1. In this case Miss Yeeles claims against the first defendant (“Mr Benton”) damages for the breach by him of a contract which she says he made with her in early 2003 for the purchase, development and sale of a property located at
2. Mr Benton denies that the contract was made with Miss Yeeles: he contends that it was made with a building company called GT Building and Contractors Ltd (“GTBC”), for which her partner, Mr Clive Taylor, worked; that GTBC worked on another contract with him and was in breach of that contract causing loss, which he was entitled to withhold by way of set-off. He denies acting in breach either of contract or trust.
3. Mr Mayhew Lewis denies playing any part in procuring a breach of contract and, although
4. The background facts are important and I will set out those which were undisputed and those where I have reached conclusions and made findings.
The Facts:
5. In early 2003 Miss Yeeles and her partner Clive Taylor, a builder by trade, for some years had been friendly with a couple called Louise Allmond and her boyfriend Mr Benton. He was a musical promoter by occupation and at the material time was working for Mr Mayhew Lewis with a company called M2TP Limited.
6. Miss Yeeles was then some 28 years of age; she was a beauty therapist by occupation and worked part time in a local salon and one day per week as a teaching assistant supporting children in need of special care. Her income from both sources was in the region of £500 per month. She had no business training, no savings, and no expertise in building, construction or development. She says that when socialising with Louise Allmond and Mr Benton at weekends the discussion turned to property development and she entered into the venture with Mr Benton to purchase, develop and sell a property and share the profit, because she knew that he had previous experience of buying two properties on buy-to-let mortgages and believed that he would have access to mortgage funds from a suitable commercial lender.
7. The idea that this would be “easy pickings” is evident from the way in which the venture was put into effect. Miss Yeeles says that the venture was agreed orally between her and Mr Benton in about February 2003. None of it is in writing or evidenced by writing. Neither had specialist knowledge of property development and neither obtained specialist advice, apart from an oral estimate of costs from Mr Taylor. They had no capital and no expectation of funding other than what Mr Benton would be able to borrow from a bank or building society. Miss Yeeles did not have the expectation of being able to obtain a mortgage either in her own name or that of Mr Taylor. There were no costings or financial projections made by either of them. According to Miss Yeeles the parties agreed that Mr Benton would raise the finance for the purchase, arrange for the services of the solicitor and, after the works were complete, would arrange to market and sell the flats; Miss Yeeles was to undertake all the administrative steps required to obtain permission for the development from the local authority and service providers; Mr Taylor would carry out the works on an “at cost” basis and she would fund the development costs. They would share the profit that they assumed would be made after both flats had been sold. She says that after the sale of the top flat the agreement was varied: the agreement then was that, instead of selling the bottom flat and taking her share in cash, she would take her share of the venture by taking the bottom flat, after paying Mr Benton his share of the profit.
8. He agrees that an agreement was made and varied but denies that it was made with her. He contends that the joint venture was agreed between himself and Mr Taylor, whom he believed to be the sole proprietor of GTBC. The agreement was later varied in that Mr Taylor/GTBC was to receive the share to which he/it was entitled by having the lower flat put into the name of Miss Yeeles as his/its nominee.
9. GT Building and Contractors Limited: Mr Taylor had been a builder by trade, in a small way, for the previous 20 years or so. He had initially worked for himself but had worked for cash and not kept proper records, and had got himself into a mess with the Inland Revenue. He had however a sister, Anita Laban (“Mrs Laban”) who was an accountant and taught accountancy at
10. Performing the Venture: After the agreement, Miss Yeeles contacted and visited, occasionally accompanied by Mr Taylor, a number of estate agents to identify domestic properties which were ripe for development by conversion into flats; she identified the property at Seal Road; she and Mr Taylor inspected it so that they could assess its suitability for development and for Mr Taylor to provide an oral estimate of the costs of conversion and repair. Mr Benton also visited the property with them, and learned from Mr Taylor the estimated cost of conversion which at that time was put, on a “no-profit” basis, at between £25,000 and £30,000; it was decided that
11. On 5th March 2003 Mr Benton instructed Mr Michael Leach, a solicitor of the firm Copley Clarke & Bennett to act in the conveyancing in connection with the purchase of
12. The balance necessary to complete was a little over £42,500 and Miss Yeeles set about raising this. Mrs Laban advanced by way of loan the sum of £10,000 from her own personal funds; she took £7,500 from the current account of GTBC and obtained a commercial loan in the sum of £25,000 in the name of GTBC, secured by her personal guarantee. The aggregate sum of £42,500 was transferred by CHAPS payment from the account of GTBC to Copley Clarke & Bennett on 8th April 2003.
