Zas Ventures Ltd v Forkner [2016] EWCA Civ 1062

[2016] EWCA Civ 1062Case No B6/2016/0020
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT IN CENTRAL LONDON
Her Honour Judge Faber
Claim No 3BO03394
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 1 November 2016
Before
LORD JUSTICE MOORE-BICKVice-President of the Court of Appeal, Civil DivisionLORD JUSTICE McCOMBE
Between
ZAS VENTURES LTDClaimant/LILLIAN IRIS FORKNERDefendant/Appellant
Mr. Anthony Katz (instructed by Edwards Duthie Solicitors) for appellantMr. Gideon Roseman (instructed by Wiseman Lee LLP) for respondentHearing Hearing date : 12 th October 2016
Judgment ApprovedLord Justice Moore-Bick :
[1]This is an appeal against the order of Her Honour Judge Faber ordering the appellant, Ms. Lillian Forkner, to give up possession of the premises at 14 Liddon Road, Plaistow, London to the respondent, Zas Ventures Ltd (“Zas”).[2]14 Liddon Road, Plaistow is a mid-terrace house in East London dating from about 1900. It has been Miss Forkner’s home all her life. She grew up there with her parents, her brother Brian and her sister Pamela. In due course Brian and Pamela left home and went to live elsewhere, but Lillian remained at home and continued to live in the house with her parents. On the death of her mother in 1985 ownership of the house passed to Brian and Pamela under their mother’s will. According to a statutory declaration made by Brian in 2008 it was agreed that Lillian should be entitled to occupy the house during her life or until she chose to leave, provided she maintained and insured it. No record of that agreement was made at the time. Brian made his statutory declaration in connection with the sale of the house to a company called Landmark Investments.com Ltd (“Landmark”) following Pamela’s death.[3]In September 2011 Landmark sold the house to Mr. Mohammed Chaudhary at a price which reflected Miss Forkner’s right to occupy it during her life on the terms set out in the statutory declaration and its current condition. (Pamela’s son, Matthew Sharp, also made a statutory declaration in similar terms. He does not state the source of his information, but it is likely that it was derived from one of those present, probably his mother. It does not contain anything of significance in addition to what was said by Brian.) In September 2013 Mr. Mohammed Chaudhary transferred the property to Zas, a company of which his son, Mr. Asad Chaudhary, is a director. At the same time he assigned to Zas the benefit of any rights he had against Miss Forkner.[4]In his statutory declaration Brian described the arrangements made by the family in 1985 and subsequent developments in the following way:
“3. Following the death of my said mother there was a family meeting attended by Miss Forkner, the said Mrs. Sharp [their sister Pamela], her husband, my wife and me. At that meeting Mrs. Sharp, Miss Forkner and I agreed that Miss Forkner would be allowed to continue to live in the property for as long as she wanted without paying any rent provided that she kept the property insured and in good repair and paid all the outgoings in connection with it such as Council Tax etc. . . . In practice Miss Forkner has resided in the property rent-free as per the agreement but she has not maintained it very well. Mrs. Sharp and I accepted this situation and have not required Miss Forkner to carry out any repairs 4. It was certainly our intention that the right to occupy would not be assignable or transferable and is to terminate on the death of Miss Forkner or her vacating the property voluntarily, whichever occurs first.”
