“(1) This order does not prohibit the Respondent from spending£750 a week towards his ordinary living expenses and also a reasonable sum on legal advice and representation. But before spending any money the Respondent must tell [the claimant’s] legal representatives where the money is to come from (2) This order does not prohibit the Respondent from dealing with or disposing of any of his assets in the ordinary and proper course of business (3) The Respondent may agree with [the claimant’s] legal representatives that the above spending limits should be increased or that this order should be varied in any other respect, but any agreement must be in writing.” v) Provided in paragraph 13 that “Anyone served with or notified of this order may apply to the court at any time to vary or discharge this order (or so much of it as affects that person), but they must first inform [the claimant’s] solicitors…”
“In this deed references to… (d) the Chargor are joint and several” iv) Clause 2 was headed “Secured Liabilities” and provided “The Chargor covenants with BWB that they will on demand: 2.1 pay Jared’s Liabilities as and when they fall due…” v) Clause 3 provided: “As a continuing security for the discharge and payment of Jared’s Liabilities… the Chargor: 31. Present freehold property charges to BWB by way of equitable mortgage all the Chargor’s interest in the Property…” vi) The Schedule was headed “Freehold and leasehold property specifically charged by clause 3.1”
“The principal amount of£150,000 including the sums mentioned below. In this letter, the principal amount for the time being outstanding under this facility is referred to as the “Loan”
“Purpose… the further funds to be loaned is made to finance your living expenses and legal costs in connection with the claim in the High Court brought against you by [the claimant]…” iii) In Clause 3: “Drawdown… Drawdown is conditional on satisfaction of the Conditions Precedent listed in the Schedule…” iv) In Clause 4: “Repayment… You will repay to me the Loan… on the later of (a) Payment to you of costs in the claim; (b)25 July 2010 … Any sum repaid may/not be redrawn. For the avoidance of doubt, the Loan will, if I need to call on the security, be repaid first from the proceeds of sale of your beneficial interests in the properties set out in the schedule. Penny’s interest will only be utilised in the event that your interests realise insufficient funds to repay the Loan.” v) In clause 5: “Interest… In the event that repayment of the Loan is due under clause 4 above you will in addition to repayment of the Loan pay simple interest at the rate of 4% per annum above the base rate from time to time of Coutts & Co from the time repayment is due until payment.” vi) In clause 7: “Default… (a) If you fail to pay any sum payable under this letter on the due date; or (b) if you fail to observe or perform any other obligations under this letter or any of the Security Documents; or (c) if you become insolvent… or (d) if any security (or any part of it) given under this letter or in respect of this facility is not or ceases to be or is alleged by any person not to be for any reason a valid enforceable effective and continuing security… then and at any time thereafter I may by written notice to you demand immediate repayment of the Loan… and you will comply with such demand forthwith…”
“In this deed references to…” but contained no reference to joint liability or to several liability iii) Clause 1.5 stated “Penny is only a party to this Deed insofar as she is a joint registered proprietor of Beacon Hill and so the charges covenants and obligations in this Deed shall only apply in relation to Beacon Hill and not any other part of the Property” iv) Clause 2 was headed “Secured Liabilities” and provided “The Chargor covenants with BWB that they will on demand: 2.1 pay Jared’s Liabilities as and when they fall due…” v) Clause 3 was headed “Security” and provided: “As a continuing security for the discharge and payment of Jared’s Liabilities… the Chargor: 31. Present freehold property charges to BWB by way of equitable mortgage all the Chargor’s interest in the Property…” vi) Clause 10.2 provided “Further assurance… The Chargor will… execute any deed or document and take any action required by the Lender... to perfect or protect this security…” vii) The Schedule was headed “Freehold and leasehold property specifically charged by clause 3.1”
“The principal amount of£150,000 including the sums mentioned below. In this letter, the principal amount for the time being outstanding under this facility is referred to as the “Loan”
“[Jared] intends to fund further legal expenses by accepting a loan secured by a charge over the equity in Beacon Hill. [Jared’s] father-in-law [i.e. French] is willing to loan moneys to [Jared] on this basis. Other third parties may be willing to make similar loans to him in the future. Please confirm that your client has no objection to [Jared] entering into such arrangements in order to fund his legal expenses.”
“… In particular, please confirm that your clients does not object to our client [i.e. Jared] borrowing funds from third parties to fund his legal expenses with such loans secured against the equity in Beacon Hill. Whilst [the claimant’s] consent to such loans is not needed under the terms of the freezing order and you may therefore feel that it is unnecessary to provide it expressly [Jared’s] potential funders have asked him to obtain such confirmation. We should therefore be grateful if you would take [the claimant’s] instructions as a matter of urgency in this regard and revert to us by midday on Tuesday5 May 2009 .”
“On the issue of funding, our client has received a loan from his cousin Mr Andy Heaphy of£9,999 to be used towards his legal expenses. This sum has been transferred from Mr Heaphy to our client account and will be secured by a charge against the equity in Beacon Hill. For the avoidance of doubt, the sums loaned to [Jared] by his father-in-law Mr Jim French (and any other third parties) will be secured in the same way.”
“We note that you say that Mister Andy Heapy (sic) has made a loan of£9,999 to your client for his legal expenses and that this sum has been transferred to your client account and will be secured by a charge against the equity in Beacon Hill. Our letter of30 April 2009 [which has not been put in evidence before me] was entirely clear as to our client’s position as to any such loans to be made to your client. As requested in that letter please inform us of the terms of the loan agreement and the terms of the security and provide to us copies of all proposed documents in this regard so that we may consider them in advance of their being granted… We note that you state that the sums loaned to your client by his father-in-law will be secured in the same way. Again we refer to you to the information requested in our letter of30 April 2009 and request that it now be disclosed, together with copies of all documents.”
“As you're aware [Jared] has been loaned money to fund his legal representation by Mr Heaphy and Mr French. He has agreed in principle to take a further loan of£25,000 from [Leahy] to be secured by an equity charge over [Jared's] interest in Beacon Hill. It is intended that all other loans will be secured in a similar manner… We are not aware of any authority which would require Jared to disclose details of the terms on which these loans are made or copies of associated documentation. If you believe that such authority exists please let us know…”
“We write to give you notice that [Jared] intends to dispose of part of his interest in Beacon Hill by way of a charge of security for this firm's costs in the sum of£60,000 . We will confirm the position as and when the documents have been executed and the appropriate paperwork lodged with the Land Registry… We can also confirm that it is [Jared's] intention to secure funding from third parties secured against his beneficial interest in one or more of the properties. We will obviously let you know as soon as we have further details.”
“It is of course a matter for you and your client to satisfy yourselves that the proposed transaction is appropriate from the perspective of insolvency law and that there are no proprietary claims of our client to the assets with which you propose to deal. In advance of the proposed charge being executed please inform us who the charge will be in favour of from the terms of that security and provide copies of the relevant documents. In respect to the legal fees the charge is intended to cover have those fees already being incurred or are they yet to be incurred? Please confirm either the actual or projected period that they are intended to cover. In relation to [Jared's] intention to secure funding from third parties, we await receiving further details from you in good time before any assets are secured.”
“We write to inform you that [Jared] intends to provide security for monies advanced or to be advanced by way of loans in respect of litigation expenses from Mr J French and Mr C Heaphy. The exact details are yet to be agreed but our client anticipates that both Mr French and Mr Heaphy will advance up to a total of£50,000 each, such loans to be secured against [Jared's] interests in one or more of the properties of which your client is aware. We will notify you once terms have been agreed and the appropriate documentation lodged with the Land Registry.”
“Our client is concerned that within in the last two months your client has granted or is intending to grant security over properties to a total sum of up to£160,000 in respect of legal expenses. We also note that your client has previously received loans of£25,000 and£9.999 , an additional loan from Mr French (in an unknown amount) and has spent [reference was made to further sums and a costs budget]… Our client is concerned that the total of all the sums referred to in this letter almost reach the total of your client’s costs estimate and is also understandably concerned that such a large proportion of this sum appears to be being catered for within such a short period. Please provide a full explanation for this. Please confirm whether the additional sums that your client is now seeking from Messrs French and Heaphy are in respect of legal costs that have already been incurred or are to be incurred and if in respect of both how they are split. In addition before any sums are advanced please confirm the exact sum to be advanced and the precise property on which it will be secured.”
“Your client of course requires our client’s consent to the loans and charges proposed. Accordingly, please provide the information requested above so that our client can properly consider the position.”
“We write to inform you that our client intends to provide this firm with security in respect of his liability for our costs in the form of a charge in respect to Beacon Hill. We have agreed in principle that that such security will be in respect of our costs up to the sum of£135,000 . Our client is still in the process of arranging for appropriate security to be given to a number of third parties who had loaned funds to him. Such security is likely to be in the form of charges over his beneficial interest in one or more of the properties in which he has an interest. We will write to you separately with further details.”
“You have asked us in a number of occasions to provide information concerning [Jared’s] sources of income. Save to the extent that [Jared] wishes to use such income towards his ordinary living expenses and his legal advice and representation we do not consider that he is obliged to provide you with this information. Paragraph 11(2) of the [WFO] provides that he is not prohibited from dealing with or disposing of any of his assets “in the ordinary and proper course of business”.”
