Sidnell v Wilson

On an application for leave to pursue forfeiture proceedings for disrepair under Leasehold Property (Repairs) Act 1938, the lessor need not prove the alleged breach as at a trial. It is sufficient to show a bona fide arguable case, based on material which, if accepted, could satisfy a statutory condition for leave.

The leave hearing is not an occasion for resolving conflicts of evidence or duplicating the trial. The court retains a discretion to grant leave where the statutory conditions are arguably met and the circumstances make a trial just and equitable.

The landlord alleged that the tenants had failed to keep leased commercial premises in repair after water entered the cellar and dry rot later developed. He served a notice under section 146 of the Law of Property Act 1925. The original notice did not state the tenants’ right to serve a counter-notice under the repair legislation. A later letter referred to the earlier schedule of works and stated that right.

After the tenants served a counter-notice, the landlord sought leave in Sudbury County Court to bring forfeiture proceedings. Judge Drabble declined leave after treating the application as requiring proof of an actual breach. The landlord appealed. The central issue was the standard required for leave under section 1(5) of the Leasehold Property (Repairs) Act 1938.

1. Appeal allowed unanimously. The Court of Appeal held that the statutory notice requirement had been met. Lord Denning MR regarded the letter of 24 February 1965 as a fresh section 146 notice containing the required statement, or alternatively considered that the tenants had waived any defect by serving a counter-notice. Diplock LJ considered that the later letter and the earlier notice could properly be read together as one compliant notice.

2. All three judges held that the County Court judge had applied the wrong standard under section 1(5). The provision does not require the landlord to prove the breach, or the statutory condition for leave, as if the application were the trial. Lord Denning MR and Harman LJ described the required showing as a prima facie case. Diplock LJ preferred the expression a bona fide arguable case. On either formulation, material which, if accepted, could establish the statutory condition is enough.

3. The application for leave is not the occasion for deciding disputed evidence. A judge should not hear rebutting evidence and resolve conflicts as though conducting the substantive action. The evidence concerning the onset and cause of the dry rot was capable of supporting an arguable case that the tenants’ breach had substantially diminished the value of the landlord’s reversion within section 1(5)(a).

4. The court also considered that leave should be granted in the exercise of its discretion. Lord Denning MR considered that the parties’ interlocking claims would in any event require trial. Harman LJ held that the complexity and importance of deciding responsibility for substantial structural repairs were special circumstances making leave just and equitable under section 1(5)(e). The costs below were made costs in the forthcoming action, and the appeal costs were respondents’ costs in the cause.

• Court of Appeal: Allowed the landlord’s appeal and granted leave to bring forfeiture proceedings: [1966] 2 QB 67.
• Sudbury County Court: Judge Drabble refused the landlord leave after requiring proof that the tenants had breached their repairing covenant.