Leasehold Reform Act 1967 — Tenant’s claim to extended lease — Appeal from decision of county court judge holding tenant not entitled to extended lease — A term granted for 31 years expiring on March 24 1981 had vested in a tenant who lived in the property with his family as his main residence — The tenant was, however, a bare trustee who held the leasehold interest in trust for a company — One of the issues raised, and which turned out to be the decisive issue, was whether in these circumstances the tenant could be said to have occupied the house ‘in right of the tenancy’ — The county court judge decided this issue against the tenant and his view was upheld by the Court of Appeal — The tenant had the company’s permission to occupy the house as his residence, but the lease did not give the tenant the right to occupy it — If an extended lease were granted, the company could terminate the tenant’s licence to occupy — The Act could not confer any security of tenure on the tenant and it was not its intention to confer benefits on a company — As this ruling disposed of the tenant’s claim, the conclusions reached by the Court of Appeal on two other issues, disagreeing with the county court judge, were strictly obiter dicta only, but they are of some importance — The first concerned the question whether the valuation officer’s certificate enabling a tenant to have the rateable value of his house reduced in consequence of his improvements (thus bringing the rateable value within the limits for enfranchisement or extension of lease) is a literal condition precedent to the right to give a notice of claim or whether it is merely an available procedure which can provide an
adjustment retroactive to the date of the claim — Disagreeing with the county court judge, the Court of Appeal considered the latter to be the true position — The other issue was whether a second notice of claim given by the tenant was invalid because it was served after the term of the lease had expired by effluxion of time — Disagreeing again with the county court judge, the Court of Appeal considered that, in the light of para 3 of Schedule 3 to the 1967 Act, the second notice was invalid — Tenant’s appeal dismissed
This was an
appeal by the tenant, Noel Carter Oddy, from a decision of Judge McDonnell at
Westminster County Court holding that the tenant had not established a claim to
an extended lease of a house at 60 Eaton Terrace, Westminster, London SW1. The
respondents were the trustees of the will of the second Duke of Westminster, namely,
the sixth Duke and John Nigel Courtenay James and Patrick Geoffrey Corbett.
Gavin Lightman
QC and Jonathan Crystal (instructed by Freed Stone Goodman) appeared on behalf
of the appellant; Nigel Hague QC (instructed by Boodle Hatfield & Co)
represented the respondents.
Giving
judgment, EVELEIGH LJ said: The nature of the applications with which the
county court was concerned, the facts giving rise to those applications and the
issues which fell to be determined are so clearly set out in the judgment of
the learned county court judge that I gratefully adopt his words and repeat
them seriatim:
In each of
these originating applications the applicants, as trustees of the Will of the
second Duke of Westminster and freeholders of 60 Eaton Terrace, seek a declaration
that the respondent is not entitled to the grant of an extended lease of the
property under the Leasehold Reform Act 1967. The two applications were heard
together. Although certain issues of fact were raised by the pleadings, these
have been resolved, and I have had to determine certain questions of law on the
basis of agreed facts, which may be shortly stated.
By a lease
under seal dated June 12 1950 the second Duke demised the property (which is
admittedly a ‘house’ within the meaning of section 2 of the Leasehold Reform
Act 1967) to a Mr and Mrs Farquharson for a term of 31 years from March 25
1950. After prior assignments the term was assigned to and became vested in the
respondent on November 8 1963. Thereafter the respondent lived and continues to
live with his family in the property as his main residence.
It is now
admitted that the price paid to the assignor for the assignment of the term to
the respondent was provided by a company called Student Holidays in England
Ltd. It is also admitted that the leasehold interest vested at law in the
respondent has always been treated as an asset of the company in its books and
that the respondent is a bare trustee who holds the lease in trust for the
company.
The company
was formed in 1959 and at all material times since the acquisition of the lease
the respondent has held one of the two issued shares of the company and has
been a director. The respondent’s first wife was also a director and held the
other share until her death in 1976. Since then, the respondent has married his
second wife, who has acquired the other share from his first wife’s estate and
who has herself become a director.
