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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Quadrini v Wine Cellar Ltd (t/a Booze Buster) [2006] EWHC B4 (Ch) (21 November 2006) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2006/B4.html Cite as: [2006] EWHC B4 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY

		21 November 2006

1. Introduction

1. In this action the Claimant, Michael Quadrini ("Mr Quadrini") seeks possession of property known as 10 Baxtergate, Whitby.
2. Mr Quadrini is the registered proprietor of the premises registered under Title numbers NYK198193 and NYK199184. Title number NYK198183 relates to the property known as the Angel Hotel, New Quay Road, Whitby ("the Angel Hotel"), and title number NYK199184 relates to the property known as 9-9a Baxtergate, Whitby ("numbers 9-9a").
3. The Angel Hotel and numbers 9 - 9a form part of the same building ("the Building") which stretches between Baxtergate and New Quay Road. The building also includes the property known as 10 Baxtergate
4. It is common ground that 10 Baxtergate is occupied by Wine Cellar Limited ("Wine Cellar") for the purpose of an off licence known as Booze Buster. Wine Cellar contends that it is the tenant of Cotil Investments Ltd ("Cotil") – a company that is loosely associated with Wine Cellar in that a shareholder of Wine Cellar is also a beneficiary of the trust that owns the shares in Cotil. It contends that since 2003 it has paid Cotil rent at the rate of £15,000 per annum.
5. There is no tenancy or licence agreement between Mr Quadrini or his predecessor in title and either Wine Cellar or Cotil. Mr Quadrini accordingly claims possession by virtue of his registered title. Wine Cellar and Cotil seek to defend the claim on the basis that Mr Quadrini's interest is subject to an overriding interest giving a right to possession.
6. It will be necessary to look at the transactions that occurred in detail later in this judgment. In a nutshell (and simplifying the position) Cotil derives its title by virtue of a sale dated 13^th January 1992 from Vaux Group plc ("Vaux") to Cellar 5 Ltd ("Cellar 5") at a price of £78,760 and a further sale dated 9^th April 2003 from the administrative receivers of Cellar 5 to Cotil for £112,000. It is accepted that there was no registration of either Cellar 5 or Cotil's title. However the Defendants contend that at the relevant times they were in actual occupation of 10 Baxtergate with the result that their interests are overriding interests.
7. Mr Quadrini accepts that if, indeed, there is an overriding interest it is binding on him and the claim to possession must fail. He, however, seeks to meet the Defence in a number of ways. He doe not accept that Vaux can establish the necessary title to 10 Baxtergate as at 13^th January 1992. There are complications in relation to the 2003 transfer. Part of the title appears to be leasehold and the wording of the transfer appears to refer to freehold land. There are further difficulties in knowing what was freehold and what was leasehold. Thus there are difficulties in knowing the precise boundaries of the property transferred. Mr Quadrini does not accept that the 9^th April 2003 was effective to transfer any leasehold interest to Cotil. Furthermore he does not accept that the Defendants can establish the occupation necessary to create any overriding interest. In so far as notice is a necessary ingredient on the date Mr Quadrini bought he does not accept that he had actual or constructive notice of the occupation by Cellar 5 at any relevant time.

2. Representation

8. Mr Quadrini was represented by Miss Caroline Hutton instructed by hlw Commercial Lawyers of Sheffield. Wine Cellar and Cotil were represented by Mr Wilson Horne instructed by Richard Saleh & Co of Didsbury. Both Counsel produced full and helpful skeleton arguments. Miss Hutton produced a number of other documents designed to assist me with the labyrinthine complexity both of the unregistered title of 10 Baxtergate and of the various names and re-incarnations of the Companies with which this case is concerned. Indeed she referred to Cellar 5 as Co.No.1014273 throughout her skeleton in order to avoid the confusion.
9. Needless to say I am most grateful to Counsel for their assistance in this by no means straightforward case.

3. Witnesses

10. 2 witnesses were called on behalf of Mr Quadrini - Mr Quadrini himself and Mr Knox. 3 witnesses were called on behalf of the Defendants – Mr Jackson, Mr Forsyth and Mr Gaskell. I formed the view that all of the witnesses were patently honest and doing their best to assist me. There was, in fact, very little dispute as to the facts and I have no difficulty in accepting their evidence.
11. In addition at a late stage of the proceedings I was provided with witness statements from Mr Brown and Mr Richards to prove that the title deeds came from lawful custody.

4. The Facts

4.1. 10 Baxtergate

12. The property with which this action is concerned is that registered under Title Number NYK199184. The Registry Plan shows 10 Baxtergate as fronting Baxtergate, immediately to the west of Angel Yard. It does not purport to show any boundaries of the building. To the south is the Angel Hotel which fronts New Quay Road. In fact the building that comprises the Angel Hotel is connected to the building of which 10 Baxtergate is said to form part. Immediately above 10 Baxtergate is Laughtons nightclub. Public access to the nightclub is gained from a door fronting Baxtergate. .
13. It consists of a 19th Century building on a relatively steeply sloping site running down from Baxtergate to the New Quay Road which runs beside the harbour in Whitby. The building comprises four storeys where it fronts Baxtergate and has cellars. The building is to the rear of and internally connected with The Angel Hotel which fronts the New Quay Road and is the property registered under Title Number NYK95034. The internal connections are complex.
14. 10 Baxtergate is part of the basement, part of the ground and part of the first floors of the building on the corner with Baxtergate and Angel Yard. There is a helpful description in a report by Consulting Engineers made in 1997:

The property comprises about one quarter (on plan) of a large block which fronts directly onto Baxtergate. The harbour is approximately 100 yards away to the rear of the block. The block is four storeys high but [Greenalls Cellars] occupy only the first 2 floors. We understand that the second and third floors are occupied by a discotheque but there was no access to these floors …

The building is constructed in brick with stone facing blocks. The external walls are about 600mm thick. We do not know the age of the property but suspect it was constructed about 100 years ago.

