ADJUDICATOR TO HER MAJESTY’S LAND REGISTRY
ORDER
Case Number:
REF/2008/0961
Title Number:
HE33151 & HE36368
Property:
York House and land adjoining Lane Head Farm - Eaton Bishop, Herefordshire, HR2 9QE
Applicant:
Andrew Roy Lifely & Vanessa Irene Pomeroy-Lifely
Respondent:
Kathleen Mary Lifely
The Adjudicator to HM Land Registry directs as follows:
Each party is to bear their own costs of these proceedings.
Reasons
- The detailed facts of this case appear from my decision dated 18 May 2009. In summary, for the purposes of the Respondent’s claim for costs, the relevant facts may be summarised as follows:
- The late Mr. R.D.F. Lifely (“Mr. Lifely”), the father of the First Applicant (“Andrew”) and the husband of the Respondent (“Mrs. Lifely”), owned a property called York House and a considerable amount of farmland. Early in 1990 he was diagnosed as suffering from terminal cancer and sought to set his affairs in order. At a family meeting he drew on Ordnance Survey maps the boundaries of the land that was to go to Mrs. Lifely and to each of his sons. As drawn the maps showed the disputed triangle of land in this case as going to Andrew. Mr. Lifely, with the help of his solicitor, who was in possession of a copy of those maps, also executed a will leaving what appear to have been intended at the time to be the different areas of land marked by him on the plans to each of his sons including Andrew. There was a residuary gift to Mrs. Lifely.
- A few days later, Mr. Lifely visited his solicitor with Mrs. Lifely and made a lifetime gift of York House and its grounds to Mrs. Lifely. For this purpose a copy of the maps was used, but, as found by me, it was altered on Mr. Lifely’s instructions to remove the disputed triangle from the land to go to Andrew and added to the land being gifted to Mrs. Lifely. The alteration was effected by a crude additional colouring to the plan which was not initialled, as it should have been, by Mr. Lifely, so that it was impossible to tell from the plan when the alteration had been made. Neither Mr. Lifely nor Mrs. Lifely ever told Andrew about this change. The triangle adjoined the driveway to York House and lay between a field and a farmyard which were to be left to Andrew.
- After Mr. Lifely’s death his executors, who included both Mrs. Lifely and Andrew assented to the land left to Andrew being vested in him. The assent was drafted by the same solicitor, and was in part by reference to a plan which included the triangle as going to Andrew. Andrew and the Second Applicant (“Vanessa”) married in 2000, and some time later the property left to Andrew was transferred to himself and Vanessa jointly.
- For many years the relations between Andrew and Mrs. Lifely were good, and each of them used the triangle and indeed other land without any discussion of entitlement. Unfortunately, relations then broke down
- In 2007, Andrew and Vanessa sought to have their property registered for the first time, and the same solicitor undertook the task, at first agreeing that the triangle should be included. He then appears to have discussed this with Mrs. Lifely. He was persuaded by her that the triangle belonged to her, and he advised Andrew of this. By that time, he had already had the triangle registered in Mrs. Lifely’s name without informing Andrew and Vanessa, and contrary to the instructions he had received from them to register it in their names. He did subsequently suggest a sensible compromise of this dispute, but it appears to have been rejected by both sides.
- By an application dated 19 March 2008, Andrew and Vanessa then applied to have the triangle removed from Mrs. Lifely’s title and added to their own. Mrs. Lifely objected by letter dated 20 May 2008. Her allegations included allegations that Andrew had taken the master map and altered it. She stated “He didn’t intend me to find out this & planned to steal this off his Brothers off York House when I had died. We have found him out.” The letter goes on to allege that Andrew had threatened to steal her garden as a punishment and had excluded her from other areas of land which belonged to her. It became apparent at the site view and hearing that the other areas of land to which she referred had clearly been included in the bequest to Andrew and were within the area included as his on the marked map by his father. Although her case was not pleaded on this reference to raise such issues, it was plain from her evidence and other statements that she has persisted in these allegations without any apparent basis.
- At the end of my decision I observed that this dispute arose because of problems surrounding the will, conveyance and vesting assent and that those problems were caused by a combination of the failure by either Mr. or Mrs. Lifely to inform Andrew of the change to the conveyance, and the apparent terms of the vesting assent. The solicitor, acting for the executors, was primarily responsible for the error in the vesting assent, but Mrs. Lifely ought to take some responsibility as the only person apart from the solicitor to know of the gift of the triangle. Those problems and family ill will were exacerbated by the unwarranted attacks by Mrs. Lifely on Andrew’s integrity. My inclination therefore was to make no order as to costs, but I invited written submissions from Mrs. Lifely if she did wish to claim costs, and such submissions have been made by solicitors on her behalf. Andrew and Vanessa have responded in writing, and Mrs. Lifely’s solicitors have replied.