By a notice
dated November 22 1977 but not served upon the applicants until February 23
1978 (which I shall call ‘the First Notice’) the respondent gave notice to the
applicants under the Leasehold Reform (Notices) Regulations 1967 of his desire
to have an extended lease of the property. In its original form it stated that
the rateable value of the property on March 23 1965 was £805, as was the fact,
but in its amended form it stated that the rateable value on that date was £513
and that the rateable value on April 1 1973 was £1,867, as was the fact. By
virtue of subsection (6) of section 1 of the Act, as the rateable value was
more than £400 on ‘the appropriate day’ the respondent’s right to acquire an
extended lease under section 1(1) depended upon the rateable value on April 1
1973 not exceeding £1,500 or the rateable value at the latter date being
adjusted in the manner provided in Schedule 8 to the Housing Act 1974 so as not
to exceed £1,500. The applicants on April 14 1978 gave a notice in reply saying
that they did not admit the respondent’s right to an extended lease because the
rateable values in 1965 and 1973 exceeded £400 and £1,500 respectively.
On November
13 1978 the respondent gave to the applicants’ predecessors a notice of
tenant’s improvements affecting rateable value and on December 28 1978 the
respondent made an originating application to this court seeking declarations
that he had made certain improvements to the property at his sole cost. An
answer was filed on March 30 1979. On October 3 1980 His Honour Judge Ruttle
declared that the improvements described in the order were improvements to
which Schedule 8 to the Leasehold Reform Act 1967 applied, that they involved
the work specified in the order and that they had been made by the respondent.
This order entitled the respondent to apply to the valuation officer for a
certificate that the improvement had affected the rateable value of the
property on April 1 1973 and the amount by which the rateable value would have
been less had the improvement not been made: see Housing Act 1974, Schedule 8.
On November 21 1980 the applicants gave notice of appeal against the order of
October 3 1980. The appeal has not been heard and both parties have agreed that
it should not be brought on for hearing until the determination of the matters
involved in the applications before me because my decision may determine the matter,
or, if it does not, it would be convenient and economical for an appeal against
my decision to be heard at the same time as the other appeal.
On January 19
1981 the applicants gave a further notice in reply to the first notice stating
that they did not admit the respondent’s right to an extended lease on the
ground that ‘at no time have you been in occupation of the property in right of
the tenancy as required by section 1 of the Leasehold Reform Act 1967 as
amended’. On January 26 1981 the first originating application before me was
filed. On March 6 1981 the respondent filed an answer in which inter alia
he denied the allegation that he held the tenancy granted by the original lease
only as a trustee for Student Holidays in England Ltd. As I have said, this
fact has since been admitted.
The term
granted by the lease expired on March 24 1981.
On April 7
1981 the valuation officer issued his certificate that the improvements would
have affected the rateable value on April 1 1973 and that the rateable value
would have been £391 less had the improvements not been made. Thus the 1973
rateable value would have been less than £1,500 on that date had the
improvements not been made.
On December
17 1981 the respondent gave a fresh notice of his desire to have an extended
lease of the property (which I shall call ‘the Second Notice’). On June 4 1982
the applicants gave a notice in reply saying that they did not admit his right
on the grounds (1) that he had not been in occupation of the property ‘in right
of’ the tenancy, (2) that at the date of his notice the tenancy had expired and
(3) that the rateable value in 1965 exceeded £400 and on April 1 1973 exceeded
£1,500. On June 22 1982 the applicants made the second originating application
now before me and on August 27 1982 the respondent filed an answer admitting
that he ‘now holds the legal estate’ of the term as trustee for the company.
The three
issues of law which I have to decide are:
(a) Has the respondent at all material times
occupied the house as his residence ‘in right of the tenancy’? If he has not, then the applicants are
entitled to the declarations which they seek;
(b) Was the first notice invalid because the
rateable value on April 1 1973 exceeded £1,500 despite the later adjustment?;
and
(c) Was the second notice invalid because it was
given after the term created by the lease had expired by effluxion of time?
As to the
first question: the learned judge held that the tenant was not occupying ‘in
right of the tenancy’. In relation to the second question, he held that the
tenant’s right to claim an extended lease did not arise until the rateable
value was adjusted by agreement or by a certificate of the valuation officer,
which in the present case meant April 7 1981. He held that the adjustment was
not retroactive and consequently the first notice was of no effect.