“Loans [Jared] has received a number of loans from third parties (Mr Jim French, Mr Andy Heaphy, Mr Paul Drayton and Mr Adrian Faiers) details of which are set out below: [there then following a table which included the French Pre-Charge Loans and from Heaphy the sums of£9,999 on1 June 2009 and£5,000 on18 September 2009 ]… We understand that Mr French is prepared to loan [Jared] up to£100,000 , and that Mr Heaphy and Mr Drayton are also prepared to loan further sums.” “[Jared] intends to provide security in respects of these loans against his beneficial interest in his assets, including [the Properties].”
“You are, of course, aware that [Jared] has granted this firm a charge up to the value of£60,000 secured against his interest in the property at Beacon Hil, and that that cover will be extended to£135,000 .”
“In respect to the third party loans we should say at the outset that we are surprised that third parties should be willing to lend your clients such large sums. Your client has already received loans in excess of£110,000 and you state that Mr French is prepared to learn your client up to a further£100,000 and that Mr Heaphy and Mr Drayton are also prepared to load further sums. Please provide all documentation relating to such loans including the terms of such loans. Furthermore monies received by [Jared] from third parties of course become an asset of your client’s and are therefore caught by the [WFO]. He is not entitled to deal with those monies except in the ordinary course of business. Furthermore, before spending any money on living expenses up to the limit provided for, or on legal advice and representation, [Jared] is required pursuant to paragraph 11(1) of the [WFO] to disclose where the money is to come from. We are therefore entitled to be informed of any payment that is proposed to be made to give our client the opportunity to consider it. However, despite those clear requirements, in respect of the majority of the loans referred to in your letter we were not given any information whatsoever. We are considering this further and fully reserve our client's rights in this respect. You also state that [Jared] intends to provide security in respect of those loans against his beneficial interest in his assets including [the Properties]. Under the [WFO] your client is clearly not entitled to provide any such security without our client’s consent. Furthermore, and again for the avoidance of doubt, we also put your client on notice that he cannot repay any loan from third parties without our client’s consent…” “… In the light of our client’s serious concerns regarding your client’s compliance with the [WFO], please may we hear from you by return.”
“We write further to previous correspondence regarding the loans that [Jared] has been required to take out. We have previously advised you of the times amounts and parties involved in such arrangements and write to confirm that, following further discussions between them, [Jared] will be providing security in respect of funds advanced (and to be advanced to him) by Mr French and Mr Heaphy up to the sums of£125,000 and£75,000 respectively. These loans will be subject to a charge and secured against [Jared's] property interests. You recently suggested that our client requires your client's consent to these arrangements. We disagree. Our client has given your client such notice as is required under the [WFO] and your client is required to co-operate in ensuring that there are no delays or difficulties in respect to those third parties registering their interest at the Land Registry. Please confirm, unequivocally, that your client will not do any act or make any omission that will prevent those third parties from registering their interests.”
“We accept that the [WFO] does not prohibit your client from spending money on living expenses up to the agreed weekly limit and a reasonable sum on legal advice and representation. We further accept that, once notice has been given as to where those monies are to come from, our client’s consent is not necessary for legitimate transactions (including the provision of security) which fall within those exceptions to the WFO. We further accept that the WFO does not prohibit your client from dealing with or disposing of any of his assets in the ordinary and proper course of business. Notwithstanding this, you have asked our client to provide express confirmation that he does not object to your client effecting charges over his property in order to grant security to Mr French and Mr Heaphy for alleged commercial loans. In effect this amounts to asking our client to agree that these transactions are legitimate and in the ordinary and proper course of business. However, your client has refused to provide our client with basic information about the transaction and his relationship with these individuals (despite our repeated requests to be provided with that information). In particular, you have still not informed us of the specific amount being advanced/secured. Although you have now asserted that the money should be used for living expenses and legal expenses, you have not informed us how the monies are to be split between those two purposes. We remind you that your client is only entitled to spend money on living expenses up to the agreed weekly limit. You also have not provided us with information as to whether the money should be used to cover legal costs already incurred or to be incurred or the split between them. We further note that you have not provided us with your client’s Listing Questionnaire costs estimate. Please do so by return. Furthermore, you have not provided copies of the documentation relating to the alleged loans. Our client is therefore not in a position to satisfy himself the agreements are on “commercial terms” as you assert. For example, our client does not know what the interest provisions under these agreements are. You have also yet to answer our clients queries regarding Transparent Trading, Piagi and your client’s US visa. In the absence of such basic information, our client is unable to satisfy himself as to whether the proposed transactions with Messrs French and Heaphy are legitimate or not. In these circumstances, your request for express confirmation from our client is inappropriate. Our client is not in a position to offer you or your client any assurances regarding the proposed transactions. As we say above, we accept that our client’s consent is not necessary for legitimate transactions which fall within the exceptions to the [WFO]. It is a matter for you and your client to satisfy yourselves that the transactions with Messrs French and Heaphy are legitimate transactions. If your client does go ahead with the proposed transactions, our client reserves all his rights in the event the transactions are subsequently revealed not to be legitimate. Regarding your threatened application, we consider it entirely unreasonable to have demanded a response to your letter (received after close of business yesterday) by 4:00pm today. In light of what we say in this letter, we do not consider that such an application is necessary. However, if you do proceed to make an application, we will require full notice of that application will seek the costs from your client.”
“We refer to your letter dated12 January 2010 regarding further funds being advanced by Mr Heaphy and Mr French… We have already set out our client’s position regarding third party loans in our letter dated23 December 2009 … Please confirm that the funds referred to in your letter of 12 January are part of the figures referred to in your letter dated 16 December and they are the only funds that have been advanced to your client since your letter dated27 November 2009 .”
“equitbabechargeheaphyfrench000681275,doc loanagreementheaphyfrench000681275.doc; loanagreementfrench00710449-V2.doc and draftchargefrench000710992-V1.doc”
“As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a "sham," it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v. Maclure and Stoneleigh Finance Ltd. v. Phillips), that for acts or documents to be a "sham," with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a "shammer" affect the rights of a party whom he deceived. There is an express finding in this case that the defendants were not parties to the alleged "sham." So this contention fails.”
“263. The argument that the leases to BAW were shams was made (see Mahan’s closing submissions, paragraph 76) to shed light on the parties’ relationship and their intentions regarding the beneficial ownership of the aircraft. I have rejected the evidence of Mahan’s witnesses that from the outset it was not intended that any payments would be made under the leases (see [134]) and given my reasons for concluding that Mahan has not established that the real agreement between the parties was other than that contained in the written documents. I can deal briefly with the submissions as to the relevant legal principles. 264. In determining whether a document amounts to a sham it is necessary to consider both the circumstances of the creation of the document and also the parties’ conduct under it: Neufeld v Secretary of State for Business, Enterprise and Regulatory Reform[2009] 3 All ER 790 at [82]. The fact that the parties have departed from the agreement, for example in the set-off arrangements in the present case, does not, however, justify a conclusion that the agreement is a sham or the term that has been departed from is not part of the contract: see Express and Echo Publications Ltd v Tanton[1999] IRLR 367 at [25] per Peter Gibson LJ and Lloyds and Scottish Finance Ltd v Cyril Lord Carpets Sales[1992] BCLC 609 at 620, per Lord Scarman. In Autoclenz Ltd v Belcher[2009] EWCA Civ 1046 at [53] it was stated that the mere fact that parties conduct themselves in a particular way does not of itself mean that the conduct accurately reflects their legal rights and obligations. 265. A number of the decisions, including the Autoclenz and Neufeld cases, concern employment law where a court will be alive to the inequality of bargaining power and will take care that workers are not deprived of their rights by one party offering terms on a “take it or leave it” basis which describe the other party as an “independent contractor”
“What the parties privately intended or expected (either before or after the contract was agreed) may be evidence of what, objectively discerned, was actually agreed between the parties: see Lord Hoffmann’s speech in the Chartbrook case at [64] to [65]. But ultimately what matters is only what was agreed, either as set out in the written terms or, if it is alleged those terms are not accurate, what is proved to be their actual agreement at the time the contract was concluded.” (at [91])”
“22. In East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 Brightman LJ stated the conditions for what he called “correction of mistakes by construction”: “Two conditions must be satisfied: first, there must be a clear mistake on the face of the instrument; secondly, it must be clear what correction ought to be made in order to cure the mistake. If those conditions are satisfied, then the correction is made as a matter of construction.” 23. Subject to two qualifications, both of which are explained by Carnwath LJ in his admirable judgment in KPMG LLP v Network Rail Infrastructure Ltd [2007] Bus LR 1336 , I would accept this statement, which is in my opinion no more than an expression of the common sense view that we do not readily accept that people have made mistakes in formal documents. The first qualification is that “correction of mistakes by construction” is not a separate branch of the law, a summary version of an action for rectification. As Carnwath LJ said, at p 1351, para 50: “Both in the judgment, and in the arguments before us, there was a tendency to deal separately with correction of mistakes and construing the paragraph ‘as it stands’, as though they were distinct exercises. In my view, they are simply aspects of the single task of interpreting the agreement in its context, in order to get as close as possible to the meaning which the parties intended.” 24. The second qualification concerns the words “on the face of the instrument”
“My Lords, I will say at once that I prefer the approach of the judge. But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381 , 1384–1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989 , is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of “legal” interpretation has been discarded. The principles may be summarised as follows. (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the “matrix of fact,” but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them. (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749 . (5) The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191 , 201: “if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”
“105. It is necessary, therefore, to set the contextual scene. In the present case the contextual scene is the grant of a legal charge intended to be registered at HM Land Registry under theLand Registration Act 2002 . That Act was passed following six years' work by the Law Commission and the Land Registry. Its fundamental objective, stated in paragraph 1.5 of the report which presented the draft bill, was expressed as follows: “The fundamental objective of the Bill is that, under the system of electronic dealing with land that it seeks to create, the register should be a complete and accurate reflection of the state of the title of the land at any given time, so that it is possible to investigate title to land on line, with the absolute minimum of additional enquiries and inspections.” 106. The report called for a fundamental change in the perception of title. As explained in paragraph 1.10: “It will be the fact of registration and registration alone that confers title.”
