Business tenancy–Notice to terminate followed by tenant’s application to county court–Tenant also commences Chancery action claiming specific performance of agreement for 50-year lease–County court judge’s decision not to grant adjournment of application for new lease under Act upheld on appeal–In proceedings under the 1954 Act the county court has jurisdiction to determine equity questions to do with relevant matters such as the existence of a tenancy between the parties
This was an
appeal by Mr Roy Frederic Rushton, Mr Peter Harry Knight, Mr Peter Halsworth
Field Phillips and Mr Anthony Sherwood Brooks New, carrying on business at 39,
40, 41 and 42a Cloth Fair, London EC1, as the Seely & Paget Partnership, architects,
from an order of Judge Leonard in the Mayor’s and City of London Court on
January 17 1975 refusing to adjourn or stay an application by the partnership
in that court for a new tenancy of the premises occupied by them, pending the
hearing of an action by the partnership in the Chancery Division against Mr
Paul Edward Paget, and against the present respondents, Mr John Lindsay Eric
Smith and his wife, Mrs Christian Margaret Smith, sued as trustees of the
Landmark Trust, for specific performance of an agreement for the grant of a
50-year lease of the premises.
Mr G M Godfrey
QC and Miss E Gloster (instructed by Stone, Odell & Frankson, of Banstead)
appeared for the appellants, and Mr N T Hague (instructed by Stephenson,
Harwood & Tatham) represented the respondents. Mr J D Waite (instructed by
Field, Fisher & Martineau) held a watching brief on behalf of Mr Paget.
Giving
judgment, MEGAW LJ said: This appeal arises out of proceedings under Part II of
the Landlord and Tenant Act 1954. The appellants are Messrs Rushton, Knight,
Phillips and New, who carry on business as partners in an architects’
partnership under the name Seely & Paget Partnership. I shall call the
appellants, collectively, ‘the tenants.’
The respondents in the appeal are Mr Smith and Mrs Smith, who are
concerned in this litigation in their capacity as trustees of the Landmark
Trust. I shall call them ‘the landlords.’
The Landmark Trust is concerned in the preservation of small buildings
of architectural or historic importance or interest. The premises in question
are 39 (in part), 40, 41 and 42a Cloth Fair, in the City of London. Since 1925
a partnership (or, it may be, successive partnerships) had been carried on in
these premises under the name Seely & Paget. In 1963 Mr Paul Paget, who
had, I think, been one of the original partners, became the sole partner, or
proprietor, of the firm. Mr Paget also became the freehold owner of the
premises in question in Cloth Fair. On October 8 1963 Mr Paget took into
partnership the four gentlemen whom I have named above and whom I am calling
‘the tenants.’ This was done by a
partnership agreement of that date, Mr Paget being described therein as ‘the
senior partner.’ In that partnership
agreement, which appears at p 33 of the bundle, clause 2 provides as follows:
‘Period. Subject to the senior partner being entitled to retire at any time
from the firm, the period of the partnership will be of three years’ duration
from April 1 1963.’ Clause 4 is
marginally described as ‘Business Accommodation.’ Subclause (1) reads: ‘The firm will continue
for business purposes its occupation of the accommodation in 39, 40 and 42a
Cloth Fair together with permissive use of the reception room and offices in 41
Cloth Fair as hitherto, all as shown on the schedule forming part of this
agreement.’ Clause 4, subclause (2)
reads:
The premises
to which reference is made in clause 4 (1) of these heads will remain the sole
property of the senior partner and will be leased to the firm at a rent of
£1,800 per annum, inclusive of all fixtures, fittings and office furniture
taken over at April 1 1963, for the term of 50 years from April 1 1963,
determinable by the partnership on three months’ notice at any time and by the
senior partner or his representatives on three months’ notice at any time after
the dissolution of the partnership.
On May 20 1966
a supplemental agreement was made between the same parties, extending the
partnership agreement for three years to April 1 1969. On that latter date Mr
Paget retired from the partnership. The tenants continued as partners. Nothing
that I say is to be construed as indicating any view whether the partnership
was or was not dissolved; whether the existing partnership continued without Mr
Paget; or whether a new partnership was created. That is not an issue before
us. It may be an issue hereafter. I express no views on it. Mr Paget, having
retired, sold the premises in Cloth Fair to Mr and Mrs Smith, the landlords, in
their capacity as trustees of the Landmark Trust. The contract of sale was
dated August 19 1970. Completion date was shown to be September 29 1970. Mr
Paget sold as beneficial owner. The only relevant part of the contract which I
need cite is special condition of sale K (c). That is as follows:
K. The
purchasers hereby agree with the vendor so that the provisions of this clause
shall remain in full force and effect notwithstanding completion of the sale .
