Landlord and tenant — Forfeiture — Registered equitable charge — Whether equitable chargee of lease entitled to relief from forfeiture
By an agreement dated 4 May 1994 the plaintiff
surrendered a lease of restaurant premises to the first defendant landlord. The
landlord granted a new lease to Mr and Mrs B, who agreed to pay the plaintiff
£172,500 in instalments for the business. Following the failure to pay certain
instalments, the plaintiff obtained summary judgment against Mr and Mrs B and,
later, two charging orders, one against the assets of Mr and Mrs B and the
other against the beneficial interests of Mrs B; both orders included the
lease. These orders were registered in January 1996, pursuant to the Land Charges
Act 1972. In April 1996 the lease was forfeited by peaceable re-entry for
arrears of rent and a new lease was granted to the second and third defendants.
In proceedings by the plaintiff seeking relief from forfeiture on the basis
that she was an unpaid vendor and equitable chargee with the benefit of
registered charges over the forfeited lease, the landlord and the second and
third defendants contended that relief could not be granted to an equitable
chargee of the lease.
relief from forfeiture was dismissed. The plaintiff’s claim for relief under
section 146(4) of the Law of Property Act 1925 was bound to fail as she was not
an underlessee. An equitable chargee did not have the right to relief against
forfeiture by peaceable re-entry under the inherent jurisdiction of the court
where the person who had the equitable right to apply for relief did not seek
that relief. An equitable chargee has, at most, a mere equity, an equitable
right that falls short of an equitable interest in land, and, as such, has no
right to relief from forfeiture. Although the landlord was informed of the
equitable charges prior to the forfeiture and the charges were registered
against the names of the owners of the forfeited lease, the second and third
defendants were bona fide purchasers for value from the landlord without notice
of the charges; they were not deemed to have notice under section 198(1) of the
Law of Property Act 1925. Because the forfeited lease was held in equity by Mr
and Mrs B as undivided shares in the proceeds of sale under a trust for sale,
and because such a share is not land, the charging orders did not affect land
and were not registrable under the Charging Orders Act 1979. Therefore, the
plaintiff’s rights could not bind purchasers of the forfeited lease and could
not bind purchasers from the landlord. Even if the plaintiff had a right to
claim relief, as a matter of discretion that relief would not have been
granted.
The following cases are
referred to in this report.
Abbey National Building Society v Maybeech Ltd [1985] Ch 190; [1984] 3 WLR 793; [1984] 3 All
ER 262; [1984] 2 EGLR 69; [1984] EGD 479; (1984) 271 EG 995
BICC plc v Burndy
Corporation [1985] Ch 232; [1985] 2 WLR 132; [1985] 1 All ER 417
Financiera Avenida SA v Shiblaq The Times 21 November 1988
Hoffmann-La Roche (F) & Co AG v Secretary of State for Trade and Industry [1975] AC 295;
[1974] 3 WLR 104; [1974] 2 All ER 1128, HL
Ladup v Williams & Glyn’s Bank plc [1985]
1 WLR 851; [1985] 2 All ER 577; (1985) 50 P&CR 211
Perry v Phoenix
Assurance plc [1988] 1 WLR 940; [1988] 3 All ER 60; (1988) 56 P&CR 163
Shiloh Spinners Ltd v Harding [1973] AC 691; [1973] 2 WLR 28; [1973] 1 All ER
90; (1973) 25 P&CR 48, HL
Standard Property Investment plc v British Plastics Federation (1987) 53 P&CR 25
Tickner v Buzzacott
[1965] Ch 426; [1965] 2 WLR 154; [1964] 1 All ER 131
Westminster Bank Ltd v Lee [1956] Ch 7; [1955] 3 WLR 376; [1955] 2 All ER 883
This was a claim for
relief from forfeiture by the plaintiff, Davinia Patricia Bland, against the
landlord, Ingrams Estates Ltd, to which the second and third defendants, Fogir
Uddin and Ripon Chowdhery Fogir, were parties.
Robert Denman (instructed by Joseph Aaron &
Co, of Ilford) appeared for the plaintiff; Timothy Fancourt (instructed by
Collyer-Bristow) appeared for the first defendant; Justin Althaus (instructed
by Armstrong & Co) represented the second and third defendants.