“The ability to obtain information from the registers of title and cautions is an essential feature of the system of conveyancing that the Bill seeks to create. Easy and open access to information held by the Registry are the keys to speedier conveyancing.” 107. These objectives were reflected in section 66 of the Act which provides: “(1) Any person may inspect and make copies of, or of any part of— (a) the register of title, (b) any document kept by the registrar which is referred to in the register of title, (c) any other document kept by the registrar which relates to an application to him, or (d) the register of cautions against first registration.” 108. Thus a person who applies under this section will be supplied with documents kept by the registrar. Necessarily those documents are limited to documents with which the registrar was supplied in the first place. The facility agreement was not one of those documents. Section 120 has an important bearing on documents kept by the registrar. It says: “(1) This section applies where— (a) a disposition relates to land to which a registered estate relates, and (b) an entry in the register relating to the registered estate refers to a document kept by the registrar which is not an original. (2) As between the parties to the disposition, the document kept by the registrar is to be taken— (a) to be correct, and (b) to contain all the material parts of the original document. (3) No party to the disposition may require production of the original document. (4) No party to the disposition is to be affected by any provision of the original document which is not contained in the document kept by the registrar.” 109. I draw attention in particular to section 120 (2) (b) . It applies not only to a subsequent incumbrancer but also “as between the parties to the disposition”; that is to say as between the chargor and the chargee. In my judgment to treat the registered charge as containing a modification of the statutory power of sale contained only in the facility letter falls foul of that sub-section. In essence a document held by the Land Registry such as a registered charge may be inspected by a person contemplating some dealing with the land, although there are rules which permit the withholding of sensitive commercial information. But it is unlikely that the Registrar would agree to withholding information about a power of sale on the ground that it is commercially sensitive, because to do so would prejudice the keeping of the register: Ruoff & Roper Registered Conveyancing (§ 31.007). Moreover a person contemplating some dealing with the land must take copy documents held by the registrar as correct and containing all material provisions. In addition he is not entitled to call for the original so as to check the correctness of the copy. The clear intention of the joint report was that the copy document and the register would be conclusive (§ 9.52); and that the register would be “a barrier to further enquiry in relation to the documents referred to in it” (§ 9.53). Not only is this part of the general framework within which transactions are now conducted, it is a fact which is or should be known to the parties themselves. The charge in the present case was created by using the standard Land Registry form CH1. The standard form ends with a warning which includes: “Undersection 66 of the Land Registration Act 2002 most documents (including this form) kept by the registrar relating to an application to the registrar or referred to in the register are open to public inspection and copying. If you believe a document contains prejudicial information you may apply for that part of the information to be made exempt using form EX1 under rule 136 of theLand Registration Rules 2003 .” 110. The use of CH1 is not compulsory. Parties are free to use their own forms of charge. So the use of form CH1 is a question of choice. Here the parties chose to use it. Moreover, parties may choose to hive off their bargain into two separate documents (as was done in this case). Knowing that form CH1 is a public document the parties may choose which parts of their bargain they choose to put into the public domain and which parts they wish to keep private. Party autonomy is thus fully respected. They may, of course, choose to incorporate by reference the terms of another document (e.g. the Barsetshire Building Society's mortgage conditions 2012 edition); but that is a matter for them. If they do incorporate the terms of another document by reference, that will be apparent on the face of the document that the Registrar has retained, and which anyone may inspect. Moreover, in such a case the Registrar may refuse to proceed with the registration unless the incorporated document is produced for retention by him:Land Registration Rules 2003 r. 17 ; Ruoff & Roper Registered Conveyancing (§ 31.007). 111. The priority of interests under the Act is governed principally by section 29. That says: “(1) If a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration. (2) For the purposes of subsection (1), the priority of an interest is protected— (a) in any case, if the interest— (i) is a registered charge or the subject of a notice in the register, (ii) falls within any of the paragraphs of Schedule 3, or (iii) appears from the register to be excepted from the effect of registration, and (b) in the case of a disposition of a leasehold estate, if the burden of the interest is incident to the estate.” 112. Schedule 3 contains the list of overriding interests which are not postponed to a registered disposition. They include (among others) certain rights of persons in actual occupation of the land. It is also necessary to refer tosection 116 of the Act which provides: “It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following— (a) an equity by estoppel, and (b) a mere equity, has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).” 113. A right to rectify is traditionally classified as a “mere equity”
“(3) The proprietor of a registered charge may … make a further advance on the security of the charge ranking in priority to a subsequent charge if— (a) the advance is made in pursuance of an obligation, and (b) at the time of the creation of the subsequent charge the obligation was entered in the register in accordance with rules. (4) The proprietor of a registered charge may also make a further advance on the security of the charge ranking in priority to a subsequent charge if— (a) the parties to the prior charge have agreed a maximum amount for which the charge is security, and (b) at the time of the creation of the subsequent charge the agreement was entered in the register in accordance with rules.” 115. It is to be noted in particular that these matters must be entered on the register if they are to affect third parties. Section 51 makes it clear that a charge by way of legal mortgage comes into effect on registration. Section 52 (1) provides that: “Subject to any entry in the register to the contrary, the proprietor of a registered charge is to be taken to have, in relation to the property subject to the charge, the powers of disposition conferred by law on the owner of a legal mortgage.” 116. It will be seen therefore that all these sections refer to registration or to entries on the register. The form of the register is prescribed by theLand Registration Rules 2003 . Charges are entered in the charges register, whose form is prescribed by rule 9 of the Rules. This requires the charges register to contain (among other things) details of the charge, sufficient to enable it to be identified, and restrictions entered under section 40 of the Act. Section 49 (3) is picked up by rule 108 which enables (but does not require) a proprietor of a registered charge to apply to the registrar for an obligation to make further advances to be entered in the register. If such an application is made the registrar “must make an entry in the register in such terms as he considers appropriate to give effect to [the] application”
“124. Our courts have already drawn distinctions between the use of background material in the interpretation of what I might call “ordinary” commercial contracts on the one hand, and the interpretation of negotiable and registrable contracts or public documents on the other. It is true, as Arden LJ points out at [41], that in his speech in Chartbrook Lord Hoffmann did not expressly refer to documents in a public register. But he did refer to articles of association and to bills of lading; and made the point that the background relied on in Chartbrook would have been available to any prospective assignee or lender. The point about public documents did not arise for decision. If Lord Hoffmann had meant to exclude public documents from the kind of instrument where the role of background is limited, he would have had to have considered authority to contrary effect. In Opua Ferries Ltd v Fullers Bay of Islands Ltd[2003] UKPC 19 [2003] 3 NZLR 740 the Privy Council considered the scope of a licence to operate a ferry service. Opua argued for the admission of extrinsic evidence to explain the terms of the registered certificate. The Privy Council rejected that argument. Lord Hope said: “19. There would much to be said in favour of this argument if the relevant documents were contained in a contract between the parties which the court was being asked to construe. If that were so the court would wish to put itself into the same position as the contracting parties were when they entered into their contract. As Lord Hoffmann said in Investors Compensation Scheme Ltd v West Bromwich Building Society[1998] 1 WLR 896 , 912H, when one is interpreting a document of that kind one is seeking to ascertain the meaning which it would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. The parties' knowledge of how the ferry service was in fact being operated from day to day at the time when such a contract was entered into would be part of the background. 20. But it does not follow that the same approach is to be taken when one is construing a public document. The documents included in the register maintained by a regional council under section 52(1) of the Act have that character. This is, and is intended to be, a public register of passenger transport services. Members of the public who consult the register may come from far and near. They may have some background knowledge, but they may have none at all. In Slough Estates Ltd v Slough Borough Council[1971] AC 958 , 962 Lord Reid said that extrinsic evidence may be used to identify a thing or place referred to in a public document. But he went on to say that this was a very different thing from using evidence of facts known to the maker of the document but which are not common knowledge to alter or qualify the apparent meaning of words or phrases used in it. As he put it, members of the public, entitled to rely on a public document, ought not to be subject to the risk of its apparent meaning being altered by the introduction of extrinsic evidence. Moreover, the only information which a regional council is obliged by section 53 to ensure is reasonably readily available to the public is that which gives details of the service which the council has registered. The statute makes the position clear. The register is expected to speak for itself.” 