|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Akasuc Enterprise Ltd & Ors v Farmar & Shirreff (A Firm)  EWHC 1275 (Ch) (05 June 2003)
Cite as:  EWHC 1275 (Ch)
[New search] [View without highlighting] [Printable RTF version] [Help]
Strand, London, WC2A 2LL
B e f o r e :
| (1) Akasuc Enterprise Limited
(2) Mr A. K. S. Choudhury
(3) Mrs T. Choudhury
|- and -
|Farmar & Shirreff
Mr F Tregear QC (instructed by Ince and Co.) for the Defendants
Hearing dates : 14th, 15th, 16th, 19th and 21st May 2003
Crown Copyright ©
Mr Justice Peter Smith:
ACQUISITION OF THE PROPERTY
FINANCIAL POSITION OF AKASUC/MR CHOUDHURY
CONCLUSION RE FINANCIAL POSITION OF CLAIMANTS
NEGOTIATIONS WITH MANSARD
"1. Purchaser to pay £200,000.00 on receipt of renewed and outline planning permission. Purchaser will take a first charge on the property with the vendor leaving a caution in place".
Mr Tregear QC on behalf of the Defendants submitted that. Paragraph 1 meant that the purchaser would have a charge in respect of the unpaid purchase price, the vendor having the benefit of the caution against dealings, I do accept that. The reference to a caution in favour of the vendor naturally flows from the discussion recorded in Miss Dolding's note of 9th September 1996.
"Our clients agree that in principle some form of security should be provided to your clients.
For the reasons expressed in our letter of 22nd October this may not be possible by way of a second charge. They are considering how best to provide your client with security and will advise further".
A copy of this letter was sent to Mr Choudhury on the 4th November 1996. Although she did not expressly draw to Mr Choudhury's attention the lack of a charge, that is not significant to my mind. Mr Choudhury would have seen from the letter that there was serious doubt about whether or not the Claimants would obtain a charge of security for the payment. It was not significant because Miss Dolding had already flagged it up, as I have said above, and considered the possibility of protecting the overage payments by a caution.
CONCLUSION IN THE LIGHT OF THE EVENTS LEADING UP TO THE CONTRACT
1) Initially in September 1996 Mr Choudhury raised with Miss Dolding the question of security for the overage payment. At that stage, the discussion centred on a charge, but the possibility of a caution was raised by Miss Dolding.
2) That is a matter of a solicitor discharging her retainer. The retainer is to use all reasonable endeavours to obtain security for the overage. It is not a matter of advice in that sense. The solicitor has to come up with a suitable method of securing the overage (assuming at this stage that Mansard would accept it).
3) Mansard's solicitors rejected a charge (and even a second charge) outright initially.
4) In discussion between Mr Baty and Mr Choudhury, he discerned that Mansard's banks stance was not as rigid as Matthews & Co. had indicated and that some form of security possibly by a charge would be acceptable. In this context, Matthews & Co. letter acknowledged that also in rejecting a possible second charge.
5) Miss Dolding and Mr Choudhury discussed these various options and in the course of the discussion Miss Dolding advised that if a partial secured charge only was available thereafter upon release of the charge a caution would be an acceptable form of security.
6) Miss Dolding drafted an amendment to the Agreement, attempting to obtain a second charge. Matthews & Co. sent back a draft with no charge whatsoever.
7) Discussions then ensued between Miss Dolding and Mr Choudhury and Mr Choudhury and Mr Baty. As a result of those discussions, Mr Choudhury was entitled to assume that if he negotiated a charge with a release upon payment of a certain sum he would be protected if there was a caution afterwards. He secured agreement for both of those from Mr Baty and reported that back to Miss Dolding.
8) The Agreement was then executed, incorporating the charge to a limited degree with a deed of postponement intended for the bank, leaving the possibility that the remainder would be secured by the caution.
EVENTS SUBSEQUENT TO EXCHANGE
"To simplify matters we would wish to agree a fixed price, which will become payable within 28 days of the following:
1. Satisfactory detailed planning consent…
2. The acquisition of … rights of access …".
He said further in the letter:-
"We are very much committed to this project and to date have expended in the order of £50,000.00 in surveys, application for professional fees. Substantial additional expenditure and effort is now required to bring the site to a state where it can be developed.
Without an access and in its present condition the site is undevelopable and practically worthless. We are prepared to work with you to overcome all the problems, but clearly this is going to take longer than anticipated.
A meeting to discuss the above and to exchange information and ideas is essential, and I would appreciate a call to arrange a date upon receipt of this letter"
CONCLUSIONS ON THE FACTUAL EVIDENCE
WOULD MANSARD HAVE ACCEPTED THEM?
LOSS OF OPPORTUNITY
THE LOST CHANCE
1) Mr Goodman acknowledged that any sale to a third party, which was lost, must be on the basis that Akasuc would seek to enforce the Mansard overage provisions on such third party. Mr Goodman therefore acknowledged that any third party would in negotiations involving Mansard be willing to pay a lesser sum because of the obligations being enforceable against it.
2) Mr Goodman acknowledged that in the light of the agreed statements by the experts to the effect that Mansard made a bad bargain, there would be no real possibility of persuading a third party to enter into an agreement on the Mansard terms.
3) Given that, Mr Goodman acknowledged that there was no realistic possibility of seeking the Church consideration, namely £1,050,000.00 plus a figure for overage.
4) Mr Goodman acknowledged that in the light of paragraph 12.2 of Mr Hampton's report, that the loss of a chance was the loss of an opportunity to obtain £1 million from a sale renegotiated in June/July 1997. Mr Hampton is the Claimants expert.
5) The experts agreed the value of the Property at June 1997, was £600,000.00 in its unimproved state under the Church contract Mansard received £1,050,000.00. Church paid £270,000.00 as a contribution towards the access costs of £300,000.00. Some of the reclamation works remained outstanding. Mansard agreed to do those and the costings of those are accepted by both experts (in the absence of actual figures) of being some £340,000.00. The starting point for the ascertainment of that figure is appendix 33 of Mr Adams-Cairns report, the Church Development Appraisal. Five items in that appraisal are given a figure of £0.00 on the basis that Mansard was carrying those works out. Mr Hampton in his report (appendix 6) identifies the same items as costing approximately £340,000.00. There was no agreement between the experts as to whether or not those items were carried out at the cost of Mansard or Church. Under the Mansard-Church agreement dated 3rd June 1997 (appendix 24 to Mr Adams-Cairns report condition 5.3) Church has the ability to carry out the works necessary to comply with condition 16 of the planning permission if they have not been completed so as to satisfy that condition by the 1stOctober 1997. It then can carry them out at a cost to Mansard. There are invoices, which Mr Adams-Cairns produced as annexed to his witness statement of 15th May 2003, which show Mansard carrying out the earth works referred to. There is no other evidence, but it seems to me on the evidence before me, I conclude that Mansard did indeed carry out the works that it contracted to do. The cost of those works appears to be some £340,000.00.
MR ADAMS-CAIRNS STANCE
METHOD OF ASSESSMENT OF CHANCE