Pinisetty v Manikonda & Anor

In April last year, HHJ Walden-Smith heard evidence and submissions in a claim seeking a declaration that the Defendants hold property on constructive trust for the Claimant and that the Claimant is entitled (subject to being in a position to discharge the mortgage or to procure its discharge) to call upon the Defendants to convey the legal title of the property to her or to such third party as she may nominate. In the alternative the Claimant sought the same or similar relief by reason of proprietary estoppel. In the event that these proprietary claims did not succeed, alternative claims were made for personal remedies together with other relief on the basis that the Claimant had paid the Defendants sums which it would be unconscionable for them to retain.

By a considered judgment, delivered orally, the judge held against the claim but accepted that the Claimant was entitled in principle to reimbursement or restitution of all sums paid by or on her behalf to the Defendants.

The Claimant appeals against that decision.

The facts pieced together from the judge’s judgment were these. The first and second Defendants owned property (“the property”) at 33, 35 and 35A Countess Lilias Road in Gloucester. 33 was a 3 bedroom house. 35 and 35A, next door to 33, were a shop with a flat above. 33, 35 and 35A were together registered under the same title number.

By the summer of 2012, the first and second Defendants, who were then married, were struggling financially. The property was mortgaged, and it appears that they were finding payment of the mortgage debt difficult. Debts were accumulating. They needed to sell the property in order to stabilise their financial position. In the summer of 2012 it was agreed between the Defendants and a Mr Chirumamilla that they would sell the property to him. He paid a £71,000 deposit.

The proposed sale and purchase did not go smoothly. Toward the end of the year, the Defendants consulted a solicitor, a Mr Desari, who was part of the same Indian community as were they. On their behalf, he served a notice of rescission. He did so in what the judge described as “late 2012 or early 2013”.

The transaction having collapsed, the Defendants were now desperate in their search for a fresh purchaser. Mr Desari, who was prominent in the community, agreed to help find one if he could.

In March 2013 a Mr Konverji agreed orally to buy the property. He offered the Defendants a cash sum of £120,000, agreed to discharge the mortgage; and to settle the dispute which had arisen with Mr Chirumamilla, who was seeking the return of his deposit or a substantial part of it, and to pay the legal fees. This would consequently leave the Defendants with £120,000 clear.

Once agreement had been reached, Mr Manikonda (the first Defendant) told Mr Konverji that he was in urgent need of some £80,000 in order to pay creditors in India, and that he also had to pay off the mortgage arrears, which had now reached £16,000, because Barclays Bank, the mortgagee, was not prepared to extend his credit facilities any more. Mr Desari took it upon himself to guarantee the repayment of the £80,000 to Mr Konverji, so as to enable Mr Konverji to pay that sum over to Mr Manikonda with confidence. The sum was paid, together with £16,171.12 to clear the mortgage arrears. Mr Konverji began to run the business through an employee of his, who was installed in the flat above. Nothing, however, had been put in writing. Mr Konverji was dissatisfied with the turnover from the shop. He considered that he had not been told the true position with regards to the profitability of the business.

Against this background, a critical meeting relevant to the issues in the case occurred. This was in a restaurant. Present were Mr Konverji, Mr Manikonda (Mrs Manikonda was not present but the judge was satisfied that at the time Mr Manikonda acted as her agent and with her authority: (para.51 of the judgment)), Mr Desari, and the Claimant. As to this meeting, the judge said (para.48):-

“At the meeting on 7^th April 2013… Mr Konverji complained that he had not been told the truth about the level of turnover of the shop, and that he had not been told the true position with respect to the profitability of the business. Mr Konverji made it clear that he did not want to proceed with the purchase of the property and the business and that there ought to be an alternative buyer. The Claimant agreed at that time to purchase the property. She was told by Mr Manikonda that he needed the monies because he was travelling to India shortly thereafter. She was told that the purchase price of £120,000, thus paying off the mortgage arrears, would remain the same; that she was to takeover the mortgage payments; and that she was to settle the dispute with Mr Chirumamilla, together with the legal fees. Because monies had already been paid by Mr Konverji, the Claimant was to pay the balance. She was further told that Mr Manikonda would assist her in her endeavours to build up the business. On that basis she agreed to purchase the property. None of this was put into writing. The only written documentation is that which records the meeting, but that does not amount to a written agreement to purchase. None of this was put into writing. The only written documentation is that which records the meeting, but that does not amount to a written agreement to purchase.”

Mr Desari was in a relationship with the Claimant at the time. During the meeting he expressed concern as to his position because of this, a matter which he repeated in writing to his clients (the Manikondas) the next day.