15. A number of photographs were put in evidence during the course of the hearing. These include photographs taken from Baxtergate that show the front of the off licence – trading as Booze Buster, and of the separate entrance to Laughtons next door. A number of other photographs were taken from various parts of Angel Yard. These show the side entrance from which access is gained to the first floor flat and for the delivery of goods.
16. In July 1997 Norman Lowe and Associates prepared a structural survey of 10 Baxtergate. The plans that were prepared show the area of the land that is subject to the Defendants' claim. It is clear from the plans that the first floor area is significantly larger than the ground floor and basement area. In so far as 10 Baxtergate belongs to Cotil there is a flying equitable interest.
17. On 3rd March 1994 10 Baxtergate was valued by Tom Marshall. In his report he stated that the ground floor area was 353 sq ft, that the basement and first floor storage area was 650 sq ft. He valued 10 Baxtergate at £135,000.

4.2. Cellar 5

18. Cellar 5 was incorporated on 14th June 1971 under the name Eldwich Limited. Its registration number was 01014273. It changed its name to Cellar Five Limited on 3rd March 1971, to Cellar 5 Limited on 21st October 1993 and to Greenalls Cellars Limited on 24th August 1994. During this period it was wholly owned by Greenalls Group plc.
19. In the summer of 1997 there was a management buy out of the shares in Cellar 5. Following the management buy out Cellar 5 changed its name to Parisa Ltd on 23rd October 1997 and back to Cellar 5 Ltd on 23rd November 2001.
20. On 6th December 2001 the Royal Bank of Scotland appointed Administrative Receivers to Cellar 5.
21. In order to avoid confusion I shall refer to the Company as Cellar 5 throughout this judgment.

4.3. Mr Quadrini and the purchase of the Angel Hotel

22. Mr Quadrini is a highly successful businessman in the leisure industry. He is the Chairman, principal shareholder and director of a number of companies which operate hotels, nightclubs and casinos including Cinderella Rockefeller Ltd, Youngkeen Limited and Metwall Limited. He or his companies employ over 500 people. Mr Anthony Knox is the Managing Director of many of the Companies and is Mr Quadrini's number 2.
23. Mr Quadrini was approached by a representative of Carlsberg Tetley Brewing Ltd ("Tetleys") in the summer of 1995. Tetleys were owed money by Maltfine Properties Ltd, the owners of the Angel Hotel and Laughtons nightclub and on 4th May 1994 had appointed administrative receivers pursuant to their rights under a Debenture. They also had a number of other bad debts at the time and were anxious to dispose of a number of properties so as to reduce the level of these debts.
24. Mr Quadrini purchased the Business as a going concern from the Administrative Receivers with the assistance of a loan from Tetleys at a price of £415,000. Contracts were exchanged on 12th January 1996; completion took place on 16^th February 1996.
25. Mr Quadrini visited the Angel Hotel only once before he bought. He was accompanied by Mr Knox. Neither could remember the precise date but both thought it was about 6 months before they bought. Thus the best estimate is the summer of 1995. They had two or three other properties to look at from Tetleys' portfolio, one in Redcar and one in Scarborough. Thus they were in a hurry. They only spent about an hour at the premises. It was pouring with rain and they both accepted that this affected the extent to which they made an external inspection of the property. Both Mr Quadrini and Mr Knox agreed that they did not carry out a close inspection of the outside. They did not go to Baxtergate at all. They entered the Angel Hotel from the New Quay entrance. They were shown round - Mr Quadrini described it as a warren. They saw the night club and the inside of the Angel Hotel itself. They both accepted that their principal interest lay in the financial details that were provided. In particular they were interested in the amount of beer that was being sold so as to see whether the deal they were offered was viable.
26. Mr Quadrini could not remember who showed him round but remembers being told that all of the buildings were included in the sale. Both Mr Quadrini and Mr Knox were wholly unaware of Booze Buster trading from 10 Baxtergate at the time of the sale. They only discovered about the existence of Booze Buster much later.
27. Shortly after the initial visit Mr Quadrini accepted instructions from the Administrative Receivers to manage the Angel Hotel on their behalf. Mr Quadrini thought that they would have retained the existing management but would have sent a further manager to oversee and to look after financial matters.
28. After exchange of contracts on 12^th January 1996 Mr Quadrini was allowed to enter into possession as licensee and to trade on his own behalf.

4.4. Occupation of 10 Baxtergate by Cellar 5 and Wine Cellar.

29. The evidence of the occupation of 10 Baxtergate came from Mr Jackson, Mr Forsyth and Mr Gaskell

Mr Jackson

30. Mr Jackson was involved with 10 Baxtergate since 1985. He was then employed by Blayney Wines a subsidiary or trading name for Vaux as the area manager with overall responsibility for Whitby. As Area Manager he visited 10 Baxtergate approximately once a fortnight for 20 years up to his retirement in June 2006. He was able to confirm that for that period the ground floor was continuously occupied and traded as an off licence under various names – Blayney Wines, Cellar 5 and Booze Buster. In addition there was a full time on site manager and a number of other part time staff. The Manager at one time occupied the flat on the first floor. He confirmed that 10 Baxtergate has always had separate access from the rest of the building.
31. The photographs show a black door in Angel Yard which gives access to the first floor flat and the basement. It is also the tradesmen's entrance to the off licence. There is a door off Baxtergate giving access to the public to the off licence. There is no access from any part of 10 Baxtergate to that part of the building occupied by the Angel Hotel or Laughtons. Equally there is no access to that part of the building occupied by the fried chicken shop. Entrance to that shop is via a blue door in Angel Yard next to the black door.
32. In cross-examination Mr Jackson was asked about the chronology. He confirmed that, as far as he was aware he was employed by Vaux. In 1992 following the portfolio sale of the off licences by Vaux to Greenalls he believed he was employed by Cellar 5. He confirmed Cellar 5 as a subsidiary of Greenalls. He recollected that the name of the off licence was changed to Cellar 5 within 2 years of the purchase from Vaux; it remained as Cellar 5 until the management buy out in 1997. It was changed to Booze Buster within a relatively short time after the management buy out. Mr Jackson thought it might have been as much as 2 years; Mr Forsyth said it was within 6 months. It has traded as Booze Buster since then.
33. He was asked about his duties. He said he was responsible for the day to day running of the 25 to 30 properties within his portfolio. Everything involved in the profitability was within his provenance.

