Landlord and Tenant Act 1954, Part II — ‘Competent landlord’ — Lease and sublease — Whether plaintiff sublessees, seeking grant of new tenancy, had brought proceedings against correct landlords as defendants — Whether immediate landlords had ceased to be the ‘competent landlord’ at the material date — Effect of request for new tenancy made by immediate landlords to the superior landlords — Sections 29(3), 40(2) and 44(1) of 1954 Act inter alia considered — Decision against plaintiffs given ‘with regret’ — Procedural complications — The main points covered by the judgment were as follows:
commercial building, received a section 25 notice from the defendants, their
immediate landlords, lessees of the whole building, and duly replied to the
notice within the two months mentioned in section 25(5), stating that they were
not willing to give up possession — At that date there was no doubt that the
immediate landlords were also the competent landlord for the purpose of section
44(1) — Plaintiffs subsequently issued their originating summons seeking the
grant of a new tenancy and naming their immediate landlords as defendants —
Plaintiffs’ summons was served well within the time-limit laid down in section
29(3) and, as far as the plaintiffs were aware at the time, the immediate
landlords were still the competent landlord — As it turned out, however, this
was not so
served a request for a new tenancy on their own landlords specifying as the
date for the commencement of their new tenancy a date the effect of which was
that their existing tenancy would terminate within the period of 14 months
mentioned in section 44(1)(b) — This meant that they could not be the competent
landlord at the date of the plaintiffs’ originating summons; the role of
competent landlord passed to the defendants’ landlords, a company called
Benesco Ltd — As it was of some relevance in the argument before the court, it
should be mentioned that the defendants, at the same time as serving a request
for a new tenancy, served a notice on Benesco exercising an option to renew
their lease — Also, although it did not prove to be of importance, it may be
mentioned that Benesco later granted a lease of the whole building to another
company
the substitution of parties, it was clear that the plaintiffs’ application for
a new tenancy was wrongly served on the defendants, as by then the defendants
had ceased to be, and Benesco had become, the competent landlord — A suggestion
that the exercise of the above-mentioned option to renew had resulted in a
tenancy, which could be added to the unexpired portion of the defendants’ lease
to produce a period exceeding the 14 months mentioned in section 44(1)(b), was
rejected by the judge — The judge also rejected a submission based on estoppel,
holding that it was not unconscionable for the defendants to assert that they
had ceased to be the competent landlord at the material time — The judge noted
that the plaintiffs had not served a section 40(2) notice, which might have
resulted in information as to the section 26 request made by the defendants and
the consequent change in the competent landlord situation
could have been substituted as defendant to the plaintiffs’ originating summons
— The difficulty was the time-limits for an application to the court laid down
in section 29(3) — In the case of Benesco the application would necessarily
have been made more than four months after the giving of the landlords’ notice
under section 25 and Benesco would thus have a defence akin to that under the
Statute of Limitations — Various provisions in the Rules of the Supreme Court
in regard to the joinder and substitution of parties were considered, but it
was pointed out that their application was subject to the well-established
principle that an amendment in the way of adding
reached his conclusion against the plaintiffs with some regret because there
had been a change of competent landlord unknown to the plaintiffs, but, as
already mentioned, it had been open to them to obtain the information by means
of a notice under section 40(2) — The agreed question before the court was
answered by declaring that the defendants were not rightly sued — Appropriate
directions given on the summonses and notice of motion — Leave to appeal
granted if required
The following
cases are referred to in this report.
Bar v Pathwood Investments Ltd [1987] 1 EGLR 90; (1987) 282 EG
1538, CA
Beardmore
Motors Ltd v Birch Bros (Properties) Ltd
[1959] Ch 298; [1958] 2 WLR 975; [1958] 2 All ER 311
Bristol
Cars Ltd v RKH Hotels Ltd (in liquidation)
(1979) 38 P&CR 411; [1979] EGD 176; 251 EG 1279, [1979] 2 EGLR 56, CA
Destia
Investments Ltd v Parisian Opera & Field
Glass Co Ltd Unreported 1980
Evans
Constructions Co Ltd v Charrington & Co Ltd
[1983] QB 810; [1983] 2 WLR 117; [1983] 1 All ER 310; [1982] EGD 326; (1982)
264 EG 347, [1982] 2 EGLR 61, CA
Green v Bowes-Lyon [1963] AC 420; [1961] 3 WLR 1044; [1961] 3 All
ER 843; [1961] EGD 301; (1961) 180 EG 429 HL
Habib
Bank Ltd v Habib Bank AG Zurich [1981] 1 WLR
1265; [1981] 2 All ER 650; [1982] RPC 19, CA
Kammins
Ballrooms Co Ltd v Zenith Investments (Torquay)
Ltd [1971] AC 850; [1970] 3 WLR 287; [1970] 2 All ER 871; (1970) 22
P&CR 74, HL
Spiro v Lintern [1973] 1 WLR 1002; [1973] 3 All ER 319, [1973] EGD
961; (1973) 227 EG 2045, CA
Townsend
Carriers Ltd v Pfizer Ltd (1977) 33 P&CR
361; 242 EG 813, [1977] 1 EGLR 37
In this case
there were a number of proceedings before the judge, described at the beginning
of his judgment, summonses by the plaintiffs and the defendants and a notice of
motion by the plaintiffs, together with an ‘agreed question’ (agreed between
counsel) not expressly mentioned in any summons.