- The main points made on behalf of Mrs. Lifely is that she was entitled to resist the Applicants’ claim; that the grounds for that claim were clearly set out both before the application was made and after the reference was made; and that Andrew and Vanessa both failed to mediate prior to their application and dismissed a reasonable offer from Andrew’s brother, Simon, said to have been on behalf of Mrs. Lifely, with Andrew refusing to speak to him and Vanessa saying “I don’t do deals”. It is also suggested that the costs of the reference were increased because of the conduct of Andrew and Vanessa and that Mrs. Lifely was unaware of Andrew’s claim until he made the application to the Land Registry.
- I also note that this case was referred to the adjudicator on 22 July 2008. On 15 July 2008, there had been a hearing in the Court of Appeal of an appeal by Andrew against a decision of Judge Weeks QC in a partnership dispute between himself and another brother, Nicholas. The hearing was on the basis of new evidence that had emerged following the hearing before Judge Weeks. Mrs. Lifely had given evidence for Nicholas in that case which, if believed would have reflected badly on Andrew. In his judgment, delivered on 30 July 2008, with which Dyson and Lloyd LJJ agreed, Ward LJ did not find Mrs. Lifely to be a reliable witness. While not finding her to be dishonest, he found her evidence riven with inconsistencies, with an incredible embellishment and with implausible reasons for her conduct.
- Before considering these matters, it is necessary to consider what restrictions are placed on my ability to take them into consideration by the provisions of rule 42 of the Adjudicator to Her Majesty’s Land Registry (Practice and Procedure) Rules 2003 (“the 2003 Rules”). Rule 42(3) provides that in deciding what order as to costs (if any) to make, the adjudicator must have regard to all the circumstances. Rule 42(1), however, limits the meaning of “all the circumstances”. In its unamended form, which applied to all proceedings referred before 25 August 2008, it provides as follows:
“(a) ‘all the circumstances’ are all the circumstances of the proceedings and include –
(i) the conduct of the parties during (but not prior to) the proceedings;
(ii) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(iii) any representations made to the adjudicator by the parties; and
(b) the conduct of the parties during the proceedings includes –
(i) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(ii) the manner in which a party has pursued or defended his case or a particular allegation or issue; and
(iii) whether a party who has succeeded in his case in whole or in part exaggerated his case.”
- “Proceedings” are defined by rule 2(1) as meaning “except in the expression court proceedings, the proceedings of the matter before the adjudicator but does not include any negotiations, communications or proceedings that occurred prior to the reference or rectification application”. Given that many of the matters which are arguably relevant to the issue of costs occurred before the commencement of the proceedings of the matter before the adjudicator, it is necessary to consider what this rule purports to exclude me from considering.
- Rule 3(3) requires me to seek to give effect to the overriding objective when I exercise any power given to me by these Rules or when I interpret the Rules. The overriding objective is set out in rule 3(1) and is to deal with matters justly. “Matter” is defined by rule 2(1) as the subject of either a reference or a rectification application. It may be open to question whether the costs are part of the subject of the reference or rectification application, but even if they are not, it appears to me to be self evident that the adjudicator must deal with any question of costs justly. It also appears to me to be the case that, whether by virtue of rule 3(3) or otherwise, insofar as there is an ambiguity in rule 42, I must interpret it if possible as designed to enable the adjudicator to deal with the question of costs justly. It is also clear that I should interpret it to produce a rational result rather than an irrational one.
- Before proceeding further with this analysis, it is helpful to consider what sort of matters might be relevant to the making of a costs order that may occur before the commencement of the proceedings before the adjudicator. I give some examples below:
(i) A party makes an open offer, or indeed a Calderbank offer, to settle the dispute subject to its being accepted within say 28 days (which for this purpose I assume to be a reasonable time to allow for it to be considered). The decision of the adjudicator leaves the party making the offer in as good a position as, or a better position than, if the offer had been accepted. This is plainly an important factor in considering any award of costs. It must be taken into account if made after the commencement of the proceedings before the adjudicator. It would not, on the face of it, be reasonable or rational wholly to disregard an offer made immediately prior to the date of the reference, but to take into account one made immediately after the reference was made.
