Parker v Parker [2003] EWHC 1846 (Ch)

Case No HC 02 000816

Neutral Citation Number: [2003]EWHC 1846 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date Date: 24 th July 2003

Before

THE HONOURABLE MR JUSTICE LEWISON

Between

THE RIGHT HONOURABLE RICHARD TIMOTHY GEORGE MANSFIELD PARKERClaimant/

9 TH EARL OF MACCLESFIELDPart 20 Defendant

THE HONOURABLE JOCELYN GEORGE DUDLEY PARKERDefendant

THE BEECHWOOD ESTATES COMPANYDefendant/Part 20 Claimant

FENTVILLE LIMITEDPart 20 Defendant

Mr. Leslie Kosmin QC & Miss Caroline Hutton (instructed by Manches) for Claimant

Mr. Frank Hinks QC (instructed by Denton Wilde Sapte) for Defendant

Hearing Hearing dates : 18 th, 19 th,20 th,23 rd,24 th,25 th,26 th,27 th,30 th June

1 st,2 nd,3 rd,4 th,7 th,14 th,15 th,16 th, July

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

.............................

Mr. Justice Lewison

Background and family history

[1]Shirburn, near Watlington, Oxfordshire, lies at the edge of the Vale of Oxford under the Chiltern escarpment, and to the south of the M40. It is within easy reach of both London and Oxford. Shirburn Castle was built in the late fourteenth century. It takes the form of a rectangular crenellated keep, with round towers at each of its four corners. It is surrounded by a moat over which there are three bridges. At first sight it looks very like the famous castle at Bodiam in Sussex. However, there is one important difference. Whereas Bodiam Castle is an uninhabited ruin, Shirburn Castle has been inhabited, more or less continuously, since 1716 by the successive Earls of Macclesfield. As Mr Weeks, one of the experts, put it:

“Shirburn Castle is a sleeping beauty of a castle. … It retains much of the detritus of past generations and is therefore a time capsule as it stands.”

[2]The family name of the Earls of Macclesfield is Parker. The Earl’s eldest son is given the courtesy title Viscount Parker. The Claimant has successively been Mr Richard Parker, Viscount Parker and the Ninth Earl of Macclesfield. I hope that my account of the narrative can be followed despite the changes in nomenclature.

[3]Thomas Parker, the First Earl of Macclesfield, bought Shirburn Castle and its estate in 1716. The First Earl rose to prominence as Lord Chief Justice, and subsequently Lord Chancellor. He commissioned the remodelling of the castle in the Georgian taste. Windows were opened in the curtain walls, panelling was added to interior rooms and so on. The Second Earl was a noted scholar. I was told that he was a keen astronomer, and that he was responsible for what are the oldest weather records in the country (which are now housed in the Bodleian Library in Oxford). His chaplain and former tutor was a friend of Isaac Newton. It was probably the Second Earl’s influence which led to the unusual fact that the castle has no less than three libraries. The libraries contain a valuable collection of antique books and rare manuscripts. Their contents once included Isaac Newton’s papers; but the Ninth Earl sold those to Cambridge University in 2000.

[4]Since the days of the First Earl, all the successive Earls of Macclesfield, with one exception, have lived in the castle on accession to the title. The one exception was the Fifth Earl. He was blind, and succeeded to the title late in life. He therefore remained in familiar surroundings at his home at Eynsham Hall.

[5]The Seventh Earl succeeded to the title at the age of 8, on the death of his father in 1896. He lived in the castle until his death in 1975. His wife had predeceased him in 1974. Their children, Thomas, William and Jocelyn, lived with them in the castle until adulthood. The Seventh Earl held the legal freehold interest in the bulk of the estate (including the castle) as tenant for life under a deed of resettlement made in 1909. It was vested in Settled Land Act Trustees in 1926.

[6]In 1922 the Seventh Earl incorporated The Beechwood Estates Company (“the company”), almost certainly for tax planning reasons. Until then the Shirburn estate, and for practical purposes the earldom, had been held in tail male by successive Earls. In 1936 the Seventh Earl (as protector of the settlement), his Countess and his eldest son, Thomas, executed a disentailing deed. The effect of this deed was to vest in the company the beneficial interest in the freehold estate in reversion, expectant on the death of the Seventh Earl. The deed recited an oral contract for the sale of the Seventh Earl’s life interest under the 1909 settlement. Thus following execution of the disentailing deed, the Seventh Earl held the legal estate in the freehold on trust for the company, arising out of the contract for the sale of the life interest and the disposition of the interest in remainder. As part of the arrangements, and no doubt in recompense for the assignment of his interest as remainderman, Thomas, Viscount Parker, became the owner of half the issued share capital in the company.

[7]The Hon. William Parker was killed in the Second World War. Shortly after the war the Seventh Earl gave his remaining shareholding to his younger surviving son, the Hon Jocelyn Parker. As the Ninth Earl accepted in evidence, this was a departure from the previous tradition of primogeniture. The shareholding has been held equally by the two branches of the family ever since. From that time, although he continued to live in the castle, the Seventh Earl had no shareholding in the company. In 1947 The Hon Jocelyn Parker took a tenancy of a farm on the estate. It is called Pyrton Field Farm. In 1951 Thomas, Viscount Parker, took another farm on the estate. It was called Model Farm.

[8]Model Farm was burned down in a catastrophic fire in 1962. Although the estate had its own fire engine (an early Dennis, which is still in the former stable block of the castle), Model Farm could not be saved. Viscount Parker and his family, who included their two sons, Richard and David, moved into the Castle at the invitation of the Seventh Earl.

[9]In 1967 the Seventh Earl entered into a covenant with his eldest grandson, then Richard Parker, the Claimant. The covenant was made on the occasion of Richard Parker’s first marriage. By that covenant the Seventh Earl in effect gave the Claimant most of the chattels in the castle. These included paintings, a collection of arms and armour, and the contents of all three libraries. Almost all of these pictures, chattels and books remain in situ in the castle with the consent of the company.

[10]At about this time Richard Parker took a tenancy of a farm on the estate called Portobello Farm, where he lived until late 1993. Portobello Farm is up on the Chiltern Hills, whereas the remainder of the estate is down in the Vale of Oxford. The farm has always been only marginally profitable, if profitable at all.

[11]Thomas, Viscount Parker, succeeded to the earldom as the Eighth Earl in 1975, on the death of his father. On his succession to the title, the Eighth Earl continued to live in the castle. His elder son Richard, the Claimant, succeeded to the courtesy title Viscount Parker. The Eighth Earl’s younger son is The Hon David Parker. He now farms Model Farm, where he also lives.

[12]In 1983 Richard, Viscount Parker, met Mrs Sandra Mead, known as Sandy. She was living alone with her children and was divorced in October 1983. She and Viscount Parker formed a relationship, and he moved into the cottage where she was living in 1984. At that time his first wife continued to live at Portobello Farm. Viscountess Parker moved out of Portobello Farm at Christmas 1985, and Viscount Parker and Mrs Mead moved in at about that time. Following Viscount Parker’s divorce, Mrs Mead and Viscount Parker were married in May 1986.

[13]The Eighth Earl died suddenly on 6 December 1992. The Claimant succeeded to the title as Ninth Earl. His mother, the Dowager Countess, remained living in the castle. There was no dower house on the estate, and she had nowhere else to go.

[14]In late 1993 (the precise date being in dispute), the Ninth Earl moved into the castle, with his wife, the Countess of Macclesfield, and has lived in the castle ever since. I shall have to examine the circumstances in which he moved in greater detail. The Dowager Countess was still living in part of the castle, and her occupation was not disturbed until she died in 1994. At the same time, the Earl’s company, Fentville Ltd (“Fentville”), began to conduct its business from the Old Stores in the estate yard.

[15]The question I have to decide is whether the Ninth Earl is entitled to continue to live in the castle and Fentville is entitled to remain in the Old Stores, and, if so, on what terms. It is not suggested that the Ninth Earl or Fentville has any contractual right to remain in the castle. The claim is based on the principles of proprietary estoppel. The dispute between the parties is the culmination of a series of bitter family disputes which have gone on for decades. The Hon David Parker described this litigation as a tragedy, and I agree with him. Although the precise details of those family disputes are not directly relevant to the issues I have to decide, the broad outlines are. I have, therefore, to traverse much of the ground examined in detail during the course of the trial.

[16]At the trial Mr Leslie Kosmin QC and Miss Caroline Hutton appeared for the Earl and for Fentville; and Mr Frank Hinks QC appeared for the company. Mr Kosmin’s task was not made easier by the company’s very regrettable late disclosure of a substantial quantity of highly relevant documents. I am not often impressed by complaints about non-disclosure of documents, but in this case I consider that the complaints are fully justified. Whether the complaints are properly levelled at the company (and its officers) or at the company’s solicitors is not something that I can decide.

The claim

[17]As I have said, the claim is based on proprietary estoppel. In a nutshell, Lord Macclesfield claims the right to occupy the whole of the castle, some of its outbuildings and part of its grounds for his lifetime, on the terms of a draft lease annexed to the Particulars of Claim. Fentville claims the right to occupy the Old Stores on a lease for a term of fifteen years, on the terms of a draft lease also annexed to the Particulars of Claim.

[18]I need not discuss the detailed terms of the lease at this stage, although I will return to them later.

[19]The company, on the other hand, claims that both Lord Macclesfield and Fentville are no more than tenants at will, whose respective tenancies have been determined. The company asserts that Lord Macclesfield was the tenant at will of the whole of the castle, and that Fentville was the tenant at will of the Old Stores. Since both tenancies have been terminated, the company claims an immediate right to possession.

Preliminary issues and result

[20]As a matter of form, this case comes before me on the trial of preliminary issues. The preliminary issues are set out in an order of Master Price dated 11 October 2002. In essence, I am asked to decide what legal or equitable rights the Ninth Earl and Fentville have in the castle and the Old Stores respectively.

[21]This is, regrettably, a very long judgment. So to avoid suspense, I say now what I am going to decide. I will decide that Lord Macclesfield does not have the right that he claims. But I will also decide that the company is not entitled to immediate possession either. Whether I approach the question from the equitable perspective of proprietary estoppel, or from the common law perspective of a licence, I will decide that Lord Macclesfield is entitled to stay in the castle until he is given two years’ notice. At the end of a two year period of notice, he will have to go. Fentville is entitled to stay with him until he goes.

Proprietary estoppel

[22]Both sides were content to take as the starting point the summary of principle contained in Megarry & Wade on Real Property (6th edition) para 13-001. I set it out now so that the relevance of my findings of fact can be appreciated.

[23]Megarry & Wade says: “(i) an equity arises where(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 upon this belief, C acts to his detriment to the knowledge of O; and

(c) O then seeks to take unconscionable advantage of C by denying him the right or benefit which he expected to receive. (ii) This equity gives C the right to go to court to seek relief. C’s claim is an equitable one and subject to the normal principles governing equitable remedies. (iii) The court has a wide discretion as to the manner in which it will give effect to the equity, having regard to all the circumstances of the case, and in particular to both the expectations and conduct of the parties. (iv) The relief which the court may give may be either negative, in the form of an order restraining O from asserting his legal rights, or positive, by ordering O either to grant or convey some estate, right or interest in or over his land, to pay C appropriate compensation, or to act in some other way.” (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 upon this belief, C acts to his detriment to the knowledge of O; and (c) O then seeks to take unconscionable advantage of C by denying him the right or benefit which he expected to receive.

[24]I have in mind that my primary task is to find facts and identify the crucial legal points and to advance reasons for deciding them in a particular way, rather than to engage in academic discussion (see Customs and Excise Commissioners v. A

[2003] 2 All ER 736

at 753). However, I will have to return to the law in more detail later in this judgment.

The family tree

[25]As this is essentially an unfortunate family dispute, an understanding of the family tree is essential in understanding the narrative. Greatly simplified, the family tree is as follows: The topography of the castle

[26]My understanding of the topography of the castle was greatly helped by a view which I undertook on 17 June 2003, the day before the trial started. I have also been shown many plans of the accommodation, coloured to show the various rooms occupied by successive Earls and their families.

[27]It will, I hope, help understanding if I give a description of the layout of the castle. As originally constructed, the castle was rectangular in shape, built around a central courtyard. The courtyard probably survived the remodelling carried out by the First Earl. During the nineteenth century the courtyard was roofed over, and the space that it formerly occupied is now occupied, in the basement, by cellars and other domestic offices.

[28]At ground floor level there are three entrances to the castle, each one by way of a bridge over the moat. The original entrance (though not the current entrance) was via the gatehouse in the middle of the western side. The gatehouse would have led to the courtyard, but, as I have said, it is now roofed over. The southern side of the castle is occupied by two ranges of rooms on either side of a corridor. The northernmost range (at the southern end of the former courtyard) is separated from the outer wall by a long corridor known as the bell passage. Proceeding anti-clockwise from the gatehouse to the south eastern corner of the castle, and taking the northernmost range of rooms first, one encounters the old kitchen, the servants’ hall, the small study, and a photographic dark room. In parallel, the southernmost range of rooms contains the kitchen, the breakfast room, the pantry kitchen, the small sitting room and the oak dining room. Board meetings of the company were held from time to time in the oak dining room, which is in one of the round towers. Between the breakfast room and the pantry kitchen is another entrance to the castle over a bridge. This is the entrance currently used as the main entrance.

[29]The eastern side of the ground floor is occupied by the dining room and the smoking room. These are two of the so-called “state rooms”. The tower at the north eastern end of the castle is currently locked.

[30]The northern side of the castle also has two parallel ranges of rooms. That closest to the old courtyard (on the southern side) consists of the baronial hall; probably added in the nineteenth century. The other consists of a WC, an ante room and the drawing room. The baronial hall and the drawing room are also “state rooms”. At the north-western corner of the ground floor, again in one of the round towers, is the gun room.

[31]There are two staircases on the ground floor, leading up to the first floor. One is the main staircase, which is elaborately carved. The other is the pink staircase, so-called because it is painted pink. The pink staircase rises towards the south-eastern corner of the first floor, while the main staircase rises towards the north-eastern corner. There is also a mediaeval spiral staircase at the western end of the castle.

[32]The western end of the first floor is occupied by a kitchen and dining room. In the round tower at the south-western corner there is a WC and a laundry room. As with the ground floor, the southern side of the first floor contains two parallel ranges of rooms. The northernmost consists entirely of the white library. The southernmost consists of the Turkish bedroom, an adjacent bathroom, a sitting room, and a study. The round tower at the south-eastern corner of the castle is occupied by a WC and bathroom. The eastern side of the first floor consists of a bedroom (currently occupied by the Countess’ father), the four poster room, the crimson bedroom and the “ugly” bedroom. It is not the bedroom itself which is ugly, but the elaborate bed in it. The round tower at the north-eastern corner contains a bedroom. On the northern side of the first floor is a dressing room. This is the bedroom suite which the Earl and Countess occupy. The remainder of the northern side of the castle is taken up with two parallel libraries, the north library and the south library. The latter is reached by the flying staircase. These are also “state rooms”.

[33]The principal access to the second floor is via the pink staircase. The rooms surrounding the former courtyard (on the inner sides of the floor and reached via the traditional green baize door) were formerly servants’ rooms. There are ten in all. They are now almost derelict. The southern side of this floor consists of four rooms which have traditionally been bedrooms and sitting rooms for younger members of the family. The eastern side consists of four rooms and a bathroom. One of these rooms was formerly the nursery.

[34]The nature and layout of the rooms makes it difficult to find a combination of rooms which would make a satisfactory self-contained dwelling within the castle, either by vertical or horizontal division.

[35]As one would expect, the castle is also provided with a number of outbuildings. These include the old brewery, the old dairy, the old stores, stables, tack rooms and the like, and buildings which accommodate the generating equipment formerly used to power the batteries which in turn provided the castle with electricity. They are mainly in the estate yard.

[36]The castle is, as I have said, surrounded by a moat. Beyond the moat are the grounds. They are mostly laid to grass, with little formal planting. The grounds contain a derelict orangery and a temple in the Palladian style.

[37]Unfortunately the castle is in a poor state of repair. Little has been done to it, probably for a century. The electrical system has failed, and most of the castle is plunged into darkness at nightfall. A professional estimate puts the costs of putting it into proper repair as being some £2.6 million.

The witnesses

[38]Many of the witnesses had little or no independent recollection of the critical events in this case. Most were reliant on the documents to reconstruct what must have happened or have been in their minds. This process is inevitably heavily influenced by the entrenched positions that the two sides have taken up over the years. However, there is ample contemporaneous documentation. I have relied heavily on the documentation in assessing the reliability of the oral evidence. I will, however, make it clear where I accept the uncorroborated oral evidence of witnesses.

[39]Lord Macclesfield was one of the witnesses whose memory has faded. He was often reliant on the documents in an attempt to reconstruct what must have happened. As he said in evidence:

“I have very little memory of these meetings at all. We have documentation of memories here and there, and then hopefully build it up from the documentation.”

I have no doubt that he was doing his best to tell the truth as he sees it. But his perception of what happened is, in my view, coloured by years of dispute. Lady Macclesfield had a better recall of events. However, she was not present at the few crucial meetings, and largely remained on the sidelines.

[40]The company put in a witness statement made by the Hon Jocelyn Parker. Because he is in poor health, he did not give oral evidence. Crucial parts of his statement were demonstrably wrong. I can place very little weight on his evidence where it conflicts with the evidence of other witnesses. There is a general point here that I wish to make about the witness statements served on behalf of the company. Under the traditional procedure a witness’s evidence in chief was given orally and in response to questions. This gave the witness the opportunity to tell his story in his own words. Under our modern procedure, the witness statements fulfil the function of evidence in chief. If, as is so often the case, they are little more than a rehash of the documents, they serve very little purpose. Moreover, when the witness does get the opportunity to tell his story in cross-examination, he is more than likely to go beyond the confines of his witness statement. This inevitably leads to questions whose theme is: why was this not in your witness statement? The answer, I suspect, in many cases is that the witness statement has been inadequately prepared and the witness has not been properly questioned before the statement is finalised. I think that this is what happened in the present case. To give one example: a schedule of costs of repairs was appended to Mr Robert Parker’s witness statement. He verified the truth of his statement in his evidence in chief. But it turned out that the schedule had been prepared by the company’s solicitors, and Mr Parker was quite unable to answer even the most simple of questions about it.

[41]Mr Robert Parker was called as a witness for the company. He was, I regret to say, an unsatisfactory witness. His evidence was coloured by a palpable dislike of his cousin, Lord Macclesfield. He was evasive when faced with difficult questions; defensive about his motivation and actions; and prone to convenient lapses of memory. Some of his evidence was falsified by documents disclosed late. He was also “economical with the truth”. For example when he was asked whether manuscript annotations on letters were his, he replied that they were not, without revealing that there were other (at that time undisclosed) versions of the same letter which did bear his annotations. His answer on that occasion was no doubt “the truth”, but it was not “the whole truth”. I am not prepared to accept his evidence, except where it is corroborated or is inherently probable.

[42]The Hon David Parker was, in my view, a measured witness. He has found the feud between the two branches of the family extremely distressing. He was an honest witness, doing his best to remember what happened. He denied that he had colluded with Mr Robert Parker in preparing his evidence, and I accept his denial. Although I do not accept all his evidence, there are large parts that I do.

[43]Mr Hextall was another witness whose evidence I am prepared to rely on. I think he did his best to give professional advice to the company. I do not believe that his professional integrity was compromised by the manner in which he took instructions, primarily from Mr Robert Parker. Mr Kosmin criticised his evidence because he had been given the transcripts of Mr Robert Parker’s evidence to read before he came into the witness box. Mr Hextall was, he said, a “primed witness”. I do not accept this criticism. Although he did not remember every detail, I am satisfied that his memory of the broad outlines of the story was accurate.

The Company

[44]As I have said, the company was incorporated as an unlimited company in 1922. Its objects are drafted in the verbose style common in a memorandum of association. They include:(1) “To purchase or otherwise acquire, hold, sell, improve, manage, develop …lease …grant rights and privileges in respect of, dispose of … real and personal property of all kinds and wherever situate … and in particular any real or personal property of any kind and wheresoever situate, or any part of share therein of or to which the Right Honourable George Loveden William Henry Earl of Macclesfield or his successors in title to any such real or personal estate is now or may hereafter be seised or possessed or entitled for any estate and whether absolutely or as tenant for life or in reversion or remainder or for any other estate”

(2) “To acquire, purchase, take on lease, sell, lease, improve, extend, manage, turn to account, dispose of or otherwise deal with any mansion house, parks, and grounds, either with or without the contents thereof, furniture and other effects, plant and mechanical appliances therein and heirlooms, and in particular any such property or effects of or to which the said Earl of Macclesfield or his successors in title to such property or effects is now or may hereafter be seised or entitled to any estate, whether freehold or for life or in reversion or remainder or otherwise, and to manage, carry on, and conduct such mansion house as a private residence or otherwise …”

[45]On incorporation, the Seventh Earl owned all the issued share capital in the company, apart from two shares. Under the terms of the articles of association, he was entitled to be a director of the company for his lifetime, as was his eldest son (destined to become the Eighth Earl). No other prospective Earl was given this right.

[46]As mentioned, Thomas, Viscount Parker, acquired half the shares as part of the barring of the entail. The Hon. Jocelyn Parker acquired the other half shortly after the war. Thus the shareholding was equally divided between the two branches of the family, although three shares were held by professional advisers who held the balance between the two branches. The shareholding has remained divided equally between the two branches of the family ever since, although there have been changes within each branch.

[47]On 1 November 1968 Viscount Parker gave his two sons, Richard and David, 6,425 shares each. Each shareholding represented about 12.5 per cent of the share capital. The Hon David Parker and his wife acquired a further 500 shares from Viscount Parker in 1970.

[48]In 1981 The Hon Jocelyn Parker gave 250 shares each to his two children Mary Boone and Robert Parker. In 1986 The Eighth Earl (as Viscount Parker had then become) gave a further 10,500 shares to his son David and his wife. Thus the Hon David Parker became a more substantial shareholder than his elder brother. He has, in turn, given many of his shares to his son, Timothy.

