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Issue 63 – June 2009

Cases

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Cases

*National Insurance Corporation v Winmark Ltd

Citation: [2009] All ER (D) 240 (Apr)
Alternative citations: [2009] UKPC 16
Hearing date: 6 March 2009
Court: Privy Council
Judge: Lord Hoffmann, Lord Rodger of Earlsferry, Lord Carswell, Lord Brown of Eaton-under-Heywood and Lord Mance.


Abstract: Company – Property. Privy Council: the National Insurance Corporation of St. Lucia's claim for payment of arrears of employees' contributions took priority over a bank's hypothec where, at the time that the bank had been granted its hypothec, section 74 of the National Insurance Corporation Act 2000, under which the liability to pay contributions was a 'privileged debt', was in force. Neither a privilege nor a hypothec displaced a debtor's ownership of his immovable property. The appeal was allowed.

 
Keywords: Company – Property – Civil code – Company property subject to hypothec – Company defaulting on obligations under loans with bank – Company in arrears with payments of national insurance contributions for employees – Whether National Insurance Corporation's claim taking priority over bank's rights under hypothec over company's property – Whether provision stating that national insurance contributions amounting to privileged debt contravening prohibition in constitution on compulsory taking of property – National Insurance Corporation Act 2000, section 74 – St Lucia Civil Code, articles   967, 1877, 1888, 1938, 1969.


Summary: The judgment is available at: [2009] UKPC 16


Section 74 of the National Insurance Corporation Act 2000 provides so far as material: '(1) Where (a) any execution has been levied against the property whether movable or immovable, of an employer, in respect of a judgment against him or her, and any such property has been seized or sold or otherwise realised in pursuance of such execution; or (b) on the application of a secured creditor, the property, whether moveable or immovable, of an employer has been sold, any sums due as contributions by such employer shall rank as a privileged debt pari passu with state taxes without the necessity for registration thereof.'


Winmark Ltd (the company) granted fixed and floating charges over its assets and undertaking to the Caribbean Banking Corporation Ltd (now RBTT Bank Caribbean Ltd (the bank)) to secure repayment of an advance of EC$12.7m and the interest due thereon. The fixed charges included a hypothec over land in St Lucia which was registered in the Land Registry. The company defaulted on its obligations under the loans and on 1 October 2004, the bank appointed a receiver. At that date the company was in arrears with its payments of contributions due under the National Insurance Corporation Act 2000 in respect of its employees.


On 1 February 2005, the National Insurance Corporation (the corporation) commenced proceedings against the company to recover EC$505,564.19 arrears of contributions and a surcharge for late payment. A certificate issued by the comptroller was registered the same day. The general principle in article 967 of the St. Lucia Civil Code was that all real rights took effect on registration. Article 1969 provided that certain specified privileges were 'exempt from the formality of registration'. However, section 74 of the Act, which was in force at the date on which the bank had been granted its hypothec, stated that the privilege for contributions 'shall rank as a privileged debt', with the stated priority, without the necessity for registration thereof. On the latter basis, the master held that the corporation's claim took priority over the bank's hypothec. The Court of Appeal reversed his decision, having found that the effect of section 74 was to give the corporation rights over property in which the bank, by reason of its hypothec, had a beneficial interest, thereby contravening the prohibition in section 6 of the Constitution of St. Lucia on the compulsory taking of property. The corporation appealed to the Privy Council.


It fell to be determined whether: (i) the corporation's claim took priority over the bank's rights under its hypothec over the company's property; and (ii) whether the effect of section 74 of the Act contravened the prohibition in section 6 of the Constitution of St. Lucia on the compulsory taking of property.


The appeal would be allowed.


(1) Section 74 of the Act had to be interpreted in the light of the provisions of the St. Lucia Civil Code and the general principles of French law relating to security interests in land. When section 74 of the Act described the liability to pay contributions as a 'privileged debt', it was clearly creating a privilege within the meaning of article 1877 of the Code. It was settled law that certain individuals were preferred creditors and thus had legally protected privileges which entitled the individual to payment in preference to secured creditors such as the holders of hypothecs. Prima facie, the privileged debt took priority to the hypothec (see [4] - [7] of the judgment).


