Case No: A3/2015/1251
Neutral Citation Number: [2017] EWCA Civ 1390
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT MANCHESTER
(CHANCERY BUSINESS)
Mr Recorder Khan
3MA30612
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 5 October 2017
Before :

LADY JUSTICE GLOSTER Vice President of the Court of Appeal, Civil Division
and
LORD JUSTICE LEWISON

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Between :

	MR IAN WATT	Appellant	
	- and -		
	(1) MR GARRY EDWARD DIGNAN
(2) MS ANDREA JAYNE DIGNAN
(3) MR BRADLEY JAMES DIGNAN
(4) PAINTMASTER (2000) LIMITED	Respondents	

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MR PEPIN ASLETT & MR DANIEL METCALFE (instructed by Kuit Steinart Levy LLP) for the Appellant
MS SUZANNE RIVERS MANSFIELD & MR ASA JACK TOLSON (instructed by Chafes Hague Lambert) for the Respondents

Hearing date : 18 July 2017

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Judgment
Lord Justice Lewison: 
1.	The main issue on this appeal is whether the Dignans have enforceable rights to use the toilet facilities at Unit 27 on the Bingswood Industrial Estate outside Whaley Bridge in Derbyshire. Unit 27 is owned by Mr Watt. It is common ground that such rights, in the nature of easements, were granted to their predecessors in title as owners of Units 26A and 29 by two conveyances respectively dated 27 September 1985 and 16 April 1987. The question is whether they are now estopped from asserting those rights. Mr Recorder Khan held that they were not. 
2.	The purchaser under the two conveyances granting the rights was a Mr Pearson. On 28 February 1989 Mr Pearson conveyed Unit 26A to a Mr and Mrs Tomlin; and on 7 April 1989 he conveyed unit 29 to the same Mr and Mrs Tomlin. The Dignans acquired the two units from Mr and Mrs Tomlin on 20 June 2011. Mr Watt acquired Unit 27 on 29 February 2012 from Tasco LLP. The Recorder found that Mr Watt acquired unit 27 with a view to demolishing it.
3.	The toilets had been decommissioned in about 2005, before the Dignans’ acquisition of the units, although the urinals remained in situ. The occupiers of Units 26A and 29 did not use them after that, although the toilet block remained standing. Mr Watt demolished the toilet block in September 2012. 
4.	Mr Watt argued before the Recorder that the easements had been abandoned by the time of the demolition. The Recorder rejected that argument and there is no appeal against that. It was also argued that the Dignans were estopped, at least by September 2012, from asserting their easements with the consequence that Mr Watt had been entitled to demolish the toilet block. The Recorder rejected that argument too. Although he declined to order reinstatement of the toilet block, he ordered Mr Watt to pay damages in lieu. With the permission of Beatson LJ Mr Watt appeals on the latter two points.
5.	In advancing his case on estoppel Mr Aslett relied on the statement of principle by Patten LJ in Lester v Woodgate [2010] EWCA Civ 199; [2010] 2 P & CR 21. In that case a company called Sherwell was entitled to a right of way over land belonging to Mr Mees. Mr Mees carried out work to the route over which the right of way ran which made it unusable. The work that he carried out amounted to an actionable nuisance. Sherwell made no complaint. The lack of objection by Sherwell made it possible for Mr Mees to sell his land to Mr and Mrs Woodgate without having to give notice of any dispute about the right of way. Sherwell then sold its land to Mr and Mrs Lester. This court, upholding the trial judge, held that Mr and Mrs Lester were estopped from asserting the right of way. Patten LJ noted at [23] that the pleaded case was that by failing to take any steps to prevent the creation of an actionable nuisance by Mr Mees, Sherwell became estopped as against Mr Mees and his successors in title from enforcing the right of way.
6.	At [40] he said:
“If the claimant’s conduct at the time takes the form of encouraging the defendant to believe that his otherwise tortious interference with the claimant’s property will be waived and not objected to and, in reliance on that, the defendant subsequently acts in a way which can be characterised as detrimental then the position is, I think, different from the facts considered in Ramsden v Dyson and the court does then have to decide whether the causative effect of that conduct is sufficient to bar the enforcement of the legal right.”