Giving judgment, MR PETER LEAVER QC said:
Introduction
The principal issue that arises in this case is
whether the plaintiff, Davinia Patricia Bland (Mrs Bland), as equitable
chargee, is entitled to relief against the forfeiture of a lease of premises at
54/56 The Parade, Bourne End, Buckinghamshire (the premises). The lease had
been granted to Franco and Caroline Beer (the Beers) by Ingrams Estates Ltd
(Ingrams), and the Beers had agreed with Mrs Bland to purchase trade fixtures
and fittings from her. The Beers failed to pay instalments of the purchase
price to Mrs Bland, who obtained judgments and charging orders against them.
The Beers also fell into arrears of rent, as a result of which Ingrams
forfeited the lease for non-payment of rent. The forfeiture was by peaceful
re-entry.
With that brief introduction to the principal
issue, I shall state the facts, and, in doing so, shall identify the other
issues that I have to decide.
Facts
On 5 May 1989 Mrs Bland and her husband, John
Colin Bland, took a lease of the premises from Ingrams Estates for a term of 16
years from 25 March 1988 at an annual rent, which was subject to review, of
£10,000. In fact, Mr
previous tenants, whose lease had only about 18 months to run, and Ingrams had
agreed to grant a new lease to Mr and Mrs Bland at an annual rent that, at the
commencement of the lease, was double that which was being paid by their
predecessors. I shall refer to this lease as ‘the Bland lease’. Mr and Mrs
Bland spent a large sum of money on the premises and ran it as an Italian
restaurant. Previously, the premises had been used as a café.
In 1992 Mr Bland was adjudicated bankrupt.
Thereafter, Ingrams permitted Mrs Bland to remain in possession as the sole
tenant.
By an agreement dated 4 May 1994 Mrs Bland sold
the premises and trade fixtures and fittings to the Beers for £172,500. The
purchase price was payable by instalments: a total of £30,000 being payable on
dates between 4 May 1994 and 9 June 1994, and the balance by instalments
payable between 15 June 1994 and 25 June 1996. Mrs Bland surrendered the Bland
lease, and Ingrams agreed to grant a new lease to the Beers. I shall refer to
this lease as ‘the Beer lease’. The Beer lease was entered into on 12 May 1994
and was for 16 years from 25
the commencement date, subject to review.
The Beers paid a number of instalments of the
purchase price to Mrs
total sum of £24,000 payable to Mrs
the outstanding instalments. Those cheques were dishonoured on presentation,
and, on 24 May 1995, Mrs Bland obtained summary judgment in respect of the
dishonoured cheques. Mrs Bland also obtained summary judgment for the balance
of the unpaid instalments then outstanding, namely £72,500.
It would appear that not only were the Beers
failing to pay Mrs
but also that they were failing to pay rent due to Ingrams.
Mrs Bland took steps to secure her judgments
against the Beers. On 20 December 1995 she obtained a charging order against
the interests
was in respect of the judgment for £24,000. On 10 January 1996 Mrs Bland
obtained a similar order against Franco Beer’s assets, including the premises.
Then, on 4 March 1996, Mrs Bland obtained a charging order against the
beneficial interests of Caroline Beer in certain assets, including the
premises. This charging order was in respect of the judgment for £72,500. Mrs
Bland did not obtain a similar order against Franco Beer in respect of that
judgment, as he had by then been adjudicated bankrupt.
On 19 January 1996 the charging orders were
registered at the Land Charges Registry, pursuant to the provisions of the Land
Charges Act 1972.
While Mrs Bland was taking these steps, Ingrams
was preparing to forfeit the Beer lease for non-payment of rent. By April 1996
new tenants had been found for the premises: the third defendants, Mr and Mrs
Uddin.
On 6 March 1996 Mr Reginald Lewis, who at the time
worked as a self-employed consultant to Ingrams, having previously been an
employee, wrote to Ingrams’ solicitors to inform them that he had agreed the
terms under which a lease should be granted to Mr and Mrs
in the letter that ‘forfeiture of the present lease will coincide’ with grant
of the new lease.
On 17 April 1996 Mr Lynton, a managing clerk who
worked for Mrs
about precisely what was said during this conversation. I shall revert later in
this judgment to this dispute.
On Friday 26 April 1996 Mr Lewis wrote to the
Beers to inform them that the Beer lease had been forfeited. That forfeiture
was by peaceful re-entry.