Polinere v Felicien [2000] 4 LRC 176 considered.


Principle: (2) It was clear from the Code that neither a privilege nor a hypothec displaced the debtor's ownership of his immovable property. A privilege was only 'a right which a creditor had of being preferred to other creditors' (article 1878), and, pursuant to article 1938, hypothecs did not divest the debtor of the hypothecated property. Both hypothecs and privileges were charges, namely real rights for the purpose of providing security over someone else's property (see [21] of the judgment).


In the instant case, at the time that the bank had been granted its hypothec, section 74 was in force. Accordingly, the corporation's claim took priority over the bank's hypothec. The bank never obtained any rights over the company's property which was not subject to the priority accorded by statute to any claims for contributions which might exist when the bank's security came to be enforced. It followed that section 74 did not deprive the bank of any property and section 6 of the Constitution had no application in the instant case (see [11], [23] of the judgment).


The judgment of the master would be restored (see [24] of the judgment).


Carla Dougan-Bacchus, barrister
Published date: 19/05/2009
 

Whitehouse v Loi Lee


Citation: [2009] All ER (D) 130 (May)
Alternative citations: [2009] EWCA Civ 375
Hearing date: 14 May 2009
Court: Court of Appeal, Civil Division
Judge: Waller, Rimer and Aikens LJJ
Representation: Daniel Dovar (instructed by Rooks Rider) for the claimant. Tracey Bloom (instructed by Hodge Jones & Allen) for the defendant.


Abstract: Action – Possession. Court of Appeal, Civil Division: An application by the tenant to set aside an order for possession was allowed on the basis the judge had approached the determination of reasonableness question from a mistaken basis.


Keywords: Action – Possession – Action by landlord for possession – Tenant having protected tenancy - Landlord seeking possession – Landlord finding alternative accommodation for tenant – Tenant refusing to move – Landlord granted order for possession - Whether judge erring.


Summary: The judgment is available at: [2009] EWCA Civ 375


The defendant became the tenant (the tenant) of flat 34c in 1963. Her tenancy was a protected tenancy by the Rent Act 1977. The landlord bought the reversion of flat 34c. In 2001, the landlord decided that she wanted to sell flat 34c with vacant possession. The only basis on which they could recover possession was on the ground that reasonable alternative accommodation was available for the tenant. To that end, the landlord bought another flat (flat 11). The tenant did not like flat 11 and was opposed to moving there. The landlord issued possession proceedings. The judge made an order requiring the tenant to give up possession of flat 34c on the basis that it was reasonable to do so. On that basis the tenant appealed.


The issue that arose as to whether the judge had been in error in concluding that it was reasonable to make an order for possession.


The appeal would be allowed.


(1) The question of whether or not it was 'reasonable' to make an order for possession was one of fact. The determination of that question required the judge to take account of all the facts, matters and circumstances relevant to it; and then to evaluate all of them in forming an overall factual judgment. The evaluation exercise was akin to, although different in kind from, the exercise of discretion. It was important to recognise the limits of the grounds upon which to interfere with the trial judge's decision. The only circumstances in which it would ordinarily have been open to review the judge's decision on that question would be if it was satisfied that he acted under an error of principle or that his decision was plainly wrong (see [23] of the judgment).


In the instant case, the judge had arrived at his decision on a mistaken basis. An appropriate starting point for consideration of the arguments was to identify the correct judicial approach to the determination of the 'reasonableness' question that had been before the judge. The decision as to whether or not it had been reasonable to make a possession order was not one that could be made merely by a purported balancing of the reasonableness of the tenant's wish to stay in flat 34c against the reasonableness of the landlord's wish that she should have gone. It had required the judge to look at the question from all angles; in particular by considering the effect on the parties and not just if an order was made, but also if it was not. The critical question, which the judge had not addressed, was as to the effect on the landlord if no order had been made. Accordingly, the order had to be set aside (see [24], [30] and [35] of the judgment).