13. On 30th April 2003 contracts were exchanged for the purchase of the property by Miss Yeeles and Mr Benton jointly in the sum of £175,000. However, the Bank of Scotland was not prepared to allow the property to be transferred into both names where, as here, it was prepared to make a loan only to Mr Benton and accordingly the solicitor and Mr Benton arranged for the transfer to be taken by him alone. On 9th May 2003 the purchase was completed and title to the freehold was transferred to Mr Benton alone, though at this stage Miss Yeeles was not made aware of the fact.
The Planning and Development:
14. On 17th March 2003 Miss Yeeles made application to the local planning authorities in her name to secure the necessary planning consent for the conversion which eventually was obtained. During the course of the work it was she who made application to the appropriate utilities for services to be connected and to the council for each property to be registered for council tax. All fees chargeable by these authorities came out of the bank account of GTBC.
15. The work of conversion was executed by GTBC and Miss Yeeles alleges that the value of the works performed and other payments made by January 2004 was £35,629.59. In fact, the work was done and payments made mainly at the cost of GTBC, though Mr Benton, I find, paid the sum of £12,500 towards the cost. No payment was made by Miss Yeeles.
16. The work on both flats was completed at about the same time, but because the top flat did not achieve a quick sale it was decided that the bottom flat would be let out on a shorthold tenancy in order to generate an income. The Tenancy Agreement was faxed to Miss Yeeles and, I find, it was then that she discovered that the property had been put into Mr Benton’s name alone; she was not pleased but not unduly worried either as she still trusted him.
17. The upper flat found a buyer in late January 2004 at a price subject to contract of £146,000: contracts were exchanged, and the sale completed, on 14th May 2004; the net proceeds of sale were applied in the discharge of Mr Benton’s mortgage with the Bank of Scotland. There was a small balance of about £1,482 which was retained by Mr Benton .
18. It is common ground that between January and April 2004 there was a variation of the original agreement, as already mentioned in paragraphs 7 and 8 above, that is to say, it was agreed that the bottom flat should put into the name of Miss Yeeles, in partial payment of her (or, according to Mr Benton, GTBC’s) share of the equity in the property and share of profit and that an account should be drawn between the parties to equalise, with a payment of cash to Mr Benton, their respective entitlements under the venture. This agreement was also made orally and is not evidenced in writing.
19. It was at this stage that the parties fell out – as a result very largely of differences arising under a separate agreement reached between GTBC and Strand represented by Mr Benton, in connection with the purchase and development of Broadview House at Hadlow.
Broadview House in Hadlow:
20. The complication in the history of
21. Broadview was purchased in late August 2003 and GTBC commenced work shortly afterwards. Substantial payments in cash were made to GTBC, in the region of £5,000 per week, without any valuations being required or quality control. By the end of the year the works were beginning to run into trouble and there were disputes between
22. Strand took the view that it had overpaid GTBC the sum of £28,586 and that the value of remedial works was a further £41,000, making a total liability of GTBC to
23. In the result, on 14th February 2004 Mr Mayhew Lewis gave GTBC instructions to leave site immediately and new building contractors were to be appointed. Surveyors were appointed by
24. On 25th March 2004 a report was made by a quantity surveyor on behelf of GTBC that, on the contrary, on his assessment, the amount by which GTBC was underpaid was £1,000. It did not however report on the value of any defective work. Correspondence between
The Venture – Events in May 2004:
25. It was planned that the sale of the top flat at
26. At Mr Benton’s request on 6th May 2004 Miss Yeeles sent to Mr Benton an account setting out a breakdown of the expenditure on the flat. The breakdown she supplied showed that Miss Yeeles/GTBC had incurred total expenses of £78,879, made up of finance costs of £49,597, building and development costs of £35,629 and outstanding expenses of £1,651 against which credit needed to be given of £8,000 received from Mr Benton.
27. What Mr Benton says, and I accept, is that in the first week of May he spoke to Mr Taylor and told him that if he did not return to the negotiating table and repay the money which Strand says had been overpaid in relation to Broadview House, they would simply withhold transferring to them the ground floor flat at Seal Road, deduct what they believed they were due and pay over to him only the balance.
