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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Chapman v Louei [2011] EWCA Civ 155 (25 February 2011) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2011/155.html Cite as: [2011] EWCA Civ 155

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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PLYMOUTH COUNTY COURT
His Honour Judge Leeming Q.C.
PL890014

		Royal Courts of Justice Strand, London, WC2A 2LL
		25/02/2011

Lord Justice Etherton :

Introduction

1. This is an appeal by the defendant and CPR Part 20 claimant, Paul Chapman, from an order made on 30 April 2010 by HH Judge Leeming QC in the Plymouth County Court. So far as relevant to this appeal, the order gave judgment for the claimant, Joseph Louei, on his claim in the sum of £244,343.37; gave judgment for defendant on his counterclaim in the sum of £120,343.37; ordered the defendant to pay the claimant £124,000 within 28 days; ordered the defendant to pay the claimant 50 per cent of his costs of the claim and counterclaim; and ordered the defendant to pay £10,000 within 28 days on account of costs. The issue on this appeal is whether the Judge was right to give judgment in favour of the claimant for £209,343.33 paid by him to the defendant to discharge a mortgage on a property owned by the defendant.

The background

2. For the purpose of this appeal, the material background facts can be stated very shortly. The claimant and the defendant are businessmen who previously worked together operating two hotels in Plymouth through a single corporate vehicle, Legendary Limited ("Legendary"). The two hotels were the Boringdon Hall Hotel and the Astor Hotel. Adjacent to the Astor Hotel is 12 Elliott Street ("No 12"), the legal title to which was in the defendant's name, but which was regarded as part of the joint venture. A cookery school was conducted there, and the claimant lived there with his family. The claimant and the defendant fell out, and agreed to split the business between them. In very broad terms, the overall structure of the transaction was that the Astor Hotel and part of Legendary's corporate borrowings would be de-merged and taken over by a company owned by the claimant, and the defendant would transfer No. 12 to the claimant free from the NatWest mortgage ("the Mortgage") which secured the defendant's loan account 36062995 ("the NatWest loan account").
3. At a meeting on 5 April 2007 attended by the claimant, the defendant and Gordon Fox, a partner in Francis Clark, Legendary's accountants, the claimant and the defendant signed a document headed "Declaration" ("the Declaration"). So far as material, it was in the following terms:

"Joseph Louie agrees to lift the personal charge that he has registered against the property known as The Borringdon Hall Hotel subject only to the satisfactory repayment of £215,000 acknowledged to be paid to him by Paul Chapman consequent to the partition of The Astor Hotel business from Legendary Limited to Joseph Louie and Sons Limited together with the satisfactory resolution of all other outstanding personal borrowings between Joseph Louie and Paul Chapman."

4. The £215,000 mentioned in the Declaration was the amount thought to be necessary to discharge the Natwest loan account and hence the Mortgage, and which it was envisaged would be advanced by the claimant to the defendant to enable No 12 to be transferred to the claimant free of the Mortgage.
5. At the end of June 2007 the claimant paid £209,343.33 towards the discharge of the Natwest loan account, and No 12 was transferred to the claimant free of the Mortgage.
6. At the 5 April 2007 meeting it was agreed that the corporate borrowing to be taken over by the claimant as part of the de-merger ("the transferred borrowing") was £1.475m. On 3 July 2007 the claimant's solicitor sent an e mail to the defendant's solicitor saying that the correct figure for the bank borrowings was not £1.475m but £1.26m, a difference of £215,000. Completion of the de-merger eventually took place on 3 December 2007 when the transferred borrowing was agreed to be £1.26m.
7. In February 2008 the claimant, by his solicitors, demanded payment of £215,000 under the Declaration. The defendant denied liability to pay any such sum.