[5]In October 2012 Mr. Asad Chaudhary on behalf of his father obtained a report on the condition of the property from a local firm of surveyors which identified a number of defects which in their opinion required immediate repair. Attempts to persuade Miss Forkner to leave the house voluntarily failed and in March 2013 solicitors acting for Mr. Chaudhary wrote to her formally accepting as a repudiation her failure to comply with the terms of her licence. These proceedings seeking possession of the property were issued on 29th October 2013. The grounds of the claim were that Miss Forkner had failed to insure the property or keep it in good repair.[6]In her defence Miss Forkner admitted that she had agreed to insure the property and keep it in good repair. She also admitted that she had failed to do either of those things, but she alleged that the claimant’s predecessors in title had waived her obligations or had released her from them or that they had waived or acquiesced in her failure to perform them. She also alleged that the claimant was barred by laches or acquiescence from relying on her breaches of the terms of her occupancy.[7]It was common ground, therefore, that Miss Forkner was entitled to occupy the property on the terms agreed between herself and other members of her family in 1985, which involved insuring and maintaining it. The seventh ground of appeal criticises the judge for having failed to determine the precise nature of Miss Forkner’s right of occupation, but in my view it does so unfairly, because it was accepted that she had such a right enforceable against Zas as the current owner, subject to any breach of the terms on which she was entitled to exercise it. It was also common ground that she had failed insure or maintain the property. By the time the case came on for trial other issues that had been raised by the statements of case had fallen away, so the only issue of substance was whether the conduct of the claimant’s predecessors in title precluded it from treating her as being in repudiation of the terms of her occupation. The judge held that they did not. She held that the breaches continued year by year and that although previous owners had not complained, since at least December 2012 Mr. Chaudhary had. Accordingly, there were no grounds for holding that there had been waiver of any breaches that had occurred since then.[8]It is convenient to begin by considering the sixth ground of appeal, namely, that the judge was wrong to allow Zas, without any amendment to its particulars of claim, to argue at the trial that the failure to maintain was a continuing breach of the terms on which Miss Forkner was entitled to occupy the property. In my view there is nothing in this point. It was clear that Zas was seeking to treat the obligation to maintain as if it were a repairing covenant in a lease and thus as a continuing obligation. There is nothing to indicate that Miss Forkner or those acting for her were misled about that or that their approach to the case would have been different if a continuing obligation had been formally pleaded. These were county court proceedings in which the judge was concerned to identify and deal with the real points in dispute. In my view there is no basis for saying that she was wrong to allow Zas to rely on this point.[9]The second, fourth, fifth and eighth grounds of appeal all relate in one way or another to the effect of the agreement made in 1985 and therefore provide the starting point for all that follows. It is convenient to consider them together. It is said that, although it was a term of her occupation that Miss Forkner should insure and maintain the property, her right to occupy the house was not conditional upon her performance of those obligations. Accordingly, although her admitted failure to do so might give rise to a claim for damages, it did not provide grounds on which Zas could obtain possession. This argument does not appear to have been pursued below, or if it was, it did not receive much attention, but Miss Forkner has been granted permission to pursue it and, if it is correct, it is of fundamental importance.[10]Mr. Katz submitted that the terms in which Brian described the agreement in his statutory declaration did not support the conclusion that he and Pamela contemplated the possibility that their sister could be required to leave the property if she failed to insure and maintain it. In support of that argument he relied not only on the language of the statutory declaration, but upon the fact that no attempt had been made to require Miss Forkner to insure or repair the property during the twenty-three years between the death of their mother and the sale to Landmark. He also relied on statements contained in some draft auction particulars, prepared at some later date on Landmark’s instructions, that there were no maintenance agreements and that the buyer was to insure. Mr. Roseman, on the other hand, submitted that the meaning of the agreement was clear and was apt to impose conditions upon Miss Forkner’s right to occupy the property, which, if not complied with, lapsed.[11]The agreement under which Miss Forkner was entitled to occupy the property appears to have been entirely informal. No record of it was made at the time; all we have is Brian’s recollection of its terms set out in the statutory declaration he made in 2008, some 23 years later. Nor do we have any evidence of the context in which the agreement was made that would tend to support or undermine the submission made by Mr. Katz. It is, however, relevant to note that the statutory declaration was made in connection with the sale to Landmark, presumably both to protect Miss Forkner’s position and to enable Landmark to understand the terms on which she occupied the property. I am also prepared to infer, both from the nature of the language and from the circumstances in which it was prepared, that it was drafted by solicitors in accordance with Brian’s instructions.