Royal Courts of Justice
Strand
London, WC2
Thursday, 19th June 2003
B E F O R E:
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The Applicant
appeared in person.
The Respondent did not appear and was unrepresented.
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1. This is an application by Mr Siddiqui for permission to appeal from the order of His Honour Judge Rich QC sitting in the Central London County Court dated 9th April 2003. By this order the judge dismissed Mr Siddiqui's claim for possession of the premises 296/298 High Street, Harlington and made consequential orders to implement an agreement which he found had been made for the purchase of Mr Siddiqui's leasehold interest in that property by Mr Yunus and the second respondent, Mrs Khurram. There are other orders sought on this application. They are an order for an extension of time and an order for a stay of execution. I have no difficulty with the application for an extension of time in the circumstances which have been explained in the bundle before me and grant that application.
2. It is now necessary to say a little about the background facts in issue in these proceedings. I have taken the facts from the judgment, but I should point out that the judgment is not an official transcript. It is, as I understand it, a note provided by Mr Siddiqui's solicitors at the trial. It is not clear to me whether it was prepared by them or not, but it is clear that it is not a complete document, and, therefore, there may be aspects of the judgment which are not fully set out and which are material to this application.
3. The property consisted of a flat and a shop used as a newsagent and for the sale of food. Mr Siddiqui was the assignee of the lease in about January 2000. On 8th January 2002 the respondents tendered a deposit of £5,000 for the property and made Mr Siddiqui sign a form of receipt that he had produced himself. This stated that £5,000 had been paid, "being advance/deposit payment for sale of goodwill and business known as Harlington News & Superstores together with the flat above". The agreed price was £29,000 plus the cost of the stock at valuation less a 5% discount. The judge noted that it was common ground between the parties that the receipt recorded a transaction for the assignment of the leasehold interest subject to contract. Nevertheless, the judge noted the document at least set out the outline of the proposed transaction between the parties.
4. On 16th January a document entitled "Proposal" was drawn up. This provided for the defendants to move into the flat in return for a rent from 25th January 2002. Indeed, the defendants were also to move into the shop. They would pay a rent of £800 per month and pay utility bills. The letter states:
Should through any account relating to ourselves Mr. K Yunis & Mrs Iffatt Khurram the proposed assignment of lease be unable to be carried through we will return all keys and the property known as 298 High St Harlington back to Mr./Mrs. Siddiqui.
...
On agreement by the landlords of 296/298 High Street Harlington that the reassignment of the lease can go ahead and the proposers references are satisfactory we will pay to Mr Siddiqui the sum of Pounds: NINETEEN THOUSAND & five hundred £19,500. Plus stock that will be counted prior to the handover.
The remaining amount of POUNDS FIVE THOUSAND £5,000 will be handed over on assignment of the lease.
This document is signed by Mr Yunus on behalf of the defendants and witnessed by Mr Sanger.
5. The defendants moved into the flat on 8th February and paid Mr Siddiqui the sum of £1,000. The judge also found that on 11th February 2002 Mr Siddiqui asked for further payment in accordance with the agreement. The judge also found that, some time thereafter, Mr Siddiqui asked for payment in advance of his wife leaving on holiday. He did not accept Mr Siddiqui's claims that this was simply a request for a further deposit. On 15th February 2002 the defendants paid Mr Siddiqui a further £18,000. A stock-take was also undertaken on 15th February and the defendants commenced trading in the shop the next day, 16th February 2002.
6. On 11th April 2002 an e-mail was sent to Mr Siddiqui by the landlord of the premises. That e-mail stated that the landlord had not received adequate references for the defendants and therefore could not accept the defendants as proposed assignees of the premises. Mr Siddiqui then sent a letter to the defendants on the same date. The letter stated that, after a great deal of consideration, he had decided not to go ahead with the reassignment of the lease. The next day, 12th April 2002, Mr Siddiqui issued a claim for possession of the premises. Mr Siddiqui argued that there was no binding agreement between the parties that complied with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The defendants accepted that there was no such formal contract, but contended that Mr Siddiqui was estopped from relying on such want of formality and/or held the leasehold interest upon constructive trust for the defendants and all restitution.