David
Neuberger QC and William Elland (instructed by Romain Coleman & Co)
appeared on behalf of the plaintiffs; Gavin Lightman QC and Miss Elizabeth
Jones (instructed by Wright Webb Syrett) represented the defendants, United
Artists Corporation Ltd; Michael Briggs (instructed by Chethams) represented
Benesco Ltd, whom the plaintiffs’ summons asked to be joined as second
defendant or substituted as defendant.
Giving
judgment, MERVYN DAVIES J said: The plaintiffs in this matter are Mr R C
Shelley, Mr T S Curzon and Mr J J Pinnick. They are chartered accountants and
partners under the style of Shelley, Pinnick & Co. I will refer to them as
‘Shelleys’. Shelleys have been in occupation as tenants of the premises on the
second floor of 37-41 Mortimer Street, London W1, since January 1984. The
premises were let to them by a lease dated March 19 1984 wherein the defendant,
United Artists Corporation Ltd (‘United Artists’), is described as ‘the
Landlord’. The term of the lease was from December 23 1983 to June 20 1988 at a
rent of £32,500. On October 22 1987 Shelleys issued an originating summons with
United Artists as defendant. The relief sought was the grant of a new tenancy
pursuant to Part II of the Landlord and Tenant Act 1954. The originating
summons is not before me. Doubts have arisen, stemming from section 44 of the
Act, as to whether United Artists is the proper person to sue. It is suggested
that another company, Benesco Ltd, ought to have been made the defendant
instead of United Artists. Then it is said, if that be so, it is now too late
for Shelleys to sue Benesco. In these circumstances two summonses were issued,
the one by the plaintiffs dated April 18 1988 and the other by United Artists
dated May 16 1988. Later Shelleys — see the affidavit of Mr Curzon dated July
22 1988 — intimated that they wished to contend that United Artists is and have
at all material times been the right persons to sue. In these circumstances the
question whether United Artists is properly sued was, by agreement between
counsel, accepted as a question (‘the agreed question’) before me, although it
is not expressly mentioned in any summons. So it is that there have been before
me (a) the agreed question and (b) the two summonses I have mentioned. As well,
there is a notice of motion by the plaintiffs dated October 12 1988 that I will
mention later.
The
plaintiffs’ summons dated April 18 1988 is an application by the plaintiffs for
an order:
(1) that Benesco be joined as a second defendant
in addition to United Artists;
(2) alternatively, that Benesco be substituted
for United Artists as defendant; and
(3) that such extensions of time as may be
appropriate may be granted.
This summons
was served on Benesco.
The
defendant’s summons dated May 16 1988 is for an order that the plaintiffs’
originating summons be dismissed; alternatively, an order that United Artists
ceases to be party.
On June 7 1988
the master made an order that the summonses be adjourned to be heard in court
and that prior thereto there be discovery and inspection.
The notice of
motion dated October 12 1988 seeks the addition of yet another company, MGM/UA
Home Video (UK) Ltd (‘MGM’), as a defendant. It was issued because by a lease
dated October 7 1988 MGM became Benesco’s tenant. That fact made apparent that
any 1954 Act application by Shelleys ought perhaps now to proceed against MGM
rather than Benesco or United Artists.
The procedural
situation that I have tried to outline is complicated. Fortunately the
questions that arise for decision, once the procedural matters have been
understood, may be simply expressed. They are:
(1) Whether Shelleys were right to make United
Artists their defendant; and
(2) If they were not right, and disregarding the
MGM lease, whether Benesco can now be substituted for United Artists as
defendant, bearing in mind the time-limit of section 29(3).
As to (2) it is
accepted that if the answer is in the affirmative, MGM can now be substituted
for United Artists.