125. This is not an isolated occurrence. The same principle has been applied to the meaning of planning permissions both by the House of Lords (Slough Estates Ltd v Slough Borough Council[1971] AC 958 ) and by this court ( Secretary of State for Communities and Local Government v Bleaklow Industries Ltd[2009] EWCA Civ 206 [2009] 2 P & CR 21 ). It has been applied to a company's memorandum and articles of association ( Egyptian Salt and Soda Co Ltd v Port Said Salt Association[1931] AC 677 ); and also to the interpretation of an injunction or receivership order ( Masri v Consolidated Contractors (Oil and Gas) Company SAL[2009] EWCA Civ 36 [2009] 1 CLC 82 ). In all these cases the justification for the restrictive approach is that third parties might (not will ) need to rely on the terms of the instrument under consideration without access to extraneous material. 126. The High Court of Australia has applied the same approach to the interpretation of conveyancing documents intended to be registered under the Australian Torrens system: Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45(2007) 233 CLR 528 . As the joint judgment in that case put it (§ 39): “The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.” 127. It is true that even after the passing of theLand Registration Act 2002 ours is not a fully fledged Torrens system, where the registered title is indefeasible with very limited exceptions. We have more overriding interests, and greater opportunities to alter or rectify the register than would be acceptable under a true Torrens system. Despite these differences in my judgment the general approach of the High Court ought to apply to our system of land registration. It is also true that the High Court expressed itself in terms of admissibility. But as I have said admissibility is not the sole criterion. Even if the evidence is admitted, the question remains: what influence should it have? 128. There is, in fact, no conflict between this approach and the principles established in Investors Compensation Scheme. For the question is: what weight would the reasonable person with all the background knowledge of the parties attribute to background material which did not appear on the face of the charge itself? All this was elegantly explained by Campbell JA in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 (§ 151): “However, the way those principles come to be applied to a particular contract can be affected by aspects of the contract such as whether it is assignable, whether it will endure for a longer time rather than a shorter time, and whether the provision that is in question is one to which indefeasibility attaches by virtue of the contract being embodied in an instrument that is registered on a Torrens title register. All these are matters that would be taken into account by the reasonable person seeking to understand what the words of the document conveyed. That is because the reasonable person seeking to understand what the words convey would understand that the meaning of the words of the document does not change with time or with the identity of the person who happens to be seeking to understand the document. That reasonable person would therefore understand that the sort of background knowledge that is able to be used as an aid to construction, has to be background knowledge that is accessible to all the people who it is reasonably foreseeable might, in the future, need to construe the document.” 129. In Attorney General of Belize v Belize Telecom Ltd Lord Hoffmann himself said of an earlier decision of the Court of Appeal discussing a company's articles of association: “Because the articles are required to be registered, addressed to anyone who wishes to inspect them, the admissible background for the purposes of construction must be limited to what any reader would reasonably be supposed to know. It cannot include extrinsic facts which were known only to some of the people involved in the formation of the company.” 130. In my judgment this is the key to the present case. The reasonable reader's background knowledge would, of course, include the knowledge that the charge would be registered in a publicly accessible register upon which third parties might be expected to rely. In other words a publicly registered document is addressed to anyone who wishes to inspect it. His knowledge would include the knowledge that in so far as documents or copy documents were retained by the registrar they were to be taken as containing all material terms, and that a person inspecting the register could not call for originals. The reasonable reader would also understand that the parties had a choice about what they put into the public domain and what they kept private. He would conclude that matters which the parties chose to keep private should not influence the parts of the bargain that they chose to make public. There is, in my judgment, a real difference between allowing the physical features of the land in question to influence the interpretation of a transfer or conveyance (which we do) and allowing the terms of collateral documents to do the same (which we should not). Land is (almost) invariably registered with general boundaries only, so the register is not conclusive about the precise boundaries of what is transferred. Moreover, physical features are, after all, capable of being seen by anyone contemplating dealing with the land and who takes the trouble to inspect. But a third party contemplating dealing with the land has no access to collateral documents.”… 135. Cherry Tree point out that there was in fact an obvious defect in the charge as registered, because panel 7 referred to the sum secured by the charge in panel 9; and panel 9 was blank. Cherry Tree accept that if the charge as registered appeared to be complete, then the facility agreement would not have influenced the interpretation of the charge. In other words, if the registered charge had specified the amount secured by the charge, but had failed to include the enlargement of the statutory power of sale, then the only means of remedying the defect would have been by rectification. But that is not the case here: the reader of the charge has no way of knowing how much is secured by it. Thus it is argued that the reasonable person with the background knowledge of the parties would have realised that there was something missing; and would have made further inquiries. Those inquiries would have led him to the facility agreement, and to the agreement that the mortgagee's power of sale should extend beyond the statutory power. I do not accept this argument. It is one thing to say that the reasonable reader would perceive an obvious mistake in the document (call it “A”) and that recourse to the background enables mistake A to be corrected. It is quite another to say that having perceived mistake A, recourse to the background enables the reasonable reader to identify another and unconnected mistake (call it “B”) and then use the background to correct both mistake A and mistake B. I do not believe that there is any case that goes that far; and in my judgment it would be an unwarranted extension of the principles approved in Chartbrook . As Lord Hope explained in Melanesian Mission Trust Board v Australian Mutual Provident Society[1996] UKPC 53 (1997) 74 P & CR 297 : “The intention of the parties is to be discovered from the words used in the document. Where ordinary words have been used they must be taken to have been used according to the ordinary meaning of these words. If their meaning is clear and unambiguous, effect must be given to them because that is what the parties are taken to have agreed to by their contract. Various rules may be invoked to assist interpretation in the event that there is an ambiguity. But it is not the function of the court, when construing a document, to search for an ambiguity. Nor should the rules which exist to resolve ambiguities be invoked in order to create an ambiguity which, according to the ordinary meaning of the words, is not there. So the starting point is to examine the words used in order to see whether they are clear and unambiguous. It is of course legitimate to look at the document as a whole and to examine the context in which these words have been used, as the context may affect the meaning of the words. But unless the context shows that the ordinary meaning cannot be given to them or that there is an ambiguity, the ordinary meaning of the words which have been used in the document must prevail.” 136. In my judgment in the particular contextual scene of a charge intended to be completed by registration at HM Land Registry, the insertion of the missing clause ought to have been effected (if at all) by way of a properly pleaded and proved claim for rectification. There was no such claim pleaded in the present case, and no attempt to prove one. In my judgment therefore the case should not have been decided summarily as a pure question of interpretation of the charge.”
“147. Mr Pickering for Cherry Tree who is the purchaser from Landmain in the present case seeks to follow this fashion by saying that the background to the charge shows that the parties agreed the power of sale could be exercised at any time after execution of the charge. It must follow that the parties intended to express that agreement in the charge because they must have intended that agreement to be effective; it must further follow that their failure to express that agreement in the charge was a mistake and that the charge must therefore, as a matter of construction, mean that the power of sale could be exercised at any time after execution of the charge and that the power of sale conferred on the mortgage bysection 101(1)(i) of the Law of Property Act 1925 has been “varied or extended by the mortgage deed” pursuant to section 101(3) of that Act; it would then follow yet further that a good title has been passed to the purported purchaser who is therefore entitled to be registered as the proprietor of the property. 148. This line of argument, it seems to me, goes too far in its reliance on the background relied on, even though that background was undoubtedly known to both of the parties to the charge. The legal charge in the present case is not just an agreement made by two parties to the transaction who are themselves alone affected. It is a public document on a public register open to inspection and potentially to be relied on by third parties. I do not think that mistakes in such documents can be construed away by a process of construction of the kind envisaged in Lord Hoffmann's principle (5). 149. For my part I would respectfully approve the statement of principle at para 3.18 of Lewison on The Interpretation of Contracts (5th ed. (2011)): “In the case of a standard form contract, a negotiable contract or a public document evidence of background to an individual contract has a more limited part to play.”
“Introductory definitions Several liability arises when two or more persons make separate promises to another, whether by the same instrument or by different instruments. Thus if A and B covenant with C that they will each pay him£100 , each is liable to pay£100 . Their promises are cumulative and payment by one does not discharge the other.”
“A joint liability arises when two or more persons jointly promise to do the same thing. There is only one obligation and consequently performance by one discharges the other. Joint liability is subject to a number of strict and technical rules of law which are discussed in the paragraphs as follows.”