28. On the 7th May 2004 there is a record that Mr Benton made contact with a solicitor at David Wineman, solicitors, who recorded that he was going to transfer instructions to Winemans, after completion on the top flat had taken place. This in my judgment is a significant event. Winemans were the personal solicitors of Mr Mayhew Lewis and it is significant that it was to them that Mr Benton went. Mr Brahams of Winemans agreed to commence acting and on 11th May 2004 Mr Benton wrote to Mr Leach on
29. It is accepted on the part of both Miss Yeeles and Mr Benton that there were discussions between them, some of them heated over the accuracy of the list of expenses produced by Miss Yeeles. It is also clear to me and I find that Miss Yeeles became anxious when she learned that the sum of £42,500 which had been provided by Anita Laban and GTBC was now at risk, as also was the value of the unpaid work done by Mr Taylor in the renovations, if Mr Benton fulfilled his threat to withhold the transfer of the flat.
30. She made contact with Mr Leach and on the 10th May 2004 he confirmed to her that her name was not on the title to the property. On 17th May he confirmed he had received the instruction to transfer the property to Strand and the deeds to other solicitors. And it was this that caused her to panic.
31. She was already at that time in touch with solicitors Redfearn Stigant, as she was taking steps with them to raise the finance necessary to fund the purchase of the bottom flat. She spoke to a person at that firm and got the idea that she should place a restriction on the title to the bottom flat at the Land Registry. Through the firm she lodged an application to register a restriction on the ground that she had contributed the sum of £42,500 to the purchase of
32. However, she also says that at some time after an argument on 9th May 2004, she reached agreement with Mr Benton that he would after all transfer the bottom flat to her, pursuant to the earlier agreement, in return for payment of his profit share. She says that the precise sum could not be calculated with accuracy at that time nor was she then able to pay it. She was however able to agree with him that the balance due to him would be approximately £12,000.
33. Miss Yeeles says that following this confirmation from Mr Benton she instructed solicitors, called Cooper Whiteman, explaining her predicament and saying that it was very urgent that she had a transfer for Mr Benton to sign as soon as possible as he was going away on holiday to China. The solicitors drafted an appropriate draft transfer [form TR1] for her and because of the urgency delivered it to her house. She says that Mr Benton agreed to sign it before he went on holiday and, learning that his travels the following day would take him fairly close to a building site in Chislehurst on which Mr Taylor was then working, they arranged that he should call at the building site and sign it there.
34. Miss Yeeles tells me that she gave the partly completed Form TR1 to Mr Taylor to take with him in his lorry to Chislehurst the following day. He told me that at some time during the day, while he was working on the roof, Mr Benton arrived; he was in a mad panic and so Mr Taylor threw down the keys to his van to his colleague Mr Kevin Gaywood so that he could get the TR1 from the van and get Mr Benton to sign it; and that was how the signature of Mr Benton was obtained on the Transfer Form; Mr Gaywood signed as a witness. Mr Gaywood was not called to give evidence before me and Mr Benton has told me that the signature is not his.
35. On the 26th May 2004, the day of Mr Benton’s return from
Your actions have caused our company to suffer loss and damages in terms of time, interest payments, the rectification of your defective and dangerous workmanship and general inconvenience. ….
Given the circumstances as outlined above it will come as no surprise that I have decided not to sell you the ground floor flat at 74 Seal Road, and to recoup our losses and cost of rectifying the roof, plastering, windows and other items pertaining to Broadview House from the £42,000 deposit we hold and return you the balance. I am sure you’ll now be interested in sitting down with Simon and myself to agree these deductions. I will then furnish you with a full and detailed statement; we look forward to hearing from you to arrange a time at your convenience to conclude this matter.
