Agricultural holdings — Agreement — Negotiations ‘subject to contract’ for 10-year term — Intended tenant allowed into occupation — Intended landlord dying before agreement completed — Whether tenancy granted — Whether proprietary estoppel — Whether section 2(5) of Law of Property (Miscellaneous Provisions) Act 1989 applied — Whether solicitor had authority to conclude agreement to grant tenancy — Whether summary judgment under CPR 24.2 at commencement of trial where no case management conference identified issues
In 1995 H advertised a farm to let for a period of
10 years. The appellant was interested, and by 11 October 1995 the appellant’s
solicitors had been sent a draft agreement. On 21 October H permitted the
appellant to go into occupation to take care of the flock of sheep. The
appellant wormed, dipped and marked the sheep, and the parties agreed their
fair valuation. By 2 November 1995, all matters had been agreed save for a
question relating to quota, and, on that date, the appellant’s solicitors sent
H’s solicitors the appellant’s part of the agreement duly signed. H then became
seriously ill. Following a telephone conversation between the appellant and H’s
solicitors on 17 November, the contents of which were partly in dispute, but
during which the solicitors requested the payment of certain moneys, the
appellant delivered a cheque to the respondent, H’s sister. The cheque was or
£15,236, made up of the agreed valuation for the sheep, a half-share of the
costs of valuation and six months’ rent in advance.
H died on 19 November. All the negotiations for
the tenancy were conducted through solicitors under the protection of the
‘subject to contract’ label. In 1997 the respondent, as administratrix of H’s
estate, served a notice to quit on the appellant to determine any tenancy he
might have of the farm; she later commenced possession proceedings. At the
hearing, the county court judge, who had read all the pleadings and witness
statements, concluded that there was no real defence to the claim and invited
counsel to address him upon that basis, as he was minded to give the respondent
summary judgment under CPR 24.2. After hearing argument, he gave the respondent
summary judgment for possession.
The appellant appealed, relying upon two points:
(1) an oral agreement amounting to a constructive trust was enforceable as
proprietary estoppel under section 2(5) of the Law of Property (Miscellaneous
Provisions) Act 1989 (see Yaxley v Gotts [1999] 2 EGLR 181, where
a constructive trust was said to be closely akin to, if not indistinguishable
from, proprietary estoppel); and (2) there was estoppel based upon H’s
solicitors’ invitation to the appellant to pay the £15,236.
dismissed. The circumstances of the case did not give rise to proprietary
estoppel in favour of the appellant, let alone a constructive trust for his
benefit; section 2(5) of the 1989 Act, as considered in Yaxley v Gotts
[1999] 2 EGLR 181, had no application. No estoppel arose out of the request for
payment in the telephone conversation of 17 November. A solicitor does not have
authority, without being given special authority, which H’s solicitors were
not, to conclude a contract binding upon H. In any event, any actual authority
that the solicitors might have had to act as H’s agent automatically determined
when H had a stroke and became mentally incapable of conducting his affairs.
The appellant was not entitled to contend, in the alternative, that the
instructions to the solicitors to complete the transaction came from the
respondent. The present case should have been the subject of more active case
management at an earlier stage to identify the issues; the summary dismissal of
a claim where the parties, their legal representatives and the witnesses arrive
prepared for a full (three-day) trial must not be allowed to happen in the
future.
This was an appeal by the appellant, Andrew John
Evans, from a decision of Judge Moseley QC, in Bridgend County Court, giving
summary judgment to the respondent, Gwladys James, in possession proceedings by
the respondent against the appellant.
David Phillips QC and Richard Griffiths
(instructed by G Huw Lewis, of Neath) appeared for the appellant; Martin Rodger
(instructed by David Prosser & Co, of Bridgend) represented the respondent.
Giving the first judgment, WRIGHT J said: This is an appeal by
the defendant in the action, Mr Andrew John Evans, against the summary judgment
of Judge Hywel Moseley QC, given on 5 July 1999 at Bridgend County Court,
whereby he entered judgment for the claimant, Mrs Gwladys James, on the ground
that the defendant had no real prospect of successfully defending the claim
against him. The learned judge made that determination on the first day of what
would otherwise have been a three-day witness trial, when there was before him
not only the pleadings but also all the relevant witness statements and
documentation relating to the dispute between the parties, and, accordingly, as
he indicated, he exercised the powers vested in him by CPR 24.2(a)(ii). There was,
apparently, no application on behalf of the claimant for summary judgment under
that rule — the parties had attended prepared to conduct a trial — but the
learned judge, having read the witness statements and the documents, had come
to the conclusion at the outset that there was no real defence to the claim,
and he called upon counsel to address him upon that basis. There is no question
but that he had jurisdiction to take that course, but the appellant contends
that, in arriving at the conclusion that he did, the learned judge misdirected
himself as to the law.