(ii) A party is asked prior to the reference to the Adjudicator to produce documents that would establish his case, but unreasonably refuses to do so. He then produces them with, or after, serving his Statement of Case. The other party concedes and the winner claims his costs. Must his unreasonable refusal be ignored?
(iii) A party presents his case to the Land Registry on one basis, which is seriously flawed, but the Land Registry does not consider it groundless and refers it to the Adjudicator. That party then puts his case very differently, on different evidence, to the Adjudicator and once the other party is made aware of the new case and the basis on which it is put, he concedes. Must the adjudicator ignore the fact that the winning case was only pleaded after the reference and perhaps was not even hinted at before. Would it make any difference if the seriously flawed case included wholly unjustified allegations of dishonesty against the other party?
- In my judgment, it would be neither rational nor just to say that a settlement offer made the day before the reference, or its rejection at that time, is to be ignored, while the same offer made immediately after the date of the reference is to be taken account of. It would equally be irrational and unjust to say that the fact that the claim as pleaded is wholly different from the claim put before the Land Registry is irrelevant to the question of costs, or that the deliberate and unreasonable refusal of a party to produce the documents that establish his case until he has served his Statement of Case should not, as a matter of justice, affect the incidence of costs.
- For the purposes of rule 42, “all the circumstances of the proceedings” includes, in my judgment, the circumstances which led to the proceedings except as excluded by the rule. Those circumstances appear to me to include, in the present case, the conduct of Mr. Lifely, his executors and the solicitor as described above. For this purpose, I construe “parties” as meaning the parties in the capacities in which they are parties to the proceedings, so that their conduct as Mr. Lifely’s executors can be taken into account.
- “Conduct” is not a term of art. The making of an open offer to settle may be described as conduct, or it may be regarded as separate from it. In relation to costs in court proceedings, CPR44.3(4) draws a distinction between the conduct of the parties and payments into court or admissible offers to settle. It appears to me that by analogy, “conduct” under rule 42 of the 2003 Rules does not include offers to settle where, if accepted, there would be a binding agreement between the parties.
- On the other hand, in CPR44.3(5), conduct is expressed to include the conduct of the parties before the proceedings and in particular the extent to which the parties followed the pre-action conduct Practice Direction and any relevant pre-action protocol. It appears to me that there is included in “conduct” prior to the proceedings in Rule 42 equivalent factors, which include settlement negotiations.
- It appears to me that I should not have regard to such negotiations between the parties, or the lack of them. In Firle Investments Limied v Datapoint International Limited, [2001] EWCA Civ 1106, Schiemann LJ, with whom the other members of the court agreed commented as follows:
“5. The Civil Procedure Rules set out the relevant guidelines, in CPR 44.3, and I do not need to set them out in detail, save to remind myself that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order; amongst the relevant factors for the court to take into account is payment in or an offer to settle; the conduct of the parties; and in particular whether a particular issue has been decided against one party who, nevertheless, managed to win overall.
6. What is important and is relevant to the present case is what was said by Chadwick LJ in Johnsey and agreed with by the remainder of the court in paragraph 32 of the judgment. He said this:
"It seems to me that a court should resist invitations to speculate whether offers to settle litigation which were not in fact made might or might not have been accepted if they had been made. There are, I think, at least two reasons why a court should not allow itself to be led down that road. First, the rules of court provide the means by which a party who thinks that his opponent is not open to reason can protect himself from costs. He can make a payment in; he can make a Calderbank offer; now, under the Civil Procedure Rules 1998, he can make a payment or an offer under CPR Pt 36. The advantage of the courses open under the rules is that they remove speculation. The court can see what offer was made, when it was made, and whether it was accepted. Second, speculation is likely to be a most unsatisfactory tool by which to determine questions of costs at the end of a trial."
7. Without knowing the detailed advice received by each party at each stage of its claim - and it was not suggested in that case, and I do not think it is in the present case, that this should have been available - the speculation of the court would be hopelessly ill-informed.
8. The matter was put slightly differently by Simon Brown LJ in Amber v Stacey where he said this in paragraph 39 and following:
"There are to my mind compelling reasons of principle and policy why those prepared to make genuine offers of monetary settlement should do so by way of Part 36 payments. That way lies clarity and certainty, or at any rate greater clarity and certainty than in the case of written offers."
9. He goes on to say:
"Payments into court have advantages. They at least answer all questions as to (a) genuineness, (b) the offeror's ability to pay, (c) whether the offer is open or without prejudice, and (d) the terms on which the dispute can be settled. They are clearly to be encouraged, and written offers, although obviously relevant, should not be treated as precise equivalents."