. . (c) to grant to Messrs Seely & Paget an initial term of three years of
parts of 39, 40, 41 and 42a Cloth Fair comprising the whole of the office
premises now occupied by them at an initial exclusive rent of £1,800 per annum
together with . . .
–and then I
need not read the specific provisions that follow. The contract contained no
reference to the term of the partnership agreement regarding the 50-year lease
from April 1 1963, and the lease for an initial term of three years referred to
in special condition K (c) was not executed.
It would
seem–and I do not think that there is controversy about this–that the tenants
continued after Mr Paget’s retirement, and after the sale of the premises, to
occupy
defendants, the landlords, the rent was presumably paid to them, the landlords,
and not to Mr Paget. However, on July 18 1974 the landlords, through their
solicitors, served on the tenants a notice purporting to be under section 25 of
the Landlord and Tenant Act 1954, terminating the tenants’ tenancy on January
25 1975. The notice indicated that the landlords would not oppose an
application to the court under Part II of the 1954 Act for the grant of a new
tenancy. A further notice, also under section 25, was served by the landlords
on November 22 1974. That further notice gave notice of termination on
September 30 1975. That notice was served to cover a possible different view of
the date of the expiry of the tenancy. The first notice, that of July 18 1974,
purporting to terminate the tenancy, did not come out of the blue, nor as a
shock to the tenants. Further, the correspondence between the parties before
the issue of that notice in some minor degree, and after November 1974 more
specifically, indicated to the landlords that the tenants were, or might be,
asserting that the tenancy by reference to which the landlords were giving
their notice was not accepted by the tenants as being the tenancy which they
possessed.
The rateable
value of the premises is recorded as being £2,880. The county court
jurisdiction, as laid down in section 63 (2) (a) of the 1954 Act as amended by
the Administration of Justice Act 1973, is subject to the limit of a rateable
value of £5,000. So this is well within the county court jurisdiction so far as
concerns the Landlord and Tenant Act proceedings. The tenants’ first response
to the landlords’ section 25 notice of July 18 1974 was to submit an
application (which appears at p 1), in proper time under the Act and the rules,
in the Mayor’s and City of London Court, on November 18 1974, applying for the
grant of a new tenancy. On the face of it, that application may appear somewhat
odd in relation to the issues which are being raised: for by it the tenants
appear to accept that their tenancy was, indeed, a term of three years, whereas
they now seek to assert that no question of the grant of a new tenancy under
the 1954 Act arises, because they (the tenants) are entitled to a tenancy of 50
years from April 1 1963, so that Part II of the Landlord and Tenant Act 1954
(if it should so long survive) would not become relevant to the premises until the
year 2013. However, there is no suggestion by the landlords that any waiver or
estoppel arises from the tenants’ application having been expressed in that
form. It is accepted that by the relevant time, the landlords were aware of the
tenants’ primary contention that the tenancy under which they held had not
expired. For their part, the tenants made this application when they did in
order to prevent themselves from being defeated by the stringent time
provisions of the Act and the rules in the event of their failing to be able to
rely, broadly speaking, on their alleged 50-year lease. The landlords on
December 2 1974 submitted their answer proposing a new lease for seven years
with a rent of £15,000 pa, and other terms into which it is unnecessary to go.
Then on January 3 1975 the landlords, seeking to take advantage of section 24A
of the Landlord and Tenant Act 1954, which had been introduced by section 3 of
the Law of Property Act 1969, submitted an application to the Mayor’s and City
of London Court asking for the determination of an interim rent.