Cumming v Danson [1942] 2 All ER 653 considered; Shreeve v Hallam [1950] WN 140 considered; Cresswell v Hodgson [1951] 1 All ER 710 considered; Battlespring Ltd v Gates [1983] 2 EGLR 103 considered.


(2) The landlord's claim for possession was one that was brought by reference to perfectly reasonable financial considerations, although her financial circumstances were not such that a failure to obtain such an order would have caused financial hardship. As for the tenant, the judge had correctly recognised that the making of an order for possession would have caused distress to her and that flat 11 would never be the same as flat 34c. A consideration of the effect on the parties both if an order was made, and if not made, pointed unerringly to the conclusion that it was not reasonable to make an order for possession (see [36] and [39] of the judgment).


Benjamin Weaver, barrister
Published date: 18/05/2009
 
*Port of London Authority v Ashmore


Citation: [2009] All ER (D) 74 (May)
Alternative citations: [2009] EWHC 954 (Ch)
Hearing date: 8 May 2009
Court: Chancery Division
Judge: Stephen Smith QC sitting as a deputy judge of the High Court
Representation: Charles Harpum (instructed by Port of London Authority) for the authority. The defendant appeared in person.


Abstract: Limitation of action – Land. Chancery Division: It was possible for the owner of a vessel that was moored in a particular place on a tidal river to acquire title by adverse possession to part of the river bed where the title to the river bed had not yet been registered and the vessel rested on the bed at low tide.


Keywords: Limitation of action – Land – Acquisition of title by squatter – Claimant claiming paper title to river bed – Defendant claiming to have taken title by way of adverse possession – Whether defendant demonstrating both actual possession and intention to possess.


Summary: The judgment is available at: [2009] EWHC 954 (Ch)
The defendant was the owner of the sailing barge 'Atrato', an 84.4 foot long flat bottomed boat. He had purchased it in 1980 and, in 1983, he had sailed it to Albion Wharf, now Albion Riverside, in the Thames. The defendant dropped anchor and tethered Atrato to the bank fore and aft via mooring rings set into the wall. At all material times the defendant lived on Atrato, and for 26 years paid nothing to anyone in respect of his residence. The defendant had had no permission from the claimant authority to tether Atrato or to use the mooring rings. The authority was the statutory body which, under the terms of the Port of London Act 1968, was charged with responsibility for the conservancy of that part of the River Thames that was tidal, within the meaning of schedule 1 and section 2(1) of the 1968 Act.


It was common ground that unless the defendant had acquired title to the fee simple of the bed of the River Thames, title was vested in the authority pursuant to the operation of the Thames Conservancy Act 1857 and the Port of London Act 1908. The authority claimed that the defendant had been a trespasser on their property since 1983, it applied to register title to the bed of the Thames, it sought an injunction to restrain further trespass and applied for declaratory relief. The defendant objected in so far as it concerned the area of the bed upon which Atrato came to rest twice a day at low tide, and claimed title to that part of the bed by adverse possession, pursuant to section 15(1) of the Limitation Act 1980.


The authority argued that the defendant had not been in sufficient factual possession of the relevant area of the river bed, as the defendant's continuous, unbroken possession had been prevented by the tide, and the acts of possession relied upon had not unequivocally demonstrated an intention to possess that area. On 3 November 2008, the determination of the preliminary issue of 'whether it is possible for the owner of a vessel that is moored in a particular place on a tidal river or other area of tidal water to acquire title by adverse possession to the sea or river bed or the foreshore for the footprint of that vessel where: (a) the title to the sea or river bed or the foreshore has not been registered; and (b) the vessel rests on the bed or the foreshore at low tide' was ordered.


The court ruled:


(1) Title to the bed of a tidal river could be acquired by adverse possession. To make out a claim for legal possession a squatter needed to establish: (i) a sufficient degree of physical custody and control (factual possession); and (2) an intention to exercise such custody and control on one's own behalf and for one's own benefit (intention to posses). An intention to own, or even an intention to acquire ownership, would not suffice. Further, a squatter could be in continuous possession even if he did not use the land continually (see [10], [15], [18], and [26] of the judgment).


