Breach of contract – Estoppel – Damages – Appellant challenging decision of High Court that he was in breach of agreement under which first respondent to acquire beneficial interest in villa to which appellant held legal title – Whether first respondent ceasing to be entitled to beneficial interest – Whether judge reaching conclusion on facts no reasonable judge could have reached – Appeal dismissed
In 2008, the appellant and the first respondent entered into a contract under which the appellant was to obtain ownership of a yacht, and the first respondent was to acquire the beneficial interest in a villa in Mallorca to which the appellant held the legal title. The yacht was registered in the name of the second respondent, a company owned and controlled by the first respondent. The respondents subsequently claimed damages for breach of the 2008 agreement.
It was common ground that the result of that agreement was that under English law, the first respondent became entitled to the beneficial interest in the villa despite the appellant’s retention of the legal title. The issue at trial was whether the first respondent had ceased to be entitled to that beneficial interest; or was estopped from denying that he had. The judge found against the appellant on both issues.
The appellant had argued, amongst other things, that an agreement had been reached by email in December 2010 that the first respondent should transfer his beneficial interest in the villa to a third party. The judge concluded that the email neither was, nor evidenced, a concluded agreement; but was just one of the proposals under discussion at the time.
The appellant appealed contending, amongst other things, that the 2010 email was a record of the contract. Moreover, the first respondent was estopped from disputing that the beneficial interest in the villa had passed to the appellant by his failure to protest.
Held: The appeal was dismissed.
(1) There was a heavy burden on an appellant seeking to challenge a trial judge’s finding of fact, especially where he had heard oral evidence. Appellate courts would not interfere with findings of fact by trial judges, unless compelled to do so. In making their decisions, trial judges would have regard to the whole of the evidence. The atmosphere of the courtroom could not be recreated by reference to documents (including transcripts of evidence). Thus, even if it were possible to duplicate the role of the trial judge, it could not in practice be done: Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] FSR 29 applied.
An appeal court was bound, unless there was compelling reason to the contrary, to assume that the trial judge had taken the whole of the evidence into his consideration. The weight which he gave to it was pre-eminently a matter for him. The mere fact that a judge did not mention a specific piece of evidence did not mean that he overlooked it. The validity of the findings of fact made by a trial judge was not aptly tested by considering whether the judgment presented a balanced account of the evidence.
(2) An appeal court could set aside a judgment on the basis that the judge failed to give the evidence a balanced consideration only if the judge’s conclusion was rationally insupportable. The question for an appeal court was not whether it would have made the finding that the judge did, but whether his conclusion was one that no reasonable judge could have reached: Volpi v Volpi [2022] EWCA Civ 464; [2022] PLSCS 65; [2022] 4 WLR 48 and Kynaston-Mainwaring v GVE London Ltd [2022] EWCA Civ 1339 applied.
In the present case, it followed from the judge’s factual findings that there had been no agreement or assurance. The email of December 2010 was no more than a proposal which was not progressed. There was no trust declared for value; no specifically enforceable contract; no arrangement or understanding capable of giving rise to a common intention constructive trust; and no sufficiently clear assurance to give rise to a proprietary estoppel. Thus, the third party did not acquire beneficial ownership of the villa, either outright or by way of security.
(3) In asserting an estoppel by convention arising out of non-contractual dealings, it was not enough that the common assumption upon which the estoppel was based was merely understood by the parties in the same way. It had to be expressly shared between them. The expression of the common assumption by the party alleged to be estopped had to be such that he might properly be said to have assumed some element of responsibility for it, by conveying to the other party an understanding that he expected the other party to rely upon it. The person alleging the estoppel had in fact to have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter. That reliance must have occurred in connection with some subsequent mutual dealing between the parties. Some detriment must thereby have been suffered by the person alleging the estoppel, or a benefit conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position: HMRC v Benchdollar Ltd [2010] 1 All ER 174 and Tinkler v HMRC [2022] AC 886 considered.
(4) In this case, the estoppel relied on was an estoppel by convention arising out of dealings between the parties. A failure to react or protest could give rise to an estoppel but only where that failure implied a manifestation of assent. The pleaded case relied on the first respondent’s failure to contest the existence of his debt to a third party; his failure to contest the existence of the third party’s beneficial interest in the villa and/or the appellant’s beneficial interest in it. The first respondent’s actions were consistent with his assertion of his interest in the property. If someone asserted their rights, they were not bound to continue to assert those rights every time they were infringed; still less where on the face of it the first respondent had been presented by the third party with what appeared to be a fait accompli.
Reliance was itself a question of fact. The judge’s conclusion that reliance had not been established on the facts was one that had been open to him. If reliance had not been established, the estoppel claim failed.
Hugh Sims KC and George McPherson (instructed by Blake Morgan LLP) appeared for the appellant; Richard Salter KC and Fraser Campbell (instructed by Burges Salmon LLP) appeared for the respondents.
Eileen O’Grady, barrister
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