36. On his return from
37. The meeting with Mr Brahams took place on 27th May 2004 and it is evident that during the meeting Mr Benton explained the arrangements under which GTBC contributed the sum of £42,500 towards the original purchase of
38. Notwithstanding this important advice, on the 28th May 2004 Mr Mayhew Lewis telephoned the home of Mrs Laban (which was the registered office of GTBC) and spoke to Mr Laban: he told him of the allegedly defective work and told him that, in light of those problems, he felt that he was entitled to keep the £42,500 paid by Miss Yeeles in respect of Seal Road. This was the first in a number of telephone calls in which he expressed strong views as to
39. Notwithstanding that advice, Mr Benton and Mr Mayhew Lewis also attempted in June 2004 (perhaps successfully) to raise money from the Bank of Scotland in the name of
40. After this, the bottom flat successfully attracted a buyer who agreed in about December 2004 to purchase at the price of £97,000 subject to contract: contracts were exchanged and the transaction completed on 7th March 2005. The net proceeds of sale of £92,725.44 were paid in part to Mr Benton personally (£22,725.44) and to
41. As regards the attempts by Miss Yeeles to register the transfer: statements were obtained and lodged by her in support of the validity of the signature of Mr Benton on the TR1 and by Mr Benton to contrary effect. The issue was not, however, determined and the application to transfer lapsed because, for reasons unexplained, the Bank of Scotland did not manage to register the release of its charge in time to enable the adjudication to be completed within appropriate time limits.
The First Defendant’s [Simon Benton’s] Case:
42. By his original Defence, Mr Benton denied that he had made the alleged or any contract with Miss Yeeles: he said that “at all material times [Miss Yeeles] acted only as a nominee of [GTBC] and not as a contracting party in her own right” and he had made the contract pursuant to an oral agreement with Mr Taylor who was the “de facto” general manager of GTBC; that the sum of £42,500 was provided pursuant to a face to face agreement with Mr Taylor that the money would be provided by GTBC and “was to be a deposit in respect of the purchase [at an agreed price of £95,000] of a long lease of the ground floor flat at the property by Miss Yeeles acting as a nominee of GTBC”; that he paid the sum of £12,500 in cash to GTBC towards the works of building and conversion; that since he was owner of the property, he was entitled to retain the rent paid in respect of the ground floor flat, until the balance of the purchase price was paid to him; that he paid the sum of £12,500 for the performance of the development works performed by GTBC out of his own personal and business bank accounts. He says that he gave the instruction for the ground floor flat to be transferred to Strand because “shortly before the instruction, Mr Taylor communicated to [him] that GTBC would not be able to provide the required sum of £52,000 to complete the purchase of the ground floor flat by Miss Yeeles as its nominee” and that this communication constituted a repudiatory breach of contract by GTBC.
43. By an Amended Defence, for which permission to amend was given at the trial, Mr Benton admitted that the proceeds of sale of the bottom floor flat were retained but contended that this was not in breach of contract or trust: that is because the Seal Road project made a net loss of about £11,200 and there was therefore no trust or contract of any material value to breach; the sum of £69,586 from the net proceeds was transferred to Strand to compensate it for a combination of the costs of remedial works to Broadview (£41,000) and the difference in value between the payments made to GTBC and the value of the works done on that property (£28,586).
The Second and Third Defendants’ Cases:
44. Mr Mayhew Lewis and Strand accept that out of the proceeds of sale of the bottom flat, the sum of £69,972 was paid into
The Trial:
45. The trial of the action proceeded over a 3 day period and I heard oral evidence from Miss Yeeles who also called the following witnesses to give evidence on her behalf: Mr Clive Taylor (her partner), Mrs Anita Laban (Mr Taylor’s sister), Mr Laban and Mr Michael Leach, the solicitor who had acted on the conveyancing of the property. I heard also from Mr Benton (who conducted his case in person with the assistance of his step father, acting as his McKenzie Friend) and Mr Mayhew Lewis.
46. Generally I did not regard Miss Yeeles, Mr Taylor or Mrs Laban as witnesses on whom I could rely as witnesses of truth. There were a number of factual touchstones which led me to this conclusion. These included the following:
47. First, I have come to the very clear conclusion that the Transfer Form TF1 dated 24th May 2004 was forged either by or on the instruction of Miss Yeeles. As soon as Mr Benton learned of its existence, he immediately complained that what purported to be his signature was a forgery. Miss Yeeles and Mr Taylor both denied in cross examination the allegation that the signature had been forged. I have set out in paragraphs 33 and 34 above the account which each gave as to how the document came to be signed: I do not believe for one moment the story that each gave me. The factual scenario presented to me was one with no hallmarks of reality and every appearance of fantasy. I note that the story was corroborated at no point: that neither witness purported to have witnessed the application of the signature (as though this made the lie less culpable) and that the person who was supposed to have witnessed the signature did not attend to give evidence of it.
