Andrew McCarthy v William Allan Jones & Anor.

An appellate court should not interfere with a trial judge’s findings of primary fact, evaluation or inference unless the decision is plainly wrong or rationally insupportable. This restraint is especially important where oral evidence was heard.

Estoppel by convention requires an expressly shared assumption, responsibility for conveying it, actual reliance, subsequent mutual dealing, and detriment or benefit making it unjust to assert the true position. Silence assists only where it manifests assent. An unauthorised payment by a third party does not discharge another’s debt without authority, ratification or compulsion. Damages for failure to transfer land are ordinarily assessed by reference to market value at the relevant date, and costs remain within the broad discretion of the trial judge.

Under a 2008 agreement, Andrew McCarthy was to obtain ownership of a yacht and William Allan Jones was to acquire the beneficial interest in a Mallorca villa and a mooring, while legal title to the villa remained with Mr McCarthy. The High Court found that Mr McCarthy breached the agreement by revoking and later altering a power of attorney and by selling the villa to a third party. It awarded Mr Jones €1,025,000: [2022] EWHC 2186 (Ch).

Mr McCarthy appealed on the basis that Mr Jones had transferred or surrendered his beneficial interest to William Allan Jones, or was estopped from asserting it, and challenged the assessment of damages. A separate appeal concerned costs arising from a document-preservation and document-use application. The central issues were whether the alleged agreements or estoppel were established, whether the payment to a third party reduced Mr Jones’s loss, and whether the costs order was within the judge’s discretion.

Lewison LJ gave the judgment of the court. Baker LJ and Elisabeth Laing J agreed. Both the substantive appeal and the costs appeal were dismissed.

1. Findings and pleadings. The email of 9 December 2010 was properly treated as an uncompleted proposal, not a concluded agreement. The alleged surrender of the beneficial interest and the alleged June 2016 oral agreement were also unsupported by the evidence. The trial judge’s findings were open to him. The appellate court’s task was not to decide whether it would have reached the same conclusion, but whether no reasonable judge could have done so. The principles in [2014] EWCA Civ 5 and [2022] EWCA Civ 464 applied. The pleaded case also mattered: parties define the issues through their statements of case, and a materially new point requires fair warning and, ordinarily, amendment.
2. Consequences. Since there was no agreement or assurance, Mr Proctor acquired no beneficial ownership, whether outright or by way of security. The alleged trust, specifically enforceable contract, common intention constructive trust and proprietary estoppel therefore failed. Formalities concerning an interest in land might also have required consideration.
3. Estoppel by convention. The applicable principles were those summarised in Tinkler v HMRC, approving with minor modifications HMRC v Benchdollar Ltd: an expressly shared assumption, responsibility for conveying it and expected reliance, actual reliance, subsequent mutual dealing, and sufficient detriment or benefit to make assertion of the true position unjust or unconscionable. The evidence did not establish the shared assumption or reliance. Mr Jones’s conduct was consistent with asserting, rather than surrendering, his interest. Failure to protest assists only where it manifests assent; repeated assertion of an existing right is not always required.
4. Payment and damages. Mr Proctor had no security interest. Under the rule in Electricity Supply Nominees Ltd v Thorn EMI Retail Ltd and Crantrave Ltd v Lloyds Bank plc, Mr McCarthy’s unauthorised payment did not discharge Mr Jones’s debt without authority or ratification. Swynson v Lowick Rose llp and Tiuta International Ltd v De Villiers Surveyors Ltd concerned a different collateral-benefit question. Damages were properly based on the villa’s market value at the relevant date. The intended family transfer at an undervalue did not reduce that value, and the proposed further deductions were unsupported.
5. Costs. Civil Procedure Rules 1998, Part 46.1 governed costs as between the applicant and respondent to the non-party disclosure application, not costs between the applicant and another party to the underlying action. It was legitimate to treat the costs as part of the general costs of the underlying proceedings where the wrongdoer was already a party. The order fell within the wide discretion under Part 44.3.

1. Court of Appeal (Civil Division) The court dismissed the substantive appeal and the separate costs appeal.
2. High Court of Justice, Business and Property Courts, Business List (ChD) HHJ Jarman KC found breaches of contract and awarded Mr Jones €1,025,000: [2022] EWHC 2186 (Ch).