Thomas v Smalling

Permission to appeal a possession and money judgment should be refused where the first-instance judge properly applied the three-stage test in Denton v TH White Ltd to serious procedural defaults, found no good reason for them, and gave appropriate weight to trial urgency and the interests of other court users.

An appellate court should not interfere lightly with robust case-management decisions unless there is an error of principle, a material omission or an obviously untenable balancing exercise. A signed declaration concerning beneficial interests will generally be decisive when it forms part of the transaction documentation. An arrangement giving a person a contractual right to purchase property at a discount does not itself confer a beneficial interest. Whether documents are shams depends on the parties’ actual intended legal rights and obligations.

The appellant sought permission to appeal orders made by His Honour Judge Luba QC in the County Court at Central London. The underlying claim concerned possession of a property occupied by the appellant, rent arrears, and a counterclaim asserting that the respondent held the property on trust for the appellant.

The County Court refused relief from sanctions, permission to amend the defence and counterclaim, and an adjournment. It ordered possession, entered judgment for rent arrears, and dismissed the counterclaim. The appellant challenged the procedural decisions and the findings that a gifted deposit declaration and an assured shorthold tenancy were genuine documents rather than shams. The central questions were whether the judge had erred in applying the procedural rules and whether his factual and beneficial-interest findings were open to him.

1. Permission refused. None of the proposed grounds had a real prospect of success.
2. The first-instance judge was entitled to find that the failures to serve disclosure and witness statements were serious and significant. The appellant provided no good reason for the default. The absence of a proper explanation for the period before new solicitors were instructed, and the continuing failure to disclose documents, supported that conclusion.
3. The judge properly applied the third stage of Denton v TH White Ltd [2014] EWCA 906. The evidence sought to be introduced was not ready, so granting relief would have required an adjournment. The urgency of the trial, the appellant’s failure to expedite her application, the interests of other court users and the impact on the defence were all relevant considerations. The balancing exercise was not obviously untenable.
4. The approach was consistent with Clearway Drainage Systems Ltd v Miles Smith Limited [2016] EWCA Civ 1258 at paragraph 68. An appellate court should not lightly interfere with a case-management decision merely because another judge might have assigned different weight to the factors.
5. The judge was entitled to reject the sham arguments. Applying the concept described in Snook v London and West Riding Investments [1967] 2 QB 786, the evidence supported the conclusion that the documents reflected the parties’ intended legal rights and obligations. The inaccuracies in the gifted deposit declaration did not require a finding that it was a sham.
6. The gifted deposit declaration fell within the category of a written declaration concerning beneficial interests described in Gany Holdings (PTC) SA v Khan [2018] UKPC 21 at [17], and was the kind of document that would generally be decisive. The appellant’s contractual right to acquire the property at a discount did not create a beneficial interest in the property itself.
7. The finding that the assured shorthold tenancy was genuine was a factual conclusion open to the judge. It could be challenged only if no reasonable judge could have reached it or it was clearly against the weight of the evidence. That threshold was not met.

• High Court (Chancery Division): permission to appeal the County Court orders was refused.
• County Court at Central London: His Honour Judge Luba QC refused relief from sanctions, permission to amend and an adjournment; ordered possession; entered judgment for rent arrears; and dismissed the counterclaim.