Forcelux Ltd v Binnie
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warren,Lord Justice Jacob,Lord Justice Ward |
| Judgment Date | 21 October 2009 |
| Neutral Citation | [2009] EWCA Civ 1077,[2009] EWCA Civ 854 |
| Docket Number | Case No: B5/2008/2917 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 October 2009 |
[2009] EWCA Civ 1077
Before: Lord Justice Ward
Lord Justice Jacob and
Mr Justice Warren
Case No: B5/2008/2917
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NOTTINGHAM COUNTY COURT
HER HONOUR JUDGE HAMPTON
7LN1909
Mr Richard Hayes (instructed by Messrs Barnes & Taylor) for the Appellant
Mr Mark Diggle (instructed by Messrs Langleys) for the Respondent
Supplemental Judgment without hearing
Mr Justice Warren:
Following the handing-down of the judgments, to the parties in draft in July, we were asked not to make a formal hand down then because it might prejudice an application for permission to appeal to the Supreme Court if we ourselves refused such permission. We acceded to that request and the parties were directed to provide written submissions with regard to the form of order. This they have now done. So this judgment is being handed down immediately following our judgment on the main appeal.
Costs
In order to deal with the costs of the appeal (including the costs of the Respondent's notice), it is necessary to look at when various different points were taken. Before I do that, I must mention that Forcelux now relies on the provisions of the Lease as entitling it, as a matter of contract, to its costs of the appeal as well as the costs before DJ Hudson and HH Judge Hampton. Mr Hayes accepts that the court has a discretion to make an order which departs from the contractual position, but submits that the contractual provision remains a very important factor in the exercise of that discretion.
The Lease contains a covenant by Mr Binnie in the following terms:
“To pay all costs charges and expenses (including legal costs and also charges payable to a Surveyor) which may be incurred by the Lessor or in contemplation of any application to the Lessor for any consent pursuant the covenants herein contained and of any steps or proceedings or the service of any notice under Sections 146 or 147 of the Law of Property Act 1925 including the reasonable costs charges and expenses aforesaid of and incidental to the inspection of the Demised Premises the drawing up of schedules of dilapidations and notices and any inspection to ascertain whether any notice has been complied with and such costs charges and expenses shall be paid whether or not any right of re-entry or forfeiture has been waived by the Lessor or avoided otherwise than by relief granted by the Court”
Mr Hayes submits that, as a matter of construction, this provision entitles Forcelux to its costs of the entirety of the proceedings both below and in this court. The important words are “all costs charges and expenses (including legal costs…..) which may be incurred by the Lessor in or in contemplation ……of any steps or proceedings….under sections 146 or 147 …..”.
The Court of Appeal in Fairview Investments Ltd v Sharma CA (unreported 14 October 1999) was concerned with a covenant in a lease very similar to the one in the present case. The lessor covenanted to pay all expenses “under section 146 of the Law of Property Act 1925 or incurred in contemplation of or in proceedings under sections 146 or 147 of that Act….”. Chadwick LJ (with whom Thorpe LJ agreed) saw the covenant as dealing with the three distinct phases for which, according to him, sections 146(1) and (2) provide. Thus it required the lessee to pay (1) the lessor's costs in relation to the preparation and service of a section 146 notice (2) the costs incurred by the lessor after notice and in contemplation of proceedings to enforce the right of re-entry (i.e. contemplated possession proceedings) and (3) the costs of proceedings actually commenced (i.e. actual possession proceedings). Section 146, however, is concerned with forfeiture and relief from forfeiture: proceedings for possession are not brought pursuant to an authority conferred by section 146 although frequently they are brought in order to enforce a right of forfeiture (rather than by effecting actual re-entry which would not, in any case, be permissible in relation to an occupied residential property).