Although Mr Desari described the transaction as relatively straightforward in that letter, with the Claimant stepping into the shoes of Mr Konverji, the judge regarded it as “anything but” (para.53).

Not all the findings of fact in respect of the agreement, and the extent to which it was performed, are to be found in the factual account which the judge set out. Many are interleaved with her conclusions of law. Thus, the judge was setting out the principle expressed in Herbert v Doyle in which Lady Justice Arden had said (para. 57):

“…if the parties intend to make a formal agreement setting out the terms on which one or more of the parties is to acquire an interest in property, or, if further terms of that acquisition remain to be agreed between them so that the interest in property is not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither party can rely on constructive trust as a means of enforcing their original agreement. In other words, at least in those situations, if their agreement (which does not comply with section 2(1) [Law of Property (Miscellaneous Provisions) Act 1989]) is incomplete, they cannot utilise the doctrine of proprietary estoppels or the doctrine of constructive trust to make their agreement binding on the other party by virtue of section 2(5) of the 1989 Act”.

when she commented (at her para. 93):

“In this case the parties did not deliberately leave matters on a speculative basis, but they did leave matters without certainty. It is an unfortunate consequence for the parties dealing with matters in the manner in which they were dealt with in this case, that is in a more free-flowing and vague basis, because these were arrangements between members of the community which were changing.

It is a not usual situation [sic] for a party who agrees to purchase a commercial property for the running of a business to enter into that commercial property and, after a short while, decide it is not really for them and therefore seek to pass on that property and the business to another.

94.

…there was, …a lack of completeness to the agreement. That is an inevitable consequence of these matters being dealt with in the way that they were. First, there was a lack of agreement as to when completion of the purchase would, in fact, take place. Secondly, and potentially of more significance, there was a lack of ability on behalf of the Claimant to complete the agreement. One of the important matters in the agreement was for the mortgage to be taken over by the purchaser. There is no evidence in this case that the Claimant was in a position either to discharge the mortgage that was already outstanding on the property, or to obtain her own mortgage. That is not only because at the time she had a precarious immigration status, but also because of her questionable ability to service such a mortgage. Her purported intention has been to obtain a mortgage in the name of someone else. But that, of course, is fraught with all sorts of difficulties and not least the uncertainty of such an arrangement.”

As a further matter of fact it is clear from the judgment that Mr and Mrs Manikonda received £121,480. The Claimant has settled the dispute between Mr Chirumamilla and the Defendants; and she has paid off the outstanding arrears of payments on the mortgage which has fallen due. She has not however, discharged the mortgage, nor does it appear that she has entered into any arrangement with the mortgagee to transfer the mortgage into her own name, or discharge it; nor has she reached any agreement with any other mortgage provider. The fact that even at the time of trial and this appeal no steps had been taken to satisfy this crucial part of the agreement is demonstrated by the terms in which relief was sought in the action as noted above, the entitlement of the Claimant was “subject to being in a position to discharge the mortgage or to procure its discharge”.

The other matters of relevant fact found from the judgment are that Mr and Mrs Manikonda were in financial difficulty throughout and in urgent need of funds.

Although the judge accepted the evidence of the Claimant and her witnesses in preference to that offered by the Defendants, about which she was in some respect scathing, she dismissed the claim for a proprietary remedy for two reasons: first, that the agreement of 7^th April was not legally enforceable; and secondly that, even if it were, it could be set aside by the Defendants as having been procured by undue influence.

As to the first, it is trite law that Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 provides that a contract for the sale or other disposition of an 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. However, nothing in Section 2 affects the creation or operation of a resulting, implied or constructive trust. The Claimant had claimed that there was, here, a constructive trust and, if not, proprietary estoppel applied. However, the Judge adopted what Lady Justice Arden said in Herbert v Doyle [2010] EWCA Civ 1095 at para. 57 (in which she saw, as a common thread running through the speeches of Lord Scott and Lord Walker in Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55, that if the parties intended to make a formal agreement setting out the terms on which one or more of the parties was to acquire an interest in property or a further term for the acquisition remained to be agreed between them so that the interest in property was not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither could rely on a constructive trust as a means of enforcing their original agreement). Lady Justice Arden had said:

“In other words, at least in those situations, if their agreement (which does not comply with Section 2(1)) is incomplete, they cannot utilise the doctrine of proprietary estoppels or the doctrine of constructive trust to make their agreement binding on the other party…”

As to the second ground, the Defendants’ solicitor acting for them in the transaction was Mr Desari. He was in a relationship with the Claimant. He also had a clear personal interest in securing a transfer to the Claimant in succession to Mr Konverji, for if he did so successfully, he would be relieved of the potential liability as guarantor of the Defendants’ debt which he had earlier assumed. The judge expressed these views at para. 97:

“The benefit of having the property, which was either one worth in the region of £500,000 as the Defendants seek to say it was worth, or at the very least £350,000 (or thereabouts) as the mortgage plus the monies spent would seem to indicate, is a transaction which benefitted the Claimant. She was receiving a property which was worth more than the money she in fact was spending on it. On the face of it, therefore, the evidence is that this was a transaction which requires an explanation. Mr Desari, who was in a position of trust and confidence, had benefitted from the transaction. At the time of the transaction, he was in an intimate relationship with the Claimant purchaser. By reason of the sale of the property to the Claimant, he was being relieved of his potential liabilities, having stood as guarantor to Mr Chirumamilla in those circumstances, the requirements of Bank of Scotland v Etridge ([2001] UKHL 44) of the transaction requiring an explanation and him being in a position of trust and confidence are made out. If it were a case that there was an enforceable agreement for the sale of the property, then in my judgement, it is an agreement which would be impugned and potentially liable to be voided by reason of the presumption of undue influence…”

The judge went on to consider the personal claims which she considered required further investigation.

Mr Bennion-Pedley for the Claimant submitted that a constructive trust or proprietary estoppels arise in favour of a claimant where the owner of land induces, encourages, or allows that claimant to believe that she has or will acquire a right or benefit in the owner’s land; where in reliance upon that belief the claimant acts to her detriment to the knowledge of the owner; and the owner then seeks to take unconscionable advantage of the claimant by denying her the right or benefit which she expected to receive. He accepted that a complete agreement is required – one which is not intended to be reduced to writing, nor one in which further terms for the acquisition remain to be agreed – as well as an intention by the parties that they should immediately be bound by the agreement. He submitted nonetheless that the fact that the parties did not agree a fixed date by which the Claimant was to relieve the Defendants of their mortgage liabilities did not render the agreement of 7^th. April incomplete: there was a certainty as to the interest she would receive, and the judge fell into error by placing too much reliance upon the obiter comments of Lord Scott in Yeoman’s Row. Alternatively, if there were no express agreement as to when the Claimant was to procure the Defendants’ release from their mortgage obligations, it was open to the court to construe the parties’ intentions as to the time that was to be achieved (upon the basis that if the agreement did not specify a time, it could be inferred that it was to be executed within a reasonable time, and that would be for the court to determine). Alternatively, having accepted the Claimant’s account the court was bound to try to do justice between the parties having regard to all the circumstances of the case including the expectations and conduct of the parties: for this he relied on Jennings v Rice[2002] EWCA Civ 159. At para.36 of his judgment Lord Justice Aldous said:

“there is a clear line of authority from at least Crabb [Crabb v Arun District Council [1976] Ch 179] to the present day which establishes that once the elements of proprietary estoppels are established an equity arises. The value of that equity will depend upon all the circumstances including the expectation and the detriment. The task of the court is to do justice. The most essential requirement is that there must be proportionality between the expectation and the detriment.”

Thus Mr Bennion Pedley argued that the court could (and should, if it were to do justice to the equity which had arisen) have ordered the property to be sold so as to procure the Defendants’ release from their mortgage obligations, but with the proceeds of sale going to the Claimant. He submitted that it would be utterly unconscionable for the Defendants to retain the property and the equity that had accrued in the interim when the Claimant had preserved them through their own industry and resources.

As to undue influence, the judge should have had regard to the fact that there could be no criticism of the agreement reached between the Defendants and Mr Konverji: the effect of the agreement of 7^th April was that the Claimant was to stand in Mr Konverji’s shoes. There was thus no basis for suggesting that there was, here, undue influence: and the transaction did not call for an explanation. In any event, a presumption of undue influence is rebuttable and had been rebutted in circumstances in which the Defendants had agreed to sell the property to Mr Konverji, and had received money in respect of that agreement; had misled Mr Konverji as to the profitability of the shop such that he wished to withdraw from the transaction; his withdrawal was going to cause the Defendants significant financial difficulty such that the Defendants were likely to lose the property through being unable to maintain their liabilities in respect of it, and that Mr Konverji had encouraged the Claimant to take on the business. Given that the Claimant had introduced Mr Konverji in the first place she felt under an obligation to do so, such that her involvement in the transaction was almost inevitable. Thus, though Mr Desari’s involvement was regrettable, and unwise, it ought not to have precluded the court from exercising its jurisdiction to give effect to the parties’ informal arrangement.

The Defendants supported the judge’s reasoning. The legal principles had been applied appropriately: as a matter of fact, the judge had concluded that the arrangement as to discharging the existing mortgage was so nebulous that it could not be given effect – and Mr Sawtell for the Defendant noted that there had been no challenge to the judge’s findings of fact. He emphasised this by submitting that the claim was equivalent to a claim for specific performance, albeit of an oral agreement in respect of the sale of land, but since the Claimant was unable to show that she was unable to discharge the mortgage already secured against the properties then if the contract had been reduced to writing as it stood that would have been fatal to any claim for specific performance (Measures Bros Ltd v Measures [1910] 2 Ch 248, CA). It was wrong for the Claimant to be in a stronger position because the contract was oral than she would have been if it had been made in a form compliant with Section 2 of the 1989 Act. The findings of the judge precluded the implication of a term that completion would take place within a reasonable period. The uncertainty was such as to fall within that regarded by the authorities (in particular Yeoman’s Row Management Ltd v Cobbe and Herbert v Doyle) as defeating a claim to proprietary estoppel or constructive trust, at least in a “transactional” claim such as the present.

In any event, the judge was right to presume that there had been undue influence. The Defendants had reposed trust and confidence in their solicitor Mr Desari. He stood to benefit from the transaction in a number of ways. In particular he would be relieved from his obligation as guarantor, and his intimate partner could purchase the property at what the judge said was an undervalue. The transaction was not ordinarily explicable in the ordinary way. There was no explanation of it sufficient to rebut the presumption of undue influence.

The Defendants’ cross-appealed from a ruling which the judge had made, on 23^rd October 2016, extending time to file the notice of appeal to 29^th October. I shall deal with the cross-appeal at the conclusion of this judgment.

Counsel accepted that there is a distinction between what might be described as “transactional cases”, in which an agreement which does not meet the requirements of Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 might nonetheless be given effect in equity as involving the creation or operation of a constructive trust, and those cases which might loosely be described as “familial” in which promises or assurances had been made between individuals as to their future conduct, in reliance upon which the Claimant acted to his or her detriment in a way that would make it unconscionable for the promise as to future conduct not to be given effect.

Yeoman’s Row Management Ltd v Cobbe is a transactional case: an oral agreement could not be given effect, except in equity, since it did not comply with the requirements of the Law of Property (Miscellaneous Provisions) Act 1989. The House of Lords considered that neither proprietary estoppels nor constructive trusts arose in the circumstances of that case, in which a property developer, Cobbe, had agreed orally to purchase a property comprising of a number of flats for re-development into 6 town houses from the Defendants, controlled by Mrs. Lisle-Mainwairing and her late husband. The oral agreement was (i) that the property developer, at his own expense, would apply for planning permission to demolish the existing block of flats and to erect, in its place, a terrace of six houses, (ii) that, upon the grant of planning permission and the obtaining of vacant possession, the property would be sold to the developer for an up-front payment of £12 million, (iii) the developer would then develop the property in accordance with the planning permission and (iv) would sell the six houses and pay to the Defendants 50 per cent of the amount, if any, by which the gross proceeds of sale exceeded £24 million. Acting in the belief, encouraged by the Defendants, that the property would be sold to him, Cobbe spent some 18 months engaging professionals in applying for planning permission: but as soon as planning permission was given, the Defendants withdrew from the agreement. Cobbe argued that the Defendants were estopped from denying that he had acquired a beneficial interest in the property because they had acted unconscionably in knowingly inducing and encouraging by their actions a belief on which he had relied to his detriment that the property would be sold to him and then refusing to honour the oral agreement. Alternatively, he claimed there was a constructive trust in his favour.

Lord Scott (with whom the majority of their Lordships agreed) considered on these facts that (paragraph 7):

“The oral agreement in principle that had been reached, i.e. the core terms, did not cover everything that would have been expected in due course to be dealt with in a formal written contract. It must have been expected, for example, that Mrs Lisle-Mainwaring would have wanted some provision to be included in the formal contract regarding the reasonably expeditious commencement and progress of the development and, also, some security and timetable for the payment of the appellant's share of the excess over £24 million of the gross proceeds of sale. The nature of the transaction would plainly have excluded reliance on a vendor's lien. Mr Cobbe, for his part, would probably have wanted some contractual assurance as to the timing of the availability of vacant possession of the block of flats. These would not have been expected to have been difficult matters on which to reach agreement but were all matters for future discussion, and the outcome of future negotiations has always an inherent uncertainty.”

These facts ruled out there being any estoppel (paragraph 15):

“The terms of the oral "agreement in principle"... [were]... contractually, an incomplete agreement. The terms that had already been agreed were regarded by the parties as being "binding in honour", but it follows that the parties knew they were not legally binding. So what is it that the appellant is estopped from asserting or from denying? The appellant cannot be said to be estopped from asserting that the second agreement was unenforceable for want of writing, for Mr Cobbe does not claim that it was enforceable; nor from denying that the second agreement covered all the terms that needed to be agreed between the parties, for Mr Cobbe does not claim that it did; nor from denying that, pre 18 March 2004, Mr Cobbe had acquired any proprietary interest in the property, for he has never alleged that he had. And what proprietary claim was Mr Cobbe making that an estoppel was necessary to protect? His originally pleaded claim to specific performance of the second agreement was abandoned at a very early stage in the trial (see para.8 above) and the proprietary claims that remained were claims that the appellant held the property on trust for itself and Mr Cobbe. These remaining proprietary claims were presumably based on the proposition that a constructive trust of the property, with appropriate beneficial interests for the appellant and Mr Cobbe, should, by reason of the unconscionable conduct of Mrs Lisle-Mainwaring, be imposed on the property. I must examine that proposition when dealing with constructive trust as a possible means of providing Mr Cobbe with a remedy, but the proposition is not one that requires or depends upon any estoppel.”

An expectation dependent on the conclusion of a successful negotiation was not an expectation of a “certain interest in land” (a phrase derived from Taylor’s Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133, 144) since an expectation dependent upon the conclusion of a successful negotiation was not an expectation of an interest having any certainty comparable to the certainty of the terms of the lessees' interest under the Taylors Fashionsoption (see paragraph 18). Nor was it an expectation that he would have an interest in land, but rather that:

“…he and Mrs Lisle-Mainwaring, or their respective legal advisers, would sit down and agree the outstanding contractual terms to be incorporated into the formal written agreement, which he justifiably believed would include the already agreed core financial terms, and that his purchase, and subsequently his development of the property, in accordance with that written agreement would follow.” (paragraph 20)

Nor in Lord Scott’s view did Mr Cobbe’s claim fall within the line of cases in which a claimant expends money on land on the basis of an informal or incomplete agreement and in the expectation that, in due course, a binding agreement would be forthcoming: the court could not infer the contractual terms which further negotiations would or might have produced (paragraph 23).

As to constructive trust, he referred at paragraph 17 to a judgment of Deane J. in the High Court of Australia in Muschinski v Dodds(1985) 160 CLR 583, at 615, where he had said:

Though he could not be prescriptive about the situations in which a constructive trust would arise, amongst the factual circumstances in which it had often been recognised to do so were those where there was a failed joint venture. However:

“a claim for the imposition of a constructive trust in order to provide a remedy for a disappointed expectation engendered by a representation made in the context of incomplete contractual negotiations is, in my opinion, misconceived and cannot be sustained by reliance on unconscionable behaviour on the part of the representor.”

As to the second basis for the judge’s decision in the present case, Bank of Scotland v Etridge [2001] UKHL 44 concerned a transaction into which a wife said she had entered by reason of her husband’s undue influence over her. Lord Nicholls identified a class of relationship between two individuals such that, without more, one of them is disposed to agree a course of action proposed by the other. He said this typically occurs when one person places trust in another to look after his affairs and interests, and the latter betrays this trust by preferring his own interests. He abuses the influence he has acquired. In Allcard v Skinner (1887) 36 Ch D 145 Lindley LJ, at p 181 had described this class of cases as those in which it was the duty of one party to advise the other or to manage his property for him; in Zamet v Hyman [1961] 1 WLR 1442, 1444-1445 Lord Evershed MR referred to relationships where one party owed the other an obligation of candour and protection.

It was accepted before me that the relationship between solicitor and client had long been identified as one such relationship. In Etridge itself Lord Hobhouse observed:

“…if a solicitor has bought property from his client and it is properly put in issue that the purchase was at an under-value or that the client's consent may have been improperly obtained, the solicitor will have to show that the price was fair and that the client's consent to the transaction was freely given in knowledge of the true facts. The solicitor has to justify what he has done. He has a burden of proof to discharge and if he fails to discharge it he will not have succeeded in justifying his conduct. Thus, at the trial the judge will decide on the evidence whether he is in fact satisfied that there was no abuse of confidence.”

Lord Scott (at paragraph 153 and following) noted that where a presumption of undue influence arose from the relationship between the parties it was rebuttable. The onus of rebutting it rested upon the person seeking to maintain the impugned transaction.

Though the parties referred me to other cases – notably a decision at first instance of HHJ Behrens, sitting as a judge of the High Court in Ghazaani v Rowshan [2015] EWHC 192 (Ch) - they did not identify any principle of general application which arose from those cases: in particular, they accepted that Ghazaani was an example of the illustration of the principles for which Yeoman’s Row and Herbert v Doyle stood, rather than setting out any development of principle of its own. It is not therefore necessary to consider those cases further.

The present case is one which may be classed as “transactional”.

The law is as set out in Yeoman’s Row Management Ltd v Cobbe, as applied in Herbert v Doyle (see above). The principles were not in significant dispute before me.

The argument that the judge was wrong to reach the conclusion she did once these principles are accepted rests upon their application to the facts the judge found. Her conclusion as set out at paragraph 94 was to the effect that the Claimant would not be entitled to specific performance of the contract, since the agreement was insufficiently complete to permit it. The background she had explained and accepted was one in which Mr Konverji made an oral bargain, and was not held to it by the Defendants, despite having run the shop and installed a manager to do so. The judge was entitled to think that the agreement between the Claimant and the Defendants was incomplete, not only with regard to formalities, but in its substantial terms: the context offered by Mr. Konverji’s failed purchase adds further support to this conclusion, even if it is not a finding necessary to reach it.

Though I am inclined to think that uncertainty as to the date of completion is not usually such as to render a contract for the purchase of real property unenforceable, since time may not be of the essence unless and until a notice to complete is issued, the matter which the judge thought (in my view rightly) to be of more significance was the vagueness of the agreement as to the future of the mortgage. The Claimant had an uncertain immigration status. This was bound to affect both her ability to take on a mortgage and her suitability as a mortgagor in the eyes of any legal person who might offer her one. The arrangements as to how and when she would obtain such a mortgage to replace the existing one – if that was the plan – was uncertain, and needed further agreement to resolve those uncertainties. So too did the issue as to whether the Claimant proposed merely to take over payment of instalments of interest, or capital and interest, on the mortgage already obtained in the name of the Defendants (and, if so, the question would arise as to the status of such a mortgage if the debt it secured was a debt of the Defendants but the property securing that debt was legally to be considered in the ownership of another: in practical terms it would probably require the consent of the mortgagee, which might well be withheld in such circumstances). The intention the Claimant expressed to the Judge (see the penultimate sentence para. 94) appears to envisage a person who did not own the property, nor have any interest in it which might be sufficient security for a loan on mortgage: as the Judge said in the last sentence, that was fraught with difficulty and uncertainty.

On these facts, the Judge was right to consider that the contract was not sufficiently certain to be enforced. This was not a case in which the court could “fill in the gaps” by construing what terms it would be reasonable to infer as having been agreed by the parties (as Mr Benion-Pedley submitted). Though the Defendants had acted in an unconscionable manner, as the facts of Yeomans Row demonstrate that is not on its own sufficient to demonstrate that there is either a proprietary estoppel which can operate, or a constructive trust.

Accordingly, on the first ground of her decision, I uphold the Judge.

As to the second, the central paragraph relating to undue influence is paragraph 97. The Judge made a finding of fact in that paragraph which does not entirely coincide with earlier observations. She said the Claimant “…was receiving a property which was worth more than the money she in fact was spending on it”. Yet at paragraph 37, the Judge identified the mortgage debt as being £232,055.02. She also found that the Defendants received £121,480 from the Claimant, as well as her uncertain promises in respect of taking responsibility for the mortgage, and were relieved of a liability they might have had to Mr Chirumamilla of some £50,000. Totalled, this amounts to just over £400,000. The judge did not herself attempt a precise valuation of the property, but observed that the Defendants had placed a value of some £500,000 on it. There is some gap between the expressed expectations of the Defendants and the sale price they ultimately agreed: but I am unclear if there was any further express basis for the judge’s finding as to the sale being at an undervalue.

However, the circumstances were those analogous to those of a forced sale, given the desperation of the Defendants for money to pay pressing debts. The context thus supports the judge’s conclusion.

I do not need to resolve the issue of fact as to whether the contemplated sale was at an undervalue (from the perspective of the vendors), even if I could do so here given that issues of primary fact are for the trial judge: the judge had a second and independent reason for concluding that the transaction, which was advised by Mr Desari,was both one in which he acted as solicitor to the Defendants, and one from which he personally benefitted. By reason of the sale he was relieved of his potential liabilities as a guarantor of Mr. Konverji’s debt. Though it might be said that the Defendants knew, or ought to have realised, that this would be the effect of transferring the property to the Claimant, questions would arise as to whether Mr Desari had attempted to obtain any other purchaser (or advised the Defendants to seek one), particularly given the judge’s feeling after hearing all the evidence that the property might very well have been sold at less than the value the Defendants would otherwise have achieved. The presumption of undue influence arose. The solicitor acting for the Defendants had both a personal and financial interest in the transaction. The transaction could thus be avoided unless the Claimant could rebut the presumption.