I now set out
the situation that gives rise to these applications. Shelleys were, as I have
said, tenants of United Artists under a lease dated March 19 1984 for a term of
about four and a half years expiring on June 20 1988. In turn United Artists
were tenants of Benesco, holding not merely the second floor let to Shelleys
but the entire building at 37-41 Mortimer Street. The predecessors in title of
Benesco (Rathmoor Holdings Ltd) granted United Artists a lease of the entire
building on August 22 1967. The term was for 21 years from June 24 1967, and so
expiring on June 24 1988. With the expiry date of the Shelley lease in
prospect, Wright Webb, the solicitors for United Artists, on July 28 1987
served on Shelleys a notice of termination in the prescribed form under section
25 of the Act, together with a section 40(1) notice. The section 25 notice was
within the time provision of section 25(2). At about the same time Wright Webb
also turned their attention to Benesco. On July 30 1987 they served on Benesco
in the prescribed form a request for a new tenancy under section 26 of the Act,
together with a notice under section 40(2). On the same day Wright Webb sent a
second, separate letter to Benesco. This second letter was a notice on behalf
of United Artists for the exercise of an option in clause 6 of the lease dated
August 22 1967 under which United Artists was then holding of Benesco. This
clause 6, so far as now material, is in these terms:
6(1) On the expiration of the term hereby granted
the Lessee shall have the option of taking a further Underlease of the demised
premises for a term of 14 years commencing on the expiration of the term hereby
granted at a yearly rent to be ascertained as hereinafter provided such further
Underlease to contain the same covenants conditions and provisions as are
contained herein including this clause and in addition to contain a stipulation
that provisions equivalent to this clause shall not be included in any
subsequent Underlease for the demised premises granted pursuant to such further
Underlease.
(2) If the Lessee wishes to exercise this option
it shall give Notice in writing to the Lessor not less than 9 months and not
more than 12 months before the expiration of the term hereby granted whereupon
the parties shall endeavour to reach agreement as to the rent to be reserved by
such further Underlease but if they have not reached agreement within two
months of the service of such Notice . . .
here follow
provisions for the rent being fixed by a surveyor on certain terms.
(3) Within 14 days after the Lessee is notified
of the amount of the rent to be reserved by such further Underlease as
ascertained in accordance with the provisions of the preceding sub clause it
may notify the Lessor in writing that it no longer wishes to exercise the
option contained in sub clause (1) of this clause in which event the Lessee
will vacate the demised premises at the expiration of the term hereby granted
or at the expiration of 6 months from the date upon which the Lessor receives
such notification (whichever shall be the later) but otherwise on the
expiration of the term hereby granted or on the expiration of 28 days after the
Lessee is informed of the amount of such rent (whichever is the later) the
Lessor shall grant the Lessee and the Lessee shall accept and execute a counter
part of such further Underlease in accordance with the provisions of this
clause. Any occupation of the demised premises by the Lessee after the
expiration of the term hereby granted shall be upon the
rent payable to the Lessor shall be at the rate per annum of the annual rent
ascertained in accordance with the provisions of the last preceding sub clause.
On August 6
1987 the solicitors acting for Shelleys, Romain Coleman, responded to the
section 25 notice stating that Shelleys were not willing to give up possession.
In this way they had regard to section 29(2) of the Act and did so within the
two months’ time-limit implicitly imposed by section 25(5). Wright Webb (for
United Artists) also received a response to their section 26 notice from
Benesco acting by their solicitors, Chethams. The response was dated August 20 1987
and acknowledged receipt not only of the section 26 notice but also of the
option letter. On August 24 Wright Webb, with other information, wrote to
Chethams stating that before service of the section 26 notice on Benesco there
had been served a section 25 notice on Shelleys. A copy of the section 25
notice was enclosed, together with a copy of the Romain Coleman letter dated
August 6 1987.
The next event
to mention is that on October 22 1987 Shelleys issued their originating summons
seeking the grant of a new tenancy. United Artists was named as defendant. The
deadline for the issue of the summons was November 28 — see section 29(3) — so
the summons was well within time. Wright Webb sent an acknowledgement of
service on November 2 1987. A letter dated November 25 from Wright Webb to
Chethams suggests that at about that time United Artists issued an originating
summons against Benesco. The letter does not refer to the originating summons
issued by Shelleys. However, no doubt Shelleys supposed that their application
would proceed against United Artists in the usual way. But on February 12 1988
Wright Webb informed Romain Coleman that United Artists was advised that it
(United Artists) was not and was not at the time of the issue of proceedings on
October 22 1987 the competent landlord under the Act. For Shelleys it was then
complained that United Artists had failed to notify them (Shelleys) that United
Artists had ceased to be the competent landlord (as defined in section 44). On
February 23 1988 Wright Webb replied, stating that United Artists was under no
obligation to notify any change of competent landlord. As well, it was pointed
out that Shelleys’ solicitors had served no notice under section 40(2); that
subsection enabled Shelleys to ask for information about the United Artists’
title. Correspondence ensued that I need not mention, save to say that on March
17 Wright Webb informed Romain Coleman that United Artists’ immediate landlord
was Benesco and that the United Artists’ lease would determine on June 23 1988.