The proceedings

8. On 4 July 2008 the claimant commenced proceedings for the £215,000 mentioned in the Declaration and interest.
9. The defendant's initial position in his handwritten defence and counterclaim was (1) to admit the capital sum of £215,000, but (2) to contend that the Declaration made the payment of that debt subject to the satisfactory resolution of all other outstanding personal borrowings between himself and the claimant, and (3) to counterclaim for various sums, totalling in excess of £447,000, alleged to be owed by the claimant to the defendant. An amended defence and counterclaim dated 5 September 2008 were prepared by counsel on behalf of the defendant entirely replacing the original defence and counterclaim. The essence of the amended defence was that the Declaration did not create any legally binding obligation of any kind; alternatively, any payment obligation of the defendant was dependent on a satisfactory resolution of all the outstanding personal borrowings between the claimant and the defendant; in the further alternative, the defendant made personal loans to the claimant of some £299,000, which the defendant was entitled to set off in extinction or diminution of the claimant's claim. The defendant counterclaimed in respect of that same sum.
10. There was an amended Reply and Defence to Counterclaim, which it is not necessary to summarise.
11. The defendant made a witness statement dated 25 November 2009. In it he made a connection between the £215,000 mentioned in the Declaration and the reduction from £1.475m to £1.26m of transferred borrowing. He said at paragraph 60 of his witness statement, so far as relevant:

"The Claimant was now insistent that he was only paying £1,260,000. I refer the court to the email dated 3^rd December 2007 from MR O Grady …. I agreed to this. At page 132 is a meeting note prepared by my Solicitor. This meeting note indicates that I agreed to this reduction in consideration. In effect the Claimant no longer had to pay the sum of £215,000 in cash. The meeting note also indicates that both I and the claimant had separate claims against each other which would be resolved amicably."

12. The trial took place over 6 days in December 2009 and April 2010. During the course of it, the Judge required the defendant to amend further his defence if he wished to run a defence based on the reduction in the transferred borrowing to £1.26m. A re-amended defence and counterclaim was served dated 14 December 2009. It included the following two new paragraphs:

"9A Further, or in the alternative, the Defendant is not indebted. The meeting of the Claimant and Defendant on 5^th April 2007 with Mr Gordon Fox and the documents signed by the parties on or about that date formed part of the demerger (referred to and outlined in Paragraph 6 of the Amended Reply and Defence to Counterclaim) to separate the Claimant's and the Defendant's business interests. The demerger was not completed until on or about 3 December 2007.

9B In the circumstances the Declaration was an agreement to agree and/or a step in the negotiations which was superseded by the eventual terms of the demerger completed and or concluded on 3^rd December 2007. In particular whereas it was agreed on 5^th April 2007 that the Claimant (through a corporate vehicle promoted and/or acquired for the purpose) would pay £1,475,000 to Legendary Limited in respect of the proposed Intra Group Transfer (in respect of inter alia the transfer of the Astor Hotel to the Claimant's new company) by on or about 3 December 2007 the sum of £215,000 (acknowledged in the Declaration) was agreed and/or understood to be accounted for and/or was accounted for by a reduction in the consideration for the Intra Group Transfer by £215,000 from £1,475,000 to the sum of £1,260,000."

13. At the trial the defendant's counsel, Mr Gerard McMeel, who also appeared for the defendant on this appeal, raised a further objection that the way the claim was put at the trial was not the same as that pleaded in the particulars of claim. At the trial, the claimant's claim was not advanced on the basis of an agreement constituted by the terms of the Declaration, but rather on the basis of an independent agreement, merely reflected in the terms of the Declaration, that, to enable No 12 to be transferred to the claimant free of the Mortgage, the claimant would pay off the Mortgage debt against the defendant's undertaking to reimburse him in full; and that reimbursement obligation crystallised at the latest when the claimant made his payment of £209,343.33 in June 2007.

