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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ranson v Ranson  EWCA Civ 1929 (13 December 2001)
Cite as:  1 FCR 261,  EWCA Civ 1929
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE - FAMILY DIVISION
( MR JUSTICE SINGER)
London, WC2A 2LL
Thursday, 13 December 2001
B e f o r e :
LORD JUSTICE ROBERT WALKER
SIR MARTIN NOURSE
| CHRISTOPHER PHILIP RANSON
|PENELOPE ANN RANSON
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
(instructed by Messrs Mills & Reeve of Norwich NR2 4TJ) appeared for the appellant
BARRY SINGLETON QC, LEWIS MARKS and JONATHAN SEITLER
(instructed by Messrs Manches & Co of London WC2B 4RP) appeared for the respondent
Crown Copyright ©
i) Was the judge entitled to reach his conclusions as to liquidity and value of Site 'B' on the evidence and submissions?
ii) Were the orders ultimately made on 30 July sufficiently consistent with and justified by those conclusions?
"I hope that the foregoing is not too brief nor simplistic an account of the background to the valuation problems in relation to Site 'B' with which in the context of W's application I must now grapple. I emphasise that as well as giving rise to problems of valuation they may give rise to liquidity problems, whether in terms of the saleability or the mortgageability of Site 'B'."
"It seems to me that the fact that two advocates of their degree of sophistication and experience can disagree as sharply as they did about the effect of these covenants and obligations is far more significant than any opinion I might express upon the detail of their submissions. But both in effect agreed that in the result H remains bound by the covenant not to dispose of any section of the land without first offering to sell it to LA at 1882 prices, and at risk (subject perhaps to some discretionary relieving power in the court) that in the event of a breach of covenant he might be required to sell the land back to LA at such a price.
Both also agreed that, through oversight, the transfers from O to H in 1993 had constituted a breach of O's covenant in that O did not have TP's consent to dispose of the land to H (rather than to C Ltd), and had not first offered to resell to TP. Both counsel also agreed that notwithstanding those breaches on the part of O, both the transfer and the grant of the lease were valid and created title in H, and that LA has no remedy directly against him while he retains ownership. LA's remedy would be, or would have been, to sue O for damages for breach of contract. The measure of those damages would presumably be the difference between the 1882 price for the land and its 1993 developed value."
"In the light of the submissions which I have heard, and the evidence of this abortive transaction, I do not believe I need to embark upon analysis of the difference of view as to law and as to effect which emerged between Mr Barnes and Mr Lewison. But I do find myself in broad sympathy with the latter's view that a purchaser would not regard the fact that the risk of effective expropriation was 'technical and unmeritorious' (in the words of Mr Barnes) as a hugely comforting safeguard against a publicly-accountable body in a position to make a huge windfall profit.
Thus, and again without descending into the detail of the evidence which I heard, I do accept that it may be optimistic to hope that a prospective purchaser (whether institution, syndicate or private individual) and its advisers would simply fail to appreciate the significance of this extremely unusual combination of circumstances.
Nor is it immediately apparent to me what steps, on the evidence, H could take to improve his position and that of a prospective purchaser from him, to resolve the conundrum. That having been said, I do harbour considerable suspicions that H has not disclosed the full strength of his hand on this issue. These suspicions are based in part upon the bizarre timing of the manner in which this issue achieved prominence in these proceedings, notwithstanding that Mr Wallace clearly told me how in March 1998 he had explained to H, apparently for the first time, how this property might prove unsaleable save to LA for less than £9,000.
But the proof whether there is in fact already or potentially some practical solution to the difficulties may only emerge if and when H is obliged to realise this investment whether at a time of his own choosing or one dictated by one or more of his creditors anxious that he should meet his obligations. Meanwhile, and for valuation purposes, I am prepared to assume that there may be major difficulties in effecting a sale at the sort of market value which a property in this location, of this quality and with this security and extent of rental income would ordinarily command."
"But, at the end of the day, there clearly are the potential problems about which I have heard from Mr Barnes and Mr Lewison, and no very evident way out of them which has so far emerged."