Mr Forsyth

34. Mr Forsyth is a Chartered Surveyor. He was employed by Greenalls from February 1985 to June 1989 as an Estates Surveyor. He was in fact the only surveyor employed by them in relation to their off licence premises. Between June 1989 and November 2001 he was employed by Cellar 5 as its property director. As such he assumed full responsibility for all aspects of property management within Cellar 5. He had a team of people working for him.
35. Mr Forsyth only visited 10 Baxtergate 3 or 4 times. He was, however, able to confirm that it was Cellar 5 (under its several names) that was trading from and occupying the property from the date when it was purchased from Vaux to the date when he was made redundant in 2001.
36. Mr Forsyth was asked a number of questions about some equivocal correspondence in October 1999 between Mr Williamson, an estates manager in his team, and Richard Hardy at Carter Jonas. There are 2 letters both dated 20^th October 1999 that are inconsistent. In one of the letters Mr Williamson apparently enclosed a copy of a lease in respect of the property. Mr Forsyth knew nothing about any lease and confirmed that he would have known if any lease had been granted by Cellar 5 of 10 Baxtergate. He confirmed that Cellar 5 continued to trade throughout the relevant period. It is, furthermore, apparent from correspondence in August 2000 that no copies of the lease remained with Cellar 5 and that attempts to get the copy of the lease back from Carter Jonas were not successful.

Mr Gaskell

37. In August 2001 Mr Gaskell was appointed the Finance Director of Cellar 5. Its business consisted of approximately 376 off licences including the off licence trading at 10 Baxtergate, Whitby. He has not, as I understood his evidence, ever visited 10 Baxtergate. As well as being the Finance Director of Cellar 5 he was on the board of Cellar 5 Group Ltd and Cellar 5 Investments Ltd.
38. On 6^th December 2002 the Bank of Scotland appointed Administrative Receivers to Cellar 5. Mr Gaskell was asked why this happened. He said that the bank formed the view that there was no prospect of being paid the debt owed to them.
39. In any event the Administrative Receivers asked Mr Gaskell to stay on and help Cellar 5 continue trading with a view to selling the business (or as much as possible) as a going concern.
40. Sometime in late December 2002 the Administrative Receivers introduced Mr Gaskell to Mr Jebreel as a possible purchaser of some of the assets of Cellar 5. Mr Jebreel was a director of a company that had been incorporated on 22^nd November 2002 and subsequently changed its name to Wine Cellar Ltd. Mr Jebreel offered Mr Gaskell the post of Managing Director of Wine Cellar in late January 2003.
41. On 11^th February 2003 Cellar 5, acting by the Administrative Receivers, agreed to sell to Wine Cellar (under its old name) a number of freehold and leasehold properties for a price that has not been disclosed to the Court. The obligations of Wine Cellar were guaranteed by Maryland Securities Limited – another Company under the control of Mr Jebreel. One page from the Schedule to the Agreement has been included in the bundle. The relevant entry is as follows

No	Type	Cellar 5 Basic Address	Code	Postal Address	Tenure Title Root of Title	Price (£)	Price (£)	Price (£)
120	BB	6160BB WHITBY	6160	10 Baxtergate, Whitby …	FH			140,000

42. Mr Gaskell explained that the price of £140,000 was not the contract price for 10 Baxtergate but the book value in Cellar 5's accounts. He was unable to say how the book value had been arrived at but suggested a number of possible explanations. In any event he explained that the price paid under the contract was less than the book value in Cellar 5's books with the result that the price paid was reduced on a pro rata basis.
43. Between 11^th February 2003 and the date of completion the directors and shareholders decided that some of the properties were to be held by an overseas company. Accordingly on 1^st April 2003 Cotil was incorporated in Jersey for the specific purpose of owning the properties.
44. The transaction was completed on 11^th April 2003. Mr Gaskell was aware that some of the properties that had been bought had difficult titles. He was not specifically aware of the rejection of the application for registration. Indeed he was not aware that Mr Quadrini was claiming title to 10 Baxtergate until November 2004.

5. Mr Quadrini's title

45. As Mr Quadrini's title is registered it is not necessary to trace it in detail. The transfer to Mr Quadrini has been included within the trial bundle. The parcels clause is in 2 parts:

ALL THAT freehold and leasehold land … being the Angel Hotel …as the same is contained in Title Number NYK95034…

AND ALSO ALL THAT freehold and leasehold land together with the buildings erected thereon or some part thereof and known as Laughtons 9 and 9a Baxtergate Whitby … as the same is comprised in a Conveyance dated 15th July 1988 and made between Donald Thornham Dunwell (1) and Maltfine Properties Limited (2)

46. On 31^st December 1997 application was made to the Land Registry to register Mr Quadrini's title. There were complications and the application took over a year to complete. It was, however, successful and Mr Quadrini is now the first registered proprietor of NYK199184. It is common ground that 10 Baxtergate is within that title. He is also the registered proprietor of the Angel Hotel under title number NYK198193. Mr Horne drew to my attention 2 features relating to Mr Quadrini's title. First he drew to my attention that the land was stated to be part freehold and part leasehold and that the 2 parts were indistinguishably mixed. There was excluded from the title any estate right or interest of the holder of the reversionary estate consequent on the determination of the leasehold term.
47. Second he drew my attention to the plan attached to the 2 titles. He drew to my attention that approximately half of the width of Angel Yard, co-extensive with 10 Baxtergate was omitted from the title. He said this was consistent with the unregistered title of Cotil.