The notion that, for a squatter to establish sufficient possession for a claim of adverse possession, he had to be able to prove some physical contact with the relevant land at all times was incorrect. The question of what acts constituted a sufficient degree of exclusive possession depended in particular on 'the nature of the land and the manner in which land of that nature [was] commonly used or enjoyed'. Accordingly, when the land in question was part of the bed of a tidal river which was flooded twice a day, the fact that the squatter's boat rose and fell with the flowing and ebbing of the tide did not mean that the squatter had relinquished physical possession of the land upon which the boat rested at low tide. If some physical contact had been necessary, such contact could be established through its anchor (see [22] and [23] of the judgment).


Bligh v Martin [1968] 1 All ER 1157 applied; J A Pye (Oxford) Ltd v Graham [2002] UKHL 30 applied; Roberts v Swangrove Estates Ltd [2007] EWHC 513 (Ch) applied; Denaby and Cadeby Main Collieries Ltd v Anson [1911] 1 KB 171 considered; Red House Farms (Thorndon) Ltd v Catchpole [1977] 2 EGLR 125 considered.


(2) In respect of whether an act of possession was equivocal, the test was what the occupier in possession would say to someone with the knowledge of the paper owner if he took the trouble to be aware of what was happening to his land (see [36] of the judgment).


On the facts of the instant case, the defendant had had a sufficient intention to possess the relevant part of the river bed at all material times. That part was the total area between the extreme points where Atrato had had contact with the river bed over the years (see [38] and [40] of the judgment).
The preliminary issues would be answered in the affirmative; it was possible for the owner of a vessel that was moored in a particular place on a tidal river to acquire title by adverse possession to part of the river bed where the title to the river bed had not yet been registered and the vessel rested on the bed at low tide (see [39] of the judgment).


Gareth Williams, barrister
Published date: 11/05/2009
 
Maresca and another v Smyth and another


Citation: [2009] All ER (D) 66 (May)
Hearing date: 8 May 2009
Court: Court of Appeal, Civil Division
Judge: Pill, Sedley and Wall LJJ (judgement delivered extempore)
Representation: Charles Joseph (instructed by Tinklin Springall) for the claimant. Anthony de Freitas (instructed by Alison Trent & Co) for the defendant.


Abstract: Easement – Right of way. Court of Appeal, Civil Division: An appeal by the defendants against the granting of a mandatory order was dismissed on the basis that the judge had been correct in her approach and entitled on the evidence to make the order she had.


Keywords: Easement – Right of way – Extent – Claimants owning land with express right of way over defendants' land – Claimants and defendants neighbours – Right of way forming claimants' driveway – Right of way granted by express easement – Defendants building wall extending over right of way – Claimants seeking removal of wall – Defendants ordered to remove wall – Whether judge erring.


Summary: The claimants and defendants were neighbours. The defendants' house was built in the 1960's on what had previously been the claimants' land. There was a right of way which formed the driveway of the defendants' property. The right of way had been granted by an express easement in the original conveyance. The claimants claimed that the right of way, the subject of the express grant, had been obstructed by the erection of a wall, and in particular by the extension of the wall's length during certain works by the defendants. The claimants sought the removal of the part of the wall that extended furthest onto the right of way and issued proceedings. In June 2007, the judge found for the claimants and ordered that the relevant part of the wall be removed and any necessary regrading of the land carried out so that the claimants could properly use the right of way.

 The defendants appealed.


They claimed that the judge had made a mandatory order as to the regrading of the land without sufficient consideration of what regrading involved. The order should have made clear what the defendants were expected to do, and in the absence of such clarity the order should not have been made.

 
The appeal would be dismissed.


The judge had been correct in her approach and entitled on the evidence to make the order she had. She had been right to make an order for demolition of part of the wall and regrading of the land in order to allow the right of way to be properly used by claimants. There was no merit in the submission that judge had not been entitled to make the order she had. The Judge had made her decision carefully and skilfully. The instant case was one in which the costs were quite out of proportion to the issues at stake. The claimants were successful in their claim and it was difficult to criticise them when there had clearly been an un-crossable bridge between them and the defendants.
Moncrieff v Jamieson [2008] 4 All ER 752 considered.


