REF/2006/0271

ADJUDICATOR TO HER MAJESTY’S LAND REGISTRY
LAND REGISTRATION ACT 2002

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

BETWEEN
MAUREEN JANICE WAGHORN
Applicant
and
STEVEN ALBERT ANDREW WAGHORN
Respondent

Property Address: Land and buildings lying to the north east of Maiden Lane, Crayford
Title Number: SGL433404

Before: Mr Simon Brilliant sitting as Deputy Adjudicator to HM Land Registry

Sitting at: Procession House, 55 Ludgate Hill, London EC4M 7JW

On: 23 and 24 October 2006

Applicant’s Representation:		Mr Jamie Clarke of counsel. 
 
Respondent’s Representation:		Mr Timothy Cowen of counsel.

DECISION

Proprietary estoppel – adult son working in family business with father and uncle – alleged promise of a small garage from which he could carry on own business as well as assist in family business – factual issues arising as to whether promise made, reliance and detriment – was it unconscionable for the promissors’ successor not to transfer the freehold to the adult son almost 30 years later. 

Cases cited: Gillett v Holt [2001] Ch 210, Wayling v Jones (1993) 69 P&CR 170, Sledmore v Dalby (1996) 72 P&CR 196.

Introduction

1.	In this reference, Mr Steven Waghorn (“Steven”), the respondent, claims an interest by virtue of proprietary estoppel in a small single unit garage (“the garage”) owned by Mrs Maureen Waghorn (“Maureen”), the applicant. The garage was at sometime used by Steven as a motor vehicle body repair and paint-spraying workshop.  Maureen denies this claim to an interest.

2.	The garage forms a very small part of a substantial area of land in Crayford, Kent. I shall refer to the whole area of land as “the site”.  Maureen is now the sole registered freehold proprietor of the site under title number SGL433404.

3.	On 5 December 2002, Steven entered a caution against dealings in respect of the site under section 54 of the Land Registration Act 1925.  He asserted that he was interested in the site as the beneficial owner of part of the site, namely the garage, as a result of proprietary estoppel.

4.	On 29 September 2005, Maureen applied to cancel the caution against dealings (“the original application”).  By a notice, dated 18 October 2005, Steven objected to the original application.  This objection was treated under the transitional provisions of the Land Registration Rules 2003 as an objection to the original application under section 73 of the Land Registration Act 2002.  
	The dispute was referred to me under section 73(7) on 7 February 2006.

The background

5.	Steven is a married man now aged 48. Maureen is his widowed mother.  Her late husband, who was Steven’s father, was Andrew Waghorn (“Andrew”).  He died in March 1997, whilst still running the family business which operates from the site.  Steven is the eldest of the 4 children of Andrew and Maureen.  Steven has worked in the family business since he left school at the age of 16 in 1974.

6.	Andrew was a much loved and larger than life character affectionately known as “Wag”.  At the material time, he ran the family business with his brother Mr Peter Waghorn (“Peter”).  The family business included (1) the retail supply of solid fuel, (2) house clearance and auctioning and (3) the letting out of light industrial units erected on the site. The family business has never been incorporated, and over the years has operated either as a partnership or sole trading entity. 

7.	Andrew was an extrovert wheeler-dealer, who carried out his various business activities in a buccaneering, although not always profitable, manner.  Andrew and Maureen separated in 1976, but their business affairs remained connected.  Indeed, they appear to have remained on civil terms.  Although Andrew spent practically the remainder of his life after 1976 living with another lady, he would have a Christmas dinner every year with each family.  He returned to care for Maureen when she required major surgery, not long before he himself was struck down by his final illness shortly before died.

 8.	No grant of representation has ever been taken out in respect of Andrew’s estate, although I have seen a copy of a will executed in the 1970’s.  By that will Andrew left his entire estate to Maureen.  No provision whatsoever was made for Steven, who was 39 at the time of Andrew’s death.

The witnesses

9.	Steven gave oral evidence and called Peter on his behalf.  Maureen gave oral evidence.  In addition, the trial bundle contained a large number of letters written on behalf of Steven’s case from friends, locals and customers of the family business.

