Szeto v Workman Llp

On an application for permission to appeal, the Court of Appeal will not reopen accepted factual findings unless they are strikingly wrong. It examines whether an error of law or procedural mishap warrants intervention. A tenant who pays rent due under a lease to the landlord’s managing agent cannot recover it merely because he later misunderstands the legal effect of a Law of Property Act section 146 notice or the identity of a connected group company. Service of such a notice does not prevent acceptance of rent, although acceptance may waive the breach. Where the tenant knows the agent acts for the direct landlord, uncertainty about the precise group company does not create agency for an undisclosed principal.

The claimant was the tenant under an underlease of commercial premises. He paid £6,990 in rent arrears in cash to the respondent managing agents, who remitted the money to the landlord. About six years later, he sued the agents for repayment, arguing that they had ceased to be agents and that the payment involved an undisclosed principal and a legal mistake.

District Judge Philips struck out the claim. HHJ McKenna dismissed the claimant’s appeal. Moore-Bick LJ refused permission to appeal on the papers. The claimant renewed his application orally before Jackson LJ. The central issues were whether the factual findings could be reopened, whether the payment was recoverable, and whether the circumstances involved agency for an undisclosed principal.

The application for permission to appeal was refused. There was no realistic prospect of success and no basis for a second appeal.

1. Appellate review. The Court of Appeal does not retry factual disputes determined by the lower courts. It considers whether findings are strikingly wrong or whether an error of law or procedural mishap justifies intervention. The findings that Workman LLP remained managing agents when the payment was made could not be challenged in this application.
2. Effect of a section 146 notice. Service of a section 146 notice does not prevent the landlord from accepting rent. A landlord may decline payment because acceptance can amount to waiver of the breach and affect the available remedies. That tactical consideration did not make the payment recoverable.
3. Mistake. The claimant was under contractual obligations to pay rent, and the arrears were due. Even assuming that he paid under a mistaken view of his legal position, a mistake of law of that kind did not entitle him to recover the payment from the payee. The payment was not made under a mistake of fact.
4. Undisclosed principal. The claimant knew that the managing agents were acting for the underlessor, namely his direct landlord. A possible mistake as to which closely connected company in the Quintain group owned the property did not create a genuine case of agency for an undisclosed principal. The agents had received the rent in that capacity and had passed it to the landlord.
5. The lower courts’ decisions disclosed no appealable error. Permission to appeal was therefore refused.

• Court of Appeal (Civil Division): Jackson LJ refused the renewed oral application for permission to appeal. Moore-Bick LJ had previously refused permission on the papers.
• Birmingham Civil Justice Centre: HHJ McKenna dismissed the claimant’s appeal from the strike-out decision.
• Birmingham County Court: District Judge Philips struck out the claim as disclosing no reasonable grounds for bringing it.