The two summonses that I have mentioned were issued and came before the master
on June 7 1988, when it was ordered, as I have mentioned, that the summonses be
adjourned to the judge and that prior thereto there be discovery and
inspection. It was in consequence of discovery that Shelleys learned of the
exercise of the clause 6 option that I have referred to above. Finally, to
complete this statement of the relevant events, it is only necessary to repeat
that on October 7 1988 Benesco granted to MGM a lease of the whole of Mortimer
House. It was for 25 years from June 24 1988. United Artists is guarantor to
the lease. There was some affidavit evidence before me. I will refer to it as
necessary below.
The first
question I have to decide is whether in the originating summons Shelleys were
right in naming United Artists as defendant. The defendant should be ‘the
landlord’ as defined in section 44(1): see Ord 97, r 6. Was the landlord United
Artists on October 22 1987? Mr Neuberger
appearing for Shelleys said ‘yes’ to that question. Whether he is right depends
on a consideration of the facts and of section 44(1) of the Act. Section 44
reads:
(1) Subject to the next following subsection, in
this Part of this Act the expression ‘the landlord’, in relation to a tenancy
(in this section referred to as ‘the relevant tenancy’), means the person
(whether or not he is the immediate landlord) who is the owner of that interest
in the property comprised in the relevant tenancy which for the time being
fulfils the following conditions, that is to say–
(a) that it is an interest in reversion expectant
(whether immediately or not) on the termination of the relevant tenancy, and
(b) that it is either the fee simple or a tenancy
which will not come to an end within fourteen months by effluxion of time and,
if it is such a tenancy, that no notice has been given by virtue of which it
will come to an end within fourteen months or any further time by which it may
be continued under section 36(2) or section 64 of this Act,
and is not
itself in reversion expectant (whether immediately or not) on an interest which
fulfils those conditions.
(2) References in this Part of this Act to a
notice to quit given by the landlord are references to a notice to quit given
by the immediate landlord.
(3) The provisions of the Sixth Schedule to this
Act shall have effect for the application of this Part of this Act to cases
where the immediate landlord of the tenant is not the owner of the fee simple
in respect of the holding.
It was common
ground that on July 28 1987 (when United Artists served its section 25 notice)
United Artists was the landlord or, to use the phrase in the Sixth Schedule,
‘the competent landlord’. United Artists was the competent landlord because (a)
the United Artists’ tenancy had more than 14 months to run: in this connection
see Green v Bowes-Lyon [1963] AC 420 at p 446; and (b) no
relevant notice had been served: see section 44(1)(b). But, according to
Mr Lightman for United Artists, United Artists remained the competent landlord
only until July 30 1987. With the service on that day of the section 26 notice
by United Artists on Benesco, it is said that Benesco became the competent
landlord. That view must be right, if one considers simply section 26(5), which
reads:
Where the
tenant makes a request for a new tenancy in accordance with the foregoing
provisions of this section, the current tenancy shall, subject to the
provisions of subsection (2) of section thirty-six of this Act and the
provisions of Part IV of this Act as to the interim continuation of tenancies,
terminate immediately before the date specified in the request for the
beginning of the new tenancy.
The ‘date
specified’ was June 24 1988. Thus, applying section 26(5), it is clear that the
United Artists tenancy held of Benesco would terminate on June 24 1988, ie
within the 14-month period referred to in section 44(1) (b). So United
Artists ceased to be the competent landlord, being replaced in that capacity by
Benesco. Mr Neuberger, however, submitted that account has to be taken of the
exercise by United Artists of the clause 6 option. As I have mentioned, the
option was exercised on July 30 1987. Reading clause 6 in the light of the
exercise of the option, it is said that one looks not only at section 26(5) but
also at the position brought about by the exercise of the option. United
Artists, it is said, having exercised the option, continued to hold a tenancy
fulfilling the conditions of section 44(1). The argument in outline was:
(a) the exercise of the option gave rise to an
agreement for a new lease;
(b) an agreement for lease is a ‘tenancy’ — see
section 69(1); and
(c) the combination of the unexpired period of
the United Artists lease up to June 24 1988, plus the period of the tenancy
arising by virtue of the exercise of the option exceeded the 14-month period in
section 44(1).
I do not
accept that argument. It seems to me that the exercise of the option did not
effect any enlargement or prolonging of the tenancy as created in 1967. It
merely indicated that another tenancy might come into existence on June 24
1988. A reading of clause 6 shows that the possibilities are:
(1) a new tenancy for 14 years from June 24 1988;
(2) a new tenancy for up to six months after June
24 1988; or
(3) no new tenancy at all after June 24 1988 —
this in the event of the new rent being fixed soon enough before June 24 1988
to enable United Artists to withdraw pursuant to clause 6(3) before that date
and United Artists then so withdrawing.
