Landlord and Tenant Act 1954, Part II — Strict attitude of Court of Appeal towards adherence to time-limits by tenants in serving notice on landlords of originating application for new tenancy — Discretion given to county court judge by CCR, Order 13, rule 5 must be ‘very sparingly used’ — In the absence of unusual circumstances the time-limits set by CCR, Order 40, rule 8 and Order 8, rule 35 must be observed — Cases where the time can properly be extended will be rare — It is not enough to show that the tenant’s legal advisers overlooked the time-limits or that the tenant will suffer hardship by being deprived of the right to a new tenancy — In evaluating the tenant’s hardship, however, it is permissible to have regard to the existence or absence of a claim by the tenant against his solicitors for failure to serve in time — These principles were applied in two appeals before the court — In one a county court judge’s refusal to extend time was upheld, in the other a judge’s decision to grant an extension was reversed — Judgments of Waller and Ackner LJJ of importance to those concerned with court procedure under Part II of the 1954 Act
The first
appeal, Robert Baxendale Ltd v Davstone (Holdings) Ltd, was from
a decision of Judge Wallis-Jones at Cardiff County Court, reversing decisions
by the registrar to grant extensions of time to the tenants, Robert Baxendale
Ltd. The tenants appealed against the judge’s decision. In the second appeal, Carobene
v John Collier Menswear Ltd, the landlords, John Collier Menswear Ltd,
appealed against the decision of Judge Braithwaite at Bath County Court
granting the tenant, Clemente Carobene, an extension.
In the first
appeal, Michael Barnes QC and D Holgate (instructed by Ellis, Wood, Bickersteth
& Hazel, agents for Phillips & Buck, of Cardiff acting only on the
appeal, appeared on behalf of the appellants, Robert Baxendale Ltd; Christopher
Lockhart-Mummery (instructed by Thornton, Lynne & Lawson) represented the
respondents, Davstone (Holdings) Ltd.
In the second
appeal, E Caws (instructed by Thornton, Lynne & Lawson) appeared on behalf
of the appellants, John Collier Menswear Ltd; A Steynor (instructed by Lawrence
& Co, of Bristol) represented the respondent, Clemente Carobene.
Giving
judgment, WALLER LJ said: These are, in form, two appeals from decisions of
Judge Wallis-Jones and Judge Braithwaite given on March 15 1982 and April 20
1982 respectively. In the former case the judge held that the tenants had lost
their right to a new tenancy of their shop premises at Dominion House, Queen
Street, Cardiff, because their originating application was not served in time
and in the latter case the judge refused to order a new trial. The effective
appeal, however, is the first one. The appellants have been the tenants of shop
premises in Cardiff for 38 years. Their last lease was a 21-year lease expiring
on November 11 1981 and the respondents are the successors in title to the
landlords in that lease. The Landlord and Tenant Act 1954 provided certain
rights to both tenants and landlords at the termination of the lease and if, on
the one hand, the landlord does not take certain steps the tenant will acquire
certain rights in relation to the holding and if, on the other hand, the tenant
does not take certain steps he may lose his right to remain in possession as a
tenant with a new lease. Section 24 of the Act provides for the continuation of
tenancies unless terminated under the Act and section 29 lays down the
procedure for applying for a new tenancy. Section 25 of the Act provides for
the landlord giving notice to the tenant to terminate the lease and on May 8
1981 the landlord served the appropriate notice stating that he would not
oppose the application to the court for a new lease. Section 26 of the Act
provides for the tenant serving a counternotice and on July 2 1981 the tenant
served such a notice stating that he was not willing to give up possession at
the termination of the lease. On August 18 1981 (ie not less than two months
nor more than four months after landlords’ notice (section 29 (3) of the Act)
the tenant issued an originating application under section 24 of the 1954 Act
which was filed on August 21. By virtue of the combined provisions of Order 40,
rule 8 and Order 8, rule 35 of the County Court Rules the originating
application had to be served on the landlord within two months, ie by October
21. It was not served in time, but on October 23 1981 the originating
application was served on the respondents’ surveyor, Mr D W Caddick, who sent a
photocopy to the respondents on October 28. There was an application for an
extension of time granted for seven days on October 28 and later there was a
further extension granted in December, as a result of which, for the first
time, there was service direct upon the respondents. On appeal to the judge
both these decisions to grant extensions of time were reversed. The appellants
now appeal against that decision and also against the refusal of the judge to
order a new trial of the application for an extension of time.