6. Cotil's Title

48. I am extremely grateful to both Counsel for the extreme care with which they have taken me through the title deeds in this case and have set out the relevant parts of the title deeds in their written submissions:

6.1. 18^th century Leases

49. In her helpful analysis of the conveyancing information Miss Hutton has drawn to my attention 2 leases one dated 20^th September 1750 for an alleged term of 999 years and the other dated 19^th September 1758 for a term of 900 years. Each was purportedly granted by the then Lord of the Manor. No one has seen a copy of either; no one knows what the nature or extent of the demised premises were; nor what has happened to the leasehold title.
50. A predecessor in title to the Claimant, William Cornforth, enfranchised his leasehold interests on 29 August 1969 by acquiring the freehold reversion and redeeming the rent charge in a transaction with the then Lady of the Manor, Monica Lucy Ann Strickland. Curiously notwithstanding this enfranchisement Mr Quadrini's registered title refers to the leasehold interest.

6.2. Conveyance dated 17^th March 1891 to Thomas Parrington

51. By this conveyance all of the Building and the Angel Hotel was vested in Thomas Parrington. The relevant part of the parcels clause is the following:

ALL THAT hotel called the Angel Hotel and all that large hall or public room called Saint Hildas Hall and the sale shop adjoining formerly occupied as a wholesale jet ornamental warehouse but then as a fruiterers shop WHICH said hereditaments and premises were situate in Baxtergate in Whitby aforesaid and were formerly in the occupation of William Dawson or his undertenants afterwards of William Piercey but then or late of Robert Ward and William Dowell AND ALSO ALL THAT messuage or dwellinghouse and shop situate in Baxtergate aforesaid and as the same was formerly

in the occupation of Isaac Greenbury afterwards of Robert Wakefield but then of Messieurs Skelton & Son AND ALSO ALL THAT yard adjoining to and on the East side of the said Hotel and last mentioned messuage or dwellinghouse and shop (the site of which hotel messuages shops and yard was more particularly delineated on the plan drawn in the margin of an Indenture dated the 12th May 1869 and made between the said Mark Weighill of the one part and the said William Piercey of the other part and thereon coloured yellow green and brown)

52. The plan which was attached to the conveyance dated 24/02/28in a later transaction appears to confirm ownership of the Building was vested in Thomas Parrington.
53. The Habendum is in the following terms:

TO HOLD as to such part of the said hereditaments as was of freehold tenure unto and to the use of the said Thomas Parrington in fee simple subject nevertheless to such parts thereof as were subject thereto to the yearly ground rent of 10/- payable to the Lord of the Manor of Whitby aforesaid And as to such part of the said hereditaments and premises as were of leasehold tenure To hold the same unto and to the use of the said Thomas Parrington for the residue of a term of 999 years created by a Lease of the 20th September 1750 subject to the yearly rent of 17/6 and to the performance of suit and service to the Lord of the Manor of Whitby aforesaid And as to such other part of the said hereditaments as were leasehold To hold the same unto and to the use of the said Thomas Parrington for the residue of a term of 900 years created by a Lease of the 19th September 1758 subject to the yearly rent of 2/6 and to the performance of suit and service to the Lord of the Manor of Whitby aforesaid

6.3. Vesting Deed 23^rd January 1928

54. Thomas Parrington died on 28/3/1915. By his will dated 24/12/1894, he appointed his wife Annie Parrington, C R Hugill and H J Parrington as executors and trustees thereof. Thomas Parrington bequeathed the residue of his real and personal estate to the Trustees in trust to pay the income thereof to his wife for life and after her death to apply the same in such manner as she should appoint by her will. His will was duly proved on 13/5/1915.
55. By virtue of a Vesting Deed dated 23 January 1928 made between Annie Parrington and C R Hugill as Trustees, and Annie Parrington of the other part, the Trustees vested the properties mentioned in the schedule thereto in Annie Parrington. The schedule describes the property so vested and includes the Building, which is described by reference to the plan referred to in the indenture dated 12/5/1869.
56. The parcels clause includes:

ALL THAT Hotel called the Angel Hotel and all that large hall or public room called Saint Hildas hall and the sale shop adjoining formerly occupied as a wholesale jet ornamental warehouse fruiterers shop occupied by Richard Vasey WHICH said hereditaments and premises are situate in Baxtergate in Whitby aforesaid AND ALSO ALL THAT messuage or dwellinghouse and shop situate in Baxtergate aforesaid as the same was late in the occupation of Messieur Skelton & Son and now of Robert Whiteley Walker and Numbered 10 in Baxtergate aforesaid AND ALSO ALL THAT yard adjoining to and on the East side of the said Hotel and last mentioned messuage or dwellinghouse and shop

57. Mr Horne submits that the reference to the yard can only be a reference to Angel Yard. This seems to be confirmed by a reference at the end of the parcels clause to the plan.