In January
1975, the tenants sought to make a fairly drastic amendment of their
application originally submitted on November 18 1974. I do not think that the
precise date is material for present purposes, but we were told, as I
understood it, that the application to make this amendment was in fact made to
the judge in the Mayor’s and City of London Court at a hearing on January 17
1975, and was then allowed by him. The amendment of the formal application
raised a point, which I do not think is relevant at the present stage of the
proceedings, as to the validity of the landlords’ notice of termination served
on July 18. Paragraph 2 of the amended application read thus:
In the
alternative to (1) above, if (which is denied) the said notice was served on us
on a correct date and the said date of termination is correct, and if (which is
denied) the respondents are right in their contention that we hold the premises
under a lease or an agreement for a lease for a term of three years from
September 29 1970, then we apply to the court for the grant of a new tenancy
pursuant to Part II of the Landlord and Tenant Act 1954.
Then further
particulars are set out. That paragraph 2 was intended, I think, indirectly,
and no doubt deliberately indirectly, to indicate the tenants’ contention that
the landlords’ assumption of a tenancy of three years commencing on September
29 1970 was not accepted by the tenants. I say that it was indirectly indicated
and deliberately so. That is because the tenants were minded to seek to have
the issue of the tenancy determined, not in the Mayor’s and City of London
Court, but in the Chancery Division of the High Court. The landlords had been,
some time earlier, at any rate by the middle of November 1974, apprised of the
general intention of the tenants to adopt some such course. Hence the tenants
presumably were not anxious to appear themselves to raise directly, in the
Mayor’s and City of London Court proceedings, the issue or issues which they
were going to contend could only be decided, or should properly be decided, in
a different court. They (the tenants) then launched proceedings in the Chancery
Division of the High Court by writ issued on January 16 1975 and by a statement
of claim delivered on the same day. In those proceedings, Mr Paget was made the
first defendant and the landlords were made the second defendants. The essence
of the relief claimed was a declaration against both the first and second
defendants that the tenants (who were the plaintiffs in the Chancery action)
were entitled to an order for specific performance of the agreement contained
in the partnership agreement of October 8 1963 for the grant to the tenants of
a 50-year lease running from April 1 1963 at a rent of £1,800 pa. Alternatively,
against the first defendant, Mr Paget, there was a claim for damages; and there
were various claims for other relief.
The writ and
statement of claim in the Chancery proceedings were part of the material put
before the learned judge in the Mayor’s and City of London Court in the
proceedings on January 17 1975, to which I shall come shortly. The defence in
the Chancery Division proceedings had not then been delivered. It has been
delivered since. By paragraph 5 of that defence, which was delivered, coupled
with a counterclaim, on March 11 of this year, the second defendants–that is
the landlords–contended that the sale agreement ‘created an equitable tenancy
for the term of three years from September 29 1970,’ and that that equitable
tenancy had been ‘duly determined’ by the notice given on July 18 1974 under
section 25 of the Landlord and Tenant Act. Paragraph 7 of the defence asserted
that ‘prior to the date of the contract for sale . . . the plaintiffs ‘–that
is, the gentlemen whom I have called ‘the tenants’–‘or one or more of them were
fully aware that the purchase price payable’ under that contract of sale by the
landlords to Mr Paget ‘was negotiated on the footing that the plaintiffs’
interest in the premises was only the agreement to grant a term of three years
from the date of the transfer.’ It was
denied that the tenants were entitled to a 50-year term, or to any term; and it
was contended that the plaintiffs, the tenants, had expressly or impliedly
represented to the landlords that they, the tenants, had no rights of
occupation of the premises, or that, after completion of the purchase by the
landlords, the plaintiffs would occupy the premises solely by virtue of the
agreement for a three-year term, and that the landlords relied on those
representations. Particulars were given of that assertion. By paragraph 8 of
the defence it was further asserted
plaintiffs, the tenants, a 50-year term in the partnership agreement was terminated
by mutual agreement between them prior to the date of the contract of sale. By
paragraph 9 it was asserted that the agreement and rights in relation to a
50-year term were not overriding interests within section 70 (1) of the Land
Registration Act 1925, and further or alternatively that the plaintiffs, the
tenants, were estopped by their conduct from claiming any rights under that
agreement against the second defendants, the landlords. By paragraph 10 it was
asserted that if the 50-year term remained valid and subsisting, the landlords
were entitled to determine that term by three months’ notice at any time after
the partnership between Mr Paget and the plaintiffs, the tenants, had been
dissolved.
Pursuant to
the proceedings in the Chancery Division, the landlords gave notice under the
Rules of the Supreme Court, order 16, rule 8, addressed to the first defendant
in those proceedings, Mr Paget, claiming that they were entitled to damages or
an indemnity in the event of the plaintiffs’ claim in that Chancery action
succeeding against the landlords. I return to what happened in relation to the
proceedings in the Mayor’s and City of London Court. The tenants applied in
that court for an adjournment or stay of the proceedings pending the
determination of the action which they had started in the Chancery Division of
the High Court. On January 17 1975 that application was heard and refused by
Judge Leonard. He did, however, grant an adjournment of the proceedings under
the Landlord and Tenant Act in order to enable an appeal to be taken to this
court should the tenants be so minded. It is that appeal which is before us
now. The essence of the submissions made on behalf of the tenants is that the
Mayor’s and City of London Court, having the jurisdiction of a county court,
does not have jurisdiction to determine an issue which the tenants wish to
raise in this case: that is, the issue that they, the tenants, are entitled to
a decree of specific performance of the provision of the partnership agreement
under which the agreement was made that they should have a 50-year lease of the
premises. The tenants also contend that if they are wrong on that submission,
and if there was indeed jurisdiction in the Mayor’s and City of London Court,
nevertheless that jurisdiction is discretionary, and the judge was wrong in
exercising his discretion so as to prevent the tenants from having the
opportunity to have determined in the Chancery Division the proceedings which
they have started in that Division before the proceedings in the Mayor’s and
City of London Court should be further heard and decided.
The value of
the premises with which we are here concerned is accepted to be very
substantially over the limit of £5,000 which is prescribed in section 52 (1)
(d) of the County Courts Act 1959. That section, which relates to the
jurisdiction of the county court in equity proceedings, provides by subsection
(1), ‘A county court shall have all the jurisdiction of the High Court to hear
and determine any of the following proceedings, that is to say . . . (d)
proceedings for the specific performance . . . of any agreement for the sale,
purchase or lease of any property, where, in the case of a sale or purchase,
the purchase money, or in the case of a lease, the value of the property, does
not exceed the sum of £5,000.’ So in the
ordinary way the county court, while it has full jurisdiction to deal with
proceedings for specific performance where the value of the property is not
more than £5,000, has no such jurisdiction where the value of the property is
greater than £5,000. Here, as I have said, it is not disputed that the value of
the property is greater than £5,000. However, the matter does not stop there,
because there are the specific statutory provisions of the Landlord and Tenant Act
1954. By section 63 (2) of that Act it is provided that: ‘Any jurisdiction
conferred on the court by any provision of Part II of this Act or conferred on
the tribunal by Part I of the Landlord and Tenant Act 1927 shall, subject to
the provisions of this section, be exercised (a) where the rateable value of
the holding does not exceed £5,000, by the county court.’ Then there are further provisions in later
subsections of that section whereby the parties can, by consent, agree to the
transfer of what I may call a county court jurisdiction case to the High Court,
and vice versa; and there is power also in the court itself so to do, on the
application of either of the parties. I should refer also at this stage to the
definition of ‘tenancy,’ which is set out in section 69 (1) of the same Act.
‘Tenancy’ is there defined as follows: ”Tenancy’ means a tenancy created
either immediately or derivatively out of the freehold, whether by a lease or
underlease, by an agreement for a lease or underlease or by a tenancy agreement
or in pursuance of any enactment. . . . ‘
I need not read the rest of it. While I am referring to the provisions
of the Act, I should also cite section 43A, which was introduced into the 1954
Act by section 13 of the Law of Property Act 1969. It provides as follows:
Where the
rateable value of the holding is such that the jurisdiction conferred on the
court by any other provision of this Part of this Act is, by virtue of section
63 of this Act, exercisable by the county court, the county court shall have
jurisdiction (but without prejudice to the jurisdiction of the High Court) to
make any declaration as to any matter arising under this Part of this Act,
whether or not any other relief is sought in the proceedings.
In this case
the tenants are seeking a declaration that they are entitled to a decree of
specific performance of what they say is the agreement between them and Mr
Paget initially in the partnership agreement, whereby it was agreed that they
should be granted a lease of the premises for 50 years; and, the tenants would
seek to say, when the freehold of the premises was sold by Mr Paget to the
landlords, the tenants’ equitable right which they had by virtue of that
agreement with Mr Paget survived and the burden of it became binding upon the
landlords. The statement of claim which has been delivered in the Chancery
Division is concerned to set out the history of the matter directed towards
building up such a case. It is a part of the tenants’ submissions (and this is
not, I think, in dispute as a matter of fact) that at all material times they
remained in occupation of the premises throughout this period, even though no
lease for 50 years was ever executed in pursuance of the agreement: ‘So,’ say
the tenants,
‘We, under
the doctrine of Walsh v Lonsdale (1882) 21 Ch D 9, are entitled to
specific performance of that agreement as against the landlords: therefore we
have a tenancy which runs for 50 years from April 1963, and therefore these
proceedings by the landlords terminating the tenancy are wholly abortive as a
matter of law because our right is specific performance, creating a bar to the
existence of any other tenancy than that which would run for 50 years.’
Those, say the
tenants, are proceedings which, not merely should, but can only, be determined
in the Chancery Division of the High Court: they cannot be determined in the
county court because of the provision of section 52 (1) (d) of the County
Courts Act which I have read, with its limitation of value of £5,000 on the
county court’s jurisdiction. The landlords, on the other hand, say that the
county court has jurisdiction because of the provisions of the Landlord and
Tenant Act 1954 itself. Mr Hague on their behalf submits that by reference to
the definition of ‘tenancy’ which I have already read from section 69 of the
Act, and the provisions of section 63 (2), the county court has jurisdiction.
It must have jurisdiction, it is said, to determine any matter which is
relevant in relation to the question whether or not there is here a tenancy
such as the tenants claim that there is. In those circumstances, the county
court has jurisdiction to deal with the question of specific performance: not,
indeed, so as to grant a declaration or a decree of specific performance, but
so as to decide whether or not the tenants would be entitled to such a
declaration or to such a decree. For if the
defence to the landlords’ proceedings under the 1954 Act fails. It is an issue
which has to be decided as an integral part of the 1954 Act proceedings.
It is said on
behalf of the tenants that the question of the county court’s jurisdiction in
this case is similar to that which was dealt with by the Court of Appeal in Foster
v Reeves [1892] 2 QB 255, and that that decision is conclusive in favour
of the tenants. In that case the defendant had entered on premises under an
executory agreement for a lease. He subsequently gave six months’ notice to
quit, as if he were on a yearly tenancy, and he left. An action was brought
against him in the county court for a quarter’s rent accruing due after the
time when he had given up possession. The value of the premises exceeded £500,
which at that stage was the limit of county court jurisdiction in equity
matters; and so the judge had no jurisdiction to decree specific performance of
the agreement. But the county court judge was of opinion that it was a case in
which specific performance would be decreed and that he was, therefore, bound
to treat the defendant as a tenant under the terms of the agreement; and so he
gave judgment for the plaintiff for the rent claimed. On appeal to the Queen’s
Bench Division, that judgment was upset; and in this court the judgment of the
Queen’s Bench Division was upheld. It was held ‘that the equitable doctrine that
a person who enters under an executory agreement for a lease is to be treated
as in under the terms of the agreement, can only be applied where the court in
which the action is brought has concurrent jurisdiction in law and equity, and
that the plaintiff could not recover in the action’–because there the county
court had jurisdiction in law but it did not have jurisdiction in equity. Lord
Esher, in his judgment in that case, said that it was ‘a puzzling point.’ However, there is a subsequent decision of
this court, Cornish v Brook Green Laundry Ltd [1959] 1 QB 394,
which in my judgment is of vital importance on the question of jurisdiction.
There the question arose under the provisions of the Landlord and Tenant Act
1954. I do not propose to go into the rather complicated facts of the case. It
is, I think, sufficient for this purpose to read that part of the headnote
which relates to the problem with which we are here concerned, and a passage
from the judgment of Romer LJ delivering the judgment of the court. Holding no
3 in the headnote (at p 395) is in these terms:
That the
county court judge was right in exercising jurisdiction under section 63 (2) of
the Act of 1954, notwithstanding the provisions of the County Courts Acts,
although the value of the premises exceeded £500, as he was not required to
enforce any equitable right, but merely to decide whether or not such a right
existed.
Foster v Reeves [1892] 2 QB 255 was distinguished. Though that is
recorded in the headnote as being a ‘holding’ of the court, it appears that it
was strictly speaking obiter dictum, because of the earlier holdings.
