Bat-Sheva Goudsmid v Drewe

Where entitlement to disputed sale proceeds depends on an unresolved preliminary issue, the court should preserve the funds until that issue has been determined if its outcome may dispose of the claim. An application for permission to appeal an interim payment direction may properly be adjourned where the appeal could become academic after the preliminary issue. If the issue is resolved against the party seeking permission, the appeal may no longer arise. If it is resolved in that party’s favour, the application should be restored for further argument on notice.

The parties had lived together and jointly acquired a property, which was later sold. The net proceeds were held by the vendors’ solicitors pending resolution of their competing claims. The applicant relied on an agreement and documents purporting to transfer the property to her. The defendant alleged that the transfer documents were forged and relied alternatively on a later agreement concerning the proceeds.

Lightman J ordered a trial of the preliminary issue whether the defendant had signed the transfer. He directed that half the proceeds and accrued interest be released immediately. The defendant sought permission to appeal that payment direction. The central issue was whether the funds should be released before the preliminary issue was decided.

1. Application adjourned. Dyson LJ adjourned the application for permission to appeal, with no order as to costs. The court did not finally determine whether permission should be granted.
2. Funds to remain preserved. On the material available, it was not right to require the solicitors to release half the proceeds before judgment on the preliminary issue. If the transfer was genuine, the applicant would be entitled to all the proceeds, as the defendant accepted. If the transfer was forged, entitlement would depend on the April 1996 agreement and whether its condition had been breached. The court was not then able to assess the strength of that alternative case.
3. Conditional restoration. If the defendant failed on the preliminary issue, he accepted that no appeal concerning release of the proceeds would arise. If he succeeded, the permission application was to be restored for further argument, preferably before Dyson LJ, and on notice to the applicant so that the court could receive further assistance.

• Court of Appeal (Civil Division): The application for permission to appeal was adjourned conditionally. It was to be restored if the defendant succeeded on the preliminary issue. There was no order as to costs.
• High Court (Chancery Division): On 20 May 2002, Lightman J ordered a trial of whether the defendant had signed the transfer and directed the immediate release of half the proceeds and accrued interest.