7.	He pointed out that the trial judge had held that the estoppel was made out because Mr Mees had relied on Sherwell’s acquiescence by selling to Mr and Mrs Woodgate. At [44] Patten LJ rejected the submission that Sherwell’s acquiescence had not been relied on by Mr Mees.  Mr Mees was entitled to rely on that acquiescence in formulating his replies to enquiries before contract. What is important is that the case was decided on the basis of reliance by the person to whom the representations were made and who was the property owner at the time of the reliance. There is no mention in the judgment of any reliance by Mr and Mrs Woodgate. 
8.	It is, I think, important at this point to record the way in which the estoppel was pleaded at trial. Paragraph 13 of the Amended Defence put it as follows:
“Further or in the alternative, it is averred that the Claimants are estopped from relying upon the Right to WC Facilities.
PARTICULARS OF ESTOPPEL
(i) The WC Facilities were removed by 2005 at the latest;
(ii) The Claimants did not make any request for the reinstatement of the WC Facilities until 12 December 2012 but made use of alternative toilet facilities;
(iii) The Claimants utilised the WC Facilities as a storage area and/or dumping ground from 2005 at the latest;
(iv) Such conduct on the part of the Claimants constituted a promise and/or representation to the First Defendant that the Claimants would not use the WC Facilities and/or would not rely upon and/or issue proceedings consequence upon the Right to WC Facilities;
(v) The First Defendant relied upon the Claimants’ promise and/or representation and accordingly demolished part of Unit 27;
(vi) The First Defendant would suffer detriment in the form of rebuilding costs and/or damages if the Claimants were permitted to resile from their promise and/or representation;
(vii) It would be unconscionable for the Claimants to be permitted to resile from their promise and/or representation.”
9.	There are a number of important points about the way that the case was pleaded:
i)	The conduct relied on was the conduct of the Dignans, rather than their predecessors in title, Mr and Mrs Tomlin.
ii)	The conduct was said to be a representation to Mr Watt, rather than to his predecessor in title, Tasco LLP.
iii)	The detrimental reliance pleaded was the demolition of part of Unit 27, not anything earlier in time.
10.	The case now advanced on appeal is that before Mr Watt bought Unit 27 there was already a completed estoppel as between the Dignans or their predecessors in title on the one hand, and Tasco LLP on the other, and that Mr Watt’s detrimental reliance was not the demolition of the toilet block but his antecedent purchase of Unit 27 with a view to demolition. Alternatively it is said that there was an inchoate estoppel at the time of Mr Watt’s purchase of Unit 27 which crystallised on that purchase. This is a different case to the one that is pleaded.
11.	In Prudential Assurance Co Ltd v HMRC [2016] EWCA Civ 376, [2017] 1 All ER 815 this court, in a judgment to which I was a party, said:
“[20] … Our procedural system is and remains an adversarial one. It is for the parties (subject to the control of the court) to define the issues on which the court is invited to adjudicate. This function is the purpose of statements of case. The setting out of a party's case in a statement of case enables the other party to know what points are in issue, what documents to disclose, what evidence to call and how to prepare for trial. It is inimical to a fair hearing that a party should be exposed to issues and arguments of which he has had no fair warning. If a party wishes to raise a new point, he should do so by amending a statement of case. We were told that by the time that skeleton arguments for trial were served each party would know what points were in issue. We do not regard that as sufficient. In this case, for example, HMRC's skeleton argument was served about ten days before the trial started. If (as in fact happened in this case) HMRC wished to argue that the evidence proposed to be called by Prudential was directed at the wrong issue (being an issue that had not been raised before) ten days' prior notice was manifestly inadequate.
[21] Although in days gone by the court would routinely allow late amendments to statements of case, in more recent time attitudes have changed. It is now the case that the court requires strong justification for a late amendment. This is not only in the interest of the opposing party but also consonant with the interests of other litigants in other cases before the court and the court's duty to allocate a proportionate share of the court's resources to any particular case. Where a new issue arises which is not foreshadowed in a statement of case, a party needs the court's permission to advance it. The court is then faced with a discretionary case management decision, to be exercised in accordance with the overriding objective.”