"If a way round these problems can be found then the parties agree a value of £11.4M, from which would need to be deducted the costs of sale and capital gains tax (assuming as I do, and nobody argued the contrary, that the Inland Revenue would either not attempt or would not succeed with an argument that this too was a trading transaction). But I feel that the evidence is not sufficient to justify me in taking the view that such a sale is achievable. Time may tell. Therefore I must find what I hope will be a fair way to value this potentially inalienable property, upon the basis that H can (unless external pressures force him to do otherwise) simply sit tight and attempt to satisfy the claims against him and his own needs from the rental income."
"£10M is for these reasons the figure which I regard as fair to include as my assessment of the value to be attributed to Site 'B' when I survey, as I shall now do, the overall value of these parties' assets and liabilities. But I will not lose sight of the fact that this amount, and indeed the potentially higher market value which it is agreed could be achieved if a way can be found through the problems, is not to be treated by me as equivalent to either liquid funds or to the proceeds of a readily realisable asset."
"Upon the assumption that £1M is available from property sales, the next question is therefore whether Site 'B' will prove acceptable as security for borrowings. There is of course the risk that it may not, the same risks as must lead to less than total confidence that it could be sold, or sold for a price which reflects adequately the stream of income it produces.
But, setting that problem for one moment to the side, I can consider in the light of the (I have to say, not totally helpful) evidence which I have heard whether H could service a £3M borrowing. It was primarily in relation to this aspect of his expertise that Mr Mills gave evidence. I am sorry to say that on this topic he did not seem up to the minute."
"The viability of this course turns upon whether H is willing and able to find a suitable lender prepared to accept Site 'B' as security for such a borrowing. Failing that, the alternatives which present themselves are either that Site 'B' is sold, or that H funds the totality of the balance of his liabilities from his income.
If a sale could be achieved at a reasonable price upon a basis that would guarantee H immunity from suit for breach of covenant by LA, then my conclusion would likely be that in principle such a sale should be effected, if otherwise W would be made to wait unreasonably long or to encounter unreasonable difficulties to achieve satisfaction of my order. The decision to order sale or not would obviously be considerably affected by whatever alternative proposals H might at the relevant time make.
The final alternative, it seems to me, is to consider how much W should receive from H's rental income, and how those receipts could be secured. It will also be necessary to give consideration to such questions as the allocation between lump sum instalments and cost liabilities; whether and if so at what rate interest should apply to the balance of the lump sum; and the position of H both in terms of his own living requirements and his need to meet other liabilities.
In considering these different eventualities it must not be thought that I have overlooked the goose set loose by Coleridge J in N v N  2 FLR 69. Without wishing to over-egg the analogy, I recognise in arriving at my decision that Site 'B' may well prove unmarketable. But as against that I conclude that its ability handsomely to produce gold will continue without pause."
"Applying all the facts and considerations which I have set out the conclusion at which I arrive is that H should pay W a lump sum of £1.9M, to bring her fortune up to about £2.5M (subject to her costs liabilities, or any add-back should she be entitled to recover sufficient and do so). Upon my assessment of the asset position that would leave H worth £5.3M net, but also subject to his own and any further orders for costs."
"Sale of or loan on Site 'B'a. The court has enquired what steps H has taken to raise the money since the draft judgment was handed down. H points out that evidence has been given from 3 surveyors as to the problems with this property; 2 leaders have agreed that the property suffers from serious title defects; a solicitor has given evidence that Norwich Union refused to buy because of the title defects. The judgment (correctly) states that borrowing is as dependent as sale on good title. It might be thought that the evidence in this case was as full as it needed to be on this point.
b. In fact:i. Since the trial Weatherall Green & Smith have been asked by H to consider the property. They have advised that it is not worth more than £4M with the defects. This report is available. The effect of a sale at that level or at up to £7M is shown on the attached table.
ii. Since the last hearing, Weatherall Green & Smith's dedicated finance department has been asked to see if H could raise £5M on the security of Site 'B'. Their answer is that 'in our view this property would not form suitable security to the lenders who are active in the market today'. This letter is available.
iii. H has consulted Mr Arbuckle, who has acted for him before and knows the problems. He has advised H:1. It would be a fruitless exercise and dangerous because it would widen knowledge of the defect within the investment and finance community.