Mr Barnes, on
behalf of the appellants, submitted that the judge had a discretion to grant an
extension in all the circumstances of the case, relying on the decision of this
court in Lewis v Wolking Properties Ltd [1978] 1 WLR 403 and that
this court could review the exercise of that discretion. He further submitted
that the judge wrongly took into account the remedy which the appellants had,
or might have, against their solicitor. Further, he submitted that the judge
had wrongly come to a conclusion that there was no service upon the respondents
until December 15, when a proper examination of the facts showed that there was
service on October 28 by reason of the forwarding by Mr Caddick of a photocopy
of the originating application.
Were it
necessary to decide the relevance of the claim against the solicitor, I would
be of the opinion that in a case like the present, where relative hardships
might have to be considered but where the effect of the decision, unlike that
in a personal injury claim, was clear, it would be right to take into
consideration as an element for consideration the existence of a claim against
the solicitor. In a case like Birkett v James [1978] AC 297,
quite apart from the question of a possible claim against the solicitor there
were other imponderables such as the question of whether the delay was
inordinate and inexcusable and whether when the action was ultimately fought
the plaintiff would win or lose. The same considerations apply to personal
injury claims.
In this case
if the decision is that the service is good the tenant will win. If the service
is bad then the landlord will win. In deciding whether to exercise discretion
to extend the time and make an otherwise bad service good it must, in my view,
be relevant to consider the tenant’s rights against his solicitor: see, for
example, Joan Barrie Ltd v GUS Property Management Ltd (1981) 259
EG 628, [1981] 2 EGLR 65. In Birkett v James the House of Lords
was considering only the prejudice to the defendant by reason of inordinate
delay, whereas, as I have already indicated, the question is one of balance of
hardship. I see nothing in the observations of Lord Diplock or Lord Edmund Davies
which would rule out consideration of rights against the solicitor in a case
such as the present.
I would also
be of opinion, were it necessary to come to a conclusion about the events of
October 28, that the forwarding of a photocopy of the originating application
by Mr Caddick to the respondents did not amount to service upon the
respondents. Mr Barnes’ submission was that the requirements of section 437 of
the Companies Act were met. Section 437 requires service on a company to be
made ‘by leaving it at or sending it by post to the registered office of the
company’. Mr Barnes’ submission depended in part upon the judge’s finding that
Mr Caddick had a duty to inform his principals and that sending a photocopy of
the originating application was in pursuance of that duty.
I now come to
the question of the extent of the discretion of the judge. The rules which have
to be considered are: Order 40, rule 8:
Part III.
Security of Tenure for Business Tenants under Part II of the Act of 1954.
8.-(1) An application for a new tenancy under section 24 of the Act of 1954
shall be made by originating application in Form 335. (1A) Order 8, rule 35,
shall apply in relation to an originating application under this rule as it
applies in relation to a default summons but with the substitution for the
references to 12 months of references to two months.
and Order 8,
rule 35:
35.–(1) The time within which a default summons may
be served shall, unless extended under the next succeeding paragraph, be
limited to a period of 12 months from the issue of the summons (1971). (2)
Where reasonable efforts have been made to serve the summons within the said
period and service has not been effected, the registrar may, on application,
order that the time be extended for a further period not exceeding 12 months or
for successive periods not exceeding 12 months each: Provided that the time
shall not be extended for any period unless the application is made within the
currency of the last preceding period.