48. Apart from this, it simply made no sense in the chronology of events in the first three weeks in May that Mr Benton should have written the letters dated 11th and 14th May and yet have agreed to a transfer of the bottom flat to Miss Yeeles on the day before he departed for China on the 16th May 2004 for a 10 day holiday with Miss Allmond. Apart from which, the contemporary documentation does not support the argument that the TF1 was signed by Mr Benton. There is in the papers a Fax Cover Sheet dated 21st May 2004 containing a message from Miss Yeeles to Mr Leach in which she says “I am going to see Simon and his girlfriend Miss L Allmond when they get back and I am going to spill the beans to his girlfriend who is also one of my best friends in the hope she can make him see sense and sign the flat over to me as planned.” This of course suggests that on the 21st May the TF1 had not been signed, contrary to the sworn evidence that Mr Benton had signed it on site at Chislehurst on the 15th May and that the story that he had done so had not by then occurred to her. The Transfer itself bore a date applied by Miss Yeeles’ solicitors by date stamp of “24th May 2004”. Mr Benton was of course out of the country and unable to sign between 16th and 26th May 2004.
49. Secondly, there is in the papers a further document which I think was probably forged, that is to say a letter dated 25th May 2003. I was told by Miss Yeeles that she composed and typed the letter, which was addressed to GTBC and signed by herself and Mr Benton: he denies that its validity and alleges that what purports to be his signature was a forgery. The only surviving document is a copy: the original has not been found. In her statement Miss Yeeles said that she had sent the original round to Mr Benton and that he had faxed it back. The copy bearing what purports to be Mr Benton’s signature does not bear any sign that it had been transmitted by fax. It stated as follows:
“Dear G,T Building and Contractors,
We are in receipt of your estimate and payment plan dated 11th May 2003.
Firstly we would like to confirm that we would like your company to do the work, we agree with your estimated price to cover development and would like to discuss the possibility of upgrading a few things with the builder. We would appreciate your help to start this job as soon as possible.
We agree with your proposed advancement of £42,5000 to help with the deposit on the above property and will pay the monthly charges and interest incurred on a monthly basis, the balance payable on sale of upstairs flat.
Miss Yeeles will prepare the planning application and building work application and will forward this to yourselves,
Sincerely,
Signature Signature
Miss Yeeles Mr S Benton
50. I am of the view that this letter was probably written in May 2004 at the time when Miss Yeeles was concerned that Mr Benton was going to attempt to resile from the agreement to convey the property to her: she has provided what I judge to be an authentic (but undated) note of various discussions she had with various solicitors, and this shows clearly that they raised the question with her whether there was any documentary evidence supporting the agreement on which she was relying. I believe that she probably then set about creating it.
51. The letter sticks out like the proverbial sore thumb: it is written in language that I do not believe the signatories would ever have used. If it had been a genuine letter, it would not have been written in a tone of faux formality; nor contain the wording “we would like to discuss the possibility of upgrading a few things with the builder” when the builder was someone whom they both knew as Clive. Apart from which, I do not believe they would have bothered to put either the estimate or the matters in the letter into writing at all – there is no other contemporaneous document evidencing the existence of any part of the arrangement between the parties. Apart from which the reference to the £42,500 as GTBC’s “proposed advancement to help with the deposit” is quite inaccurate as the sum had already been sent to solicitors by CHAPS payment 6 weeks earlier on 8th April 2003.
52. Now both Miss Yeeles and Mr Taylor have given positive evidence of a course of events designed to persuade me that the TF 1 was genuinely signed by Mr Benton: I am satisfied that the evidence was untrue and deliberately so. That has had a material effect on my views as to their credibility.
53. As regards Anita Laban, I was struck by the unreality of some of her evidence. In particular, she told me that the first that she had learned of the proposed venture was when Miss Yeeles told her that she needed the sum of £42,500 to purchase the property; that she was angry that she had not been told before about the venture; that had she been told she would have lent the whole of the funds and obviated the need to deal with Mr Benton at all; and that she borrowed the money in the initial belief that it was being advanced for only a week or so.