10.	Maureen is a formidable lady with considerable determination and business acumen.  Her robust common sense and prudence has enabled the family business to stay solvent.  She tolerated Andrew’s buccaneering attitude to business with difficulty and has a less sentimental approach to life than he did.  I found her in the main to be an honest and engaging witness, but I am unable to accept many of the assertions she has made in her written evidence about matters concerning the garage of which she has no direct knowledge.  

11.	I found Peter to be a charismatic witness whose evidence I accept.  He too displayed a certain sophistication in business matters.

12.	I found Steven to be a thoroughly honest witness.  Steven was born with a very different personality to Andrew, Peter and Maureen, and does not have their abilities.  He lacks their acumen and drive, and does not have the skills to set himself up on his own account.  But he is extraordinarily loyal and, I believe, hardworking.  In the course of her evidence Maureen asserted that Steven was not hardworking.  That had never been part of her written case or evidence and was not put to Steven in cross-examination.  I reject that suggestion. 

The site prior to the construction of the garage

13.	The site is a long and narrow strip running off Maiden Lane in Crayford and bounded on its southern side by the River Cray.  Until about 80 years ago there was a fruit farm on the site.  Indeed, a substantial farmhouse still stands at the mouth of the site where it joins Maiden Lane.  This building is now the home of Peter.

14.	In the 1920’s, Mr Albert Waghorn (“Albert”) acquired the site.  He was the father of Andrew and Peter, and Steven’s grandfather.  He established himself as a coal and coke merchant.  In due course, he took Andrew and Peter into the business and they traded under the style “A.T. Waghorn and Sons”.

15.	Albert died in 1971.  There was litigation over his will, which left everything to Andrew and Peter, between them on the one hand, and their sister, on the other.  But in 1979 Goulding J pronounced the will valid and the site became vested in Andrew and Peter in joint names.  After Albert’s death, Andrew and Peter carried on at the site the various activities described above, despite the fact that litigation was proceeding.

16.	As time went by the demand for solid fuel decreased and Andrew and Peter tried to adapt their activities, particularly by the construction of light industrial units on the site.  This was done without a great deal of regard for the relevant planning requirements.

17.	Steven has worked at the site, in a somewhat menial capacity, from the moment he left school at the age of 16 in 1974.  He carted the solid fuel, drove and maintained the delivery vehicles, helped out in the auction business, assisted with the construction of the light industrial units, collected the rents from the tenants of the units and carried out maintenance duties on the site.

The construction and use of the garage

18.	In addition, Steven has always been interested in working with motor vehicles.  The garage was constructed on the site, at some time during the 1970’s or early 1980’s, in the circumstances I shall have to set out in more detail below. It is a brick and timber construction. A photograph produced by Steven shows that the whole of the front of garage is taken up by a pair of steel doors, giving it the appearance of an industrial container. 

19.	Steven thereafter made some part time use of the garage for the purposes of his own motor vehicle body repair and paint-spraying business.  He was only able to devote time to this when not required to help in the family business.  The profits from his own business were only ever very modest and the garage has not been used since Andrew died in 1997.

20.	In outline, Steven asserts that he has an equitable interest in the garage, binding on Maureen, which interest arises by virtue of the doctrine of proprietary estoppel.  His case is that Andrew and Peter orally gave him the land on which the garage stands, in part for his own business, before the garage was constructed.  He says that it would now be unconscionable for Maureen, as successor to Andrew and Peter, to renege on that promise of a gift.

21.	Steven asserts that he relied on the promise and in doing so he acted to his detriment.  He says that in return for being promised the garage:

(1)	he assisted in constructing the garage without pay; 

(2)	he contributed to the cost of constructing the garage;

(3)	he continued to work in the family business for low pay; 

(4)	he neglected the opportunity to develop an independent full time career in motor vehicle body repairs and paint-spraying.

22.	Maureen denies that any promise of a gift of the garage was ever made. If I find it were made, she denies any reliance on any such promise or that Steven has acted to his detriment in relying on it.

The site since the garage was constructed

23.	In 1982, Andrew and Peter decided to separate aspects of the business being run from the site.  Andrew from then on ran the solid fuel business, whilst Peter ran the auction business.

24.	In 1985, Peter decided to leave the family business altogether and sold out his one half interest in the site.  He had intended to sell it to Andrew for £69,900.  But Andrew was not in a position to raise the money.  Maureen sold 2 cottages she owned to raise the funds and Peter sold his interest to Andrew and Maureen jointly. Maureen’s security had been keeping the business afloat for some years.