“The allegation of the appellants in this case is to the effect that the father and son [who I should say are the partners] being joint debtors only and not jointly and severally liable. The banker’s their creditors by the course which they have taken in proving against the estate of the son have put an end to their right any further to pursue a remedy against the father. In respect of this proposition, the appellants invoke, though I think they invoke unsuccessfully for the reasons I will mention, the judgment in Kendall v Hamilton. It appears to me to be of considerable importance to bear in mind exactly what Kendall v Hamilton did and what it did not decide. Now, in order to do that, in a few words I should like to consider the rights in equity as distinguished from the rights in law of creditors of a joint debtor. The common law principle that a judgment recovered against a joint debtor is a bar to a further action to be prosecuted against another joint debtor is explained at length in the case of King v. Hoare. There is in the case of joint contracts and joint debt, as distinguished from the cases of joint and several contracts and joint and several debt, only one course of action. The party injured may sue at law all the joint contractors or he may sue once subject in the latter case to the right of the single defendant to plead an abatement and whether an action in the case of a joint debt is brought against one debtor or against all the debtors or continued against one debtor or all the debtors it is for the same cause of action. There is only one cause of action. This rule, although the advantage or disadvantage of it may have been questioned in times long past has now long passed into the law of this country. I should only wish to observe that whether or no the rule by the light of pure reason and unassisted by authority might or might not have (inaudible) to modern minds, the rule is no means a technical rule. It is based rightly or wrongly on the idea that a joint debtor has a right to demand as he pleases that he should be sued at one and the same time with all his co-debtors. To enforce this right he is only entitled to plead an abatement that the right is one of considerable business value and is so recognised by the law. In order to protect each of the joint debtors, the law treats the cause of action as being a joint one as it is capable of being merged whenever it is pursued to a judgment. It is absorbed and merged in the judgment which is recovered against one of the debtors only.”
“It has not been made apparent to us that there was any ambiguity in the language of these covenants. Indeed, counsel for the respondents admitted that if these covenants stood alone and uncontrolled by anything else in the instrument, they were free from ambiguity and were in form joint obligations and should be so interpreted. Being asked on what he relied as coercing us to depart from the words of the instrument and interpret that which was in form and language the joint covenant to the two lessees as being a separate covenant of each, in reply he pointed to the words of the habendum ‘as tenants in common and not as joint tenants’ as giving severally the undivided interest to the lessees coupled with unit of possession.”
“The current and modern decision has been, as we think it ought to be, to adhere to the very words of the contract where they are plain and unambiguous and not to depart from them on grounds of hardship or inconvenience. The contract in such cases represents in its language the intention of the parties and if they intended otherwise, they should have said so. We ought to hold ourselves bound by the express and unambiguous covenant before us unless coerced by authority to put on it a different construction from which its words import.”
“The argument was that we should mould the covenant to the lessees because of their separate interests in the subject matter of the grant but no decision has been cited going so far. The passage cited from Platt (p. 123) is expressed, ‘shall be measured and moulded according to the interests of the covenantees.’ No decision to which we have referred has gone beyond that.”
“My Lords, I have on the whole come to the conclusion that the covenants in question are free from ambiguity and are in their language and form joint and not several, that there is nothing on the face of the instrument to warrant us putting on the covenants any other construction from that which their language imports.”
“I take it to be clear that where several persons covenant with another in terms which import without ambiguity a joint and not a several obligation, the covenant must be held to be a joint one. Where the terms are ambiguous and may import either a joint or a several obligation, you may no doubt look at other parts of the deed, the interests of the covenantors and, indeed, any other circumstances appearing on the face of the instrument which will aid in the determination of the intention of the parties. In the present case, it appears to me to be free from doubt that the covenant is in form joint. I can see nothing to indicate any several obligation and if it be free from ambiguity it must , as I have said, be held to be a joint covenant. The only ambiguity which could be suggested... the use of the word ‘their’ preceding the words “executors, administrators and assigns.”
“If the expression ‘the mortgagor’ includes more than one person it shall be construed as referring to all and/or any one of those persons and the obligations of such persons hereunder shall be joint and several.”
“Mr Davidson accepts that the construction contended for by the bank, and accepted by the Court of Appeal, is a legitimate construction but argues that the distributive construction, too, is legitimate and that the court, in choosing which of two legitimate constructions to adopt, should choose that which is more appropriate having regard to the factual matrix. The factual matrix, he says, supplies no reason why Mr Gold should have been expected to undertake personal liability for Mr Martin’s debts and that the distributive construction is, therefore, to be preferred. 39. I am afraid that I do not find Mr Davidson’s submissions in the least compelling or clause 2 in the least ambiguous. The clause starts with a joint covenant by Mr Gold and Mr Martin. It is not three separate covenants, one by them jointly and one by each of them individually. It is a single joint covenant. Their liability under this joint covenant is declared to be joint and several. This deals with the effect of their joint covenant. It does not turn a single covenant into three covenants. 40. But the critical issue is not whether Mr Gold and Mr Martin, as well as jointly covenanting to pay, have severally covenanted to pay. The critical issue is what have they covenanted to pay? Under sub-clause (1) they have covenanted to pay ‘all sums of money... advanced to the mortgagor by the bank...’ The mortgagor means the two of them and/or each of them. So they have covenanted to pay all sums of money advanced by the bank to the two of them and/or to each of them. I do not understand how any process of construction can avoid the conclusion that they have covenanted to pay the sums advanced by the bank to Mr Martin alone as well as the sums advanced by the bank to them jointly. 41. The point is the same under sub-clause (2). Mr Gold and Mr Martin have covenanted to pay or discharge ‘all other indebtedness and/or liabilities whatsoever of the mortgagor to the bank... ‘ ie ‘... of the two of them and/or each of them...’ So they have covenanted to pay or discharge the indebtedness of Mr Martin to the bank as well as their joint indebtedness to the bank. 42. The distributive construction, which treats the single joint covenant as three separate covenants, makes no sense of sub-clause (3). Mr Gold and Mr Martin covenant to pay ‘all costs and expenses incurred by the bank... in relation to this legal mortgage...’ This would cover the costs of proceedings taken by the bank to enforce payment of the indebtedness of Mr Martin alone as well as the cost of proceedings to enforce payment of any joint indebtedness. There is no reference in sub-clause (3) to ‘the mortgagor’ and no distributive construction can exclude Mr Gold’s liability to pay all costs and expenses caught by the sub-clause, whether incurred in connection with the recovery of indebtedness for which Mr Martin is primarily liable or of any joint indebtedness. A construction that excludes Mr Gold from liability in respect of advances to Mr Martin alone but leaves him liable to pay the bank’s costs of proceedings to recover those advances does not produce a result that could sensibly, or reasonably, have been intended. 43. In my opinion, there are no real difficulties of construction arising out of the reference to ‘the mortgagor’ in clause 2. As was succinctly put by Mr Cousins, following for the bank, clause 2 constitutes a covenant by Mr Gold and Mr Martin to pay their joint debts to the bank, to pay Mr Martin’s debts to the bank and to pay Mr Gold’s debts to the bank. 44. This simple construction may leave Mr Gold under obligations that he had not foreseen and had not intended at the time he signed the joint mortgage. But he has already succeeded in an action for negligence against the firm of solicitors who acted for him and, as I understand it, this appeal is being funded by their insurers.”
“2 Contracts for sale etc. of land to be made by signed writing. (1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each. (2) The terms may be incorporated in a document either by being set out in it or by reference to some other document. (3) 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. (4) Where a contract for the sale or other disposition of an interest in land satisfies the conditions of this section by reason only of the rectification of one or more documents in pursuance of an order of a court, the contract shall come into being, or be deemed to have come into being, at such time as may be specified in the order… (5) In this section— “disposition” has the same meaning as in theLaw of Property Act 1925 ; “interest in land” means any estate, interest or charge in or over land or in or over the proceeds of sale of land.”…”
“8 Time limit for actions on a specialty. (1) An action upon a specialty shall not be brought after the expiration of twelve years from the date on which the cause of action accrued. (2) Subsection (1) above shall not affect any action for which a shorter period of limitation is prescribed by any other provision of this Act. 9 Time limit for actions for sums recoverable by statute. (1) An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued. (2) Subsection (1) above shall not affect any action to which section 10 or 10A of this Act applies.”
“194 I add that theLimitation Act 1980 does not prevent me from granting relief unders.423 Insolvency Act 1980 in relation to the transaction effected by the 2012 Deed. On the authorities if the s.423 claim is for a sum of money, the limitation period is 6 years unders.9 Limitation Act 1980 as a claim to recover a sum of money by virtue of an enactment. Other claims are subject to a 12 year limitation period as actions upon a specialty unders.8 Limitation Act 1980 . The claim in the present case is not a claim for the payment of a sum of money, or at least the relief which I am granting is not an order for the payment of a sum of money. Thus, the limitation period is the 12 year period. The earliest possible starting date for that 12 year period is the date of the 2012 Deed (5 October 2012 ). The latest possible end date is the date of the amendment to the Part 8 Claim Form. That may not formally yet have occurred, but it is likely to occur well within the 12 year period from5 October 2012 . This timing makes it unnecessary for me to consider or rule upon the subtleties of whether the limitation period could start to run before Mr Sahota became a creditor of Mr Rajan Sohal. It is possible that the amendment for which I have given permission will never be effected. To cover off that possibility I will make my s.423 order in respect of the transaction effected by the 2012 Deed (including my order below in respect of the transaction effected with Mrs Veena Sohal under the 2019 Deed) conditional on compliance by Mr Sahota before the 12th anniversary of the 2012 Deed, that is by5th October 2024 , with the requirements ofCPR Practice Direction 17 paragraphs 1.3 (filing) and 1.5 (service). Accordingly limitation is not a bar to my granting relief under s.423 as above.”