The subject matter of the action was a claim by
the claimant for possession of Fforchwen Farm, at Pontcymmer in Glamorgan, then
in the occupation of the defendant, Mr Evans. I gratefully adopt from the
learned judge’s judgment the following summary of the background facts:
The action concerns a farm which was owned during
his lifetime by Mr Thomas Hopkin. The essential facts are that Mr Hopkin
contemplated letting the farm for a period of ten years. Through a firm of
estate agents in Cowbridge he advertised the farm with a view to receiving
tenders. Mr Evans, who is a young farmer in his early twenties, tendered for
the tenancy and was viewed favourably by Mr Hopkin. Solicitors on each side
were then appointed and a contract of tenancy for the ten years was drafted.
The terms of that concluded draft were submitted to Mr Evans and he signed his
part of the contract. Unfortunately Mr Hopkin then had a stroke and never
signed his part of the contract, and he eventually died without regaining
consciousness. Attendance notes and witness statements in the Court file
describe how he was either unconscious in hospital or at least in a drowsy
state, unable to deal with his business affairs from the time he suffered the
stroke until his death. So no contract was ever concluded.
That background summary needs a little expansion
for the purposes of this judgment. The particulars of the farm issued by the
estate agents, in addition to the details of the buildings and land, included
the following stipulation:
Sheep Flock.
The settled sheep flock comprises 300 ewes and
lambs in flock ages. The successful tenant will be required to take over at
valuation the flock and appropriate quantity of ewe lambs. The valuation will
be undertaken by John David Watts and Morgan and the cost of the valuation will
be shared equally by the landlord and incoming tenant.
Mr Evans approached Mr Hopkin, and expressed an
interest in taking a farm business tenancy for the period and upon the terms
offered by those particulars. Matters proceeded smoothly, and by 11 October
1995 Mr Hopkin’s solicitors were able to write to Mr Evans’ solicitors with a
draft agreement. However, Mr Hopkin and Mr Evans were also in contact the one
with the other, and on 21 October 1995 Mr Hopkin permitted Mr Evans to go into
occupation of the farm and take over care of the flock. For his part, Mr Evans
arranged for the flock to be wormed, dipped and marked as his, and thereafter
looked after them as his own property. At some stage, a sum was agreed between
the parties as representing a fair valuation of the flock.
By 2 November 1995, all outstanding matters with
relation to the tenancy had been agreed, save for a question relating to quota,
so that, on that date, Mr Evans’ solicitors were able to send to Mr Hopkin’s
solicitors Mr Evans’ part of the agreement duly signed.
On 17 November 1995 Mr Simon Thomas, Mr Hopkin’s
solicitor, received a telephone call from his brother-in-law, Mr James (the
claimant’s husband), indicating that Mr Hopkin was extremely ill in hospital
and was, indeed, in a coma and effectively incapable of managing his affairs.
Mr Hopkin had apparently had a stroke some days earlier. In fact, Mr Thomas
already knew that Mr Hopkin was seriously ill, having been so informed by a
partner in the estate agent earlier that same day. At 5.40 that afternoon,
after the previous telephone calls, Mr Evans telephoned
Mr Thomas indicating that he wished to pay over all moneys then due in order to
finalise the tenancy agreement. According to Mr Thomas’ attendance note, his
response was that he had been trying to contact Mr Evans’ solicitors to request
that all moneys should be paid over, and that he would be holding these ‘until
such time as matters were a little clearer as to how the tenancy would
proceed’. He added that, as far as he was concerned, the family seemed to be
indicating that they wished the tenancy to proceed in the name of Mr Evans.
Mr Evans’ recollection of this telephone
conversation was, first, that it was initiated by
Mr Thomas and not by him, and, second, that what Mr Thomas actually said was
that it would be necessary for him to pay the cheque for rent urgently in order
to ‘secure the tenancy’ because of Mr Hopkin’s serious state of health. This is
about the only conflict of fact in the whole case.
Immediately after that conversation, Mr Evans
delivered by hand a cheque for £15,236, made up as to agreed valuation for the
sheep, the half-share of the costs of valuation and six months’ rent in
advance. He delivered it not to Mr Thomas but to Mrs James, Mr Hopkin’s sister.
It is accepted that she had no authority to accept this cheque on behalf of her
brother, but nevertheless gave it to his man of business, who paid it into her
brother’s bank account, and the cheque was cleared on 22 November. By that
time, sadly, Mr Hopkin had already died, on 19 November.