[49]The company has never paid a dividend, except on one occasion when compelled to by the Inland Revenue. It has on occasion paid modest salaries to the chairman and some directors. But the most substantial shareholders, Robert and Timothy Parker, have had little or no financial reward for their investment. Although the company has a relatively substantial income, most of it is spent on the upkeep of the castle and the renovation and repair of other properties owned by the company. The company’s income has been supplemented on occasion by the receipt of location fees from film and television companies who have used the castle for filming.

[50]As one would expect, the business of the company is managed by the directors (article 79 of the articles of association). Article 81 says that a director may enter into contracts or arrangements with the company and may have or be interested in dealings with the company. It also says that a director shall not: “be liable to account to the Company for any profit arising out of any such contract, arrangement or dealing to which he is a party or in which he is interested by reason of his being at the same time a Director of the Company, provided that such Director discloses to the Meeting of the Directors at which such contract, arrangement or dealing is first taken into consideration the nature of his interest therein”.

[51]However, the same article forbids an interested director from voting on a proposal. The Ninth Earl (then Viscount Parker) was appointed a director of the company some time in the 1970s. Robert Parker became a director in January 1986. By 1992 the Board consisted of Viscount Parker (as chairman), his father the Eighth Earl, The Hon David and Jocelyn Parker and Robert Parker. Mary Boone and Timothy Parker became directors in February 1997.

[52]The Board dismissed the Ninth Earl as chairman in December 2000, although he remains a non-executive director. Timothy Parker resigned as a director in May 2002, and The Hon David Parker resigned in the following month.

[53]The Board meets about once a month. Almost all its meetings are minuted. The minutes are very full. The board members are plainly concerned the minutes should be accurate, and since 1992 there has been a section in each set of minutes dealing with the accuracy of the minutes of the previous meeting. I think that that I can rely on the minutes (as corrected at subsequent meetings) as accurately recording the substance of board meetings.

[54]The existence of the company has, in many ways, bedevilled the Parker family story. There have been conflicts both at shareholder and board level. There have been potential conflicts of interest between family members in their capacity as directors and those same family members protecting their own interests. I will have to outline some of these conflicts in telling the story. It has also proved to be an impediment to modern tax planning. But more significantly, from the legal point of view, is that the question of unconscionable behaviour is unconscionable behaviour on the part of the company, and not unconscionable behaviour by individual members of the company, at least when acting in their personal capacities, rather than as directors of the company.

The extent of occupation: the Seventh Earl

[55]I was shown a set of plans showing the extent of occupation of the castle by the Seventh Earl. According to these plans, he occupied the following parts of the castle.

[56]In the basement he occupied some of the domestic offices. He occupied both sets of parallel ranges of rooms on the southern side of the ground floor. He occupied the rooms in the round towers at the south-western, south eastern and north eastern corners of the castle (the pantry, the oak dining room and the gun room). He made occasional use of the dining room and the smoking room at the western end. On the first floor, he occupied four rooms and a bathroom (including what I have called the dressing room, the “ugly” bedroom and the crimson bedroom). He did not occupy any of the three libraries. He occupied none of the second floor.

Extent of occupation: the Eighth Earl

[57]The Eighth Earl and Countess and, after his death the Dowager Countess, occupied different parts of the castle. As I have mentioned, they moved in after the destruction of Model Farm in 1962. The Seventh Earl was still in occupation of part of the castle at that time. So the castle was shared between the Seventh Earl and his son, then Thomas Viscount Parker. The company does not appear to have been consulted. The Hon Jocelyn Parker said in his witness statement that it was regarded as “essentially a family transaction”, and I accept that evidence.

[58]At about the time that he went into occupation, Viscount Parker sought advice from the family solicitors about rent. The advice he received was that he should not become his father’s sub-tenant. Either the castle should be divided between them, with each paying rent for the part he occupied; or Viscount Parker should become the company’s tenant of the whole, with the Seventh Earl becoming his sub-tenant. The reasons for this advice were all to do with estate duty, and I need not be concerned with the details.

[59]Viscount Parker accepted this advice. In his letter of 5 October 1962 he said:

“My father and I, as you suggest, will pay half rent each. The rent at the moment is £100 a year. Ought we to increase it to £150 or £200?… We are also going to pay half the rates each…”

[60]I have not seen a reply to that letter, but I infer that the proposal to pay half rent each was put into effect.

[61]Lady Macclesfield produced plans showing the rooms that the Eighth Earl and Countess occupied. Lady Macclesfield must have been referring to occupation after the death of the Seventh Earl, since some of the areas she attributed to the Eight Earl and Countess (including a bedroom suite on the first floor) had been occupied by the Seventh Earl. According to those plans, the parts of the castle that they occupied were as follows.

[62]On the ground floor they occupied the old kitchen, the servants’ hall, the kitchen and breakfast room, the pantry kitchen, the dining room, the smoking room, the oak dining room and the tower room. On the first floor they occupied another dining room, the pantry, the whole range of rooms on the south side of the castle, and all the bedrooms on the east side, with the exception of the “ugly” bedroom.

[63]Lady Sandhurst, who was a friend of the Eighth Earl and Countess, produced different plans, showing the areas occupied by the Earl and Countess. According to those plans they occupied nothing on the ground floor. On the first floor they occupied the whole range of rooms on the south side of the castle, a kitchen and dining room on the west side and one bedroom on the east side adjacent to the bathroom in the south east tower. They also occupied three rooms on the second floor.

[64]According to Lady Sandhurst’s plans there was no overlap between the accommodation occupied by the Eighth Earl and Countess and that occupied by the Seventh Earl and Countess. I think that this is likely. Lord Macclesfield put it in cross-examination as follows:

“Up until the death of grandparents, mum and dad lived on the first floor. After their death they did as they pleased obviously and they used the breakfast room, kitchen next to it… Then they used and occupied the ground floor.”

[65]Later in the story the Eighth Earl claimed a tenancy of part of the castle, as I shall explain. The parts of the castle that he said were within his tenancy were: Ground floor South side Kitchen and breakfast room next to it First floor West side Kitchen and dining room South side Work room, sitting room, the Earl’s sitting room, the Earl and Countess’ bedroom and two spare rooms Second floor South side Two rooms

[66]The overall impression I have is that the precise accommodation that the Eighth Earl and Countess occupied varied from time to time, and that there was no fixed accommodation allocated to them. As Lord Macclesfield said in evidence:

“By that time [i.e. when he moved in], in a sense, Mum and Dad had done a certain amount of swapping with the 7th Earl and his wife by moving breakfast and cooking quarters down to the ground floor. There was no suggestion that there was a need to consult the company over this.”

[67]They did not, however, so far as I can judge, make much (if any) use of the North and South libraries or the state rooms, with the possible exception of the occasional use of the dining room and smoking room.

[68]What is clear is that neither the Seventh Earl nor the Eighth Earl occupied the whole castle or claimed the right to do so.

The chattels

[69]As I have mentioned, the Seventh Earl gave Richard Parker most of the chattels in the castle in 1967. They have (so far and with the exception of the Newton papers) remained in the castle ever since. The books, which are antique and rare books, are mainly housed in the North and South libraries on the first floor. There are a number of pictures in the two libraries, the drawing room, the smoking room, and the dining room. There is an extensive collection of arms and armour displayed in the baronial hall. There are a number of gilt mirrors, which have the appearance of being bespoke, in a number of different rooms in the castle. Finally there is a quantity of miscellaneous furniture, but none of it is of exceptional size.

[70]In addition to these items, there are numerous other chattels within the castle, which belong to different members of the Parker family. Some of these were bequeathed by the Seventh Earl; and others by the Dowager Countess.

[71]One room in the castle, the tower room on the ground floor, which used to be the Seventh Earl’s study, is now locked. The locks were put on by the company, and I do not know what is inside it.

Deadlock in the family

[72]The fact that the shares in the company were held equally by the two branches of the family has led to deadlock in the management of the company. It has also led to considerable ill-feeling between the two branches. I do not need to go into the details of all the matters of disagreement, but a sketch is necessary.

[73]In 1985 Robert Parker was interested in taking a lease of the Old Vicarage in Shirburn. He had no home on the estate. At the time he only had a small shareholding in the company. The terms he proposed were for a lease of 35 years at a rent of £150. This gave rise to a fear that the grant of a lease on those terms might give him the right to enfranchise under the Leasehold Reform Act 1967. Mr Shorey of Herbert & Gowers, the company’s solicitors, advised against the proposal. Mr Shorey was also the company secretary. The Board met on 6 November 1985. The Hon David Parker was the chairman at the time. The proposed lease was rejected by the Board, although it was suggested that the Old Vicarage could be sold to Robert Parker outright. Mr Parker felt that the Board’s decision was unfair and that he was being treated in an oppressive and discriminatory manner. After some procedural skirmishing, an EGM of the company was held on 9 January 1986. Mr Robert Parker complained about the beneficial terms on which the Eighth Earl occupied the castle, and compared it with his own treatment over the Old Vicarage. He was informed at the meeting that the Earl’s occupation of the castle was not governed by a lease or tenancy, but “was based on tradition or custom in the family”. He was also told that counsel had advised that the board should not agree to the terms that Mr Parker had proposed for the lease of the Old Vicarage. It was at this meeting that Mr Parker was appointed as a director of the company.

[74]The deadlock between the two branches of the family was such that it was perceived at that time that the only solution would be to demerge the company, with each branch taking an equal share of its assets. At the board meeting of 5 February 1986 the Hon David Parker, as chairman, was deputed to ask Mr Shorey for advice about how this could be done. He also agreed to ask Mr Shorey:

“if a short term tenancy could be drafted to allow Mr Robert Parker to live in the Old Vicarage prior to the demerger of the Company, without compromising the position of the Company in any way.”

[75]Lord Macclesfield accepted in evidence that the thinking behind this was that the grant of a long lease could devalue the Old Vicarage and that, in the context of a possible demerger of the company, it was important not to change the status quo. The board, at this time, consisted of the Eighth Earl (managing director), Viscount Parker (chairman), the Hon David Parker, the Hon Jocelyn Parker and Mr Robert Parker. The composition of the board was such that there was an in-built majority of the “senior” branch of the family. Upon many occasions thereafter the board split on family lines, with the result that proposals put forward by the “cadet” branch of the family were routinely defeated. I have no doubt that this contributed to the dissatisfaction felt by the “cadet” branch.

[76]Mr Parker was still dissatisfied about the Old Vicarage. He asked if he could take his own legal advice about the possibility of constructing a lease that would not compromise the company. At the board meeting of 7 May 1986 it was agreed that if “a lease” could be constructed that did not compromise the company in any way, then Mr Robert Parker could take the lease. The natural reading of that minute, to my mind, is that “a lease” was being contrasted with a “short term tenancy”, and that the thinking was that it might be possible to grant Mr Robert Parker a long lease that did not devalue the property.

[77]Discussions over the demerger had been delegated to the Eighth Earl and the Hon Jocelyn Parker as the respective heads of the two branches of the family. They took advice from Mr Shorey. One potentially insuperable problem was that of capital gains tax, if property was to be transferred out of the company. Another problem was how to divide up the properties between the two branches. The Eighth Earl was insistent that on any demerger his branch of the family should retain the castle.

[78]Very little progress was made. Discussions took place between Mr Taylor (solicitor for the Hon Jocelyn and Robert Parker), Mr Shorey (in effect representing the Eighth Earl and Viscount Parker) and Mr Carlisle, a surveyor. Mr Shorey wrote to Viscount Parker on 19 June 1989 suggesting three possible ways forward. The first was the grant of fresh agricultural tenancies by the company to the various members of the family. The second was a total demerger. The third was for the Hon Jocelyn Parker and his family to be bought out “on the basis that the Castle should remain with your family as the holders of the title.”

Family farms

[79]Many members of the family (including Viscount Parker, the Hon David and the Hon Jocelyn Parker) were tenants of farms on the estate. Viscount Parker was the driving force behind the company policy that the rents payable by the tenants (including himself) should be arms’ length market rents. But all the directors were aware of their legal duty to act in the best interests of the company.

[80]The details do not matter, but throughout the ensuing parts of the narrative, there was running in parallel a series of negotiations about increases in the rents of farms, and the terms of the agricultural tenancies held by the tenants. It seems that the Hon Jocelyn Parker did not hold under a full repairing lease, and Viscount Parker thought that he ought to. The Hon Jocelyn Parker also claimed that he was not the sole tenant of Pyrton Field Farm, but that his son Robert was his co-tenant. After an abortive reference to arbitration, the company conceded this claim.

[81]Mr Robert Parker’s evidence about these disputes was, to say the least, selective. For example he said that he and his father did not dispute the advice given to the company by Cluttons, the company’s land agents, whereas it was clear from the documents that they fought their corner very hard indeed.

[82]The disputes over rent and terms were a further cause of friction between the two branches of the family.

The Eighth Earl’s status in the castle

[83]In the meantime, the question arose of the Eighth Earl’s status in the castle. The Earl had been making periodical payments to the company, at a level of £575 per annum, set by the company’s accountants, Grant Thornton. It does not appear that he paid for anything other than the rooms he occupied, in accordance with the arrangement that he had been advised to set up when he moved into the castle to share it with his father. If the Inland Revenue could be persuaded that this amounted to a commercial letting, then tax relief on the cost of repairs could be allowed. In addition, if the Inland Revenue could be persuaded that the Earl was paying the maximum lawful rent, then he would not be taxed on the benefit of living in the castle. The latter point raised the question whether the Eighth Earl had a protected tenancy within the meaning of the Rent Acts, and if so, of what. The Revenue were not receptive to the argument. In a letter of 14 September 1989 the Revenue asserted that the Earl did not enjoy a tenancy protected under the Rent Acts. The ground for the contention was that the Earl was the tenant of the whole of the castle and that the rateable value of the castle exceeded the Rent Act limits. The Revenue also contended that the rent paid by the Earl was below the open market rental value either of the suite of rooms he occupied or the castle as a whole. The District Valuer had advised that the open market rental value for a suite of rooms was £12,000 to £15,000 per annum and £25,000 to £30,000 for the castle as a whole.

[84]Viscount Parker sent a copy of the Revenue’s letter to Mr Carlisle. Mr Carlisle advised that the Eighth Earl’s occupation of the castle should be put on “a formal and proper basis unless there are good tax reasons not to.”

[85]On 6 October 1989 Mr Robert Parker raised with both Mr Carlisle and Mr Shorey his fear that each of them might have a conflict of interest. Although he did not explain the precise nature of the perceived conflict, it was, to my mind, obvious. It was clearly in the interests of the Eighth Earl if he could assert a claim to the protection of the Rent Act. It was clearly adverse to the company’s interests if such a claim succeeded. Mr Shorey was dismissive of Mr Parker’s fear. Mr Carlisle was slightly less dismissive, but also expressed the view that there was no conflict. In my view both of them were plainly wrong. There was a clear conflict, and as events unfolded, Mr Shorey in particular was clearly aligned with the Earl against the interests of the company.

[86]Viscount Parker instructed Mr Carlisle on 23 October 1989 to contact the District Valuer with a view to agreeing the rental value of the castle. This he did, and he reported that the District Valuer was prepared to agree a rental value of £12,000 per annum.

[87]At the board meeting of 6 February 1990 Mr Robert Parker returned to the question of the Old Vicarage. He proposed that the company should offer him a lease on the Old Vicarage “on as favourable terms mutatis mutandis as the occupancy of the Castle”. The board split on family lines, but Viscount Parker said that he would obtain legal advice on the legality of the proposal. Mr Shorey duly advised. His advice was that Mr Robert Parker’s proposal was a non sequitur, for the reasons set out in his letter of 22 February 1990. First, he said, the Eighth Earl was probably a protected tenant “as regards his accommodation in the Castle”. Second, he said, the Earl of Macclesfield “occupies the Castle by virtue of his title and as Managing Director of the Company”. Third, he said, the Earl could argue that he should be paid a salary for duties he performed on behalf of the company.

[88]At the same meeting on 6 February Mr Robert Parker produced a letter from Mr Carlisle in which the latter reported that he had agreed a fair rent of £12,000 for the castle. Mr Robert Parker thought that that was too low and suggested that it would be possible to obtain a rent in excess of £30,000. This suggestion provoked a heated reaction from the Hon David Parker. According to the minutes, he said that:

“this level of rent would drive his father out of his house, which would be tantamount to killing his father and would Mr Robert Parker like to take a knife out of the nearest drawer and use it.”

[89]At the same meeting the Hon Jocelyn Parker and Mr Robert Parker proposed a resolution that the company should instruct an independent valuer to advise on the open market rent of the castle and also on a fair rent, so that the board could take a decision based on independent advice. The resolution was considered by the Board at its meeting on 6 March 1990. Viscount Parker, by now the chairman, said that since Mr Carlisle had concluded the negotiations he had been asked to undertake, the matter was now concluded. The board once again split on family lines and the resolution was lost.

[90]In the meantime Mr Shorey and Mr Carlisle were considering whether the Eighth Earl had a protected tenancy. They had ascertained that the rateable value of the castle was £930. Mr Shorey’s first thought was that the rateable value could be apportioned as between the castle on the one hand, and its outbuildings on the other. If the apportionment brought the rateable value below £750, then any tenancy the Earl had would be protected (because £575 per annum was more than two thirds of £750). On 5 March 1990 the District Valuer reported that a proper apportionment would attribute a rateable value to the castle of £763, still above the relevant limit. Mr Carlisle was therefore asked to investigate the rateable value of the castle in 1965. If it was below £200, then, once again, any tenancy that the Earl had would be protected. However, on 4 June 1990 the District Valuer reported that the rateable value of the castle in 1965 was £422. So a tenancy of the whole of the castle would fall outside the Rent Acts.

[91]Mr Shorey’s next thought was that the Earl might not have a tenancy of the whole castle, but only of the rooms he occupied. He put this to Mr Carlisle. Mr Carlisle was inclined to disagree, but he suggested, in his letter of 12 April 1990, that for the future it would be better to arrange matters formally; so that the Earl had a tenancy of the suite of rooms he did occupy, and the company could then take back the remainder of the castle. Mr Shorey did not favour this suggestion, and said that it would be better to persevere to see if they could get closer to the true position of the existing tenancy.

[92]In December 1990, on the advice of Mr Shorey, the Eighth Earl wrote to the directors of the company claiming a protected tenancy of part of the castle. The parts of the castle that he said were within his tenancy were: Ground floor South side Kitchen and breakfast room next to it First floor West side Kitchen and dining room South side Work room, sitting room, the Earl’s sitting room, the Earl and Countess bedroom and two spare rooms Second floor South side Two rooms

[93]The Earl’s claim was discussed at the board meeting on 8 January 1991. The Hon Jocelyn Parker asked for more details of the Earl’s claim and asked to see a copy of the tenancy agreement. He and Robert Parker also raised the question of conflict of interest. Viscount Parker said that he was aware of their views and had instructed Mr Shorey to copy the letters on the subject of the Eighth Earl’s tenancy to Mr Taylor (the solicitor acting for the Hon Jocelyn and Robert Parker). This was more conciliatory than previous responses, but the conflict of interest remained.

[94]Mr Shorey wrote to Viscount Parker on 16 January 1991, suggesting that the Hon Jocelyn Parker should put his questions directly to the Eighth Earl. On the same day he copied his advice about the Earl’s status to Mr Taylor. During the next few months the Earl’s status in the castle was touched on from time to time. Mr Shorey’s view (regularly copied to Mr Taylor) had shifted to some extent. He now thought that there were “grey areas”. Mr Carlisle still thought that the best solution was a compromise under which the Earl would be granted a tenancy of that part of the castle that he occupied.

[95]At the board meeting on 17 July 1991 it appears to have been agreed that Mr Carlisle should make a presentation to the Rent Officer with sufficient criteria to enable him to determine a fair rent. The only note of dissent recorded in the minutes was Mr Robert Parker’s request for a formal apportionment of the rateable value of the castle.

[96]Matters drifted through the remainder of the year, due in part to the Eighth Earl’s illness. In early January 1992 Mr Carlisle began the preparation of an application to the Rent Officer for the registration of a fair rent. On 13 January 1992 Mr Robert Parker wrote to Mr Carlisle, asking, in effect, for a progress report. Mr Carlisle responded by sending him a schedule of accommodation which he proposed to include in the application. The accommodation listed in that schedule was considerably more extensive than that referred to in the Eighth Earl’s original claim. It included, for instance, the dining room and smoking room on the ground floor and the white library on the first floor.

[97]On 27 January 1992 Mr Robert Parker wrote to Mr Carlisle on behalf of himself and his father. He said:

“While in principle my father and I are content for the Earl and his wife to occupy part of the Castle for their joint lives or the life of the survivor, we do not agree or accept the fact that the Earl’s previous tenancy was protected by the Rent Act 1977 nor that any new tenancy should gain that protection.”

[98]Mr Carlisle replied on 28 January. The substance of his reply was that no one knew whether the Earl’s tenancy was or was not protected by the Rent Act, but under the proposed compromise the new one would be.

[99]In the following month Mr Robert Parker told the board that he was seeking his own legal advice about the Earl’s status. At the board meeting on 6 May 1992 he told the board that the opinion he had was that “the castle is not a protected tenancy”. He expressed the view that the company should not apply to the Rent Officer but should seek a full market rent.

[100]The question of the application was discussed at the board meeting on 2 September 1992. Viscount Parker proposed that the application should go ahead. Robert Parker objected. The question was put to a vote. The Eighth Earl abstained. As usual the board split on family lines, so that there were two in favour of the application and two against. Viscount Parker used his casting vote as chairman and the proposal was carried. Viscount Parker gave instructions to Mr Shorey a few days later. The application was made on 8 October 1992. The application proposed a fair rent of £5,200 per annum for the parts of the castle that the Eighth Earl occupied. This is some indication of the rental value of that part of the castle in its then physical condition (although the tenancy would have been subject to the implied terms now contained in section 11 of the Landlord and Tenant Act 1985).