At first sight
this would appear to make any question of extension once a period of two months
has passed impossible. There is, however, another rule — Order 13, rule 5:
5.–(1) Subject to the provisions of these Rules, any
of the times fixed by these Rules or by any judgment, order or direction for
doing any act may be enlarged or abridged by consent of all parties or by the
court on the application of any party. (2) An order enlarging time may be made
although the application therefor is not made until after the expiration of the
time allowed or appointed.
Mr Barnes
submitted that the judge should take into account all the circumstances and not
only the circumstances concerning the failure to serve the application within
time. The contrary submission was that only the circumstances relating to the
failure to serve in time were relevant.
In Lewis
v Wolking Properties Ltd, supra, the court had to consider a case where
reasonable efforts had been made to serve within the specified period and had
to consider whether the proviso to rule 35 prevented the court from extending
the period because the application was not made ‘within the currency of the
last period’. The failure to serve in that case was entirely caused by the
landlord moving without informing the tenant. The tenant having made reasonable
efforts to serve the landlord, this court came to the conclusion that Order 13,
rule 5, permitted the court to grant an extension after the currency of the period.
Orr LJ, at p 407, said:
I would add
that it is a necessary consequence of Mr Rich’s argument that, if it is right,
no relief at all could be obtained by an applicant for a new lease who, for
reasons quite beyond his control, has been unable to serve notice of his
application on the landlord within the permitted time, and for that reason,
quite apart from authority, I should for my part have been reluctant to adopt
the construction which Mr Rich advances unless compelled to do so by the
language of the rules. I do not, for the reasons I have indicated, find myself
so compelled.
And at p 410,
Geoffrey Lane LJ, as he then was, after referring to the speech of Lord Reid in
Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd
[1971] AC 850, said, at p 410:
That was a
decision under section 29 (3) of the Landlord and Tenant Act 1954. It is not
directly in point, but it is indicative of the view of their Lordships’ House
that the parties have power to alter by consent statutory times laid down, and
if that is the case it seems difficult, to my mind, to argue that those times
are mandatory rather than directory (to use the appropriate jargon). I can see
no reason for doubting that Order 13, rule 5 (1) and (2) applies to these
provisions. No doubt the power to extend the time is a power which must be very
sparingly used, in the light of the words in Order 8, rule 35. It is however,
conceded in this case, and, if I may say so, properly conceded, by Mr Rich that
if there is the jurisdiction in the court to extend the time this is indeed a
proper case in which that jurisdiction should be exercised.
That was a
case where reasonable efforts to serve had been made. In construing these rules
it is important to bear in mind the equivalent High Court rule, because it would
be surprising if the effect of the rules were different. By RSC, Order 97, rule
6 (which deals with applications for new tenancies under section 24 of the Act)
provision is made for an originating summons and by rule 6(3) Order 6, rule 8
is to apply to such summons as it does to a writ but with substitution of two
months for 12 months.
Order 6, rule
8 (1) and (2) reads:
Duration and
renewal of writ (06, r8). 8.-(1) For the purpose of service, a writ (other than
a concurrent writ) is valid in the first instance for twelve months beginning
with the date of its issue and a concurrent writ is valid in the first instance
for the period of validity of the original writ which is unexpired at the date
of issue of the concurrent writ. (2) Where a writ has not been served on a
defendant, the Court may by order extend the validity of the writ from time to
time for such period, not exceeding twelve months at any one time, beginning
with the day next following that on which it would otherwise expire, as may be
specified in the order, if an application for extension is made to the Court
before that day or such later day (if any) as the Court may allow.
Megaw J in Heaven
v Road & Rail Wagons Ltd [1965] 2 QB 355, at p 361, said:
. . . the
principle, or the general rule, to be applied is that leave will not be given
to extend the validity of a writ when application is made retrospectively after
the period of 12 months prescribed by the rules has expired, if the effect of
so doing would be to deprive the defendant of a defence which he would have had
under the relevant statute of limitation supposing that leave to extend were
not given and the plaintiff were thus compelled to serve a fresh writ.