7. The judge held in Mr Siddiqui's favour that the contract did not comply with section 2 of the 1989 Act. He also rejected the possibility that Mr Siddiqui was subject to a constructive trust. However, he rejected the claim for possession on the grounds, first, that the defendants had not entered the property under a licence because the sums were too great to be referable to a mere licence, and, second because there was in his judgment proprietary estoppel. The judge applied the decision of this court in Yaxley v. Gotts [1999] 3 WLR 1217. The judge held that the defendants were entitled to refuse to complete if the landlord refused permission to assign. They had handed over money and began running the shop, thereby suffering detriment. This is therefore a case which turned on proprietary estoppel.
8. The requirements for proprietary estoppel were summarised thus by Mr Nugee, sitting as a Deputy Judge of the Chancery Division, in Re: Basham [1986] 1 WLR 1498:
Where one person, A, has acted to his detriment on the faith of a belief, which was known to and encouraged by another person, B, that he either has or was going to be given a right in or over B's property, B cannot insist on his strict legal rights if to do so would be inconsistent with A's belief.
That statement of principle was approved by the Court of Appeal in Gillett v. Holt [2002] 3 WLR 815.
9. The judge had to be satisfied that the defendants had acted to their detriment and had a belief which was known to and encouraged by Mr Siddiqui that they were going to get an interest in the lease.
10. The judge's analysis of the proprietary estoppel claim appears in paragraph 13 of the note of his judgment. He found that there was an agreement that the defendant would be entitled to an interest in the property, subject to being able to refuse it if the landlord's consent was not forthcoming, and that the defendant handed over money and began running the shop on the faith of that agreement. So one has to return to see what the factual basis was for the judge's conclusion that there was an agreement to that effect.
11. At paragraph 3 the judge refers to the agreement of 16th January. While the note I have is not verbatim, it appears to have been the judge's view that the opening words of that agreement:
Should through any account relating to ourselves, Mr. K. Yunis and Mrs Iffatt Khurram the proposed assignment of leave be unable to be carried through ...
meant that it was only in the case of default by the proposed purchaser that the provision was to be made for the return of the keys. I do not have an exact note of what the judge was saying at this point, but if the judge was saying that those opening words only covered a case where the defendants defaulted in, for example, paying the purchase price and that the agreement would not go ahead, then, as it seems to me, there is a reasonable argument that he applied too narrow a construction. The grounds for the assignment not being carried through was expressed in the agreement to be "through any account relating to" the defendants. On a literal reading these words might well cover a case where the reason why the assignment of the lease could not be completed was the lack of the landlord's consent.
12. The judge then goes on to deal with the payments of money from the defendants to the claimants and the entering into possession. He deals with this in paragraph 6. In particular, he says that he was satisfied that Mr Siddiqui asked for a payment in advance of his wife going on holiday, and he says that that was not a further deposit. He says that such an assertion makes no sense in the context and would be inconsistent with the fact that on 15th February a stock-take was taken and on 16th February the defendant moved into possession and began trading. Further, by 16th February the defendants had paid a further £18,000. So those are crucial acts of subsequent conduct for the purposes of the proprietary estoppel claim: namely, the request for further payments otherwise than for a deposit, the entry into possession and the taking of the stock-take and, in particular, the further payment of £18,000 on 15th February. Mrs Siddiqui tells me that in fact the £18,000 was paid as a gesture of good faith, rather than as a payment under the agreement. I obviously do not know what evidence was given at the trial about that matter, but I do have before me Mr Yunus's witness statement, and looking at paragraphs 6 and 13 of that statement it would appear that Mr Yunus thought that the assignment was going to go ahead but that he would simply have to put up a certain number of months' rent deposit.
13. The position, as it seems to me, is this. The judge has referred to certain payments being made and actions taking place. He concludes that there must have been an agreement that the defendant could have the lease, even if the landlord's approval was not forthcoming, but he does not explain how he has inferred that agreement from the facts found as appearing in this note. The fact that Mr Yunus thought that there would be an assignment and that he would have to put up a rent deposit may suggest that he did not believe that he was going to be able to take the lease, unless the landlord gave his consent. He does not state at any point in his statement that that was the agreement: so the judge inferred it from the payments and actions to which I have referred above but without stating how.