[101]On 20 October 1992 The Hon Jocelyn Parker and his two children requistioned an EGM of the company. The resolution they proposed was that the company should seek independent legal and valuer’s advice, and that, in the meantime, the application to the Rent Officer should be withdrawn. Mr Shorey’s view was that the requisition was invalid, but an EGM was in fact called by a notice dated 13 November 1992. The meeting was arranged for 9 December 1992.

[102]Mr Robert Parker said in evidence that his concern about the Eighth Earl’s claim was that it might give rise to three generations of protected tenancy. His principal concern was that Viscount Parker might become entitled to a protected tenancy. While I can see that if the Eighth Earl had a protected tenancy, his widow would have succeeded to it, Viscount Parker could only have succeeded to a protected tenancy if, at the date of her death, he had been residing with her for six months. Residence in another part of the castle would not have been enough; he would have had to have been resident in that part of the castle in which the Eighth Earl claimed a protected tenancy. That would have been highly unlikely. In addition, if the concern had been a genuine concern, it is inexplicable that Mr Robert Parker and his father were content for the Ninth Earl to move into the castle at all while his mother was still alive and living there. It is also noteworthy that the suggested concern about succession rights does not feature in any of the contemporaneous documentation. I am not a natural subscriber to conspiracy theories, and I do not consider that there was any sort of conspiracy to seek to secure succession rights for the Ninth Earl.

[103]In my view Mr Parker’s real concern about a protected tenancy was that it would lead to the payment of a rent which was not a proper market rent, but only a “fair rent” registered under the Rent Act. The suggested concern about succession rights is a later addition.

The Eighth Earl’s death and its aftermath

[104]Unfortunately the Eighth Earl died unexpectedly on 7 December 1992. But the EGM took place anyway. Viscount Parker, of course, succeeded to the title as the Ninth Earl. Mr Robert Parker argued that the application to the Rent Officer should be withdrawn because it was tantamount to a recognition that the late Earl’s tenancy was protected. The shareholders continued to discuss the resolution until the Hon David Parker left in distress, upset that the shareholders should discuss the accommodation in the castle so soon after his father’s death. His distress is entirely understandable. The meeting was adjourned.

[105]Following the closing of the meeting an informal discussion took place. Mr Shorey kept a full note of that discussion, which he sent to the Ninth Earl on 15 December 1992. Mr Taylor made it clear that his clients did not want to disturb the Dowager Countess’ occupation of the castle for the present. He suggested, and it was agreed, that the application to the Rent Officer should be deferred for six months. The note then continues as follows:

“Lord Macclesfield also indicated to the shareholders that he would be interested in taking a tenancy of the whole or part of the accommodation in the Castle when the future of the Castle was discussed at a later date. It seemed clear that for the moment the shareholders wished to keep the matter open, and Mr Taylor suggested that before the shareholders came to any decision about the future of the Castle, they should seek independent advice. DWS, in an attempt to clarify that, asked if the advice would involve the desirability or otherwise of selling the Castle or letting it. Mr Taylor confirmed that that was what he had in mind.”

[106]Lady Macclesfield told me in evidence that she did not know that her husband had given this indication. But she was not at the meeting. Mr Robert Parker, who was at the meeting, said that if Lord Macclesfield gave this indication, then he (Mr Parker) did not hear it. Whether or not Mr Parker heard it, I find that the indication was given. On 14 December 1992 Mr Carlisle withdrew the application to the Rent Officer.

[107]Following the Eighth Earl’s death, the Dowager Countess remained in occupation of those parts of the castle that she and her late husband had occupied together.

[108]The events recounted in the last few paragraphs are important for a number of reasons. First, the Earl’s interest was in taking a tenancy of the whole or part of the castle. It was not a case of all-or-nothing. Second, the Earl knew that the future of the castle was still something that had to be discussed by the shareholders, and not just by the board. Third, the other shareholders wanted to keep their options open, and those options included selling the castle or letting it to a third party. They would need independent advice on the future of the castle before taking a decision. Fourth, unless the Dowager Countess was disturbed in her occupation (which no one wanted), the Earl and Countess could not have moved in to the whole of the castle. In addition, Lord Macclesfield accepted in cross-examination that he knew he needed the consent of the company to live in the castle. He also knew that the company acted through the board; and that the authority of the board had not been delegated to any individual director.

The Ninth Earl moves to the castle

[109]Lord Macclesfield said that his mother did not want to share the castle at first. However, at about Easter 1993 she asked him if he would move in. Lord Macclesfield said that if he moved to the castle it would be impractical for him to continue farming Portobello Farm, and that his game business would have to be moved with him.

[110]The farming business at Portobello Farm was only marginally profitable. Lord Macclesfield also carried on a business of dressing game, through the medium of his company, Fentville Ltd. That business, too, was only marginally profitable. Lord Macclesfield accepted in evidence that both businesses were really hobbies, and that his financial well-being did not depend on them. The farm house at Portobello Farm was his home. However, it was not big enough to accommodate all the chattels that his grandfather had given him.

[111]Lord Macclesfield did not have a written tenancy agreement for Portobello Farm. But there had been negotiations between him and the company to settle the terms of his tenancy. One of the agreed terms was an obligation, on the part of the tenant, to reside in the farmhouse. So a move to the castle, on whatever terms, would, for practical purposes, have necessitated giving up the tenancy of the farm.

[112]On 14 May 1993 Lord Macclesfield applied, in the name of the company, for planning permission to change the use of one of the estate outbuildings (the Old Stores) for use for dressing game and retail and wholesale sales.

[113]On 7 June 1993 Lord Macclesfield wrote to the Hon Jocelyn Parker. He said:

“Various factors that come to mind over the Castle rent (1) the company requires that the Castle expenditure be tax deductible (2) the Revenue requires a correct rent probably interpreted as a director not getting an advantage. What is a correct rent under all the circumstances! The whole Castle will not be exclusively occupied by the E of M. It has not been for some time. In addition there is a “Granny flat” – an additional source of income in the eyes of both BEC and the Revenue. The main occupier – one E of M after another has taken caretaker responsibility for that part of the Castle not occupied. The Castle rooms are used by BEC to a limited extent for AGMs and Board meetings. Each E of M has overall responsibility for problems that arise out of the house. It is not required by BEC that E of M lives in Shirburn Castle –but life would be very difficult if he did not – particularly as E of M & BEC are synonymous in some minds for some purposes. Recently the thought that BEC could obtain income from “filming rights” has become a reality. This has come about through agreement of E of M (as tenant) to accept film crews but allow BEC to collect the rental. BEC has also had the rental value of the contents which belong to members of the family who have allowed BEC to collect all. Historically E of M has paid the rateable value as rent with agreement of Grant Thornton (I think?) Out of all this lot and anything else that occurs to you has to come a “correct rent” for revenue purposes which I believe will be negotiated with an Inspector of Taxes at the end of the day. Let us just look at the effects of an extreme Inspector of Taxes’ decision on rent. An extreme low rent would solve one problem but would be unfair in terms of what I should pay for accommodation thus creating another problem. An extreme high rent would simply mean that I could not live at Shirburn Castle, would sell the contents that belong to me and move away. Not a prospect that I wish to contemplate because it would finish BEC – but the possibility exists.”

What is a correct rent under all the circumstances!

[114]Mr Robert Parker said that the first time he became aware of the Ninth Earl’s wish to move to the castle was when he saw this letter. I do not accept this evidence. The letter is clearly not written as an “opening shot”, and it presupposes that the Hon Jocelyn Parker already knew that Lord Macclesfield wished to move in. In addition among the documents that were disclosed late was a note, made by Mr Robert Parker himself, of a meeting on 4 June 1993. The note reads:

“Castle to be sorted by JP. E of M. RP.”

It is a reasonable inference that the letter of 7 June was prompted by this meeting. This is another example of Mr Robert Parker’s unreliability. The letter makes it clear that the Earl did not expect to occupy the whole of the castle exclusively. It also envisages that if the rent turned out to be too high, the Earl might not be able to live in the castle after all. It must follow that if, having moved in, the rent turned out to be unacceptable to the Earl, he was taking the risk of having to move out. In addition the letter recognises the “Granny flat” (that is the accommodation occupied by the Dowager Countess) as being an additional source of income for the company. It is implicit in this that the Earl recognised that it was the company’s right to control the “Granny flat” and to receive the income from it.

[115]The bundle contains a reply from The Hon Jocelyn Parker to the effect that in view of Mr Shorey’s advice the matter should be referred to the shareholders. Lord Macclesfield did not recall seeing this letter; and the Hon Jocelyn Parker does not mention it in his witness statement. It is, moreover, unsigned. I find that this letter was not sent. However, it is, I think, a fair reflection of the Hon Jocelyn Parker’s state of mind at the time.

[116]The Board met again on 7 July. Mr Robert Parker questioned why the planning application for the Old Stores had been made in the name of the company. Lord Macclesfield replied that it was less complicated to do it that way. Mr Robert Parker asked what the application was costing the company, but Lord Macclesfield explained that he was paying for it himself. Mr Parker returned to the subject at the next meeting on 4 August. Lord Macclesfield could not remember why it was less complicated for the application to be made in the name of the company. Mr Robert Parker asked for a short description of the proposals. Lord Macclesfield replied that “they were to help him to move to the Castle, bringing his game business with him.” Planning permission, limited to the dressing of game for retail and wholesale sales (rather than a general Class B1 use), was granted on 12 August 1993.

[117]The next board meeting was scheduled for 18 August 1993. Two days beforehand, on 16 August, Lord Macclesfield prepared a memorandum which he circulated to the directors. It read:

“Planning permission for the Old Stores has been granted, so I propose: (1) I move to Shirburn Castle – I hope 1st October 1993 (2) Portobello Farm to be let to my stockman, Mark Heaton. … Should I move to Shirburn Castle and Portobello cannot be re-let at 1.10.93, I would be responsible for up to another year, giving formal notice at Michaelmas 1993. (3) Agreement and Rent for the premises in the Castle yards would be negotiated by Cluttons on the same arm’s length basis as farm rents. I would be responsible for all setting-up and changeover costs.”

Should I move to Shirburn Castle and Portobello cannot be re-let at 1.10.93, I would be responsible for up to another year, giving formal notice at Michaelmas 1993.

[118]This proposal was considered by the board at its meeting on 18 August. The formal minutes on this topic say:

“The letter that the Earl of Macclesfield sent to the Directors was discussed and in response to questions said that he would like to take up residence in various rooms in the Castle, not yet finalised. Cluttons would negotiate with the Earl of Macclesfield over a new tenancy which will have to be agreed as an arms length transaction. This should also be agreed with the Inland Revenue so that repairs can be tax deductible.”

[119]The meeting was then adjourned until Saturday 21 August for further discussion. Mr Robert Parker made his own notes of the discussion on 18 August. One of them, drafted in the style of a formal minute reads:

“M’s proposal … to move into the Castle was considered. M stated that he wanted: (1) A separate lease for life occupancy of roughly the same rooms as the 7th Earl (2) Cluttons to negotiate on behalf of the Co. (3) Portobello to be let to M’s stockman (Mark Heaton) … It was agreed that M will give precise details of his requirements at the next Board meeting.”

[120]The other, is a contemporaneous note of the discussion. It reads:

“What part of castle – g’ma and g’pa [i.e. the 7th Earl and Countess]. Separate lease. Life occupancy. Who agrees rent and lease? Cluttons on behalf of company with M. Result to be approved by Revenue as arms length negotiation. Reason = repairs to castle.”

[121]Between 18 and 21 August Lord Macclesfield made a list of the rooms that he wanted to occupy. They were as follows: Ground floor Kitchen, breakfast room, turret sitting room, dining room, passageways First floor Far turret room & bathroom, passageways Second floor Two bedrooms facing lawn; bedroom & bathroom facing laundry, passageways

[122]Lady Macclesfield told me that her husband did not consult her over the contents of this list. The list was before the board when it resumed its meeting on 21 August. The Board’s decision was recorded in the minutes as follows:

“It was resolved in principle that the Chairman should move to the Castle and rent the stores and paint shop for his game business, providing that this does not compromise the Company. It was agreed that the Hon Jocelyn Parker would seek an agent to act on behalf of the Company. It was resolved, in principle, that the Hon Jocelyn Parker and Robert Parker could take over from the Chairman at Portobello Farm on a similar lease to that negotiated with the Chairman.”

[123]One of the important factual issues in the case is whether Lord Macclesfield’s request for a life occupancy was rejected by the Board during the course of this two stage meeting. There was a sharp conflict of evidence about this. Lord Macclesfield did not accept that his proposal for a life occupancy had been rejected by the board. He said that if it had been the rejection would have been recorded in the minutes. His evidence did not seem to me to be an independent recollection, but was heavily reliant on reconstruction from the minutes. Lord Macclesfield also said that if there had been a clear objection voiced at the meeting, he would not have moved from Portobello Farm. On the other hand, Mr Robert Parker said in evidence that he and his father voiced their objections and said that they did not want “another long tenancy”. This was a reference to the claim to a protected tenancy made by the Eighth Earl. The suggestion that Mr Robert Parker and his father voiced objections is not reflected in the minutes; nor in Mr Parker’s own notes of the meeting. Nor is it contained in Mr Parker’s witness statement, nor in that of his father. Mr Robert Parker’s witness statement dealing with the meeting does not suggest that anything in particular was said. In paragraph 111 of his statement he says that Lord Macclesfield proposed a life occupancy. He then continues:

“It was partly because my father and I were unhappy at that suggestion that it was agreed that an independent agent should be asked to advise. Therefore, although Richard may have wanted a life interest I cannot conceive that he did not know that this was opposed by other members of the board.”

This is not evidence of a clear objection having been raised, although on one reading the unhappiness must have been expressed in some way in order for the board to have concluded that an independent agent should be instructed. Mrs Mary Boone said in her witness statement:

“From the discussions I had at the time with my father and my brother Robert Parker … my recollection is that the question how long Richard should stay at the castle was not of prime consideration. Of greater significance was how “buttoned up” any tenancy agreement would be.”

[124]Mr Robert Parker’s oral evidence was, however, corroborated orally by the Hon David Parker. The Hon David Parker said that he could not remember the details of the meeting, nor whether things that were said were said at the first part of the meeting (on 18 August) or the second part (on 21 August). He said:

“this went on over two days. We went through all the possibilities of assignment, enfranchisement, we were not property lawyers, we are not land agents. Jocelyn sat there and said we can have no more long leases. It was quite clear what he said. That “not compromising the company” was a way of not having a row about the minutes.”

[125]His recollection of Jocelyn Parker’s objection appeared to me to be a vivid one. As he said in evidence:

“I will be definite about Jocelyn Parker, because I can still see him doing it.”

[126]There was considerable debate about the meaning of the phrase “providing that this does not compromise the Company”. In his oral evidence Lord Macclesfield accepted that it meant that the company was reserving its commercial interests generally, and that it was expected that the company would take independent professional advice before reaching a decision in the best interests of the company. I think that his evidence is probably a fair reflection of his understanding at the time. However, he also said that although there was no legal commitment “there was a moral arrangement, if you like, that my move to the castle would be long term”. Whether this is so is one of the central issues in the case. Mr Robert Parker said in his witness statement that his understanding of the phrase was that the lease would have to be negotiated on an arms’ length basis and it would have to be framed in such a way that the cost of repairs would be tax deductible. In his oral evidence he said that he understood that the phrase meant there would be no life occupancy. There had been an oblique reference to this in his witness statement. This tripartite understanding was corroborated by the Hon David Parker, both in his witness statement and his oral evidence. He said that in addition he understood the phrase to mean that Lord Macclesfield was not to have long term protection, although he (David Parker) thought that Lord Macclesfield would have a fixed term of years. What he had in mind, he said, was that Lord Macclesfield would be granted a fixed term, without security of tenure, but that the term would be renewable in line with the normal policy of the estate, which was to renew tenancies unless the tenant had misbehaved. This level of detail was not in the Hon David Parker’s witness statement either.

[127]I find that Lord Macclesfield made a clear request for a life occupancy. I find that the Hon Jocelyn Parker (perhaps supported by his son Robert) did express unhappiness, but I am not prepared to find that it was as explicit as Robert and David Parker suggested. I find that the Hon Jocelyn and Robert Parker made what Mr Kosmin QC called in his closing submissions “negative noises”. I consider that the Hon David Parker is mistaken in the details of his recollection, vivid though it seemed. I also find that the Board as a whole did not decide finally to reject the request. No one suggested that the Board voted on the Lord Macclesfield’s request. Bearing in mind how the Board had dealt with previous requests by family members, I consider that if there had been a final rejection of Lord Macclesfield’s request, there would have been a vote. Lord Macclesfield’s desire for a life occupancy was clearly recorded, and if it had been finally rejected, the rejection would, in my view also have been recorded. But if there was no express rejection of a life occupancy, there was no express approval either. When Mr Hinks suggested to Lord Macclesfield that a life occupancy would compromise the company he answered that that “was entirely in the hands of those appointed to do the negotiations”. Lord Macclesfield understood that the company was reserving its commercial interests generally and that it would take advice before reaching a decision. This militates against any agreement in principle for a life occupancy. In my view, by the end of the meeting on 21 August the question of the terms of the Earl’s occupation (including its duration) remained an open question, to be revisited once the company had received its professional advice, and Lord Macclesfield knew that this was so.

[128]Mr Parker also said in oral evidence that on 18 August he and his father did not want Cluttons to do the negotiation. However, that evidence is clearly contradicted by the terms of the agreed formal minute, and I reject it. However, at the adjourned meeting on 21 August the minute authorised the Hon Jocelyn Parker to seek an agent to act for the company. So there had been a change between 18 August, when Cluttons seemed acceptable, and 21 August when the Board decided to engage a new agent. What was expected is that there would be a negotiation between Lord Macclesfield and the company’s newly appointed agent.

[129]On the same day (21 August), Mr Robert Parker wrote to his solicitor, Mr Taylor. He said in his letter:

“Lord Macclesfield wishes to move into the Castle and convert the Stores to a game larder by the 1st October this year. This would be before the terms of a lease or rental figures are agreed and before chattels and furniture can be removed from the let rooms in the Castle. My father and I feel that the move should take place after these terms and figures are agreed and the alterations completed. Lord Macclesfield claims that the Company will not be compromised because, in Company Law, he would have to vacate if terms were not agreed. Are there any legal reasons for which we could delay his move until all outstanding matters are settled?”

[130]The reply to that letter (if there was one) has not been disclosed. Mr Robert Parker claims not to remember whether Mr Taylor made any response. However, it is important to record that Lord Macclesfield accepts that he made the statement that the letter attributes to him. Accordingly I find that Lord Macclesfield told the board on 21 August that if terms were not agreed then he would have to move out. This too shows, to my mind, that Lord Macclesfield accepted that even if he moved to the castle there was a risk that he would have to move out again. Lord Macclesfield said in evidence that if terms were not agreed then they would have to be determined by arbitration. However, he also accepted that arbitration was never mentioned. He explained this by saying that he understood agreement to include arbitration. I do not believe that this was his conscious thought at the time; and, even if it was, I do not believe that it was shared by the remainder of the board.

[131]On 1 September 1993 the Hon Jocelyn Parker wrote to Lord Macclesfield. He said:

“Please let me have as agreed, a revised accurate plan and details of your proposed requirements in the Estate Yard, in order that I may proceed with this matter as soon as possible, bearing in mind your urgency. Upon receipt of the plan, services requirements and Yard/access requirements I will endeavour to have a proposal drafted by the end of this month. In the same vein, as discussed the other day at Portobello, the proposed accommodation in the Castle must also be clarified without delay. However, having also spoken with your mother, it is not realistically possible for a lease to be drafted and valued and for you to take up residence within the next month, bearing in mind the complexity of the matter. I expect to hear from you soon.”

I expect to hear from you soon.”

[132]This letter seems to me to envisage that a lease would have to be drawn up and a rent agreed before Lord Macclesfield moved into the castle. It also indicates that the company had not yet formulated its “proposal”. These indications point away from a conclusion that the company was already committed to anything in particular. In early September 1993, Lord Macclesfield prepared a revised list of the accommodation in the castle that he wanted to occupy. Again, Lady Macclesfield was not consulted. On the ground floor, he added a WC. On the first floor, he added a dressing room adjacent to the main bedroom. He also added parking for three cars. Some of these rooms were in use by the Dowager Countess at the time.

[133]The Hon Jocelyn Parker had, in the meantime, been seeking an agent in accordance with the Board’s resolution of 21 August. He approached John D Wood & Co. On 22 September 1993 Mr Nicholas Hextall FRICS of that firm prepared a memorandum for consideration by the Board. The memorandum set out what he understood his brief to be. He first said that he understood the proposal to be that the Earl of Macclesfield was considering moving into a part of the castle. He described his brief as follows:

“1. To meet with the Earl of Macclesfield and inspect Shirburn Castle and the proposed premises. 2. To consider all aspects of the proposals. 3. To submit a report to the Directors with my advice and recommendations. 4. On receipt of instructions, to consider the rental and advise on proposed rental levels, taking into consideration terms, outgoings and other salient factors.”

[134]The board, including Lord Macclesfield, met and approved the terms of Mr Hextall’s brief. Although Lord Macclesfield said in his witness statement that Mr Hextall was instructed to advise about rental levels only, he accepted in his oral evidence that his recollection was wrong. Mr Hextall was to carry out a two-stage process. First, he was to consider the proposals generally. Then, on receipt of further instructions, he was to deal with rent. Mr Hextall’s instructions were confirmed by the Hon Jocelyn Parker, on behalf of the board, on 27 September 1993.