12.	Mr Tolson, on behalf of the Dignans, complains that the way in which the case is now put on appeal is not the case that his clients came to meet. The evidence that they called was tailored to the pleaded case; the legal submissions made both in the trial skeleton argument and in closing submissions was also tailored to the pleaded case; and at least one witness whose evidence might have been relevant to the new way in which the case is put was not cross-examined. In my judgment these objections are well-founded. Mr Aslett showed us some passages both in the Dignans’ skeleton argument at trial and in the transcript of counsel’s closing submissions which, he said, showed that everyone appreciated the different case that he was advancing in this court. I do not agree that a few phrases and sentences, taken out of context, can justify the radical departure from the pleaded case. For good measure Mr Tolson showed us other passages in which Ms Mansfield, then appearing for the Dignans, clearly understood that the detrimental reliance was that which had been pleaded: namely the demolition of the toilet block. In addition, I do not consider that there would have been an evidential foundation for the case that is now advanced.
13.	Mr Tomlin gave evidence before the judge, and was cross-examined. In his witness statement he said that he had used the toilet block; and that he was aware that Mr Watt had demolished it. He said that he recalled being on site and telling Mr Watt that he should not have knocked the toilets down. In cross-examination he was asked some questions about his use of the toilet block. The only evidence about the decommissioning of the toilets was this:
“Q: You see, there has been evidence put before the court that effectively there was no water after about 2005. Do you know after that point whether … can you recall?
A: If it had been disconnected in the toilet block I did not notice, but I still had water in the garage.”
14.	In answer to the judge he confirmed that the urinals were still accessible and usable. No questions were put to him about any failure to protest about the disconnection of the water supply. It was not suggested to him that any action or lack of action on his part contributed to a belief on the part of anyone that the right to use the toilet block had been given up. His evidence that he had told Mr Watt that he should not have knocked down the toilets was not challenged.
15.	Mr Worthington, who had been a founding partner of Mr Watt’s predecessor in title Tasco LLP, made a witness statement. He was not cross-examined. He came to the site in 2000. He said that he understood that the toilet facilities were decommissioned before 1996 and that he had been “reliably informed” that this was because the urinals and toilets became blocked. (In fact the judge found that they were not decommissioned until 2005). In the final paragraph of his statement he said:
“Since I started working for Stampiton and its associated companies, I have never received any formal request to reinstate the toilet facilities from any company on the Bingswood Estate, nor any request to reinstate them.”
16.	He gave no evidence about any belief on the part of Tasco LLP that the right to use the toilet block had been abandoned. Nor did he give any evidence that any such belief had any causal link with action or non-action on the part of Mr and Mrs Tomlin or the Dignans. Nor did he give any evidence about reliance on any such belief by Tasco LLP.
17.	On that state of the evidence it would have been quite impossible for the judge to have concluded that even before Mr Watt arrived on the scene there was a completed estoppel as between Mr and Mrs Tomlin or the Dignans on the one hand and Tasco LLP on the other. None of the ingredients of estoppel as described by Patten LJ had been established.
18.	When Mr Watt was considering buying Unit 27, it is clear (and the judge found) that he knew of the existence of the right to use the toilet block. On 23 November 2011 he sent an e-mail to Mr Garry Dignan offering to buy Unit 29. His offer stated:
“We would like to offer £5,000 lump sum, and would require any title to the toilet facilities covenant to be withdrawn.”
19.	Mr Dignan replied on 30 November:
“The figure I had in mind would be £25,000 for it to be worth me selling. The covenant relating to the use of the toilet block would be passed over to you in the event of a purchase of the garage.”
