David Raymond Brierley v Frank Otuo & Ors

In this judgment, I refer to:

This judgment deals with:

These applications are the latest stage of long-running litigation between the claimant, David Brierley and the first defendant, Frank Otuo, who has acted in person throughout. A brief background is set out in my judgment dated 28 June 2022 [2022] EWHC 1530 (Ch) (“the June 2022 judgment”). The procedural history is one of labyrinthine complexity, with 57 orders (including 17 charging orders) having been made in claims between these parties.

The first relevant event for present purposes is the Le Poidevin order. This made orders for the sale of 311 Leigham Court Road and 31B Oxford Road, and ordered the first and second defendants (Mr Otuo and his wife, Ruth Otuo – to whom I will refer as “the defendants”) to pay £90,000 on account of the costs ordered against them. The orders for sale were made to enforce charging orders in respect of costs orders against the defendants in previous proceedings (commenced in 2012). Expanding the scope of the terminology in my judgment dated 8 April 2022 [2022] EWHC 688 (ChD) (“the April 2022 judgment”), I refer to the charging orders against each of 311 Leigham Court Road and 31B Oxford Road which were the basis of the Le Poidevin order as “the 2012 claim charging orders”.

The claimant obtained possession from the tenants of 311 Leigham Court Road in January 2020, and that property has remained unoccupied since then. Neither property has been sold, although for different reasons.

The £90,000 payment on account of costs ordered by the Le Poidevin order (and sums due under other later costs orders) were secured by two final charging orders dated 17 February 2020 of Deputy Master Lloyd against each of the defendants on 311 Leigham Court Road (“the 2020 charging orders”).

On 12 March 2020, the parties entered into a consent order approved by Deputy Master Bowles (“the 2020 consent order”), under which the claimant agreed to:

On 20 September 2021, I made an order requiring the claimant to file and serve a redemption statement setting out the total sum required to discharge all the charging orders on the first defendant’s properties. I did so because, the defendants having paid £250,000 (Footnote: ¹) and released 31 Oxford Road from the order for sale, wished to recover 311 Leigham Court Road as well, but the claimant had not told them what sum was required to be paid to do so. (Footnote: ²)

At the hearing on 20 September 2021, one of the issues was whether the 2012 claim charging orders on 311 Leigham Court Road had been discharged as a result of payment of the £250,000 pursuant to the 2020 consent order. The claimant’s position (in paragraph 6 of his skeleton argument) was that

“The existing court orders, and in particular the [Le Poidevin order] and the [2020 consent order], offer a comprehensive and rigid set of instructions as to how and in what manner the debts of the First and Second Defendants to the Claimant are to be paid, and make any further question of allocation of payments or release of particular charges redundant.”

The claimant’s authorities at that hearing included Holder v Supperstone [2000] 1 All E.R. 473, but his counsel did not refer the Court to it, and did not submit that the 2012 charging orders were not discharged in circumstances where the LCR costs had not been paid.

The first redemption statement was filed and served on 22 October 2021. At this stage, the claimant’s position was that the unassessed costs ordered by the Le Poidevin order (and which remain unassessed 3½ years later) were also secured by the 2020 charging orders; so that payment of all the liquidated sums secured by those charging orders would not result in their discharge.

On 14 February 2022, in circumstances set out below, the claimant gave an undertaking to the court (“the Undertaking”) not to sell 311 Leigham Court Road until 28 days after the determination of the applications which were outstanding (“the outstanding applications”) following the June 2022 judgment.

On 16 February 2022 , I ordered the claimant to file and serve by 2 March 2022 breakdowns of the following sums in the first redemption statement:

The breakdowns provided on 2 March 2022 can be summarised:

On 10 March 2022, the claimant issued an application notice seeking to be released from the Undertaking (“the release application”). The background to the application was that the claimant had found a buyer for 311 Leigham Court Road, and wished to proceed with the sale.

On 8 April 2022, in the April 2022 judgment, I held that the 2012 claim charging orders on 311 Leigham Court Road had been discharged because the underlying debts (and interest on them) had been discharged by the payment of £250,000 referred to above.

The claimant has produced numerous versions of the redemption statement ordered by me on 30 September 2021. These are summarised in the table below.

On 28 June 2022, in the June 2022 judgment, I held that in determining the sum required to discharge all charging orders on 311 Leigham Court Road, the unassessed costs ordered by the Le Poidevin order were to be disregarded. The claimant appealed this decision; and permission to appeal was refused by Miles J on 20 January 2023.

At the hearing on 5 October 2022 to determine the order consequential on the June 2022 judgment, the claimant conceded that his calculations as to interest were flawed, and that the defendant’s approach was correct. This resulted in the parties agreeing (after the hearing) that the sum required to discharge the 2020 charging orders was £52,429.73, inclusive of interest to 5 October 2022 (plus continuing interest to payment). At that hearing, the claimant’s position was that he no longer pursued his application to be released from the Undertaking on the basis that the outstanding applications would be determined at that hearing.

