England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(HHJ COWELL)
(Applications of 1st & 2nd Defendant)

		Royal Courts of Justice Strand London WC2 Wednesday 1st May 2002

Wednesday 1st May 2002

1. LORD JUSTICE CHADWICK: The order that I propose to make is that the applications for permission to appeal that are now before me are to be relisted on notice to the landlords for hearing in the first or second week of July 2002 with a stay of execution in the meantime; with appeal to follow if permission is granted. They are, therefore, to be listed before a two judge court. The reasons why I make that order are these.
2. These are renewed applications for permission to appeal against orders made by His Honour Judge Cowell in the Central London County Court in proceedings brought by Pat (Pensions) Ltd as landlord of premises known as 24 Gloucester Road, London SW7. The premises comprise a ground floor shop with residential accommodation on the upper floors. They are held under a lease granted in September 1989 for a term of 20 years from 29th September 1986. The passing rent is, or was at the material time, £26,000 per annum. The lease contains a proviso for forfeiture and re-entry in the usual terms.
3. The applicant in relation to the applications listed (2002/0522 and 0524), Miss Soheir Kamal, is a tenant under the lease. She and her co-tenant, Mr Peter Kempster, were defendants in the proceedings. Mr Kempster has also made an application for permission to appeal under reference 2002/0523. Those applications have not been listed for hearing today; but Mr Kempster is present in person in court; and, with his agreement, I propose to treat those applications as before me as well as the applications under reference 0522 and 0524 made by Miss Kamal. There are ancillary to the application for permission to appeal, applications for permission to rely on further evidence. They are made under reference 0522A, 0523A and 0524A.
4. The proceedings were commenced by the issue on 9th June 2000 of a claim form in the Chancery Division of the High Court. The landlord alleged that the lease had been forfeited on the grounds of nonpayment of rent and breach of repairing and other covenants. The claim was for possession and payment of arrears of rent and insurance charges. The arrears of rent were claimed in the sum of £36,500 odd, together with interest; and there was a claim for mesne profits at the rate of the rent payable under the lease, that is to say £26,000 a year, from 24th June 2000 until possession was delivered up.
5. On 7th August 2000 the applicant served a defence and counterclaim. She alleged - and it is not, I think, in dispute - that she had expended some £32,200 in effecting structural repairs to the premises. The need for repair was caused by the cracking and settlement of the main timber beam spanning between the party walls of the ground floor level. She alleged - and again I think it is not really in dispute - that the tenants' covenants in the lease imposed no obligation on the tenants to carry out structural repairs; and she claimed that the monies which she had expended should be set off against the arrears of rent. She also claimed relief from forfeiture.
6. The landlord's response to that, by application notice dated 16th August 2000, was to seek summary judgment under CPR Part 24. That application came before Master Price on 9th November 2000. He gave permission to the defendant to defend the claim on terms that she pay £10,800 in respect of arrears of rent by 30th November 2000 and pay £6,500 thereafter on the usual quarter dates from 25th December 2000 until trial; and he transferred the proceedings to the County Court.
7. The matter came on for trial before His Honour Judge Cowell on 29th and 31st October 2001. He held, first, that, in the circumstances that the lease imposed no obligation on either party to carry out structural repairs, the tenants were not entitled to set off the cost of doing so against the rent; and, second, that there had not been, as Miss Kamal alleged, any agreement by the landlord through its agents that she could carry out repairs at the landlord's expense. It followed that the tenants were in arrears in the payment of rent and that the landlord had been entitled to forfeit the lease. By the order which he made on 7th December 2001, the judge gave judgment to the landlord in the sum of £48,406 with interest and mesne profits. He ordered possession by 1st January 2002; but he stayed that order on the basis that, if payment of the arrears be made by 31st December 2001, the tenants should be relieved from forfeiture.
8. The matter came back before the judge on 17th January 2002. At that stage the defendants were seeking permission to appeal. The judge refused permission to appeal; but he ordered that, if Miss Kamal paid £25,000 into the West London County Court by 28th January 2002, then the warrant of execution, which was due to be executed on 29th January, should be suspended. He directed that the matter should come back to him on 15th February. It is clear that what he anticipated - or, perhaps, hoped - as a result the representations made to him, was that Miss Kamal would be able to find the money to enable her to pay off the arrears of rent.
9. The costs of proceedings were assessed on 13th February 2002 in the sum of £42,227. That assessment was made in circumstances in which, as appears from the default costs certificate, no points of dispute on the landlord's bill of costs had been raised by the tenants. Miss Kamal has told me that the certificate is the subject of appeal.
10. The position, therefore, when the matter came back before Judge Cowell on 15th February 2002 was that Miss Kamal was, prima facie at least, a debtor in respect of a substantial sum, representing the balance of the arrears of rent and the amount of the assessed costs. Further, that the landlord had served, or was about to serve on her, a statutory demand in the amount of £67,200. The judge plainly took the view on 15th February that, faced with that demand upon her, there was no prospect that Miss Kamal would be able to raise the amount needed to pay off the arrears and costs; so that was no purpose in giving her further time so that she could raise money. He was told that there was a prospect that funds could be forthcoming from Miss Kamal's father in Egypt; but that it would take a period of some twelve months for funds to be made available from that source. Her proposal was that the order be stayed for twelve months to enable the debt to be paid off in two instalments. Not surprisingly, the judge did not find that a sufficient reason to grant a further stay. More accurately perhaps, he did not think that those were terms upon which he could order relief from forfeiture.
11. That was the position when the application first came before me on paper. I refused the application for the reasons set out in a written note dated 19th April 2002.
