Scribes West Ltd v Relsa Anstalt & Anor (No 2)

This matter was listed before us for a ruling on a jurisdictional issue.

The claimants, Scribes West Ltd, were the lessees of business premises on the ground floor and basement of the Barkers Centre, Kensington, pursuant to the terms of a lease dated 25^th January 1991 which was granted to them by House of Fraser plc. The first defendants Relsa Ansalt (whom I will call “RA”) were registered as the freehold proprietors of the premises on 10^th November 1993.

The claimants ceased trading on 1^st May 1997, being the day on which they were granted a licence to assign the lease to London Sportsman’s Club Limited (whom I will call “LSC”), and on which they also entered into a second charge over the leased premises to secure a loan they had made to LSC. In November 1999 the claimants entered into a voluntary arrangement with their creditors.

On 28^th February 2001 the defendants assigned their reversionary interest to Relsa Barkers Limited, (whom I will call “RB”), pursuant to the terms of a transfer document which was described as “TR1”. On the same day RB gave notice to LSC of the assignment and required them to pay the rent to them. On 16^th July 2001 RB peaceably re-entered the premises on the grounds of arrears of rent. On 25^th July 2001 RB granted a new lease of the premises to a company called Settle Up Limited (whom I will call “Settle Up”).

For the purposes of deciding the jurisdictional issue it is unnecessary to say any more about the facts. The present proceedings were commenced on 19^th December 2001 and were constituted as an action by the claimants against RA claiming relief from forfeiture. The claimants’ interest derived from their status as chargees of the valuable security constituted by the lease.

On 23rd February 2002 District Judge Madge allocated the action to the multi-track and joined Settle Up as second defendants.

On 19^th July 2002 the claimants made an application to amend their particulars of claim and to join a number of new parties to the proceedings. By the proposed amendment they also sought a declaration that RB’s peaceable re-entry was ineffective to forfeit the lease, as an alternative to their claim for relief from forfeiture. Their application notice contained an application for a “declaration that the proposed grant of a lease to the Second Defendant was ineffective or alternatively a declaration that the lease has not been forfeited, or that relief from forfeiture be granted.” It did not, however, comply with paragraph 2((2) of the Practice Direction to Part 24, although an accompanying witness statement indicated that it was intended to be an application for summary judgment. At all events RA did not recognise it as such, and did not file any evidence in response to it.

On 24^th March 2003 RA applied for an order striking out the claim, alternatively for summary judgment, on the grounds that the claimants’ claim – and their proposed amended claim - were misconceived. Their case was based on the contention that they had assigned the right to rent to RB who in turn were entitled to forfeit the lease pursuant to section 141(2) of the Law of Property Act 1925. They also contended that delay should prevent the claimants from obtaining relief from forfeiture. Alternatively they sought to strike out the claim on procedural grounds, but they did not pursue that part of their application before the judge.

On 7^th April 2003 District Judge Price directed that both sides’ applications should be listed for hearing before a circuit judge, together with another application which need not concern us. Although he directed a timetable for the service of the claimants’ evidence in response to RA’s application, he made no such direction in relation the claimants’ application. It was by this route that the two applications came to be decided by Judge Mayer, sitting for the purpose in the Barnet County Court.

The first day of the hearing, in which the claimants and RA were both represented by leading counsel, was on 28^th May 2003. The skeleton argument filed by RA’s leading counsel before the hearing betrayed no awareness that the claimants were seeking summary judgment on the prayer to their Amended Particulars of Claim at the same time as they were seeking permission to amend. The claimants’ wishes in this regard seem to have been clarified at the hearing on 28^th May, and in the interval between 28^th May and 2^nd July, when the hearing resumed, the claimants filed and served a second skeleton argument to which RA responded. This supplementary skeleton argument, which was said to be submitted on behalf of both RA and RB (even though RB was not a party to the action), contained in paragraph 2 the following statement:

The hearing then resumed on 2^nd July 2003 with nobody apparently paying much attention to procedural niceties. In much the same way as the claimants’ initial application had been ineptly drafted (I leave on one side the question whether a party can seek to amend its statement of case and seek summary judgment on the amended statement of case at one and the same time), nobody seems to have addressed the question whether RA was now accepting that the hearing included an application for summary judgment, or was acquiescing in an unformulated proposal that the judge was instead being invited to try an issue on the amended pleading pursuant to CPR 3.1 (2) (i) – or, possibly, CPR 3.1 (2) (m). But the judge could not do this unless she granted permission to amend, with the effect that the requested declaration would bind not only RB and RA but also the second defendants Settle Up; and also LSC and a Mr Lewis (who also had an interest as a chargee). We were told that LSC and Mr Lewis, who were among the parties whom the claimants sought to join to the proceedings, had written letters to the court (or to the parties?), but we were not shown those letters, and the court certainly had no power to make a declaration which could bind them in respect of their interests without them first being formally joined to the proceedings and being given notice of the declaration it was sought to make. Settle Up were trading from the premises under the new lease which had been granted to them by RB in July 2001, and they had instructed a solicitor to look after their interests in court, although he did not play an active part in the proceedings.