At that hearing, I held that the defendants were entitled to detailed assessment of all the costs and expenses of the sales of all properties ordered to be sold by the Le Poidevin order. I also decided that since the LCR costs had been ordered (Footnote: ³) to be paid from the proceeds of sale of 311 Leigham Court Road, the defendants could only recover it, i.e. prevent its sale, by payment into court pending the detailed assessment of those costs. That was, in the light of the case law considered below, an error, for the reasons which I also set out below. In these circumstances, where the order has not been drawn up, the court is not only entitled but obliged to revisit that decision to correct the error: In re L and another (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8, [2013] 1 W.L.R. 634 .

The parties were unable to agree the order to be made following the 5 October hearing. I therefore sent them a draft order I proposed to make, subject to the parties' comments. Following those comments, a further hearing was listed on 31 January 2023 to determine all outstanding issues.

On 19 January 2023, the claimant issued an application notice seeking the determination of the release application at the hearing on 31 January 2023. His solicitors also informed the defendants that the further LCR costs incurred since 29 September 2022 were:

On 30 January 2023, the claimant filed an “activity list” in respect of his solicitors’ time costs (untotalled, but later filed with a total of £12,446.50) and disbursements totalling £4,757.50.

Finally, on 2 February 2023 (having been directed to do so at the hearing on 31 ) the claimant filed and served a more extensive “activity list” of his solicitors’ time costs claimed by him in respect of the 2 properties. His position as to his total sale costs as at that date was:

In these circumstances the following issues apparently arose:

However, in the course of preparing this judgment, my own research revealed the following passage (which had not been drawn to my attention by the claimant’s counsel) in Fisher & Lightwood's Law of Mortgage at para 55.6:

The authorities referred to in support of the first sentence of this paragraph are Re Sneyd, ex p Fewings (1883) 25 Ch D 338 at 352, CA; Sinfield v Sweet [1967] 1 WLR 1489. Similar passages to that in Fisher & Lightwood are found in other textbooks on mortgages e.g. Cousins on Mortgages (4^th edn) at para 26-29; Halsbury’s Laws (5^th edn) at para 743.

The principle that the liability is not a personal liability extends to equitable charges: see Ezekiel v Orakpo [1997] 1 WLR 340, CA.; and accordingly applies to charging orders: Charging Orders Act 1979, s 3(4); Holder v Supperstone [2000] 1 All ER 473.

I therefore drew the passage in Fisher & Lightwood (and the two supporting authorities) to the parties’ attention, commenting,

“Since

(1)

all charging orders on 31B Oxford Road were discharged by agreement;

(2)

I held in my judgment of 8 April 2022 that the 2012 claim charging orders had been discharged by payment of the underlying debt,

it would seem that there is no basis on which the claimant may recover the costs and expenses of effecting the sale of each property.

In addition, since the basis of the orders for sale made in the Le Poidevin order was the 2012 claim charging orders, it is unclear whether, those orders having been discharged, the claimant remains entitled to sell 311 Leigham Court Road.”

I provided the parties with an opportunity to file written submissions on the above, and they did so. The claimant does not seek to challenge the legal principles set out above.

The starting point is the Le Poidevin order, which, after ordering the sale of 311 Leigham Court Road and 31B Oxford Road, provided, in the usual way:

“13.

The Claimant’s solicitors shall apply the proceeds of sale of 31B Oxford Road as follows:

(i)

to pay the costs and expenses of effecting the sale of that property;

…

(iv)

to reduce or discharge the First Defendant’s indebtedness to the Claimant as secured by all and any charging orders (including accrued interest) made in favour of the Claimant upon the First Defendant’s interest in that property, including … the amount due under all orders for costs made against the First Defendant … (including the order hereinafter made).

…

14.

The Claimant’s solicitors shall apply the proceeds of sale of 311 Leigham Court Road as follows:

(i)

to pay the costs and expenses of effecting the sale of that property;

…

(iv)

out of the First Defendant’s share

a.

to pay all sums as required to reduce or discharge the First Defendant’s indebtedness to the Claimant as secured by all and any charging orders (including accrued interest) made in favour of the Claimant upon the First Defendant’s interest in that property, including … the amount due under all orders for costs made against the First Defendant … (including the order hereinafter made).

(vi)

out of the Second Defendant’s share:

a.

to pay the amount due under all orders for costs made against the Second Defendant … (including the order hereinafter made).”

The provisions for payment of the sale costs reflect the position that a charge holder is entitled to reimburse himself out of the charged property for all costs, charges and expenses reasonably and properly incurred in enforcing or preserving his security: Holder v Supperstone [2000] 1 All E.R. 473, following Parker-Tweedale v Dunbar Bank (No.2) [1991] Ch. 26, [1990] 2 WLUK 223.

These costs include the costs of an attempted sale: Corsellis v Patman (1867) L.R. 4 Eq. 156; Farrer v Lacy, Hartland & Co (1885) L.R. 31 Ch.D. 42.

As noted above, the 2012 claim charging orders on which the orders for sale were based have been discharged. In the case of 311 Leigham Court Road, this was, as I have held, by payment of the underlying debts secured by the 2012 claim charging orders. In the case of 31B Oxford Road, all charges on it were discharged by agreement; and, in any event, the debts underlying the 2012 claim charging orders on it were also discharged by that payment.

The Le Poidevin order does not contemplate this event. It assumes that the properties will be sold to pay the sums due under the 2012 claim charging orders, and provides for the LCR costs and OXR costs to be paid from the net proceeds of sale. This position is, of course, subject to the claimant only being entitled to recover his reasonable costs and expenses. In the usual case, where a claimant sells to recover the charged sum, those costs and expenses are assessed after the sale, and to the extent that they are reduced on assessment, that sum is credited to the defendant.

At the hearing on 31 January 2023, the claimant’s counsel made the following submissions in respect of the OXR costs. First, he submitted that the OXR costs were recoverable under the Le Poidevin order. I reject that submission. The OXR costs were recoverable under the 2012 claim charging orders as being chargeable to the security, and the Le Poidevin order merely reflected that fact – it did not in my judgment create a new liability independently of the charging orders. More importantly, as noted above, the costs and expenses of sale are not, as a matter of law, personally recoverable from the chargee; and the Le Poidevin order did not, in my judgment, alter that position.

The claimant’s counsel then submitted that the £250,000 paid pursuant to the 2020 consent order must be treated as being applied to the debts secured by charging orders on 31B Oxford Road (which was held to be solely beneficially owned by the first defendant); and that those debts included the OXR costs.

He relied particularly upon the fact that the terms of the 2020 consent order provided that the payment of £250,000 was “…in part payment towards outstanding monies owed to the Claimant under the Charging Orders (Footnote: ⁴)” (recital 2.1) and referred to as “…reducing or discharging the indebtedness” of the first defendant to the claimant.

He also relied upon the fact that there was no broader agreement to waive the OXR costs in the order.

The difficulty with that submission arises out of para 2.5 of the 2020 consent order, which, as set out above, provided that, on payment of the £250,000 the claimant would

Since the claimant’s only entitlement to the OXR sale costs was, pursuant to the 2012 claim charging orders on 31B Oxford Road, to have them paid out of the proceeds of sale, it follows, in my judgment, that that entitlement ended as a result of the 2020 consent order. The provisions in that order preserving the claimant’s rights to sums presently owed could not in my judgment change the nature of those rights: it did not convert his right to have those costs paid from the proceeds of sale of the property into a right against the first defendant personally. Having agreed to remove the charging orders on Oxford Road, the claimant’s only means of payment of the OXR costs was therefore also removed. The claimant could have required the first defendant to agree to become personally liable for those costs as a term of the 2020 consent order, but he did not do so.

I therefore reject the claimant’s counsel’s submission that the sums due to him include any sum in respect of the OXR costs.

The position is analogous in the case of the LCR costs. Here, there was no express agreement to discharge the 2012 claim charging orders, but, as I held in the April 2022 judgment, the £250,000 was applied to the debts set out at paragraph 41 of my judgment dated 8 April 2022, with the consequence that the 2012 claim charging orders were discharged: see para 53 of the judgment.

The effect of that was, in my judgment, to remove, the claimant’s entitlement to recover the LCR costs, because 311 Leigham Court Road was no longer charged with the payment of those costs.

The claimant submitted, however, that, if the effect of the April 2022 judgment is that the defendants are not obliged to account for the costs and expenses of sale, then that decision is wrong. If that is a submission that the defendants are personally liable for those costs and expenses, that is plainly wrong. If it is a submission that although the underlying costs debts (and interest on them) have been paid, the 2102 charging orders have not been discharged, then I reject that submission, as being contrary to the decision on that point in the April 2022 judgment. If my decision was wrong, then the claimant’s remedy was to appeal it. He is not entitled to re-open it before me.

The claimant submitted in the alternative that he is entitled to recover the LCR costs pursuant to:

I reject the submission that the effect of the Le Poidevin order is to create a free-standing personal liability for the LCR costs for the reasons set out at paragraph 39 above.

I also reject this submission. The 2020 charging orders had not been made at the date of the Le Poidevin order, though they charged 311 Leigham Court Road with payment of the £90,000 ordered on account of costs. No order for sale has been made in respect of the 2020 charging orders, and therefore the costs and expenses of such a sale cannot be charged by them.