54. I do not accept that evidence. I formed the view that the family was a close family; they were, and had to be, in regular contact for the GTBC corporate arrangement to operate with even a modest degree of efficiency. The departure of Miss Yeeles into speculative development would be a matter which would inevitably be a matter for discussion, or remark at the least. I do not accept that Mrs Laban did not know about the venture until the moment when she was asked to advance Miss Yeeles the loan to support it or that her immediate reaction to the request was to borrow and advance such large sums without question. The rationale for the venture was that the profit which they would receive from it would operate to “set them (i.e. Mr Taylor and Miss Yeeles) up as a couple”, as Mr Taylor confirmed to me, – which was itself a reason which I note Mrs Laban gave for advancing the funding of £42,500. As regards Mrs Laban’s contention that she believed that she would be advancing the funds for only a week’s lending, I find it incongruous, if that were so, that she did obtain the funding by way of a 5 year loan with fixed charges based on the money being repayable over 5 years. Nor have I seen any sign of the resources which would have enabled her to advance the whole of the funding required for venture.
55. The conclusion to which these observations lead me is that I am unable to rely on Mrs Laban in all respects as a witness of truth and I think it probable that all three members of the family discussed the evidence that they were proposing to give to me and were aware that it would present a misleading impression.
56. I accept the truth of the evidence given by Mr Laban and Mr Leach, though the evidence of neither is central to the issues for determination in the case.
57. Mr Benton has not been entirely truthful. His original pleaded case, i.e. that the sum of £42,500 was advanced merely by way of a deposit to secure the purchase on of the downstairs flat was untrue and deliberately misleading. I note it appeared first after the time he received legal advice from Mr Brahams on 27th May 2004 that the receipt of the money as a contribution to the original purchase was strongly suggestive of the creation of a trust in favour of Miss Yeeles.
58. Nor do I accept his suggestion that Mr Taylor had told him that he/GTBC was unable to raise the sum of £52,000 or so required to complete the purchase of the ground floor flat. This inability was supposed to be the justification for the decision to refuse to transfer the ground floor flat to GTBC/Miss Yeeles. I do not believe this conversation took place. It was in any event contrary to the documentary evidence which shows that Miss Yeeles was able successfully to receive an offer of finance from a Building Society in a larger amount. I believe that this story was concocted in order to provide a justification for denying the existence of a trust affecting the property and the allegations against him and Mr Mayhew Lewis.
59. Apart from these important qualifications on his integrity, I regard his account of events as more truthful than that of Miss Yeeles.
60. Nor do I entirely accept the evidence of Mr Mayhew Lewis. It is quite evident, from what I saw of them, that as between Mr Benton and Mr Mayhew Lewis, the latter is not merely a stronger character but the dominant character. The surrounding circumstances support this view. I note that initially it was Mr Benton who administered the Broadview project and, when Mr Mayhew Lewis first turned his interest to it, he showed a lack of tolerance to the way in which Mr Taylor had been allowed to work and caused him to be excluded from the site and chased him for recompense in a number of forcefully expressed letters, written in the main by him. I note also and accept the evidence of Mr and Mrs Laban as to the forceful attitude displayed in telephone calls from him.
61. I do not accept that, when Mr Benton initially told Mr Mayhew Lewis about the contribution made via Miss Yeeles of £42,500, he did other than explain that it was a contribution towards the original purchase, as he originally explained to Mr Brahams, rather than a deposit on the ground floor flat.
62. Apart from this, I note also Mr Mayhew Lewis deliberately chose to act in a manner contrary to the advice given by Mr Brahams on 27th May 2004.
Conclusion on the Central Issues:
63. It was central to the argument and evidence in this case that Mr Benton asserted that the venture was agreed with Mr Taylor and GTBC and not with Miss Yeeles and such part as she played was only as an agent or nominee of GTBC. Although I take the view that this is not decisive of liability, indeed not relevant to it, I obviously need to express my conclusion upon it.
64. I am quite clear that GTBC was regularly formed, was not a “sham” and was run in a proper manner. However, to the outside world Mr Taylor was ostensibly the proprietor and the ‘de facto’ General Manager, as Mr Benton pleads. The outside world would normally not ever come into contact with either Mrs Laban or Miss Yeeles and Mr Taylor would have a wide degree of discretion and flexibility in his organisation of the business affairs of the company. The notion, that Miss Yeeles and Mrs Laban would have me believe, that he was merely an employed builder/labourer is wide of the mark.
65. I accept the evidence of Mr Benton that the venture was agreed in discussions between himself and Mr Taylor and not between himself and Miss Yeeles. I think it probable that she was present during and participated in the discussions; it is probable that she had also agreed with Mr Taylor that she would be the one who carried out those administrative tasks which I have recorded in paragraph 9 above, as he was neither interested in nor good at performing such tasks. But that did not in my judgment turn her into a principal in the venture.
