Brake and another v Chedington Court Estate Ltd

Land – Licensee – Unlawful eviction – Appellants claiming unlawful eviction from cottage by respondent, as licensee of trustee in bankruptcy of partnership – High Court holding that respondent, as licensee of sole beneficial owner, had better right to possession than appellants, as bare legal owners – Appellants appealing – Whether respondent having common law right to dispossess appellants without court order – Appeal allowed In September 2004, the first appellant bought West Axnoller Farm, Dorset, which included a substantial dwelling house. Adjoining the farm, on the other side of the drive, was West Axnoller Cottage. In 2010, the cottage was acquired by a partnership formed by the first and second appellants and their son and registered in their names. The partnership was in the business of holiday lettings and events such as weddings. Under the partnership agreement, the partners were entitled to reside rent-free in the cottage as licensees. The partnership was dissolved in 2013 and subsequently went into liquidation. In 2015, the appellants were made bankrupt. In 2017, the respondent acquired the property surrounding the cottage and the wedding and events business and the appellants worked for the respondent until November 2018 and used the cottage periodically. In January 2019, the respondent acquired from the partnership liquidators and the appellants’ trustee in bankruptcy such legal and equitable interests in the cottage as vested in them, subject to a condition precedent that the trustee would obtain a court order for the transfer of the appellants’ legal title to the cottage. The trustee also granted the respondent a licence to occupy the cottage. The respondent then took possession of the cottage. The appellants subsequently brought a claim for possession and damages for trespass against the respondent. Issues arose whether the appellants were entitled to relief on the ground that they were unlawfully evicted from the cottage, and whether they were now entitled to recover possession of it. The High Court decided both questions against the appellants: [2022] EWHC 366 (Ch). The appellants appealed. Held: The appeal was allowed. (1) It was common ground that, for the purpose of determining who had the better right to possession, what mattered was the parties’ respective rights on the day when the appellants were dispossessed. A person who was in possession of land, but was subsequently dispossessed, was entitled to reclaim possession against any person other than one with a better title to possession than his own. Thus, at common law, in an action for ejectment, what mattered was who, as between the parties, had the better title to the land: Ocean Estates Ltd v Pinder [1969] AC 19 considered. There was no cause of action at common law for wrongful eviction as such. Nor did section 3 of the Protection from Eviction Act 1977 create one. In many cases, where the parties had been in a contractual relationship, the claim would be based on a breach of the express or implied covenant for quiet enjoyment. In other cases, where there had been no such relationship it would be based in trespass: Smith v Khan [2018] EWCA Civ 1137; [2018] PLSCS 94; [2019] 1 P & CR 4 considered. (2) The appellants were two out of the three registered proprietors of the cottage, but they had no beneficial interest in it. In so far as the partnership had a beneficial interest, the liquidators had agreed to sell it to a third party. In so far as the appellants had a personal beneficial interest in the cottage (either through their shares in the partnership or by way of proprietary estoppel) it passed to the trustee in bankruptcy. They were, therefore, bare trustees. The appellants also relied on their actual possession of the cottage. From the perspective of the common law, it did not matter what equitable interests there might be in the land. The common law simply did not recognise their existence. If the trustee in bankruptcy had sought the intervention of the court in the exercise of its jurisdiction to administer equity, the position would probably have been different. But he did not ask the court to intervene; nor did the respondent advance any counterclaim in the action relying on the principles of equity. (3) It was clear that the respondent was authorised by the trustee in bankruptcy to take possession. The respondent’s factual possession was the trustee’s vicarious possession. The question was whether the trustee in bankruptcy had the right at common law to dispossess the appellants through the agency of the respondent without the intervention of the court. A bare trustee was a trustee who was a mere repository of the trust property with no active duties to perform, and with no responsibilities in relation to trust property other than to preserve the property for the beneficiary (and the transferor of the assets). On the facts of this case, it was impossible to say the appellants were “mere nominees” for the trustee in bankruptcy, even though he was entitled to the whole beneficial interest. He did not instal the appellants as trustees (or nominate them): he merely acquired the beneficial interest partly by operation of law and partly by contract from the liquidator. (4) A lease from the beneficiary of a trust could not be set up against the trustee in any case without the aid of a court of equity. Since the Judicature Acts, the court could be any court administering the rules of equity. In those circumstances, by taking matters into their own hands, without submitting the competing claims to the adjudication of the court, the trustee in bankruptcy and the respondent were not entitled to rely on any principles of equity to undermine the appellants’ common law claim. While the trustee’s rights against the appellants would have been recognised by a court of equity, the respondent had not been entitled to rely on those rights to undermine the appellants’ common law claim without the intervention of the court. The judge’s error was to treat the state of affairs as at 18 January 2019 as if those claims had been before the court, when they were not: Billson v Residential Apartments Ltd [1992] 1 EGLR 43 considered. (5) The appeal would be allowed to the extent of declaring that the exclusion of the appellants from the cottage was unlawful at common law and that the respondent had no right or title at common law to justify any interference with the appellants’ exclusive possession of the cottage without a court order. Alexander Learmonth KC and Jon Colclough (instructed by Direct Access) appeared for the appellant; Andrew Sutcliffe KC and William Day (instructed by Stewarts Law LLP) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of Brake and another v Chedington Court Estate Ltd