Although Megaw
J was there considering a case under Order 6, rule 8, where the effect of
extending the writ retrospectively would be to defeat a limitation defence, in
my opinion, the present case is analogous in that once the time has passed, the
landlord is no longer under an obligation to provide his tenant with a new
lease. In the present case no effort to serve within the time-limit had been
made. If an extension is not granted, the tenant will have to vacate his
holding and the landlord will make a substantial profit. On the other hand if
an extension is granted, even though the tenant has not complied with the
rules, the landlord will lose his profit. It has to be remembered that the
Landlord and Tenant Act 1954 made provision for the continuation and renewal of
tenancies which altered very considerably the contractual rights of the parties
under a tenancy agreement or lease. Whereas under the lease in the present case
the tenant was obliged to leave on November 11 1981, by virtue of the
provisions of the 1954 Act, provided that the tenant took the proper steps he
did not have to leave, and if the landlord did not wish to occupy the premises
himself the tenant could have a new lease on terms decided by the court (see
section 24 et seq) but the proper steps involved a timetable of which part was
in the statute and part was comprised by Order 40, rule 8 and Order 8, rule 35.
I do not see anything unfair in that timetable being strictly adhered to.
The 1954 Act,
in the interests of tenants, has seriously interfered with the landlord’s right
to possession of his property and it is only fair that the period of
uncertainty should not be prolonged. No doubt it is for this reason that Order
40, rule 8 adopts a strict default summons procedure set out in Order 8, rule
35.
Accepting, as
I do, the decision of this court that these rules are directory and not
mandatory, albeit that, as Geoffrey Lane LJ said, the discretion should be used
very sparingly, it was a decision made in the context of a case where the
tenant had done his best. In the present case the failure to serve the
originating application was entirely the fault of the tenant or his advisers.
Having regard to the wording of the rules I find it difficult to visualise any
facts where it would be permissible to extend time after it had expired and the
fault lay entirely on the tenant’s side. In my opinion the appellants had to
show that there were exceptional circumstances relating to the non-service of
the application. Unless there were exceptional circumstances the provisions of
Order 13, rule 5 would not arise.
In Lewis
v Wolking Properties Ltd Geoffrey Lane LJ came to consider Order 13,
rule 5, after looking at Order 8, rule 35. It was only in the exceptional
circumstances that he went on to consider Order 13, rule 5, and applied it
subject to the comment that it should only be used very sparingly.
I have
accordingly come to the conclusion that the learned judge was right to allow
the appeal against the registrar, and that this was a case where, time having
gone by, the tenant had lost his rights. I would dismiss this appeal, in the case
of Baxendale v Davstone (Holdings) Ltd.
I now come to
the case of Clemente Carobene v John Collier Menswear Ltd. In
that case the applicant is the tenant of property known as 30 Westgate
Buildings, Bath, under the terms of a lease dated July 23 1968, a 14-year lease
expiring in December 1981. The applicant carried on a hairdressing business at
the said property. On June 23 1981, the landlords served notice on the tenant
terminating the lease and saying that an application to the court for the grant
of a new tenancy would not be opposed. On August 13 1981 a counternotice was
served and on October 22 1981 an originating application for a new lease was
made to the county court. No further steps were taken until February 12 1982,
seven weeks after the time for the originating application to be served. The
landlords applied to the judge, Judge Braithwaite, for the application to be
struck out and the tenant applied to the judge for an extension of time for the
service of the application. The learned judge dismissed the application to
strike out the originating application and granted an extension of time for
seven days. The landlords’ now appeal.
I do not here
set out the arguments for the appellants and the respondent on the facts of
this case, because I have taken those arguments into account in the judgment I
have just delivered. The fact is that no excuse of any kind was given for the
failure to serve the originating application within time and all the arguments
were directed to the effect of that failure upon the tenant. It is unnecessary
to set out the arguments put forward on behalf of the tenant because the facts
of this case are clearly covered by the judgment which I have just completed.
There were no exceptional circumstances to explain the failure to serve in time
and accordingly it was not open to the learned judge to grant the extension
which he did after that time had expired. Accordingly in my judgment the appeal
should be allowed.