66. I am confirmed in this by the fact that she contributed not a penny piece to the venture nor did she perform any part of the building and conversion works. Such tasks as she performed were essentially ‘back office’ functions. When additional monies were required to complete the purchase of the property it was provided by GTBC: my attention has been drawn to the fact that the sum of £42,500 was recorded as expenditure by the company in its annual accounts lodged at Companies House. The work of building and conversion was carried out by Mr Taylor in the name of GTBC. All expenditure on materials and all incidental expenses were paid by cheques drawn on the GTBC account and, I assume, claimed as deductions against its profit and loss account. There is also in the files a document prepared by Miss Yeeles in May 2004 in which, on one side of paper, she apportions the respective costs and expenses of the venture into two columns, the one headed “Simon”, the other headed “Clive” – when one might have thought, on her case, the columns should have been headed “Jennifer” and “Clive”.
67. The consequence therefore is that in pursuance of the venture GTBC advanced the sum of £42,500 towards the purchase of the property at
68. The real problem for Mr Benton, however, is that it is incontrovertible that the Broadview venture was being carried out by him and Mr Mayhew Lewis entirely under the umbrella of
69. Because Mr Benton was improperly withholding from GTBC property held in trust for it, he was acting both in breach of trust and breach of contract. It has been suggested that he has no liability in the present proceedings because it had been pleaded that it was Miss Yeeles who was the contracting party, contrary to my finding that it was GTBC. I do not accept that argument. Although Miss Yeeles issued proceedings as a principal, it was accepted by Mr Benton in his original Defence (and not subsequently denied) that she was a nominee for GTBC. I have found that that allegation is correct. In my judgment the consequence is that she is entitled to succeed in the claim but will receive the benefit of this judgment as a nominee for GTBC and therefore will hold it in trust for GTBC.
The position of Mr Mayhew Lewis and
70. The position of
71. The money was in fact trust money. Because Mr Benton was one of the Executive Directors of Strand it is clear that it was fixed with the knowledge of the relevant facts which was possessed by him. It is in any event acknowledged that the funds received by
72. As regards Mr Mayhew Lewis: the case alleged against him is that the letter dated 26th May 2004 sent by Strand to GTBC constituted a repudiatory breach of contract and trust; that Mr Mayhew Lewis, by purporting on behalf of Strand to be entitled to a set-off, against the value of Mr Benton’s performance of the agreements with Miss Yeeles, and in advancing a set-off unconnected with that contract, had “knowingly procured, counselled and assisted in the breaches [sc. of the contract with Miss Yeeles] and that he was liable “for receiving and paying the £69,972.97 of the proceeds of sale into Strand”.
73. In his statement Mr Mayhew-Lewis states how in early 2003 he gained an understanding of Mr Benton’s involvement in the
74. However, by the time Mr Benton left on holiday for China, Mr Mayhew Lewis accepts that he had got to know (though he says he cannot recall how) that Mr Taylor had paid Mr Benton a deposit of £42,000 (sic) to purchase the bottom flat but had been unable to find the balance in order to complete; and that Mr Benton wanted the sale to continue because he was proposing to use the proceeds of sale of the flat as his contribution towards the funding of the Broadview project. As I have indicated above, I do not accept that a conversation in these terms took place; the notion that Mr Taylor had been unable to come up with the balance of the purchase price was a concocted story to avoid the allegation of breach of trust. It is my view that Mr Mayhew Lewis wanted Mr Benton’s money to be released from the Seal Lane project as soon as possible so that it could be applied to the Broadview House project and that the two of them should take the opportunity to make a recovery of Strand’s losses from Mr Taylor/GTBC; these were the reasons he suggested to Mr Benton that he make use of his own solicitor, Mr Brahams of the firm David Wineman to deal with the problem.
75. The basis of Mr Mayhew Lewis’ denial of complicity in the decision by Mr Benton to break his contract was founded on two propositions. The first is that Mr Benton made up his mind on his own. The second is that he did not know of any participation of Miss Yeeles. I do not accept these arguments.