[12]Since there is no other evidence of the agreement, I think that the intention of those who were parties to it must be collected from the language of the statutory declaration. There is no better evidence of what was said and the private intentions of those who were present are irrelevant, even if they could be ascertained. I do not think that the draft auction particulars are of any assistance, because there is no indication of how they came to be drafted in that form. To suggest that they reflect some information acquired by Landmark about the insurance or maintenance of the property is mere speculation. Likewise, I do not think that paragraph 4 of the statutory declaration takes Miss Forkner any further. It does no more than record Brian’s understanding that his sister was not intended to acquire an interest in the property capable of being transferred to a third party.[13]Whether Brian and Pamela ever contemplated the possibility of taking steps to remove their sister from the property may be doubted, but that is not the question. The question is whether they attached any condition to her right of occupation and in my view the way in which Brian described the agreement, using the words “provided that”, show that they did. In the absence of any indication to the contrary that is how I think it must be understood and how a reasonable person in the position of Landmark, or any subsequent purchaser to whose attention it came, would understand it. In my view, therefore, the judge was right to proceed on the basis that the obligation to insure the property and keep it in good repair was a condition of Miss Forkner’s right to occupy it, which, if broken, would provide grounds for termination. The question, then, is whether the failure of Brian and Pamela or that of Landmark to insist on compliance with the conditions of occupation prevents Zas as successor in title from insisting on their being performed.[14]It is apparent from Brian’s statutory declaration that he and Pamela were aware that their sister had not been maintaining the property and that that situation had persisted over a long period. Whether they knew that she was not insuring it is not clear, since he says nothing about that, although the statement in the draft auction particulars suggests that Landmark may have been aware that she was not, or might not be, doing so. The doctrine of laches, on which Mr. Katz sought to rely, does not assist Miss Forkner, because it is concerned with the failure to pursue equitable claims to which the Limitation Acts do not apply by analogy. In other words, it is a form of limitation defence, which operates on claims that have arisen in the past; it does not prevent similar claims arising in the future. If Miss Forkner is to succeed in her defence to the claim, therefore, she must show that the conduct of previous owners was such as to relieve her from the burden of having to comply with her obligations under the agreement. The remaining grounds of appeal, i.e. first, third and sixth grounds, are all directed in one way or another to that aspect of the case.[15]Mr. Katz’s submissions centred on two matters: the fact that for 23 years the family had not required Miss Forkner to carry out any repairs, although they had been aware that the property was deteriorating; and the fact that it was not possible to identify the extent to which, if at all, the property had deteriorated in the four years since it had been acquired by Mr. Chaudhary. It is convenient to deal with the latter point first.[16]The judge found in paragraph 173 of her judgment that the property had received little or no maintenance since Miss Forkner’s mother died in 1985 and she appears to have accepted what she understood to be the evidence of the single joint expert, Mr. Billingham, that about 25% of the deterioration that he observed in 2015 had occurred since 2011. However, she made no express finding about that.[17]Mr. Billingham was instructed to “prepare a report detailing the disrepair/defects and structural condition of the property and in particular to identify the disrepair/defects and structural condition of the property on 28th September 2011” (that being the date on which it was acquired by Mr. Chaudhary) and “the current disrepair/defects and structural condition.” He produced a report and answered questions put to him in writing by the claimant, but was not called to give evidence in person. In section 4 of his report he identified various defects which, in his opinion, rendered the property uninhabitable. In section 5 he stated that he had seen little evidence of maintenance to the property that would have changed the list of defects he had described in paragraph 4 between 28th September 2011 and the date of his inspection on 26th June 2015. However, he did not express an opinion on the difference between the condition of the property in September 2011 and its condition at the time of his inspection, despite having been asked to do so, other than to say that “when ceilings become cracked the cracks may extend and when dampness ingresses the building the extent of defects will only increase in time as will the areas of de-bonded render.”[18]Among the questions the claimant put to Mr. Billingham and the answers he gave were these: Q: 1. As regards to the issues identified at paragraphs 4.1.1, 4.1.2, 4.1.3, 4.1.5 and 4.1.7 is it likely that the said issues are having any form of negative impact in relation to the properties on either side . . . ? 