“35 New claims in pending actions: rules of court. (1)For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced— (a)in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and (b)in the case of any other new claim, on the same date as the original action. (2)In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either— (a)the addition or substitution of a new cause of action; or (b)the addition or substitution of a new party; and “third party proceedings” means any proceedings brought in the course of any action by any party to the action against a person not previously a party to the action, other than proceedings brought by joining any such person as defendant to any claim already made in the original action by the party bringing the proceedings (3) Except as provided by section 33 of this Act or by rules of court, neither the High Court nor the county court shall allow a new claim within subsection (1)(b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim. For the purposes of this subsection, a claim is an original set-off or an original counterclaim if it is a claim made by way of set-off or (as the case may be) by way of counterclaim by a party who has not previously made any claim in the action.”
“Read literally — and injunctions are meant to be read literally, particularly when they have a penal notice attached saying that he will be sent to prison if he does not comply — this would have prevented Mr Shanks from buying himself a loaf of bread or indeed incurring any expenditure at all in the course of his ordinary life. It is plainly wrong in that respect. Mareva injunctions addressed to natural persons should always make provision for the defendant's living expenses unless there is reason to believe that the defendant has other assets to which the order does not attach and which would be available for that purpose. Furthermore, there should always be provision for the payment of ordinary debts as they become due, because the purpose of a Mareva injunction is not to establish a potential or actual judgment creditor as a priority creditor. Its purpose is solely to prevent the defendant evading the due processes of execution by salting away assets or otherwise making himself judgment-proof.”
“42 That brings me to the question of whether we should nevertheless hold that the expenditure is outside the ordinary course of business of Koza Ltd for the reasons advanced by the respondent in its first additional ground. I agree with Mr Crow that it does not follow from the fact that a particular activity will benefit the company that it will be in the ordinary course of the company’s business. An unprecedented new venture for a company, though deemed beneficial, would not necessarily be in the ordinary course. It is necessary to examine the existing business of the company, and decide whether, in the light of all the circumstances prevailing at the time when the activity is embarked on, it can properly be described, objectively, as within the ordinary course.”
“14. Thus Colman J seems to have thought that the bank was under some sort of duty to apply for permission to exercise its security, in default of which it would be in contempt of court. Despite the respect which has to be given to the views of such an experienced Commercial Court judge, I respectfully disagree with that analysis. The source of Colman J's views seems to be Z Ltd v A-Z and AA-LL[1982] QB 558 , the case referred to in para 15 of his judgment. In that case Lord Denning MR set out the basis of a freezing order (then a Mareva injunction). He described the “usual type of case” and said, at p 572, that: “Every person who has knowledge of [the injunction] must do what he reasonably can to preserve the asset. He must not assist in any way to the disposal of it. Otherwise he is guilty of a contempt of court.”
“I need not cite authority for the proposition that it is of high importance that orders of the court should be obeyed. Wilful disobedience to an order of the court is punishable as a contempt of court, and I feel no doubt that such disobedience may properly be described as being illegal. If by such disobedience the persons enjoined claim that they have validly effected some change in the rights and liabilities of others, I cannot see why it should be said that although they are liable to penalties for contempt of court for doing what they did, nevertheless those acts were validly done. Of course, if an act is done, it is not undone merely by pointing out that it was done in breach of the law. If a meeting is held in breach of an injunction, it cannot be said that the meeting has not been held. But the legal consequences of what has been done in breach of the law may plainly be very much affected by the illegality. It seems to me on principle that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them.”
“Mr Colman's distinction between the disposal of a tangible asset and the disposal of a chose in action may or may not be correct. It is unnecessary for us to decide. For it is preferable to dispose of this appeal on a simpler ground. The courts have never allowed the Mareva jurisdiction, beneficial though it be, to inhibit the ordinary course of business or to interfere with a defendant's ordinary transactions, especially where third parties are involved. This was decided so far as concerns the payment of debts in the ordinary course of business in the case which is usually known as the Angel Bell [1981] Q.B. at page 65, even though it was arguable on the facts of that case that the debt in question was irrecoverable as a money lending transaction. It was decided, so far as the ordinary living expenses of individuals are concerned - even though the living expenses were on the grand scale - in p.c.w. v. Dixon[1983] 2 Lloyds Reports, 197 as varied on appeal. But the principle extends beyond the payment of debts, or the incurring of ordinary living expenses. It applies also to all ordinary transactions in the course of business or, I would add, in the course of life. That appears from the decision of the Court of Appeal in Avant Petroleum Inc. v. Gatoil Overseas Inc.[1986] 2 Lloyd's Reports, 236 . I need not refer to the facts of that case. The relevant passage is to be found in the judgment of Lord Justice Neill at page 243 where he said: “… the Mareva jurisdiction should not be used if the effect of the injunction which is granted is to bring to an end entirely a bona fide and established method of trading unless some wholly new arrangements are made between the party enjoined and some third party”.”
“74. Teare J’s rejection of these submissions was based in large part on his construction of paragraph 9(b). He refers in his judgment to the definition of “ordinary course of business” by Lloyd LJ in Normid Housing quoted earlier but, as already explained, the focus of the Court of Appeal in that case was on whether the settlement of the issued claim justified the grant of Mareva relief. In that context the description of a disposal in the ordinary course of business as being the obverse of the dissipation of assets makes sense because that was the issue in relation to the grant or not of the injunction. We do not, however, accept that any transaction (even if not dissipatory in nature) can properly be described as one in the ordinary course of business. As explained earlier, the standard exception on which paragraph 9(b) is modelled provides a limitation on the scope of the injunction thereby enabling routine business transactions to be conducted without reference to the court. But dealings or disposals which are not part of the ordinary business of the defendant in that sense do not necessarily fall foul of the purpose of the freezing order. They merely require the approval of the court or the claimant before they are carried out and so enable the court to scrutinise what, on its face, may not appear to be a routine or regular transaction.”
“75. The judge relied on the judgment in Normid Housing as providing support for his view that the paragraph 9(b) exception should be construed widely and not narrowly. It should, he said, be construed as extending to the activity of holding and managing assets so long as it is not aimed at dissipating a defendant's assets. We think that this is too widely stated. Literally applied, it would entitle any defendant to dispose of or deal with his investments free of the scrutiny of the court and is inconsistent with the form and structure of a freezing order which, for the reasons stated earlier, deliberately does not limit the scope of the injunction to transactions carried out with an intention to dissipate. The need to protect a claimant from this risk (in a case which by definition must have involved a prior finding by the judge that there is a real risk of dissipation but for the grant of the injunction) is achieved by prohibiting all disposals of assets except those permitted by the express exceptions to the order and by giving the defendant a general liberty to apply in respect of any particular intended disposal. Transactions can therefore be sanctioned by the court and if found to be unobjectionable then permitted: see Atlas Maritime Co SA v Avalon Maritime Ltd (“The Coral Rose”)[1991] 1 Lloyd's Rep 563 . 76. This format points, in our view, to the standard exception about disposals in the ordinary course of business being given a narrower rather than a wide meaning. Transactions in the ordinary course of business in the case (e.g.) of a trading company will include all its usual purchases and disposals and the payment of its trade and other liabilities as they fall due. A regulated investment company which acquires and sells shares and other securities on behalf of its clients would be treated in the same way. But we do not consider that the concept of the ordinary course of business would, as a general rule, comprehend alterations in investments by a private investor however wealthy he may be. For them to qualify it would be necessary to show that the investor was himself running a business by making the changes in his holdings rather than merely re-organising his investments to obtain a better outcome.”
