Smith v Spaul

Permission to appeal may be granted on grounds that are merely arguable, particularly where the lower court may have proceeded on an incomplete or mistaken legal basis. A mortgagee’s counter notice may raise a question as to whether it can be relied upon by a lessee in possession. An estoppel arising from settlement of earlier proceedings must be confined to issues actually resolved by that settlement. It may prevent reliance on an unauthorised breach of covenant, while leaving continuing disrepair arising from defective work capable of separate consideration.

The applicant appealed from a decision of His Honour Judge Goldstein in the Central London County Court. The judge had treated the settlement of earlier proceedings against Dr Moore as creating an estoppel or waiver which prevented the applicant from pursuing claims against the respondent concerning breaches of lease.

On the resumed permission hearing, the Court of Appeal considered whether there was an arguable issue concerning the effectiveness of a counter notice served after a section 146 notice, whether an earlier originating application might have sought the relevant leave, and whether the settlement barred claims based on continuing disrepair.

1. Permission granted. Permission to appeal was limited to the identified arguable issues.
2. The effectiveness of a counter notice served after the applicant’s section 146 notice was arguable. Church Commissioners for England v Best Manufacturing Company [1957] 1 QB 238 suggested that a lessee in possession could not rely under the 1938 Act on a counter notice served by a mortgagee. It was arguable that the authority could be distinguished because the mortgagee in that case was not in possession. Egerton v Jones [1939] 2 KB 702 was among the authorities requiring consideration.
3. It was also arguable that an originating application in the bundle had been an application for the relevant leave. If satisfactory evidence and an order granting leave could be produced, the Court of Appeal could consider whether the lower court should have determined that application before disposing of the action on the basis that leave had not been granted.
4. The estoppel or waiver point required examination. Settlement of the earlier proceedings could prevent the applicant from relying again on breach consisting of work undertaken without the required consent. It did not necessarily prevent reliance on separate, continuing states of disrepair, including defective window joinery or water leakage, even if permission for the underlying work had been given.
5. The respondent’s attendance costs were not ordered. The application for permission was granted.

• Court of Appeal (Civil Division): permission to appeal granted on limited grounds.
• Central London County Court: His Honour Judge Goldstein had disposed of the claim on the basis of estoppel or waiver arising from the settlement of earlier proceedings.