On Monday 29 April 1996 at 12.41 pm the Beers’
solicitors wrote to Ingrams’ solicitors stating that the Beers would be
applying for relief against forfeiture. At 1.38 pm that day Ingrams granted a
lease to Mr
lease’. The Uddin lease was for a term of 24 years from 25
an initial annual rent of £14,000.
Shortly after the grant of the Uddin lease, the
Beers commenced proceedings against Mr Uddin in respect of the fixtures and
fittings remaining on the premises that the Beers claimed. Interlocutory orders
were granted, about which I do not think it necessary to give details at this
stage of the judgment, save to say that on 18 June 1996, on Mrs
application, injunctive relief was renewed, restraining Mr
removing or dismantling any of the fixtures or fittings. Mrs Bland gave an
undertaking in damages to be responsible for any loss and damage that Mr Uddin
suffered by reason of the order.
Mrs Bland then interpleaded in those proceedings,
and Caroline, Antonio and Camellia Gabriella Beer were made respondents to the
interpleader proceedings. Those proceedings are referred to as ‘the chattels
action’, and I have to decide whether Mrs Bland is liable to Mr
Uddin on her cross-undertaking in damages. Mr and Mrs
they were unable to open the premises as a restaurant for a period between 16
May 1996 and 24 September 1996 because of the injunctions, which should not, as
they submit, have been granted.
As I have stated above, the principal issue in the
main part of the proceedings before me, which I shall refer to as ‘the
forfeiture action’, is Mrs Bland’s claim for relief against forfeiture. During
the course of the trial, an issue arose as to whether the proceedings were
properly constituted in the absence of Mr and Mrs Beer. I indicated that, in my
judgment, it would be necessary to have the Beers as parties to the action:
alternatively, as Nicholls J suggested in Abbey National Building Society
v Maybeech Ltd [1985] Ch 190*, the Beers should be notified of the
proceedings and should consent to the court granting relief against forfeiture,
if the court so ordered. This they did, on Mrs
assume their responsibilities under the Beer lease, if it were revived. In
addition, Mr Beer’s trustee in bankruptcy stated that he would disclaim the
Beer lease if relief were granted to Mrs
the proceedings to continue as constituted before me.
*Editor’s note: Also reported at [1984] 2 EGLR 69
There is one more important matter to which I must
refer. These proceedings were originally commenced in the county court, and on
16
time, Mrs Bland’s claim for forfeiture was made pursuant to section 146 of the
Law of Property Act 1925. At the hearing, Mr Robert Denman, counsel for Mrs
Bland, sought, and by consent was granted, leave to amend the pleadings to add
a claim for relief pursuant to section 139 of the County Courts Act 1984. Mrs
Bland’s claim for relief, as now, was put on the basis that she was the unpaid
vendor and equitable chargee with the benefit of charging orders registered at
the Land Charges Registry.
In the county court Ingrams and Mr and Mrs Uddin
took the preliminary point that the court had no jurisdiction to grant relief
under either of those Acts. Judge Hull QC heard argument on this issue, and
gave a judgment in which he held that there was no jurisdiction. Mr
then applied for leave to amend the pleadings yet further so as to rely upon
the court’s inherent jurisdiction to grant relief against forfeiture. Judge
Hull ruled that the county court had no such jurisdiction, but transferred the
case to the High Court under section 42 of the County Courts Act 1984. He also
transferred the chattels action to the High Court.
At the trial before me Mr Denman sought to contend
that it was open to him to claim relief against forfeiture both under section
146 of the Law of Property Act 1925 and under the court’s inherent
jurisdiction. I heard submissions on that issue, and ruled that it was not open
to Mr
appeal from it, the judgment of Judge Hull was decisive on this issue. I ruled
that I was not sitting as an appellate court, and I take the view, as I
expressed in my ruling, that, absent a successful appeal against Judge Hull’s
judgment, Mrs Bland is estopped from seeking relief under section 146 of the
1925 Act. Thus, in the forfeiture action, the only ground for relief that has
been argued before me is that which arises under the inherent jurisdiction of
the court.