25.	Peter transferred his one half interest in the site to Andrew and Maureen on 17 June 1985.  Andrew and Maureen were registered as joint proprietors of the site on 26 June 1985.  When Andrew died in March 1997, it seems to have been assumed that Andrew and Maureen were joint tenants of the site.  So Maureen became the sole registered proprietor of the site by survivorship.

26.	The family business carried on at the site has not prospered.  The solid fuel business operates no more.  The auction business has been let out to outsiders.  The rent has to be chased.  Few of the industrial units are let out anymore.  That is the deliberate policy of Maureen, who would prefer to have vacant possession.  She would like to be able to sell the site for development.

27.	Steven was absolutely devoted to Andrew.  Lacking the desire to set up on his own account Steven felt comfortable being Andrew’s right hand man.  He undertook a number of activities on behalf of the business during Andrew’s lifetime. These included attending meetings with council officials and the like.  Andrew’s death was a considerable blow to Steven.  He has found it hard to adjust to the fact that the site can no longer operate as it used to.  He does not believe there is any good reason for this.  He wishes the industrial units were all let still and that his time could be fully employed in maintenance and rent collecting duties.

28.	Steven regards the site as a shrine to his father which should be preserved and handed down to succeeding generations.  Andrew’s ashes have been laid to rest on the site with a headstone.  Steven was very upset when Andrew’s office was emptied of its contents and his favourite chair removed.

29.	Ever since Andrew died, Maureen has continued to allow Steven to work for the business.  It is mainly pottering around, collecting rents and doing some maintenance work.  Steven has always worked in the business on a self-employed basis.  He receives £640 per month.  Maureen told me that she has operated this arrangement since Andrew’s death so that Steven has something to do.  

30.	Steven has not attempted to run an independent motor vehicle body repair and paint-spraying workshop from the garage since Andrew’s death.  It is common ground that he will never do so now.  Indeed, given the size and construction of the garage and modern health and safety and environmental regulations, it is unlikely anyone could operate such a business from there. 

Proprietary estoppel

31.	In a case of proprietary estoppel the court has 5 tasks.  First, it has to determine whether a representation has been made to the promisee.  Secondly, it has to determine whether the promisee has relied upon the representation.  Thirdly, it has to determine whether the promisee has acted to his or her detriment to the knowledge of the promisor. Fourthly, it has to determine whether it would be unconscionable for the promisor to renege on the promise.  Fifthly, if the promisee succeeds on all the above issues, it has to determine the minimum equity required to do justice between the parties.

32.	Although it is convenient to set out these tasks, they are not watertight compartments and the quality of the relevant assurances may influence the issue of reliance and reliance and detriment are often intertwined.  As Robert Walker LJ (as he then was) said in Gillett v Holt [2001] Ch 210, 225D, “Moreover the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine.  In the end the court must look at the matter in the round.”

33.	With that warning in mind I propose for the sake of clarity to look at the 5 tasks I have in turn.

Was a promise made?

34.	I am entirely satisfied on the evidence that a promise was made to Steven that he would be given the garage, once it was constructed, and the land on which it stood.  Both Steven and Peter gave evidence to that effect.  It is true that Steven puts the date of the promise as about 1974 or 1975 whereas Peter says it was made in 1977 or 1978, but the precise date does not matter.

35.	In the 1970’s Peter lived at 8 Cray Close which is immediately to the north of the site.  It is a cul-de-sac and the location of the garage is immediately to the south of the end of the cul-de-sac, conveniently near to 8 Cray Close.  Peter hoped to build a garage on the site and drive into it from Cray Close.  But planning permission was refused.  Peter and Andrew agreed that the land would, instead, be given to Steven and a garage would be constructed on it.

36.	The reason for this was twofold.  In the first place, Steven would be able to use the garage for looking after and repairing the motor vehicles used in the business for delivering solid fuel.  This would be of obvious benefit for the business.  Secondly, it would give Steven the opportunity to develop his own business. 