Thereafter, relationships between Mr Evans and Mr
Hopkin’s family soured. At one stage, negotiations were underway for the
outright purchase of the farm by Mr Evans, but these came to nothing, and,
eventually, by a notice to quit dated 3 November 1997, Mrs James, as
administratrix of the Hopkin estate, sought to terminate any tenancy that Mr
Evans might have of the farm (which, on her case, could be no more than a
tenancy at will). However, in order to allow for the possibility that Mr Evans
might have a periodic tenancy, the notice was framed as a 12-month notice
expiring at the end of the next complete tenancy year. That was the situation
when the parties came before Judge Moseley QC at Bridgend in July 1999.
Case as presented to the county court judge
It was plain on the evidence, and was indeed
common ground between the parties (and so found by the learned judge), that the
negotiations for the grant of a tenancy from the time of the invitation to
tender onwards were conducted through solicitors, and were all carried on under
the protection of the ‘subject to contract’ label. Accordingly, unless and
until the negotiations were concluded in the form contemplated by the parties,
that is to say, by exchange of contracts in identical terms signed by each
party, or, as seems to have been intended in the present case, by the signing
by both parties of a single tenancy agreement, there was no contract between
the parties. Further, it was accepted by Mr Richard Griffiths, on behalf of Mr
Evans, that, this being a tenancy agreement for more than three years, it was
governed by the provisions of section 2 of the Law of Property (Miscellaneous
Provisions) Act 1989, which provides, so far as is relevant to this case:
(1) 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.
…
(5)This section does not apply in relation to —
(a) a contract to grant such a lease as is
mentioned in section 54(2) of the Law of Property Act 1925 (short leases);
(b) a contract made in the course of a public
auction; or
(c) a contract regulated under the Financial
Services Act 1986;
and nothing in this section affects the creation
or operation of resulting, implied or constructive trusts.
…
(8) Section 40 of the Law of Property Act 1925
(which is superseded by this section) shall cease to have effect.
The express supersession of section 40 of the Law
of Property Act 1925 means that a contract for the disposition of an interest
in land that does not conform with this section is not even a contract that is
valid but unenforceable (as was the case under the old law); it is no contract
at all — it is void.
All this was common ground. So also was it common
ground that nothing effective to change that situation was achieved simply by
the delivery of a cheque for, inter alia, the first six months’ rent by
Mr Evans to Mrs James. As, by that time, Mr Hopkin was not fit to manage his
own affairs, and no one had been appointed to act on his behalf, such a
delivery did not even give rise to a tenancy at will.
Mr Griffiths pleaded, and argued before the
learned judge, that the claimant was estopped from claiming possession of the
farm on the basis of a proprietary estoppel that came into existence in his
favour as the result of the negotiations between himself and Mr Hopkin, which
had led to his taking over responsibility for the flock of sheep, the work that
he had expended upon them and the payment for the sheep, and the first
instalment of rent tendered by him on 17 November 1995. The learned judge
rejected that submission, pointing out that the well-known Privy Council
authority of A-G of Hong Kong v Humphreys Estate (Queen’s Gardens)
Ltd [1987] 1 AC 114 makes it plain that where negotiations for the sale of
an interest in land were being carried on ‘subject to contract’, so that it was
clear that the parties did not intend to be bound until the execution of the
documents necessary to give legal effect to the transaction, and unless it
could be shown that it was unfair or unjust or unconscionable for the vendor to
refuse to proceed, no estoppel operated to prevent him from exercising his
legal right to refuse to execute the documents and to withdraw from the
transaction. At p127G Lord Templeman, who delivered the judgment of the board,
observed, per curiam:
In the present case the government acted in the
hope that a voluntary agreement in principle expressly made ‘subject to
contract’ and therefore not binding would eventually be followed by the
achievement of legal relationships in the form of grants and transfers of
property. It is possible but unlikely that in circumstances at present
unforeseeable a party to negotiations set out in a document expressed to be
‘subject to contract’ would be able to satisfy the court that the parties had
subsequently agreed to convert the document into a contract or that some form
of estoppel had arisen to prevent both parties from refusing to proceed with
the transactions envisaged by the document. But in the present case the
government chose to begin and elected to continue on terms that either party
might suffer a change of mind and withdraw.