Agreeing,
ACKNER LJ said: In both these appeals the landlords gave notice under section
25 of the Landlord and Tenant Act 1954 to terminate the tenancies. In both
cases there were no grounds upon which they could validly oppose the grant of
new tenancies. Accordingly, by virtue of section 25(6) the notices which they
served stated, in terms, that they would not oppose an application to the court
for the grant of a new tenancy. In those circumstances the fair inference is
that the notices were given in each case because the landlords concluded that
the rent that they were being paid was less than the market rent. Accordingly,
the formal notice under section 25 was but a prerequisite to their obtaining
the market rent, either by agreement or by order of the court.
In each of
these appeals the tenant, within the requisite period of two months, gave a
counternotice that he would be unwilling to give up possession of the property
at the date of termination. Moreover, in both these appeals the tenant made
application to the court for the grant of a new tenancy within the period provided
by section 29(3) of the Act. Thus, the tenant in each appeal complied with the
statutory time provisions laid down by the Act.
These appeals
are both occasioned by the tenants’ failure to comply with the relevant county
court rules as to the service of the relevant documents upon the landlords.
Special provision is made by Order 40, rule 8, where applications are made for
a new tenancy under section 24 of the Act. They shall be made by originating
application in Form 335. Further, Order 8, rule 35 is specifically made to
apply in relation to an originating application under this rule as it applies
in relation to default summonses, but with the substitution for the referenced
12 months of references to two months.
Order 6, rule
4 governs originating applications. Rule 4 (2)(c) provides that on the filing
of the application:
(i) the registrar shall enter the application in
the books of the court and fix a day for the hearing of the application, and
deliver to the applicant a plaint note in Form 14; and (ii) a copy of the
application and a notice in Form 26 shall be served on each respondent (if any)
in the manner prescribed by these Rules for service of an ordinary summons.
Form 26 bears
the seal of the county court. It gives notice when the matter is to be heard
and that if the respondent does not attend such order will be made as the court
thinks just. It also states that a sealed copy of the originating application
is annexed to the notice.
Order 8, rule
35, to which Order 40, rule 8 makes the specific reference referred to above,
provides as follows:
35.-(1) The time within which a default summons may
be served shall, unless extended under the next succeeding paragraph, be
limited to a period of 12 months from the issue of the summons (1971). (2) Where
reasonable efforts have been made to serve the summons within the said
period and service has not been effected, the registrar may, on application,
order that the time be extended for a further period not exceeding 12 months or
for successive periods not exceeding 12 months each: Provided that the time
shall not be extended for any period unless the application is made within the
currency of the last preceding period. (3) A note of any extension of the time
allowed for service shall be endorsed on the summons and on any copy and shall
be entered in the books of the court. (4) Where the summons has not been served
within the time allowed for service by this Rule, the action shall be struck
out.
In neither
appeal were reasonable efforts made to serve the summons within the period of
two months specified in Order 40, rule 8 and in neither case was an application
made to extend time within the currency of that period. Accordingly, if the
power of the court to extend time was to be found solely within Order 8, rule
35, no extension could be granted and the originating application would have to
be struck out.
However, Order
13, rule 5 provides:
5.–(1) Subject to the provisions of these Rules
any of the times fixed by these Rules or by any judgment, order or direction
for doing any act may be enlarged or abridged by consent of all parties or by
the court on the application of any party. (2) An order enlarging time may be
made although the application therefor is not made until after the expiration
of the time allowed or appointed.
In Lewis
v Wolking Properties Ltd [1978] 1 WLR 403 this court decided that the
county court judge is empowered to extend time by virtue of Order 13, rule 5,
notwithstanding the provisions of Order 8, rule 35. Having set out the terms of
Order 13, rule 5 Geoffrey Lane LJ, as he then was, said this in his judgment
(at p 409):
On the face
of it, that rule appears to apply to Order 8, rule 35. Does it make any
difference that the words ‘Subject to the provisions of these rules . . .’ are
to be found at the outset of Order 13 rule 5?