12. The applications are now renewed before me in different circumstances. It is now said that Miss Kamal can raise the money necessary from the remortgage or sale of a property, Flat 3, 3 Strathmore Garden, London W8, which she owns and which is rented out. The new material before me suggests, first, that the value of that property is amply sufficient to secure a loan of the amount that she would need to discharge her obligations under the orders so far made; and, second, that she has been advised by mortgage brokers acting for the St James's Place Partnership that mortgage finance should be obtainable within six weeks without undue difficulty. As I have said, the flat is rented out and so is, itself, a source of income to service a loan.
13. Further, it is now said, in a skeleton argument put before me this morning, that the judge ought to have found that the circumstances made it unconscionable for the landlord to seek to take advantage, by way of forfeiture, of the substantial sum which Miss Kamal had expended in repairing structural defects in the property. At the least, it is said, she should have been warned when she embarked on the repair of this property that the landlords would be minded to forfeit after the repairs had been effected if she fell into arrears of rent; or, as is contended in the claim form, on the basis that she was in breach of her repairing covenants.
14. That argument, whatever merit it might have in law, faces the serious difficulty that it was not raised in the pleaded case at trial. It was, however, referred to, albeit obliquely, by the judge at page 22D-F of his judgment. The judge took the view that there was nothing which established a case for set-off of the costs of the works on the grounds of restitution or unjust enrichment.
15. In my view this is a case which calls for more detailed consideration of that point that it has been possible to give to it in the circumstances in which it was raised. It is impossible to ignore the fact that the landlord, having encouraged Miss Kamal to expend monies on the structural repair of the property - by encouraging her, as she says, to think that she was under an obligation to do so - will have obtained a substantial windfall if it is now permitted to forfeit the premises without any compensation to her. That may be what the law requires; but I do not find that self-evident.
16. In those circumstances, it seems to me that the right course in this case is to adjourn the matter for further consideration with informed argument - and after an opportunity to re-read the material with that point in mind - to a hearing at which the landlord can attend and be heard if he wishes. That will give Miss Kamal the opportunity to present the argument with the benefit of legal representation, if she chooses to instruct solicitors.
17. It may be that in the meantime Miss Kamal will succeed in raising funds on her flat at 3 Strathmore Gardens and will be in a position, before this matter comes back, to pay off the arrears of rent and the amount of costs. The adjournment gives her that opportunity; but is not ordered for that purpose. She should not think that when this matter comes back permission to appeal will be granted and the appeal allowed. The difficulty in her way, as I have indicated, is that the point was not properly taken before the court below; so that, if it were to the attract the Court of Appeal, the likely consequence would have to be a new trial. That is a course which this Court would take with reluctance in the circumstances that the point had not been raised below. But, in fairness to Miss Kamal, it is right to say that at the trial she was not represented and she did seek an adjournment.
18. For those reasons, I make the order which I have indicated.
19. There will be a half-day time estimate for the July hearing.
20. LORD JUSTICE CHADWICK: Miss Kamal, this matter will come back in July. When it comes back you may be in a position to pay off these arrears; and if you choose to do that - and it will be a matter for you - then the point of law which has been identified may not need to be considered further. If, on the other hand, you do wish to seek to persuade the Court of Appeal that there really is a point of law here which has been overlooked, you would be well advised to consider legal representation on that occasion.
21. MISS KAMAL: May I ask a question?
22. LORD JUSTICE CHADWICK: Yes.
23. MISS KAMAL: I am not sure it is the right place to ask this question. Will I be allowed legal aid on this?
24. LORD JUSTICE CHADWICK: It is not a question I can answer because legal aid is obtained from the Legal Services Commission.
25. MISS KAMAL: Because Master Price, when I was representing myself --
26. LORD JUSTICE CHADWICK: I simply cannot answer the question for you.
27. MISS KAMAL: Okay.
28. LORD JUSTICE CHADWICK: What you might well find is that you could obtain legal assistance from the Bar Pro Bono Scheme by making an application at the Royal Courts of Justice Citizens Advice Bureau. You would be sensible, perhaps, to obtain a transcript of the judgment I have just given because that sets out what the problem is.
29. MISS KAMAL: I will.
30. LORD JUSTICE CHADWICK: If you explain to the Citizens Advice Bureau that there is a point of law which needs to be argued then they might think it right to help you in this Court. But you should not be under any misunderstanding. If that point fails - and it very likely will because of the difficulty I have identified, namely it was not raised properly below - then you cannot expect any further time. So you may think that it is sensible to get your fund raising in place to cover that possibility.
31. MISS KAMAL: And all the costs as well? Or I wait for the hearing?
32. LORD JUSTICE CHADWICK: Well ...
33. MISS KAMAL: Because there is a hearing regarding the costs. I made an application.
34. LORD JUSTICE CHADWICK: The position on costs at the moment is that there is a default order made against you.
35. MISS KAMAL: Yes, I made an application. There is a hearing on 23rd May.
36. LORD JUSTICE CHADWICK: I think you would be sensible to see if you can reduce that. But that is quite independent of this hearing.
37. MISS KAMAL: Shall I go ahead with that then?
38. LORD JUSTICE CHADWICK: You would be sensible to, yes. That is going to be important in any case, I think. Is that clear?
39. MISS KAMAL: Thank you very much.
40. MR KINGSLEY: Is your Lordship keeping that summary of the judgment, the salient points of judgment? I think it is to your Lordship's left.
41. LORD JUSTICE CHADWICK: No, I am not keeping it.
42. MR KINGSLEY: No. Thank you.
ORDER: Applications for PTA to be relisted on notice to the landlords in first or second week of July with stay of execution in the meantime, with appeal to follow if permission is granted.