2. If the answer to the preceding question is answered in the affirmative: . . . b. to what extent has any damage increased since 28 September 2011 to the date of your inspection? A: 2b. The only evidence I have heard was from a neighbour who stated that the property had been in the current condition for 15-20 years. If I start with the current condition represents 15-to 20 years of neglect then in the last 4 years I would guestimate (since there is no exact science about this) that the last four years i.e. since Sept 2011 I would say a range of 25%-30% worse. . . . Q: 5. Is it more likely than not that the property will deteriorate at an increased rate by reason of a combination of one or more of the defects identified in section 4? A: 5. Yes . . . Q: 6. If the answer to the preceding question is in the affirmative, please provide full details as to the same and the extent to which the deterioration would have manifested itself since 28th September to date? A: 6. I can not answer this question unless you confirm the condition of the property in Sept 2011. Once any defect in an external fabric becomes apparent and allows the ingress of moisture the extent of damage will in all probability also increase with time . . . ” . . . b. to what extent has any damage increased since 28 September 2011 to the date of your inspection? If I start with the current condition represents 15-to 20 years of neglect then in the last 4 years I would guestimate (since there is no exact science about this) that the last four years i.e. since Sept 2011 I would say a range of 25%-30% worse. . . .[19]Mr. Billingham’s answers to the questions put to him are not entirely satisfactory, but he does not appear to have been provided with a copy of the report produced for Mr. Chaudhary in 2012 and was understandably reluctant to commit himself to any concrete opinion about the extent to which the property had deteriorated since September 2011. His answers to question 2b (which in fact concerned possible effects on neighbouring properties) suggests that he may have been apportioning the development of the defects he had observed over the full period of neglect. However, it is likely that that extended well beyond the 15-20 years which he had in mind and in his answer to question 6 he candidly accepted that he was unable to assess with any degree of precision the extent of deterioration since September 2011. In my view Mr. Billingham’s evidence supports the conclusion that the property had deteriorated to more than an insignificant extent between September 2011 and the date of trial and that the deterioration was progressive. Whether it had deteriorated by 25%, as the judge found, or only about 12.5% (assuming a steady rate of deterioration over a period of 30 years) does not matter for present purposes.[20]The debate about the extent of the deterioration between September 2001 and October 2015 arose out of a submission by Mr. Katz that Miss Forkner could not be held responsible for all the defects that had accumulated since 1985. I think that is right. Whether the obligation to maintain should be construed in all respects as if it were a standard form of repairing covenant in a lease or not, it did in my view require her to carry out such repairs and maintenance as might be required from time to time and to that extent was of a continuing nature. However, Brian and Pamela’s failure (and subsequently that of Landmark) to require her to carry out any repairs over the course of 26 years, despite the fact that they were aware that the property was in a poor state of repair, and their failure, as far as one can tell, to enquire at any stage whether she had insured it, amounted in my view to a clear representation that they would not insist on performance of her obligations, at least without giving her reasonable notice of their intention to do so, and then only in respect of subsequent deterioration.[21]Despite what had been said in the correspondence, Zas appears to have accepted before the judge that Miss Forkner could not be required to make good all the defects in the property that had accrued since 1985; its case was that she had failed to repair defects that had arisen since September 2011 and was thereby in breach of the terms of her right to occupy it. Mr. Chaudhary’s solicitors had purported to treat her as having repudiated her obligations because she refused to carry out all the repairs needed, but in fact she was under no obligation to do so.[22]The correspondence between the parties between October 2012 and March 2013 did not address the question of future repairs as such. Mr. Chaudhary’s primary object was to persuade Miss Forkner to move out voluntarily and he indicated that, if she were to do so, he would not insist on her carrying out any of the repairs that were needed. However, he also made it clear that he considered her to be responsible for carrying out all the repairs that had built up over the years as well as any that might be needed in the future. Miss Forkner, on the other hand, took the position that the failure of Brian and Pamela to insist on her insuring and repairing the property had released her from any obligation of that kind altogether.[23]The judge treated the letter of 17th December 2012 from Mr. Chaudhary’s solicitors as putting an end to the waiver of her obligation to repair. Although the letter was directed to the whole history of deterioration and disrepair, it did make it clear that he expected her to comply with her repairing obligations in the future and that is broadly how the judge approached the matter. Mr. Katz complained that in doing so the judge had decided the case on a ground that had not been pleaded, but it is apparent from her description of the parties’ submissions that it was one that had been canvassed in argument and I think she was entitled to consider the matter on that basis. Mr. Billingham’s report provided a sufficient evidential basis for her finding that the property had continued to deteriorate throughout the period of Mr. Chaudhary’s ownership (and therefore since the date of that letter) and Miss Forkner had taken no steps to halt the steady decline in its condition. Mr. Katz submitted that it was not possible for her to carry out any useful repairs until Mr. Chaudhary had made good the various defects that resulted from previous years of neglect. To do so would, in his words, amount to no more than “papering over the cracks”. However, although he made the same submission to the judge, that question was not properly investigated at trial and I do not think that it can be relied on at this stage to overturn the judge’s decision. In those circumstances it is unnecessary to decide whether Zas is entitled to recover possession simply on the grounds of Miss Forkner’s failure to insure.[24]For the reasons I have given I would dismiss the appeal.

Lord Justice McCombe :

[25]I agree.