The judgment

14. The Judge delivered his judgment on 30 April 2010. He gave his view of the credibility of the claimant and the defendant as witnesses. He concluded ([20]) that the defendant is not an honest person and was not a reliable witness. The Judge considered that he had to treat the defendant's evidence with considerable circumspection where it was challenged or not supported by convincing documentation. The Judge was not very impressed with the claimant either ([16]). This was not, however, because he did not consider the claimant to be dishonest, but rather because the claimant had a tendency to convince himself of the truth of facts that may not in fact exist.
15. In the light of the evidence he had heard and read the Judge accepted the arguments of the claimant put forward at the trial for claiming the £209,343.33 paid by him in discharge of the defendant's NatWest loan account and the Mortgage, and he awarded the claimant interest on that sum. Save in respect of a set-off of the money counterclaimed, the Judge rejected the various defences that had been raised, including, in particular, that based on the pleadings and the argument that the amount claimed by the claimant was to be treated as discharged by the reduction in the transferred borrowing from £1.475m to £1.26m. The Judge found in favour of the defendant on his counterclaim in the amount of £120,343.37, and ordered the defendant to pay £124,000, being the difference between what was found due on the claim and the counterclaim respectively.

The appeal

16. The defendant sought permission to appeal on 4 grounds. Mr McMeel, to whom I am very grateful for his helpful skeleton argument and clear submissions, accepts that the permission to appeal was granted only in respect of one of them. It is as follows:

"The learned judge erred in law and/or in his findings of fact in treating the advance of £209,343.33 on 29 June 2007 as a distinct agreement, when the parties dealings with regard to the mortgage over 12 Elliott Street constituted a mere step in negotiations concerning the separation of the parties' business interests, which were ultimately concluded on 3 December 2007 when the sum of £215,000 was accounted for by the Defendant to Claimant in the context of the overall demerger of the parties' interests by a reduction of the consideration payable by the Claimant for his share of the hotel business."

17. The Judge dealt with the point as follows in his judgment:

"28. The defendant contends further that any agreement to reimburse the claimant for the mortgage redemption monies was merely provisional and indicated something that had to be dealt with or discussed when the full merger went through. He contends that since the merger went through in terms that were varied in important respects, the agreement never became binding, or it was replaced. I read the amendment to the defence as it was put in the course of trial as formulated in this way, since I insisted what the defendant's case was on this be pleaded with some precision, and this is what the amendment says: [the Judge then set out paragraph 9B of the re-amended defence and counterclaim].

29. As I have indicated, I take the view that the parties had agreed as a separate agreement at the meeting that the claimant was to get No. 12, pay off the mortgage, and be reimbursed. His right to reimbursement crystallised then at the latest, because he must have paid the redemption monies on the basis that he was indeed to be reimbursed, not upon some mere hope or speculative chance he might be reimbursed or could seek it in further negotiations. That is my finding on the facts, and my interpretation of events.

30. The further question is a more difficult one: was there a reduction of the sum payable under the later de-merger in the amount that I have mentioned in some way that extinguished or rescinded the reimbursement obligation? This contention, it appears, was only raised by the defendant when his witness statement was served. The claimant protested in his argument and in the course of his evidence that it was never intended that part of the consideration passing in the de-merger as the intra-group transfer figure was to be the higher figure. He insisted that it was the lower figure that was agreed on 5^th April, being the sum of £1,260,000. He said that was all he would agree to, because his bankers at that stage had indicated to him that was all, in effect, they would allow him to pay.

31. I have heard clear evidence from Mr. Fox, however, that what was agreed at the meeting was the higher figure. His file note confirms this. I accept Mr. Fox's evidence on this point. I believe that the claimant is mistaken about it. Whether he is mistaken or not, in any event I do not accept his evidence on this point.

32. Mr. Fox was not able to say, when I asked him about the matter, that the reduction to the lower figure in the intra-group transfer inserted in the de-merger agreement and paid under it was intended to replace the reimbursement obligation, or indeed that it could reasonably be regarded as a substitution for it. He explained, and it is clear, that the mechanics and detailed effect of the de-merger agreement are difficult to ascertain. One cannot simply pluck from it the intra-group transfer figure and treat it as though it is a simple amount of cash to be paid over in return for assets. As I have indicated, the de-merger was complicated and delayed partly because of a lack of sufficient distributable reserves.