In this
situation it is, I think, impossible to say that the exercise of the option
transformed the original United Artists tenancy into a tenancy existing beyond
June 24 1988. As I see it, the position with the exercise of the option was
that the original term continued to run but there came into existence the
possibility that there might be another tenancy running from June 24 1988. In
this connection, it is to be borne in mind that the exercise of the option
brought into existence no mutually enforceable agreement for the grant of a new
lease. The exercise of the option enabled United Artists to compel Benesco to
grant a new lease but did not enable Benesco to compel United Artists to take a
new lease. This is so because clause 6(3) entitles United Artists to withdraw.
As I see it, the exercise of the option is a first step towards the making of
an agreement for lease that becomes enforceable only when the 14 days mentioned
in clause 6(3) have passed without United Artists withdrawing. Since I think
that the exercise of the option did not bring into being any enforceable
agreement, it is not necessary to consider section 28.
It follows
that I do not think that United Artists remained Shelleys’ landlord after July
30 1987, despite the exercise of the option. Section 26(5) took effect with the
consequence that the interest of United Artists in the second floor of Mortimer
House fails to satisfy the conditions mentioned in section 44(1). Thus, in
naming United Artists as the defendant to the originating summons issued on
October 22 1987, Shelleys were in error. The defendants should have
been Benesco, since that company became the ‘landlord’ of Shelleys when the
United Artists section 26 request was served.
Mr Neuberger
submitted that if it should be found against him that United Artists ceased to
be landlord on July 30 1987, nevertheless United Artists is estopped from
alleging that it is not the landlord. In this connection one notes the
affidavit evidence of Mr R A H Galloway, sworn on May 24 1988. Mr Galloway is a
partner in Wright Webb. Mr Galloway said:
(a) that he was aware that on the service of the
section 26 notice on Benesco United Artists ceased to be Shelleys’ ‘landlord’
and that Benesco became such landlord;
(b) that he did not regard himself as being under
a duty to tell Shelleys that a section 26 notice had been served;
(c) he expected to receive a section 40(2)
notice from Shelleys requiring information about United Artists’ interest in
Mortimer House;
(d) on August 24 1987 he sent to Benesco’s
solicitors copies of the section 25(5) notice served by Shelleys;
(e) on November 10 1987 he realised that
Shelleys ought to have sued Benesco, not United Artists; November 10 1987 being
a date after the issue of the Shelley originating summons but before the
expiration on November 28 1987 of the four-month period referred to in section
29(3).
The
correspondence between the parties’ solicitors is of no help to Shelleys in
asserting estoppel. Essentially the plea is, as I understand, that United
Artists (by Wright Webb) stood by, allowing Shelleys to suppose that it (United
Artists) was Shelleys’ landlord and failing to inform Shelleys of the service
of the section 26 notice on Benesco.
I was referred
to Spiro v Lintern [1973] 1 WLR 1002, and the words of Buckley LJ
at p 1011, where he said:
On similar
grounds, in our judgment, if A sees B acting in the mistaken belief that A is
under some binding obligation to him and in a manner consistent only with the
existence of such an obligation, which would be to B’s disadvantage if A were
thereafter to deny the obligation, A is under a duty to B to disclose the
non-existence of the supposed obligation.
There are then
the words of Oliver LJ (as he then was) in Habib Bank Ltd v Habib
Bank AG Zurich [1981] 1 WLR 1265 at p 1285, where he said:
We have been
referred at length to a recent judgment of my own in Taylors Fashions Ltd
v London Victoria Trustees Co Ltd [1981] 2 WLR 576 in which I ventured
to collect and review the authorities. I there said, at p 593:
‘Furthermore
the more recent cases indicate, in my judgment, that the application of the Ramsden
v Dyson (1866) LR 1 HL 129 principle — whether you call it proprietary
estoppel, estoppel by acquiescence or estoppel by encouragement is really
immaterial — requires a very much broader approach which is directed rather at
ascertaining whether, in particular individual circumstances, it would be
unconscionable for a party to be permitted to deny that which, knowingly, or
unknowingly, he has allowed or encouraged another to assume to his detriment
than to inquiring whether the circumstances can be fitted within the confines
of some preconceived formula serving as a universal yardstick for every form of
unconscionable behaviour.’
In the Habib
case, Oliver LJ adhered to those words.
