Simpole v Chee & Anor [2013] EWHC 4444 (Ch)

[2013] EWHC 4444 (Ch)Case No HC12C00960
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue The Rolls Building, 7 Rolls Buildings, Fetter LaneDate Monday, 11 November 2013
London EC4A 1NL
Before
MR J KLEIN(Sitting as Deputy Judge of the Chancery Division)
Between
PAUL SIMPOLEClaimantKWONG SEN LEE SHUM CHEEDefendantRAJESH BABAJEEDefendant
Digital Transcript of Wordwave International Ltd (a Merrill Corporation Company)8th Floor, 165 Fleet Street, London, EC4A 2DYTel No: 020 7421 4036  Fax No: 020 7404 1424Web: www.merrillcorp.com/mls Email: courtcontracts@merrillcorp.com(Official Shorthand Writers to the Court)
MR D DOVAR (instructed by Cavendish Legal) appeared for ClaimantMR SAUHOBOA appeared for First Defendant
Judgment Approved
[1]MR KLEIN: This is the judgment following a trial of a claim and a counterclaim relating to a residential property, 122 Capworth Street, which at all material times has been let. There is in evidence a document entitled "Agreement for Sale of Personal Property" which, in this judgment, I shall call "the sale agreement".[2]Clause 1 of the sale agreement provides that "the seller agrees to sell and the buyer agrees to buy the following described property", and 122 Capworth Street, which, in this judgment, I shall call "the property", is then described. Clause 2 of the sale agreement provides that:
"Buyer agrees to pay to seller the total sum of £155,000 payable to follows: £15,500 deposit herewith, £139,500 by cash at the time of transfer."
On its face, the sale agreement is an open contract for the sale and purchase of the property.[3]The first defendant, Mr Shum Chee is identified in the sale agreement as the seller and the claimant, Mr Paul Simpole, is named as the buyer. Where the sale agreement provides for the seller to sign are, as a signature, the words KC Lee Shun Chee. Where the sale agreement provides for the buyer to sign is an indecipherable signature followed by the words in brackets, "(duly authorised)". Nothing turns on the signature on the claimant's behalf.[4]The first defendant is one of the registered proprietors of the property, he is not the only registered proprietor of the property. It appears that the other registered proprietor, Mrs Amoy Chee, died in February 2004 but, in these proceedings, nothing turns on this and nothing turns in these proceedings on her registration as co-proprietor of the property.[5]The second defendant, Mr Rajesh Babajee is or was a solicitor who appears to have in fact had conduct of the transaction which led to the sale agreement. The second defendant has taken no part in the trial. The claimant has brought a claim against him, principally for damages for breach of warranty or for compensation for breach of a Quistclose trust. Judgment has been entered against the second defendant in default of acknowledgment of service.[6]Section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989 provides in relation to a contract for a sale of land:
"The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract."
It appears, seeing the report of hand-writing expert at paragraph 11, that, in fact, there was no exchange of contracts in the true sense, instead the two signatures or purported signatures to which I have referred were written on the same document.[7]By his defence at paragraphs 3 and 9 the first defendant asserts that the words on the sale agreement which I have quoted, namely K C Lee Shun Chee, which purport to be his signature, were not written by him but instead amount to a forged signature. The claimant does not now dispute that the first defendant did not himself sign the sale agreement. The claimant instead argues that the person who wrote the words in question as a signature had the first defendant's actual authority to do so or, if that person did not, the first defendant ratified the act of signing on his behalf. The claimant argues, therefore, that the requirements of section 2(3) of the 1989 Act have been met.[8]In support of these arguments the claimant advances the following propositions of law: firstly, that an agent can sign his principal's name without indicating that he is doing so; secondly, that ratification can bring about an effective contract for the sale of land, including as to the requirements of section 2(3) of the 1989 Act, as at the date of the contract; and thirdly, that a person can ratify a forged signature.[9]For these propositions the claimant relies on London County Council and Agricultural Food Products Limited [1955] 2 QB 218, Koenigsblatt v Sweet [1923] 2 Ch 314 and McKenzie v British Linen Company (1881) 6 App Cas 82.[10]Despite the first defendant's representative, Mr Sauhoboa, arguing to the contrary, I agree with Mr Dovar, for the claimant, the propositions I have set out can be distilled from the authorities I identified.[11]The first defendant, in his statements of case, does not expressly address the claimant's ratification argument, although this is hardly surprising as it is only raised in paragraph 3 of the Defence to Counterclaim. Nevertheless, the first defendant does say in paragraph 6 of his defence "The defendant No. 1 had never approved the sale which he had never authorised." It is the claimant's case, at paragraph 6 of the Particulars of Claim, that when the sale agreement was entered into he paid the deposit of £15,500. The first defendant denies this in paragraph 6 of the Defence. In due course the time of completion arrived. There was then a delay but the claimant says on the day which was then fixed for actual completion, 14 December 2009, as to which date the first defendant makes no admission, he, that is the claimant, paid the balance of the purchase price to the first defendant's solicitors, in effect the second defendant.