Chasewood Park Residents Ltd v Kim & Anor

A court should not summarily strike out a defence where the pleaded case discloses an arguable defence and the issues require findings of fact. Questions of reliance, estoppel and the reasonableness of service charges may require a trial with evidence and, where necessary, cross-examination. A landlord claiming ground rent under a long lease must plead and prove compliance with section 166 of the Commonhold and Leasehold Reform Act 2002. A judge must give sufficient reasons to make the decision and any appeal intelligible. Where reasons are wholly unclear, the decision may be set aside.

The defendants appealed from an order of the Willesden County Court awarding the claimant landlord arrears of ground rent and service charges. The county court had effectively struck out the defence under CPR rule 3.4(2)(a), without a formal judgment, oral evidence, cross-examination or determination of the counterclaim.

The defendants challenged the treatment of their estoppel defence, their challenge to the reasonableness of service charges, and the failure to consider section 166 of the Commonhold and Leasehold Reform Act 2002. They also alleged procedural unfairness and failure to give reasons. The central issues were whether the defences disclosed reasonable grounds and whether the disputed factual matters could properly be resolved summarily.

1. Appeal allowed. The county court order was set aside and the matter was remitted to the Willesden County Court for trial before a different judge. The outstanding counterclaim also required determination.
2. A judge must give reasons which identify the principles applied and explain why the decision was reached. Reasons enable meaningful appellate review, demonstrate that justice has been done and provide judicial discipline. The absence of a formal judgment was not itself decisive, but the reasons here could not be reliably extracted from the transcript. The decision was therefore not capable of meaningful review: [2000] 1 WLR 377; [2002] EWCA Civ 605; [2002] 1 WLR 2409.
3. Under CPR rule 3.4(2)(a), the question is whether the statement of case discloses reasonable grounds for bringing or defending the claim. The pleaded estoppel case was proper on its face. Whether the claimant had adopted the representation and whether the defendants relied upon it were factual issues requiring a trial. They could not be resolved summarily.
4. The defendants’ pleaded complaints about poor maintenance and lack of consultation provided arguable grounds for challenging service-charge expenditure. In addition, the claimant had expressly required proof of the reasonableness of each element of the charges. Conflicting witness evidence meant that cross-examination and findings of fact were required. The claim could not properly be struck out.
5. Section 166 of the Commonhold and Leasehold Reform Act 2002 makes compliance with the statutory notice requirements a condition of liability for ground rent under a long lease. The landlord claiming unpaid rent must plead and prove compliance. The issue could be dealt with at the remitted trial.
6. Although the Leasehold Valuation Tribunal appeared the more appropriate tribunal for the service-charge dispute, the procedural history and proportionality considerations justified remitting the whole matter to the county court.

• High Court (Chancery Division): appeal allowed; the order of the Willesden County Court dated 8 October 2009 was set aside and the matter remitted for trial before a different judge.
• Willesden County Court: judgment was entered for the claimant for arrears and interest, with payment out and costs orders. The defendants’ defence was effectively struck out under CPR rule 3.4(2)(a), without a formal judgment or determination of the counterclaim.