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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Armitage Holdings Inc v Delahunty [2007] EWHC 1556 (Ch) (22 June 2007) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2007/1556.html Cite as: [2007] EWHC 1556 (Ch) |
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CHANCERY DIVISION
B e f o r e :
B E T W E E N
____________________
ARMITAGE HOLDINGS Inc. |
Claimant |
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and |
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PARICK JOSEPH DELAHUNTY |
Defendant and Part 20 Claimant |
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And |
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(1`) ARMITAGE HOLDINGS Inc (2`) The personal Representaives of Donald Garrett Deceased (3`) BLACKFRIARS LAND Limited |
Part 20 Defendants |
____________________
Mr Alan Steynor (instructed by Sabir Selby LLP) appeared on behalf of the Defendant.
Hearing 12th-15th June 2007
____________________
Crown Copyright ©
HHJ Alastair NORRIS QC:
Summary of the Claim
(a) that the Deceased represented or promised to Mr Delahunty that he would eventually be remunerated ;
(b) that the Deceased used to refer to him as his "partner";
(c) that in May/June 2001 the Deceased and Mr Delahunty agreed that the sum then due to Mr Delahunty "in settlement of his business relationship with the Deceased and the work undertaken" was £600,000 ;
(d) that in return for Mr Delahunty not requiring payment of the £600,000 it was agreed that he should receive "certain flats in future developments" at 126 Tooley St. and 170-176 Grange Rd.;
(e) that in reliance on that agreement Mr Delahunty continued to apply his skill and time;
(f) that in January 2003 the Deceased agreed that Mr Delahunty could move into the Flat to live in rent-free for us long as he wished (the Flat being a substitute for another property in relation to which which the same arrangement existed).
(The form of the statement of case has been heavily influenced by a claim (now abandoned) that there was a partnership between the Deceased and Mr Delahunty created either at the outset or by a written transfer of business interests by the Deceased shortly before his final decline).
(a) against Armitage (i) the dismissal of its claim for possession of the Flat and (ii) a declaration that is entitled to occupy the Flat free of rent for as long as he wishes ;
(b) from the personal representatives of the Deceased (i) the value of a flat at Tooley St plus a proper sum to compensate him for not receiving any flats at Grange Rd (ii) £600,000 (iii) a fair and reasonable sum for work done and (iv) the value of dishonoured cheques drawn on the accounts of companies of which the Deceased was "a director, majority shareholder and controller"
(c) from another company in which the Deceased was interested viz Blackfriars Land Company Ltd ("Blackfriars") the amount of some dishonoured cheques.
The legal case
"(a) the owner of land (O) induces encourages or allows the claimant (C) to believe that he has or will enjoy some right or benefit over O's property
(b) in reliance on this belief C acts to his detriment to the knowledge of O;
(c) O then seeks to take unconscionable advantage of C by denying him the right or benefit which he expected to receive."
Mr Steynor drew my attention to the elaboration of these principles in Halsbury's Laws England Volume 16(2) paragraphs 1089 to 1092.
(a) That the dishonoured cheque may itself be sued upon:
(b) That the defences available to the drawer are (so far as relevant) that the cheque was not given for consideration or that there has been satisfaction by some means other than meeting the cheque on presentation (e.g the provision of a substitute which has been met).
(a) The general principle established in Saloman v Saloman & Co Ltd [1897] AC 22 is that the liability of a company is separate and distinct from the liability of its directors or its incorporators;
(b) This general principle holds good whether one is looking at the original obligation to pay the debt or at the obligations that arise upon a cheque drawn to discharge the debt;
(c) The Court is not free to disregard the Saloman principle simply upon the ground that "justice so requires" (Adams v Cape Industries Plc [1990] Ch 433 at 536 per Slade LJ);
(d) The Court is entitled to pierce the corporate veil if a company has been used as a device or facade to conceal the true facts thereby avoiding or concealing the liability of an individual (Trustor AB v Smallbone [2001] 1 WLR 1177).
The key characters
" in relation to various promises made to Mr Delahunty that Mr Delahunty would have an interest in certain properties in return for Mr Delahunty carrying out services for Mr Garrett and for companies of which Mr Garratt appears to have been the only authorised signatory".
They also wrote in respect of
"cheques drawn on various companies in which Mr Donald Garrett has a substantial interest and for whom he was acting as signatory and in respect of which cheques to the same were dishonoured on presentation".
I was shown no response recording the Deceased's reaction to these claims. No witness statement was taken from the Deceased once the proceedings had started. Given his state of health and (from July 2005) his legal incapacity this is not surprising and I draw no inference that the Deceased would have acknowledged Mr Delahunty's claims. (Mr Delahunty told me of one incident after the commencement of proceedings in August 2005 when he had a chance meeting with the Deceased at hospital, and the Deceased told Mr Delahunty not to leave the Flat under any circumstances because "I Donald Garrett gave you the flat". The Enduring Power of Attorney would already have been registered at this stage. The Deceased's statement about the Flat can be given no weight in relation to Mr Delahunty's broad claims in this action, and is of only very limited assistance in relation to the claim concerning the Flat).
