Amended Particulars of Claim was duly served on 16th February 2012 with an Amended Defence on 16 March 2012. The re-listed hearing of the summary judgment application duly took place on 30 March 2012, as a result of which Judge Dight made the order which is presently under appeal.
To complete the procedural chronology, Mrs. Sukhlall lodged an appellant's notice seeking in the first instance permission to appeal, slightly out of time, on 26 April 2012. Subsequently, by an order that I made on 11 October 2012, I gave Mrs. Sukhlall permission to appeal out of time and permission to appeal confined to two grounds of appeal which had been set out in counsel's skeleton argument for that hearing. On 18 October 2012 Mrs. Sukhlall duly served amended grounds of appeal in accordance with that order.
In the Amended Particulars of Claim which was considered by Judge Dight, Mrs. Sukhlall advanced five different causes of action as follows: first, misrepresentation; secondly, rectification and specific performance; thirdly, collateral contract; fourthly, constructive trust; and fifthly, deceit.
At the hearing that took place before me on 11 October 2012, counsel instructed on behalf of Mrs. Sukhlall did not pursue the first, second and fourth causes of action. Instead, he confined the application for permission to appeal to the third and fifth grounds, that is to say, collateral contract and deceit. Accordingly, it is only those two causes of action that I have to consider on this appeal.
Turning to the claim for a collateral contract, this is pleaded in paragraph 12 of the Amended Particulars of Claim as follows:
"It is averred that the defendant entered into a collateral contract with the first and second claimants (‘the collateral contract’). The terms of that contract were that if the first and second claimants were to sell the property to Ravi Bansoodeb for £750,000, then the defendant would pay the first and second claimants £350,000. This was to be paid by one instalment of £80,000 in September 2007 and at the rate of £50,000 per month thereafter."
Mr. Bansoodeb contends that this allegation is unsustainable. In this connection, he relies on section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989, which is in the following terms:
"A contract for the sale or other disposition of and interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or where contracts are exchanged in each."
Judge Dight analysed the pleaded claim in his judgment as follows:
Mr. Mainwearing [counsel then appearing for Mrs. Sukhlall] submits that it is possible, as in the case where one has a finder's fee, for one person to be paid a sum in consideration of somebody else entering into a contract for the purchase of property. That is recognised in part in the judgment of Briggs J in North Eastern Properties Ltd v Coleman & Quinn [2010] EWCA Civ 277, which concerned a claim for specific performance of a contract for sale of 11 flats where there was, in addition to the contract price for the properties, an agreement between the same parties, namely vendor and purchaser, for a finder's fee equal to 2% of the list price of the flats.
The judge at first instance held that the finder's fee did not form part of the contract and ordered specific performance. On appeal the Court of Appeal upheld him. In paragraph 54 Briggs J said:
'In my judgment, the apparent disharmony constituted by the dicta on this point' — having referred to the various authorities on collateral contract in section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 — 'may be reconciled as follows:
Nothing in section 2 of the 1989 Act is designed to prevent parties to a composite transaction which includes a land contract from structuring their bargain so that the land contract is genuinely separated from the rest of the transaction in the sense that its performance is not made conditional upon the performance of some other expressly agreed part of the bargain.'
He then sets out some facts from the case of Grossman v Hooper.
'(ii) By contrast, the parties to a composite transaction are not free to separate into separate document expressly agreed terms, for example as to the sale of chattels or the provision of services, if upon the true construction of the whole of the agreement, performance of the land sale is conditional upon the chattel sale or service provision. That that would, albeit for reasons which seem to me to frustrate rather than serve the purpose for which the 1989 Act was passed, fall foul of section 2(1), however purposively construed. So would a series of separate contracts for the sale of separate parcels of land, if each was conditional upon the performance of the other.'
Bearing those comments in mind, Mr. Cowen submits, and I accept, that the effect of the alleged contract in this case is not to give rise to a separate transaction. The reality is that it is part of the original transaction and conditional on it. He relies in particular on the fact that in paragraph 12, in the second sentence, the words 'if and 'then' appear. In other words:
'In the terms of the contract whether if the first and second claimants were to sell the property to Ravi Bansoodeb for £750,000, then the defendant would pay the first and second claimants £350,000.'