37.	At this time Maureen was a “sleeping partner” in the business.  She provided security for the bank.  But she had absolutely no day to day knowledge of what was happening on the site.  She can call no direct evidence to counter what Peter and Steven have told me.  I accept their evidence.  Maureen puts forward 3 arguments to the contrary.  First, Andrew and Peter had no title to the site before 1979.  Secondly, the site was charged to Barclays Bank plc.   Thirdly, Steven has never paid the outgoings (mainly rates) on the garage. In my judgment the arguments put forward by Maureen to the contrary are without merit.  

Reliance

38.	I am satisfied that Steven relied on the promise.  In answer to the question “Would you have done anything different if the promise had not been given to you?” Steven answered in the negative.  “I would have helped my father through thick and thin” and “I put the yard before everything” were his answers.

39.	But that is not the test.  In Wayling v Jones (1993) 69 P&CR 170, the Court of Appeal held that once the claimant had shown that the promises were made, and that his conduct was such that inducement could be inferred, the burden of proof shifted to the defendant to establish that the claimant did not rely on those promises.

40.	In my judgment, the fact that Steven as a young man carried on working in the business, in the circumstances more fully explained below, raises the necessary inference. Wayling v Jones goes on to establish that the correct question is, “What would you, Steven, have done if Andrew and Peter, having made the their promises, told you that they did not propose to implement them?” (see Balcombe LJ at p.175).

41.	This was a difficult question as it is hypothetical.  Whilst his answer in part suggested that his customary loyalty would have prevailed, Steven did say that he would have had to “sort out” the promise and would have sought legal advice.  Mr Cowen pointed out that Steven has been prepared to take legal action against his mother. In my judgment, Maureen has not established that Steven did not rely on the promise.

Detriment

42.	I am satisfied that Steven did act to his detriment as a result of relying on the promise.  Although Steven did construct the industrial units as part of his usual work for the business, I accept that he did extra work, with friends and family, to construct the garage without pay.  I also accept his oral evidence that he contributed a modest amount to the cost of constructing the garage.

43.	I am also satisfied that he continued to work in the family business for low pay as a result of the promise.  I accept that the business was never in a position to pay him much more money, but one reason he stuck with what he was doing was because he now had a small stake.  His brother, also Andrew, was not prepared to put up with the low pay and sought work elsewhere. 

44.	Importantly, I am persuaded that he neglected considering the opportunity to develop an independent full time career in motor vehicle body repairs and paint-spraying.  I am, of course, unable to say whether he would have taken the opportunity or, if it had been taken, he would have made a go of it.  But Steven may well have flourished as an employee in a small business, whereas running his own business was not for him. The detriment is the loss of the chance.  

45.	I place reliance on the written evidence of Mr Clark at page 89 of the bundle.  There was no suggestion by anyone that I should not treat the letters as evidence adduced under the Civil Evidence Act 1995, although I would have preferred to have heard from Mr Clark. He said:

“At one point several years ago, before the death of his father, Steven was in financial straits.  I had a word with the manager of the garage I was working in at the time, with regards to a job for Steven.  He could have had a job in the vehicle body repair shop, at a wage of about £14,000 per annum, but would not even come to an interview because he could not let his father down and break up their working partnership, thus jeopardising his future inheritance of the family business”.

46.	It may well be that Steven was motivated in part by the hope that the business would be passed on to his generation, but the promise of the garage was a separate factor and a reason in itself why he never left the nest. 

Would it be unconscionable for Maureen to renege on the promise?

47.	It was not suggested, as I understood, it that Maureen took her interest in the site free of any equitable rights Steven might have.

48.	When dealing with whether it would be unconscionable for Maureen not to honour the promise, it is important that I look at the matter in the round.  I must consider all the evidence and the practicalities.

49.	Maureen is portrayed in the letters adduced by Steven in the trial bundle as someone who suddenly appeared at the site on the death of Andrew and who has sought to deprive Steven of his rightful inheritance and livelihood.  Maureen’s written evidence failed to do justice to her true involvement in the affairs of the business and the picture only became clear when she gave her oral evidence.

50.	I am satisfied that without the involvement of Maureen and the injection of her capital the business would have collapsed a long time ago.  Andrew and Peter, charismatic though they may have been, were struggling for years to keep the business afloat.  They took money out of the business to ensure a reasonable standard of living without caring too much for future investment in it.  In 1992 the bank was pressing because the overdraft limit of £30,000 had been breached.  By 1996 the facility had increased to £75,000.