20.	The judge held at [37] that Mr Watt’s evidence that he assumed that the toilet rights had been abandoned was difficult to reconcile with that exchange of correspondence. That was something of an understatement. Mr Aslett argued that there is a difference between believing that a right exists and believing that a right is enforceable. There is no evidence that Mr Watt made such a legalistic distinction. Moreover, even if he had had that belief, it cannot have had any causal link with what Mr Dignan had said. That was the state of affairs at the date of Mr Watt’s purchase of Unit 27. If the case had been pleaded on the basis that the relevant detrimental reliance was Mr Watt’s purchase of Unit 27 (rather than its demolition) it would have been highly relevant for the conveyancing file to have been disclosed. That would, for example, have shown what inquiries before contract Mr Watt made of Tasco LLP and what the replies were; and also what (if any) requisitions on title were made. It was on the basis of the conveyancing that Lester v Woodgate was decided in the way that it was. As it is, material relevant to the new way of putting the case was simply not before the court. Once again, the relevant ingredients of an estoppel had not been established as at the time of Mr Watt’s purchase.
21.	By the time that Mr Watt began the demolition of the toilet block there had been further communications between the parties. In an e-mail of 4 July 2012 from Mr Garry Dignan to Mr Watt, Mr Dignan said:
“it is my intention to let out the garage and to that end will need full use of the toilet block for the new tenants.”
22.	On 9 August 2012 there was a meeting between Mr Garry Dignan and Mr Watt’s son Daniel. There was a conflict of evidence about what happened at that meeting, which the judge resolved in Mr Dignan’s favour. On the basis of the judge’s findings Mr Daniel Watt told Mr Dignan that the Watts were going to refurbish (rather than demolish) the toilet block. On 16 August Mr Dignan wrote to Mr Ian Watt. His letter said:
“Following my discussion with your son Dan on Thursday 9th August 2012 I believe you intend to commence refurbishing the adjoining toilet block to my property.
As you are aware we have a common interest in the use of the toilet facility, so please could you inform me in writing of your plans and timescale with regards to any work commencing.”
23.	On 17 August Mr Watt replied that “we are in the process of demolishing the toilet block and our ancillary buildings”. The demolition was completed in the following month. By the time that the demolition began Mr Dignan had clearly asserted his right.
24.	This, according to the Amended Defence, was the detrimental reliance. The pleading of that detrimental reliance goes a long way to explain why the conveyancing file was not before the court. In the light of Mr Dignan’s e-mail of 4 July it was simply not necessary. The pleaded detrimental reliance was that on which the judge rightly concentrated. The only ground upon which the judge’s decision on the pleaded case is criticised is that his reasoning is said to have been “infected” by his decision that the easement had not been abandoned. Mr Aslett fastens on a single sentence in paragraph [33] of the judge’s judgment in which he said:
“The argument in relation to the loss of the toilet rights by reason of estoppel must fail in the same way as abandonment fails.”
25.	That, it is said, shows that the judge conflated the requirements of abandonment on the one hand and those of estoppel on the other. In my judgment this is simply not a fair reading of the judgment. The judge set out the legal test for estoppel at [29] in terms that have not been (and could not be) criticised and then went on at [30] to consider how that test might be applied to the facts of the case. In the latter paragraph he made it clear that the reliance that he was considering was the demolition of the block. Immediately following the single sentence on which Mr Aslett relies the judge went on to consider the facts in detail over the next two and a half pages of his judgment. In my judgment his conclusion is unassailable.
26.	The last point relates to the remedy that the judge awarded. He decided that it would not be appropriate to grant a mandatory order requiring reinstatement of the toilet block but decided to award damages in lieu. He considered that the correct measure of damages would be the diminution in value of Units 26A and 29 by reason of the loss of the toilet facilities. There is no criticism of the measure of damages that he adopted.
27.	The only valuation evidence was given by a single joint expert, Mr Andrew Dippnall MRICS. He prepared a written report and also attended court for cross-examination. In his written report Mr Dippnall expressed the view that the difference in value for each of the two units with or without toilet facilities was £20,000 per unit. In the course of his cross-examination he also said that because the facilities were external to the two units, he would reduce the difference in value by 20 per cent in respect of Unit 26A and 10 per cent in respect of Unit 29. That gave an overall diminution in value of £34,000 which is the sum that the judge awarded.