As to the
third question, he held that the second notice was not invalid because the
combined effect of para 5(1) and para 3(1) of the Third Schedule to the Act
prolonged the term of the original ‘long tenancy’ and therefore the second
notice was valid as it was given during the currency of that ‘long tenancy’.
The tenant now
appeals. All three issues have been argued before us. While it is appreciated
that a conclusion on the first issue adverse to the tenant would determine this
appeal, the court, after some hesitation, agreed that it would consider all of
the issues whatever its decision on the first might be. I shall therefore take
each one in turn.
As to the
first question. Was the tenant occupying in right of tenancy? Section 1(2) reads:
In this part
of this Act references, in relation to any tenancy, to the tenant occupying a
house as his residence shall be construed as applying where, but only where,
the tenant is, in right of the tenancy, occupying it as his only or main
residence . . .
The question
in this case is whether the tenant is occupying in right of the tenancy as his
residence. The tenant claims that, as against the landlord, he has the right of
occupation because he has legal title to the lease. In my judgment, however,
one has to ask whether the tenant has right to occupy ‘as his main residence’
and, if so, how was that right created. The tenant was trustee of the lease for
the company. The lease did not give the tenant the right which he asserts to
occupy as a residence. He is to be regarded as having the permission of
the company to occupy. The Act is concerned to protect a person who has the
right to reside in a house. If an extended lease were granted in this case, the
company could terminate the licence to occupy. The Act would not confer any
security of tenure for the tenant or preserve for him the use of the property
for residential purposes. It is not the intention of the Act to
person occupying as his residence shall be taken to extend to any occupation of
a company. For this reason, I would dismiss this appeal.
As to the
second question: ‘Is the certificate of the district valuer retroactive to the
date of the tenant’s first notice?’ The
Act contains no specific provision which answers this question. Counsel have,
perforce, asserted the advantages and disadvantages which would result if the
certificate did or did not relate back to the date of the notice. Arguments
have been advanced on both sides in which various sections of the Act have been
recited as affording support inferentially for the opposing contentions.
In such a
situation I think it is necessary to consider Part I of the Act including its
Schedules as a whole in order to discover the intention of Parliament and,
having arrived at that presumed intention, to test it against the provisions
which are immediately relevant, lest such a presumed intention is inconsistent
with them.
I start with
the title: ‘An Act to enable tenants of houses held on long leases at low rents
to acquire the freehold or an extended lease . . .’. Part I is headed:
‘Enfranchisement and extension of long leaseholds’. It is significant that
section 1 itself does not purport to confer a right. It is in the nature of an
announcement or a proclamation and in my opinion declares more loudly than any
section what it is that Parliament intends to achieve and the limits within
which it intends to do so. Section 1(1) as amended reads:
This Part of
this Act shall have effect to confer on a tenant of a leasehold house,
occupying the house as his residence, a right to acquire on fair terms the
freehold or an extended lease of the house and premises where — (a) his tenancy
is a long tenancy at a low rent and (subject to subsections (5) and (6), the
rateable value of the house and premises on the appropriate day is not (or was
not) more than £200 or, if it is Greater London, than £400; and (b) at the
relevant time (that is to say, at the time when he gives notice in accordance
with this Act of his desire to have the freehold or to have an extended lease,
as the case may be) he has been tenant of the house under a long tenancy at a
low rent, and occupying it as his residence, for the last three years or for
periods amounting to three years in the last ten years; and to confer the like
right in the other cases for which provision is made in this Part of this Act.
Subsection
(4A), originally inserted by the Housing Act 1974 but now substituted by the
Housing Act 1980, Schedule 21, para 2, reads:
Schedule 8 to
the Housing Act 1974 shall have effect to enable a tenant to have the rateable
value of the house and premises reduced for purposes of this section in
consequence of tenant’s improvements.
I shall refer
to Schedule 8 in a moment. It provides machinery by agreement or judicial and
administrative process to determine a notional rateable value for the
application of Part I of the Act, particularly with reference to section 1 and section
9, to which I will refer later.
