Practice and procedure – Possession order – Procedural irregularity – Possession claim allowed without full trial on ground that defendants’ pleadings disclosing no defence to claim – Whether procedural irregularity in judge reaching that decision without first hearing submissions from defendants – Whether necessary to remit case for trial to remedy irregularity – Appeal allowed – Case remitted for trial
The claimant brought proceedings against the defendants for possession of a property over which it held a legal charge as security for loans advanced to the first defendant, the legal owner of the property. By their defence, the defendants alleged the existence of an oral agreement under which the claimant had agreed not to demand payment of the loans while the first defendant sought to “trade out” of its existing debt by developing further properties with financial assistance from the claimant; alternatively, they argued that the claimant was estopped from demanding repayment by reason of representations in broadly similar terms to the alleged trade-out agreement.
On the hearing date, it became apparent that there would not be time to conduct the anticipated full trial of the claim. There were applications by the defendants to amend their defences so as to amplify the trade-out agreement and estoppel points, and the parties had agreed that if those amendments were allowed, the trial would have to be adjourned. The claimants argued that the trade-out agreement and estoppel points did not prevent the immediate grant of a possession order on a summary basis since they operated, if at all, not as a defence to the possession claim but only as a counterclaim sounding in damages. The county court judge heard some submissions from the defendants on their application to amend but these were cut short when he indicated that he was minded to allow the amendments. However, he later gave an extempore judgment in which he refused to grant an adjournment and proceeded to make a possession order on the ground that the amendments, even if made, provided the defendants with no defence to the possession claim.
The defendants appealed, primarily on the grounds of procedural irregularity; they contended that the judge, after dealing with the defendants’ applications, should either have adjourned the case for a full trial. They also sought to challenge the judge’s conclusion that their estoppel point was not arguable.
Held: The appeal was allowed.
There had been procedural irregularity in the way that the judge dealt with the case. The irregularity did not lie in the judge’s failure to proceed to a trial. The only claim before the court was the claimant’s claim for possession of the property. Both the legal charge and the alleged debt had been admitted so that, in the absence of a pleading that could amount to a defence, the claimant could obtain an order for possession without proving anything, simply by relying on the defendants’ admissions. There was nothing procedurally irregular about a trial judge, at the beginning of a trial, entertaining a submission that the defendants’ pleadings disclosed no defence to the claim, even if the claimant had made no formal application to strike out, if, on his pre-reading of the papers, it appeared to him that there was a properly arguable case for strike-out, which, if established, would save the parties further time and expense. However, before entertaining such an application, the judge had to be satisfied that the defendants had a fair opportunity to respond to it. The real procedural irregularity lay in the judge deciding to deal with the possession claim summarily, without a trial, without first inviting and hearing submissions on the question of whether the defendants’ pleadings, amended to the extent that he had permitted, disclosed any defence to that claim. Although there was no automatic right to a full trial of a case where it was alleged that the pleadings failed to disclose a triable issue, it was fundamentally unjust for a judge to conclude that a defence was defective without first inviting, hearing and considering argument from the defendants.
This was not a case where it would be appropriate to uphold the judge’s decision on the grounds that it was so obviously right that the remission of the case would serve no useful purpose, or where the claimant had a sufficiently overwhelming case that the pleaded defence was insufficient to warrant a trial. Moreover, a conclusion that the judge’s decision was right would not always prevent a serious procedural irregularity from amounting to an injustice. To deny to a party any opportunity of making submissions in support of its case was a fundamental denial of procedural justice in its own right, regardless of the consequences. Although there would be many cases where the absence of any adverse consequences flowing from a serious procedural irregularity would mean that any appeal based on that irregularity would fail, there was a residue of cases, of which the instant case was one, where the absence of consequences did not displace the injustice of the inappropriate treatment of the complaining party. The case would accordingly be remitted to the county court for trial, but with permission to the claimant to advance a claim for strike-out if so advised: Labrouche v Frey [2012] EWCA Civ 881; [2012] 1 WLR 3160 applied.
Ian Wilson (instructed by DLA Piper UK LLP, of Leeds) appeared for the claimant; Neil Mendoza (instructed by Blackstones Solicitors, of Northwood) appeared for the first and second defendants; Michael Paget (instructed by Saunders Law Ltd) appeared for the third and fifth defendants.
Sally Dobson, barrister