Key features of the dealings
(a) Armitage and the Deceased already had a substantial portfolio of properties at the time when the Decease met Mr Delahunty;
(b) The Deceased had available to him the services of various local builders to conduct repair and maintenance work. From those builders he obtained estimates and quotations at the start of work, and a final at statement at the conclusion of work which he would scrutinise and query. The accounts included (where appropriate) charges to VAT which appear to have been paid without demur.
(c) Mr Delahunty began to work for the Deceased in 1994 on renovation work on a property in Lowther Hill, London SE23 (which was put on the market by Armitage around September 1994, and eventually sold in August 1995).
(d) He then worked on other properties which it is unnecessary to burden this judgement by describing (but the evidence relating to which I have re-read before coming to my conclusions);
(e) In relation to this work Mr Delahunty did not in general produce the same quality of paperwork as other builders; there are occasional statements and invoices (and, as indicated above, I intend to rely on these).
(f) It is a feature of work undertaken by Mr Delahunty that there are frequent cash payments, either in the form of real cash or in the form of cheques drawn to cash. There are also cheques drawn in favour of third parties (but where the stub or the entry in the ledger indicates that they were for the benefit of Mr Delahunty). Mr Delahunty denied receipt of the entire proceeds of these cheques, explaining that they were given by the Deceased to third parties in return for cash subject to a 10% commission deduction: but (given the demonstrated ability of the Deceased to obtain cash from his bank or to draw cheques to cash) I found this evidence not credible and to detract from the overall credibility of Mr Delahunty.
(g) It is also feature of this work that he was paid in advance to fund the work he was undertaking. Thus in relation to Coldharbour Lane he wrote in November 1995 to explain to the Deceased why he needed more money, the letter making plain that the Deceased was paying in advance the wages that would become due the following week, and for materials that it was intended to purchase to undertake work the following week.
(h) In January 1996 Mr Delahunty received a cheque for work undertaken at 97 Coldharbour Lane. This was the last payment to him for two years. It is common ground that there was a falling out between Mr Delahunty and the Deceased at the conclusion of the Coldharbour Lane work. It was Mr Delahunty's evidence that the rift lasted for only three weeks and that he resumed work. I do not accept this evidence (and it again detracts from his overall credibility). I regard as far more reliable the documentary record of payment. Mr Delahunty was not paid anything by the Deceased for two years. Mr Delahunty would not have worked for nothing for that period. The only sensible inference to draw is that he was not working for the Deceased.
(i) In January 1998 Mr Delahunty again began to work for the Deceased's companies. The payment arrangements seem to have been as before. There are significant cash payments. There are some payments in advance. All payments are in round sums. There is no running account kept. There is no complete record of the work undertaken and the cost of that work. According to Mr Delahunty the practice was for him to receive payment, for him then to pay wages and expenses, and for him then to take whatever was left over.
(j) Mr Delahunty acknowledged in evidence that there were periods when he received monthly round sums (he spoke of £5,000 a month) from the Deceased; the impression I gained from Mr Delahunty was that these were a form of general retainer (or maintenance contract) in return for which he was expected to do whatever work was required on the portfolio. But it was impossible to relate this evidence to the account given in his witness statement of each item of work that he had undertaken
(k) I have no doubt that this degree of informality on occasion suited the Deceased as much is it suited Mr Delahunty. It would for example have provided a convenient means of recycling (by upgrading the portfolio of Armitage) cash rents collected. I have sought to remain alert to the danger that the Deceased's estate and his companies may be seeking to take advantage of an arrangement that served them well.
(l) I have equally no doubt that Mr Delahunty's approach (which was to build first and then seek the requisite consents afterwards) also suited the Deceased, although on occasion it resulted in him having to pay Mr Delahunty to demolish what had been built.
(m) In the year 2000 relatively little work was done by Mr Delahunty for the Deceased's companies because he was engaged on work in the automotive industry (for which he received from that customer £236,000). Otherwise the Deceased and his companies appear to have been Delahunty's main customer (though I emphasise that the absence of adequate documentation relating to Mr Delahunty's business makes a reliable assessment impossible).
(n) Mr Delahunty sought to promote himself as something more than jobbing builder, endeavouring to paint in evidence a picture of involvement in the choice of properties, the performance of the role of architect and the introducer of bank funding. It is right that the relationship between the Deceased and Mr Delahunty was something more purely commercial: they were something approaching friends, and when (towards the end) there was a rift in the Deceased's family, Mr Delahunty fulfilled the role of carer. But this does not help me in relation to the various contracts upon which Mr Delahunty founds his claim. Nor does it warrant any finding that they were co-venturers. Even at the very end when control was passing from the Deceased members of his family (and the Deceased might have been concerned to confirm the position of Mr Delahunty) the evidence (a letter written by Mr Delahunty in May 2005) establishes that the Deceased told Mr Delahunty "I'm in charge, me, Donald Garrett; you Peter the builder".