14. In all the circumstances, it seems to me that there is a real prospect of success on what I can see at this stage of showing an appeal that the judge's conclusion on proprietary estoppel was one to which he was not entitled to come. Obviously I do not have access to all the evidence that was given to the judge, nor do I have access to a full note of the judge's judgment. I will direct that there be a transcript of the judge's judgment at public expense to be given to Mr Siddiqui; but I will also order that if the respondents consider that this is one of those rare cases on which they should apply to discharge the permission which I have given, then their time for doing so should only run from the time when a copy of the transcript is served on them.
15. That leaves me to go through the other grounds of appeal.
16. The grounds of appeal which are involved in the proprietary estoppel point are, as I see it, ground one, ground two, ground four.
17. I do not give permission in relation to ground three because that is dealing with promissory estoppel, and, while the words "proprietary" and "promissory" are mixed up in the judge's judgment, it seems to me that he is only dealing with proprietary estoppel. In relation to ground five, it is said that the judge did not give effect to section 2 of the 1989 Act. It is established by a decision of this court that the judge was entitled to proceed on the basis of proprietary estoppel, notwithstanding section 2, if the facts warranted it. In my judgment, this is not a good ground for appeal and I do not give permission in relation to ground five.
18. In relation to ground six, Mr Siddiqui complains that he has not been treated fairly. I do not give permission in relation to this. I have not investigated the matter with Mrs Siddiqui, who has made submissions on her husband's behalf this morning, because, as I am giving permission on the proprietary estoppel point, Mr Siddiqui will have an opportunity to make submissions on proprietary estoppel -- which is the only point which was held against him -- in this court.
19. So far as ground seven is concerned, this refers to evidence which it is desired to adduce from the landlord. As regards this, I do not have the evidence in question. Moreover, if there is to be an application to adduce fresh evidence, it would have to be by way of separate application. I have told Mrs Siddiqui that the court has rules on this matter and it is only rarely that the court admits fresh evidence. If that part of the application is to be pursued, it must be done separately.
20. In the circumstances I propose to give permission on the basis that I have mentioned.
21. I would wish to refer to one further point that the judge refers to, at least so far as the note that I have got suggests, namely that Mr Siddiqui had spent the money which the defendants had paid him. That was quite a considerable sum of money, some £24,000 or £26,000. What Mrs Siddiqui tells me is that she and her husband have had to pay the rent, which is £12,000 per year, in order that the lease should not be forfeited, and that the defendants have been in occupation for some 18 months. If the sums paid were not the purchase price the claimants would obviously seek a payment of mesne profits or rent for the period in which the defendants had been in occupation, there would also be the question of paying for the stock, in any event, which they have since sold.
22. I would also add that Mr Siddiqui's evidence was that when the sum of £18,000 was paid it was paid into a bank account on deposit and that when he gave notice to quit he offered to repay everything. In those circumstances it seems to me that I need not be concerned at this stage that the money which was paid by the defendants was, as the judge found, actually applied for other purposes.
23. That brings me to one further matter, and that is that the position on the ground is extremely unsatisfactory. The judge made his order in April 2003. If the judge's order had been carried through, the lease would have been transferred to the defendants and the matter would have been closed. But, of course, Mr Siddiqui would still be the person who was the leaseholder so far as the landlord was concerned. The position is that Mr Siddiqui is having to pay the rent, and obviously it is a considerable sum of money for a private individual. In those circumstances, it seems to me that this case ought to come on for hearing as soon as practical in the list. It should not be a long case, and it is obviously highly desirable from the point of view of resolving this issue that the matter should be heard as soon as possible. I have, of course, indicated that the position may appear different when a full transcript of the judgment is received, and I have made an order in relation to any application the defendants might be advised to make in that circumstance.
24. Finally, this a complex matter and, while I have been assisted by Mrs Siddiqui this morning (and she has done her very best to help me), the court is usually able to contact the Bar Free Representation Unit to see whether they can assist on these occasions, or take other steps which might lead to pro bono representation of the appellants. I would like the court to take those steps in this case if Mrs Siddiqui is agreeable.
Order: As above.