I think not. They cannot mean ‘except where the rules specify a
particular time within which some steps should be taken.’ Of course, if it meant that, it would
emasculate the rule entirely and deprive it of any potency. All that this
exception does, to my mind, is to make it clear that where one gets plain words
inconsistent with Order 13, rule 5 then that rule shall not apply, and an
instance of this is to be found in Order 10, rule 7, which reads as follows:
‘Where 12 months have expired from the date of service of a default summons,
and . . . (ii) an admission has been delivered but no notice of acceptance or
non-acceptance has been received by the registrar, the action shall be struck
out and no extension of time shall be granted beyond the 12 months, notwithstanding
Order 13, rule 5.’ I can see no reason
why the draftsman of the Act of 1954 and the orders which apply to this case
should not, if such had been the intention, have included such words as are
found in Order 10, rule 7. The words of Order 8, rule 35 are, in my judgment,
not of a sufficiently mandatory nature to oust the effect of Order 13.’
He concluded
by saying: ‘I can see no reason for doubting that Order 13, rule 5(1) and (2)
applies to these provisions. No doubt the power to extend the time is a power
which must be very sparingly used, in the light of the words in Order 8, rule
35.’
In that case
the landlord conceded, and in the view of this court properly conceded, that if
there was jurisdiction to extend the time, it was a proper case because the
conduct of the landlord created the very difficulties which had resulted in
service being out of time.
There is, of
course, jurisdiction in the High Court to entertain applications for new tenancies
under section 24 of the 1954 Act. It is, therefore, appropriate to have in mind
the provisions of the Rules of the Supreme Court, since it would obviously be
undesirable for there to be any significant difference in improcedural matters.
Order 97, rule 6 provides that Order 6, rule 8 shall apply to the originating
summons as it applies to a writ, but with the substitution for the references
to 12 months to references to two months. Accordingly, by virtue of the
provisions of Order 6, rule 8: ‘(i) The originating summons is valid for two
months beginning with its date of issue. (ii) Where the originating summons has
not been served within this period, the Court may by Order extend its validity
from time to time for such period not exceeding two months at any one
time.’ It is well settled that if an
application is made for renewal the discretion to extend the validity of the
writ ought to be exercised with caution and renewal is not to be granted as a
matter of course. (Battersby v Anglo American Oil Co Ltd [1945]
KB 23.) There must be sufficient or good
reason to justify the exercise of the court’s discretion and exceptional
circumstances need to be shown for the renewal when the claim has become
statute barred (see Heaven v Road & Railway Wagons Ltd [1965]
2 KB 355).
Mr Steynor,
for the respondent tenant, Clemente Carobene, has accepted that the failure to
serve the landlord with Form 26 and notice of the application for the new lease
until some seven weeks after time had expired was quite inexcusable. His
client’s own affidavit concedes that his solicitors made no attempt to serve
the landlords until seven weeks after time had expired. He has therefore been
obliged boldly to submit that Lane LJ was in error when he said that the power
to extend time is a power which must be very sparingly used. In his submission
the power should be sparingly refused. This submission to my mind must
inevitably totally disregard Order 8, rule 35, to which Lane LJ made specific
reference, and would introduce a very significant difference between practice
in the High Court and in the county court in a jurisdiction which is
concurrent.
I therefore
cannot accept Mr Steynor’s submission that an extension of time to serve the
application is, except in a wholly unusual case, there for the asking, as if a
party were applying for extra time to deliver a pleading. In my judgment, the
cases in which the discretion can be validly exercised to extend time for the
service of the application will be rare, because sufficient and good reason
accounting for the failure to serve the application in time needs to be
established by the applicant. It is not enough to show that the legal advisers
overlooked the time-limits or misunderstood the rules as to service and that,
unless time is extended, the tenant will lose his right to a new lease with the
sort of hardship which would normally result. Such a case would have no unusual
feature about it. It would be a common form situation where the Rules of Court
are overlooked or not properly considered.