There is one other important factual matter to
which I must refer. It is relevant because relief against forfeiture is an
equitable remedy, and it is, therefore, necessary to consider the equities in
coming to a decision. As I have said, forfeiture of the Beer lease was on 26
April 1996, and the Uddin lease was granted on 29 April 1996.
On 30 April 1996 Mrs Bland was informed of the
forfeiture and of the grant of a new lease. That information was given to Mr
Lynton, of Mrs Bland’s solicitors, later that day. On 1 May 1996 Mrs Bland’s solicitors
wrote to Ingrams’ solicitors informing them of the charging orders in favour of
Mrs Bland, and stating that Mrs Bland wished to make urgent arrangements to
attend the restaurant in order to collect the trade fixtures and fittings. They
asked Ingrams’ solicitors to give them a date upon which the Blands could
attend ‘before the New Lessee begins to trade’. There was no mention of relief
against forfeiture in that letter. On 2 May 1996 Mrs
again wrote to Ingrams’ solicitors. In this letter they asserted that Mrs Bland
‘would be entitled in the face of her charging order to seek relief for
forfeiture from the Lease’. Ingrams’ solicitors responded on 2 May 1996. They
stated that the reason that the Beer lease was forfeited without notice to Mrs
Bland was that ‘no notice of charge’ had ever been given under the terms of the
forfeited lease. Ingrams’ solicitors’ attendance note of a conversation between
their Mr
May 1996 shows that Mr Lynton appeared to agree that if Ingrams had no notice
of the charging orders, it could not have given notice to Mrs Bland of the
intention to forfeit the Beer lease. It was not until 22
the proceedings in the forfeiture action were commenced. The delay between 30
April 1996 and 22 August 1996 is one to which I will have to have account in
deciding whether Mrs Bland is entitled to equitable relief in this action.
I mentioned earlier in this judgment the important
telephone conversation between Mr Lewis and Mr
There was produced in evidence Mr Lynton’s attendance note of that
conversation. Mr Lewis denied that such a conversation ever took place. I heard
evidence from both Mr Lynton and Mr Lewis. I was quite satisfied that both of
them were honest witnesses, who were trying to be truthful. I
believe, however, that Mr Lynton has made up the attendance note, a conclusion
to which I would inevitably be driven if I were to accept Mr Lewis’ evidence
that such a conversation did not take place, and so I find that there was a
telephone conversation between Mr
The attendance note contains the following passage:
They had a charge on the fixtures and fittings in
the restaurant, and a charging order against the property. They have other
rights and therefore Ingram Estates might be compelled to deal with them.
I accept that Mr Lynton said what he records in the
attendance note he told Mr Lewis about the charging orders. The importance of
this conversation is that Mr
notice to Ingrams of Mrs Bland’s charges over the property. I shall revert to
this issue later in this judgment.
On those facts the issues that I have to decide
are:
(1) Is Mrs Bland entitled to relief against
forfeiture?
(2) If Mrs Bland is so entitled, should the court
exercise its discretion in her favour?
(3) Are the Uddins entitled to damages on Mrs Bland’s
cross‑undertaking in damages in the chattels action?
Relief against forfeiture
Mr Denman submits that Mrs Bland is an equitable
chargee of the Beer lease (by virtue of the charging orders) so that she has
proprietary or possessory rights that entitle her to claim relief against the
forfeiture of that lease.
It is well-established that relief against
forfeiture is an equitable remedy, but that it is only available where
proprietary or possessory rights have been, or are liable to be, forfeited: Shiloh
Spinners v Harding [1973] AC 691 per Lord Wilberforce at
pp722A-795F and BICC plc v Burndy Corporation [1985] Ch 232, CA.
In Ladup v Williams & Glyn’s Bank
plc [1985] 2 All ER 577 the plaintiff had recovered judgment against the
lessee of a residential flat. The plaintiff then obtained a charging order
absolute in respect of the lessee’s lease of the flat. Proceedings for
forfeiture of the lease for non‑payment of rent were brought, and
possession of the flat was obtained. The plaintiff, a person interested in the
lease by virtue of the charging order, sought relief against forfeiture. An
application to strike out the proceedings for relief was heard by Warner J, who
held that it was not so plain and obvious that the claim would fail as to
entitle him to strike it out.