It is to be
noted that the only specific reference in section 1 to the tenant’s notice is
in subsection (1)(b). The intention is clearly expressed to the effect that the
tenant’s notice, which is referred to in later sections as the first step to
acquiring the freehold or extended lease, shall only be effective for that
purpose when the tenant satisfies the residential qualification of three years.
By way of contrast, section 1(a) contains no requirement that the rateable
value shall be within certain limits at the date of the giving of a notice. It
simply prescribes the class of those premises which carry the possibility of
the tenant having the right to acquire the freehold or the extended leasehold.
The only qualification laid down in relation to service of the notice as a
condition to entitlement to acquire the freehold or extended lease is three
years’ residence by the tenant. The rateable value is not related to the
validity of the notice but to the eligibility of the premises.
The Act was
originally concerned only with premises with rateable limits of £200 or £400.
The amendments to the Act in subsection (4A) and Schedule 8 to the Housing Act
1974 were clearly prompted by the realisation that it was unjust for a tenant
to be excluded from the benefits which the Act conferred when the rateable
value exceeded the limits only because of improvements effected by the tenant
himself. The amendment effected by this subsection (4A) was clearly intended to
put such a tenant in the same position as a tenant whose house would be within
the prescribed limits if unaffected by the tenant’s improvements.
We are
therefore concerned to determine whether the procedure laid down by Schedule 8
to the Housing Act 1974 is to be regarded as a condition precedent to the right
to give notice by a tenant with a rateable value in the valuation list at the
figure above the limit or whether that procedure is available as a means of
determining the notional rateable value to be accepted by the court when it is
called upon to adjudicate upon the tenant’s rights. With this in mind I go to
the operative sections of the Act. Section 5(1):
General
provisions as to claims to enfranchisement or extension. — (1) Where under this
Part of this Act a tenant of a house has the right to acquire the freehold or
an extended lease and gives notice of his desire to have it, the rights and
obligations of the landlord and the tenant arising from the notice shall inure
for the benefit of and be enforceable against them, their executors,
administrators and assigns to the like extent (but no further) as rights and
obligations arising under a contract for a sale or lease freely entered into
between the landlord and tenant; and accordingly, in relation to matters
arising out of any such notice, references in this Part of this Act to the
tenant and the landlord shall, in so far as the context permits, include their
respective executors, administrators and assigns.
Of course, the
wording of this subsection begs the question. In what situation does the tenant
have the right to acquire the freehold?
The respondents would say that it is after he has established the
notional rateable value. The appellant would say it is if he is a person whose
actual rateable value is within the limits or who is in a position to establish
a notional rateable value within those limits. With the arguments thus evenly
balanced, section 5 would not seem to take us very much further.
However,
counsel for the respondents contends that section 5 provides a powerful
argument for his case. He says that, on the giving of the notice of the
tenant’s desire to acquire the freehold, there is the equivalent of a contract
of sale. He says that section 9 determines the price. That price for property
in the Greater London area is greater if the rateable value is above £1,000,
for that section as added to by the Housing Act 1974, section 118(4), so
provided. He said, and this was in the forefront of his argument, that if the
rateable value was above £1,000 in the valuation list at the date of the
tenant’s notice, then to allow the Schedule 8 adjustment to be retroactive
would deprive the landlord of a vested right to the greater price. I agree that
this would mean that the landlord would not get the greater price. I do not
agree that it would deprive him of a vested right to that greater price.
The reference
to price first appears in section 8(1). That reads:
Enfranchisement. 8. Obligation to enfranchise. — (1) Where a tenant of a house has
under this Part of this Act a right to acquire the freehold, and gives to the
landlord written notice of his desire to have the freehold, then except as
provided by this Part of this Act the landlord shall be bound to make to the
tenant, and the tenant to accept (at the price and on the conditions so
provided), a grant of the house and premises for an estate in fee simple
absolute, subject to the tenancy and to tenant’s incumbrances, but otherwise
free of incumbrances.