76. First of all, I think it probable that Mr Mayhew Lewis did cause Mr Benton to decide to refuse to allow the transfer of the ground floor flat to Mr Taylor/GTBC/ Miss Yeeles. It is probable that he did this by persuading Mr Benton that he needed to take a tougher line with Mr Taylor: one way of doing this was to abandon Mr Leach and accept advice from Winemans. The decision to change to these solicitors had obviously been made just shortly before the memorandum evidencing contact with those solicitors on 7th May 2004: it was at the same time that Mr Benton orally threatened Mr Taylor that
77. In my judgment it is unrealistic to think that Mr Benton had not told Mr Mayhew Lewis the basic fact, that the “deposit” had been contributed for the original purchase of
78. In my judgment it matters not that the particular contract governing the venture happened to be with GTBC (as I have found) rather than Miss Yeeles (as was pleaded in the Particulars of Claim): I am satisfied that Mr Mayhew Lewis knew that there was a contract and caused Mr Benton to take the step of breaching it. The reason he did so was because of the strength of the case he believed
79. Finally, I note that, although the legal title in the lower flat was not vested in Strand, it was put up for mortgage in June and marketed and sold as though it was owned by
Quantum:
80. In the event that I find any liability against Mr Benton, the parties were at odds as to quantum. I have received contradictory submissions which I will deal with shortly.
81. First of all, I reject the submission that the finance costs of Mr Benton’s borrowing from the Bank of Scotland should be left out of account because it was a sole mortgage not joint as originally intended. There is no merit in this. I accept, however, that GTBC is entitled to recover the cost of its borrowing in relation to the deposit of £42,500 until 17 May 2005 (when the completion of the bottom flat took place).
82. As regards the amount paid by Mr Benton towards the works: the suggestion that £12,500 was handed over in cash by Mr Benton to Mr Taylor is supported by evidence in a Bank Statement confirming the withdrawal of the cash and I accept on credibility grounds, on a balance of probability, that the sum of £12,500 was indeed handed over, as Mr Benton suggested, rather than £8,000: so GTBC must give credit for this.
83. As regards the Building and Redevelopment Costs: the claim is for the sum of £35,629, but it is completely unparticularised and unsupported by documentation. Mr Benton takes the point that the figure now claimed is well above the oral estimate of £25,000 to 30,000 which had been given to him; he points out that the figure claimed is, in any event, contradicted by the written estimate supposedly attached to the “make believe” letter dated 25th May 2003 bearing his forged signature. On the one hand the typed estimate does not include certain costs and fees of securing planning and other services; on the other hand I am sceptical that the proposed charge for vat is bona fide for a transaction which Mr Taylor and GTBC were carrying out wholly in cash and without documentation. In my judgment a proper figure to allow for these costs is the sum of £30,000.
84. My assessment therefore of the contribution made by GTBC/Miss Yeeles and/or Mr Taylor to the costs of the purchase and development of the property is as follows:
i. Deposit: £42,500
ii. Borrowing Costs: £ 9,297
iii. Building etc costs: £30,000
iv. Less: payt by SB: (£12,500)
v. TOTAL: £69,297
85. As regards Mr Benton: he certainly received the balance of the net proceeds of sale of the top flat (£1,438) together with the net proceeds of sale of the bottom flat (92,725). However some of the deductions from the gross sale price are not deductible expenses of this venture: in this category are the costs of the abortive mortgage/transfer (£622) and the “costs re dispute with J Yeeles” (£1,068).
86. The proceeds which Mr Benton received out of the sale of the completed property are as follows:
i. Balance on sale of top flat: £ 1,438
ii. Net proceeds bottom flat: £94,415
iii. Net rent received from let: £ 2,343
iv. Sub-Total: £98,196
87. In my judgment he expended the following deductible expenses: they are additional to those which are already properly taken into account in the net proceeds of sale:
i. Cost of initial survey: 411
ii. Payment to GTBC: 12,500
iii. Balance of purchase price 4,558
iv. Bank Management Charge 1,000
v. Council Tax 460
vi. Carpet –
vii. Sub-Total: 19,925
88. That means that the profit arising from the transaction amounted to £8,974.
89. In my judgment, as at 17th May 2005, Miss Yeeles as a nominee of GTBC was entitled to recover its net outlay of £69,297 plus £4,487, being 50% of the profit arising from the venture. The total entitlement therefore amounted to £73,784. She is entitled to judgment in that amount against Mr Benton as damages for breach of contract and breach of trust and against Mr Mayhew Lewis jointly and severally as damages for inducing the breach of contract.