On the way the matter was then being put before
him, in my view, the learned judge was right so to hold. The whole negotiation
was being conducted ‘subject to contract’. The agreement for
Mr Evans to purchase the sheep was incorporated in the terms of the offer as a
requirement of any grant of a tenancy, and, accordingly, in my view, the sale
of the sheep was equally conditional. If the negotiations for the tenancy fell
through, then so also would the sale of the sheep — Mr Evans would have had to
surrender them and would have recovered any sums paid in respect of that
purchase. If I am wrong about that, then the agreement for the sale of the
sheep, and the acceptance by Mr Evans of responsibility for them, was an
agreement standing entirely independent of the grant of the tenancy, and
cannot, of itself, give rise to the estoppel pleaded for on his behalf. Nor can
the entry into possession and the payment of the first six months’ rent assist
Mr Evans on this aspect of the case. In Javad v Aqil [1991] 1 All
ER 243*, the Court of Appeal held that where a prospective tenant was allowed
to enter into possession, and thereafter paid periodic payments of rent while
negotiations proceeded on the terms of a lease to be granted to him, it was to
be inferred, in the absence of any other material factors, that the parties
intended to create a tenancy at will, rather than a periodic tenancy, pending
the outcome of the negotiations, since the parties could not be taken to have
intended that the periodic payments of rent would create a periodic tenancy
when they were not agreed as to the terms upon which the prospective tenant
would occupy.
* Editor’s note: Also reported at [1990] 2 EGLR
82; [1990] 04 EG 61
Accordingly, where the parties were unable to
agree the terms of the lease and the vendor gave notice to quit, at that stage
the prospective tenant only had a tenancy at will. It seems to me that the same
result must follow in the present case, given that no binding contract was ever
entered into.
Case presented to the Court of Appeal
Mr David Phillips QC, who appeared with Mr
Griffiths before this court on behalf of Mr Evans, challenges the learned
judge’s finding that Mr Evans had no real prospect of success in defending Mrs
James’ claim for possession. He raises two arguments before us that were not
placed before the learned county court judge; one because the authority upon
which it is based was not then available, the other because the point was not
taken below.
The first point is based upon the decision of the
Court of Appeal in Yaxley v Gotts [2000] Ch 162†. This court,
consisting of Beldam, Robert Walker and Clarke LJJ, delivered judgment on 24
June 1999, and the case was not reported in the Weekly Law Reports until 26
November 1999. The facts of the case can conveniently be taken from the
headnote:
The second defendant offered to give the
plaintiff, a builder, the ground floor of a house that he was proposing to
purchase, in return for which the plaintiff would convert the house into flats
and manage the property on his behalf. The parties were friends and the offer
was made and accepted orally. In the event it was the second defendant’s son,
the first defendant, who actually purchased the house. The plaintiff, believing
the second defendant to be the owner, performed his side of the bargain,
supplying labour, materials and management services. The plaintiff and
defendants subsequently fell out and the first defendant refused to grant the
plaintiff an interest in the property. The judge found there was an oral
agreement with the second defendant, and that it had been adopted by the first
defendant. He held that the plaintiff was entitled to ownership of the ground
floor by virtue of the doctrine of the proprietary estoppel and ordered the
first defendant to grant him a 99-year lease of the ground floor of the
property.
† Editor’s note: Also reported at [1999] 2 EGLR
181
The defendants raised on appeal (and for the first
time) the point that any oral agreement between the parties was void by virtue
of section 2 of the 1989 Act, and contended that the doctrine of proprietary
estoppel could not operate to give effect to such an agreement. This court held
that an oral agreement whereby the purchaser of a house promised to grant
another, in exchange for materials and services supplied, an interest in the
property, although void and unenforceable under section 2(1) of the Act of
1989, was still enforceable on the basis of a constructive trust under section
2(5) in circumstances where, previously, the doctrines of part performance or
proprietary estoppel might have been relied upon, and that although the judge
made no findings as to the existence of a constructive trust, the findings upon
which he held a proprietary estoppel to have arisen provided equally the basis
for the conclusion that the plaintiff was entitled to an interest in the
property under a constructive trust.
At p174F of the report, Robert Walker LJ, having
considered the five cases decided in the course of the previous three years in
which the Court of Appeal has made some reference to estoppel in connection
with section 2 of the Act of 1989, observed:
I have no hesitation in agreeing with what I take
to be the views of Peter Gibson LJ, Neill LJ and Morritt LJ, that the doctrine
of estoppel may operate to modify (and sometimes perhaps even counteract) the
effect of section 2 of the Act of 1989. The circumstances in which section 2
has to be complied with are so various, and the scope of the doctrine of the
estoppel is so flexible, that any general assertion of section 2 as a ‘no-go
area’ for estoppel would be unsustainable. Nevertheless the impact of the
public policy principle to which Sir John Balcombe drew attention in Godden
v Merthyr Tydfil Housing Association does call for serious
consideration. It is not concerned with illegality but with what Viscount
Radcliffe in Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC
993, 1016, called a principle of general social policy,
‘to ask whether the law that confronts the
estoppel can be seen to represent a social policy to which the court must give
effect in the interests of the public generally or some section of the public,
despite any rules of evidence as between themselves that the parties may have
created by their conduct or otherwise’
In this case that principle must of course be applied
consistently with the terms in which section 2 of the Act of 1989 has been
enacted, including the saving at the end of section 2(5).