[12]By the Defence and Counterclaim, in particular paragraphs 11 through to 12, the first defendant admits that he received £110,000 which, it is reasonable to infer, and is not disputed, was part of the money paid over by the claimant. A transfer of the property has never been executed by the first defendant. The claimant, therefore, brings a claim principally for specific performance.[13]In the light of what I have said, which adequately identifies the issues between the parties on the claim, the two principal issues which I need to determine are firstly, whether the person who signed the sale agreement in the first defendant's name had actual authority to do so and, if not, secondly, whether as the claimant puts it, by retaining part of the sale proceeds, the £110,000, the first defendant has ratified the signature.[14]As I have indicated there is a counterclaim but the first defendant's representative accepts that if the claimant is successful, the counterclaim must fail.[15]I consider first the claimant's case that the person who signed the sale agreement in the first defendant's name had actual authority to do so.[16]Mr Dovar speculates that the person who signed it was the second defendant but he had to acknowledge that it might be said with equal or almost equal force that there were a number of other possible people who might have so acted. These include others at the solicitors who were engaged to act for the first defendant in the sale of the property. At one time it was thought that the person who signed the sale agreement in the first defendant's name was the first defendant's son but that suggestion is not pursued by the claimant in light of the report of the joint handwriting expert. Whilst it does not follow extricably that an inability to identify who the signature maker was bars the claimant from succeeding on his case based on actual authority, that he is no more than able to speculate as to the likely candidates, does, in my view, make it more difficult for him to satisfy the court that that person had actual authority to act as signer.[17]In this case I am not satisfied that whoever signed the sale agreement in the first defendant's name had actual authority to do so. To my mind there is simply insufficient evidence for me to infer that there was actual authority and as the claimant's case based on actual authority depends ultimately on making such an inference, I am not satisfied that the claimant can obtain specific performance of the sale agreement on this basis.[18]I turn, therefore, to consider the claimant's case on ratification.[19]The claimant called three witnesses: himself, his conveyancing solicitor, Mr Conroy, and the tenant of the property, Miss Patricia King.[20]The first defendant did not call any witnesses, although the first defendant's representative, Mr Sauhoboa, asked me to admit as hearsay a number of witness statements, mainly from the first defendant but one also from his son. I cannot attach very much weight to those witness statements. The allegations made by the first defendant are serious and as far as I am aware there is no good reason why the first defendant's son could attend to be cross-examined and there is no good reason why say a video link to Mauritius for the first defendant's cross-examination could not have been arranged.[21]In any event it seems to me that the witness statements in question do not really go to the issue of ratification. In his first witness statement the first defendant, so far as is relevant to the issues I have to consider, refers to "the unconsented sale of my property". In his second witness statement, he says, "I maintain that I have never approved the sale of my property to the plaintiff". In his third witness statement, he says, "I maintain the claim that my property has been sold without my consent." All this evidence could at least equally have been directed to the question of actual authority, not ratification.[22]Although Mr Simpole's evidence and Miss King's evidence was not entirely ad idem I found them both to be witnesses trying to help the court and to be doing their best to recall what happened a number of years ago. I found Miss King, in particular, to be an impressive witness and she benefits, of course, from apparently being disinterested in the proceedings.[23]In his witness statement Mr Simpole explains at paragraph 10 that following completion the first defendant instructed the Jamie Ellis Partnership, a firm of solicitors, to pursue outstanding sale proceeds. Mr Dovar, who appears on the claimant's behalf, also took me to an email at page 191 of the bundle which, although not entirely clear in the context in which it was written, I will deal with the context more fully below, can reasonably be taken to be a complaint that the first defendant had not actually received the sale proceeds.[24]Miss King told me that she had been living at the property for 30 years. She believed the landlord to be Michael. She used to send a cheque for the rent to Michael. Michael told her that the property had been sold and he told her that his brother-in-law had sold it to an English man but she could not recall if Michael gave her the buyer's name. She told me that since then no one other than the claimant has sought to collect or otherwise asked for rent from her. That deals with the witness evidence.[25]Referring to the documents to which I was taken: first I was taken to an affidavit sworn on 27 August 2010 by the first defendant in which he said at paragraph 4:
"As per letter dated 22.11.09 Benn Cameron solicitors had informed my proxy that the property was sold for £155,000."