“Legal principles 33. Although there was only a limited area of dispute, it is convenient to summarise the legal principles applicable to an application of this nature. 34. The standard freezing order provides that a Respondent is entitled to spend a reasonable sum on legal advice and representation without obtaining the Applicant’s permission, but the requirement to tell the Applicant’s legal representatives where the money is to come from gives the Applicant an opportunity, if it objects, to bring the matter before the court. Once it does so, the principles summarised below apply. (This is not a case where a proprietary claim over the Respondents’ assets is asserted). In the present case the effect of the Swiss attachment order is that the funds in the Otunba’s Bank Julius Baer account cannot be used by the Respondents without a variation of that order, which will only be made if Tidewater either volunteers its agreement or is directed by this court to join in an application for such a variation to be made. It was not suggested, however, that this feature of the present case makes any difference to the principles to be applied to this application. 35. The starting point is that a freezing order has been made against the defendant. Otherwise the question of use of frozen funds to pay legal expenses could not arise. This means that the court has already concluded that, even before the claimant’s claim has been established, justice requires that the defendant’s freedom to dispose of its own assets as it sees fit should be restrained. However, a freezing order is not intended to provide a claimant with security for its claim but only to prevent the dissipation of assets outside of the ordinary course of business in a way which would render any future judgment unenforceable. While the disposal of assets outside of the ordinary course of business is prohibited as being contrary to the interests of justice, payments in the ordinary course of business are permitted even if the consequence will be that the defendant’s assets are completely depleted before the claimant is able to obtain its judgment. This has been clear since the decision of Robert Goff J in The Angel Bell[1981] 1 QB 65 in the early days of what were then called Mareva injunctions. Moreover, so long as the payment is made in good faith, the court does not enquire as to whether it is made in order to discharge a legal obligation or whether it represents good or bad business on the defendant’s part. 36. A further principle is that a defendant is entitled to defend itself and, if necessary, to spend the frozen funds, which are after all its own money, on legal advice and representation in order to do so. This is recognised by the standard wording of the usual freezing order, although the defendant’s right to spend its own money on legal advice and representation is limited to expenditure of “a reasonable sum”. (Despite the substantial figures for legal expenditure in this case, it was not submitted on this application that the sums which the Respondents propose to expend were unreasonable). It was held by Sir Thomas Bingham MR in Sundt Wrigley Co Ltd v Wrigley (unreported,23 June 1995 ) to be “the ordinary rule” in a non-proprietary case. He put it this way: “In the Mareva case, since the money is the defendant’s subject to his demonstrating that he has no other assets with which to fund the litigation, the ordinary rule is that he should have resort to the frozen funds in order to finance his defence.” 37. Two points should be noticed here. The first is that even where the defendant has no other assets, its right to use the frozen funds is only “the ordinary rule”
“… in the Mareva case, in order to be allowed to spend frozen monies, the defendant must show that he has no other assets which he can use.” 39. He added at [27] that: “… it is incumbent on a defendant, like any applicant, to put the facts fully and fairly before the court.” 40. The burden on the defendant to put the facts before the court has been emphasised in further cases. It was described as “the burden of persuasion” by Sir Anthony Clarke MR in Serious Fraud Office v X[2005] EWCA Civ 1564 at [35] and [43], a case concerned with a restraint order made undersection 77(1) of the Criminal Justice Act 1988 to which the same principles were held to apply. It is necessary that the defendant should have this burden in part because it is the defendant, not the claimant (at any rate in the usual case), who knows the facts, but also because the court has already concluded that there is a risk of disposal of assets outside the ordinary course of business or it would not have granted the injunction in the first place. Judges are entitled in an appropriate case to have a “very healthy scepticism” about unsupported assertions made by a defendant about the absence of assets, as Sir John Donaldson MR noted in Campbell Mussels v Thompson (1985) 135 NLJ 1012. 41. At [43] of his judgment in Serious Fraud Office v X, Sir Anthony Clarke MR identified the issue in these terms: “43. … The question for the judge was whether X discharged the burden of proof or, as I would prefer to put it, the burden of persuasion. That depends upon an analysis of the facts. As I see it, on an application to vary a restraint order in a case of this kind, where the order relates to all the defendant’s assets, the position in principle is that it is for the defendants to satisfy the court that it would be just to permit him to use funds which are identified as being caught by the order. If the court concludes that there is every prospect of the defendant being able to call on assets which are not specifically identified in the order, or assets which others will provide for him, I do not think that the court is bound to vary the order in the terms sought.” 42. Thus it is relevant to consider not only the defendant’s own assets, but whether there are others who may be willing to assist the defendant to obtain legal advice and representation. In this respect the position is similar to that which obtains when the court is considering an argument that security for costs should not be ordered on the ground that it would stifle the claim (cf. Keary Developments Ltd v Tarmac Construction Ltd[1995] 3 All ER 534 , where Peter Gibson LJ referred to consideration of whether a claimant “can raise the money needed from its directors, shareholders or other backers or interested investors”, pointing out that “as this is likely to be peculiarly within the knowledge of the plaintiff company, it is for the plaintiff to satisfy the court that it would be prevented by an order for security from continuing the litigation”). 43. Clarke LJ went on in Serious Fraud Office v X, at [46] and [47], to approve statements of principle contained in the 5th Edition (2004) of Gee on Commercial Injunctions. These were as follows: “20.054 … Therefore, the principle is that a defendant can use his own money which is frozen under a Mareva injunction to fund the defence provided that it is apparent that there are no other funds or source of payment which should as a matter of objective fairness be used to pay for the defence rather than the frozen funds. This may require the defendant to adduce ‘credible evidence’ about his other assets before the court can be satisfied that it is just that he should be able to use the particular frozen assets… 20.056 The same principle of objective fairness applies when an injunction is granted worldwide and the question arises whether the defendant should be at liberty to pay an expense using his English assets or assets safely frozen outside the jurisdiction by a local court, or whether he should be left to make the payment from assets which are not effectively frozen or may not be available for execution or satisfaction of the judgment.” 44. It is inherent in this approach that, because the court is dealing with risks and prospects rather than certainties, and is doing so at an interlocutory stage, there is a real risk that the court, even doing the best it can on the material available, may reach what is in fact a wrong conclusion. It may conclude that a defendant has failed to adduce credible evidence that it has no other available assets and has therefore failed to discharge the burden of persuasion even if, in fact, the defendant has no other assets. It may conclude that there is a reasonable prospect that a defendant’s friends or associates will rally to his support, but that prospect may not materialise. In such circumstances the court will refuse to allow the frozen funds to be used, even if that means that in fact the defendant is left unable to pay for legal representation to defend the claim. However, this is no different from any other situation in which there is a risk that the court may make a mistaken interlocutory assessment, for example when it concludes that an order for security for costs will not stifle a claim. It should not deter the court from making the best assessment it can on the material available and imposing on the defendant the burden of persuasion for the valid reasons identified above. 45. Immediately before the passage quoted above and approved in Serious Fraud Office v X, paragraph 20.054 of Gee puts the matter in this way: “In exercising the discretion whether or not to grant an application to vary an injunction the court acts in accordance with what is ‘just and convenient’. This is the test laid down ins.37(1) of the Supreme Court Act 1981 . On an application for a variation, the claimant has already established a real risk of dissipation and a good arguable case. The principles which apply in considering whether to grant a variation are the same as those which apply when considering whether or not to grant Mareva relief. … The correct test is to consider objectively the overall justice of allowing the payment to be made including the likely consequences of permitting it on the prospects of a future judgment being left unsatisfied, and bearing in mind that the assets belong to the defendant and that the injunction is not intended to provide the claimant with security for his claim or to create an untouchable pot which will be available to satisfy an eventual judgment.” 46. I accept this as an accurate summary. Its value, in my judgment, is the emphasis which it rightly gives to the need for an assessment of “the overall justice” of the case. The principle that a defendant bears the burden of persuading the court that there are no other assets available to fund the litigation is one aspect of that assessment, but not the only aspect. In most cases the absence of other assets will be decisive. Justice will require that such assets as there are should be available to fund the defendant’s defence. But in what is likely to be an exceptional case, this is capable of being outweighed by other considerations. 47. In the present case Tidewater relies upon what it says is the injustice of allowing Respondents who have flouted orders of the court when it suits them to do so and who remain in contempt of court to invoke the court’s discretion, as a matter of justice and convenience, to permit a variation of the injunction. Mr Hossain for the Respondents submitted that this is an irrelevant consideration and that the present application should be confined to an examination of whether the Respondents have access to funds which are not effectively frozen by the order. I do not agree. In my judgment the overall justice of the case needs to be considered, and that is capable of extending to the wider considerations relied on by Tidewater. Availability of other sources of funds 48. In accordance with these principles I turn to consider whether the Respondents have discharged the burden of showing that they have no funds available to pay for legal advice and representation other than the funds in the Otunba’s Bank Julius Baer account. They do of course have funds held in Nigerian bank accounts as well as other assets in Nigeria, but they have provided evidence that Nigerian foreign exchange permission would not be available to pay for ongoing litigation expenses, although apparently it would be permitted for payment of a judgment debt. This seems surprising, but it is evidence which Tidewater has not challenged. I proceed, therefore, on the basis that their Nigerian assets are not available to the Respondents to pay for legal advice and representation in this action. However, as Mr Allen pointed out, there appears to be no reason on the Respondents’ own evidence why their Nigerian funds should not be used to pay the costs of£60,000 which they have been ordered to pay, which are in effect a judgment debt…”
“107. In considering whether it would be disproportionate to refuse relief to which the claimant would otherwise be entitled, as a matter of public policy, various factors may be relevant. Professor Burrows’ list is helpful but I would not attempt to lay down a prescriptive or definitive list because of the infinite possible variety of cases. Potentially relevant factors include the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties’ respective culpability. 108. The integrity and harmony of the law permit - and I would say require - such flexibility. Part of the harmony of the law is its division of responsibility between the criminal and civil courts and tribunals. Punishment for wrongdoing is the responsibility of the criminal courts and, in some instances, statutory regulators. It should also be noted that under theProceeds of Crime Act 2002 the state has wide powers to confiscate proceeds of crime, whether on a conviction or without a conviction. Punishment is not generally the function of the civil courts, which are concerned with determining private rights and obligations. The broad principle is not in doubt that the public interest requires that the civil courts should not undermine the effectiveness of the criminal law; but nor should they impose what would amount in substance to an additional penalty disproportionate to the nature and seriousness of any wrongdoing. ParkingEye is a good example of a case where denial of claim would have been disproportionate. The claimant did not set out to break the law. If it had realised that the letters which it was proposing to send were legally objectionable, the text would have been changed. The illegality did not affect the main performance of the contract. Denial of the claim would have given the defendant a very substantial unjust reward. Respect for the integrity of the justice system is not enhanced if it appears to produce results which are arbitrary, unjust or disproportionate. 109. The courts must obviously abide by the terms of any statute, but I conclude that it is right for a court which is considering the application of the common law doctrine of illegality to have regard to the policy factors involved and to the nature and circumstances of the illegal conduct in determining whether the public interest in preserving the integrity of the justice system should result in denial of the relief claimed. I put it in that way rather than whether the contract should be regarded as tainted by illegality, because the question is whether the relief claimed should be granted…. 120. The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, b) to consider any other relevant public policy on which the denial of the claim may have an impact and c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather by than the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate.”