Parliament’s requirement that any contract for
the disposition of an interest in land must be made in a particular documentary
form, and will otherwise be void, does not have such an obviously social aim as
statutory provisions relating to contracts by or with moneylenders, infants or
protected tenants. Nevertheless it can be seen as embodying Parliament’s
conclusion, in the general public interest, that the need for certainty as to
the formation of contracts of this type must in general outweigh the
disappointment of those who make informal bargains in ignorance of the
statutory requirement. If an estoppel would have the effect of enforcing a void
contract and subverting Parliament’s purpose it may have to yield to the
statutory law which confronts it, except in so far as the statutes saving for a
constructive trust provides a means of reconciliation of the apparent conflict.
At p180B, Robert Walker LJ continued:
To recapitulate briefly: the species of
constructive trust based on ‘common intention’ is established by what Lord
Bridge in LLoyds Bank Plc v Rosset [1991] 1 AC 107, 132, called
an ‘agreement, arrangement or understanding’ actually reached between the
parties, and relied on and acted on by the claimant. A constructive trust of
that sort is closely akin to, if not indistinguishable from, proprietary
estoppel. Equity enforces it because it would be unconscionable for the other
party to disregard the claimant’s rights. Section 2(5) expressly saves the
creation and operation of a constructive trust.
Beldam LJ and Clarke LJ delivered judgments
concurring with Robert Walker LJ in the result. However, it does seem to me
that they were prepared to accept that the strict provisions of section 2(1) of
the 1989 Act might be displaced on a somewhat wider basis than that adopted by
Robert Walker LJ. Both lords justices indicated that, in their views,
circumstances giving rise to a proprietary estoppel that might not at the same
time bring about the creation of a constructive trust could be sufficient to
have that effect, provided that they did not run contrary to the public policy
underlying the Act. However, as it seems to me, it is unnecessary to set out in
detail the relevant passages from those judgments, as, in my view, the
circumstances of the present case as set before the learned county court judge
do not, for the reasons I have already endeavoured to explain, even give rise
to a proprietary estoppel in favour of Mr Evans, let alone one that would also
create a constructive trust for his benefit. In Yaxley v Gotts,
there was, in truth, a joint venture between the plaintiff and the second
defendant, under which one party promised the other, in consideration of that
other providing part of the resources needed to refurbish and develop the
property, in the form of the work and services involved, free of charge, to
grant him a proprietary interest in the property. It would have been
unconscionable to allow the second defendant to renege on that promise. No such
consideration arises in the present case; the requirement to take over and care
for the flock was made known to Mr Evans before he ever entered into
negotiations for the tenancy; it is an ordinary incident of the granting of a
tenancy of a Welsh hill farm, and Mr Evans was always aware that the entire
negotiation was being carried on ‘subject to contract’.
Mr Phillips’ second submission relates to the
intervention in the history of Mr Hopkin’s solicitor, Simon Thomas, at the time
when Mr Hopkin himself became seriously ill and was in hospital in a coma.
Although the facts underlying the submission are set out in para 6 of the
amended defence and counterclaim, the point now relied upon by Mr Phillips was
not specifically identified as giving rise to any form of estoppel; from the
transcript of proceedings before Judge Moseley, it is plain that no such
submission was ever advanced to him; it does not appear in any explicit form in
the grounds of appeal and certainly does not feature in the appellant’s
skeleton argument. Accordingly, it appears to me that it is something of an
afterthought put forward with a view to bolstering the appellant’s case in the
event that the primary submissions relating to the appellant’s dealings with Mr
Hopkin are not sufficient to persuade this court that he has a real prospect of
success in maintaining his defence.
Mr Phillips’ submission, as I understood it, was
that by inviting Mr Evans to pay over the moneys then due on 17 November ‘to
secure the tenancy’, Mr Thomas, vested with ostensible authority as solicitor
to Mr Hopkin, effectively took the negotiations out of the context of the
previous ‘subject to contract’ relationship and effectively represented to Mr
Evans that, provided he paid the money for the sheep and the first six months’
rent, he would then be granted the tenancy without more ado. Mr Evans having
accepted that invitation and paid the money, Mr Phillips argues that Mr Hopkin,
and, through him, Mrs James, would be estopped from refusing to fulfil that
promise.