The underlying claim for unpaid work
(a) He emptied a small detached house in Bournemouth (paying for a skip) and put up six fence panels. He said that he took himself and three handyman five full days to do the work and that the appropriate charge was £7,000. I would want more than Mr Delahunty's word that that was a fair charge for that work.
(b) For work undertaken at Harpenden Road the Deceased's files contained an estimate and a printed statement from B & G Builders charging £2500: in his witness statement Mr Delahunty estimated the value of this work at £17,000.
(c) In relation to work at 12 to 14 Cotswold Street there was a written estimate in the sum of £172,000: in his witness statement Mr Delahunty said that the initial quotation was £200,000.
(d) In his witness statement Mr Delahunty described work undertaken at Copleston Road Beckenham. He estimated the costs he incurred on the work to be £6,000. The trial bundle contained an apparent contemporaneous estimate by him for the identical work in the sum of £675.
(a) In relation to 12 to 14 Cotswold St. Mr Delahunty's evidence gave the impression that very substantial sums remained outstanding and that basically he had not been paid for the job which he valued at £350,000. The trial bundle contained an apparently contemporaneous written statement signed by Mr Delahunty of "the estimated additional cost to finish the job on top of what has already been paid". I am satisfied from an analysis of the ledger that what had already been paid was £138,000. The additional cost to finish was £117,000. I am satisfied from an analysis of the ledger that from the 15th of May 1995 to September 1995 Mr Delahunty in fact received £120,000 in respect of Cotswold Street. There was thus nothing outstanding.
(b) In relation to Croydon Road Mr Delahunty's evidence was that he worked six days a week for 14 months with five full-time workers and he estimated the costs he incurred were £350,000 (the evidence being designed to suggest that a large part of this remained outstanding). The trial bundle contains what appears to be a contemporaneous interim statement of the work prepared for the Deceased which shows a total cost of £114,000, of which £35,000 had already been paid (and that is independently verified), and £69,000 remained outstanding. It can be demonstrated from the ledger that in the period immediately following £71,000 was paid to Mr Delahunty.
(c) In relation to the demolition work at Blackfriars Road Mr Delahunty estimated that the costs he incurred were about £115,000. The impression given in his evidence was that this remained outstanding. An analysis of the ledgers and bank statements shows that he was paid approximately £125,000 for this work.
(d) In relation 7 Cotswold St. it was the evidence of Mr Delahunty in his witness statement that it had cost him about £200,000. When it was demonstrated to him that there were in ledger entries showing payments to him of about sum, he accepted those that were paid by cheque and traceable through his account, he denied all that were apparently in cash, and he then told me that the amount he had actually spent was £400,000 (no matter what his witness statement said).
The agreement upon £600,000 and the Tooley Street and Grange Road flats
"the money [the Deceased] saved and the appreciation of the properties which we worked on…. would be rolled back into the business….we both agreed that I would take my contribution when we parted our ways".
This evidence is no longer relied upon as founding a partnership. Its function is presumably to render more credible any subsequent specific agreement.
The claim to the Flat
"I confirm your instruction with regard to [the Flat]…. you are happy for me to release the keys to [Mr Delahunty] and you do not wish me to pursue the appropriate tenancy forms for rental……."
"The reason why [the Deceased] offered to let me live in [the Flat] for as long as I wanted without paying any rent was in recognition of my contribution to building up his portfolio of properties and for the substantial amount of building work I had carried out for which I had not been fully paid".
Mr Delahunty does not contend for a contractual license (viz. that he acquired the right to live in the Flat rent-free for as long as he wanted in return for giving up his claim to a share of the business and to be paid his outstanding bills). Indeed he has brought an action claiming for those unpaid bills and for damages for the non-performance replacement agreement. What Mr Delahunty contends for is a proprietary estoppel, permanent in its effect, preventing Armitage from recovering possession of the Flat for so long as Mr Delahunty wants it.
The dishonoured cheques
"..we have already booked the piling rig for the 6 July so you could see we need this information urgently".
He added as a postscript:-
"we also need a cheque for materials i.e. steel, concrete, pipes, ballast, cement, DPC, machines and digger. So if we could please have a cheque on account for those items and the ongoing work £250,000…."
The cheque drawn on the dormant Atlantic Imports account was dated the 2nd July 2003. Mr Delahunty said that the cheque was not in response to this letter but was payment for work already done.
Conclusion
(a) to give judgement for Armitage on the claim and to order Mr Delahunty to give possession of the Flat (the provisional date for possession being the 1st October 2007);
(b) to dismiss all of Mr Delahunty's Part 20 claims against the estate of the Deceased;
(c) to give judgement for Mr Delahunty against Blackfriars Land Co Ltd in the sum of £20,000 in respect of the cheque drawn on the 20th of December 2002 and dishonoured together with interest at judgement debt rate from the 1st January 2003;
(d) to adjourn all questions of costs and any applications arising out of this judgement to a telephone hearing to be arranged by the Claimant's solicitors with the Chancery Listing Clerk at Birmingham by 16th July 2007.
HHJ Alastair Norris QC.