If the tenant
fails to establish that there are unusual circumstances relating to his failure
to serve the application in due time, then he cannot, in my judgment, base his
application merely on the hardship which he will suffer as a result of being
deprived of the right to a new lease. The establishment of the unusual
circumstances relating to the failure to serve in time is the first fence which
he must clear. Having done so, the court is then in a position to consider
exercising its discretion and will no doubt then have regard to the degree of
hardship which the tenant will suffer if an adverse decision is made against
him.
In evaluating
the tenant’s hardship it is, in my judgment, permissible to have regard to the
existence or absence of a claim by the tenant against his solicitors for
failing to serve in time. In some cases a claim may be cast-iron and extensive
compensation may be recoverable. In others, while there may be no dispute about
liability, but there may be difficulty, either in law or in fact, in recovering
the whole or a greater part of the damage which has been suffered. In other
cases there may be a serious issue as to liability. Thus, the weight to be
given to a potential claim by the tenant against his legal advisers can vary
greatly, but the tenant’s rights against his solicitor are a relevant
consideration (see Joan Barrie Ltd v GUS Property Management Ltd
(1981) 259 EG 628, [1981] 2 EGLR 65).
Like my Lord,
Waller LJ, I consider that Birkett v James [1978] AC 297 was
concerned only with the prejudice to the defendant by reason of inordinate
delays and not with the evaluation of hardship. I accordingly agree that the
observations of Lord Diplock and Lord Edmund Davies do not rule out
consideration of the tenant’s rights against his solicitor in a case such as
the present.
I have said
enough about the facts in the Clemente Carobene appeal to conclude that it must
be allowed.
The facts in
the appeal of Baxendale Ltd are somewhat different. The tenants’
solicitors were two days late in serving the originating application and then
they failed to serve the landlords, Davstone Holdings Ltd, as required by
section 437 of the Companies Act, ‘by leaving it at, or sending it by post, to
the registered office of the company’. They served the originating application
on the landlords’ estate agents, who had been handling the negotiations for a
new lease. The learned judge found (and there is no challenge to this finding)
that those estate agents were not duly authorised to accept service.
Some five days
after service had been effected upon the estate agents, they sent a copy of the
originating application to the landlords. There was no evidence that they had
the notice, or even a copy, in Form 26. What the agents were doing, and rightly
so, was to provide for the information of their principals a copy of the
document in which the tenant had set out the terms on which he was claiming a
new lease. They were not purporting to act as process servers. In my judgment
there never was good service on the landlords via the agents. On the day the
agents were served the tenant’s solicitors applied ex parte to the registrar
for a 7-day extension to serve the originating application and Form 26.
Following the registrar’s order, the solicitors again served the agents and not
the landlords. Following objections by the landlords’ solicitors and an appeal
against the registrar’s order, a further application for extension of time was
made to the registrar and a further order, notwithstanding the pending appeal,
was made on December 11. It was only on December 15 that service was effected
on the company, that is over seven weeks late.
Mr Barnes, for
the tenants, in a well-sustained argument, has been unable to point to any
exceptional circumstances surrounding the delay and failure to serve. In fact
he accepted that there were no exceptional circumstances to account for the
delay. His clients, too, had made no reasonable or any efforts to serve within
the time limited by the order and their attempts to serve after time had expired
were, as indicated above, ill-directed. The main burden of his submission was
that substantially greater hardship would be suffered by his clients than by
the landlords, if time were not
to establish unusual circumstances relating to his failure to serve the
application in due time, then he cannot base his application merely on the
hardship that he will suffer as a result of being deprived of the right to a
new lease.
I accordingly
agree that the appeal in the case of Baxendale be dismissed, and the appeal in
the case of Carobene be allowed.
MAY LJ: I have
had the advantage of reading in advance the judgments of my Lords, with which I
respectfully agree, and have nothing to add.
The first appeal was dismissed with costs. The second
appeal was allowed, the appellants to have costs below and costs in the Court
of Appeal not exceeding £500, the order not to be enforced for 12 months with
liberty to apply to extend.