The judge considered that overall there was no evidence to rebut the presumption of undue influence. The fact that she rejected the evidence of the Defendants on most if not all points in which that stood in conflict to the evidence of the Claimant does not necessarily have the consequence that the Claimant had proved there was no undue influence. The reasons for thinking that the transaction was to the advantage of Mr.Desari, and to the potential disadvantage of the Defendants, are clear, independent of any such conflict, and sufficient for the finding she made.

Both the judges’ conclusions have to be in error before the appeal can succeed. Neither is. Accordingly, I dismiss the appeal.

Having done so, I do not need to deal, except shortly, with the cross-appeal. The cross-Appellants argued that the Claimant was out of time in bringing her appeal in the first place and time should not have been extended to permit it to be brought. Given my conclusion on the substance of the appeal, this has become academic.

However, the matter has been argued.

The first point which arises is whether the Defendants are entitled to raise the cross-appeal: the Defendants are themselves out of time in bringing it.

The relevant chronology is this. Judgment was given orally, with the parties in attendance, on Wednesday 13^th July 2016. A transcript of the judgment was not supplied by the transcribers till 18^th August 2017. At that stage, it was an uncorrected copy. It is not until 23^rd October 2016 that the Judge was able to correct, revise and approve the judgment. On that date she also allowed an application by the Claimant, made earlier, to extend the time for submitting a notice of appeal. The Respondent lodged a Respondent’s notice and cross-appeal by means of tracked DX on 14^th November 2016. This was within the time limit required under the CPR. However, the covering letter was addressed to the “Appeals Office, Chancery Division” instead of the “Appeals Office Queens Bench Division”. This was understandable, in my view, given the nature of the claim which had been made. Moreover, I observe, that the documents had been lodged with the court within the prescribed time.

The court office neither forwarded the documents to the Queens Bench Division, nor returned them at the time, such that belatedly a replacement had to be filed.

None of this is in contention. Evidence about it is given by a witness statement of 10^th March 2017 subject to a statement of truth. Ms Sukhneel Kaur Goel accepts nonetheless in that witness statement that the criteria set out in Denton v White [2014] EWCA Civ 906 apply. She accepts that there was a breach but argues that it was neither serious nor significant, since the Appellant knew what the content of the Respondents’ notice was from their skeleton argument. Though this does not amount to a “good reason” under the test set out in Mitchell v News Group Newpapers [2013] EWCA Civ 1537, she asks in the interests of justice for time for appealing to be extended pursuant to CPR Rule 3.1(2)(a) because in these circumstances the breach was an oversight.

In R (Hysaj) v Secretary of State for the Home Department [2015] 1WLR 2472; [2014] EWCA Civ 1633, the Court of Appeal held that an application under Rule 3.1(2)(a) for an extension of time for filing a notice of appeal should be approached in the same way and with the same rigour as an application for relief from sanctions under Rule 3.9, and hence I accept that the approach promulgated by Mitchell and Denton applies.

The principles, as set out in paragraphs 40 – 41 of Mitchelland 24 of Denton are i) if the failure to comply with the relevant rule can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly; ii) if the failure is not trivial, the burden is on the defaulting party to persuade the court to grant relief; iii) the court will want to consider why the fault occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted, but merely overlooking the deadline is unlikely to constitute a good reason iv) it is necessary to consider all the circumstances of the case before reaching a decision, but particular weight is to be given to the factors specifically mentioned in Rule 3.9.

Denton suggested a 3 stage approach should be taken when applying that guidance. First, a court should

“…identify and assess the seriousness and significance of the failure to comply with any rule… which engages Rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate “all the circumstances of the case so as to enable [the court] to deal justly with the application..”

It is that more detailed guidance to which judges are now specifically directed to look (per Moore-Bick LJ at paragraph 38 of Hysaj.)

Applying that guidance, in my view the failure is neither serious nor significant. I have had a full explanation of why the default occurred and, to my mind of particular relevance to the third stage, the default is in itself very low on any scale of culpability. The deadline was well in mind. Steps were taken to meet it. Those steps would have been effective but for what might be thought to be a misdirection of the form to the particular division of the court, albeit it was the court which in another division was entitled to receive the form. In all these circumstances of the case, I have therefore decided that time should be extended to receive the Respondents’ notice.

Similar principles apply in dealing with the application for an extension of time, in favour of the Claimant, to which the cross-appeal relates. It is ironic that the cross-appeal seeks to deny the Claimant any extension for her appeal whilst seeking one for the cross-appeal itself.