28.	Unusually, Mr Dippnall was recalled to give further evidence part of the way through counsel’s closing submissions. In the course of his second cross-examination, Mr Metcalfe, appearing for Mr Watt, put to Mr Dippnall a point that had not been raised before. He asked Mr Dipnall to assume that the servient owner had no obligation to clean or maintain the toilet facilities, and asked whether that would make a difference to value. Mr Dippnall’s first response was that a prospective buyer of one of the units would factor in the cost of having to employ a cleaner at about £100 per month. Mr Metcalfe pressed on with the point. He asked Mr Dippnall to assume that that there was no repairing obligation for any party who had a right to use or who owned the toilet block and asked how that would affect a hypothetical buyer. Mr Dippnall’s immediate response was:
“He’d probably not proceed, to be honest with you. If there’s no rights to maintain it then, you know, he’s not going in there, all goodwill, there’s a toilet facility there; and would he proceed? Probably not. I know there’s no maintenance but it’s difficult to actually give an answer or if I put a diminution value, would it be. So I can’t really answer that question.”
29.	Undeterred, Mr Metcalfe pressed on again. He suggested to Mr Dipnall that a hypothetical buyer would not proceed with the purchase at all. Mr Dippnall replied that that was more than likely. Mr Metcalfe then suggested that the only person who would buy the unit was a person who was not bothered about the lack of toilet facilities and that for such a buyer there would be no diminution in value. The final part of this passage of the cross-examination was:
“Q: So essentially, a hypothetical buyer, bearing in mind these factors … if they wanted a toilet, would not buy it and if they were not bothered about a toilet, would pay the £40,000 for 26A or the £20,000 for unit 29.
A: Correct.”
30.	Mr Aslett submits that, on the basis of this evidence, because there is nobody maintaining the toilets, it is unlikely that a purchaser would be interested in the unit with the toilets at all, and that there would be no premium for them. From this he reasons that the right to use the toilets had only a nominal value. The judge did not refer to this evidence, and had he done so he could only have awarded nominal damages.
31.	There is a danger in asking questions like these that legal assumptions underlying them are not clearly spelled out to a witness. In the first part of the cross-examination Mr Dippnall said that the reaction of a hypothetical buyer might be to allow for a cost of £100 per month in cleaning the toilets. What was not clear in the second part of the cross-examination was whether the assumption that he was asked to make was not merely that no one had the obligation to keep the toilets in repair but the additional assumption that no one had the right to do so. His answer, which I have quoted, suggests that he was under the impression that he was being asked to assume that there was no right to maintain. This legal assumption went uncorrected. As Mr Tolson correctly submitted, the dominant owner has the ancillary right to do what is necessary to give effect to the easement in question. So, for example, in the case of a right of way the dominant owner has the right to repair the way. In the case of a right to use a toilet the dominant owner has the right to clean and maintain the toilets. It is by no means clear that Mr Dippnall understood that that was the case. His initial response, namely that a buyer would allow a sum for cleaning, suggests that on the basis that the dominant owner had a right (but not an obligation) to clean or repair his final answer would not have been so uncompromising.
32.	Mr Dippnall’s answer in the quoted passage also raises a number of other questions. Would there in fact have been buyers in the market who were not bothered about a toilet, given that employers have obligations to provide sanitary facilities for their employees? If there were any such buyers, why would they not have been bothered about toilets? Would it have been because they would have constructed their own facilities? It is also noticeable that Mr Dippnall, quite understandably in the light of the fact that the hypothesis put to him was entirely new, gave no reasons for his answer. As Jacob J said in Routestone Ltd v Minories Finance Ltd [1997] 1 EGLR 123, 127:
“What really matters in most cases is the reasons given for the opinion. As a practical matter a well constructed expert's report containing opinion evidence sets out the opinion and the reasons for it. If the reasons stand up the opinion does, if not, not.”
33.	I do not consider that the judge can be fairly criticised for not adopting the hesitant, off the cuff and unreasoned answer that Mr Dippnall gave.
34.	I would dismiss the appeal.
Lady Justice Gloster, Vice President of the Court of Appeal, Civil Division:
35.	I agree.