Mr Denman relies upon Ladup as
demonstrating that an equitable chargee can apply for and obtain relief against
forfeiture even in a case where the party whose lease has been forfeited is no
longer in possession. Mr
that Ladup is not authority for that proposition, as Warner J only had
to decide whether the claim for relief should be struck out on well‑established
grounds. Alternatively, they submit that if it is authority for
Mr
it.
In order to decide this issue, it is necessary to
consider in a little more detail precisely how Mrs Bland’s case is put. Mr
Denman submits that Ingrams knew, when it forfeited the Beer lease, that an
application for relief from forfeiture could be made.
He further submits that the Uddins knew that
Ingrams had forfeited the lease of those who had previously been lessees of the
premises, and that they therefore took the Uddin lease with the knowledge that
relief against forfeiture could be granted. Alternatively, Mr Denman submits
that even if the Uddins did not know of the forfeiture of the lease of those
who had previously been lessees of the premises, they had actual notice of Mrs
Bland’s interest by virtue of her registration of the charging orders.
What is the effect of the charging orders and of
their registration? By section 3(4) of the Charging Orders Act 1979 it is
provided that:
a charge imposed by a charging order shall have
the like effect and shall be enforceable in the same courts and in the same
manner as an equitable charge created by the debtor by writing under his hand.
An equitable chargee can apply to the court for
the appointment of a receiver. Conversely, an equitable chargee cannot take
possession, as he does not have either a legal estate or a contract to create
one. However, an equitable chargee can apply to the court for an order for sale
by virtue of the combined effect of sections 90 and 205(1)(xvi) of the Law of
Property Act 1925, by which such relief is available in respect of an equitable
mortgage on land, and mortgage is defined to include a charge.
Mrs Bland had no legal interest in the Beer lease.
Still less did she have a legal interest in the Uddin lease. Normally, relief
against forfeiture will not be granted to a person who has no legal interest in
the term created by the lease. In Tickner v Buzzacott [1965] Ch
426 the plaintiff had adverse possession against the lessee, who had died. It
was held that such possession did not entitle the plaintiff to relief against
forfeiture as the adverse possession gave her no legal interest in the term
created by the lease. When considering Tickner in his judgment in Ladup,
Warner J held that ‘interest’ was a word of ‘notoriously elastic meaning’, and
so did not help him in coming to a clear conclusion as to the law.
It is clear that Mrs Bland’s claim under section
146(4) of the Law of Property Act 1925 was bound to fail, as Judge Hull QC
held, because Mrs Bland was not an underlessee within the meaning of that
section of the 1925 Act. If it had been open to Mr Denman to rely upon section
146(4) of the 1925 Act, I would also have held that Ingrams having recovered
possession of the Beer lease by peaceful re-entry, Mrs
would not have been made in a case where ‘a lessor is proceeding by action or
otherwise to enforce a right of re-entry or forfeiture’.
It follows, therefore, that Mrs Bland can only
succeed if the inherent jurisdiction of the court is available where the
statutory jurisdiction is not. Clearly, there are circumstances in which the
inherent jurisdiction is so available, otherwise it would not have any useful
continuing existence, but I have come to the conclusion that, in general, an
equitable chargee does not have the right to relief against forfeiture when the
relief is sought in respect of the forfeiture of a lease that has itself been
forfeited by peaceful re-entry, and where the person who has the equitable
interest that would entitle him to relief does not seek relief. In the present
case, it was the Beers who had the equitable interest. In my judgment, an
equitable chargee in Mrs Bland’s position has, at most, a mere equity, an
equitable right, which falls short of an equitable interest in the land, and,
as such, has no right to relief against forfeiture: cf Westminster Bank Ltd
v Lee [1956] Ch 7.
I do not intend to hold that there is no situation
in which an equitable chargee can have a right to relief against forfeiture,
although I find it difficult to envisage how such a right could arise. It is
sufficient for the purpose of the present case for me to say that Mrs Bland
does not have such a right.
It seems to me that if an equitable chargee could
claim relief from forfeiture in respect of a chargor’s interest in land, it
would render it extremely difficult, if not impossible, for a landlord to
deduce good title to a new tenant. For a lengthy period (six months under
section 146(4) of the Law of Property Act 1925, and perhaps not much less under
the inherent jurisdiction) it would be open to a tenant, and any number of
possible equitable chargees, to seek relief against forfeiture. That way the
property market would be seriously damaged, as it would be necessary for a new
tenant wishing to take a lease to inquire into not just the landlord’s title
but also the title of the immediately previous tenant, and, possibly, even
further back.