33. The stance of the claimant in securing the reduction, as I have found it, was on my view of the evidence that he was neither willing nor able to pay any more, and his bankers would not let him. It was certainly never expressly agreed that the reduction in the intra-group transfer figure would cancel out or remove the reimbursement obligation. There is no indication in the evidence that such a suggestion was ever made, or that the topic arose explicitly in any way. The claimant says in evidence that he never thought for a moment that what he paid under the de-merger in any way was intended to affect the reimbursement obligation. I accept his evidence on this, although it is only what he thought, but again it is clear to me on the evidence that the defendant himself did not believe at the time that the reduction was intended to affect any obligation to reimburse. The admission in his defence, which is strictly classed as a non-denial, indicates this, despite his protestations to the contrary. It was open to the defendant when he agreed the reduced figure in the de-merger, to attempt to renegotiate his obligation to reimburse, but he did not do that.

34. Again, on what I gather of the claimant and his attitudes, and the circumstances prevailing at the time, he would not have been willing to allow the reimbursement obligation to be removed or reduced as some sort of quid pro quo for the reduced transfer figure, if he had been asked. The court has no power to re-order the various obligations of the parties under a vague jurisdiction to impose whatever it might regard as some sort of "more fair" result. I reject the case that the reduction of the amount paid under the de-merger destroyed or reduced the obligation to reimburse that I have found arose. In my judgment, that obligation remained extant, and the claimant is entitled to enforce it, subject to setting off any cross-claims that succeed."

18. The defendant criticises the Judge's analysis and conclusion on this issue in several respects. The nub of his appeal is that it is clear from the documents relating to the de-merger that the sum of £215,000 was accounted for in an overall reduction of the consideration payable by the claimant for his share of the business by the reduction in the transferred borrowing, and that the effect of the Judge's decision is that the claimant has effectively recovered from the defendant the same sum of £215,000 twice over.
19. Mr McMeel submitted that Judge's conclusion on the claim was plainly wrong. He says that, although the appeal is an appeal against the Judge's findings of fact, in the light of his assessment of the credibility of the witnesses, this is one of the rare occasions on which this Court can and should reach a different conclusion on the basis of the guidelines in Assicurazioni Generali SpA v Arab Insurance Group [2002] EWCA Civ 1642, [2003] 1 WLR 577. In that regard Mr McMeel said that the Judge failed to give appropriate weight to the contemporaneous documents, which provide a surer foundation than the oral evidence for any inferences to be drawn on the issue in dispute on this appeal; the Judge failed to address or deal with any of the relevant contemporaneous documentation from the parties or their professional advisers; the claimant's evidence was rejected by the Judge in some instances and on one central issue, in particular, was incredible; the Judge's finding that the defendant was not a credible witness was not justified; and so, in view of the ability of this court to examine the documents and the transcripts of the evidence at the trial, it is not necessary or right for this court to defer to the Judge's findings merely because he had the advantage of seeing the witnesses.
20. Mr McMeel took us through the documentary trail on which the defendant relies. It is not necessary for me to repeat it in every detail in this judgment. The following is sufficient.
21. Mr McMeel's starting point was a file note of Mr Fox of 5 April 2007 which recorded, among other things, the figure of £1.475m in respect of transferred borrowing and the transfer of No 12 from the defendant personally to the claimant personally free of the Mortgage. The claimant's evidence was that the agreed transferred borrowing was at all times £1.26m, but the Judge rejected that. Mr McMeel referred us to other exchanges between the parties' advisers confirming that the transferred borrowing was to be £1.26m. The Declaration, which referred to the £215,000, was also signed on 5 April 2007.
22. On Friday 29 June 2007 the claimant paid £209,343.37 to discharge the NatWest loan account and the Mortgage. Four days (one working day) later, on Tuesday 3 July 2007, the claimant's solicitor sent an e mail to the defendant's solicitor saying that the correct figure for bank borrowings, that is to say the transferred borrowing, was £1.26m rather than 1.47m. Mr McMeel submitted that this was a critical e mail, which the Judge simply overlooked in his judgment. He submitted that the Judge gave insufficient weight to the fact that the e mail, from the claimant's own lawyer, effectively asked for a reduction in the corporate consideration of £215,000 and demonstrated that the claimant was seeking to reduce the consideration for the corporate part of the de-merger by the same amount as he had only days previously borrowed in order to pay the defendant so as to enable the NatWest loan account and the Mortgage to be discharged. Mr McMeel described the letter as containing an offer, which he submitted was accepted by the defendant on or before completion of the de-merger on 3 December 2007.
23. In his skeleton argument, but not his oral submissions, Mr McMeel submitted that the reduction in the transferred borrowing meant that Legendary had to increase its borrowings in the short term to reflect what was previously agreed. In support of that contention, he relied on various e mail exchanges and the evidence of Mr Fox.
24. Mr McMeel finally relied on a file note of the completion meeting on 3 December 2007, when the critical documents were signed and executed, which recorded, among other things, the following:

"Paul Chapman confirms that he is content in all respects for the intra group agreement to be amended to show a consideration of £1,260,000 in substitution for the earlier figure of of £1,475,000 and for the deletion of the cash consideration element…. It is also acknowledged that John Chapman and Joseph Louei have separate claims against each other and that these will be resolved between them amicably."

25. Mr McMeel referred to the following comment of the defendant about that file note in paragraph 60 of his witness statement (quoted earlier):

"This meeting note indicates that I agreed to this reduction in consideration. In effect the Claimant no longer had to pay the sum of £215,000 in cash."

26. Mr McMeel referred to various other passages in the defendant's witness statement, including in particular paragraphs 37 and 66. In paragraph 37 the defendant said that, under the documents prepared in April 2007, the price supposedly paid by the claimant was £1.475m, which "included cash consideration of £215,000". Mr McMeel was unable to say whether or not that "cash consideration" had anything to do with No.12. The defendant then referred to a shortfall of £215,000 in Legendary's reserves. He concluded the paragraph saying that the documents prepared in the summer of 2006 were redrawn upon legal and accounting advice, and the de-merger was completed on 3 December 2007 "when I agreed to a reduction of the consideration of £215,000." In paragraph 66 of his witness statement the defendant said that "it is clear the purchase price was adjusted to take account of the borrowing to discharge the loan relating to 12 Elliot Street".
27. Mr McMeel submitted that all the documents signed on 5 April 2007, including the Declaration, were superseded by the formal completion of the de-merger on 3 December 2007, and that the evidence as a whole, and the evidential trail in particular, shows clearly that the effect of what then took place was to eliminate the obligation of the defendant to pay the claimant in cash the £215,000 mentioned in the Declaration or the sum of £209,343.33 actually advanced by the claimant on 29 June 2007.
28. As I have said, Mr McMeel was also critical of the views expressed by the Judge about the defendant's lack of credibility as a witness which, he suggested in his skeleton argument, sought "to dispense with the need to critically engage with the documents and the issues to be determined". He further submitted that, even if the defendant's evidence was discounted in its entirety, the Judge should have concluded, in view of the contemporaneous documentary evidence, as well as the claimant's own unsatisfactory evidence, that the claimant had failed to discharge the burden of proof in relation to his claim.