Mr. Mainwearing says, with some force, that that is the same with the finder's fee. The reality in this case, however, is that because this is all part of the same transaction it is not like a finder's fee. The £350,000, as is apparent from the earlier paragraphs that I have referred to, is part of the original purchase price of the property and not a collateral agreement. Nowhere do the pleadings set out, as I mentioned when considering the earlier paragraphs, separate obligations on each of the defendant and Ravi and the consideration for each obligation.
In any event, as Mr. Cowen rightly submits, the factual scenario that would necessarily have to be posited for the claim made in paragraph 12 to succeed, is in direct conflict with what appears elsewhere. This is not a case where, on the same set of facts, an alternative argument is being run. This is an alternative set of facts, only one of which can be correct. For those reasons it seems to me that this allegation has no real prospect of success and I would likewise strike it out."
There is no dispute before me as to the applicable principles on a summary judgment application. They can be found in many places, but a convenient summary is to be found in the judgment of Lewison J as he then was in Easyair Ltd (t/a Open Air) v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] which was approved by the Court of Appeal in AC Ward & Son v Catlin (Five) Ltd [2009] EWCA Civ. 1098.
Counsel for Mrs. Sukhlall submitted that Mrs. Sukhlall has a real prospect of success on the claim for collateral contract. It is convenient to address the argument in two stages. The first is whether the learned judge was correct to hold that there was only one contract between Mr. and Mrs. Sukhlall and Mr. Bansoodeb. Counsel for Mrs. Sukhlall accepted that, if he was correct so to hold, then the appeal must fail. If, as counsel for Mrs. Sukhlall contends, the correct analysis is that there were two contracts, then the next question that arises is whether the second contract, the collateral contract that is asserted, is caught by section 2(1) of the 1989 Act.
Counsel for Mrs. Sukhlall argued that the judge had incorrectly analysed the case pleaded in the Amended Particulars of Claim. He accepted that during the oral negotiations between the parties that were pleaded in paragraphs 6, 7, 8 and 9, there was only one agreement in view, namely an agreement for the sale of the property for the sum of £1.1 million. He argued, however, that ultimately there came into existence two contracts, the first of which was the written contract between Mr. and Mrs. Sukhlall on the one hand and Ravi Bansoodeb on the other hand for the sale of the property for the sum of £750,000 and the second of which was a separate collateral contract between Mr. and Mrs. Sukhlall on the one hand and Mr. Bansoodeb on the other hand for the payment of an additional sum of £350,000.
Counsel for Mr. Bansoodeb supported the reasoning of the learned judge below. In particular, he submitted that the learned judge was correct to conclude that the effect of paragraphs 6, 7, 8, 9 (and, indeed, part of paragraph 10) of the Amended Particulars of Claim is that there was an oral agreement between Mr. and Mrs. Sukhlall and Mr. Bansoodeb for the sale of the property for £1.1 million payable in instalments, that is to say £750,000 initially and £350,000 thereafter.
He further submitted that it was nothing to the point that, as is not uncommonly the case, so far as Mr. Bansoodeb was concerned, he was purchasing a property with a view to it being put into the name of his son, and accordingly the documentation was in the son's name. Nor did it affect the enforceability of the oral agreement that the subsequent written contract was enforceable. In short, he submitted that the learned judge was entirely correct to conclude that there was in substance only one transaction and that there was no real prospect of Mrs. Sukhlall establishing the collateral contract for which she contends.
In my judgment, notwithstanding the attractive way in which the case has been argued by counsel for Mrs. Sukhlall, the learned judge came to the right conclusion. It is pertinent to note that in the original form of paragraph 12 of the Amended Particulars of Claim, the paragraph was introduced by the words "in the premises". By amendment those words have been struck out. Nevertheless, it is quite plain that the purpose of paragraph 12 is to put a legal complexion upon the facts previously pleaded. It does not in and of itself plead any new facts. In particular, it does not plead any agreement whether written, oral or by conduct between Mr. and Mrs. Sukhlall on the one hand and Mr. Bansoodeb on the other hand to divide up what was admittedly up until that point a single transaction into two separate contracts. Absent such an allegation, it seems to me that the plea of a collateral contract is unsustainable.
Furthermore, it seems to me that the way in which the case is pleaded is really a fairly transparent attempt to avoid the consequences of section 2(1) of the 1989 Act when, on the face of the facts pleaded in paragraphs 6, 7, 8, 9 and 10 of the Amended Particulars of Claim, it is plain that the written contract does not contain all of the terms of the oral agreement and thus section 2(1) renders the additional terms unenforceable.
That being so, it is not necessary for me to address the second stage of the argument in any detail. Suffice it to say that, even if I were persuaded that Mrs. Sukhlall has a realistic prospect of establishing that there were two separate contracts, the question would still fall to be asked as to whether those two separate contracts were genuinely separate transactions so that the collateral contract would fall outside section 2(1) of the 1989 Act.
Counsel for Mrs. Sukhlall sought to distinguish the case of North Eastern Properties Ltd v Coleman referred to by the learned judge below in his judgment. He relied upon a more recent decision of the Court of Appeal in Keay v Morris Homes (West Midlands) Ltd [2012] EWCA Civ 900 and also upon a rather older authority, a decision of His Honour Judge Moseley QC in Johnsey Estates (1990) Ltd v Newport Marketworld (10 May 1996). I do not propose to go into the details of the argument. Suffice it to say that, even if Mrs. Sukhlall had a real prospect of succeeding in the argument that there was a separate contract, I do not consider that she would have a real prospect of showing that the two contracts were genuinely separate so that there was one contract relating to the land and another contract not relating to the land.
I turn then to consider the second cause of action which is relied on, namely the claim in deceit. This is pleaded in paragraph 15 of the Amended Particulars of Claim as follows:
"In the event that the defendant denies that an agreement was ever reached in the terms alleged in paragraphs 8 and 9 above, the second claimant alleges a fraudulent intention on the part of the defendant to obtain the property at a gross undervalue. It is averred that the defendant persuaded the first and second claimants to enter into an agreement which he knew or believed could not be enforced and which he never had any intention to honour. The claimant will accordingly beg the court's assistance in reversing the effects of that fraudulent scheme."
Judge Dight dealt with that allegation in his judgment as follows:
However sympathetic the court might be to a fraud said to have been committed against the claimants, the starting point in considering the viability of the plea has to be whether it is properly pleaded, sufficiently particularised and supported by the appropriate evidence. Both the pleader and the court, as Mr. Cowen reminds me, bear a heavy burden in considering the sustainability of a plea of fraud.
The elements of a claim in deceit are not to be found in this paragraph. While it might be possible, as I posited to Mr. Cowen in argument, to construct a plea of fraud against the defendant in this case, one does not see it in paragraph 15.
The representation of the statement of fact made by the defendant has to be set out in full: It is not. The respects in which that representation is deliberately made and deliberately untrue have to be set out and they are not. The elements of reliance and damage then have to be pleaded and they are not.
The core of the averment in this paragraph is that the defendant persuaded the first and second claimants to enter into an agreement which he knew or believed could not be enforced and which he never had any intention to honour. If it were the claimants' case that the defendant had persuaded the claimants to enter into a written agreement for £750,000 and an oral agreement for £350,000 and to tell their solicitors only that they had agreed a contract price of £750,000 and mentioned nothing of the £350,000 and at the time he had no intention of honouring his unenforceable promise to pay £350,000 there might be some substance in the claim, but the claim is not in fact put that way. In some circumstances it might be possible to infer the above version of the facts but it seems to me that this plea is a long way from enabling me to do so. So in those circumstances, as currently framed, I have come to the conclusion that it also has no real prospect of success."
Counsel for Mrs. Sukhlall did not seriously argue against the conclusion of the learned judge in paragraphs 43 and 44 of his judgment that paragraph 15 of the Amended Particulars of Claim does not contain a properly pleaded claim in deceit. In any event, to my mind it is plain that it does not. Rather, he concentrated his argument on paragraph 45 of the learned judge's judgment. He submitted that in that paragraph the learned judge had recognised that the existing pleading was capable of being reformulated or “fleshed out”, as he put it, so as to plead a sustainable claim in deceit.