The jurisdictional basis of the order for sale of 311 Leigham Court Road was, in my judgment, the 2012 claim charging orders, and only those orders. Those charging orders having been discharged, it follows that the order for sale cannot stand.

I turn to consider the position if I am wrong in my conclusions above, and the claimant remains entitled to sell 311 Leigham Court Road, in order to recover the LCR costs, even though the principal debts and interest secured by the 2012 claim charging orders have been paid.

In what circumstances therefore would the claimant’s entitlement to sell cease? In my judgment, this could only occur if:

If this were done, then I can no basis on which the defendants would not be entitled to regain possession of 311 Leigham Court Road. The defendants submitted that they should be entitled regain possession of 311 Leigham Court Road on payment or payment into court of a lesser sum reflecting the sum which the claimant is reasonably likely to recover. I was initially attracted by this suggestion, particularly because the costs of sale claimed by the claimant seem to me to be excessive, and to include sums not properly recoverable. However, ultimately, I have rejected it for two reasons. First, the court is not in a position on the material provided to it to carry out even a summary assessment of those costs. Secondly, this course would expose the claimant to the risk that sums to which he is found to be entitled were not recoverable by him as provided for by the Le Poidevin order. The claimant should not in my judgment be exposed to this risk.

I would however be willing to stay (pending detailed assessment) the order for sale in the Le Poidevin order on payment of a lesser sum. To do so would reflect my view that the claimant is unlikely to recover the full amount sought by him, whilst protecting him if he should in fact do so.

In this context, it is relevant to note that the sale price agreed by the claimant in November 2021 was £750,000. Although house prices have been static or dropped slightly since autumn 2022, I take judicial notice of the fact that they rose in London in the intervening period. The secured debts having priority over the 2020 charging orders total about £560,000, comprising

I turn therefore to consider the appropriate sum which would need to be paid in to court as a condition of granting a stay.

The defendants strongly dispute the level of the LCR costs on several grounds.

First, the defendants oppose in principle the recovery of any costs and expenses of effecting the sale after 14 February 2022, the date when the Undertaking was given. In my judgment, this is misconceived. Having agreed, subject to contract, to sell the property, the claimant could reasonably have incurred costs in relation to the proposed purchaser, including updating them as to the position. I agree, however, that the amount of the costs and disbursements for that period seems to be excessive.

Secondly, the defendants submit that the activity lists include costs clearly referable to the various applications heard by the court, which either have or will be the subject of separate costs orders by the court (and in which the defendants have had a measure of success). As to this, it is clear on the face of the activity reports and the list of disbursements that they include costs referable to applications in this litigation; and unclear why the claimant has considered it appropriate to include them. I take into account however, that the claimant may wish to maintain at the detailed assessment that certain of these costs are properly to be characterised as falling within the category of LCR costs.

Thirdly, the defendants rely upon the fact that the claimant’s litigation solicitors, Helix Law, are not the conveyancing solicitors acting in the sale of 311 Leigham Court Road – this is a firm called Sherwood Solicitors. The first defendant has undertaken an analysis of the claimant’s activity lists by reference to the descriptions of the items, including items shown under the descriptions AGENTS, BUYER, CONVEYANCER AND LAND REGISTRY; and excluding items under the descriptions CLERKS, CLIENT, COUNSEL, COURIER, COURT, DOCUMENTS, DRAFT, EMAIL, E-FILE, FINANCE, INTERNAL, GENERATING, KEY DOCUMENT, OPS, OTHER, PLEADINGS, REVIEW, SUBJECT & WITNESS STATEMENT. This produces total time costs of £4,826, and disbursements of £9,098.60. On this basis, the defendants are willing to pay £15,000 into court.

In my judgment, the first defendant’s analysis is plainly too restrictive. By way of example only, the items in the activity list include work done by counsel and solicitors in preparing letters to be sent to the various other charge holders of 311 Leigham Court Road. This is at least arguably to be included in the costs of effecting the sale.

The claimant’s final position was set out in his solicitors’ letter of 7 February 2023, in which he accepted the following reductions in respect of the LCR costs for the purposes only of payment into court:

Taking all the matters raised by the defendants into account, and inevitably approaching this issue on a relatively broad brush basis, I consider that the appropriate amount to be paid into court as a pre-condition of a stay would be £25,000.

The stay would be pending the detailed assessment of LCR costs. Once they had been assessed and the amount payable determined, then the defendants would have a short period within which to make payment, failing which the stay would end.

My primary conclusion is that, since the 2012 claim charging orders have been discharged, there no longer remains any jurisdictional basis for the order for sale of 311 Leigham Park Road. In these circumstances, I shall order a stay of those parts of the Le Poidevin order that provide for the sale. That order will render the Undertaking otiose, and it is unnecessary therefore to consider the claimant’s arguments in support of it being released. It will be released when I make the stay order.