Benjamin Weaver, barrister
Published date: 08/05/2009
 
 
*Heslop v Bishton and others


Citation: [2009] All ER (D) 208 (Apr)
Alternative citations: [2009] EWHC 607 (Ch)
Hearing date: 20 April 2009
Court: Chancery Division, Birmingham District Registry
Judge: Judge David Cooke (sitting as a judge of the High Court)


Representation: The appellant appeared in person. William Hansen (instructed by Underhill Langley Wright) for the respondents.


Abstract: Easement – Right of way. Chancery Division, Birmingham District Registry: The appellant's appeal against a decision of a district judge granting the respondents declarations stating, inter alia, that the erection by the appellant of a brick wall and pillar constituted a substantial interference with a right of way enjoyed by the respondents, was dismissed on the basis that in the circumstances the district judge had been right to make the declarations that he had.


Keywords: Easement – Right of way – Disturbance – Appellant building wall and pillars making gateway on his land – Respondent householders obtaining declarations that wall and pillars interfering with existing right of way – Appellant contending that given existence of a right of deviation no actionable interference with right of way occurring – Whether district judge correct to make relevant declarations.


Summary: The judgment is available at: [2009] EWHC 607 (Ch)
The appellant was the owner of a property, which was part of an estate of houses developed on land partly owned by the respondents. There was a gap between the appellant's property and the respondents' referred to as 'the passageway'. Behind the estate of houses owned by the respondents, there originally ran a right of way which the householders could use to go to and from the passageway. Anyone following the right of way along the back of the houses would join the passageway. Due to the title of the houses, each of them had a garden which was effectively separated by the right of way.


In 1985, the appellant and the owner of the neighbouring property wished to extend their houses by building at the rear over the previous right of way. A deed was entered into by all the relevant title holders by which the right of way was diverted by a distance of some 55 inches to make room for the extension (the 1985 deed). There was then a revised right of way. The respondents' property had a passageway strip which extended 41 inches behind the original rear building line, which meant that there appeared to be a gap of 14 inches between the right of way and the passageway strip.
The appellant built a wall and pillars to make a gateway on his land, immediately to the south which was centred on the centre line of the passageway strip.

It was common ground that the gateway could not be effectively used by means of the existing right of way, however, one could step into a small part of the appellant's land in order to pass. The appellant appealed against an order obtained by the respondents making declarations that: (i) the erection by the appellant of a brick wall and pillar (being one side of the gateway) constituted a substantial interference with a right of way enjoyed by the respondents; and (ii) as long as the obstruction subsisted the respondents would be allowed to pass on to land of the appellant not subject to the right of way, in order to make effective use of the gateway.


Relying on established authority, the appellant contended that, looking only at the extent of the right of way granted by the 1985 deed, the wall and pillar that he constructed had prevented the effective use of that right. However, he argued that anyone using the right of way was not in practice constrained to go through only 16 inches of the gateway but could use the full width of it by stepping on a small piece of his land to the east of the existing right of way.

By using that right of deviation, a person wishing to enter the passageway could use the whole width of the gateway and gain access in a manner which was equally convenient to the use of the right of way formally granted. Against that background, the appellant referred to the fact that the district judge had accepted that the right of deviation existed and had relied on it to make the declaration that he had done. The appellant argued that the district judge should have held that given the existence of the right of deviation, there was no actionable interference with the right of way at all (see [12] - [13] of the judgment).
The appeal would be dismissed.


It was well established that the servient landowner could not unilaterally alter the route of a right of way. The alteration of a right of way involved two processes: (i) the grant of a right of way over a new route; and (ii) the extinguishment of former rights of way over the existing route so that the dominant landowner would be compelled to use the new route. The servient owner could not unilaterally reroute a right of way. It followed that he could not by provision of a new right of way prevent acts of obstruction of the old route from being in principle actionable. The availability of the new route would go to remedy, but could not extingui