On 26^th August 2003 the judge delivered a reserved judgment. Its opening paragraph was in these terms:

In paragraphs 3-19 she set out a chronology of events. In paragraph 14 she described the claimants’ application dated 19^th July 2002 as including an application for summary judgment on a declaration that the lease was extant. The rest of this narrative betrayed no understanding that she was deciding a preliminary issue in the action. Paragraphs 20-50 contained the judge’s analysis of the interesting legal issues in the case (which had warranted the retention of leading counsel on both sides). She made it clear that she preferred the defendant’s submissions. Her judgment ended in this way:

On 17^th September, after considering the parties’ submissions, she decided to direct that the claim should be struck out after all. She gave her reasons for taking that course, and said that she had concluded that the correct course was to strike out the entirety of the present proceedings.

In the meantime the claimants had filed a notice of appeal at the Civil Appeals Office, and on 24^th November 2003 Chadwick LJ granted permission to appeal, saying that he was persuaded that the points raised in the appellant’s skeleton argument were of sufficient general importance to require consideration by the Court of Appeal. The Civil Appeals Office then raised a query as to whether the Court of Appeal had jurisdiction to hear the appeal, in the light of what the judge had said at the end of her judgment.

There was then a further short hearing before Judge Mayer, who declined to amend her order. She said that on the face of her order this was not a final decision because it arose out of applications for summary judgment and striking out. Although she had been invited to add a declaration by way of amendment to her order, she was persuaded that this was inappropriate since this would affect parties who were not present at the hearings. She made it clear that at all times she intended to decide the issue of whether the lease was validly forfeit by RB by virtue of their standing, and she hoped that this was clear from her judgment. The other matters, she said, were consequential on this point.

In these circumstances the claimants contend, for reasons which I will explain, that the appeal properly lay to the Court of Appeal. Alternatively they wish to invite the High Court and/or the Court of Appeal to “leap-frog” the High Court pursuant to the jurisdiction conferred by CPR 52.14. The first defendants for their part contend that appeal lies to the High Court, and that it should stay there on the grounds that the principal point raised by the appeal is a small (albeit interesting) point of construction on a statute passed some 79 years ago, and that this certainly does not justify a departure from the normal route of appeal.

It is disappointing that difficulties are still arising in relation to the interpretation and/or implementation of the provisions of the Access to Justice Act 1999 (Destination of Appeals) Order 2000 (“the Destination Order”). The relevant provisions of this Order read as follows:

So far as the language of Article 1(2)(c) is concerned, the draftsman of the Order decided to adopt the language of RSC O59 r1A, which came into effect pursuant to the Rules of the Supreme Court (Amendment Rules) 1993, in an attempt to bring to an end the uncertainty created by the former rules which simply referred to interlocutory and final orders and left it to the judges to determine how to categorise a particular order. RSC O59 r1A(3) and (4) provided that:

I explained the effect of the Destination Order in my judgment in Tanfern Ltd v Cameron-Macdonald [2001] 1 WLR 1311 in these terms:

I returned to this topic in Lloyd Jones v T-Mobile Ltd [2003] EWCA Civ 1162; [2003] EGLR 55, in a judgment which I hoped would receive wider publicity because difficulties were continuing to be experienced over the effect of this part of the Destination Order. This was a case involving the trial of a preliminary issue, in which experienced City solicitors wrongly believed that appeal lay to the High Court. After going over the ground I have just covered, I said:

Before applying the Destination Order to the facts of the present case I must give a strong warning that nothing will be gained under the CPR regime by a return to the old case-law when this court was having to decide, without statutory guidelines, whether an order was an interlocutory order within the meaning of the former rule. In Salter Rex v Ghosh [1971] 2 QB 597, 601 Lord Denning MR said:

In White v Brunton [1984] QB 570, 574 Sir John Donaldson MR observed:

In Holmes v Bangladesh Binan Corporation [1988] 2 Lloyd’s Rep 120, an appeal from a judge’s order deciding a preliminary issue of law in a Fatal Accidents Act case (which would be readily categorised as a “final decision” under the modern Destination Order), Bingham LJ was constrained to say, in the absence of any assistance contained in the pre-1993 rules:

I am mentioning the difference between the old judge-made caselaw and the code contained in the Destination Order because by what Waller LJ said in Roerig v Valiant Traders Ltd [2002] EWCA Civ 21; [2002] 1 WLR 2304 he might have tempted practitioners to go back to the old case-law. In that case he said at p 2320 that it seemed to him that what the present rules in fact reflected, in relation to treating a decision as final where it was made at the conclusion of the hearing of a preliminary issue, what Bingham LJ said in this passage in his judgment in Holmes. It would be very much safer, in my judgment, for practitioners and judges to put Holmes behind them and stick to the language of the Destination Order and the interpretation given to it in my judgments in Tanfern and Lloyd Jones v T-Mobile. See also Clark v Perks [2001] 1 WLR 17 at para 54.