On behalf of the respondent to this appeal, Mr
Martin Rodger pointed out that there were at least two fatal flaws in this
argument. First of all, it would not be within the ordinary authority of a
solicitor, acting for a party to negotiations for the purchase of an interest
in land, to conclude a contract on behalf of his client unless and until he was
given special authority to do so: see D’Silva v Lister House
Development Ltd [1971] 1 Ch 17*. At p28F, Buckley J observed:
It is, I think, clearly established by authority
that negotiations subject to contract for the grant of a lease remain in a
state of negotiation until exchange of lease and counterpart. The authority for
that is Eccles v Bryant and Pollock [1948] Ch 93. Accordingly,
that letter is a bar to any claim by the plaintiff that there was a contract by
correspondence, for the correspondence must, I think, be taken as
correspondence in the course of negotiations which were conducted upon the
footing that everything would remain in a state of negotiation until exchange
of lease and counterpart. Moreover, it is also established by the same
authority and by cases that are referred to in the judgment in Eccles v Bryant
and Pollock, that letters written by solicitors acting as solicitors
relating to a proposed grant of a lease, or related to a proposed acquisition
of property by sale, are letters written by agents of the parties who have no
authority to conclude a contract; they are not written by agents within whose
ostensible authority there lies the function of making a contract. The letters
relied on here are letters between solicitors and in the absence of special
authority in my judgment, they cannot be relied upon as constituting a contract
by correspondence.
* Editor’s note: Also reported at (1970) 213 EG
373
Eccles v Bryant [1948] 1 Ch 93 is a Court of Appeal
authority that basically confirms the existence of the rule that, in an
agreement for the sale of real property ‘subject to contract’, the contract, in
the absence of express agreement to the contrary, is not complete until the
parties have exchanged contracts in accordance with ordinary conveyancing
practice; and until such exchange is effected either party can withdraw. The
plaintiff in that action had contended that a letter written by the purchaser’s
solicitor, effectively agreeing all the terms of the agreement, enclosing the
part of the contract signed by the purchaser and asking to receive in exchange
the counterpart signed by the vendor, effectively created a binding contract
between the parties. The court (Lord Greene MR and Cohen and Asquith LJJ) held
that that argument was fallacious, and at p106 Cohen LJ observed:
In my view, therefore, there was no offer and
nothing which could be accepted by the letter of June 18; but, if there was an
offer, what authority had the solicitor to make it? It seems to me to be plain
from the cases which were cited to us, including the case of Lockett v Norman-Wright
[1925] Ch 56 [at page] 62, that the solicitor would have no authority to make
any such bargain. In that case, Tomlin J, as he then was, said: ‘Solicitors are
not, in the absence of specific authority, agents of their client to conclude a
contract for them… ‘In the present case there was no evidence of any
authority being conferred on the solicitors to make such a bargain, and I think
that that fact is perhaps an additional reason why we should place the natural
construction on the letter of June 11 and not impute to the solicitors an
intention to make a bargain which they had in effect no authority to make.
Mr Rodger also pointed to an observation by Harman
J in Hollington Bros Ltd v Rhodes [1951] 2 TLR 691 at p694 to the
like effect.
Mr Rodger’s second riposte was that, in any event,
Mr Thomas’ actual authority to act as agent for Mr Hopkin automatically
determined when Mr Hopkin suffered his stroke and became mentally incapable of
conducting his own affairs. Mr Rodger cited in support of that proposition Bowstead
and Reynolds on Agency (16th ed) para 10-017, and Yonge v Toynbee
[1910] 1 KB 215. In that case, solicitors conducted a whole series of
interlocutory applications in the course of an action in ignorance of the act
that their client had been certified as being of unsound mind. In those
circumstances, when the action was ultimately aborted, they were held
personally liable for the opposing parties’ costs of the action on the basis of
their breach of an implied warranty of authority. In the present case, Mr
Thomas, on the clear contemporaneous documentary evidence, plainly knew that Mr
Hopkin was no longer fit to manage his own affairs, so that if he did make the
representations that Mr Evans suggests, and if, as a result, Mr Evans was moved
irrevocably to change his position to his detriment (as to which latter aspect,
for my part, I beg leave strongly to doubt), then any remedy that Mr Evans
might have would have to be directed against Mr Thomas for breach of warranty
of authority, and not against either Mr Hopkin or his administratrix.
