Skyparks Group Plc v Marks & Anor

An estoppel based on privity of interest requires more than a shared objective. There must be sufficient identity of interest with the litigant and an informed decision to let that person fight the case. Competing proprietary or financial interests, lack of prior involvement and lack of independent advice may prevent the estoppel.

A charging-order decision that establishes only that a debtor has some beneficial interest, while leaving its extent for later enforcement proceedings, does not finally determine the extent of that interest. A judgment concerning land is not thereby a judgment in rem. A declaration of trust remains effective despite breach of contractual restrictions in a mortgage, although the charge remains enforceable. A defeasible interest with no realisable value cannot support possession and sale orders.

Skyparks obtained judgment in the Queen’s Bench Division against Mr Marks and a charging order over his beneficial interest in Woodwinds. Master Murray decided that Mr Marks had some beneficial interest, leaving the extent of that interest for enforcement proceedings. Sullivan J dismissed Mr Marks’s appeal.

In subsequent Chancery proceedings, Mrs Marks and Mr Shanti Shah, as trustees of the Chanick Trust, asserted that Mr Marks held Woodwinds on an express trust. The High Court declared that Mr Marks owned 87 per cent and Mrs Marks 13 per cent, and ordered possession and sale. The appeal challenged the estoppel ruling and the rejection of the express trust. Skyparks cross-appealed on the scope of the estoppel and Mrs Marks’s beneficial interest.

Lord Justice Robert Walker gave the leading judgment. Lord Justice Keene and Mr Justice Colman agreed.

1. Estoppel. A non-party could be bound by privity of interest only where there was sufficient identity of interest with the litigant and an informed decision to stand by while the litigation was conducted. The principle in House of Spring Gardens v Waite [1991] 1 QB 241, explained through Gleeson v Wippell [1977] 1 WLR 510 and Nana Ofori Atta II v Nana Abu Bonsra II [1958] AC 95, did not bind Mrs Marks or the trustees. Their interests were not identical to Mr Marks’s. Mrs Marks had not been involved in the earlier proceedings, had not taken independent advice and believed that an appeal would protect her position. The trustees’ interests had not been found or proved to be identical to Mr Marks’s.
2. The plea of abuse of process added nothing on these facts. The order of Sullivan J was not a judgment in rem. That specialised category concerns status and does not include every judgment concerning immovable property.
3. Charging order. Section 2 of the Charging Orders Act 1979 was in wide terms. There was no standard two-stage procedure, although in a complicated case the extent of a charge could properly be left for later Chancery enforcement proceedings. The earlier order therefore decided only that Mr Marks had some beneficial interest.
4. Declaration of trust. The legal charge gave Midland effective security over Woodwinds. Its restrictions on dealing with the equity of redemption were contractual obligations. They did not invalidate the declaration of trust, even if the declaration involved breach of those obligations. Mr Marks held the property as nominee on the express trust created or evidenced by the declaration.
5. Mr Marks had a life interest in one half under clause 6 of the Chanick Trust, subject to the trustees’ discretions under clause 7. That interest remained subject to the charging order, but was defeasible and had no realisable value. It could not support the possession and sale orders. The appeal was allowed. Costs were awarded here and below, the interim-payment application was refused, and the charging order and Land Register entry were varied.

1. Court of Appeal (Civil Division) In [2001] EWCA Civ 319, the appeal was allowed and the charging order was varied.
2. High Court of Justice, Chancery Division On 8 September 2000, the court declared that Mr Marks and Mrs Marks held beneficial interests of 87 per cent and 13 per cent respectively, and ordered possession and sale of Woodwinds.
3. Queen’s Bench Division Master Murray made a charging order over Mr Marks’s beneficial interest. Sullivan J dismissed Mr Marks’s appeal and left the matter to subsequent enforcement proceedings.