Landlord and tenant – Leasehold enfranchisement – Disclosure of documents – Respondent applying to exercise right of collective enfranchisement – Appellant landlord resisting application – Appellant failing to comply with court order concerning disclosure of documents – Court refusing relief from sanctions and declaring in favour of respondents – Appellant appealing – Whether judge wrongly refusing relief from sanction and incorrectly exercising discretion – Appeal dismissed
The respondent was a company set up by the tenants of premises at 1 Palace Gate, London W8 as a vehicle to acquire the freehold of the property. The appellant was the freeholder, a company incorporated in the Isle of Man.
In September 2020, the respondent served a notice under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993, seeking to exercise the tenants’ right of collective enfranchisement under that Act.
An issue arose whether it had a right of enfranchisement which depended on the status of flat 6 in the property. The key question was whether, at the date of the respondent’s notice, flat 6 was used for residential or for commercial purposes. The appellant argued that flat 6 was an office, not an apartment. The was no right of collective enfranchisement if more than 25% of the space in the premises was used for commercial (rather than residential) purposes.
The appellant failed to comply with a court order relating to disclosure of documents which provided that, in the event of such failure by a specified date, its defence would be automatically struck out.
The judge refused the appellant’s application for relief from sanctions and made a declaration in favour of the respondent to the effect that its owners (all the tenants of the premises) were entitled to exercise their right of collective enfranchisement. The appellant appealed.
Held: The appeal was dismissed.
(1) The nub of the appellant’s argument was that the judge wrongly exercised his discretion in considering the third stage of the test in Denton v TH White [2014] EWCA Civ. 906 (requiring the court to consider all the circumstances of the case). It said that the declaration the respondent was seeking, without a trial, was draconian and disproportionate, given that the appellant’s failures were procedural only, and given that the judge had other, less draconian options available to him which he did not, or did not adequately, consider.
An appeal court would be very slow to interfere with an exercise of discretion, particularly in the context of case management by the court below. It had to be shown that the judge misdirected himself on the law, or took into account irrelevant factors, or overlooked relevant factors, or that his decision was so extreme that it fell outside the generous ambit within which reasonable disagreement was possible, such that it was perverse: Piglowska v Piglowski [1999] 1 WLR 1360 considered.
(2) The judge’s overall findings were not unfair or unwarranted given the procedural background which he set out in detail. The process for standard disclosure required the appellant itself to describe what searches it had undertaken, in particular for electronic documents; but it had singularly failed to say what it had done, save for a perfunctory description.
The appellant’s position remained that it had complied with its duty to conduct a reasonable search, but without explaining why it maintained that was the case, in circumstances where further documents produced before the hearing and obtained by the respondents suggested strongly it had not.
(3) This was not a case in which relevant matters were overlooked, or irrelevant matters taken into account. What was really being said was that the option the judge chose was one that no reasonable decision-maker could have settled on.
It had to be shown that no reasonable person could have made the decision which was in fact made. It was of the essence of a judicial discretion that, on the same evidence, two different minds might reach widely different decisions without either being appealable. It was only where the decision exceeded the generous ambit within which reasonable disagreement was possible, and was, in fact, plainly wrong, that an appellate body was entitled to intervene: Piglowska and Bellenden v Satterthwaite [1948] 1 All ER 343 considered.
The judge’s decision did not exceed the generous ambit within which reasonable disagreement was possible. Others might have responded differently, but it was impossible to say that the judge’s decision to refuse relief from sanctions was plainly wrong and effectively perverse.
(4) The judge was entitled to come to the decision he did. His response was not so disproportionate or unfair that it could be described as plainly wrong or unprincipled. The judge was justified in finding that the defaults were serious. The relationship between the defaults in question and the sanction was proportionate. The court’s disclosure orders had been made precisely to ensure that the appellant’s defence was advanced fairly by means of the respondent having access to all relevant documents on the single disputed issue; that not having been achieved, it was a proportionate response to debar the appellant from defending itself.
The judge correctly placed particular weight on the two factors specifically referenced in CPR 3.9, namely, the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance with rules, practice directions and orders. The judge was effectively saying that other available responses would have increased costs and led to further delay and would have attached insufficient weight to the fact that the appellant’s predicament only arose because of its own defaults. It was irrelevant that others might have taken a different view because the judge was entitled to take the view he did.
(5) The court had a discretion to allow amendments to an appellant’s notice out of time, but needed to consider a number of factors before doing so, including whether there was a real prospect of the amendment succeeding, the lateness of the application, the reasons for the lateness, the earlier history and the effect of the application on the litigants and the litigation generally: Lighting and Lamps UK Ltd v Clarke [2016] EWCA Civ 5 considered.
Here, a proposed further ground of appeal came very late and, when properly considered, it had no real prospect of success. The judge was seised of the appellant’s application and considered that, in the absence of any positive defence at trial, the declaration was one he could properly make. He was entitled to take that view on the evidence before him, albeit that that evidence was somewhat equivocal.
David Berkley KC (instructed by Hill Dickinson LLP) appeared for the appellant; Rupert Cohen (instructed by Northover Ltd) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Winchester Park Ltd v 1 Palace Gate Freehold Ltd