As I have already indicated, Mr Phillips’
submissions in relation to the effect of Mr Thomas’ involvement in matters on
17 November was not foreshadowed in his skeleton argument, and undoubtedly took
Mr Rodger somewhat by surprise. Mr Rodger’s responses, formulated as they were
over the short adjournment, equally took Mr Phillips by surprise. After the
oral hearing in this appeal had been concluded, Mr Phillips submitted to us
further written submissions, and Mr Rodger did likewise in response to Mr
Phillips. We have considered those submissions without the necessity for a
further hearing.
Mr Phillips pointed out that the passage in Bowstead
and Reynolds on Agency relied upon by Mr Rodger did suggest that, even
though the agent’s actual authority was determined when the principal became
mentally incapable, the doctrine of apparent authority might apply to protect
third parties. The authority for that proposition is Freeman & Lockyer
v Buckhurst Park Properties (Managd)Ltd [1964] 2 QB 480. The essential ratio
of that case was that where the defendant company allowed one of its directors
to act as the managing director, and to give instructions to the plaintiff firm
to do work on behalf of the defendant company, the fact that that person had
never been formally appointed as managing director was of no consequence. Given
that the other directors knew of the facts, the company had effectively held
out that individual as having the powers of the managing director, and the fact
that he may have gone outside his actual authority did not affect the fact that
he had apparent (or, what is the same thing, ostensible) authority to do what
he did, and the company was bound.
This may well be so, but it does not seem to me
that that argument assists Mr Phillips in the circumstances of the present
case. Eccles v Bryant and D’Silva v Lister House
Development Ltd make it clear that it is not within the ordinary course of
a solicitor’s authority, when negotiating the sale or purchase of an interest
in land that has been conducted on a ‘subject to contract’ basis, to conclude a
contract on behalf of his client. There is no evidence in this case that Mr
Hopkin had ever given Mr Thomas special authority to conclude the contract on
his behalf. Nor is there any evidence that he had ever held Mr Thomas out to Mr
Evans as having that authority. Any actual authority that Mr Thomas may have
had was terminated by Mr Hopkin’s illness. There is no evidence that he ever
had the apparent authority contended for by Mr Phillips.
Faced with these two formidable objections, Mr
Phillips shifted his ground yet again. He suggested that the instructions came
not from Mr Hopkin, but from Mrs James herself, speaking through the agency of
her husband, who had had the telephone conversation with Mr Thomas earlier on
17 November, before the latter spoke to Mr Evans. The submission, based upon Mr
Thomas’ attendance note of that telephone conversation, is that Mrs James was
effectively giving instructions to Mr Thomas to represent to Mr Evans that, in
the event that her brother died and she became administratrix of the estate,
she would undertake to grant the 10-year tenancy for which Mr Evans had been
negotiating with Mr Hopkin as soon as she was in a position to do so on the
grant of letters of administration.
There are, as it seems to me, yet more formidable
objections to this line of argument. First of all, again there is no whisper of
any suggestion that this is the basis of the proprietary estoppel relied upon
by Mr Evans in the pleadings. Furthermore, there is no suggestion in Mrs James’
witness statement that she had ever given her husband authority to give such
instructions to Mr Thomas on her behalf, nor is there any suggestion in Mr
James’ witness statement that he had, or thought he had, any such authority.
Indeed, he does not mention the conversation that Mr Thomas records in his
attendance note at all. Finally, there is nothing in Mr Thomas’ witness
statement that would indicate that he appreciated that his authority to act on
behalf of Mr Hopkin had come to an end as a result of Mr Hopkin’s illness, and
still less is there any indication that he thought that he had received
instructions and was now acting on behalf of Mrs James, as the prospective
administratrix of the Hopkin estate, when he spoke to Mr Evans and requested
him to pay over the money that was then perceived to be due. Yet further, and
in any event, I do not lose sight of the fact that Mr Thomas’ own
contemporaneous attendance note indicates that the basis upon which the moneys
were to be paid over was to himself as the solicitor hitherto conducting the
negotiations on Mr Hopkin’s behalf, to hold ‘until such time as matters were a
little clearer’, and that language is wholly inconsistent with any suggestion
that the ‘subject to contract’ basis of those negotiations was now being
abandoned.
Mr Phillips, in his further written submissions,
submitted that these statements of case and witness statements sufficiently set
out the factual basis upon which this argument is based, and if and in so far
as they did not do so, he relied upon the observations of Lord Woolf MR in McPhilemy
v Times Newspapers Ltd [1999] 3 All ER 775 at p792 in support of a
proposition that, in the modern era of witness statements, extensive and fully
particularised pleadings are no longer as necessary as they used to be, so long
as they still identify the issues, the extent of the dispute between the
parties and the general nature of the case of the pleader. This is undoubtedly
correct, but it does not seem to me to obviate the necessity that there has to
be some sort of evidence to support the case that is being advanced. In the
present case, as I have already indicated in respect of Mr Thomas’ position
with regard to Mr Hopkin, if he was to be in a position to bind Mrs James to
grant a tenancy to Mr Evans, in the context of negotiations that, although now
being taken over by Mrs James, had hitherto always been conducted ‘subject to
contract’, then, by parity of reasoning, he would have to have had actual and
specific authority from Mrs James to bind her in that regard. For the reasons I
have already indicated in the preceding paragraph, there is no evidence of such
authority, and there never could be any apparent or ostensible authority for
him to do so.
In my judgment, therefore, both Mr Phillips’
submissions, as they have been developed before us, both in oral argument and
in later written submissions, if they had been put before the county court
judge would have met with the same fate as those arguments originally advanced
by Mr Griffiths. None of the propositions advanced by Mr Phillips, in my view,
presented Mr Evans with any reasonable chance of success in defending Mrs
James’ claim for possession. I confess to feeling considerable sympathy for Mr
Griffiths, in the early days of the new civil justice regime, upon arriving at
court expecting to conduct a three-day witness action to find himself presented
with the challenge thrown down by the learned judge. Indeed, Judge Moseley
recognised the difficulties that he was causing. None the less, having had the
benefit of full argument in this court, I have come to the clear conclusion
that the learned judge was, in the final analysis, correct in dismissing this
action under r 24(2)(a)(ii), and I would dismiss this appeal.
DAME
BUTLER-SLOSS P: I agree with the judgment of Wright
J, which I have had an opportunity of reading in draft.
There is only one matter upon which I wish to add
some comments, that is to say, the use of the powers provided to a judge under
CPR 24.2, which provides:
The court may give summary judgment against a
claimant or defendant on the whole of a claim or on a particular issue if —
(a) it considers that —
…
(ii) the defendant has no real prospect of
successfully defending the claim or issue; and
(b) there is no other reason why the case or
issue should be disposed of at trial.
In the present case, there was no application by
the claimant at the directions hearing for summary judgment. The case proceeded
on directions upon the basis of a three-day hearing before a circuit judge. Witnesses
were notified and attended on the first day of the trial. Counsel, as well as
solicitors, witnesses and parties, expected the trial to take its course. The
appeal to the Court of Appeal took a full day, and we reserved our judgments.
In the event, we agree with the decision of the judge to dismiss the claim,
but, in coming to that conclusion, we have travelled many miles further than
did the trial judge.
In line with the philosophy that underpins the CPR
— and, in particular, the overriding objective a judge has in dealing justly
with a claim, and the obligation to keep the trial in proportion and to allot
to it an appropriate share of the resources of the court — to dispose of it
summarily if one party has no reasonable prospect of success is entirely
appropriate.
This case, however, discloses a number of
unsatisfactory features, principally the failure of case management at the
interlocutory stage. The judge rightly referred in his judgment to the
importance of active management and r 1(4)(2)(c). That management should,
however, have been at a much earlier stage and before witnesses were called to
attend court. Steps should have been taken to avoid such an unsatisfactory
position by earlier identification of the issues and the strength of the defendant’s
case. A more rigorous identification of issues at an earlier stage ought to
have elicited the significance attributed by the defendant to the telephone
conversation with the deceased’s solicitor, and the question of the incapacity
of the deceased and the extent of the ostensible authority of the deceased’s
solicitor. This inquiry as to the issues should have been conducted before
Judge Gaskell at the directions hearing on 23 February 1999. I appreciate that
both counsel were taken by surprise at the hearing by Judge Moseley suggesting
that there was no reasonable defence to the claim. They had little time to
formulate their arguments, but the judge was not alerted by Mr Griffiths for
the defendant to the importance attached to the telephone conversation nor,
following from that, the impact of the deceased’s lack of mental capacity upon
any reliance placed upon that conversation.
I do not suggest that a case that ought to be
concluded in half a day should continue in order to call witnesses, but the situation
that arose before Judge Moseley, whereby witnesses are waiting to be called and
the case is summarily dismissed, must not be allowed to happen again. There is
now a greater burden upon the bar, solicitors, and judges and district judges
to exercise proper case management. Apart from anything else, it is a
disproportionate use of appellate time for this court to have to spend a day to
review a county court decision to dispose summarily of a relatively small
claim.
I agree that this appeal should be dismissed.
THORPE LJ: For the reasons given by my lord, I agree that this appeal should
be dismissed.
Appeal dismissed.