Taking the
broad approach suggested by Oliver LJ, it seems to me that in the particular
circumstances of this case it would not be unconscionable for United Artists
now to be permitted to say that it (United Artists) ceased to be the competent
landlord on July 30 1987. I say that because, as I see it, all that Shelleys
can fasten on is Mr Galloway’s failure on or about November 10 to inform
Shelleys of the fact that in his view the Shelley originating summons ought to
have been issued against Benesco and not against United Artists. This point
must be considered against the background that Shelleys, when serving their own
section 25 notice on United Artists, did not require of United Artists the
information that could be derived from a section 40(2) notice. They were
entitled to serve a notice pursuant to section 40(2) but failed to do so. The
service of such a notice would, at least possibly, have resulted in Shelleys
learning of the section 26 notice served by United Artists on Benesco; and in
consequence that thereby United Artists had ceased to be the competent
landlord. Taking into account this failure to use section 40(2), I am not
prepared to say that the conscience of United Artists ought to be affected by
Mr Galloway’s failure after November 10 1987 to tell Shelleys that in his view
Shelleys were suing the wrong defendant. Estoppel was also alleged against
Benesco, but the facts fall far short of allowing any such plea. In this
connection Mr Neuberger accepted that Benesco did not know of the issue of the
originating summons against Shelleys until after November 28 1987.
Since I find
that Benesco and not United Artists ought to have been made defendant to the
Shelley originating summons and, as well, that no estoppel operates either against
United Artists or Benesco, the question is whether Benesco may now be
substituted for United Artists as defendant. Mr Briggs for Benesco resisted any
such substitution. In fact Benesco’s status as landlord passed on October 7
1988 to the MGM company I have mentioned above — in consequence of the lease of
that date that I have mentioned. Thus, as I see it, substitution, if
appropriate at all, is appropriate to substitute MGM for United Artists.
Nevertheless, there can be no substitution or replacement of United Artists by
MGM unless one first establishes that before October 7 1988 there could have
been a substitution of Benesco for United Artists. If that is established, then
it would follow that MGM can be made defendant. Mr Lightman for MGM does not suggest
otherwise. So the practical question is: could Benesco, prior to October 7
1988, have been substituted for United Artists?
In this connection, I am content to assume, without deciding the point,
that the counternotice required of Shelleys pursuant to section 25(5) was
served, and served in time, on Benesco. I make that assumption because a copy
of the counternotice sent to United Artists by Shelleys was sent on by United
Artists to Benesco on August 24 1987; Townsend Carriers Ltd v Pfizer
Ltd (1977) 33 P&CR 361 suggests that that operation may have been
effective service on Benesco. However, the real question is whether Benesco
could, prior to October 7 1988, have been made a defendant to the originating
summons.
One would
suppose that a substitution of defendant would be readily ordered. But the
position is complicated by the existence of the time-limits laid down in
section 29(3) of the Act. In short it is said that it is now too late to
proceed against Benesco (and in consequence MGM). Section 29(3) reads:
No
application under subsection (1) of section twenty-four of this Act shall be
entertained unless it is made not less than two nor more than four months after
the giving of the landlord’s notice under section twenty-five of this Act or,
as the case may be, after the making of the tenant’s request for a new tenancy.
The
‘application’ there referred to is an application to the court: see section
24(1). So an application to the court may not be made more than four months
after the giving of the landlord’s notice under section 25 — in this case after
November 28 1987. The application with United Artists as defendant was, of
course, made before that date on October 22 1987. It is said that if Benesco is
made a defendant the application will be made against Benesco after November 28
1987, so that Benesco has a defence akin to a defence under the Statute of
Limitation. I note the words of Lord Diplock in Kammins Ballrooms Co Ltd
v Zenith Investments (Torquay) Ltd [1971] AC 850 at p 881H. He said:
Subsections
(2) and (3) of section 29 deal with procedure in the list resulting from an
application by a tenant to the court for the grant of a new tenancy, and
subsection (3), with which this appeal is immediately concerned, is a statute
of limitation incorporated in the Act. It prohibits the bringing of legal
proceedings by the tenant before or after the period specified. It is imposed
for the benefit of the landlord alone.
In the same
case Lord Diplock explained the circumstances in which estoppel, quasi-estoppel
or acquiescence might avail to overcome difficulties arising from the section
29(3) time-limit: see pp 883D-885. Templeman LJ (as he then was) considered a
similar topic in Bristol Cars Ltd v RKH Hotels (in Liquidation)
(1979) 38 P&CR 411. However, I am satisfied that on the facts of this case
there is no possibility of Shelleys overcoming that time-limit difficulty by
any recourse to estoppel or acquiescence. It is plain that Benesco did not know
of the issue of the Shelleys originating summons until after November 28 1987.
