Top 3 cases May 2024 03 June 2024
In this series of articles, we aim to highlight 3 of the most interesting cases in our field decided in the past month. This month: misrepresentations and the 1954 Act; permission to appeal against an arbitrator’s award; and the ‘but-for’ causation test.
Our readers may also be interested in other cases this month digested by our colleagues, in particular this summary of Shamsan v 44-49 Lowndes Square Management Co Ltd (regarding landlord’s liability for a concierge’s negligence) and this summary of Secretary of State for Levelling Up, Homes and Communities v Grey GR Limited Partnership, a claim for a remediation order under s.123 Building Safety Act 2022.
1. McDonald’s Restaurants Limited v Shirayama Shokusan Company Limited [2024] EWHC 1133 (Ch)
Summary
The High Court determined that a landlord had obtained termination of a tenancy under ground (g) of the Landlord and Tenant Act 1954 by the making of misrepresentations, and that it was liable to pay compensation, to be assessed in a separate trial, under s37A.
The landlord had successfully opposed the grant of a new tenancy on the basis that it intended to occupy the premises itself for the purposes of a Japanese bento restaurant. However, after judgment was handed down, the landlord did not open that restaurant; it suggested a variety of different possible restaurants it might open, and after some time, eventually opened a different scheme.
Edwin Johnson J found, having heard evidence from the decision-maker (who had also given evidence at the trial), that the landlord had deliberately misrepresented its intentions to the court rather than changing its mind after the judgment was made.
Why it’s important
There is little authority regarding s.37A of the 1954 Act (which provides for payment of compensation where possession is obtained by misrepresentation), and so this judgment will be required reading for any practitioner who may have to bring such a claim. In particular, this case establishes that while the court has to consider whether the misrepresentation was causative of the order being obtained, so it may be legitimate to consider what the position would have been if the misrepresentation had not been made, there was no requirement to show that an alternative case based on the true position would also have failed.
The decision will also be of relevance to anyone preparing evidence on behalf of a landlord seeking to rely on ground (g): the problem here was the landlord’s evidence suggested that its intention had crystallised into an intention to run a particular restaurant concept, when in reality this was not the case. Had the landlord’s evidence been broader, it might be that they would still have made out ground (g) without opening themselves up to a misrepresentation claim. In addition, the judgment contains food for thought in relation to the way undertakings to implement the asserted intention should be drafted: the judge held that a representation that the landlord intended to comply with the undertakings was implicit in them, which could found a s37A claim (as well, potentially, as putting the landlord in contempt of court if the undertakings were not complied with).
The case is also of relevance to the law of the tort of deceit; the judge rejected the claim in deceit on the basis that the tort does not accommodate a misrepresentation made to a third party (in this case, the court) and not relied upon by the claimant.
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2. Osler v Osler [2024] EWCA Civ 516
Summary
The Court of Appeal determined that it had no jurisdiction to grant permission to appeal against an arbitrator’s award; permission had to be sought from the High Court, and if it was refused, that was the end of the road.
An arbitrator made an award determining the basis of a valuation to be used in calculating the price payable to exercise an option under a partnership deed. The appellant issued a claim under s.69 Arbitration Act 1996, seeking permission to appeal against the arbitrator’s conclusion and, if successful, an order varying the relevant part of the award.
The first instance judge made an order on the papers refusing permission to appeal (Order 1). Order 1 erroneously contained wording about PD52B (which does not apply to appeals under the Act), stating that as a result of that practice direction, any party could apply to have the order set aside or varied.
The appellant made an application to set aside. This was treated as an application for permission to appeal, and was dismissed at an oral hearing (Order 2).
The Appellant sought permission to appeal against Order 2. Permission was refused by the circuit judge, but granted by a Court of Appeal judge (Order 3). However, when the appeal was heard by the Court of Appeal, the Court queried whether the Court of Appeal judge had jurisdiction to make Order 3.
The Court of Appeal noted that s.69(6) requires the leave of the County Court or the High Court to appeal against a decision to refuse leave to appeal an arbitration award. In substance, the circuit judge’s refusal to grant leave to appeal had been a decision under that section. Accordingly, the purported grant of permission to appeal by the Court of Appeal had been ineffective, and it could not hear the appeal.
Why it’s important
This case makes clear that permission to appeal an arbitration award under Arbitration Act 1996 s.69 can only be granted by the High Court. This is an important procedural point for practitioners to be aware of. The fact that there is not possible to seek permission to appeal from the Court of Appeal if the High Court rejects the application for permission to appeal reinforces the sanctity of the arbitration process.
The case also provides a helpful reminder of the high bar for such appeals to be successful. Although the Court was not able to deal substantively with the appeal, it nevertheless commented that while there were reasonable arguments that could have been made, the arbitrator’s award did not seem to be ‘obviously wrong’.
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3. Davies v Bridgend County Borough Council [2024] UKSC 15
Summary
The Supreme Court allowed an appeal against an award of damages for the residual diminution in the value of a residential property due to the risk Japanese knotweed (which had been treated) would recur, on the basis that the diminution in value had arisen prior to any breach of duty by the Defendant, and was not caused by the breach.
Japanese knotweed had encroached from the defendant’s land onto the claimant’s land at some point prior to 2004. However, no breach of duty occurred until 2013, by which time the defendant had become aware of the issues and ought to have implemented a remedial programme.
The Supreme Court held that as there was no evidence that the breach had caused or materially contributed to the diminution in value, the Claimant could not establish that ‘but for’ the breach, the loss would not have arisen. No damages should be payable in respect of the diminution in value.
Why it’s important
This judgment clarifies the nature of the test of causation in the tort of private nuisance, and particularly in relation to cases concerning encroachment by Japanese knotweed. It is now apparent that this is not an exception to the ‘but for’ test. The Court of Appeal’s reliance on Delaware Mansions Ltd v Westminster City Council [2001] UKHL 55 was misplaced: that case establishes that it may be possible to recover the costs of abating a continuing nuisance, and does not establish that diminution in the value of property is recoverable regardless of the causative sequence of events.
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