2. The process would take some time. Any offer would be subject to a proper valuation and a certificate of good title. Once the offer is made, H would have to sign a commitment to proceed to the next stage, including an undertaking to pay costs if the transaction did not proceed. These would be lawyers' and valuers' fees. These would be £25,000.
c. All the above can be reduced to formal evidence if required.
d. If required, H can pursue the question of a loan; but this is a costly exercise: as shown above."
H wishes to point out:a. The appointment of a receiver will radically alter the stance of the Inland Revenue to the negotiations (and they will definitely not agree staged payments) and his bankers (who will call in the overdraft debt secured on Site 'B'). He will not be able to borrow against Paget's Farm to which he wishes to transfer the debt.
b. A receiver will run up huge legal and surveyors' fees re Site 'B': which will advance the state of knowledge re the marketability of that property and the impossibility of approaching the local authority not at all (cf para 5(a) above)."
"(b) to seek advice in respect of and, if appropriate, to negotiate for the release of the pre-emption rights held by the authority, and
(c) to effect a sale of, or borrow against, Site 'B' if that proves possible."
"But I feel that the evidence is not sufficient to justify me in taking the view that such a sale is achievable. Time may tell."
"No. Anybody wishing to secure their loan on the property would make exactly the same enquiries as a purchaser and they would then quickly realise that they would be unable to foreclose on the property and realise the money that they needed to retire the debt."
"Both parties postulated these figures on a clean break basis, although the husband raised the question whether (if the lump sum would otherwise be larger than £850K) continuing periodical payments should be ordered."
"I envisage that you may wish to consult the Conveyancing Bar, the Chancery Bar, a firm of solicitors specialising in commercial property matters, valuers and chartered surveyors. You may need some accountancy support too."
"Where the High Court .... makes a qualifying periodical maintenance order, it may at the same time exercise either of its powers under sub-section (4) below in relation to the order, whether of its own motion or on an application made under this sub-section by an interested party."
"This is sometimes referred to as 'equitable execution' although it is not strictly speaking a method of execution. However, a receiver will not be appointed in the absence of special circumstances making it just and convenient to do so, where execution can be obtained in the ordinary course of law. As in the case of all equitable relief, the remedy is discretionary."
".... this has indeed been in many senses an unusual and exceptionally difficult case ...."
£70K x _T_
£1.9M (Where T = the sum of the payments on account)
However throughout the husband remains under a continuing obligation to use his best endeavours to achieve payment of the whole at the earliest date and by whatever means are open to him. In the interests of the wife, if not in his own interests, he remains under a continuing obligation to use his best endeavours to achieve a sale of Site 'B'. The wife must have a charge over Site 'B' until such time as the lump sum is discharged in full. Once all the husband's financial obligations to the wife arising under the order below, as varied by this court, have been satisfied the charge will be released and there will be a reciprocal dismissal of all claims that each may have against the other whether under the Matrimonial Causes Act 1973 or the Inheritance (Provision for Family and Dependants) Act 1975.
ROBERT WALKER LJ:
The 1875 Act
" … in the normal case, the local authority will not itself carry out the work, save as to the street works, but will engage other persons, including bodies of trustees, to do the work and to take a conveyance or lease of the land on certain conditions."
The 1882 deed
"The lengthy covenants which I have just read in effect fall into three categories. The first is a batch of simple restrictive covenants, restricting the use by the governors of the land so as not to permit the erection or alteration of buildings and confining the use of the buildings to dwellings for artisans and labourers. Secondly, it contains a restrictive covenant restraining the governors and their successors from selling the land to anybody without the consent of [MBW] and conferring a right of pre-emption on [MBW] at a very moderate price. Thirdly, it provides that in the event of breach by the governors of any of the covenants, [MBW] has an option to repurchase."
(A) covenants restrictive of building;
(B) covenants restrictive of user;
(C) a right of pre-emption (framed as a qualified covenant against disposal without first offering the property for resale to the original vendor); and
(D) an option for repurchase ("the penalty option") in the event of any breach of any of the preceding covenants.
The price payable on exercise of the right of pre-emption or the penalty option was the historic 1882 cost of less than £8000 (referred to by the Vice-Chancellor, with some understatement, as a very moderate price) or a proportionate part of that sum.