In these circumstances, the possibility of substituting Benesco for United
Artists must be considered by reference to Ord 15, r 6; Ord 20, r 5; and Ord
97, r 8(3). Ord 97, r 8(3) empowers the court to add a defendant to the
originating summons, but the power is not to be exercised to defeat a vested
right: see Supreme Court Practice at p 1346, and Beardmore Motors Ltd
v Birch Brothers (Properties) Ltd [1959] Ch 298. That case resembles the
present case and was decided when the old Ord 16 was in force, and the present
Ord 15, r 6 was not under consideration. So one turns to Ord 15, r 6. The
relevant subrule is Ord 15, r 6(5). I quote subrule (5):
No person
shall be added or substituted as a party after the expiry of any relevant
period of limitation unless either:
(a) the relevant period was current at the time
when proceedings were
party should be added, or substituted, or
(b) the relevant period arises under the
provisions of section 11 or 12 of the Limitation Act 1980 and the court directs
that those provisions should not apply to the action by or against the new
party.
In this
paragraph ‘any relevant period of limitation’ means a time limit under the
Limitation Act 1980 or a time limit which applies to the proceedings in
question by virtue of the Foreign Limitation Periods Act 1984.
Neither (a)
nor (b) is relevant but, drawing attention to the definition of ‘any
relevant period of limitation’, Mr Neuberger said, as I understand, that Ord
15, r 6 does not refer to the time-limits applied by the Landlord and Tenant
Act 1954. That may be so, but I do not think it follows that one must disregard
the well-established principle that an amendment in the way of adding a party
is not to be allowed if thereby a vested right is defeated. Now that time-limit
has gone by, Benesco have, as it seems to me, a vested right not to be sued. In
Bar v Pathwood Investments Ltd [1987] 1 EGLR 90 Glidewell LJ said
at p 92(D):
Mr Primost
urges us to follow the general principle that the courts will not deprive a
party of a vested right acquired as the result of the expiry of a time-limit.
For that proposition, which is undoubted, he referred us to Beardmore Motors
Ltd v Birch Brothers (Properties) Ltd [1959] Ch 298, a decision of
the late Harman J, which was a decision under the 1954 Act and was specifically
approved by this court in Davies v Elsby Brothers Ltd [1961] 1
WLR 170, a case not concerned with the Landlord and Tenant Act.
Before leaving
Ord 15, r 6, I must mention an unreported case of Sir Nicolas Browne-Wilkinson
V-C. It is Destia Investments Ltd v Parisian Opera & Field Glass
Co Ltd — judgment given on July 31 1980. Destia’s position there was much
the same as Shelleys’ position here. In the Destia case Hanover (in the
position of Benesco) had been joined by an order of the master as a defendant
after the time-limit of section 29(3). The Vice-Chancellor declined to strike
out Hanover as defendant. He took the view, as I understand, that an amendment,
by the adding of a party, made pursuant to Ord 15, r 6, could in exceptional
circumstances be made despite the rule that ‘in general the court will not give
leave to join a new party so as to prejudice that party’s existing rights’: see
transcript p 16; and p 14A. But I see that when the Destia judgment was
given on July 31 1980 subrules (4), (5) and (6) had not been added to Ord 15, r
6. Those subrules were introduced by SI 1981 no 562 coming into operation on
May 1 1981. See also SI 1985 no 1277. Having regard to that fact and to the Beardmore
and Bar cases (supra), I do not think I should regard myself as
bound by the Destia case.
That leaves
for consideration Ord 20, r 5. Ord 20, r 5, so far as now material reads:
(1) Subject to Order 15, rules 6, 7 and 8 and the
following provisions of this rule, the Court may at any stage of the
proceedings allow the plaintiff to amend his writ, or any party to amend his
pleading, on such terms as to costs or otherwise as may be just and in such
manner (if any) as it may direct.
(2) Where an application to the Court for leave
to make the amendment mentioned in paragraphs (3), (4) or (5) is made after any
relevant period of limitation current at the date of issue of the writ has expired,
the Court may nevertheless grant such leave in the circumstances mentioned in
that paragraph if it thinks it just to do so.
In this
paragraph ‘any relevant period of limitation’ includes a time limit which
applies to the proceedings in question by virtue of the Foreign Limitation
Periods Act 1984.
(3) An amendment to correct the name of a party
may be allowed under paragraph (2) notwithstanding that it is alleged that the
effect of the amendment will be to substitute a new party if the Court is satisfied
that the mistake sought to be corrected was a genuine mistake and was not
misleading or such as to cause any reasonable doubt as to the identity of any
person intending to sue or, as the case may be, intended to be sued.
