S E P Properties Ltd v Balai

An appellate court should rarely interfere with findings of fact based on oral evidence. Intervention requires exceptional circumstances, such as a material misdirection or clear evidential error. In a rectification claim, the central question is whether the lease records the common intention of the original contracting parties. Later insurance payments by an assignee do not, without more, establish that intention. They may instead support a separate claim for reimbursement or set-off. A direction requiring expert attendance is not shown to be erroneous where no written report was available when it was made. The trial judge may reconsider attendance once a report is produced.

S E P Properties Ltd claimed rent arrears under a 25-year lease assigned to Habib Balai. It also sought rectification to exclude a flat above the shop from the demised premises.

The Birmingham County Court rectified the lease, allowed Mr Balai’s appeal against refusal of permission to call additional expert evidence, and adjourned the remaining issues. Mr Balai sought an extension of time and permission to appeal, relying on the rectification findings, an insurance schedule covering the shop and flat, and the proposed use of written expert evidence alone.

1. Outcome. The extension of time was granted, but permission to appeal was refused and the application was dismissed.
2. Rectification. The trial judge had to determine whether the lease reflected the common intention of the original lessor and lessee. He also considered whether rectification would be inequitable as against the assignee. His conclusions were based on oral evidence from witnesses to the original transaction and findings that both the original lessee and Mr Balai understood the transaction to concern the shop only.
3. The Court of Appeal’s established practice is not to interfere with factual findings based on hearing witnesses except in very exceptional circumstances. No such circumstances or legal misdirection appeared. The insurance schedule did not provide a realistic basis for overturning the findings. There was no evidence that Mr Balai had paid the relevant premiums, and payment would not illuminate the original parties’ intention when the lease was made or the position at assignment. At most, overpayment might found reimbursement or a set-off against rent arrears.
4. Expert evidence. The direction requiring the expert to attend disclosed no arguable error because no written report was available when it was made. After production of the report, the trial judge could reconsider whether personal attendance remained necessary, having regard to the reports and any agreement between the experts.
5. The failure to have the trial bundle available identified no further arguable ground. The only document relied on was the insurance schedule, which did not affect the result.

• Court of Appeal (Civil Division): Granted an extension of time but refused permission to appeal and dismissed the application.
• Birmingham County Court: His Honour Judge Charles Harris QC rectified the lease to exclude the flat, allowed an appeal concerning additional expert evidence, and adjourned the remaining issues.