[135]Mr Hextall visited the castle on 4 October and again on 8 October. Lord Macclesfield, the Hon Jocelyn Parker and Mr Robert Parker were present on 4 October. Mr Robert Parker made a note relating to that meeting. He noted (among other things): “Minimum tenure?” It is not clear whether that was a note to himself to raise the question of tenure, or whether it was a record of what somebody said. I place no weight on it. In his first witness statement Mr Hextall said that he met Lord Macclesfield on 8 October 1993. However, Lord Macclesfield said that the meeting took place on 4 October, and in his second witness statement, Mr Hextall agreed. Mr Hextall said that at the meeting he had discussions with Lord Macclesfield about the precise rooms that he was to occupy within the castle. Mr Hextall’s statement continues: “My recollection was that he wanted to use the whole of the castle but that the company was not prepared to agree to this and we, therefore, discussed which parts of the castle he could occupy and how the areas in the castle would need to be allocated. In particular, we considered which areas of the castle would need to be “common parts” so that he could gain access to the parts he used. At the time I was aware that part of the castle was already occupied by the Earl’s mother, the Dowager Countess, and her interests also had to be taken into account.”

[136]This evidence was not challenged in cross-examination, and Mr Kosmin confirmed during the course of Mr Hinks’ re-examination of Mr Hextall that he accepted it. The board met on 6 October 1993. It was reported that Mr Hextall had inspected the castle and required plans to be prepared. The board agreed. Mr Hextall immediately set about commissioning detailed floor plans of the castle. At the same meeting the board also agreed that Lord Macclesfield could give up the tenancy of Portobello Farm without formal notice, and that the Hon Jocelyn Parker and Mr Robert Parker would take over the farm on or about 1 November 1993.

[137]Through October 1993 Lord Macclesfield began to sell the livestock which had been on the farm in preparation for giving up the tenancy. He also began to commission works to the Old Stores.

[138]Mr Hextall produced a draft report on 13 October and sent it to the Hon Jocelyn Parker. He discussed its contents with Mr Robert Parker, as a result of which he made minor changes. I do not find anything sinister in this. The negotiations were to be arms’ length, and in any event some of the changes were in the prospective tenant’s favour. The only substantive change in the landlord’s favour was the proposal that the tenant should pay the legal costs. But in the first place Lord Macclesfield’s own proposal was that he should pay the “setting up and changeover” costs; and in the second place a requirement for the ingoing tenant to pay the landlord’s costs is standard commercial practice.

[139]On 18 October 1993 Mr Hextall produced his final report. He sent four copies of it to the Hon Jocelyn Parker. However, for some reason, it does not appear to have been given to Lord Macclesfield until 3 November 1993, when the board met again. Mr Robert Parker suggested that it might have been left in a rack in the estate office some time earlier for Lord Macclesfield to collect. However this was a suggestion rather than a memory, and I do not accept it. I do not, however, think that this was a deliberate attempt to ambush Lord Macclesfield. It was, in my view, the well known alternative to conspiracy. I shall deal with the contents of the report when I deal with the meeting of 3 November.

[140]Through October, and into November, Fentville carried out works to the Old Stores in order to fit it out for its business. The works consisted of improving or installing drainage, the rendering of the walls and so on. The cost of the works was somewhere between £7,000 and £12,000.

[141]Lord Macclesfield had instructed Mr Steven Brett to act for him in connection with the surrender of Portobello Farm. On 20 October 1993 Mr Brett wrote to Lord Macclesfield. He said, among other things, that he needed a set date to work to.

[142]On 29 October 1993 Lord Macclesfield, acting as chairman of the board, gave instructions to Mr Miles Tuely of Cluttons to act on behalf of the company. His letter said that he would be giving up the farm on 8 November 1993.

[143]Lady Macclesfield said that she and her daughter moved into the castle over the weekend of 30/31 October. She said that there were three reasons why she was able to be confident about the date. First, she remembered that it snowed that weekend. As it happens, the Hon David Parker is a keen meteorologist. He produced weather records that he kept at Model Farm, which is close to the castle. They showed that the first snow that autumn was at the weekend of 21/22 November and that no snow fell on the weekend of 30/31 October. But both Lord and Lady Macclesfield said that the snow was at Portobello Farm, rather than at the castle itself, and that as the farm is some 400 feet higher than the castle, it is not uncommon for the weather to be very different. The Hon David Parker disagreed with this. He said that the change in temperature on account of the height of Portobello Farm would not have been great enough for it to have snowed at Portobello Farm, given the weather conditions that he recorded at Model Farm. Second, Lady Macclesfield also remembered that she was already living in the castle when Lord Macclesfield, who was still sleeping at the farm, came over in the evening to tell her that her brother had died in tragic circumstances. She placed that as 2 November, the date of her brother’s death. Lady Macclesfield’s brother had been found dead in a hotel in the USA. The date of his death had originally been certified as 3 November, but following a post mortem, that was changed to 2 November. It seems to me to be likely that his body was not discovered until 3 November, and that Lady Macclesfield did not learn of his death until the evening of 3 November, rather than 2 November. But I do not think that matters. Third, Lady Macclesfield was about to celebrate her 50th birthday, and had arranged to have a party at the castle. She remembers that she was already living at the castle when the party took place. Mrs Strolin is an American friend of Lady Macclesfield. She came over for the birthday party. According to her statement (which was put in as hearsay evidence) she arrived at the castle on 5 November. Lady Macclesfield was already living there. Many of her possessions were not yet unpacked. There are three other pieces of evidence that support Lady Macclesfield’s account. First, the Hon David Parker said that Lady Macclesfield was physically present in the castle during the week of her party, although he said that she was a guest of his mother. The second is a note written by Mr Robert Parker on a letter that he received from Lord Macclesfield on 5 November 1993. On part of the letter dealing with the castle, Mr Parker wrote:

“You have been allowed in without a lease”

. This points to the conclusion that Lord Macclesfield had already been let in. The third is a note made by Mr Parker in response to Mr Hextall’s later suggestion that a “rent holiday” for the Old Stores should run from 1 March 1994. Mr Parker’s note reads:

“Why 1st/3rd Nov. possession”

. This points towards Fentville having moved in between those dates. These two documents were also disclosed after Lord Macclesfield had concluded his evidence; and long after the company had required him to disclose bills and other documents evidencing the date of the move. Although the conflict of evidence over the snowfall is puzzling, I accept Lady Macclesfield’s evidence, and find that she moved into the castle over the weekend of 30/31 October, and took most of her possessions with her. Lord Macclesfield, however, remained at Portobello Farm until 21 November, and the farmhouse was sufficiently furnished for him to continue to live there. I think that the probable explanation of the conflict over the snowfall is that some furniture was left behind at Portobello Farm until 21 November and that the farm was finally cleared on that date.

[144]What of the Hon David Parker’s suggestion that Lady Macclesfield was a guest of his mother? This is based on a note in the Dowager Countess’s handwriting which reads:

“Richard not to come in without lease can come and stay with me”

. It is written on a letter from Mr Shorey. The Hon David Parker also says that he had a conversation with his mother in which she said that if the Earl and Countess came to stay with her they would not acquire successionary rights under the Rent Act. Ironically, if the Dowager Countess herself had had a statutory tenancy by succession, the best way to confer the right to a further succession on Lord Macclesfield would have been for him to live with his mother in the same household, as opposed to occupying a separate part of the castle. On the other hand, if Lord and Lady Macclesfield had moved in to a different part of the castle then, unless they paid rent (which nobody envisaged until a rent had been agreed), not even the most cautious lawyer would have seen any risk of creating a contractual tenancy. It seems highly improbable that Mr Shorey would have made such a fundamental legal mistake. Moreover the board minutes do not support the suggestion. The Dowager Countess’ note is susceptible of other interpretations. I do not accept that Lady Macclesfield moved to the castle as a guest of her mother-in-law.

[145]The board met on 3 November 1993. As I have said, Mr Hextall’s report was given to Lord Macclesfield at or shortly before that meeting. Mr Hextall’s report is an important document. It may well be, as Mr Kosmin QC suggested to Mr Robert Parker, that its perceived importance has grown as the case has progressed. In making my findings about this report, I certainly bear in mind that it was not specifically referred to or relied on when matters first came to a head; or in the early correspondence between solicitors. Mr Kosmin also suggested that Mr Robert Parker had “nobbled” Mr Hextall by telling him that the company did not want a long term occupancy, rather than letting Mr Hextall form his own view. It is true that Mr Parker gave Mr Hextall instructions to this effect, but I do not see this as a sign of bad faith. First, the board had resolved that an agent be appointed to act on behalf of the company. Mr Hextall was therefore the company’s agent. The company was entitled to give him instructions. Second, I do not believe that it would have been practicable to leave everything to Mr Hextall without giving him a framework within which to work. Third, it had been said at the shareholders’ meeting in December 1992 that the shareholders (rather than the board) would have to consider the future of the castle, which the grant of a long term interest would have impaired. Fourth, Mr Hextall in effect disclosed the instructions he had been given on the face of his report.

[146]Mr Hextall’s report is only 6 pages long. It is clearly expressed and well laid out, and would have taken no more than ten minutes to read. It began by setting out certain assumptions he had made. The first of them was that the company wished to retain maximum flexibility and not lose vacant possession of either property long term. This reflected the instructions he had been given, and was plain to any reader of the report. He then turned to the Old Stores. His advice was that full security of tenure must not be granted by the company to the tenant. His recommendation was for the grant of a tenancy for five years, contracted out of the Landlord and Tenant Act 1954. He then turned to the castle. He recorded “the proposition” as being that the Earl of Macclesfield wished to take an apartment within the castle for occupation with his family. His recommendation was that the company should enter into an agreement with the Earl “based on a shorthold tenancy in which possession can be regained if required”. He then set out heads of terms. They included (on page 5 of the report):

“3) THE PROPERTY: 1. Exclusive occupation of that part of Shirburn Castle as shown shaded blue on a plan to be prepared 2. Occupation in common with others of that part of Shirburn Castle shaded pink on the plan to be prepared 3. Exclusive occupation of that part of the grounds of Shirburn Castle as shaded green on a plan to be prepared 4. Occupation in common with others of that car park area and access shaded yellow on the plan to be prepared 4) TERM: From 1 November 1993 through to 31 October 1998”

[147]The board minutes record:

“It was agreed to consider further the exclusive use of part of the grounds. The terms of heading were agreed as per the report of John D Wood. It was agreed that negotiations for the old stores area could go ahead immediately but that negotiations for the Castle would have to wait for the plan to be completed.”

[148]Some light on the meeting is shed by Mr Robert Parker’s contemporaneous note. His note reads:

“J.D. Woods proposal. P 5 3) iii) Garden. Further consideration. Why is it [necessary] With exception of above Board agrees Heads of Terms as per report from J.D. Wood. He could go ahead with negotiations on Stores but those for Shirburn Castle will have to wait for the plan to be completed. Other car parking spaces needed – by the church?”

Other car parking spaces needed – by the church?”

[149]Lord Macclesfield said that he had not read the John D Wood report before or during the meeting. He said that had he done so, he would have noticed the reference to an assured shorthold tenancy and “got straight on to a solicitor”. However, the reference in the minutes and in Mr Parker’s note to the exclusive use of part of the grounds is a reference to one of the detailed suggestions that Mr Hextall had made. As Mr Parker’s note says, it is contained on page 5 of the report, so the pages must have been turned at least that far. Although the Hon David Parker did not have a clear recollection of the meeting, he believed that the Board either read through the report at the meeting or went through discussing it bit by bit. It need not have taken very long. He added:

“The important things were the length of the lease, which I thought was quite short, but I thought that would be negotiable, and the shorthold tenancy which was the vehicle I expected to come forward.”

Lord Macclesfield said in his witness statement that his recollection of the meeting was “hazy”. He also said in his first witness statement that the board discounted Mr Hextall’s advice. But this is flatly contradicted by the board’s agreement to the “terms of heading” in the report. Lord Macclesfield said that the agreement to the “terms of heading” was merely an agreement to the headings themselves, and not to the contents of the headings. I find that an implausible understanding of the board’s agreement as recorded in the minutes. Mr Robert Parker’s note uses the more conventional expression “Heads of Terms”. As regards Lord Macclesfield’s proposal for a life occupancy, which had been mentioned at the meeting on 18 August, Lord Macclesfield said that if it had been rejected, the rejection would have been recorded in the minutes. That point applies, as it seems to me, with far greater force to Mr Hextall’s report. If the advice contained in that report had been rejected, it is astonishing that the rejection was not recorded in the minutes. Moreover, long after Lord Macclesfield had had ample opportunity to read and consider Mr Hextall’s report, there is no recorded dissent from him about Mr Hextall’s proposals for a short term tenancy either of the Old Stores or of part of the castle. I do not accept Mr Robert Parker’s evidence that the report was discussed line by line. I find that Mr Hextall’s report was put before the board and considered by it, albeit briefly, and that, broadly, his proposals were accepted. Moreover the decision that negotiations could proceed over the Old Stores is the beginning of stage two of the two stage process envisaged by Mr Hextall’s brief. Lord Macclesfield agreed that this was so. I do not mean to suggest that Lord Macclesfield, in his capacity as tenant/occupier of the stores or the castle, was in any way bound by Mr Hextall’s report. But it seems to me that the proposals contained in that report were agreed by the board as being the company’s initial negotiating position, and that the company would seek to achieve a deal on those terms. I find that Lord Macclesfield knew that this was so on or very shortly after 3 November.

[150]The next item in the minutes records that the chairman would give up Portobello Farm on 8 November 1993 “but that he can guard it for a short while.” In his witness statement Lord Macclesfield said:

“Of course by the date the Report was received I had, in practical terms, if not in strict law, burnt my boats. My stock had been sold or nearly so, my stockman made redundant, my family and possessions were ready to move.”

[151]I agree that Lord Macclesfield had not burnt his boats in strict law. But I do not consider that he had burnt his boats in practical terms either. He had not actually surrendered the farm, and the move to the castle was not irreversible. New stock could have been bought. If Lord Macclesfield’s stockman had been unwilling to be re-employed (as to which there is no real evidence), there is no evidence that it would have been difficult to find another. Moreover, as Lord Macclesfield accepted in evidence, the farming business was little more than a hobby. I have no doubt that it would have been highly inconvenient to halt the move. But it would have been possible. It was not even a question of hiring removers, since Lord and Lady Macclesfield moved themselves, using Fentville’s van. Fentville had begun some works to the Old Stores, but by 3 November they were not far advanced. Mr Robert Parker spoke to Mr Hextall on 5 November. Following the conversation, Mr Hextall wrote to the Hon Jocelyn Parker. His letter said:

“…I confirm the following:- 1. That the conclusions of the report have been accepted in total by the Directors with the exception of clause 3) 3 on page 5. 2. That negotiations in connection with the apartment within Shirburn Castle should be held in abeyance pending the plans being produced by Robin Simpson 3. That I am to proceed with negotiations in respect of rentals for the Old Stores and Buildings in the Estate Yard.”

[152]This contemporaneous document corroborates the finding I have made about the board meeting on 3 November. It shows that, contrary to Lord Macclesfield’s evidence, the board had accepted Mr Hextall’s “conclusions” and not merely his headings. On 4 November 1993 Lord Macclesfield wrote to Mr Robert Parker (although the letter is wrongly dated 3 November). Under the heading “My move to Shirburn” Lord Macclesfield wrote:

“The estate gains income from the lease of an unused building. I gain nothing. The deal is arms’ length”

. The reference to “the deal” is some further slight evidence that Lord Macclesfield recognised that a “deal” had been done, or at least identified.

[153]On Sunday 7 November 1993 the Countess of Macclesfield celebrated her birthday by holding a lunch party at the castle.

[154]On 10 November 1993 Lord Macclesfield, as chairman of the board, wrote to Mr Tuely. He said:

“It is agreed that I give up Portobello Farm at short notice. It is agreed that Hon J Parker and Mr R Parker shall take over subject to terms. … While I have stated that I give up on 8th November, I think the arms-length problem means that I should accept responsibility till 19th November.”

[155]This letter seems to me to show clearly that on 10 November Lord Macclesfield did not regard himself as having already given up Portobello Farm, or even being committed to do so on any particular date. He was able to give it up on short notice. The die was not yet cast. The company was liable to pay tenantright to Lord Macclesfield as the outgoing tenant of Portobello Farm. Usually the outgoing tenant and the ingoing tenant negotiate this without the intervention of the landlord, but that did not happen in this case. Since the settlement of a tenantright claim is a specialist field, Mr Tuely passed the matter on to Mr St John, also of Cluttons. Mr St John and Mr Brett met at Portobello Farm on 17 November. Lord Macclesfield was there too, and Mr St John remembers his coming out of a farm building. Mr Brett had also been to the farm on 10 November. Either on 10 or 17 November Mr Brett went into the farmhouse. He remembers it being furnished, although not fully furnished.

[156]On 17 November 1993 Mr Tuely of Cluttons had a telephone conversation with Mr Anstey, the land agent acting for the Hon Jocelyn and Robert Parker. Mr Tuely said that the Hon Jocelyn and Robert Parker had until 21 November to decide “whether to take on the tenancy of Portobello Farm”. The company had demanded that they pay a non-returnable deposit of £500 on 22 November or else the tenancy would be granted to Mr Heaton, Lord Macclesfield’s former stockman. This stance on the part of the company (in effect Lord Macclesfield himself) is not consistent with the resolution of 21 August having created morally binding, let alone legally binding, obligations.

[157]Some time between 19 November 1993 (a Friday) and 21 November 1993 (a Sunday) Lord Macclesfield finally vacated the farm. Mr Kosmin QC suggested that the surrender took place earlier in November, on about 8 November. It is true that Lord Macclesfield envisaged giving up the farm on that date. It may also be the case that the tenantright valuation was made as of that date, although the evidence is not entirely clear. However, Lord Macclesfield remained in the farm until the weekend of 19/21 November; he paid rent until 21 November; Mr Robert Parker paid rent as from 22 November, and the memorandum recording the payment of the deposit (which I deal with below) also records the rent running from 22 November. He also subsequently told his counsel in the course of a conference that he surrendered the farm on 21 November. In my view the surrender took place on 21 November and not before. The surrender was a surrender by operation of law, and there was no preceding binding contract to surrender.

[158]In the early evening of 21 November Mr Robert Parker spoke to Lord Macclesfield on the telephone. Lord Macclesfield (in his capacity as chairman of the company) made it clear that he would not allow access to Portobello Farm unless the £500 was paid on the following morning. No doubt Mr Parker was angry. He made a note, which I think must have been a note to himself:

“£500 to buy time & then argue about his occupation of the Castle & Stores because Richard has overthrown minute of …”

[159]It seems to me that the clear inference to be drawn from this is that Mr Robert Parker wanted to make himself secure at Portobello Farm before dealing with Lord Macclesfield’s own occupation of the castle and the Old Stores. I would also infer that this strategy was prompted by Mr Parker’s perception that Lord Macclesfield was not adhering to the decision recorded in the minutes. That perception was in my view justified. In my view both Lord Macclesfield and Mr Parker behaved shabbily.

[160]Mr Robert Parker took over as from 22 November. For Lord Macclesfield there was now no going back. When he moved to the castle, the Dowager Countess was still in occupation. However, Lord Macclesfield told me that, for practical purposes, her accommodation was confined to the first floor.

Negotiations after the Ninth Earl’s move

[161]On 30 November 1993 Mr Hextall prepared a report on the proposed rent for the Old Stores. A copy of that report was passed on to Lord Macclesfield. Mr Hextall began by setting out his assumptions. His first assumption was that the Heads of Terms dated 13 October had been agreed. The reference to 13 rather than 18 October was a mistake, and was one which Mr Hextall repeatedly made. However no one was misled by it. In his report, Mr Hextall had commented adversely on the planning application that had been made. It was his view that the company ought to have applied for full office use. The heads of terms attached to his report again stated that the term of the proposed lease would be five years from 1 November 1993 to 31 October 1998. But he did not reiterate his advice that the tenancy should be contracted out of the Landlord and Tenant Act 1954. He proposed a rent of £7,000 per annum. This proposal drew a sharp letter from Lord Macclesfield. He strongly disputed Mr Hextall’s view that an office development would be desirable. He commented that the proposed rent was “a bit high, but realistic”. He made no comment on the length of the proposed term. He did not challenge the first of Mr Hextall’s assumptions (i.e. that the Heads of Terms had been agreed).

[162]On 14 December 1993 the floor plans of the castle were produced. On 17 December Mr Hextall wrote to Lord Macclesfield and sent him the plans, having first coloured them up to show possible areas of occupation. The four areas showed the rooms to be occupied by the Earl and Countess; rooms occupied by the company; rooms occupied by the Dowager Countess; rooms that were potentially public rooms and areas to be considered common areas. The proportion of the castle allocated to the Earl and Countess amounted to 5,217 square feet, representing about 20 per cent of the floor area of the castle.

[163]The first board meeting of 1994 took place on 5 January 1994. The board considered that some of the points raised in Mr Hextall’s letter of 30 November 1993 should be discussed by the whole family in the near future. Later in the month, Lord Macclesfield prepared a note for Mr Hextall. In that note he made a number of points about the shortcomings of the castle, and he also indicated that he would like the old kitchen to be included in the lease.