It will be
seen that Ord 20, r 5(3) allows an amendment, even to the extent of
substitution, if the court is satisified (i) that the mistake sought to be
corrected was a genuine mistake, (ii) was not misleading, or (iii) such as to
cause any reasonable doubt ‘as to the identity of any person . . . intended to
be sued’. If those conditions are satisfied, the court may allow amendment if
it thinks it is just to do so. Ord 20, r 5 was considered in the Evans
case [1983] QB 810.* At p 821 Donaldson
LJ (as he then was) said:
In applying Ord
20, r5(3) it is, in my judgment, important to bear in mind that there is a real
distinction between suing A in the mistaken belief that A is the party who is
responsible for the matters complained of and seeking to sue B, but mistakenly
describing or naming him as A and thereby ending up suing A instead of B. The
rule is designed to correct the latter and not the former category of mistake.
*Editor’s
note: Evans Constructions Co Ltd v Charrington & Co Ltd [1983]
QB 810. Also reported at [1982] EGD 326; (1982) 264 EG 347, [1982] 2 EGLR 61.
Adapting those
words to the present situation, it seems to me that Shelleys sued United
Artists in the mistaken belief that United Artists was the right person to make
defendant. Shelleys did not seek to sue Benesco and mistakenly describe them as
United Artists. Accordingly, as I see it, the Shelleys mistake is not such a mistake
as Ord 20, r 5 is designed to correct. It must be borne in mind that when the
originating summons was issued Shelleys knew nothing of Benesco. It did not
occur to Shelleys at that time that United Artists might not then be the
‘landlord’ within section 44.
The conclusion
I have reached may be emphasised by a wider consideration of the Evans
case. In that case there was in 1970 a lease by Charringtons to Evans expiring
in 1976. Charringtons assigned the reversion to Bass Ltd, another company in
the same group — the Bass Charringtons Group. Charringtons then became the
managing agents of the demised property for Bass. On April 1 1977 a new lease
was executed expressed to be supplemental to the 1970 lease. But in fact the
new landlords were Bass. The new lease ran out on June 24 1979 but the 1954 Act
applied. Evans held over and received a section 25 notice. The notice was given
by Charringtons, not on its own account but expressly as agent for Bass. The
solicitor acting for Evans then applied in the county court for a new tenancy.
Unfortunately, he named Charringtons as landlords, not Bass. The Court of
Appeal ordered (in effect) that Bass be substituted for Charringtons. A reading
of the judgment of Griffiths LJ (as he then was) shows that on the facts of
that case the learned lord justice was satisfied as to (i), (ii) and (iii) set
out above and that the amendment was just. At p 825H there are these words:
As the
mistake in this case which led to using the wrong name for the current
landlords did not mislead Bass and as, in my view, there can be no reasonable
doubt as to the true identity of the person intended to be sued, this case
falls within the scope of Ord 20, r 5(3), and it would be just to correct the
name of the respondent from Charringtons to Bass.
The learned
lord justice took that view because, of course, on the facts of that case both
Bass and Charringtons must have known that Evans intended to sue Bass the
landlord, and not the agent who had given the notice for the landlord. The
facts in this case are very different. When the originating summons was issued
on October 22 1987 it cannot be said that both Benesco and United Artists must
have known that Shelleys intended to sue Benesco. Benesco knew nothing of the
issue of the originating summons. Mr Neuberger accepted that Benesco did not
know of the issue of the originating summons until 1988. The Shelleys mistake
is therefore not a mistake that can be said to be a mistake that was ‘not
misleading’ within Ord 20, r 5(3). In other words, it cannot be said against
Benesco that before November 28 1987 they knew that they were persons intended
to be sued. It follows that, in my view, there can be no substitution pursuant
to Ord 20, r 5.
I reach my
conclusion with some regret because the fact that there was a change of
landlord on July 30 was unknown to Shelleys, the change resulting from the
notice given to Benesco by United Artists, coupled with the operation of
section 26(5) of the Act. On the other hand, it was open to Shelleys, as I have
already mentioned, to serve a notice under section 40(2). The form prescribed
for use as the section 40(2) notice includes a paragraph 3 in these terms:
3 I/We give you notice requiring you to notify
me/us in writing, within one month of the service of this notice on you —
(a) whether you are the freeholder of the whole
or part of the premises.
If you are not
the freeholder:
(b) I/We also require you to state, to the best
of your knowledge and belief —
(i) the name and address of
the person who is your immediate landlord in respect of the premises or the
part of which you are not the freeholder;
(ii) the length of your
tenancy; and
(iii) the earliest date (if
any) at which your tenancy can be terminated by notice to quit given by your
immediate landlord.
Had United
Artists been required to give the information there required, it is at least
possible that the fact of the change in landlord would have become known to
United Artists well before November 28 1987.
In the result,
I answer the agreed question by saying that United Artists is not rightly sued.
As to the Shelleys summons dated April 18 and the Shelleys notice of motion
dated October 12 1988, I decline to make any order. On the United Artists
summons dated May 16 1988 I order that the originating summons be dismissed.