Mr Sawtell notes that the time limit for filing the notice of appeal following judgment of 13^th July expired on 3^rd August 2016. Time runs from the date of the decision. The parties knew the decision. Being represented by competent counsel, each had a note of the salient points. There was no reason why a notice of appeal could not have been made within the 21 days following the judgment. If it was thought one could not be made without considering the detail of the transcript, a formal application to extend time could have been made, but none ever was. The grounds of appeal and skeleton argument were dated 7^th September 2016, 20 days after the uncorrected draft was received from the transcribers: but it is plain from this that the Claimant did not need to see the revised and approved transcript. The judge’s decision was erroneous. She recounted that checking by the judgment had taken time, and then, (paragraph 5) said

“I’m informed that the Appellant is in a position to lodge the notice of appeal immediately and given that the delay of correcting the judgment does not fall upon the Claimant in any way it is plainly just for the Claimant to be given an extension of time for the filing of the notice of appeal.”

The notice of appeal had already been compiled and did not depend upon any corrections, as the judge implicitly should have recognised by recording that the Appellant was ready forthwith to lodge the notice. Her reasoning relates entirely, therefore, to a factor which had no effect in limiting the ability of or desirability for the Claimant appealing when she did.

The judgment being in error, I would have been bound to allow the appeal had it still been material. The real question would have been the consequence of reaching that conclusion - namely, whether I should exercise my own discretion, or refer the matter to the first instance judge. Since the application relates to filing a notice of appeal before the appeal court, it would have been appropriate that I should do so.

Applying the principles set out in Denton, as being applicable to an application such as this, Mr Sawtell reminds me that the appeal was not lodged for more than 2 and a half months after the expiry of the 21 day time limit. The appeal was not even lodged when it was prepared in September. The purpose of prescribing a 21 day time limit is so that those likely to be affected by any decision know quickly whether to adjust their expectations or not. The delay was thus considerable and significant. There was no good reason for it, particularly since the parties knew the detail of the judge’s reasoning since judgment had been given orally.

Mr Benion-Pedley in response, tells me that it was clear at the end of the hearing that the losing Claimant intended to apply. The Claimant proposed in an email 26^th July that there should be a “long stop date” by which the Claimant must bring her appeal, and suggested 19^th August. On 4^th August he sought a response to that email, not by then having had one. The next day (5^th August) Mr Sawtell responded that he had no instructions to agree 19^th August but that he would discuss this with his instructing solicitor.

19^th August came and went.

On 7^th September, Mr Benion- Pedley emailed Mr Sawtell. In the course of that email he said

“You’ll need to tell me whether you require me to make a formal application in respect of the date for the Appellant’s notice but if so we shall be seeking our costs of doing so.”

He enclosed draft grounds of appeal with that email.

I do not regard it as appropriate that one party, in default, should seek the agreement of the other party to an extension without making an application to the court for it, since it is the court’s obligation to consider and grant an adjournment. It is clear that a court’s jurisdiction does not depend upon the agreement of the parties and cannot be conferred by such an agreement, nor is a court simply to be used as if it were a rubber-stamp.

On 9^th September, Mr Sawtell responded that his clients were not willing to agree to the extension. A week later, Mr Benion-Pedley proposed an order requiring the Claimant to bring her appeal by 23^rd September and file her Appellant’s notice by that date. Both parties agreed that a hearing was not necessary. It was therefore that application which came before the court, though the date was amended to read “30^th September 2016” rather than 23^rd.

No reason has been advanced why the appeal could not have been brought within the 21 days time limit.

With very considerable hesitation, in this case I would have granted relief from sanction. I would have extended time. I would have done so because permission to appeal had already been given (by the lower court). The vice to which Mr Sawtell referred – that of the parties not knowing if their rights were or were not in jeopardy from an appeal - does not arise, unless the length of time taken in context within which the appeal was lodged was significant or substantial. It is part of setting the context for that, in dealing with the first question I am required to address by Denton, that I think that the fact permission to appeal had already been granted was relevant. If so, it was desirable generally that any cross-reference in a notice of appeal, albeit that it should be in rare cases only where that is required, was to the perfected judgment. Though I have regard to the circumstances amongst which is that the Claimant was in a position to proceed on 7^th September and did not do so, the appeal file would only be progressed in the appeal court once a perfected judgment was received at the court office. Given the clear message from the email traffic that the appeal was to be pursued, I have come to the conclusion that the delay was neither serious nor significant taken in context.

I would not have found there to be any good reason for delay. It was never suggested by the Claimant herself that she was waiting for the perfected judgment, and that simply does not in any event stand with the chronology. The points Mr Sawtell makes are good ones, but cannot in the event answer the fact that not to extend time in these circumstances would be to rely heavily upon a formalism which had no meaningful or practical effect on either party or the progress of the appeal.

It follows that I would have extended time to hear the appeal, and dismissed the Respondents’ cross-appeal: but in any event on the appeal itself I dismiss that appeal for the reasons I have given.