6.4. The conveyance dated 24^th February 1928 in favour of Spencer Brockhurst Dean

58. Under this conveyance Annie Parrington conveyed land to S B Dean. The relevant part of the parcels clause of the Deed is as follows:

ALL THAT Hotel called the Angel Hotel and all that large hall or public room called Saint Hildas hall and the sale shop adjoining formerly occupied as a wholesale jet ornamental warehouse fruiterers shop occupied by Richard Vasey WHICH said hereditaments and premises are situate in Baxtergate in Whitby aforesaid AND ALSO ALL THAT messuage or dwellinghouse and shop situate in Baxtergate aforesaid as the same was late in the occupation of Messieur Skelton & Son and now of Robert Whiteley Walker and Numbered 10 in Baxtergate aforesaid AND ALSO ALL THAT yard adjoining to and on the East side of the said Hotel and last mentioned messuage or dwellinghouse and shop …

ALL WHICH hereditaments above described and thereby conveyed and assigned for the purpose of description only and not by way of warranty shown on the plan drawn thereon and thereon coloured red and form part of the hereditaments conveyed and assigned to the said Thomas Parrington by a deed of the 17th day of March 1891 and made between Alfred Cooke of the one part and the said Thomas Parrington of the other part

59. The Habendum is in identical terms to that contained in the 1891 Conveyance.

6.5. The Indenture dated 3^rd March 1928 in favour of Robert Whiteley Walker.

60. On this date the title to 10 Baxtergate separated from the rest of the building as it was sold to the then occupier Robert Whiteley Walker. The indenture thus splits title in the Building, and the operative part of the indenture is in the following terms:

All that messuage or dwellinghouse shop and premises with the appurtenances thereto belonging situate and being Number 10 in Baxtergate in Whitby in the County of York as the same are now occupied by the Purchaser Together with one half in width of the roadway on or towards the East of the said premises leading from Baxtergate aforesaid to the New Quay and the Angel Hotel in Whitby aforesaid so far as such roadway is co-extensive with the ground floor of the hereditaments hereby assured Subject nevertheless to such rights of way as now exist over the same roadway .... proportionate part of the said yearly ground rent ....proportionate part of the said yearly rent ...etc.

61. Mr Horne draws to my attention the reference to dwellinghouse and shop known as number 10, and significantly, the reference to one half of the roadway. He submits that this can only be a reference to one half of Angel Yard insofar as it runs co-extensively with the ground floor of number 10. He reminds me of the layout of 10 Baxtergate as shown in the photographs.
62. The Habendum is in similar terms to the Habendum in the earlier deeds save that there is a reference to the proportionate part of the rents payable where appropriate.

6.6. Conveyance dated 24^th April 1941 in favour of Thomas Relton

63. By this time Robert Whiteley Walker had died and the shop was occupied by (his son?) Mr Walker who was carrying on business there The transaction involves the sale of Mr Walker's business and the sale of the property by the executrix. The conveyance recites the death of Robert Walker and the probate of his will. It conveys the property to Thomas Relton. The relevant parcels clause is:

all that messuage or dwellinghouse shop and premises with the appurtenances thereto belonging situate and being No10 in Baxtergate Whitby aforesaid as the same are now occupied by Mr Walker TOGETHER with one half in width of the roadway on or towards the East leading from Baxtergate aforesaid to the new Quay and the Angel Hotel in Whitby aforesaid so far as such roadway is co-extensive with the ground floor of the hereditaments hereby assured ....Subject to but with the benefit of the Agreement and Declaration contained in a certain Conveyance and Assignment dated the 3rd day of March 1928 and made between Spencer Brockhurst Dean of the one part and the testator of the other part relative to the main and boundary walls of the property hereby assured and to rights of support and other easements".

64. Both Miss Hutton and Mr Horne pointed out that the business of wine merchant was being sold by Thos. Whiteley Walker together with the property which was owned by Mrs Whiteley Walker
65. The Habendum is in similar terms to the Habendum in the 3rd March 1928 Indenture.

6.7. Conveyance 16th May 1973 to Vaux

66. T H Relton died on 16th March 1944. Probate of his estate was granted to Jane Relton. On 11th April 1973 Horace Relton as executor of Jane Relton assented to the vesting in himself of the properties included in the Schedule. The Schedule comprises 3 properties. It includes

No 10 Baxtergate, Whitby (including one half of the roadway at the East side thereof).

67. On 16th May 1973 Horace Relton sold various properties to Vaux. The parcels clause (so far as material) included:

"ALL THAT messuage or dwellinghouse shop and premises with the appurtenances thereto belonging situate and being Number 10 in Baxtergate Whitby ...TOGETHER with one half in width of the roadway on or towards the East leading from Baxtergate aforesaid to the New Quay and the Angel Hotel ...so far as such roadway is co-extensive with the ground floor of the property hereby assured but subject to such rights of way ..."

68. The Habendum grants the purchaser a fee simple in respect of those parts of the property that were freehold and grants the residue of the term of those parts that are leasehold.

6.8. Transfer dated 13th January 1992 to Cellar 5

69. By a Transfer dated 13th January 1992 Vaux transferred 10 Baxtergate to Cellar 5. [In fact the transfer contains a mistake. The purchaser is referred to as Cellar 5 Limited. The price was £78,670. At that time Cellar 5's name was in fact Cellar Five Limited. On the final day of the trial Miss Hutton accepted that no confusion was caused by this and that the Court should treat it as a transfer to Cellar 5.]
70. The parcels clause was contained in The First Schedule

10 Baxtergate being the property described in the Third Part of the Schedule to a conveyance and assignment dated 16 May 1973 ...being part freehold and in part leasehold ....

71. The transfer was subject to compulsory registration at the Land Registry. On 9th December 1992 documents were submitted to the York District Land Registry. In the covering letter Mr Brown made the point that the property was unusual being recited as being both freehold and leasehold but that it was not clear which part of the property was which. On 7th January 1993 the Land Registry raised a requisition requiring identification of the freehold and the leasehold land separately. There was some correspondence in March 2003 but the application was treated as cancelled.