Discussion

29. This ground of appeal is, as Mr McMeel frankly accepted, against the Judge's findings of fact. Mr McMeel was content to accept that the test is whether, in the light of the oral and documentary evidence, the Judge, in making those findings, exceeded the generous ambit within which reasonable disagreement about the conclusion to be drawn from the evidence is possible: Assicurazioni Generali at [197] (Ward LJ).
30. I do not accept that the Judge's finding on this issue was one that he could not properly have reached or that his judgment is fatally flawed by failing to refer to all the documents on which Mr McMeel relies.
31. I have no hesitation in rejecting Mr McMeel's criticism of the Judge's view that defendant was not a reliable witness and that his evidence should be treated with considerable circumspection where it was challenged or not supported by convincing documentation. The basis for Mr McMeel's criticism appears to be that the Judge's view was (in the words of Mr McMeel's skeleton argument) "not tied to any documents or transactions relevant to the case". I do not understand that criticism. The Judge set out clearly and in commendable detail in paragraphs [17] to [19] of his judgment the facts on which he relied in arriving at his conclusion as to the defendant's lack of honesty and credibility. His view on that matter is not capable of serious challenge on appeal.
32. The first point to be made about Mr McMeel's paper trail is that, as the Judge observed in the course of the trial, the history of the negotiations as to the terms of the de-merger, and the rationale for the terms finally agreed, are obscure. That is not merely because of their complexity, but also because not all the relevant documents were in evidence (the claimant's solicitors apparently asserting a lien over many of them), and the only independent witness giving oral evidence was Mr Fox, an accountant specialising in tax. He was only one of the accountants advising on the de-merger. In cross-examination, he said that he had no understanding as to how the overall deal about bank borrowing changed between the meeting in April and December 2007. Specifically, as the Judge recorded in his judgment, Mr Fox was unable to say how, if at all, the reduction in the transferred borrowing was related to the £215,000 mentioned in the Declaration.
33. Further, Mr McMeel's trail of contemporaneous documentation requires some amplification by reference to the following facts and matters. At the beginning of November 2007 accountants were advising that the delay in carrying out the de-merger had given rise to a possible new problem, namely the lack of sufficient distributable reserves to make a distribution in specie of the shares in Legendary's subsidiary Astor Limited. At the end of November 2007 the claimant confirmed that his bank had agreed to borrowings of £1.26m. It appears that, at about the same time, £215,000 was identified as the shortfall in the necessary distributable profits; that shortfall was to be made good by an increase in funds which Barclays was willing to provide from £640,000 to £855,000; and it was agreed that "cash consideration" of £925,000 in respect of the de-merger was to be deleted.
34. Mr McMeel submitted, as I have said, that the e mail of 3 July 2007 is critical and demonstrated that the claimant was seeking or offering to reduce the consideration for the corporate de-merger by the amount of his borrowing to discharge the NatWest loan account in respect of No. 12. I see no reason why the Judge should have drawn that inference. The e mail is referred to in a single sentence in the defendant's witness statement, and it is not portrayed there as a request or offer by the defendant in connection with No 12 or as having any particular significance. There was no witness who drew attention to the e mail in the way now contended for. There is nothing at all in the e mail about No 12 or the payment made by the claimant to the defendant to discharge the NatWest loan account and the Mortgage. So far as concerns the reduction of the transferred borrowing from £1.475m to £1.26m, which was mentioned in the e mail, Mr Fox's evidence in cross-examination was that he thought that the reduction "was the result of … problems in obtaining finance from the banks …". That was also the claimant's evidence. It was also the Judge's conclusion ([33]) that the claimant's bankers would not let him pay any more. That was a finding of fact, which the Judge was plainly entitled to reach on the evidence.