By the time all the relevant cases had been identified and were before the court it became obvious that the answer to the question about the destination of this appeal was readily obtainable once it was ascertained what decision the judge had in fact made. Mr Weekes, for the claimants, maintained that her decision should be interpreted as if she had granted the amendments his clients sought, had directed the trial of a preliminary issue as to whether RB had been entitled to forfeit the lease, and had then made a declaration to the effect that it was so entitled. In that case appeal would have lain to this court from a final decision on a preliminary issue in the multi-track.

Mr Bruce, for the defendants, maintained on the other hand that the judge had made a favourable decision on his clients’ application that the claim should be struck out. In that case appeal lay to a High Court judge because a striking order is not a final decision. The judge’s reasoning had included her finding that RA had successfully assigned to RB the right to re-enter in the event of the tenant’s failure to pay the rent reserved by the lease, but her decision was that the present action should be struck out. Even if an order had been drawn up describing the fate of the claimants’ application, it would have been drawn up to the effect that the court had dismissed their applications to amend and to join new parties, and had also dismissed their application for summary judgment (given that the amendments were refused and the judge was in any event not disposed to grant the declaration sought). In that event, too, appeal would have lain to a High Court judge.

I can understand why the claimants are seeking to draw out of RA’s supplementary skeleton argument (in which RB curiously joined: for this skeleton argument see para 10 above) a willingness on their part to invite the judge to make a final determination of the legal issue at the heart of this dispute, and why they are seeking to interpret what happened when the hearing resumed on 2^nd July as if the matter had proceeded along those lines. But nobody seems to have articulated this clearly to the judge, and as she was to observe the following February, the other parties (RB, LSC and Mr Lewis) would have had to be formally joined in order for any declaratory order to be binding on them.

The judges of this court (and the staff at the Civil Appeals Office) have to interpret the order of the lower court as we find it. The relevant decision (see para 18 above) is the court’s order, and the Destination Order determines where appeal should lie from that order. If the parties (or one of them) believe that the order has not been drawn up correctly, then the correct procedure is to ascertain whether the lower court is willing to amend its order under the slip rule (and on the present occasion Judge Mayer was not willing to make any such amendment). If that party is disappointed by the lower court’s response then this may be one of the complaints it may make on its appeal to the appeal court, but the appeal court must be the one that is readily ascertainable from the face of the court’s order, and not one which would or might have been ascertainable if the judge had made a different order. It would be intolerable if appeal courts had to be subjected to a complicated examination of the types of order that might have been made if the parties had dealt with things differently in the lower court, merely for the purpose of determining whether they possess jurisdiction. The destination of the appeal should be ascertainable from the language of the order.

In case he failed on that point, Mr Bruce had another reason for submitting that any appeal from this order did not lie to the Court of Appeal, He argued that a claim issued on Form N5A under CPR Part 55 (see CPR 55.3, the Practice Direction to Part 55, para 1.5 and the Table in the Practice Direction to Part 4) is not “a claim made under Part 7 of the Civil Procedure Rules within the meaning of Article 4 of the Destination Order”.

The present language of Article 4 was introduced by the Civil Procedure (Modification of Enactments) Order 2003. Before this order came into effect, Article 4 was in these terms:

Until the change made to Article 4 of the Destination Order in 2003, a Part 55 claim allocated to the multi-track pursuant to CPR 55.9 was not covered by the language of that article, and the purpose of the amendment was evidently to introduce a much more straightforward regime. The guidelines are set out in the third section of the Practice Direction to Part 7:

Claim Form N5A, the form required to be used in claims for relief from forfeiture, does not state that the claim is proceeding under Part 8. The claim therefore is a claim proceeding under CPR Part 7 and falls within the language of the new Article 4 of the Destination Order. I therefore reject Mr Bruce’s alternative submission.

For these reasons I consider that on the proper interpretation of the Destination Order, appeal from Judge Mayer’s order lies to a High Court judge. Whether it is appropriate to transfer the appeal from the High Court to this court is a different issue, which I will determine as a High Court judge when I have had the opportunity of considering any further submissions which I invited the parties to send to the court once they had had the opportunity of considering this judgment in draft.

I agree.

I also agree.