10. But Simon-Brown LJ draws attention in paragraph 40 to a possibly important consideration, that a party may be able to establish that it was their opponent's unreasonable conduct which prevented them making a properly informed decision about their prospects in the litigation and thus avoid what would be the usual costs order. That is an important consideration to bear in mind because manifestly the court is concerned that each party should be able to assess its case realistically with a view to being able to make a sensible offer; and it is a fair point to make that in the present case the parties were a long way apart. In many ways the judge came down much closer to the defendant's side than to the claimant's side and it is a fair point to make that the claimant indicated that it really was not interested in talking at the level at which the defendant was talking; but nonetheless the end position was that the claimant beat both payments in.”
- It appears to me that there is an important distinction between negotiations and an actual offer, the acceptance of which would bring the dispute to an end. In assessing the weight to be put on negotiations or on oral offers which need to be reduced to writing to become binding, it may be necessary to hear evidence as to those negotiations and offers. It appears from the submissions made to me that there is here a dispute as to precisely what offer was being made by Simon. There may also be an issue as to whether Mrs. Lifely had authorised the offer or whether she would have gone ahead with it. As it dealt with an interest in land, there would only be a binding agreement once it was reduced to writing and signed. Finally, there is also likely to be in the present case a question of how far Andrew and Vanessa could reasonably have been expected to negotiate or treat offers made by or on behalf of Mrs. Lifely given her attitude to them and the other family issues to which I have referred.
- I consider that this is the sort of conduct prior to the proceedings which I am directed to ignore by rule 42, and indeed the sort of conduct which may carry little weight after the commencement of the proceedings, as it is always open to a party to make an offer in writing, preferably in a form which is capable of becoming a legally binding contract if accepted.
- Although I can have regard to the conduct of the solicitor in setting out the case as he saw it, I attach little weight to it, first because he was not acting for Mrs. Lifely in presenting the case in that way and that was not the way in which Mrs. Lifely was presenting her case to the Land Registry at the time and secondly because of his personal involvement both in the matters which led to the dispute and in the way in which he registered the land in Mrs. Lifely’s name after agreeing to register it in the names of Andrew and Vanessa and without telling them first.
- Had this problem emerged after Mr. Lifely’s death and before the estate was fully administered, it appears to me that, if the dispute had reached court the court would have been likely to have treated it as the type of case where the person who made the will and the person entitled to the residue (Mrs. Lifely) had been the cause of the problem, which reasonably led to an investigation, and either directed that the costs should come out of the estate or that there should be no order as to costs. No doubt the estate and/or Mrs. Lifely would then have had a claim against the solicitor for negligence to recover those costs.
- While it is true that Mrs. Lifely’s case, as presented by her solicitor, was confined to the grounds upon which she was successful, even at the hearing she persisted with her unreasonable allegations against Andrew. Further, the solicitor’s evidence shifted from remembering the instructions that he had been given to asserting that he must have had such instructions as he would not have made the alteration otherwise and that, as appeared for the first time at the hearing, the deed had never since been out of his firm’s custody, so that the alteration could not have been made by anybody else.
- It further appears to me that I am entitled to take into account that at the date of the reference, so far as Andrew and Vanessa were concerned, Mrs. Lifely’s position was as stated to the Land Registry. Although this position was changed two months later with the delivery of her Statement of Case, her evident general hostility to them and her willingness to make unfounded accusations against them remained. The circumstances in which the alteration to the plan had been made reasonably required investigation. The solicitor’s recollection, in paragraph 3 of his witness statement, that he had received instructions from Mr. Lifely to include the triangle in the conveyance to Mrs. Lifely, contrasted with his previous letter dated 16 April 2007 to Andrew where he gave no indication of such a specific recollection, and also with the evidence which he gave at the hearing, that he could remember nothing about it but that he would not have made the alteration without such instructions, and nobody else ever had the opportunity to make it.
- In the end, taking all the circumstances of the proceedings into consideration, other than the conduct of the parties before the proceedings, although the usual rule is that the successful party should be awarded their costs, this is a case in which it is appropriate to make no order as to costs. This is so nothwithstanding that Mrs. Lifely was the Respondent to Andrew and Vanessa’s application. I note that it was the solicitor’s conduct in registering Mrs. Lifely with title to the triangle at a time when he knew that Andrew and Vanessa understandably regarded the triangle as their own which made this inevitable.
Dated this
Thursday 23 July 2009
By Order of The Adjudicator to HM Land Registry