However, in case I am wrong in my conclusion about
Mrs Bland’s right to claim relief against forfeiture of the Beer lease, I go on
to consider whether relief should be granted in the circumstances of this case
Mr Denman submits that, because, as I have found,
Mr Lynton told Mr Lewis of Mrs Bland’s charging orders during the telephone
conversation of 17 April 1996, Ingrams had actual notice of the charges and of
the fact that Mrs Bland was an equitable chargee. It was accepted by Mr
Fancourt that, if I found that Mr Lynton’s account of the telephone
conversation was correct, Ingrams did have such notice, but he submitted that
it made no difference, as the charges only operated, if at all, as a charge
over the beneficial interest of the proceeds of sale, and that, in any event,
the charges only affected purchasers from the Beers, and not purchasers from
Ingrams.
In relation to the Uddins, Mr Denman submitted
that the registration of the charges under the Land Charges Act 1972 was notice
of the charges to the whole world, and that therefore the Uddins could not
claim protection as bona fide purchasers for value without notice of a prior
equity.
As I have stated earlier in this judgment, the
charging orders were obtained under the Charging Orders Act 1979 and were
registered in the register of writs and orders affecting land. That register is
maintained pursuant to section 6 of the Land Charges Act 1972. By section 6(2)
of the 1972 Act it is provided that:
Every entry made pursuant to this section shall
be made in the name of the estate owner or other person whose land, if any, is
affected by the writ or order registered.
A charging order is void against a purchaser of
the land unless the order is for the time being registered under section 6: see
section 6(4). By section 2 of the 1979 Act, a charge may be imposed by a
charging order only on any interest held by the debtor beneficially in any
asset of a kind mentioned in subsection (2), which, in this case, is land,
namely the premises. As I have said, Mrs Bland’s charging orders were
registered individually against Franco Beer and Caroline Beer.
Mr Denman relies upon section 198(1) of the Law of
Property Act 1925 for the effect of registration. That section provides that
registration in a register kept under the 1972 Act is deemed to constitute
actual notice of the order and of the fact of registration to all persons and
for all purposes connected with the land affected as from the date of
registration. In my judgment, ‘the land affected’ means the Beers’ interest in
the land under the Beer lease. Thus, a purchaser of the Beer lease or an
interest in it would have actual notice. Conversely, the purchaser of a new
lease from Ingrams would not have any notice under section 198(1). A search
under the Beers’ name would demonstrate a charging order against the Beers’
interest in the premises. A purchaser from Ingrams would have no reason to
search against the Beers’ names. Accordingly, the registration against their
name would not give notice to a person carrying out a search against Ingrams’
name.
In Megarry & Wade, Law of Real Property,
5th ed (1984) at p180 the system of registration against names is described as
‘seriously defective from the point of view of the purchaser’. In his judgment
in Standard Property Investment plc v British Plastics Federation
(1987) 53 P&CR 25, Walton J analysed carefully the effect of the present
system of registration. I gratefully adopt his description of the system. It
seems to me that an equally stringent criticism as appears in Megarry &
Wade could be made in respect of a system of registration against names, if
registration against a person’s name could be held to be actual notice to the
world notwithstanding that there was no reason to search against that person’s
name. The facts of the present case illustrate the difficulty. The Uddins were
entering into an agreement with Ingrams. They had an interest to ensure that
Ingrams could deduce title or had good title. They had no interest in any
previous tenants. Their interest, therefore, required a search against Ingrams
(or, at least, an inquiry) but not against previous tenants. For the reasons already
given, conveyancing would become extraordinarily difficult, if not impossible,
if there were such an obligation.
In my judgment, therefore, section 198(1) of the
Law of Property Act 1925 does not have the effect for which Mr Denman contends.
It follows, therefore, that unless he can rely upon some other fact as bringing
Mrs Bland’s charging orders to their notice, the Uddins were bona fide
purchasers for value from Ingrams without notice of Mrs
charges over the Beers’ beneficial interests in the premises. Mr Denman cannot
point to any such fact.
For the sake of completeness, I should add that
Mr
Browne-Wilkinson V-C in Perry v Phoenix Assurance plc [1988] 1
WLR 940, submitted that the charging orders against the interests of Franco and
Caroline Beer individually were not registrable under the 1979 Act. He
submitted that the joint tenancy of the Beers was held in equity as undivided
shares in the proceeds of sale of land held on trust for sale, and that such a
share is not land so that the charging order in such a share did not affect
land.
In my judgment, that submission is correct, and
unless Mr Denman’s submission that the effect of the registration of Franco’s
interest and Caroline’s interest individually has the effect of turning that
which is not registrable into something that is, the registration of the
charging orders against the Beers is not sufficient to give Mrs Bland any
priority. I do not accept that there can be the type of ‘joinder’ that
Mr
rights as equitable chargee cannot bind purchasers of the Beer lease, and, a
cannot bind purchasers from Ingrams.
In case I am wrong in the conclusions to which I
have already come in this judgment, I go on to consider the application for
relief against forfeiture. I do so, as I must, on the assumption that, contrary
to the views already expressed, Mrs Bland can claim such relief. The relevant
facts appear earlier in this judgment.
After the initial flurry of correspondence in the
first few days of May 1996, there followed a substantial period where there was
a dispute about fixtures and fittings. That dispute resulted in the
commencement of the chattels action before, on 22 August 1996, Mrs Bland
started the forfeiture action that is before me. The Uddins had been in
possession of the premises since 29
the premises since September 1996.
Between May 1996 and August 1996 the Uddins made
preparations for trading from the premises. Those preparations were obviously
hampered by the injunctions in the chattels action, and it is clear that the
Uddins did, to some extent, alter their position before the forfeiture action
commenced. That is a factor that I must take into account in deciding whether
to exercise the court’s discretion to grant relief against forfeiture.
Another factor to take into account is that Mrs
Bland does not intend to trade from the premises if relief is granted. She
would immediately attempt to sell the lease. Thus, the effect of granting
relief would be to put the Uddins out of the premises so as to enable Mrs Bland
to sell them. Ingrams, having obtained the benefit of the covenant from the
Uddins against assignment, would have imposed on them tenants whom they did not
wish to have, Mr and Mrs Bland. Furthermore, there is no evidence that I can
accept that Mrs Bland would obtain any substantial value for the lease if she
were to be granted relief and then immediately sell it. Mrs Bland relies upon
the evidence of Mr Rex to support her submission that the lease would have
substantial value. I found Mr
and I was far from satisfied that his ‘gut feeling’ valuation, as he described
it, was a valuation upon which I could place any reliance. His more
‘scientific’ approach left me equally unconvinced.
In the result, I would not exercise the court’s
discretion to grant relief against forfeiture, even if I had come to the
conclusion that Mrs
I turn now to the only remaining issue, which is
whether the Uddins are entitled to damages on Mrs
cross-undertaking in the chattels action.
I should add that the Uddins put forward a counterclaim
against Ingrams for damages for misrepresentation. As I have held that relief
against forfeiture should not be granted to Mrs Bland, it is unnecessary for me
to make any findings on this claim, as it is common ground that, even if there
were misrepresentation by Ingrams, no loss was caused to the Uddins by the
existence of Mrs Bland’s charges.
Claim on the cross-undertaking
It was a term of the agreement between Mrs Bland
and the Beers that the Beers would purchase the trade fixtures and fittings that
were identified in the agreement. After the forfeiture of the Beer lease,
payment for those fixtures and fittings remained outstanding. The fixtures and
fittings remained on the premises. After the Beers moved into the premises,
they had installed further fixtures and fittings: these were said to have been
installed by Antonio and Camellia Gabriella Beer. All the fixtures and fittings
remained on the premises after the forfeiture of the Beer lease.
On 15 May 1996, just over two weeks after the
forfeiture of the Beer lease and the grant of the Uddin lease, the Beers
commenced proceedings for the return of all of the fixtures and fittings.
On 16 May 1996 an injunction was ordered against
Mr
paraphrase, removing the fixtures and fittings from the premises. The inter
partes hearing was fixed for 18 June 1996. On 12 June 1996 Mrs Bland’s
claim to the fixtures and fittings were notified, and, on 13
Uddin gave notice of his intention to apply for discharge of the injunction.