Although he does not expressly say so, Chadwick LJ must have regarded possession proceedings brought to enforce a right of re-entry following a notice under section 146(1) as proceedings “under” section 146. I would respectfully agree given the terms of section 146(2) which clearly contemplate the enforcement of a right or re-entry “by action or otherwise”. It makes perfect sense to regard the action (i.e. an action for possession) as proceedings “under” section 146 in the sense that they are the very proceedings within the contemplation of the section. Similarly in the present case, the possession action is within the scope of the words “any steps or proceedings” within the scope of the covenant. It follows that the application to set-aside the possession order, as much as the application for relief from forfeiture coupled with it, is also within the scope of those words.
When setting aside the order for possession and granting relief from forfeiture, DJ Hudson dealt with the costs. It was not suggested on that occasion that Mr Binnie had covenanted to pay any part of the costs. DJ Hudson did not therefore address the issue. In fact he made a split order, giving Forcelux its costs to 25 June 2008 but not thereafter. This was to reflect the fact that Mr Binnie had produced evidence prior to that to indicate that funds were available; one can see from DJ Hudson's judgment that he regarded Forcelux's behaviour after that to have been wrong and his costs order was clearly intended to reflect that behaviour.
DJ Hudson dealt with the substance of the set-aside application on the basis of CPR 39.3. The meaning of “trial” was not an issue before him. When the matter came before HH Judge Hampton, the meaning of “trial” was an issue. It was formally raised in Mr Binnie's Respondent's notice filed 26 August 2008 although it had been adumbrated a few days earlier in Mr Diggle's skeleton argument for the appeal from DJ Hudson (which took place before HH Judge Hampton on 18 September 2008). HH Judge Hampton, it will be remembered, dismissed the appeal from DJ Hudson. She decided that there had been no “trial”. She did not herself exercise any discretion as I have explained in my judgment on the appeal. In relation to costs, it was again not suggested that Forcelux had a contractual right to its costs. The judge ordered Forcelux to pay Mr Binnie's costs of the appeal save that she ordered there be no costs of (i) Mr Binnie's application for permission to file a Respondent's notice and (ii) the costs of a hearing on 13 November 2008 (about which I know nothing).
The judgment of this court was that HH Judge Hampton was correct in holding that there was no “trial”. We went on to exercise the discretion to set aside the possession order in favour of Mr Binnie and formally to dismiss the appeal. Forcelux's Appellant's notice seeks an order setting aside the whole of HH Judge Hampton's order including the costs order which she made. It sought substitution of an order (1) allowing the appeal from DJ Hudson's order setting aside the possession order and granting relief from forfeiture (2) dismissal of Mr Binnie's application to set-aside the order and relief from forfeiture (3) an order that Mr Binnie pay the costs of that application and of the appeal to HH Judge Hampton. The contractual point about costs was not raised before us on the appeal; it did not feature in the grounds of appeal or in Mr Hayes' skeleton argument. It has surfaced for the first time in relation to the consequential directions which are sought following the judgments of this court.
It will be apparent from the main judgment that all of the members of this court are doubtful that Mr Binnie acted promptly for the purposes of that rule and my own judgment proceeded on the basis that he was not, without actually deciding the point. We accordingly reached a decision in favour of Mr Binnie on different grounds from DJ Hudson and on grounds which were not argued before him and which had not even been raised between the parties.
Mr Hayes now submits that we should give effect to what he says are Forcelux's contractual rights under the Lease and award it the whole of the costs of the appeal and of the proceedings below notwithstanding (a) that the contractual point was not raised below or before us on the appeal (b) that costs orders were made below including the one made by DJ Hudson which deprived Forcelux of an element of its costs and (c) that the appeal failed on both the “trial” point and the issue of the exercise of discretion.
As I have said he accepts the jurisdiction of the court to make a different order notwithstanding the contractual position as he states it, but submits that the general principle is that the discretion should be exercised in line with the contract. He relies on Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] CH 171 (a mortgage case) and Church Commissioners for England v Ibrahim [1997] 1 EGLR 13 (a lease case) to demonstrate that principle. I do not dissent in any way from the proposition that the general principle is as he states. But the general principle is not a rule of law and it may well be that in a particular case, or even in a class of case, the court's discretion should be used to override the contractual right.
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