6.9. The Management Buy Out.

72. On 28th August 1997 there was a management buy out of Cellar 5. The share acquisition agreement has been produced. It is not a document of title as such in that it did not purport to transfer any interest in 10 Baxtergate. However it did contain a number of warranties by the vendor. Those warranties included warranties that it contained an accurate list of all freehold and leasehold properties owned used or occupied by Cellar 5. Included in the list was 10 Baxtergate. The tenure was described as Freehold.

6.10. The transfer in favour of Cotil dated 9th April 2003.

73. I have set out above the circumstances in which Cotil purchased from the Administrative Receivers of Cellar 5. At the time of the transfer the title deeds to 10 Baxtergate had been lost. There was accordingly a statutory declaration from Mr Forsyth of the same date. In it he said that (amongst other properties) the title deeds to 10 Baxtergate had been lost but that the legal and beneficial ownership was in Cellar 5.
74. The Transfer is dated 9^th April 2003 and in the standard form TR1. Cellar 5, acting by the Administrative Receivers executed a transfer of 10 Baxtergate in favour of Cotil. The consideration was stated to be £112,000 and the transfer was said to be by way of subsale. The parcels clause makes no reference to the leasehold interest and is in the following terms:

All that freehold property situate at and known as 10 Baxtergate, Whitby, North Yorkshire YO21 1BW and shown for identification purposes only edged red on the plan annexed hereto

75. The plan attached to the transfer on any view includes part of the building that does not form part of 10 Baxtergate. The plan is said to be for identification purposes only. The property was financed with a secured loan from Barclays Bank plc.
76. On 31^st July 2003 an application was made to register the transaction by solicitors acting on behalf of Cotil and Barclays Bank plc. On 11^th August 2003 the application was rejected on the ground that the land was already registered freehold under Title NYK199184.

6.11. The position of Wine Cellar

77. These proceedings were initially commenced against Wine Cellar alone. In its defence Wine Cellar alleged that Cotil was its nominee. However, following a contested hearing before H H Judge Kaye QC on 14^th June 2006 that defence was abandoned. Cotil was properly joined as the Second Defendant and alleged that following the transfer of 9^th April 2003 it let 10 Baxtergate to Wine Cellar.
78. There was no written tenancy agreement but at the trial Mr Gaskell confirmed that this was the position. He told me that Wine Cellar went into occupation from the date of the contract as licensee of Cellar 5. Following completion it has been the tenant of Cotil. There is no formal written tenancy agreement but rent at an approximate rate of £15,000 per annum has been paid by Wine Cellar to Cotil. Mr Gaskell produced documents showing the total of rents demanded and paid since 2003 for the occupation of all of the properties owned by Cotil. He also produced a breakdown for the years ending January 2004, 2005 and 2006 showing rent payments including payments in respect of 10 Baxtergate.
79. There were, in fact, a number of minor discrepancies with the figures. Miss Hutton did not cross-examine Mr Gaskell on this part of his evidence and in her closing submissions accepted that there was indeed a tenancy between Cotil and Wine Cellar. She made the point that there was no reason why the rents should be the same every year. In those circumstances I do not need to consider this aspect of the case any further.

7. The Law

7.1. Common Ground

80. There was very little dispute between Counsel as to the relevant law, though there was a minor issue as to the standard of proof. A number of points can be made:

1. It was accepted by Mr Horne that the failure by Cellar 5 to register the 1992 Transfer at H M Land Registry within the 2 month statutory period means that the Transfer was void at law after 2 months. It was accepted by Miss Hutton that this did not prevent Cellar 5 obtaining an equitable interest.

2. It was accepted by Mr Horne that the effect of registration was to confer on Mr Quadrini a legal estate in fee simple absolute in possession in 10 Baxtergate notwithstanding that Mr Quadrini may not have had any title to 10 Baxtergate by virtue of his unregistered title.

3. It was accepted by Miss Hutton that in so far as the unregistered transfer to Mr Quadrini purported to convey title to 10 Baxtergate, Mr Quadrini's unregistered title to 10 Baxtergate would have been subject to any equitable interests of which he had constructive notice at the date of completion (19^th February 1996). Miss Hutton referred me to section 199 of the Law of Property Act 1925. Mr Horne did not challenge the analysis under section 199. He, however, submitted that it was irrelevant to any issue that I had to decide. This was because of the subsequent registration of Mr Quadrini's title. Once Mr Quadrini's title was registered the only relevant question was whether it was subject to an overriding interest.

4. It was further accepted by Miss Hutton that Mr Quadrini's registered title to 10 Baxtergate would take effect subject to any overriding interest under section 70(1)(g) of the Land Registration Act 1925 namely "The rights of every person in actual occupation of the land or in receipt of rents and profits thereof, save where enquiry is made of such person and the rights are not disclosed".

5. In relation to section 70(1)(g) it was agreed that:

1) In order to establish a right for the purpose of an overriding interest Cotil had to establish a legal or equitable interest in 10 Baxtergate at the relevant date. A mere licence to occupy was insufficient.¹

2) The right must also be coupled with actual occupation of the interested party. It was sufficient for Cotil to establish that Cellar 5 was in occupation of part of 10 Baxtergate as at 31^st December 1997. It was not necessary to prove occupation of the whole.2

3) The relevant date for the purpose of establishing an overriding interest was the date of first registration of Mr Quadrini's title – 31^st December 1997. Thus it was necessary to prove that Cellar 5 had an equitable interest in 10 Baxtergate as at 31^st December 1997.3

6. It was accepted by Miss Hutton that any overriding interest in 10 Baxtergate that was vested in Cellar 5 as at 31^st December 1997 was capable of being transferred to Cotil whether or not Cellar 5 or Cotil were or remained in possession of 10 Baxtergate after that date⁴

7.2. Standard of Proof

81. Miss Hutton referred me to a passage from paragraph 12-073 the 6^th Edition of The Law of Real Property by Megarry & Wade:

A doubtful title is one which the vendor cannot prove with certainty to be good and which is therefore in law bad. A title is not necessarily doubtful merely because a doubt is raised with regard to it. Commonly the doubt will relate to a blot which has been cured by lapse of time so that any adverse claims have been barred. In such a case a court will attempt to resolve the doubt and "if the facts and circumstances are so compelling to the mind of the court that the court concludes beyond reasonable doubt that the purchaser will not be at risk… the court should declare in favour of a good title being shown5"

82. Miss Hutton submitted from this that there was a different standard of proof in cases relating to title to land. She submitted that in such a case a vendor had to refute any doubt as to its title "beyond reasonable doubt". She further submitted that Cotil was in the same position as a vendor seeking to make a good title to land. If there was any reasonable doubt as to Cotil's title it had no interest at all in 10 Baxtergate with the result that the claim to an overriding interest would fail.
83. I do not accept Miss Hutton's submissions. She is taking the dictum of Lord Russell of Killowen out of context and applying it to a situation for which it was not intended. This is a civil dispute. If and in so far as facts are in dispute they are decided on the balance of probabilities. This is so whether or not the facts relate to a question of title to land or otherwise.
84. I equally do not accept that Cotil's position is identical to a vendor seeking to compel a doubtful title on an unwilling purchaser. The question that I have to decide is whether Cellar 5 could establish an equitable interest in 10 Baxtergate as at 31^st December 1997 which was binding on Mr Quadrini and was successfully transferred to Cotil in April 2003. No doubt there are similarities between the 2 situations in that it is necessary to look at Cellar 5's title but I do not accept that the tasks are identical.

8. The issues

85. In order to establish whether Cotil has established an equitable interest it is accordingly necessary to examine Cellar 5's title, to consider whether Cellar 5's title was validly transferred to Cotil and thirdly whether Mr Quadrini takes subject to any interest that Cotil may establish.
86. In her closing submissions Miss Hutton in effect took 3 points. Her main (or best) point relates to the second issue. She submits that the transfer of 9^th April 2003

was effective only to transfer the freehold interest (if any) of Cellar 5 in 10 Baxtergate. She drew to my attention that the interest of Cellar 5 was in part leasehold. As it was impossible to establish which part was leasehold and which part was freehold, the transfer was ineffective to pass any interest to Cotil.

87. Her second point related to Cellar 5's title. She accepted that in the Conveyance of 24^th February 1928 Annie Parrington conveyed the whole of the building to Spencer Dean. She also accepted that on 3^rd March 1928 Spencer Dean divided the title and sold 10 Baxtergate to Robert Walker. She drew to my attention the parcels clause in the March 1928 Conveyance set out above. She submitted that the words "as are now in the occupation of the Purchaser" defined the land to be conveyed. As it was now impossible to know what land was occupied by Robert Walker in 1928, the parcels clause was uncertain with the result that it was impossible to know what was in fact conveyed to Robert Walker. She also accepted that the conveyance of 24^th April 1941 would have been a perfectly good root of title in respect of a purchase by Cellar 5. However that conveyance referred to the premises being occupied by Mr Walker. In the absence of evidence as to what premises Mr Walker occupied in 1941 the title was defective.
88. Her third point related to notice/actual occupation. She submitted that it could not be established that Mr Quadrini had constructive notice of Cellar 5's rights on 19^th February 2006 and that Cellar 5 was not in actual occupation of any part of 10 Baxtergate on 31^st December 1997. She made a number of suggestions as to why this might be the case.

8.1. The transfer dated 9^th April 2003.

89. I was referred by Mr Horne to the overview contained in Chapter 1 of Mr Justice Lewison's valuable book on the interpretation of contracts. Both Counsel referred me to the now often cited passage from Lord Hoffman's speech in Investors Compensation Scheme v West Bromwich Building Society6

"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] 3 All ER 237 at 240–242, [1971] 1 WLR 1381 at 1384– 1386 and Reardon Smith Line Ltd v Hansen-Tangen, Hansen-Tangen v Sanko Steamship Co [1976] 3 All ER 570, [1976] 1 WLR 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.

[1998] 1 WLR 896 at 912F-913E.

(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 Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945).

(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the commonsense 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 Cia Naviera SA v Salen Rederierna AB, The Antaios [1984] 3 All ER 229 at 233, [1985] AC 191 at 201:

'… if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.

90. The relevant part of the Transfer has been set out above. For convenience I shall repeat it:

All that freehold property situate at and known as 10 Baxtergate, Whitby, North Yorkshire YO21 1BW and shown for identification purposes only edged red on the plan annexed hereto

91. It is to be noted that it does not purport to convey Cellar 5's freehold interest. It merely describes the property as freehold. It is thus not a case of transfer of a specific interest in the property. It uses the word "all" which is hardly consistent with an intention to retain an interest in the property. This was a sale by the Administrative Receivers of a number of business premises to Cotil. They would have had no commercial purpose in retaining any part of 10 Baxtergate and plainly did not intend to do so. Miss Hutton made the point that not all of the assets were sold to Cotil. This is true but she was not able to provide any commercial reason why they should have retained any part of 10 Baxtergate. The leasehold interest was on any view of a very minor nature. It arose out of 2 18th century leases and involved the payment of rent of under £1 a year. The land subject to the leases was uncertain. There is no evidence of payment of rent for many years.
92. At the time of the transfer the title deeds to 10 Baxtergate were lost so that the parties may not have been aware of the minor leasehold interest that existed.
93. The construction put forward by Miss Hutton "flouts business common sense". If she is right Cotil paid £112,000 for 10 Baxtergate and yet got nothing. In all the circumstances I have no difficulty in rejecting Miss Hutton's submission. In my view the word "freehold" is used as part of the description of the property and not as an indication of the interest to be transferred. It is an inaccurate part of the description but there is no difficulty in construing the transfer by reference to the remainder of the parcels clause. In my view the transfer should be construed as if the word "freehold" was not included.
94. It follows that the 9th April 2003 transfer was effective to transfer the whole of Cellar 5's interest in 10 Baxtergate to Cotil.