He submitted that, that being so, the learned judge had been wrong in principle to resort to the draconian step of granting summary judgment on the claim, or in reality striking it out for want of a proper pleading, in circumstances where he himself had recognised that the pleading could be reformulated. He argued that in those circumstances the only proper exercise of discretion was for the learned judge to give Mrs. Sukhlall one last opportunity to formulate a proper pleading by a suitable amendment.
Counsel for Mr. Bansoodeb made two submissions in answer. First, he submitted that in so far as the argument was that the learned judge had exercised his discretion improperly, that contention was unsustainable. He pointed out that, as the chronology I related earlier shows, this was a case in which Mrs. Sukhlall had already amended her Particulars of Claim in an attempt to defeat a summary judgment application, which had led to the application being adjourned and relisted. He submitted that in those circumstances the learned judge was perfectly within the bounds of his discretion not to give Mrs. Sukhlall any further opportunity. Furthermore, he pointed out even now no draft Re-Amended Particulars of Claim, or even a draft re-amended paragraph 15 of the Particulars of Claim had been produced, despite my raising the possibility with counsel for Mrs. Sukhlall on the application for permission to appeal.
Secondly, and more fundamentally, counsel for Mr. Bansoodeb took issue with the proposition that in paragraph 45 of his judgment Judge Dight was recognising a way in which the plea might be reformulated so as to amount to a sustainable claim in deceit. He submitted that what the learned judge was doing in that paragraph was identifying a key hole in the claim as pleaded. To put the same point in slightly different words, what the learned judge was saying in that paragraph is that the position might be different if it had been alleged by Mrs. Sukhlall that there had been some conspiracy in which Mr. Bansoodeb had persuaded Mr. and Mrs. Sukhlall to conceal from the solicitors acting on their behalf the true purchase price of the property and, in particular, to conceal from those solicitors the extra £350,000. As the learned judge pointed out, however, nothing of the kind has been alleged by Mrs. Sukhlall.
To the contrary, what is alleged by Mrs. Sukhlall in paragraph 10 of the Amended Particulars of Claim is that the contracts which were exchanged "wrongly stated that the sale price was £750,000 when it had in fact been agreed at £1.1 million". Furthermore, the complaint is made that the solicitors did not tell Mr. and Mrs. Sukhlall about the consequential consequences of omitting agreed terms from the contract of sale. In other words, although the allegation is not spelt out, the implication being advanced is that Mr. and Mrs. Sukhlall told the solicitors acting for them what had been agreed but those solicitors negligently failed to ensure that section 2(1) of the 1989 Act was complied with or to advise Mr. and Mrs. Sukhlall as to the consequences if it was not. Accordingly, counsel for Mr. Bansoodeb submitted that the learned judge had been entirely correct to identify a fatal flaw in any claim for deceit on the basis of Mrs. Sukhlall's own pleaded case.
In my judgment the analysis advanced by counsel for Mr. Bansoodeb is correct. I do not consider that the learned judge was intending in paragraph 45 to recognise a way in which the existing pleading could be reformulated so as to make out a viable claim in deceit, rather he was attempting to articulate what was missing from the factual allegations relied on by Mrs. Sukhlall and why therefore it was that the allegations which were being advanced by her could not amount to a sustainable claim.
For all of those reasons, I have come to the conclusion that the learned judge came to the correct conclusion, namely that on the two causes of action which had been argued before me Mrs. Sukhlall does not have a real prospect of success, and therefore summary judgment should be entered in favour of Mr. Bansoodeb.
Accordingly, this appeal must be dismissed. With the benefit of hindsight I can see that it might be suggested that it was unkind of me in the circumstances to give Mrs. Sukhlall permission to appeal in the first place. However, it seemed to me at that stage that her case crossed the threshold for a permission to appeal application. With the benefit of the fuller argument I have received today, I am not persuaded that it crosses the threshold necessary for the appeal to be allowed.