[164]On 25 February 1994 Mr Hextall sent Lord Macclesfield a report together with Heads of Terms for the castle for his consideration and further discussion. His report set out the areas to be allocated to the Earl and Countess. The square footage was reduced from his previous report, and the area now amounted to 13.5 per cent, as opposed to the previous 20 per cent. Annexed to the report were heads of terms and a draft tenancy agreement. The heads of terms are entitled:

“HEADS OF TERMS REGARDING A PROPOSED SHORTHOLD TENANCY Between THE EARL OF MACCLESFIELD And THE BEECHWOOD ESTATES COMPANY In connection with PART SHIRBURN CASTLE WATLINGTON”

REGARDING A PROPOSED SHORTHOLD TENANCY Between THE EARL OF MACCLESFIELD And THE BEECHWOOD ESTATES COMPANY In connection with PART SHIRBURN CASTLE WATLINGTON”

PART SHIRBURN CASTLE

[165]The text of the heads of terms envisages a term from 1 March 1994 to 28 February 1999 at a rent of £15,000 per annum. Under the heading “Tenancy”, they say:

“This agreement to be an Assured Shorthold Tenancy for five years, a copy of the type of agreement is attached herewith”

[166]Lord Macclesfield responded to Mr Hextall on 28 February 1994. He made a number of practical points about the inconvenience of the castle, but did not comment either on the length of the proposed tenancy or on its status as an assured shorthold. Significantly, he did not reject Mr Hextall’s suggestion that the castle might be used for corporate entertainment as well as filming. Mr Hextall’s report was presented to the board on 2 March 1994. The minutes record that the board considered that Mr Hextall had reported outside his brief. One mystery, namely that section A of Mr Hextall’s report dealing with the Old Stores had been struck though, was, in my view, explained by Mr Robert Parker’s contemporaneous note. Part of it reads “A 2 3 4 5 out”. In my view (and despite Mr Parker’s evidence to the contrary), it records the board agreement that paragraphs A 2,3,4 and 5 of Mr Hextall’s report should be deleted as going beyond his brief. This ties in with Lord Macclesfield’s complaints about Mr Hextall’s comments on the prospect of obtaining office planning permission. I do not consider that the references to Mr Hextall exceeding his brief can be understood as meaning that Mr Hextall ought not to have recommended terms of letting beyond rent levels. Following the board meeting, Mr Hextall was asked to explain what he thought his brief was. On 17 March 1994 Mr Hextall replied that his brief had been set out in his initial report to the directors of 22 September 1993. He plainly thought that he had not exceeded his brief. He sent a copy of his letter to Lord Macclesfield.

[167]The board met again on 11 May 1994. The minutes record:

“Re Old Stores. Mr N Hextall agreed that if the tenant were asked to leave, then there would be compensation. As an addition to his heads of terms, the Hon Jocelyn Parker will write to Mr Hextall to negotiate terms of the lease. Re Castle. Mr Hextall is adamant that £15,000 per annum is the correct rent. The Chairman disagrees. Mr Hextall then suggested that the tenant pays for any improvements required by the tenant and pay a peppercorn rent. The Chairman feels that this is a possible way forward. The Chairman aims to prepare a scheme for his requirements for the next meeting.”

[168]Some time later Mr Hextall met Lord Macclesfield and others at the castle to discuss the Old Stores. He reported on that meeting on 13 July 1994. He said:

“1. It is understood that the term will now be for 6 years. 2. It is understood that the rent will be £6,250 for the first three year period, term dates being as per the initial Heads of Terms. 3. I understand that it has been agreed that the Lessee will carry out certain works to the property, the costs will be recorded. I consider that such costs should be written down over the full period of the Lease to a nominal sum of £1 at the end of the period. 4. It was agreed by all parties that it was essential that the company have the ability to serve notice to terminate the agreement. I would suggest six months to be a reasonable period. 5. Should the tenancy be terminated by notice, compensation will be payable to the Lessee at the annual written down sum for the term occupied.”

[169]These terms were accepted by the company. However, when the letter was produced to the board at its meeting on 20 July, it was decided that certain points needed clarification. The Hon Jocelyn Parker was deputed to seek the clarification. Five days later Lord Macclesfield wrote to his uncle. He was resentful that he had not been given enough credit for the financial turnaround of the company. He proposed that there should be a vote of confidence in him at the next meeting, or, failing that, a proposal to wind up the company. He continued:

“Upon the assumption that this hurdle is successfully cleared, I suggest the next move is a family meeting to discuss the Castle rent. Given refurbishment by BEC, the maximum rent that is acceptable to me is £7,500. The arrangement whereby I spend as I see fit and pay a nominal rent is also acceptable. I agree with David that solving any problems with the Revenue created by the above, formalised by a 100% shareholder agreement, must be possible.”

[170]The board considered this letter at its next meeting on 10 August 1994. It was agreed that the letter should be considered at a family meeting to take place on 7 September 1994.

[171]On 2 September 1994 Mr Hextall produced a document for Mr Robert Parker. He said in evidence that he did so unasked (and Mr Robert Parker agreed); and that he remembered this document particularly. The document was intended as a proposal for Mr Robert Parker to put forward at the family meeting. However, Mr Parker said that it was not put forward. The significance of the document lies in its description of the “Main Aims” which include:

“Lord Macclesfield and his heirs to occupy the Castle on as permanent a basis as possible” and the proposal that: “The Earl and his heirs be granted a life tenancy of the Castle”

. This is some evidence that Mr Hextall, at least, thought that it would be possible for the company to enter into a life tenancy. But Mr Hextall’s proposal was made in the context of an overall proposal for a demerger of the company in which the value of the interest granted to Lord Macclesfield would be taken into account in any division of the company’s assets. In addition since Mr Robert Parker did not present this to the family meeting, and it does not represent his thinking at the time, I do not consider that I can place much weight on it.

[172]On 14 November 1994 the Hon Jocelyn Parker wrote to Mr Hextall expressing concern over Lord Macclesfield’s continued occupation of part of the castle without a formal agreement. Mr Hextall passed this on to Mr Shorey, with a recommendation that some form of assured shorthold tenancy be entered into. Mr Shorey replied on 21 November 1994. He agreed that the company should seek to agree with Lord Macclesfield the terms on which he and his family occupied parts of the castle, and that if those terms did involve a tenancy, a tenancy should be entered into. However, he said that he did not consider that the tenancy should be an assured shorthold tenancy. He sent a copy of his letter to Lord Macclesfield.

[173]On 24 November 1994 Mr Robert Parker wrote to Lord Macclesfield about the Old Stores. Mr Shorey wrote to Lord Macclesfield on 28 November 1994 about his status in the castle. He seems to have discussed this letter with Lord Macclesfield, because on 30 November he wrote to Mr Hextall saying:

“Lord Macclesfield considers that he is a service occupant of the accommodation at Shirburn Castle, being required by the Company to occupy that accommodation for the better performance of his duties and as caretaker of the property.”

[174]Mr Hextall sent a copy of that letter to Mr Robert Parker. He commented that although there was much debate as to the way forward, it would be sensible to grant Lord Macclesfield a shorthold tenancy of part of the castle at a nominal rent while the debate continued. However, the negotiations were getting nowhere. On 5 April 1995 the board agreed that John D Wood should negotiate with Mr Brett, on behalf of Lord Macclesfield, on the rent of the castle and the Old Stores. The board also agreed (by a majority) to accept Mr Hextall’s advice that Lord Macclesfield be granted a shorthold tenancy without gaining security of tenure until matters had been sorted out. On the following day Lord Macclesfield wrote to Mr Robert Parker suggesting that a valuer be appointed to act for the company. Mr Parker instructed Mr Hextall on 29 April. Lord Macclesfield, in turn, instructed Mr Brett. At some stage, Lord Macclesfield gave Mr Brett a copy of Mr Hextall’s report of 18 October 1993. Lord Macclesfield had since lost his own copy.

[175]Mr Hextall and Mr Brett, accompanied by their clients, met at the castle on 1 June. So far as the Old Stores were concerned, it appeared that the parties agreed that there should be a rent holiday to compensate Fentville for its expenditure on improvements, and reasonable break clauses in favour of the company. So far as the castle was concerned, there was less agreement. Mr Hextall reiterated his proposal of an assured shorthold tenancy. Mr Brett was dubious because of shared rooms and shared access. He also thought that the lawyers should draw up some long term arrangement. Lord Macclesfield, who was at the meeting, did not say that the proposal of an assured shorthold tenancy was unacceptable. Mr Hextall said in evidence (and I accept):

“I do not think the basis of occupation was ever a question. The basis of occupation was that it should be occupied for a period of time and possession could be gained; so the basis of occupation was very clear at all times. It was [a] question of how, what legal framework that would be put into – I used the shorthold tenancy process in order to try to indicate that that was the way in which we should proceed.”

[176]Following the meeting, Mr Hextall produced a new proposal for the allocation of rooms, which he sent to Mr Brett. Under this one, the Earl and Countess would occupy some 4,171 square feet or 17 per cent of the total area.

[177]Mr Brett reported to Lord Macclesfield on 2 June 1995. He dealt first with the Old Stores. He said that Mr Hextall had accepted the principle of a rent free period. The argument was over how long. Mr Hextall wanted one year, and Mr Brett wanted two. Mr Brett was confident of reaching agreement. So far as duration was concerned, Mr Brett thought that agreement was possible on a fifteen year term with break clauses at the fifth and tenth years or a straight five year term. The castle, he said, was “a very complex issue”: “The fundamental issue is the basis of occupation. Hextall has been talking of an Assured Shorthold arrangement, but I cannot imagine the solicitors would accept this could cover the situation. You have spoken of a service occupation. In effect your occupation helps look after the Castle."

[178]Mr Brett reported that Mr Hextall had accepted that no rent should be paid until improvements had been carried out. Mr Brett’s suggestion was that a report would be needed to specify what work needed to be carried out to create a lettable flat for Lord Macclesfield and his family. It would then be possible to agree a reasonable rent for the flat. Although Lord Macclesfield commented on Mr Brett’s letter to him, he did not disagree with the idea of a five year term for the Old Stores. Mr Brett wrote a letter to Mr Hextall covering this ground. So far as the castle was concerned, Mr Hextall replied that his main concern was “regularising the Earl’s occupation on behalf of the Estates Company”. Mr Brett’s response was that this was really a legal point. Mr Hextall took instructions from the company and replied on 24 July 1995. He said:

“My advice to the Estates Company can only be that a specific area should be allocated to Lord Macclesfield which can be separately serviced and occupied in isolation from the remainder of the Castle – such as the Countess’ old apartment. No other system – it seems to me – can be practicably worked – unless the Estates Company is happy to allow Lord Macclesfield to occupy on a caretaker/grace and favour basis.”

[179]Negotiations then stalled. No significant progress was made either over the castle or the Old Stores. Mr Hextall had difficulty in obtaining clear instructions from the company (acting through Mr Robert Parker). Although Mr Hextall and Mr Brett were very close to doing a deal over the Old Stores, no deal was done. As Mr Hextall laconically put it in his oral evidence:

“Instructions did not seem to be forthcoming”

. It is difficult to resist the inference that, for whatever reason, the company did not want to do a deal.

[180]In January 1996 Fentville began to make periodical payments, at the rate of £6250 per annum, for its use of the Old Stores. This was done entirely on Lord Macclesfield’s initiative. The payments were shown in the company’s annual accounts, but it is not contended that any tenancy came into being as a result of the payment and acceptance of “rent”. Fentville had enjoyed a de facto rent free period of about fourteen months.

[181]On 20 April 1996 there was a family meeting. It was attended not only by the shareholders in the company but also by Lady Macclesfield and possibly by the Hon David Parker’s wife, Lynne. Mrs Boone kept a note of that meeting, which was disclosed during the trial. The question of the castle was one of two main items for discussion. Mrs Boone’s note reads:

“Next the castle came up – Richard says hasn’t agreed terms for lease and at the same time will not agree terms as lease not possible as electrics unsafe and his life is constantly interrupted etc and therefore he should pay no rent. Lot of waffle about not being able to let it to anyone else. Sandy said if they had to pay they would move out and take “the toys”

. MB, RP & JP attitude so be it. TP and DP not keen on this. RP threatened winding up order – JP wanting divide. MB suggested trust but couldn’t back up her idea but asked to explore this further. MB only one to say she would not accept no rent. Timothy leaving the country if castle not inhabited by family member! Conclusions:- Richard to produce terms with his comments by the points Richard to reconsider his position Mary to expand trust idea Mary & Lyn to talk to try to avoid conflict and be go betweens Electricity problem to be looked into. Old wiring to be taken out.” Richard to produce terms with his comments by the points Richard to reconsider his position Mary to expand trust idea Mary & Lyn to talk to try to avoid conflict and be go betweens Electricity problem to be looked into. Old wiring to be taken out.”

[182]Lord Macclesfield wrote to Mrs Boone on 25 April. He did not comment in detail on the Heads of Terms, but instead gave details of a number of physical problems with the castle. It seems clear from his letter that at that time he still had his copy of Mr Hextall’s original report.

[183]On 7 August 1996 the Board agreed that the company should take legal advice with a view to protecting its position with regard to the castle and the Old Stores. Denton Hall were instructed to advise and gave their written advice on 6 December 1996. They advised that Lord Macclesfield was a tenant at will of the castle and Fentville was a tenant at will of the Old Stores. Lord Macclesfield saw a copy of Denton Hall’s advice. His only comment on the substance of the advice was that Denton Hall had not considered “the advisability/ability of Beechwood Estates Company to let premises which are illegal”. This refers to the poor physical state of the castle and to the contention that it was not fit for human habitation. Lord Macclesfield did not comment on Denton Hall’s conclusion that both he and Fentville were no more than tenants at will. Nor did he assert an entitlement to a life occupancy of the castle.

[184]In the light of this advice relations between the two branches of the family deteriorated even further. At its meeting on 19 March 1997 the board agreed to write to Lord Macclesfield to ask if he was prepared to pay an arms’ length rent for the castle. At about this time problems had arisen over the electrical system within the castle. Part of it was a very old 110 volt direct current system. Part was a newer 24 volt alternating current system. The 110 volt system was probably dangerous, and steps were taken to obtain quotations for rewiring. By June 1997 Mr Robert Parker was becoming impatient. He complained that the subjects of the castle and the Old Stores had not been discussed at either of the last two board meetings, and felt that it was imperative that they be discussed without delay. At the following meeting it was agreed to call a special meeting on 16 July. However, at that meeting the board did no more than agree to send a letter to Mr Brett’s firm “regarding payment of rent by the Earl of Macclesfield, assuming the completion of the electrical re-wiring.” A letter was duly sent on 21 July 1997.

[185]Mr Brett replied direct to Mr Hextall on 30 July 1997. He consulted Lord Macclesfield before he did so. He said that there were three issues which needed to be addressed. The first was the “correct legal basis of any agreement”. He said that a form of service occupancy, as opposed to an assured shorthold, was the more appropriate. The second was the condition of the castle. In addition to the wiring, Mr Brett also raised the question of the plumbing. The third was the rent. Mr Brett said that once the first two issues were established, he was sure that a rent would be agreed. However, he did not put forward any figure.

[186]The board met on 3 September 1997. The minutes record:

“The Board agreed that the Earl of Macclesfield has a caretaker role which should be valued separately from an agreed rent. A service tenancy was not agreed. The Chairman’s salary should be completely separate.”

The final break

[187]By now the two branches of the family were openly hostile. There were a number of disputes over access to the castle. Lord and Lady Macclesfield took the view that their privacy was being invaded. Accusations and counter-accusations of incivility followed. I need not resolve these. Suffice it to say that relations between the two branches of the family moved towards their nadir.

[188]In early January 1998 Grant Thornton were instructed to advise on possible restructuring of the company. They produced a report on 4 June. They discussed a number of possibilities, but concluded that there was no clear step which could be taken which would have the twin result of achieving the shareholders’ objectives, and avoiding a large tax bill. One of the shareholders’ objectives was the transfer of the freeholds of their tenanted farms and houses to the tenants. Amongst the options for the castle was the transfer of the castle into a trust, and the establishment of a maintenance fund, which would mitigate the impact of inheritance tax on shareholders. Discussions about the possibility of a heritage trust and maintenance fund continued for many years. There was a meeting at the castle on 2 July 1999 at which Lord Macclesfield seems to have objected to the proposals on learning that he would not be in full control of the castle. On 7 July 1999 the board met, and it was agreed that Lord Macclesfield would write to the board “concerning his occupation and his claim for a protected tenancy.” On 12 July Lord Macclesfield wrote to Mr Robert Parker. His complaint about the proposal to break up the company and the establishment of the heritage trust was that it would leave other members of the family with their own homes, but that he would not own his. He said that it was clear that some members of the family wished to evict him from the castle and he said that he would contend that he had protection. He repeated this objection in a letter sent to all the directors in November 1999. There was now an impasse over the proposed heritage fund. Lord Macclesfield did not wish to pursue the idea, but the rest of the board did. Grant Thornton have continued to pursue the idea of a heritage trust and maintenance fund. However, it has only reached what Mr Davis called an embryonic stage. I deal with this in the next section of this judgment.

[189]Towards the end of 1999 Mrs Boone commissioned Francis Johnson and Partners, chartered architects, to consider how the castle might be divided into self-contained dwellings. They produced a scheme in December 1999. It showed a possible division of the castle into four houses, one of which could be allocated to Lord Macclesfield. Lord Macclesfield said that the scheme and its accompanying plans were not shown to him until shortly before the trial. However, a file of documents, disclosed by Mrs Boone on the eleventh day of the trial, showed that Lord Macclesfield had been kept informed about the instructions to the architects and had been given the opportunity to meet them. While it may be true that he was not shown the particular plans that they produced, those plans were not what they were instructed to produce, and were not pursued by the Board. It cannot, in my view, be seriously suggested that the Board deliberately kept Lord Macclesfield in the dark.

[190]Francis Johnson and Partners also produced a schedule of works required to put the castle into repair. The total (including the cost of renewing services, and professional fees) comes to more than £2.6 million.

[191]In May 2000 a number of shareholders (including Timothy Parker) called for the future of the castle to be discussed at a forthcoming board meeting. Unknown to Lord Macclesfield, they had already decided to evict him. In preparation for the meeting Lord Macclesfield prepared two memoranda. One dealt principally with legal title to the estate. The other dealt with his occupation of the castle. In essence, he proposed that he and the Countess should be entitled to occupy the castle under an assured tenancy determinable by the landlord on the death of the survivor of them. Any works falling within the landlord’s implied repairing obligation under section 11 of the Landlord and Tenant Act 1985 (repair of structure and exterior) should be carried out at the expense of the company.

[192]Lord Macclesfield’s memoranda were produced to the board meeting on 7 June 2000. It is probable that he read aloud his memorandum dealing with the basis of his occupation. However, the board refused to discuss them in any detail. Mr Robert Parker had arrived with a prepared script, and did not want his plan for the meeting to be disrupted. He explained his dissatisfaction with the current state of affairs. He reminded the board that the company had been advised that Lord Macclesfield and Fentville were only tenants at will and that their tenancies could be terminated by notice. He then proposed a resolution that notices should be served both on Lord Macclesfield and on Fentville. The resolution was carried. The Hon David Parker abstained. Mr Robert Parker than proposed a second resolution to the effect that a committee of directors be established to instruct solicitors and begin proceedings. Lord Macclesfield’s request for an adjournment so that he could take advice was rejected. The resolution was put to a vote and was also carried. The Hon David Parker abstained again.

[193]Each side then instructed solicitors. On 13 June 2000 the company’s solicitors served notices on Lord Macclesfield and Fentville demanding possession of the castle and the Old Stores, respectively. The validity of the notices was disputed, and fresh notices were served on behalf of the trustees of the legal estate (the Hon Jocelyn Parker and Mr Robert Parker) on 6 October 2000. The notices gave Lord Macclesfield four weeks to vacate what had been his home for some seven years.

[194]I do not think I need to summarise the fierce battles in correspondence that took place over the ensuing years. I need only record two things. First, that Lord Macclesfield has made a number of open offers to compromise the dispute, none of which proved acceptable to the company. I was also told that the parties had attempted mediation, but that failed too. Second, the importance of the meeting of 3 November 1993 and Mr Hextall’s report of 18 October did not feature as events of significance in the correspondence.

[195]The committee of directors originally appointed to give instructions to the lawyers consisted of Mr Robert Parker and Mr Timothy Parker. However, Mr Timothy Parker resigned in 2002. Since then the company’s instructions have been given by Mr Robert Parker and his sister, Mrs Mary Boone.

[196]The final matter to record is that the trustees conveyed the freehold of the castle to the company on 16 May 2002. The conveyance has not been registered at HM Land Registry. However, it is exempt from the requirement of compulsory registration, since it is a conveyance from nominees to the beneficial owner.

The future of the castle

[197]The future of the castle is in the hands of the directors of the company. I cannot make any decision for them. Much evidence and questioning was directed to the question whether the directors were acting in the best interests of the company; or were dealing fairly as between the various shareholders. This evidence seems to me to be directed to a non-point. The present litigation is brought by the company against Lord Macclesfield in his individual capacity. I do not consider that, in his capacity as occupier of land which belongs to the company, Lord Macclesfield can rely on alleged deficiencies in the internal administration of the company as a defence to what would otherwise be an unanswerable claim. Mr Kosmin QC accepted this.

[198]That said, it seems to me that if a decision about the future of the castle were to be made purely on financial grounds, then Mr Fox is right to say that the outcome that makes the best financial sense is for the castle to be sold and its proceeds of sale reinvested or distributed to shareholders. Any other proposal is likely either to lead to considerable financial risk or to the spectre of ever increasing debt.

[199]I was shown two expert reports dealing with the possibilities of opening the castle to the public. Mr Hudson, whose report was put in on behalf of the company, concluded that opening the castle would generate enough income to pay for the costs of opening, but otherwise would make little financial contribution. However, in arriving at that conclusion he did not take into account the capital costs of preparing the castle for opening to the public. Mr Weeks, whose report was put in on behalf of Lord Macclesfield, thought that public opening would run at a loss. Neither of them thought that opening the castle would produce a commercial return; especially when the capital costs of preparing the castle for public access are taken into account. In their joint report Mr Hudson, in answer to the question whether the castle would run at a loss, said:

“Probably; quite likely to lose money – an operating loss or at best just break even. No account taken of capital costs or repayment of them.”

[200]Mr Fox’s estimate of the annual cost of servicing the capital cost of repairing the castle is £110,000. It is impossible for a surplus of income over expenditure to reach that level unless visitor numbers reach 50,000, which Mr Hudson says is “ridiculously high”. Even if they do, Mr Weeks thinks that there would be very little surplus. On the evidence I have heard, public opening does not make financial sense.

[201]One of the possibilities that has been discussed is that of establishing a heritage trust of the castle with a maintenance fund to provide for its upkeep. This possibility is not far advanced. It faces a number of difficulties arising out of the fact that the relevant legislation is designed to deal with individuals rather than companies owning “heritage property”. Mr Davis of Grant Thornton accepts that the legislation is against him. He hopes to obtain concessions from the Inland Revenue about the incidence of capital gains tax and income tax if the scheme is to succeed. Mr Fox, the expert called on behalf of Lord Macclesfield, is pessimistic about the chances of obtaining these concessions. Even Mr Davis describes them as “no more than a possibility”.

[202]If Mr Davis does not succeed in securing concessions from the Inland Revenue, especially concessions relating to income tax, the transfer of the castle by the company to trustees will be treated as a distribution by the company to its shareholders. The shareholders will have to pay income tax on the value of the distribution. The tax bill could be very heavy.

[203]If Mr Davis does succeed in securing concessions from the Inland Revenue, the scheme will involve the company transferring much of its property to trustees for nil consideration. The trustees will hold the castle on trust for the members of the family in the same proportions as their shareholdings. Trustees will hold the property placed into the maintenance fund to spend the income on repairing the castle and the capital on discretionary trusts. The class of beneficiaries in whose favour the discretion may be exercised will also be the shareholders. It is difficult to see how the company (as opposed to individual shareholders) will benefit from this scheme, as Mr Davis candidly accepted.

[204]I should also add that the grant of a lease of the whole or part of the castle does not appear to be inconsistent with the heritage scheme, provided that the terms of the lease require the lessee to give access to the public.

[205]One of the shareholders’ primary objectives is to become freehold owners of the farms and houses of which they are tenants. Understandably, Lord Macclesfield thinks it is unfair that all the shareholders apart from him should end up as absolute owners of their homes, while he has nothing. There were vague suggestions that Lord Macclesfield might be allocated a house on the estate in satisfaction of his shareholding, but no proposal was actually put to him and no property was identified. It may well be that, under companies legislation, Lord Macclesfield, as a minority shareholder, will be entitled to prevent the implementation of the scheme. However, that is not for me to decide, and I express no view one way or the other.

[206]Over the decade during which Lord and Lady Macclesfield have lived in the castle, the company has done very little to plan for the future. Even now there are no real plans to do anything with it. If Lord Macclesfield succeeds in establishing his claim, then I agree with Mr Kosmin that there are no countervailing considerations of need on the part of the company for me to take into account.

Proprietary estoppel revisited: Lord Macclesfield’s claim as formulated

[207]I have already set out the broad principles of proprietary estoppel. No point was taken on section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, no doubt in the light of Yaxley v. Gotts

[2000] Ch. 162

. The three principal elements necessary to raise the equity are: expectation, encouragement and detrimental reliance. Although it is convenient to consider them separately, they are ultimately interconnected, and the facts must be viewed in the round. As Robert Walker LJ said in Gillett v. Holt

[2001] Ch. 210

“But although the judgment is, for convenience, divided into several sections with headings which give a rough indication of the subject matter, it is important to note at the outset that the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments. Both sides are agreed on that, and in the course of the oral argument in this court it repeatedly became apparent that the quality of the relevant assurances may influence the issue of reliance, that reliance and detriment are often intertwined, and that whether there is a distinct need for a "mutual understanding" may depend on how the other elements are formulated and understood. Moreover the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.”

[208]In Taylor Fashions Ltd v. Liverpool Victoria Trustees Co Ltd (Note)

[1982] QB 133

Oliver J said:

“Furthermore the more recent cases indicate, in my judgment, that the application of the Ramsden v. Dyson LR 1 HL 129 principle – whether you call it proprietary estoppel by acquiescence or estoppel by encouragement is really immaterial – requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.”

[209]This formulation has been approved many times by the Court of Appeal. However, the breadth and flexibility of the formulation does not mean that the court is dispensing palm tree justice. As Robert Walker LJ said in Jennings v. Rice

[2003] 1 P & CR 8

“It cannot be doubted that in this as in every other area of the law, the court must take a principled approach, and cannot exercise a completely unfettered discretion according to the individual judge’s notion of what is fair in any particular case.”

[210]If an equity is raised, the question of relief then arises. The expectation is the maximum extent of the equity: Watson v. Goldsborough

[1986] 1 EGLR 265

. There is obvious good sense in that, for it would plainly be inequitable to compel the owner of property to part with more than the claimant expected. However, although the claimant’s expectation is the maximum that can be awarded, the eventual award must also be proportionate to the detriment suffered: see Jennings v. Rice at 111. Miss Hutton, who presented this part of Lord Macclesfield’s case, submitted that on the exceptional facts of this case I could award Lord Macclesfield more than his expectation, if justice demanded it. I do not accept this submission. In Pascoe v. Turner

[1979] 1 WLR 431

the defendant had been assured by the plaintiff that “the house is yours and everything in it.” In reliance on that assurance she carried out improvements to the house. Although the improvements were modest, their cost represented a large part of the defendant’s savings. The Court of Appeal held that an equity had been established, and went on to consider the extent of the relief that should be granted. The essential choice was between a licence for life or a conveyance of the freehold. The court came to the conclusion that the plaintiff intended to pursue his purpose of evicting the defendant “by any legal means at his disposal with a ruthless disregard of the obligations binding on conscience.” In the light of that conclusion, the court concluded that the only way of assuring the defendant security in her home was by ordering the transfer of the freehold. This does not seem to me to be a case of an award of relief exceeding the expectation; since the expectation was that the house would be the defendant’s. The debate, which nowadays would be conducted in the language of proportionality, was whether the expectation should be satisfied in full; having regard to the relatively modest expenditure that the defendant had incurred. The authorities are, to my mind, clear: the expectation is the maximum equity.

[211]I turn now to an examination of the elements of estoppel, before standing back and looking at the facts in the round.

[212]Expectation: the whole castle? At the time he moved into the castle, I do not believe that Lord Macclesfield expected to acquire an immediate interest in the whole of the castle. First, the Dowager Countess was already in occupation of a large part of the first floor, and her occupation was not to be disturbed. Lord Macclesfield accepted in his oral evidence that there was no intention to let the whole of the castle to him. As he put it:

“there could not have been because Mum was there”

. Second, neither the Seventh Earl nor the Eighth Earl had occupied the whole of the castle, so there was no family tradition of occupying the whole, at least in the recent past. Indeed the Seventh Earl and the Eighth Earl had shared occupation. Third, the list of rooms that Lord Macclesfield prepared was only a list of rooms in part of the castle, and the rent which he expected to pay was a rent for those rooms only. Fourth, a large part of the second floor was derelict and was of no real interest to Lord Macclesfield. Fifth, all the contemporaneous material (apart from the Earl’s tentative expression of interest in taking a tenancy of the whole castle put forward at the EGM on 9 December 1992) refer only to occupation of part of the castle. Even that tentative expression of interest must be seen in the context of the shareholders expressing the view that they wished to keep their options open. Lord Macclesfield knew that no discussion by the shareholders had taken place; and that the independent advice that they had envisaged had not been obtained. Sixth, the company had an interest in retaining the ability to use the castle for commercial purposes. These purposes included the use of the castle for filming. This was recognised by Lord and Lady Macclesfield. But Lord Macclesfield also referred to the letting of the “granny flat” as another possible source of income for the company; and he did not dissent from Mr Hextall’s suggestion that corporate entertainment was a possibility. So the commercial purposes envisaged at the time must go further than simply filming. Seventh, the subsequent negotiations between Mr Hextall and Mr Brett all proceeded on the basis that a flat would be carved out of the castle for the Earl’s occupation. These negotiations proceeded with no dissent from Lord or Lady Macclesfield, even after the death of the Dowager Countess. Had they expected to have an interest in the whole of the castle, they would surely have said so. Eighth, it was envisaged that the chattels in the castle (many of which were the personal possessions of other members of the family) would remain in the castle. I think that it must also have been envisaged that those members of the family would have had access to them. In his cross-examination Lord Macclesfield put it as follows:

“My understanding was at that time mum was alive, so there was an area for her, there was an inviolate area for us, and the dilapidated area on the top floor, all of which had to be accommodated by some arrangement or other.”

[213]Expectation: an interest for life? A number of witnesses were called who gave evidence of their expectation that Lord Macclesfield would live in the castle for his life. However, their expectation was based on the false assumption that the right to live in the castle went with the Earldom. That evidence takes Lord Macclesfield’s case no further. In addition, the “tradition” that the Earl would live in the castle is not, in my view, sufficient to found a claim under the doctrine of proprietary estoppel. As the Court of Appeal held in Keelwalk Properties Ltd v. Waller

[2002] 3 EGLR 79

, a long-standing practice cannot in itself justify an expectation that the practice will continue in perpetuity. Something more is needed before any question of unconscionability can arise.

Lady Macclesfield described her understanding as follows:

“Well, when we moved down, when Richard came back from seeing his mother and she said “you better move to the castle”, she did not say five years, so I assumed that it was forever. I was just about 50 years old, Richard was 50 already. I would not be expecting to be moving for a five year or even a 15 year term. It never came up in conversations that Richard had that he told me. It never came up in conversation with my brother-in-law, who at that point was till friendly with us; it never came up in conversation with my husband’s nephew Timothy, who came in and had coffee with us when he became a board member. Nicholas Hextall at the time I met him never talked to me about an occupancy for a limited period. All we ever discussed was which rooms we were going to use on a full and complete – they were just ours.”

[215]Lady Macclesfield’s evidence about conversations with Timothy Parker and Mr Hextall can, I think, be discounted. Not because it is untrue, but because Timothy Parker did not become a director until long after the critical period, and because Mr Hextall did not meet Lady Macclesfield until the move to the castle and the surrender of the tenancy were complete. It is significant that Lady Macclesfield does not say that her husband told her that a life occupancy had been agreed between him and the board (or even that he had made a proposal for a life occupancy which had not been explicitly refused). The main source of her understanding, according to her evidence, appears to have been her own assumption based on the Dowager Countess’ request to Lord Macclesfield. The truth, in my view, is that she did not give any conscious thought to the basis on which she and her husband were to move to the castle. As Lady Macclesfield explained in evidence:

“I am meaning that he [Lord Macclesfield] decided that he should move to the castle. He did not ask me and he did not tell me whether he had discussed it with the board. All I knew is that he had had a discussion with his mother and he had decided that we should move, or they had decided that we should move. I think of myself rather as Ruth, following “Where my husband goes, so go I.”

[216]What of Lord Macclesfield? I do not doubt that with the benefit of ten years’ hindsight, he sincerely believes now that at the time he moved to the castle he expected that he would live there indefinitely. But did he believe it then? Or, to put it more accurately, did he believe that he would acquire the right to live in the castle for the rest of his life? The high point of Lord Macclesfield’s case is his evidence that he made a request for a life occupancy and it was not denied. In the sense that it was not formally rejected by the board, that is true. But that has to be seen in context. The first piece of context is that the Eighth Earl’s claim to a protected tenancy was bitterly opposed by Robert and the Hon Jocelyn Parker. It would be surprising if Lord Macclesfield believed at the time that they had performed a complete volte face within the space of a few months. The second piece of context is that when Lord Macclesfield expressed an interest in taking a tenancy of the whole or part of the castle, he was told that the shareholders wanted to keep their options open, and that one of the options was a sale or letting of the castle to a third party. A right on the part of Lord Macclesfield to live in the castle for life would close down that option completely. Third, even if I am wrong in finding that the Hon Jocelyn Parker made “negative noises” in response to the request for a life occupancy on 18 August 1993, Lord Macclesfield recognised that in passing the resolution of 21 August 1993 the company was reserving its commercial interests. Fourth, Lord Macclesfield knew that the company had commissioned advice from John D Wood, and would not take a decision until that advice had been received and considered. Fifth, Lord Macclesfield had Mr Hextall’s report and recommendations before he surrendered the tenancy of Portobello Farm.

[217]Some further clue to Lord Macclesfield’s belief at the time of his move may be found in his subsequent attitude. First, he did not expressly dissent from Mr Hextall’s recommendation that he should be granted an assured shorthold tenancy until long afterwards. Nor did he dissent from Mr Hextall’s explicit assumption that the Heads of Terms had been agreed. Second, he contended that he was a service occupier. The status of a service occupier is not that of one who has the right to a life occupancy (and the right to a job for life would be extraordinary). Had he believed that he was entitled to a life occupancy, he would surely have told Mr Shorey who would have advanced that claim on his behalf. As Mr Hextall said in evidence (a passage I have already quoted):

“I do not think the basis of occupation was ever a question. The basis of occupation was that it should be occupied for a period of time and possession could be gained, so the basis of occupation was clear at all times. It was [a] question of how, what legal framework that would be put into – I used the shorthold tenancy process in order to try to indicate that that was the way in which we should proceed.”

[218]I am unable to find that when he moved to the castle and surrendered the tenancy, Lord Macclesfield believed that he would acquire a right to live in the castle for his lifetime. In my opinion he moved in the expectation that he and the company would agree the terms of a tenancy, and that the tenancy would be renewed from time to time in accordance with the company’s usual policy; but that if agreement was not reached, or if he did not like the agreed terms, he would have to leave. No doubt he regarded that risk as a small one, bearing in mind the “tradition” that the Earl would live in the castle, but it was a risk nevertheless. He may also have hoped to persuade the company to grant him a life occupancy, but that is a far cry from a belief that he had or would acquire a right to it. Put shortly, it seems to me that the highest that Lord Macclesfield’s case can be put is that when he moved to the castle he believed that he might acquire the right to a life occupancy, not that he would obtain it. In my judgment that is not enough.

[219]In Pridean Ltd v. Forest Taverns Ltd

(1996) 75 P & CR 447

the claimant owned a public house. It entered into negotiations with the defendant with a view to forming a joint venture company to acquire the premises or at least to take a lease of them. The defendant went into occupation of the pub, and carried out works. Negotiations over the joint venture company continued, but eventually broke down over the form of protection to be given to the claimant’s rights as a minority shareholder in the joint venture company. When the claimant demanded possession, the defendant raised the defence of proprietary estoppel. Aldous LJ (with whom Stuart-Smith LJ agreed) said:

“Mr Fetherstonhaugh did not dispute that in appropriate circumstances proprietary estoppel could arise. He submitted that, on the evidence and the findings of fact made by the judge, it did not arise in this case. I believe he is right. It is accepted that the appellants expended money and time on the premises. Thus the pertinent question to ask is – what was the expectation that the appellants were allowed or encouraged by the respondent to assume? The appellants’ answer to that question was an expectation that they would be able to occupy and trade from the premises. The Respondent says that it was an expectation that the negotiations would lead to the joint venture company occupying and trading from the premises or it would be purchased if the parties could agree terms. That in fact was the conclusion of the judge. He held that the respondents did not lead the appellants to believe that they would be granted a lease. They did however allow the appellants to expend money and time in the expectation that agreement would soon be reached on the precise terms of the joint venture or after November the premises would be purchased on terms to be agreed. There was no expectation that the appellants could remain if the negotiations for a joint venture failed. I believe you can test that conclusion by asking – what were the terms upon which the appellants believed that they were entitled to remain and manage the premises? There was no agreement. That was decided by the judge who rejected the appellants’ evidence. The answer, I believe must be “terms to be agreed”

. Those terms were never agreed. The case for proprietary estoppel failed when the judge rejected the appellants’ case that there was an agreement between the parties. If there was no agreement then the only expectation that could arise was an expectation that negotiations would be concluded as anticipated. That being so, there could not have been an expectation, which arose due to any action or inaction of the respondent, that the appellants could remain if the negotiations were not satisfactorily concluded.”

[220]Subject to one qualification, which I shall mention later, in my judgment that reasoning applies in the present case. I think that Lord Macclesfield moved into the castle in the confident expectation that terms would be agreed. I think that the general tradition in the family, that the Earl lived in the castle, would have reinforced his belief.

[221]In his Particulars of Claim Lord Macclesfield claims a lease of the whole castle, together with certain outbuildings, for fifty years determinable on his death. Since the maximum extent of his equity is his own expectation, it must follow that the claim as formulated fails.

[222]Certainty. The point does not stop there. Any lease would have to define the rights and obligations of each party. If, as I hold, Lord Macclesfield had no expectation of an interest in the whole of the castle, it would be necessary to define the part of the castle that Lord Macclesfield expected to occupy and on what terms. This is not the case of an expectation of a right to occupy a suburban dwelling or a purpose-built flat. Any lease of part of the castle would present even the most competent conveyancer with real difficulties. Indeed, those very difficulties form part of Lord Macclesfield’s case for a lease of the whole castle. Lord Macclesfield’s two lists of the accommodation that he wanted to move into were only drafts. Negotiations between Mr Hextall and Mr Brett proceeded on the basis of a different allocation of rooms. That allocation changed from time to time. There are many possible combinations of rooms, any one of which could produce the “inviolate area” to which Lord Macclesfield referred. Lateral horizontal division is what Lord Macclesfield originally had in mind; although a vertical division to produce a “house” rather than a “flat” might be a more practical possibility. Rights of access for the company, rights of filming and so on would all have to be defined. Then there is the very important question of renovation and repair. If, as Lord Macclesfield claims, he is entitled to a lease for his life, it by no means follows that the company would be bound by the obligations contained in section 11 of the Landlord and Tenant Act 1985 (which is what the draft lease annexed to the Particulars of Claim reproduces). The cost of putting the entire castle in repair is enormous. How the cost of the initial works would be split is, in my opinion, a matter of real difficulty and susceptible to a number of possible solutions. One possibility, which was actually mooted in negotiations, is that Lord Macclesfield would carry out the works himself, and pay only a nominal rent. Another would be for the company to carry out the works, as envisaged by the draft lease. Yet another is that the company would carry out works to part only of the castle, in order to create a habitable flat. Then there is the question of the provision of services by the company to Lord Macclesfield (hot water, heating, lighting, garden maintenance), and Lord Macclesfield’s liability to contribute to the cost of providing them. Then there is the question of public access. The negotiations carried out by Mr Hextall always envisaged that there would at least potentially be public access to the state rooms. Public access is a precondition of obtaining grant from public funds to help restore the castle. If the company were to put the castle into a heritage fund, in order to save inheritance tax, that, too, would require public access. So some arrangement would have to be made in order not to close off these options for the company, even if they are not concrete options at the moment. These are not just boiler-plate clauses. As Miss Hutton put it in her written closing submissions, this “would necessitate the creation of an extremely complex web of ancillary rights”. There is also the question of outbuildings. The draft lease attached to the Particulars of Claim includes within it certain outbuildings, none of which formed the subject of discussion at the time. I can quite see that it would be sensible if some outbuildings were to be included in a lease, but that would be making a bargain for the parties.

[223]It is not fatal to a claim under the doctrine of proprietary estoppel that the property in which the right is claimed has not been precisely identified. In Gillett v. Holt Robert Walker LJ said:

“But in other cases well within the mainstream of proprietary estoppel, such as Inwards v. Baker [1965] 2 QB 29 and the 19th century decisions which this court applied in that case, there is nothing like a bargain as to what particular interest is to be granted, or when it is to be granted, or by what type of disposition it is to be granted. The link is provided by the bare fact of A encouraging B to spend money on A’s land.”

[224]Thus in Re Basham deceased

[1986] 1 WLR 1498

, Mr Edward Nugee QC rejected a submission that the belief encouraged by the property owner must extend to some clearly identified piece of property; and held, on the facts of that case, that an equity was established in relation to the entirety of the deceased’s estate. There are also cases in the books in which the court has ordered the grant of a lease in satisfaction of an equity. In Watson v. Goldsborough

[1986] 1 EGLR 265

the representative of an angling club sent the owner of the land a draft lease. The owner agreed that the club could have a lease, and in reliance on that assurance the club improved the land. The Court of Appeal held that an equity had been established and that it should be satisfied by the grant of a lease on the terms of the draft. In JT Developments Ltd v. Quinn

(1990) 62 P & CR 33

the plaintiff assured the defendant that it was willing to grant him a lease on the same terms as those contained in a new tenancy that the plaintiff had recently granted to the tenant of a nearby shop, also owned by the plaintiff. The defendant carried out improvements in reliance on that assurance. The Court of Appeal held that the plaintiff was bound to grant the lease in question. In both these cases, however, the court had an identifiable starting point against which to measure the grant.

[225]An identifiable starting point is not always necessary. In Griffiths v. Williams

[1978] 2 EGLR 121

the claimant had been assured that she could live in a house for her life. In reliance on the assurance she spent money on improving the house. The Court of Appeal held that she had raised an equity. The question then arose: how should it be satisfied? The court declined to order the grant of a life interest because in those days that would have created a settlement, under which the claimant would have had the powers of a tenant for life. The court therefore suggested the grant of a long lease, determinable on her death at a nominal rent. Goff LJ said that although the payment of a nominal rent was not contemplated when the representations were made, “perfect equity is seldom possible.” In the result, the court ordered the grant of a long lease at a rent of £30 per annum, determinable on the death of the tenant. The lease was to be non-assignable, and the other terms of the lease were to be agreed between the parties or, in default of agreement, determined by the county court. This, then, is a case in which the terms of the lease could not be determined by reference to the expectations of the parties. However, there are two important points to be made about that case. First, the property to be comprised in the lease was clear. Second, the relief that the court granted was less than the expectation which the claimant actually had. The expectation itself was clear; namely a right to live in the house for life. Where uncertainty permeates the expectation, the encouragement and the extent of the relief claimed, the court is faced with a much more difficult task.

[226]In Crabb v. Arun DC

[1976] Ch. 179

the plaintiff was led to believe that he would acquire a right of access to his land. In reliance on that belief he sold off part of his land, leaving the remainder landlocked. The Court of Appeal upheld his claim to have raised an equity. Lord Denning MR, with whom Lawton LJ agreed, held that the plaintiff should have a right of access without payment. Scarman LJ said:

“There being no grant, no enforceable contract, no licence, I would analyse the minimum equity to do justice to the plaintiff as a right either to an easement or to a licence on terms to be agreed. I do not think it is necessary to go further than that. … If there is no agreement as to terms, if agreement fails to be obtained, the court can, in my judgment, and must, determine in these proceedings upon what terms the plaintiff should be put to enable him to have the benefit of the equitable right which he is held to have.”