8.2. The extent of Cellar 5's interest.

95. I equally have no difficulty in rejecting Miss Hutton's submission in relation to the parcels clause in the March 1928 Conveyance and April 1941 Conveyance. There are a number of reasons for this:

1. Both the March 1928 Conveyance and the April 1941 Conveyance contain a number of other descriptions of 10 Baxtergate from which it is possible to identify the land conveyed. The fact that it is now not possible to say what parts of the property were occupied by Mr Walker or his father does not defeat the whole conveyance.

2. The words "as the same are now occupied by the Purchaser" are only part of the description and do not require the court to ask what parts he occupied.

3. 10 Baxtergate is physically separate from the rest of the building. There is thus no difficulty in inferring the parts occupied by Mr Walker. This is confirmed by long usage. There is no evidence of any challenge to the occupation of any part of 10 Baxtergate including the first floor flat since 1928 or 1941.

4. As Mr Horne pointed out Mr Quadrini's title does not include ½ of the width of Angel Yard co-extensive with 10 Baxtergate. This is wholly consistent with Cellar 5's title deeds.

96. In all the circumstances I have no difficulty in inferring that Cellar 5's title included the basement, ground floor and first floor flat in 10 Baxtergate as shown in the plans prepared in 1997 by Norman Lowe.

8.3. Constructive Notice and/or actual occupation by Cellar 5.

97. I regard the legal question of whether Cotil has to establish actual occupation by Cellar 5 on both 19^th February 1996 and 31^st December 1997 as largely academic. There are 2 reasons for this. First I am satisfied on the facts that Cellar 5 was in actual occupation on both the relevant dates. The evidence of both Mr Jackson and Mr Forsyth supports this finding. I have already indicated that I accept their evidence. Miss Hutton had a number of suggestions to refute their evidence. First she drew to my attention the failure by Cellar 5 to register its title over a period of 14 years. Whilst this failure is regrettable it sheds no light on the identity of the occupier of 10 Baxtergate. Second she suggested that there might have been a lease. She reminded me of the equivocal correspondence in October 1999 between Mr Williamson and Mr Hardy. No-one has been able to produce any lease. There is no evidence of a tenant ever being in possession of 10 Baxtergate. Mr Forsyth, as property director, was adamant that he would have known about such a tenant and said there was none. I accept this evidence. Finally Miss Hutton suggested that following the management buy out the interest might have been transferred to another member within the group. This suggestion was wholly unsupported by any evidence; there was no reason for Cellar 5 to transfer its rights in 10 Baxtergate and the suggestion can only be regarded as fanciful.
98. I am equally satisfied that Mr Quadrini had constructive notice of Cellar 5's rights on 19^th February 1996. Both he and Mr Knox frankly admitted that they did not make a proper inspection on the one occasion that they visited. Any proper inspection would have included Baxtergate. That would have revealed Cellar 5 trading from 10 Baxtergate.
99. It is equally clear that no enquiries at all were made of Cellar 5 either in 1996 or 1997.
100. Second I am by no means satisfied that Mr Quadrini's unregistered title included 10 Baxtergate. I have set out the parcels clause in his conveyance above. The relevant part reads

AND ALSO ALL THAT freehold and leasehold land together with the buildings erected thereon or some part thereof and known as Laughtons 9 and 9a Baxtergate Whitby … as the same is comprised in a Conveyance …

101. As noted above the title to 10 Baxtergate was separated from the rest of the building in 1928. It had a separate unregistered title after that. 10 Baxtergate was not known as Laughtons and was physically excluded from it (even though within the same building). If the unregistered title did not include 10 Baxtergate questions of the rights of Cellar 5 do not arise as at 19^th February 1996.
102. Thus the difference between Miss Hutton and Mr Horne as to the relevance of 19^th February 1996 does not arise. In those circumstances it seems to be better to leave the question to a case where it is determinative of the result.

9. Conclusion

103. In my view Cotil have validly established an equitable interest in 10 Baxtergate. The interest is an overriding interest and the claim to possession must fail.
104. I have to confess that I am not sorry to reach that conclusion. Mr Quadrini believed that he was buying the Angel Hotel and Laughtons. The price he paid no doubt reflected that. He was not aware of the existence of Booze Buster trading in 10 Baxtergate when he bought. On the other hand Cellar 5 and Cotil both paid a commercial price for 10 Baxtergate when they bought in 1992 and 2003. It would have been a complete windfall to Mr Quadrini at the expense of Cotil if the provisions of the Land Registration Act 1925 had compelled me to hold that Cotil had no right to remain. I am happy that, for the reasons I have given, it does not.

JOHN BEHRENS Tuesday 21 November 2006

¹ Williams & Glyn's Bank Ltd v Boland [1987] 2 WLR 487

²Hodgson v Marks [1971] 1 Ch 892 and Ferrishurst Ltd v Wallcite Ltd [1999] 2 WLR 667 ³Abbey National v Cann [1991] 1 AC 56 and paragraph 10.014 of Ruoff & Roper on Registered Conveyancing. It was submitted by Mr Horne and accepted by Miss Hutton that as this was an application for first registration by Mr Quadrini that did not involve a disposition of a registered interest the relevant date must be the date of registration.

⁴ London and Cheshire Insurance Co Ltd v Laplagrene Property Co Ltd [1971] 1 CH 499, section 101 (6) of the Land Registration Act 1925; and page 139 of the 1958 edition of Curtis & Ruoff on Registered Conveyancing

⁵ Citing Lord Russell of Killowen in MEPC v Christian Edwards [1981] AC 205 at 220