35. As I have said, Mr McMeel further submitted in his skeleton argument that the reduction in the transferred borrowing by £215,000 meant that Legendary had to increase its borrowings, and that was explained by Mr Fox in his evidence and in various e mails. I do not agree that was explained by Mr Fox. The relationship, if any, between the reduction in the transferred borrowing and the need for Legendary to increase bank borrowing was not clarified in the evidence of Mr Fox or any documentary evidence. The implication of Mr McMeel's submission appears to be that the reduction of £215,000 in the transferred borrowing was connected in some way to the shortfall in the necessary distributable reserves of profit to effect the de-merger and a subsequent increase in bank borrowing. While that may be correct, it is not made clear on the evidence. As I have already said, Mr Fox's evidence, in cross examination, was that he had "no understanding as to how the overall deal about bank borrowing … changed between [the] meeting in April and December". He confirmed that Legendary needed to increase its bank borrowings by £215,000 "in order to clear [it's] distributable reserves", but he then added, opaquely, "that it was a very temporary, short term matter because we were borrowing money to create a situation where we paid it back to ourselves so that we could repay the bank immediately". Mr McMeel sought to give an oral explanation of what Mr Fox may have meant by that statement, but he accepted that an explanation was not provided by Mr Fox himself or any of the other witnesses.
36. In any event, what critically is entirely absent from all the contemporaneous documentation is any statement, or reference to any statement, by or on behalf of the defendant or the claimant expressly linking the reduction in the transferred borrowing with the claimant's payment towards the NatWest loan account and the discharge of the Mortgage. There is, as the Judge observed ([33]), simply no evidence, documentary or otherwise, of an express agreement between the claimant and the defendant that the reduction would cancel out the defendant's reimbursement obligation. Even the defendant's own witness statement, including in particular paragraphs 60 and 66 of that statement, is silent about any such express agreement. An implied term to the same effect is not pleaded, or contended for, and is plainly unsustainable.
37. Paragraph 9B of the re-amended defence refers to the cancelling of the defendant's reimbursement obligation by reason of the reduction in the transferred borrowing as having been agreed "and/or understood". It is trite law that an agreement must be established objectively by reference to the parties' external acts. An uncommunicated "understanding" is irrelevant. In any event, the Judge's finding ([33]), on the evidence, was that the claimant never thought for a moment that what he paid under the de-merger was in any way intended to reflect the reimbursement obligation. There is nothing in the correspondence to suggest otherwise. The Judge was clearly entitled to make that finding of fact.
38. Paragraph 9B of the re-amended defence alleges, as a further alternative, that the £215,000 "was accounted for" by the reduction in the transferred borrowing. It could not have been "accounted for" in that way, however, without some agreement between the claimant and the defendant.
39. Even if, as Mr McMeel suggested, the oral evidence of the defendant, or, indeed, of both the claimant and the defendant, was disregarded, the claim (subject to any set-off of amounts counterclaimed) would be bound to succeed. It is obvious, and not in dispute, that the claimant's payment of £209,343.33 gave rise to a right to reimbursement from the defendant, and the defendant has failed, on the evidence, to establish an agreement which removed that obligation.
40. The defendant's complaint, at a purely commercial level, is that, unless the reduction in the transferred borrowing cancelled out the defendant's obligation to repay the money advanced by the claimant to the defendant to discharge the NatWest loan account and the Mortgage, the claimant would achieve a double recovery. From the claimant's commercial perspective, however, this confuses two quite different matters. On the one hand, the claimant was insistent that, whatever else might be negotiated and agreed, he was to be re-paid money which had to be (and was) advanced by him personally so as to obtain a transfer of No. 12 from the defendant free from the Mortgage. On the other hand, he, or rather his corporate vehicle, was not willing to take over, and his bankers would not let him take over, more than £1.26m in Legendary's corporate debt. Insofar as that represented a reduction in the overall cost to the claimant of the whole deal, it was open to the defendant to refuse the reduction or to insist that it cancel out his personal reimbursement obligation in respect of the discharge of the Mortgage, but he never did so. He never did so orally, and he never did so in any documentation passing between the parties or their agents.

Conclusion

41. For those reasons I would dismiss this appeal.

Lord Justice Elias

42. I agree.

Lord Justice Mummery

43. I also agree.