[227]However, other cases show that uncertainty has its limits, even in this sphere of the law. In Orgee v. Orgee

[1997] EWCA Civ. 2650

the defendant (“Mr William”) claimed to be entitled to an agricultural tenancy under the doctrine of proprietary estoppel. His claim was upheld by the trial judge. The judge’s crucial finding was that it was clearly understood that Mr William would continue to farm the land on the basis of an agricultural tenancy, as had been discussed and agreed in principle, and that he bought stock and farm implements on that basis. However, no terms were agreed and no rent was agreed either. The claimant’s appeal to the Court of Appeal succeeded. Crabb v. Arun DC was cited to the court and described as the “leading modern authority”. The appellant’s submission was that:

“since the measure of expectation or belief is the maximum extent of the equity, it is incumbent on Mr William, in order to satisfy the test, not only to establish an expectation or belief that he would be granted a full agricultural tenancy, but also to show that such expectation of belief was of sufficiently concrete character to enable the court to give effect to it when fixing the rent and the rent review regime, and making provision for dilapidations, for the repairing covenant, and for other crucial terms.”

[228]Broadly speaking Hirst, Swinton Thomas and Mantell LJJ agreed with this submission. Hirst LJ said:

“… even if one were to assume that the first of the judge’s two findings stood intact, and that Mr William did have a firm expectation based on a clear understanding in 1989 that Mr William would continue to farm the land on the basis of an agricultural tenancy, one asks inevitably, an expectation of such a tenancy on what terms? In seeking to answer that question I think that unfortunately Mr William runs into insuperable difficulties, since, as the judge recognised in the same passage in the first part of his judgment, the matter was not discussed in any detail, whereas to my mind the detail was all important, yet so many potentially insoluble problems were left up in the air.”

[229]Hirst LJ then went on to discuss the problems of detail. Among the particular difficulties were questions of dilapidations. Orgee v. Orgee was followed by the Court of Appeal in Willis v. Hoare (briefly noted at (1999) 77 P & CR D42, although I have consulted the transcript, which is available on the Internet). Auld LJ reviewed a number of the authorities. He said of Crabb v. Arun DC that there “could be no doubt as to the nature and extent of the remedy required to give effect to [the] equity”. He said of JT Developments Ltd v. Quinn that “the nature and terms of the equity were readily identifiable”. He summarised his conclusion as follows:

“There may be uncertainties in transactions which go to the question whether unconscionable behaviour has given rise to any detriment to the party seeking to rely on such an equity. There may be uncertainties in transactions in which unconscionable behaviour may have produced such detriment but its nature and extent are so uncertain that even equity may not be able to devise an appropriate remedy for it. There are parts that sometimes even equity cannot reach; and sometimes, as here, the two aspects of uncertainty may overlap.”

[230]Chadwick LJ said:

“I am unable to recognise an equitable estoppel based on a representation which is so uncertain. It seems to me essential, if the respondent is to be prevented from exercising a clear legal right unless he first satisfies some condition which is to be imposed on him to meet by what is described as “the equity of the case”, that it should be possible to tell him what it is that he has to do. To fetter the respondent’s legal right by reference to some obligation which cannot be spelt out seems to me to be thoroughly inequitable.”

[231]I do not think that these cases are undermined by the subsequent decision of the Court of Appeal in Gillett v. Holt (in which neither was cited).

[232]Arbitration: a cure all? Lord Macclesfield’s answer to the uncertainties, and to the many points of detail that arose out of the terms of the draft lease annexed to the Particulars of Claim, was that the terms were negotiable, and, if negotiations failed, could be determined by arbitration. The problem with the first part of the answer is that an obligation to negotiate has no legal content, and is too uncertain even for equity to enforce. That was the position in Willis v. Hoare itself. The problem with the second part is that arbitration is no more than a process for resolving disputes; and in a case in which the court is unable to uphold a claim to an equity because of its uncertainty, I cannot see that the uncertainty can be cured merely by a different form of dispute resolution procedure. This is quite different from a contract containing an express obligation to submit a dispute to ADR (as in Cable & Wireless plc v. IBM United Kingdom Ltd [2002] 2 All ER (Comm) 1041, which Mr Kosmin referred to in passing). In my judgment, Lord Macclesfield’s expectation was too vague and undefined to form the basis of his claim under the doctrine of proprietary estoppel.

[233]In addition, although Lord Macclesfield said that arbitration could cure the uncertainties, his case reserved to himself the right to decline to enter into a lease on the terms determined by the arbitrator. I quote from paragraph 105 of the written opening delivered on his behalf:

“It is the Claimant’s case that, once the open market terms had been established by the advice of the independent surveyor and subsequent negotiations, he had the option whether or not to accept them. The 9th Earl recognised that, if he did not (because the commercial rent so established was too high or the terms were otherwise personally unacceptable to him), he would not, as a director and shareholder of the Company, be entitled to occupy the Castle and would have to leave.”

[234]It does not seem to me to be equitable for one side (the company) to be bound by an arbitrator’s award, while the other side (Lord Macclesfield) is not.

[235]Encouragement. Even if Lord Macclesfield had had an expectation that he would acquire a life interest in the whole of the castle, did the company encourage that belief? I do not think it did. The resolution of 21 August 1993, on which Lord Macclesfield principally relies, expressly permitted Lord Macclesfield to move provided that this did not compromise the company. As Lord Macclesfield accepted in evidence, it was envisaged that the company would take professional advice before reaching a decision. When Mr Hinks QC put to him that a lease for life would compromise the company, Lord Macclesfield replied:

“That would be entirely in the hands of those appointed to do the negotiations. There was nothing said at the time about that. It is quite clear that I put down a request for a separate lease for life occupancy and that was not denied at the time.”

[236]Lord Macclesfield also accepted that he himself said that if terms could not be agreed he would move out. In that context, it does not seem to me that the resolution can fairly be read as encouraging Lord Macclesfield to believe that he would acquire a life interest in the castle (let alone in the whole of it) irrespective of the advice that the company received. When the company did receive Mr Hextall’s advice, that advice plainly stated that Lord Macclesfield should not be granted more than an assured shorthold tenancy for five years. It was communicated to Lord Macclesfield before he gave up the tenancy of Portobello Farm, even if he had moved most of his possessions into the castle by then. Short of forbidding Lord Macclesfield from moving in at all, it is difficult to see what more the company could have done. I do not accept Mr Kosmin’s suggestion that the company should have specifically warned Lord Macclesfield that Mr Hextall’s proposals were radically different from the life occupancy that Lord Macclesfield had requested in August. Even the most superficial reading of the report would have made that clear. All the subsequent negotiations were conducted on the basis that the common aim was to agree terms for Lord Macclesfield to occupy part only of the castle and, in the case of the company’s aim, for a limited period.

[237]In my view, Lord Macclesfield’s case fails on this head too.

[238]Detriment. The concept of detriment is not a narrow or technical one. It need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial: Gillett v. Holt at 232 per Robert Walker LJ. Had I found that Lord Macclesfield had the expectation, encouraged by the company, that he would acquire a life occupancy of the castle, I would have held that giving up his tenancy of Portobello Farm was sufficient detriment to raise an equity. I say this, not because the farming business was a significant part of Lord Macclesfield’s livelihood, but because Portobello Farm was his home. Moving into the castle, and giving up his tenancy, deprived him of a secure home.

[239]Mr Hinks QC submits that Lord Macclesfield has the financial wherewithal to buy another house and that, therefore, he has suffered no real detriment at all. The factual basis for this submission is true, but I do not consider that the conclusion follows from the premise. He also says that Portobello Farm was too small to accommodate Lord Macclesfield’s possessions, and that it was unsuitable for Fentville’s game business. From this he argues that sooner or later Lord Macclesfield would have had to have found alternative accommodation. Once he had done that, the terms of his tenancy (especially the requirement that he had to live in the farmhouse) meant that he would have had to have given up the farm. He also said that Lord Macclesfield was disenchanted with farming and would have given that up too. I think that this is pure speculation. Had Lord Macclesfield not moved to the castle, who knows what would have happened? And even if he had given up his tenancy of Portobello Farm, he might have negotiated arms’ length terms for a surrender. This line of argument does not persuade me that Lord Macclesfield gave up nothing of substance.

[240]Clean hands. Mr Hinks submitted that Lord Macclesfield had repudiated the basis on which he was allowed into the castle and for that reason equity should not intervene on his behalf at all. First, Lord Macclesfield was allowed into occupation on the basis that he would occupy part of the castle but in fact he has taken over the whole, barring the company from entry. I do not consider that it true to say that Lord Macclesfield has taken over the whole of the castle. Large parts of it remain unused. Nor do I consider that Lord Macclesfield has barred the company from entry. He has barred some of its directors from entry but has made it clear that the company can enter, at least on notice. Second, he has refused to permit the commercial exploitation of the castle apart for its use for filming. It is true that Lord Macclesfield is currently opposed to public access to the castle. But the company has no active plans for public access. This is a technical complaint without real substance. Third, he was let into occupation on the basis that he would pay a rent, and did not pay anything for many years. I do not think that it is clear that Lord Macclesfield was let in on the basis that he would pay a rent before repairs and improvements had been carried out. Mr Hextall agreed that no rent should be charged before the castle (or an apartment in it) had been made habitable. Fourth, he has refused to permit other family members to enter the castle to inspect their chattels. I do not regard this complaint as particularly serious. All in all, I do not think that Lord Macclesfield’s conduct has been such that, if his claim would otherwise have succeeded, equity should refuse to intervene.

[241]In the round. I now stand back and consider the conduct of the company in the round. Although the minutes do not record an express rejection of Lord Macclesfield’s request for a life occupancy, they do not contain any agreement to that request. The contemplation of the company was only that Lord Macclesfield would occupy a part of the castle on terms to be agreed. The company took the advice of John D Wood and made that advice available to Lord Macclesfield before he surrendered his tenancy. Even if he did not read it, the company was, in my opinion, entitled to assume that he had. On the face of it, the board approved Mr Hextall’s conclusions. The financial consequences to the company of becoming bound by Lord Macclesfield’s proposed lease are severe, and would probably require the company either to sell properties or to incur substantial debt, the servicing of which would not be covered by the rent. Expenditure on that scale was wholly outside the contemplation of the parties in 1993. It seems to me that in considering whether it is unconscionable for a person to resile from an expectation that he has encouraged, the court must take into account the fact that to give effect to the expectation would produce wholly uncontemplated burdens on the party concerned.

[242]In one respect I am prepared to find that Mr Robert Parker’s conduct was unconscionable. His strategy of paying the £500 non-refundable deposit on 22 November to buy time, with the express aim of arguing about Lord Macclesfield’s occupation later was a shabby trick. But Mr Parker is not the company. Moreover, by the time that this strategy came into existence, the die was cast. Mr Parker’s conversation with Lord Macclesfield took place in the early evening of 21 November, by which time Lord Macclesfield had already vacated the farm and surrendered the tenancy.

[243]A clean break. The courts have also emphasised that where the parties have become estranged, a “clean break” should be achieved if possible. Megarry & Wade summarises the position in this way at para 13-021:

“Although C’s expectations provide an upper limit to the relief which may be given, the court is not bound to give effect to them in the manner which C envisaged if circumstances have changed so as to make it inappropriate. Thus if C has acted to his detriment in the belief that he can live with O and the parties subsequently become estranged, the court will not give C a right to reside on the premises but will find some other means of giving effect to the equity.”

[244]As Robert Walker LJ said in Jennings v. Rice, the court:

“cannot compel people who have fallen out to live peaceably together”

. There is no doubt that, in the present case, the parties have become estranged. There has been bitter feeling on both sides. This, in my view, is a further reason why it would not be appropriate for Lord Macclesfield to have a right to live in part of the castle (which was the maximum extent of his expectation) unless a self-contained unit of accommodation can be created. And the creation of such a unit would, in my opinion, go far beyond anything that Lord Macclesfield expected. To argue that the estrangement of the parties should lead to the conclusion that Lord Macclesfield should have more than his expectation turns this principle on its head.

[245]I recognise, of course, that my decision will leave Lord and Lady Macclesfield without a permanent home. I recognise also that my decision will cause them great distress. I recognise too that my decision will, in all probability, break the historic link between Shirburn Castle and the Earl and between Shirburn Castle and its contents. I regret having to come to that decision because it seems to me that, with goodwill and sincere co-operation on both sides, it would have been possible for a solution to be reached which would give Lord and Lady Macclesfield a home within the castle, even if not in the whole of it.

[246]However, I cannot see that, in the face of the claim as advanced, it is unconscionable for the company to deny that claim.

The corporate dimension

[247]Mr Hinks QC argued that the principles of company law precluded either the Earl or Fentville from relying on proprietary estoppel at all. Initially he put forward this argument under two heads. First, he said that the directors were bound to exercise their powers for the benefit of the company. If they did not, then they were guilty of a breach of the fiduciary duty that they owed to the company. To encourage Lord Macclesfield in the belief or expectation that he would acquire a life occupancy of the castle could not have been for the benefit of the company, since it would be bound to devalue the castle. So any encouragement by the directors of Lord Macclesfield’s belief must have been a breach of fiduciary duty. Since Lord Macclesfield was himself a director of the company, it must follow that he too was guilty of a breach of that duty. Thus, the argument goes, the claim based on proprietary estoppel has as its foundation a breach of fiduciary duty on the part of the person seeking to assert the claim. Equity will not allow a fiduciary to profit from his own breach of duty. Consequently the Earl’s claim must fail.

[248]I do not consider that this argument is correct. There is no doubt, of course, that a director of a company owes fiduciary duties to the company. Those duties may, however, be modified by the articles of association of the company; provided that they do not conflict with mandatory statutory requirements. It also seems likely that the scope of a fiduciary duty may be modified by a course of dealing by the person to whom the duty is owed: New Zealand Netherlands Society “Oranje” Inc. v. Kuys

[1973] 1 WLR 1126

; Kelly v. Cooper

[1993] AC 205

. Mr Hinks accepts that the directors acted in good faith throughout. He accepts that he must therefore establish that no reasonable board of directors could have considered that it would be in the company’s best interests to grant Lord Macclesfield the right to occupy the castle, or part of the castle, for his life.

[249]The reasons why I do not accept Mr Hinks’ argument are as follows. First, the grant of rights and privileges over the castle is within the corporate capacity of the company. So the grant of a life occupancy would not have been ultra vires the company. Thus the principle that a corporation cannot be estopped from denying that it has made an ultra vires contract does not come into play. Second, article 81 of the articles of association authorise a director to contract with the company, subject to his duty of disclosure, and relieve him from any duty to account for profits made under such a contract. There can be no doubt that the board knew all the relevant facts and, in particular, knew that Lord Macclesfield was interested in any potential contract. If a director is authorised to enter into a contract with the company with a view to profit, it must follow, in my opinion, that the director in question is entitled to drive as hard a bargain as he can. Lord Macclesfield has always made it clear that he is willing to pay an open market rent for the castle, or such part of it as he is permitted to occupy. He has always made it clear that he is willing to negotiate “arms’ length” terms. Third, there is no other substantial source of revenue currently in prospect. This is not a case such as JJ Harrison (Properties) Ltd v. Harrison

[2002] 1 BCLC 162

where a company director, having concealed relevant information from the board, obtained company property at a substantial undervalue. Whether the grant of a life occupancy to Lord Macclesfield would or would not be in the interests of the company must, as it seems to me, depend upon the terms of the grant. If, for example, the board had decided to grant Lord Macclesfield a long lease at a premium equating to market value, that could not have been impugned. Likewise, if the board had concluded that it was not willing or able to raise the money needed to restore the castle, but had granted a life interest to Lord Macclesfield on terms that he bore the cost of restoration, that would have been a perfectly rational decision. Fifth, even if Lord Macclesfield had an expectation, encouraged by the company, which raised an equity, the court, in satisfying that equity, would do what is just, taking into account the position of both parties. Sixth, the company had made a practice of granting tenancies of parts of the estate to members of the family which carried with them what was, in effect, lifetime security of tenure. The logic of Mr Hinks’ argument would suggest that that the directors may well have been in breach of fiduciary duty in granting agricultural tenancies to directors, since the grant of an agricultural tenancy, even at a market rent, will often devalue the unincumbered freehold. Likewise in the case of the grant of a protected tenancy to Mrs Boone or her late husband. Seventh, the articles of association precluded Lord Macclesfield from voting on the proposal, and so the decision of the board was not a decision in which he had any substantial part to play. In my judgment this line of argument must be rejected.

[250]Mr Hinks’ second argument was that if the company had encouraged an expectation on the part of Lord Macclesfield that he would acquire a life occupancy of the castle, it would be invalidated by section 320 of the Companies Act 1985. Section 320 (1) says that a company must not enter into an “arrangement”:

“whereby a director of the company or its holding company, or a person connected with a director, acquires or is to acquire a non-cash asset of the requisite value from the company … unless the arrangement is first approved by a resolution of the company in general meeting …”

[251]Section 739(1) defines a “non-cash asset” as any property or interest in property other than cash. Section 739

(2) says that the acquisition of a non-cash asset includes “the creation … of an estate or interest in, or a right over, any property”. Section 322 says that an arrangement entered into in contravention of section 320 is voidable at the instance of the company, unless certain conditions are satisfied. However, at the close of the evidence, Mr Hinks said that since the company had not yet decided to avoid the arrangement, he would no longer rely on this argument. I need not therefore express any view on its merits.

Proprietary estoppel: an alternative

[252]As I have said, I consider that Lord Macclesfield moved to the castle in the expectation that he and the company would negotiate and agree terms for his occupation. I am also prepared to find that the company encouraged him in that belief, since it agreed to appoint an agent to act on its behalf. In moving in, with that expectation, Lord Macclesfield acted to his detriment by giving up his tenancy of Portobello Farm. Thus the elements of proprietary estoppel are satisfied to this limited extent.

[253]I think that it also follows that both Lord Macclesfield and the company expected that he would not be required to vacate the castle unless and until negotiations broke down, and then only on reasonable notice. If he were required to vacate the castle on the breakdown of negotiations, he would have expected (and the company would likewise have expected) that he would take his chattels with him. The Hon David Parker accepted this in the course of his evidence. It was also alluded to in Lord Macclesfield’s letter of 7 June 1993.

[254]I asked Mr Hinks, in the course of his brief reply to Miss Hutton, whether Lord Macclesfield could have prevented the company from evicting him on 22 November 1993 (the day after the surrender of the farm). He said that Lord Macclesfield had moved into the castle in the expectation of being granted a five year assured shorthold tenancy, and that the company would have been in great difficulty in evicting him before the five years were up. In effect, therefore, Mr Hinks accepted that some form of proprietary estoppel had been made out. In his initial closing submissions Mr Hinks put it slightly differently. He said that when he moved into the castle, Lord Macclesfield knew that matters were still in a state of negotiation; that he knew that if negotiations failed to result in a concluded agreement he would have to go and would take his chattels with him and that the moving out would be at “whatever was the proper time to move his chattels out”. I prefer this way of looking at the facts.

[255]Among those chattels was the extensive library. Lord Macclesfield said that it would take two years to catalogue and pack the library and to find somewhere suitable to house it, himself and his family. That evidence was only perfunctorily challenged. It was supported by Mr Weeks (para 5.1.6), and to some extent by the Hon David Parker, and I accept it.

[256]Accordingly, I conclude that any equity that Lord Macclesfield has raised would be satisfied by requiring the company to give him not less than two years’ notice to vacate. I note that in Orgee v. Orgee the unsuccessful claimant was given six months to vacate the farm, even though his claim to an agricultural tenancy failed.

[257]The surveyors (Mr Hextall and Mr Brett) agreed between them that it would be inappropriate for Lord Macclesfield to pay “rent” until the castle had been put into proper repair. It has not; but Lord Macclesfield has in fact made payments at the rate of £16,000 per annum. I will hear counsel on the terms upon which Lord Macclesfield may remain in the castle. My provisional view is that, in the light of those payments, I should not impose further terms for payment on Lord Macclesfield during the remainder of his occupation, unless the company puts the castle into repair.

[258]Since the company has not given notice of the requisite length, it follows, in my judgment, that Lord Macclesfield is entitled to remain in the castle for the time being.

Proprietary estoppel revisited: Fentville’s claim

[259]The resolution of 21 August 1993 resolved in principle that Lord Macclesfield could “rent the stores and paint shop”. Mr Hextall’s report of 18 October 1993 recommended that any tenancy granted to the company should be “contracted out” of the Landlord and Tenant Act 1954. Lord Macclesfield accepted in evidence that it was his understanding that any tenancy granted to Fentville would be “contracted out” of the Act.

[260]I do not, therefore, consider that, at the relevant time, Lord Macclesfield had any expectation that Fentville would acquire a 15 year lease, with full security of tenure, or that the company encouraged him in such a belief.

[261]Mr Brett accepted in cross-examination that a reasonable period for writing off Fentville’s expenditure would have been seven or eight years. Fentville has in fact been in occupation for close on ten years. In addition, during the course of the negotiations, it was common ground that the fair way of dealing with Fentville’s expenditure was by way of a rent free period. Fentville has had a de facto rent free period of fourteen months. While that is a few months less than the period of eighteen months that Mr Brett thought he could agree, I consider that Fentville has had adequate satisfaction for its expenditure. Fentville’s claim, considered as an independent claim, therefore fails too.

[262]However, it was always clear to the company that Lord Macclesfield and Fentville “went together”. Looking at the matter in the round, it seems to me that equity should protect Fentville to the same limited extent as Lord Macclesfield is protected. I hold that Fentville is also entitled to two years’ notice.