The compromise deed
" … has further agreed for the purpose of giving full effect to its consents referred to in recital (9) and for ensuring that the [Governors] financing arrangements referred to in recital (10) can be completed to free the red lands from the option to re-purchase contained in the [1882 Conveyance] and more particularly described in clause 4(ii) hereunder and in manner hereinafter appearing to mitigate the application of the said option to the green land in the event of there being carried on at or on the red lands any matter in breach of the said covenants and outwith the said consents but not further or otherwise."
(1) LRB, in consideration of £100,000, granted its consent to various acts mentioned in subclauses (a), (b) and (c). This consent was granted to the Governors "so that the benefit of such consent shall attach to and run with the [entirety of the] lands for the benefit of [the Governors] and [their] successors in title the owner or owners for the time being of the lands and each and every part thereof and every estate and interest therein".
(2) The Governors covenanted with LRB to proceed with and complete the proposed development in accordance with the existing planning permission and approved plans.
(3) LRB released the Governors from liability to proceed with Phase 2 of the earlier plan.
(4) Clause 4 (expressed to be for the avoidance of doubt) provided (a) for the red lands and the blue land to be freed from the right of pre-emption with effect from their respective conveyance and lease to the company and (b) for the option penalty not to arise in respect of the red lands.
(5) The Governors agreed to pay LRB's costs of and incidental to the compromise deed, and to indemnify it and its officers against all claims "arising directly or indirectly out of or in connection with the grant of this licence and consent" (with some added administration provisions).
(6) The parties agreed to stay the appeal to the Court of Appeal.
(7) Clause 7(a) made a relatively small amendment in the right of pre-emption, in effect substituting more modern language for the 1875 Act's dated reference to artisans' and labourers' tenements. Clause 7(b) confirmed the operation of the 1882 conveyance, except as had been provided by the preceding provisions, and except for a proviso which in effect freed the green land from being at risk under the option penalty because of anything occurring on the red lands.
(8) The costs order made by the Vice-Chancellor was left intact.
(a) so far as consent was required under the first set of covenants, to (i) the erection of buildings on the red lands and the green land in accordance with the existing planning permission and (ii) "the re-erection rebuilding repair alteration extension and renewal" of any building on the red lands or the green land, but with a limit of 2,700 sq.m. for buildings on the red lands without consent, such consent not to be unreasonably withheld or delayed;
(b) so far as such consent was required under the second set of covenants, to (i) the use of buildings on the green land as residential premises, and the letting of such premises to persons approved by the Governors (as suitable occupants for low-cost housing) and (ii) the use of buildings on the red lands as commercial or residential premises, and the charging of the red lands as security; and
(c) so far as such consent was required under the right of pre-emption, to the conveyance of the red lands and the lease of the blue land to the company.
(1) whether the consent in clause 1(a)(ii) of the compromise deed authorised comprehensive redevelopment;
(2) whether the release of the right of pre-emption had been effective despite the fact that the red lands had never been conveyed to the company;
(3) whether the penalty option had been released in respect of any event other than a breach of covenant by the Governors; and
(4) whether a breach of covenant in respect of the smaller part of the red lands could imperil the whole commercial development on the larger part.
Since Mr Barnes advised some other points have been raised, but it is best to start with these four.
" … while it is right to take into account the fact that the draftsman of the lease has departed from, or has omitted part of, a well established form of words, that will not, at least on its own, normally be a sufficient reason for not giving the words he has used the natural meaning which they would otherwise bear. The fact that the draftsman has used a different form of words in relation to two provisions of a lease concerned with the same concept, in this case the use to which land is not to be put, is also something which should be taken into account when construing either of those provisions, but, again, I do not consider that it should normally justify departing from the natural meaning of either provision.
While it is appropriate for the court to contrast a provision which falls to be construed with a well established form of words or with the way in which another provision in the lease is drafted, it is also right for the court to bear in mind the way that leases are drafted in practice. It is well known that draftsmen of leases will frequently use many expressions where one will do: see eg per Hoffmann J in Norwich Union Life Insurance Society v British Railways Board  1 EGLR 137, 138D, F, and in Tea Trade Properties Ltd v CIN Properties Ltd  1 EGLR 155, 158A. Furthermore, draftsmen may take the wording of different clauses from different precedents and different clauses may come from different hands."
That was said in relation to leasehold conveyancing, but it applies to the compromise deed also.
SIR MARTIN NOURSE: