Gibbs v Lakeside Developments Ltd

A court order remains binding and effective until it is set aside. An act authorised by the order is lawful and cannot support a claim in unjust enrichment while the order stands. Intervening third-party rights do not create an exception where the order can be set aside on terms preserving those rights.

Following peaceable re-entry for non-payment of rent, relief against forfeiture must be sought with reasonable promptitude. The equitable jurisdiction is not exercisable without regard to time. The statutory six-month period provides an important guide, although equity need not apply it with inflexible strictness.

A long residential lease was forfeited after the landlord obtained default judgments for arrears and possession. The proceedings had not been validly served. After taking possession, the landlord granted a new long lease to an innocent third party.

The former tenant initially applied to set aside the possession order and for relief against forfeiture, but the County Court held that she had abandoned that relief. Her substituted claim sought the proceeds of the new lease in unjust enrichment. The District Judge dismissed the claim, and the Circuit Judge dismissed her first appeal.

The central issue on the second appeal was whether unjust enrichment could be established without first setting aside the possession order, particularly where third-party rights had intervened.

1. The appeal was dismissed unanimously. A court order has the force of law and remains binding and effective until set aside. Conduct undertaken pursuant to it is necessarily lawful. Accordingly, money paid, property transferred or rights extinguished under an extant order cannot constitute an unjust enrichment merely because the order was liable to be set aside: Moses v Macferlan (1760) 2 Burrow 1005, De Medina v Grove (1846) 10 QB 152 and Blakey v Solicitors Regulation Authority [2014] EWHC 2168 (Admin) applied.

2. The suggested exception for intervening third-party rights was rejected. The possession order could have been set aside on terms preserving the new lessee’s title while confining the consequences to a financial remedy against the landlord. The former tenant therefore could not pursue unjust enrichment without first setting aside the order.

3. The possession proceedings had not themselves effected forfeiture because forfeiture by legal proceedings occurs upon service and the proceedings had not been served. The landlord’s later physical re-entry was nevertheless lawful. No person was residing in the flat, so section 2 of the Protection from Eviction Act 1977 did not prevent peaceable re-entry.

4. Setting aside the possession order would not have restored the lease. Relief against forfeiture was also required. Under section 138(9A) of the County Courts Act 1984, an application after the landlord recovered possession had to be made within six months. The tenant applied approximately 18 months later, when the County Court could no longer grant relief.

5. The High Court’s equitable jurisdiction after peaceable re-entry is not exercisable without temporal restraint. The statutory six-month period guides the requirement of reasonable promptitude, although equity may allow limited flexibility where strict application would defeat the statutory purpose. The suggestion in Billson v Residential Apartments Ltd [1992] 1 AC 494 that relief was available without limit of time was too broad. On the facts, reasonable promptitude had plainly expired. The unsatisfied default judgment for arrears provided a further insuperable obstacle to relief.

1. Court of Appeal (Civil Division): The second appeal was dismissed. The tenant could not recover in unjust enrichment without first setting aside the possession order, and setting it aside would not have enabled relief against forfeiture.
2. County Court at Central London, Circuit Judge: Judge Walden-Smith dismissed the first appeal from the District Judge. She upheld both the requirement that the possession order first be set aside and the finding that the tenant had abandoned that relief.
3. County Court at Central London, District Judge: District Judge Parfitt dismissed the unjust enrichment claim and held that the application to set aside the possession order had been abandoned.