On 18 June 1996 the injunction was continued until
the trial of an issue that was ordered between Mrs
The order recites that the injunction was ‘renewed’ upon the application of
Mrs
Mr
On 27 June 1996 Mr Uddin again gave notice of his
intention to apply for the discharge of the injunction, but, on 2 July 1996, no
order was made on that application, save that Mr Uddin was ordered to pay the
costs of the Beers and of Mrs Bland. Also on 2 July 1996 Mrs Bland was
permitted to inspect the equipment and goods at the premises in order to
identify what was hers and to ascertain the condition.
Eventually, the goods were removed from the
premises and some were sold. Some of the goods are still stored at Mrs Bland’s
home.
Finally, on 25 March 1998, it was ordered that
unless Antonio Beer’s trustee in bankruptcy applied to set aside the order, Mrs
Bland was at liberty to enter judgment against the Beers in accordance with her
amended claim in the interpleader proceedings.
It is in these circumstances that the Uddins’
claim for damages on Mrs Bland’s cross-undertaking arises. A number of
submissions are made that the injunction should never have been made. As I have
recorded, however, applications were made to discharge the injunction but were
unsuccessful or were not proceeded with. I do not know why these applications
did not succeed or were not proceeded with, but no appeal was made by the
Uddins against any order on which they were unsuccessful. I do not think that
it would be right for me to act as an appellate court in respect of those
injunctions any more than I have thought it right to act as an appellate court
from the order of Judge Hull QC. In order to accede to these submissions, it
seems to me that I would have to decide whether the refusal to discharge the
injunction was right or not. I therefore, proceed on the basis that the
injunctions were rightly ordered. In those circumstances, it follows that the
claim for damages on the cross-undertaking fails.
However, in case I am wrong in my approach, I
should add that even if I had held that the claim on the cross-undertaking was
properly made, I would not be minded to order Mrs Bland to pay any damages. The
approach of the courts on hearing an application in respect of a cross‑undertaking
in damages is set out in the speech of Lord Diplock in F Hoffmann-La Roche
& Co AG v Secretary of State for Trade and Industry [1975] AC 295
at p361E. Lord Diplock there says:
if the undertaking is enforced the measure of the
damages payable under it is not discretionary. It is assessed on an inquiry
into damages at which principles to be applied are fixed and clear. The
assessment is made upon the same basis as that upon which damages for breach of
contract would be assessed if the undertaking had been a contract between the
plaintiff and the defendant that the plaintiff would not prevent the
defendant from doing that which he was restrained from doing by the terms of
the injunction: see Smith v Day (1882) 21 ChD 421, per
Brett LJ, at p427.
The issue of causation has proved of some
difficulty, but in Financiera Avenida SA v Shiblaq The Times,
21
damages on the cross-undertaking:
In my judgment, a party must be able to show that
he would not have suffered damage ‘but for’ the injunction, but, unless he can
also show any necessary links which caused the loss, as well as the type of
loss, was something which should fairly and reasonably be regarded as having
been in the contemplation of the parties or as something which was in the
actual contemplation of the parties, he will not be entitled to recover the
loss. Something which will happen in the great majority of cases should fairly
and reasonably be regarded as having been in the contemplation of the parties
as per Lord Reid.
I have already identified the type of damages that
the Uddins claim. It is less easy to apply the test stated by Saville J as to
whether such loss was something that should fairly and reasonably be regarded
as having been in the contemplation of the parties or as something that was in
the contemplation of the parties. It was not until 5
amended their claim to plead that the injunction prevented them from trading
from the premises, although they have previously pleaded an unspecified claim
for damages ‘By reason of the fixtures and fittings occupying his (sic)
restaurant premises’ and on an unspecified date, which must (from the title of
the action in the relevant pleading) have been served after 18 June 1996, when
the interpleader proceedings were ordered and Mrs Bland gave her undertaking in
damages.
Mr Uddin’s evidence that he was unable to trade
from the premises for the period between May and September 1996 is not
challenged. Despite that fact, however, I would have held that the loss and
damage claimed by the Uddins was not such as should fairly and reasonably be
regarded as having been in the contemplation of the parties; still less was it
something that was in the actual contemplation of the parties.
Conclusion
In my judgment, therefore, the claims for relief
against forfeiture and for damages on Mrs Bland’s cross-undertaking in damages
fail.
Claims dismissed.
