Practice and procedure – Strike out – Pleading – Claimants alleging common intention of parties that claimants occupy premises for use as medical surgery for 15 years – Claimant seeking specific performance of alleged agreement – Defendant applying to strike out claim – Whether claim should have been made in earlier proceedings – Application granted
The defendant and her husband brought an action for possession and arrears of rent in respect of 105 Calcutta Road, Tilbury, Essex. By a lease dated 15 April 2016, the property was let by the defendant to the claimants for a term of four years, with an initial rent review on 1 April 2020.
The claimants counterclaimed a beneficial interest in adjoining land purchased in the name of the defendant and her husband to construct an extension from which the claimants carried on a medical practice in partnership. They relied on the creation of a resulting or constructive trust or proprietary estoppel. At a trial of the action, the recorder decided that the claimants’ lease did not extend to the adjoining land, they were in arrears and the lease should be forfeited. Moreover, the claimants had no interest in the adjoining land.
The High Court allowed the claimants’ appeal in respect of relief from forfeiture but otherwise upheld the recorder’s decision: [2021] EWHC 2960 (Ch).
The claimants then brought fresh proceedings against the defendant alone averring that there was a common intention and agreement of the parties that the new premises would be occupied by the partners of the medical centre for the purposes of carrying on the business of providing of medical services to the local community for a term of no less than 15 years.
The relief sought included specific performance of the alleged agreement and/or a lease for not less than 15 years. The defendant applied to strike out the new proceedings on the ground that the claim now made could and should have been made in the earlier proceedings (Henderson v Henderson abuse).
Held: The application was granted.
(1) The first principle was that once a cause of action had been held to exist or not to exist, that outcome might not be challenged by either party in subsequent proceedings (cause of action estoppel). Even where the cause of action was not the same in the later action as it was in the earlier one, some issue which was necessarily common to both was decided on the earlier occasion and was binding on the parties (issue estoppel)
In Henderson v Henderson (1843) 3 Hare 100, the principle was formulated which precluded a party from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones: Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160 considered.
(2) The claimants were correct in saying that the relief now sought was a lease or licence for 15 years, whereas what was previously sought was an equitable interest in the freehold. However, the only difference was in the relief. The cause of action remained the same. If the court found that a proprietary estoppel had been established, it had a broad discretion as to what remedy to award, often described as being the minimum equity necessary to do justice. If the recorder had found that the basis of a proprietary estoppel had been established, it would have been open to him to award a lease or licence for 15 years, even though what was sought was a freehold interest. Accordingly, the defendant had established a cause of action estoppel.
Further, the facts found by the recorder were inconsistent with both the representation and the detrimental reliance that would be required in order to establish a proprietary estoppel. The new proceedings therefore depended upon alleging facts which were contrary to the recorder’s express findings of fact. That was sufficient to establish an issue estoppel.
(3) Before the recorder, the claimants claimed a beneficial interest in the adjoining land. They also claimed that it was part of their lease of No 105. Both arguments were rejected. It followed that they had no right to possession. The recorder was therefore entitled to make an order for possession, at least in relation to the adjoining land. In any event, even if he was not so entitled, the way to object would have been to appeal on the ground that the recorder had exceeded his jurisdiction by ordering possession of the adjoining land. However, they did not appeal on that ground and could not now claim relief which was inconsistent with the recorder’s order insofar as it was upheld on appeal.
It followed that Henderson v Henderson was not relevant, because the issue now in dispute was raised before the recorder. But even if that was wrong, the issue could and should have been raised before the recorder, because it arose between the parties to the earlier proceedings, it arose out of the same facts and it was simply another route to resisting eviction from the adjoining land.
(4) The claimants relied on the speech of Lord Bingham in Johnson v Gore Wood [2002] 2 AC 1; [2000] PLSCS 292, in which he referred to Henderson v Henderson as a broad merits-based principle. However, the injustice or hardship which the claimants said would result from applying the principle was not sufficiently connected with the grounds on which defendant relied on the principle. Lord Bingham’s words were not an invitation to the court to take account of unrelated hardships and injustices. In that sense the position was analogous to the “clean hands” doctrine in equity, which was sometimes sought to be invoked unsuccessfully where the uncleanness of the hands had no connection with the equity relied on.
(5) There was no objection based on res judicata or Henderson v Henderson abuse which prevented a claim against the defendant and her husband in relation to the moneys which the claimants claimed to have put into the extension (provided it was not alleged on grounds which were inconsistent with the recorder’s judgment) or the issue whether they were entitled to an indemnity from the defendants in relation to any moneys repayable to NHS England which had agreed to provide two thirds of the cost of building the extension. Accordingly, the proceedings would be struck out.
Oluwaseyi Ojo (solicitor advocate, of Taylor Wood Solicitors) appeared for the claimants. David Warner (instructed by Rainer Hughes Solicitors, of Brentwood) appeared for the defendant.
Eileen O’Grady, barrister