[263]I now turn to consider what the company’s legal rights are, assuming that no equity has been established either by Lord Macclesfield or Fentville.

Lord Macclesfield’s status

[264]What then, has Lord Macclesfield’s legal status been since 1993? Mr Hinks submits that he was a tenant at will. In support of this submission he relies on the decision of the Court of Appeal in Javad v. Aqil

[1991] 1 WLR 1007

[265]There are two preliminary points that I want to make about Javad v. Aqil. The first is that the Court of Appeal only considered whether, on the facts, a tenancy at will or a periodic tenancy had been created. This was because of the way the case had been presented at trial. An application by the landowner to amend the pleadings to allege a licence was refused. Nicholls LJ recognised that the state of the pleadings might mean that the court was considering the question on an artificial basis. The second is that the case concerned business premises rather than residential premises. A business tenant at will is not entitled to statutory protection, so it was a matter of practical indifference to the landowner whether the occupier was a tenant at will or a licensee. That is not the case with residential property. A tenant at will may become entitled to the protection of the Rent Act (or nowadays the Housing Act 1988): Remon v. City of London Real Property Co Ltd

[1921] 1 KB 49

. All the recent cases emphasise that statutory security of tenure is a very important background fact in deciding what intention should be imputed to parties who have failed to make their agreement clear.

[266]In Sopwith v. Stuchbury

(1983) 17 HLR 50

a person had been allowed into occupation of residential property pending agreement of the terms of a tenancy. He argued that he was a tenant at will. If that argument had prevailed, then an agreed rent increase would have been unlawful because of certain provisions of the Rent Act. The Court of Appeal rejected that submission and held that he was a licensee. That case was cited with apparent approval by Nicholls LJ in Javad v. Aqil. Mr Hinks argued that Sopwith v. Stuchbury did not accord with established authority; and was a decision on its particular facts. I do not consider that it does conflict with established authority (e.g. Isaac v. Hotel de Paris Ltd

[1960] 1 WLR 239

). And if it did, it would not have been cited by Nicholls LJ in the terms in which he cited it. He is, however, right that it is a decision on its particular facts; but so is every decision, including Javad v. Aqil.

[267]In Javad v. Aqil Nicholls LJ expressed the principle as follows:

“A tenancy, or lease, is an interest in land. With exceptions immaterial for present purposes, a tenancy springs from a consensual arrangement between two parties: one person grants to another the right to possession of land for a lesser term than he, the grantor, has in the land. The extent of the right thus granted and accepted depends primarily on the intention of the parties. As with other consensually-based arrangements, parties frequently proceed with an arrangement whereby one person takes possession of another’s land for payment without having agreed or directed their minds to one or more fundamental aspects of their transaction. In such cases the law, where appropriate, has to step in and fill the gaps in a way which is sensible and reasonable. The law will imply, from what was agreed and all the surrounding circumstances, the terms the parties are to be taken to have intended to apply. Thus if one party permits another to go into possession of his land on payment of a rent of so much per week or month, failing more the inference sensibly and reasonably to be drawn is that the parties intended that there should be a weekly or monthly tenancy. Likewise, if one party permits another to remain in possession after the expiration of his tenancy. But I emphasise the qualification: ‘failing more’. Frequently there will be more. Indeed, nowadays there normally will be other material surrounding circumstances. The simple situation is unlikely to arise often, not least because of the extent to which statute has intervened in landlord-tenant relationships. Where there is more than the simple situation, the inference sensibly and reasonably to be drawn will depend on a fair consideration of all the circumstances, of which the payment of rent on a periodical basis is only one, albeit a very important one. This is so, however large or small may be the amount of the payment. To this I add one observation, having in mind the facts of the present case. Where parties are negotiating the terms of a proposed lease, and the prospective tenant is let into possession or permitted to remain in possession in advance of, and in anticipation of, terms being agreed, the fact that the parties have not yet agreed terms will be a factor to be taken into account in ascertaining their intention. It will often be a weighty factor. Frequently in such cases a sum called ‘rent’ is paid at once in accordance with the terms of the proposed lease: for example, quarterly in advance. But, depending on all the circumstances, parties are not to be supposed thereby to have agreed that the prospective tenant shall be a quarterly tenant. They cannot sensibly be taken to have agreed that he shall have a periodic tenancy, with all the consequences flowing from that, at a time when they are still not agreed about the terms on which the prospective tenant shall have possession under the proposed lease, and when he has been permitted to go into possession or remain in possession merely as an interim measure in the expectation that all will be regulated and regularised in due course when terms are agreed and a formal lease granted. Of course, when one party permits another to enter or remain on his land on payment of a sum of money, and that other has no statutory entitlement to be there, almost inevitably there will be some consensual relationship between them. It may be no more than a licence determinable at any time, or a tenancy at will. But when and so long as such parties are in the throes of negotiating larger terms, caution must be exercised before inferring or imputing to the parties an intention to give to the occupant more than a very limited interest, be it licence or tenancy. Otherwise the court would be in danger of inferring or imputing from conduct, such as payment of rent and the carrying out of repairs, whose explanation lies in the parties’ expectation that they will be able to reach agreement on the larger terms, an intention to grant a lesser interest, such as a periodic tenancy, which the parties never had in contemplation at all.” (Emphasis added)

[268]A number of points arise. First, it is clear that Nicholls LJ is not ruling out a finding that an occupier of land, pending the conclusion of negotiations for a lease, is a licensee rather than a tenant at will. Second, the statutory background is of great importance in filling the gap in a way that is sensible and reasonable. Third, the consequences of one status as opposed to another is of importance in drawing the right inference.

[269]In my judgment, all the circumstances of the present case point toward the inference of a licence. First, I do not consider that Lord Macclesfield had exclusive possession of the castle. Quite apart from his mother’s occupation of part of the castle and the chattels belonging to other members of the family, at the time of his move it was recognised that the company could use the castle for filming; and moreover, the company has kept the tower room on the ground floor locked. Second, a tenancy at will at common law entitles the landlord to immediate possession on termination of the tenancy. There is a limited exception relating to emblements in the case of an agricultural tenancy, but that is of no relevance in the present case. I do not believe that the parties thought for a moment that if negotiations failed, the Earl would have to leave immediately. The Hon David Parker confirmed that this was so. Indeed, a tenancy at will would have meant that the company could have required the Earl to leave even if negotiations were continuing. A licence, by contrast, entitles the licensee to a reasonable time for removal. Third, the only escape from that conclusion would be to hold that the tenancy at will created an assured tenancy. Yet that was the very thing that the company wished to avoid. So that, too, points towards the inference of a licence.

[270]I hold, therefore, that the Earl was a licensee under a licence.

[271]A licence is normally revocable by the licensor on notice. The question that arises is: what notice? In Ministry of Health v. Bellotti [1944] 1 K.B. 298 blocks of flats had been requisitioned to provide accommodation for persons evacuated from Gibraltar during the war. The evacuees occupied the various flats as licensees. Some of them paid for their accommodation under a scheme. They were given one week’s notice terminating their licences. That was held to be an unreasonably short period, although possession proceedings were not in fact begun until after the lapse of a reasonable time. The question therefore arose whether the licences had been validly terminated. Lord Greene M.R. said:

“I refer to that because it appears to me that where a question arises as to the lawful method of terminating a licence, the circumstances in which the licence came to be granted are most relevant to consider. Where a licence is granted under a contract, it may very well be that the contract will make express provision for those matters which must be observed, but what is to happen where the contract is silent in that regard? I cannot take the view that there is some cast-iron principle of law which lays down for every type of contract, whatever the circumstances and whatever the purposes for which it was entered into, some rule which is always to operate. In my opinion, the true rule is that the implications of the contract are to be determined by regard to all the relevant circumstances of the case. Thus, in the judgment of the Privy Council in Canadian Pacific Railway Co. v. The King, the following paragraph appears: "Whether any and what restrictions exist on the power of a licensor to determine a revocable licence must, their Lordships think, depend upon the circumstances of each case." That is the only proposition of general application which I find it possible to extract from that authority; and although the case is not binding on this court, the law there is, in my opinion, laid down with complete accuracy. … The notice given by each letter operates as a clear determination of the licence at the expiration of one week. It conveys to the mind of the recipient as clearly as anything can notice that the licence is determined. It goes on, however, to indicate that the recipient of the letter, together with his possessions, is to be removed from the premises within one week. So far as the letter gives that instruction, it was, in my opinion, quite inoperative. The true view is that where a licence is revoked, the licensee has, in spite of the revocation, whatever in the circumstances is a reasonable time to enable him to remove himself and his possessions from the scene of the licence. I have already said that in the circumstances of this case such a reasonable time must extend to whatever is a reasonable time to find alternative accommodation, and, if the day after this notice expired, proceedings had been taken by the minister to eject the defendants, those proceedings would have failed because the defendants were entitled to a reasonable time, and a week was not a reasonable time, to enable them to find alternative accommodation. The circumstance that the threat to remove them before the expiration of what would have been a reasonable time was inserted in the letter does not prevent the letter from being a good notice to determine the licence. That being the position, the county court judge decided that the interval which elapsed between the expiration of the week mentioned in that document and the commencement of these proceedings was a sufficient time to enable alternative accommodation to be found. In view of that finding of fact, the defendants could not complain at the time these proceedings were instituted that they had not been allowed sufficient time in the circumstances to remove themselves and their possessions and find alternative accommodation.” (Emphasis added)

[272]I take from this that the principle of law is that whether there are any restrictions on the termination of a licence depends on the circumstances of the case; and that the circumstances of most importance are the circumstances in which the licence came into existence. The remainder of the passage I have quoted was the application of those principles to the facts of the case.

[273]Canadian Pacific Railway Co v. R

[1931] AC 414

concerned a licence to maintain telegraph poles on Crown land. The telegraph poles had originally been erected without the Crown’s permission. However, there were subsequent negotiations between the parties with a view to concluding an agreement. But no agreement was reached, so that there was no contract. The Privy Council held that, by virtue of the negotiations, the telegraph poles had to be treated as having been on the land with the licence of the Crown. Clearly that licence was not contractual. Their Lordships went on to hold that, in the circumstances of that case, the licence was not terminable except by notice specifying a date, sufficient to allow the orderly removal of the telegraph poles, upon which the termination was to take effect (a “dated notice”). This, therefore, is a case in which a non-contractual licence was terminable only by the giving of a dated notice.

[274]In Winter Garden Theatres (London) Ltd v. Millennium Productions Ltd

[1948] AC 173

the House of Lords considered the termination of a contractual licence to run a theatre. One of the questions that arose was whether the licence was only determinable by reasonable notice, or whether it was determinable by immediate notice, giving the licensee a reasonable time thereafter in which to vacate. Lord Utthwatt held in favour of the former. He said:

“The next question is whether the notice given must be a reasonable notice, or whether it may be a notice operating at once to determine the licence, the licensees in that event having a reasonable time within which to vacate the theatre. In my opinion, it is the former. I cannot think that any other notice would reflect the intention of reasonable men in the position of the licensors and licensees in the present case. No reasonable man would in that connection deny the relevance of the general proposition that he who sows should be allowed to reap. To my mind, working effect to that proposition is best given in the present case by requiring that the licence should determine when the fruits have been reaped—i.e., at the expiration of a notice the length of which is determined by the commitments of the licensees as they stood under the contract at the date of the notice, rather than by permitting an immediate determination of the licence on the giving of the notice coupled with a right in the licensees to work out the position that existed at the date of the notice. The latter alternative would resemble the exceptional position of a tenant of land expressed to hold at will whose tenancy has been determined by an immediate notice. Under the law relating to emblements he is entitled, paying no rent after his tenancy has determined, to enter and gather his crops. Presumably in the present case, were notice other than a reasonable notice sufficient and given, the licensees working out their position would not in respect of the period after the determination of the licence be under any obligation to pay rent. That is not a commercial proposition. The former alternative that a reasonable notice is necessary accords with the law that a reasonable notice is necessary to determine a tenancy of land held under a general occupation at a rent, where the tenancy is not expressly a tenancy at will: Doe d Martin v Watts. Where rent is reserved by the year, the rule has long ago been rigidly fixed that a reasonable notice is a half year’s notice expiring on the last day of theyear of the tenancy (cf, 13 H VIII, 15 b) and similar rules refining the application of the principle have been laid down as respects general occupation of land at a monthly or weekly rent. But these are rules only. The assertion of the principle and an example of its application will be found in Lowe v Adams. The licence here very closely resembles a tenancy under a general occupation and I would, as respects the nature of right of the licensors to determine it, apply the principle which governs the right to determine such a tenancy. In my opinion, therefore, a reasonable notice was necessary in order to determine the licence.”

[275]In the same case Lord Macdermott said (to the same effect):

“Turning to the present case, the question then arises whether the true intendment of the contract was such as to permit an immediate withdrawal of the licence. My Lords, on that I think it is as clear that the parties did not contemplate an immediate, out-of-hand revocation as it is that they did not intend a perpetual arrangement. What was granted was a licence to use the theatre “for the purpose of producing stage plays, concerts or ballets.”

That purpose as everyone knows, connotes a wide range of activity and a highly specialised user of the premises. It involves considerable expenditure and a host of contractual relationships with those who provide and those who seek the entertainment offered. Whatever the legal attributes of a bare and unqualified licence may be, the expressed object of this licence makes it hard to believe that either of the parties ever intended that it could be withdrawn instanter, regardless of the respondents’ commitments and leaving them only such time as they might require to remove themselves and their possessions from the theatre. This view must, of course, be subject to the terms which the parties have agreed. I cannot, however, find anything in the contract to modify it.”

[276]Mr Hinks submitted that these cases were concerned with contractual licences, and that the existence of a contract makes all the difference. He said that the present case is one of a bare licence only, and that a bare licence was always revocable without notice. I am not convinced that, in the modern law, there is a bright line difference between a contractual licence and a consensual licence. As Megarry and Wade says at para. 17-002:

“there is no limit to the possible varieties of licence”

. The statements of principle I have quoted do not expressly confine themselves to cases of contractual licences. Moreover, the decision of the Privy Council in the Canadian Pacific Railway case is directly contrary to Mr Hinks’ submission. It was the principle laid down in that case that Lord Greene MR applied in Bellotti, without drawing any distinction between a contractual and a non-contractual licence. Now that everyone has the right to respect for his home under

Article 8 of the European Convention on Human Rights

, it would be odd if a licence to occupy premises as one’s home could be peremptorily terminated. In my judgment, whether a licence is revocable and, if so, how depends on the nature of the licence and particularly on how and for what reason it came into existence.

[277]In Governing Body of Henrietta Barnett School v. Hampstead Garden Suburb Institute

(1995) 93 LGR 470

Carnwath J had to decide whether the Henrietta Barnett School was entitled to remain in occupation of the site on which it had been run for many years. He rejected a claim based on estoppel.

[278]He then turned to the school’s legal status on the site. As I understand the judgment, he held that the school had a non-contractual licence. He reviewed a number of the authorities and concluded:

“All the cases illustrate the flexibility of the principle and the need for the nature of any notice (in particular the question of whether such notice should be dated) to be judged by reference to the particular circumstances of the case.”

[279]He concluded, on the facts, that a dated notice was required and that a notice period of two years and three months was required. Although Carnwath J emphasised the public interest in the smooth running of the school, I do not read his statement of principle as being confined to cases in which there is a public interest element. If he had said that, it would have been inconsistent with the decision of the House of Lords in the Winter Gardens case.

[280]Miss Hutton submitted that Lord Macclesfield’s licence was, in any event, a contractual one. The move to the castle and the surrender of Portobello Farm were part of one transaction. Since the tenancy of Portobello Farm required the tenant to live in the farm house, it was inevitable that once Lord Macclesfield moved to the castle he would have to give up the farm. Giving up the farm was the consideration for the licence, and vice versa. It will be recalled that Lord Macclesfield moved into the castle by the end of October, but did not give up the farm until 21 November. However, if the giving of the consideration and the making of a promise are substantially one transaction, the precise order in which events occur is not decisive: see Chitty on Contracts 28th edition para. 3-026 . I accept this submission. In my view the licence was not simply a bare licence; it was contractual.

[281]She went on to submit that the purpose of the licence was to give the parties an opportunity to negotiate arms’ length terms for the Earl’s occupation of the whole or part of the castle. Thus she submitted, the terms of the licence were such that it was not revocable unless and until the company had made the Earl an offer, capable of acceptance, of an interest in the castle. Nothing, of course, was explicitly said on this score, so any terms must be implied. In support of this submission she relied on the decision of the Court of Appeal in Sandhu v. Farooqui

[2003] EWCA Civ 531

. The defendant in that case had been allowed into possession of a flat pending completion of a sale. She paid a deposit. The vendor was a solicitor. He prepared a mortgage deed, which the defendant executed. The advance was paid to the vendor/solicitor, and the defendant continued in occupation, paying the mortgage instalments, believing that completion had taken place. In fact it had not. It seems that she had been defrauded by the vendor/solicitor. Some years later the defendant discovered that completion had not taken place and that she had been defrauded. She made a claim for compensation, and recovered all her expenditure. She was also released from liability under the mortgage. Some years later the solicitor/vendor gave her notice to quit in June 2000 and claimed possession in January 2001. Her response was to assert a title to the flat by adverse possession. Whether her claim could succeed depended on whether the licence under which she had been let into occupation had been determined more than twelve years before the claim for possession. Chadwick LJ said:

“A licence to occupy premises may be granted for a term certain – so that it comes to an end on a fixed date limited by the term – or it may be granted until some event happens – in which case it comes to an end when the event occurs – or it may be granted until it is determined on notice – in which case it will be necessary to ask whether the occasion for giving notice has arisen and, if so, what period of notice (if any) is required.”

[282]Chadwick LJ went on to hold that the licence was terminable once the parties were no longer proceeding towards completion of the contemplated sale. But the termination had to be communicated. The question whether the licence had been validly terminated by the notice to quit was remitted to the county court to decide. It is worth noting that the Court of Appeal did not simply say that the licence had been peremptorily revoked, even though some seven months had elapsed between the giving of the notice to quit and the bringing of the claim for possession.

[283]Miss Hutton’s submission seems to me to contain a number of flaws. First, negotiation is a two-way process. If the Earl had made an offer, which the company had declined to accept, why should not the company revoke the licence? So a licence which is irrevocable until the company had made an offer does not seem to me to make much sense. Second, how are the contents of any offer to be measured? To adopt (and adapt) the words of Chadwick LJ in Willis v. Hoare:

“Is the [company] to require to do no more than offer a [lease] on terms which [it] would be prepared to accept? Or is the [company] required to offer a [lease] on terms which reflect the minimum that [it] would be prepared to accept – that is to say, on terms more favourable to the tenant than a landlord would ordinarily offer at the outset of negotiations? Or is the [company] required to offer a [lease] on terms which the [Earl] might reasonably be expected to accept?”

[284]Third, if the company had made an offer, which the Earl refused to accept, would the company be required to make another one? If not, why not? Negotiations which consist of a “take it or leave it” offer can hardly be described as negotiations at all.

[285]Fourth, the fetter on revocation which the Court of Appeal found to exist in Sandhu v. Farooqui was very much more limited than the fetter for which Miss Hutton argues. This particular suggested fetter on the right to revoke the licence must, in my view, be rejected.

[286]That said, it seems to me that some fetter on the right to revoke the licence must be implied. The correct implication must derive from the circumstances in which the licence came into existence, and the intention to be imputed to the parties at the time. In the present case the company knew that not only was Lord Macclesfield moving into the castle, but also that Fentville was moving into the Old Stores. It knew also that Lord Macclesfield and Fentville, so to speak, “went together”. It knew that the purpose of the move was to negotiate and, if possible, agree terms for a tenancy. It also knew that Lord Macclesfield was the owner of most of the chattels within the castle, and knew that if he were required to leave he would take his chattels with him. Among those chattels was the extensive library. I have already found that it would take two years to catalogue and pack the library, and to find somewhere suitable to house it. The task of the court, in filling the gap, is to do so in a “sensible and reasonable” way. It would not, in my view, be sensible or reasonable for the company to have the right to revoke Lord Macclesfield’s licence peremptorily, giving him merely an undefined period of grace within which to remove himself and his belongings from the castle. It would have been contrary to the parties’ expectations at the time. In my judgment, the licence was not revocable until negotiations broke down, and then only by notice. I also consider that a dated notice was required. I consider also that, on the facts, Lord Macclesfield’s licence was one that was terminable by not less than two years’ notice. Since it was clear that Lord Macclesfield and Fentville “went together”, the same period of notice is necessary to terminate Fentville’s licence.

[287]Mr Hinks argued that it would be absurd for the company to be required to have given Lord Macclesfield two years’ notice when he was claiming a life interest, and everyone knew that he would not give up possession on expiry of the notice. However, this argument approaches the question of notice with the benefit of hindsight. In my view this is the wrong end of the telescope. The question, to my mind is: at the time when Lord Macclesfield was let into the castle, what would the parties have agreed about the length of time he would have to remove himself and his chattels if negotiations broke down? This, I think, predicates co-operation rather than parties at daggers drawn, and a recognition by Lord Macclesfield that he would have to go. In my view the answer would have been: enough time for him to remove himself and his chattels in an orderly manner; and that, on the evidence, is two years.

[288]The notices served on Lord Macclesfield did not give him any substantial period of notice. They gave him only a maximum of four weeks, and on one reading just under four weeks. In my judgment that was not enough. The notices were therefore bad, and did not validly terminate Lord Macclesfield’s licence or Fentville’s licence.

[289]I should, however, add that in my view the licences were not “periodic” licences. Consequently the notice served on Lord Macclesfield was not required to comply with section 5 (1A) of the Protection from Eviction Act 1977.

Conclusion

[290]I hold, therefore, that Lord Macclesfield has the right to remain in Shirburn Castle until he has been given not less than two years’ notice to vacate; and that Fentville is entitled to remain in the Old Stores until given the same period of notice. I would welcome submissions (in the absence of agreement) on the precise form of order I should make in answer to the preliminary issues.