The right of
the landlord to the price as stipulated is the price so provided, ie under
‘this Part of this Act’, and furthermore it is an obligation from which the
tenant may withdraw on certain conditions: see section 9(3). That price is
determinable in accordance with the provisions of section 9. Section 9, which
after 1974 provides for a higher price for property above £1,000 rateable value
in Greater London or £500 elsewhere, also contains the following provision:
Section 9
(1B). For the purpose of determining whether the rateable value of the house
and premises is above £1,000 in Greater London or £500 elsewhere, the rateable
value shall be adjusted to take into account any tenant’s improvements in
accordance with Schedule 8 to the Housing Act 1974.
Those words
indicate that before the price can be ascertained there must first be an
inquiry to establish the rateable value, unless it is agreed in accordance with
the procedure in Schedule 8. The subsection is quite specific. The rateable
value shall be adjusted to take into account any tenant’s improvements in order
to determine whether the higher or lower scale shall apply.
I find it
impossible to accept the respondents’ contention that the landlord has a vested
right to the higher scale if at the time the tenant gives notice the property
is shown in the valuation list at the higher rateable value. Clearly the
valuation list is not conclusive for the establishment of the price.
It is tempting
at this stage to say that one’s labours are over and if the determination of
the price can be made to attend upon the determination of the right to adjust
the rateable value, so can the dispute between landlord and tenant as to the
right to enfranchisement also be made to attend upon the determination of
the right to adjustment of the rateable value. However, one must look at the
other sections of the Act in order to see whether this conclusion is
inconsistent with them.
Section 14
adopts similar wording to section 8 in relation to an extended lease. The
opening words are similar to those in section 5 to which I have already
referred and the other provisions of these two sections do not provide an
answer to our first question. It is one thing to have a right. It is another to
be in a position to assert it. So far as the adjustment to the rateable value
is concerned, the tenant’s right to this will depend upon matters which
occurred before the rateable value was assessed. He either has or has not
contributed to that assessment by effecting improvements which have raised the
rateable value above the limits. If he has done so, then he is entitled to
acquire the freehold or extended lease provided the other conditions are
fulfilled. One condition is that he shall have occupied the premises as his
residence for the last three years at the time when he gives notice. The notice
is a procedural step which the tenant must take if he is to call upon the court
for assistance in enforcing his right to enfranchisement. It alerts the
landlord to the claim and enables him to inquire into the tenant’s right at the
tenant’s expense: section 9(4).
In the present
case the landlord’s contention that the notice was invalid amounts to saying
that, although the tenant has now established the necessary notional value, he
has no right to an extended lease unless he can point to another notice served
during the currency of the ‘long tenancy’ issued after the rateable value was
adjusted. It also amounts to saying that the first notice was of no effect.
There are many references in the Act to a notice being of no effect; for
example, section 18(6), where notice is given after the landlord has applied
for possession on the ground that he requires it for his own occupation. See
also section 28, where the minister certifies that the property will be
required for development. See further section 5(6), where a notice is stated to
be of no effect if at the time it is given a notice to treat in relation to
compulsory purchase has been given. Nowhere is it enacted that a notice shall
be of no effect if given before there has been an adjustment of the rateable
value. In one sense the notice is an invitation to the landlord to treat.
Section 22 deals with the validity of the tenant’s notice and sets out detailed
provisions in Schedule 3 to the Act. By para 5(1)(a) of that Schedule it is
provided:
References to
a claim to acquire the freehold or an extended lease shall be taken as
references to a notice of a person’s desire to acquire it under Part I of this
Act and, except and in so far as the contrary intention appears, as including a
claim made by a tenant not entitled to acquire it and a claim made by a person
who is not a tenant.
By para 3(1)
of the Schedule it is provided:
3(1) Where a tenant makes a claim to acquire the
freehold or an extended lease of any property, then during the currency of the
claim and for three months thereafter the tenancy in that property shall not
terminate either by effluxion of time or in pursuance of a notice to quit given
by the landlord or by the termination of a superior tenancy; but if the claim
is not effective, and but for this subparagraph the tenancy would have so
terminated before the end of those three months, the tenancy shall so terminate
at the end of the three months.
Para 4 of the
Schedule contains provisions for restricting a landlord’s right of entry or
forfeiture during the currency of the claim unless the court decides that the
claim is not made in good faith, in which case the court may set aside the
notice in exercise of its power under section 20(5), order the tenant to pay
compensation to the landlord and, section 20(6), order that any further notice
given within five years be void.
Thus the
effect of section 22 and the Third Schedule is to adapt the notice as a means
of regulating the position of landlord and tenant until their rights are
finally decided by agreement or, where necessary, by the court. Except where
the Act or the Schedule specifically provides the notice shall be of no effect
or invalid, its role is to preserve the status quo, by preventing forfeiture
and deeming the tenancy ‘for purposes of the claim to be a subsisting tenancy’,
Schedule 3, para 4(2), and by keeping it alive until three months after the
determination of the claim, thus ensuring the effective control of the issues
between the parties by the court: Schedule 3, para 3(1).
While the
notice has a substantive effect by virtue of section (1)(b), its role is
largely procedural. The intention of the Act clearly is to confer its benefit
upon a tenant of a long tenancy at a low rent who has been in occupation for a
specified period where the rateable value of the property in the valuation list
is below certain limits or where the tenant is entitled to a notional rateable
value within those limits. The procedure laid down in Schedule 8 is available
if necessary to determine that rateable value. Where the tenant is in a
position to establish the notional rateable value below the limits, even though
he has not yet done so, he is a person with a right to claim the freehold or
extended lease. The fact that the notional rateable value has not been
established does not mean that the tenant has no right: id certum est quod
certum reddi potest. The notional rateable value must be established as
proof of the tenant’s right.
Section
20(2)(a) provides that proceedings shall be brought in the county court to
determine whether a person is entitled to acquire the freehold or an extended
lease. In order to succeed, the tenant will have to prove that his rateable
value has been agreed, or determined, to be within the limits. If he does that,
he shows himself to be a person who had the right to acquire the freehold or
extended lease at the time that he gave the notice. In my judgment, therefore,
the notional rateable value when determined dates back to the notice of
leaseholder’s claim.
Subsection
(4A) was introduced into the Leasehold Reform Act 1967 for the first time by
section 118 of the Housing Act 1974. That subsection then read:
At any time
the tenant may take the action provided in Schedule 8 to the Housing Act 1974
for his rateable value to be adjusted and in all such cases the agreed rateable
value or that determined by the Court or District Valuer shall be the rateable
value for the purposes of that (sic) Act.
(Clearly the word
should be ‘this’.) The new wording is
different:
Schedule 8 to
the Housing Act 1974 shall have effect to enable a tenant to have the rateable
value of the house and premises reduced for purposes of this section in
consequence of tenant’s improvements.
The original
subsection was in force at all relevant times for the purposes of this case.
The wording of the new subsection is in my judgment more appropriate for the
purpose of achieving Parliament’s intention as I have interpreted it. The
earlier wording could be said to mean that the tenant must first take
the action and thereafter the agreed or determined rateable value shall be the
value for the purpose of the Act. The present wording enables the tenant to
have the rateable value reduced for the purposes of section 1. The purposes of
that section come finally to be considered when the judge exercises his
jurisdiction under section 20 of the Act to decide whether or not a tenant is
entitled to the freehold or an extended lease. However, I do not think that the
old wording stands in the way of the conclusion which I have reached. The
wording is ambivalent. In either case the section enables the notional rateable
value to be used for the purpose of the court’s final decision, which will
involve determining whether or not the premises are within the prescribed
rateable limits. Whether we say this makes the certificate retroactive or not
does not matter.
The procedure
to be followed by a tenant after serving his notice of intention to acquire the
freehold or leasehold is strictly regulated by the Third Schedule to the Act.
The procedure for the adjustment of the rateable value is also strictly
regulated by Schedule 8 to the Housing Act 1974. Time-limits are imposed to
ensure that the tenant does not delay. (This is not strictly true in relation
to the initial notice under Schedule 8.)