“148. The adversarial system of justice imposes on the parties the obligation to identify the issues that arise for determination in the litigation so that each party has the opportunity to respond to the points which the other party makes. The function of the judge is to adjudicate on those issues alone: Al-Medenni v Mars UK Ltd[2005] EWCA Civ 1041 (“Al Medenni”), para 21 per Dyson LJ. The lawyers representing each party adduce evidence, both oral and documentary, and cross-examine the witnesses of the other party in order to establish the case which they are advancing and to counter the case which the other party is making. The lawyers in their submissions at the end of the trial address the cases which have been put to the court. In The Owners of the Ship “Tasmania” and the Owners of the Freight v Smith, the Owners of the Ship “City of Corinth” (1890) 15 App. Cas. 223 (“The Tasmania”), 225 Lord Herschell stated: “The conduct of a cause at trial is governed by, and the questions asked of the witnesses are directed to, the points then suggested. And it is obvious that no care is exercised in the elucidation of facts not material to them.”
“150. These considerations are relevant to new points being taken on appeal. There is no absolute bar on the taking of a new point on appeal. Where the new point is a pure point of law which can be argued on the basis of the facts as found by the judge at first instance, an appellate court may allow the point to be taken if satisfied that the other party has had an opportunity to meet the point and will not suffer prejudice. But an appellate court must exercise great caution before allowing a party to take a new point on appeal after there has been a full trial involving live evidence and cross-examination. In Pitallis v Grant[1989] QB 605 Nourse LJ explained the rule which operates as a norm, quoting from the judgment of Sir George Jessel MR in Ex p Firth, In re Cowburn(1882) 19 Ch D 419 , 429: “the rule is that, if a point was not taken before the tribunal which hears the evidence, and evidence could have been adduced which by any possibility would prevent the point from succeeding, it cannot be taken afterwards. You are bound to take the point in the first instance, so as to enable the other party to give evidence.” iv) However, as made clear in the Primeo decision (e.g. at paragraphs 148, 149 and 151), it is for the parties to advance their various contentions; and, although the court may raise points with the parties, it is generally not for the court to construct their cases for them. While I apply that general rule, I do think that it is dependent upon all of the circumstances and the nature of the case. Where, as here, the claimant’s case is that what would otherwise be French’s and Heaphy’s rights are defeated by an illegality being a contravention of an order of the court amounting to a contempt of court; it seems to me that the court as guardian of its own process should be careful before coming to that conclusion and should be hesitant before coming to such a conclusion on what the material before it may indicate to be a false basis; that being a matter of both public and judicial policy and appropriate to protect the integrity of the court process v) The French and Heaphy Re-Amended Points of Defence stated simply that their paragraphs 46 and 47 that the Charges were prepared by BWB and that it was denied that they did not amount to appropriate security. There was no express pleading of any variation or consent or estoppel; but it was being said, in effect, that BWB had caused there to be what was appropriate vi) In paragraph 38 of Mr Pryce’s Skeleton for the Trial it was said that “The 23/12/09 letter plainly recognised that what was being proposed was in accordance with freezing order purposes, subject to the underlying loan transactions being a (sic) legitimate.”
“In my judgment, the principles applicable to the assertion of an estoppel by convention arising out of non-contractual dealings … are as follows. (i) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly shared between them. There must be words or conduct which crosses the line between the parties from which the necessary sharing may be inferred. (ii) The expression of the common an estoppel by convention arising out of non-contractual dealings … are as follows. (i) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly shared between them. There must be words or conduct which crosses the line between the parties from which the necessary sharing may be inferred. (ii) The expression of the common Judgment Approved by the court for handing down. Avondale Park v Miss Delaney’s Nursery Schools 310. assumption by the party alleged to be estopped must be such 311. that he may properly be said to have assumed some element of 312. responsibility for it, in the sense of conveying to the other party 313. an understanding that he expected the other party to rely upon 314. it. (iii) The person alleging the estoppel must in fact have relied 315. upon the common assumption, to a sufficient extent, rather than 316. merely upon his own independent view of the matter. (iv) That 317. reliance must have occurred in connection with some 318. subsequent mutual dealing between the parties. (v) Some 319. detriment must thereby have been suffered by the person 320. alleging the estoppel, or benefit thereby have been conferred 321. upon the person alleged to be estopped, sufficient to make it 322. unjust or unconscionable for the latter to assert the true legal 323. (or factual) position.”
“[51] It may be helpful if I explain in my own words the important ideas that lie behind the first three principles of Benchdollar. Those ideas are as follows. The person raising the estoppel (who I shall refer to as “C”) must know that the person against whom the estoppel is raised (who I shall refer to as “D”) shares the common assumption and must be strengthened, or influenced, in its reliance on that common assumption by that knowledge; and D must (objectively) intend, or expect, that that will be the effect on C of its conduct crossing the line so that one can say that D has assumed some element of responsibility for C's reliance on the common assumption. [52] It will be apparent from that explanation of the ideas underpinning the first three Benchdollar principles that C must rely to some extent on D's affirmation of the common assumption and D must (objectively) intend or expect that reliance.” important ideas that lie behind the first three principles of Benchdollar. Those ideas are as follows. The person raising the estoppel (who I shall refer to as “C”) must know that the person against whom the estoppel is raised (who I shall refer to as “D”) shares the common assumption and must be strengthened, or influenced, in its reliance on that common assumption by that knowledge; and D must (objectively) intend, or expect, that that will be the effect on C of its conduct crossing the line so that one can say that D has assumed some element of responsibility for C's reliance on the common assumption. [52] It will be apparent from that explanation of the ideas underpinning the first three Benchdollar principles that C must rely to some extent on D's affirmation of the common assumption and D must (objectively) intend or expect that reliance.”
“The proper approach to construction of the Order 18. In determining this question of construction, I will apply the principles that are set out in paragraph 41 of Flaux LJ's judgment in Pan Petroleum AJE Ltd v Yinka Folawiyo Petroleum Co Ltd & Ors[2017] EWCA Civ 1525 . Flaux LJ’s summary drew on the judgment of Lord Clarke in the Supreme Court’s judgment in JSC BTA Bank v Ablyazov (No. 10)[2015] UKSC 64 and that is the “judgment” referred to in the following quote: “1. The sole question for the Court is what the Order means, so that issues as to whether it should have been granted and if so in what terms are not relevant to construction (see [16] of the judgment). 2. In considering the meaning of an Order granting an injunction, the terms in which it was made are to be restrictively construed. Such are the penal consequences of breach that the Order must be clear and unequivocal and strictly construed before a party will be found to have broken the terms of the Order and thus to be in contempt of Court (see [19] of the judgment, approving inter alia the statements of principle to that effect in the Court of Appeal by Mummery and Nourse LJJ in Federal Bank of the Middle East v Hadkinson[2000] 1 WLR 1695 ). 3. The words of the Order are to be given their natural and ordinary meaning and are to be construed in their context, including their historical context and with regard to the object of the Order (see [21]-[26] of the judgment, again citing with approval what Mummery LJ said in Hadkinson).” 19. Point 1 of Flaux LJ's summary set out a caution against using perceptions as to whether an order should have been granted and if so in what terms as an aid to construction. Lord Clarke, with whom the rest of the Supreme Court agreed, warned in his judgment in JSC BTA Bank v Ablyazov against succumbing to any temptation to stretch legal analysis to capture what are seen as the merits or lack of merits of a case. Therefore, the question is simply what the Order means. If it is desirable to give the Order a broader meaning, the solution is to vary it for the future. 20. Point 3 of Flaux LJ’s summary highlights the need to consider “context” when construing the Order. Some authorities give guidance on how relevant context is to be ascertained. In Sans Souci Ltd v VRL Services Ltd (Jamaica)[2012] UKPC 6 , a case involving construction of a court order that did not contain an injunction, Lord Sumption said at [13] of his judgment: "The reasons for making the order which are given by the court in its judgment are an overt and authoritative statement of the circumstances which it regarded as relevant. They are therefore always admissible to construe the order." 21. The authorities indicate that caution should be exercised in using the parties' submissions in a case as providing context that illuminates the meaning of an order. In SDI Retail Services Ltd v Rangers Football Club[2021] EWCA Civ 790 , Phillips LJ and Baker LJ, who were in the majority, expressed caution on this matter, with Phillips LJ saying: “Engaging in an excavation and analysis of the parties’ submissions to discover their motives for seeking particular orders seems to me to be a difficult and dubious exercise, with parallels to admitting evidence of negotiations in construing a contract. As far as I am aware, such an approach finds no support (even if not expressly forbidden) in the authorities” 22. Underhill LJ had a slightly different perception on this matter but I will follow the approach of Phillips LJ, summarised in the quote above, since he was in the majority and Baker LJ echoed his concern.”