51.	It was Maureen who sold her cottages to raise the £69,900 to buy out Peter in 1995.  When Andrew died in 1997 the finances were dire.  Maureen had to sell her home to raise £150,000 to pay off the debts to the bank.  So she has put in over £200,000 of her own money to keep the business running.  She had wanted to retire to Eastbourne but has been unable to do that.

52.	By 1996 Maureen had realised the site needed to be closed down.  The solid fuel business no longer existed.  People do not use it to heat their homes anymore. The auction business was not making money.  Andrew had become too old to do house clearances.  Maureen told me that in addition to his wages Steven had always received perks including materials for his home and has a lovely house with only a small mortgage of £16,000. 

53.	Maureen is of the view that Steven has failed to make proper use of the garage since 1997.  She has even had to advertise because he would not.  “He has done nothing in his own business” she said.  She cannot understand why he has not gone to work outside.  She also said, “Steven had his chance and lost it.”

54.	Maureen is not an uncaring person.  She told me that she has secured a court order enabling her to look after her grandson (Andrew’s son) and hopes to provide for him.  Her attitude is that enough has already been done for Steven and he needs to stand on his own feet.  She said words to the effect, “I should have brought my scissors today to cut the apron strings”.

55.	I have reached the view that on the unusual facts of this case, and looking at it in the round, that it would not be unconscionable for Maureen not to honour the promise.

56.	I say this for the following reasons:

(1)	The purpose of giving Steven the garage and the land on which it stands has come to an end.  There are no vehicles of the business to be maintained.  Steven has not run his own business at the garage for almost 10 years, and never will do so. Had Steven been running a flourishing business from the garage, my decision would be different. The gift of the garage was as a place to work from, not as capital.

(2)	The site needs to be sold for development.

(3)	There is no evidence that providing an alternative site for Steven would be of any use for him.

(4)	The business would have collapsed and the site lost a long time ago had it not been for Maureen’s substantial injection of capital.

(5)	Steven has been protected for the last 9½ years by Maureen providing him with work, which work was primarily for Steven’s benefit rather than for the benefit of the business.  As at the date of the caution Steven had been so protected for some 5 years.

(6)	This case is markedly different from Gillett v Holt [2001] Ch 210 where the promisee was someone of undoubted talent who would have been a success if he had worked elsewhere and where the business promised to him was of considerable value. 

57.	I have not overlooked Mr Cowen’s powerful closing submission that Steven was institutionalised by working in the business and it very difficult for him to find new work in middle age. I find on balance that, 9½ years after the death of Andrew, the equity has been satisfied (see Sledmore v Dalby (1996) 72 P&CR 196).

Remedy

58.	If I am wrong on that, I should for the sake of completeness set out what the minimum equity is required to do justice between the parties.  Although I have no jurisdiction to make any order giving any effect to that finding, it does not follow that I cannot make such a finding.  There are clear reasons why it is of convenience to all parties that I should be able to do so.

59.	It is common ground that on the unusual facts of this case no purpose would be gained from ordering a transfer to Steven of the freehold of the garage, or the granting of a business tenancy or a licence to occupy.  The garage is of no practical use to him.  Nor should he be entitled to use it as a ransom strip to extract a high price from Maureen who wants to sell the site for development.

60.	In my judgment the appropriate remedy would be a modest lump sum to represent the capital value of the freehold of a small garage unit in Crayford, without the benefit of any business goodwill.  Had I found in favour of Steven, I would have directed evidence to that end to be obtained.

Conclusion

61.	My conclusion is that Steven does not have an interest in the site by virtue of proprietary estoppel and I will direct the chief land registrar to give effect to the original application.

62.	My provisional view on costs is that there should be no order.  Steven fell on only one of several hurdles.  Maureen lost on most issues, importantly on the factual issue of the promise.  In respect of this, her opposition on paper was far too strident.  An order for costs would only rub further salt into the wounds of this most unfortunate family dispute.  If either side wishes to make representations as to a different order, they should be served on the adjudicator and the other party by 4.0pm 16 November 2006.

Dated this Thursday 2 November 2006

BY ORDER OF THE ADJUDICATOR TO HM LAND REGISTRY