At paragraph 7:
"My proxy[, that is the first defendant's son,] is trying by legal means to recover from the second defendant, the sum of £17,000."
At paragraph 14:
"This sum of £100,000 and £10,000 already received represent the part payment of the sale price of the property sold in the United Kingdom."
[26]Pausing there, the context in which, therefore, the first defendant's son was acting from November 2009 was that he knew that a sale or purported sale had been effected for £155,000. It is reasonable, in the circumstances of this case, bearing in mind the dependence which the first defendant placed on his son at the relevant time, to infer that even before 27 August 2010 the first defendant also had the same knowledge. In any event it is clear from his affidavit that by the date of the affidavit the first defendant had that knowledge.[27]I was also taken to a letter dated 10 February 2011 from Hamid Jagoo, counter-signed by the first defendant, which says as follows:
"Mr Kwong Sen Lee Shun Chee and Mr Kwet Choong Lee Shun Chee of [address] have retained our services. We understand this case does not have a pleasant background. One solicitor, Mr Ragesh Babajee, appears to have sold the above mentioned property on 14/12/09 and has paid our client the sum of £110,000 only. The title deed still seems to be in the name of our client. We would like to know from you if you are prepared on receiving the refund of £110,000 from our clients to forgo all your claims on the said immovable property."
In his closing submission the first defendant's representative accepted that by the date of that letter the first defendant appreciated that if he was to retain the property he would have to pay back the £110,000 which he had received. At no time has the first defendant paid back that or any other sum to the claimant.[28]Mr Dovar took me to an extract from Bowstead & Reynolds on Agency dealing with what constitutes ratification,. In Article 17, paragraph 2-070, the authors say this:
"Ratification may be express or by conduct. Ratification will be impllied whenever the conduct of the person in whose name or on whose behalf the act or transaction is done or entered into is such as to amount to clear evidence that he adopts or recognises such act or transaction; and may be implied from the mere acquiescence or inactivity of the principal. The adoption of part of the transaction operates as a ratification as a whole. It is not necessary that the ratification of any written contract should be in writing but the execution of a deed can only be ratified by a deed."
And then at 2-071, the authors say:
"So also, receipt or retention of money with knowledge of the circumstances of a contract under which it is paid will normally constitute ratification of that contract."
At 2-073, the authors say:
"Such words or conduct must be unequivocal; they must not be such that they could be accounted for by other interpretations, e.g. that the principal is simply resuming possession of his own property."
In reaching my conclusion, I also have in mind paragraph 2-074 which says:
"Several cases involving executory contracts can be explained in this way; though it is also true that “silence or inaction may simply reflect an unwillingness or inability on the part of the principal to commit himself”. It has been held that to the extent that silence can amount to ratification, the third party cannot assume assent without allowing at least a reasonable period for (assumed) deliberation to pass."
[29]On the evidence before me I am satisfied that, by the end of February 2011, the first defendant had ratified the signature in his name on the sale agreement. In reaching this conclusion I rely in particular on the following: Miss King was told that the property had been sold but no one other than the claimant has since that date made any effort to collect rent from her. I also rely, in coming to this conclusion, in particular on paragraph 14 of the first defendant's 2010 affidavit from which I have quoted above and the acceptance on the first defendant's behalf which is entirely consistent with the letter of February 2011 that if he wanted to retain the property he was obliged to pay back the £110,000 which he had received.[30]I should also deal with the following points: I have been taken to a letter dated 20 July 2011 from the claimant's solicitors to one of the first defendant's representatives. That letter, it could be argued on one construction, was capable of influencing the first defendant's mind so that thereafter it could also be argued any inaction on his part could be said to be equivocal. I do not need to reach any final conclusion on such an argument because, first, there is no evidence that the letter of 25 July 2011 ever influenced what the first defendant did or did not do and secondly and perhaps more importantly I had already found ratification had taken place sometime before July 2011. It follows, therefore, that I do decree specific performance of the sale agreement and in the light of what I have already said the counterclaim must be dismissed.[31]As to costs I am going to order that the first defendant shall pay the claimant's costs of the claim including for the avoidance of doubt the counterclaim to be the subject of detailed assessment on standard basis if not agreed. The claimant has won both the claim and the counterclaim. The general rule is set out in rule 44(2) of the Civil Procedure Rules and the general rule is that in effect the winner has his costs paid by the loser. Whilst there are certain factors which would allow the court to depart from the general rule, I do not think there are any of those circumstances in this case. I see no reason why the general rule should not apply and I so order.[32]The first defendant shall pay the claimant the sum of £17,000 on account of costs.

Cited in 1 later judgment