Paragraph 3(5) of Schedule 8 none the less provides that the valuation
officer shall not issue his certificate while any proposal is pending for an
alteration in the valuation list relating to that hereditament. This would seem
to imply that if a change is made which brings the property within the limits,
the tenant could take advantage of it. It also indicates that, while strict
time-limits are laid down, there are matters in relation to the timing which
the tenant has no power to control. He cannot control the date of the hearing
by the county court to determine whether there are relevant improvements, nor
can he control the date of the issue of the certificate. Consequently, if a
tenant could not issue a valid notice of leaseholder’s claim without first
having achieved a reduction in the rateable value, he might never be in a
position to serve a tenant’s notice during the currency of his lease. A tenant
may not acquire the necessary three years’ residential qualification until the
last month of the tenancy. It is true that he could start Schedule 8
proceedings before then, but if there is determined resistance by the landlord,
the final certificate might well be delayed beyond the termination of the
tenancy. I cannot believe that such a situation is consistent with the
intention of the legislature. On the other hand; the court has some control
over the
under para 4 of Schedule 3 in the case of unreasonable delay for the court to
order that the tenancy shall not be treated as subsisting for the purpose of
resisting the landlord’s proceedings to enforce a right of re-entry or
forfeiture within the provisions of that paragraph. Section 20(4) gives some
power of control. It is not possible to envisage every situation, but I am
confident that the court, in the exercise of its inherent jurisdiction coupled
with its powers under the Act, would be in a position to prevent any injustice
to the landlord brought about by unreasonable delay on the part of the tenant.
The third
question. In view of my decision on the second question, the third question
ceases to be of any great practical importance. I think that it is right to
say, for the reasons given by the learned county court judge, that the Schedule
prolongs the original long lease but, in my opinion, it does so for the purpose
of the claim and not for the purpose of opening the door to another claim.
I have set out
para 3(1) above. The tenant has submitted that, as it is provided that ‘the
tenancy’ shall not terminate, the duration of the original tenancy is extended
so that the tenant continues to hold under a long tenancy at a low rent.
Consequently, it is said, the provisions of Part I of the Act, and in
particular section 1 thereof, continue to apply to him until the end of the
extended term. It is submitted that the tenant may therefore serve a notice to
acquire the freehold or an extended lease during the prolonged period of the
tenancy.
In reply to
this, the landlord has submitted that the tenant for the extended period holds
under a statutory tenancy created by the Act and not under a long tenancy.
Reference was made to section 3 of the 1967 Act, which contains the definition
of ‘long tenancy’. No reference is made to the statutory extension under para 3
of the Third Schedule. By way of contrast, it is submitted, section 3(5)
expressly mentions statutory extensions under Parts I and II of the Landlord and
Tenant Act 1954 as coming within the definition of ‘long tenancy’. For myself,
I do not obtain much assistance from the fact that the tenancies under the 1954
Act are specifically included in the definition and extended tenancies under
para 3 of the Third Schedule are not. Section 3 of that Act, referring to the
tenancy which continues under its provisions, says that the tenancy shall ‘be
deemed (notwithstanding any changes in circumstances) to be a tenancy to which
section 1 of this Act applies’. Consequently, as the tenancy is only deemed
to be a long tenancy at a low rent, it was necessary to include it specifically
in section 3 of the 1967 Act.
In my opinion,
the answer to the question whether or not the tenant has the right to serve
another notice can be found in the provisions of para 3 itself. That paragraph,
which prolongs the tenancy, provides that if the claim is not effective the
tenancy shall terminate at the end of the three months following the
determination of the claim. If the tenant could serve another notice either
before the determination of the claim or within the three months thereafter
(which the tenant’s argument would allow him to do) he could defeat the express
provision of para 3 as to the date of the termination of the tenancy.
Consequently,
it seems to me that it does not matter what name one gives to the extended
tenancy. It is sufficient to say that the Act has not extended the tenancy so
as to enable the tenant to serve another notice.
KERR LJ said:
I agree with the conclusions of Eveleigh LJ on the three questions which have
been argued and that the tenant’s appeal must be dismissed because he fails on
the first of these questions.
The appeal
was dismissed with 75% of costs in the Court of Appeal, the county court
judge’s order for costs not being disturbed. Leave to appeal to the House of
Lords was refused.