They made it unnecessary for the court to express a view on that particular
point. But the court did express a view, and that view, though not binding on
us, is, in my judgment, persuasive guidance which we ought to follow. The
passage from the judgment of the court to which I wish to refer begins at p
412:
In the
present case the value of 23 Lower Belgrave Street is in excess of £500 and
therefore a county court judge could not decree specific performance of an
agreement to grant a lease of it. The difficulty which the judge felt in the
present case was whether, having regard to the decision and judgments in Foster
v Reeves, he had power to inquire whether, as the applicant alleged, a Walsh
v Lonsdale equity had been created between the trustees and Brook Green,
even though he was not being asked to enforce it if he came to the conclusion
that it had. In our judgment the judge was quite right in concluding that he had
jurisdiction to entertain the question. By section 62 (2) of the Act it is
provided that. . . .
Then the
learned Lord Justice quotes the words of that subsection as it then stood, and
he goes on:
One of the
matters which necessarily arise in applications under Part II [of the Landlord
and Tenant Act 1954] (as it arose, indeed, in the present case) is whether the
relationship of landlord and tenant exists between the respective parties, and
unless a county court judge has unfettered jurisdiction to determine that
question, it is difficult to see how he can properly exercise the powers which
are vested in him by the section. So long as the rateable value of the holding
is not in excess of £500, he can, in our judgment, and must, inquire into the
existence of a tenancy affecting that holding, whether such tenancy is said to
have been created at law or in equity. In our opinion the judge expressed the
position correctly in his judgment when he said: ‘I am not now asked, as was
the county court judge in Foster v Reeves, to enforce any
equitable right, whether to money, specific performance, rectification or
anything else. I am merely asked to determine the question as to the nature of
the right under which Brook Green hold its premises, and answer that question I
must if I am to discharge my duty under section 63 (2) (a).
Romer LJ goes
on, ‘We agree with those observations of the judge.’ That, in my view, is directly relevant to the
issue of jurisdiction with which we are concerned. That case does not appear to
have been cited to the learned county court judge; but, as I understand it,
from the reasons he gave for his judgment he had arrived at his conclusion
essentially upon that self-same reasoning.
It was
submitted to us that there was, or might be, some degree of inconsistency
between the views expressed in the judgment that I have just read and certain
passages in the judgment of Hodson LJ in Airport Restaurants Ltd v Southend
Corporation [1960] 1 WLR 880. In particular, our attention was called to a
passage at p 881, where Hodson LJ said this:
‘The position
is that an application for a new lease was made, the landlord having given
notice of termination of the tenancy–it has been conceded for the purposes of
this application that there may be either one tenancy or two tenancies of the
premises here in question–and the tenants at a late stage decided to challenge
the validity of the notice after they had themselves made their application for
a new lease. Being unable to do that in the county court proceedings, as soon
as their attention was drawn to this point by counsel they issued a writ in the
High Court claiming a declaration’
–and so forth.
It is said that the implication from the use by Hodson LJ of the words ‘Being
unable to do that in the county court proceedings’ is that the learned Lord
Justice was expressing the view that the county court would not have had
jurisdiction. I do not see anything in either of the other two judgments in
that case which would support that implication; and I do not think that Hodson
LJ had in mind in any shape or form the sort of question with which we are here
concerned. Even if one were to take the view, which I do not myself think is a
correct view, that anything said in the Airport Restaurants case would
otherwise be relevant to the question of jurisdiction in the present case, it
is to be observed, first, that that case was decided before section 43A of the
Landlord and Tenant Act 1954, which I have read earlier, was enacted; and
secondly, that Cornish v Brook Green Laundry was not, it would
seem, cited. Following the reasoning of the court in Cornish’s case, I
would hold without hesitation that the learned judge has jurisdiction to deal
with the issue of specific performance so far as it was necessary to deal with
it for the purposes of the proceedings under the Landlord and Tenant Act 1954.
He is not obliged in those proceedings to issue a declaration or to grant a
decree of specific performance, and it may well be that he has not jurisdiction
to do so. But he is not debarred from deciding the issues which are relevant
merely because in other circumstances the decision of those issues might
normally be followed by the granting of reliefs or the making of
I come, then,
to the second argument put forward on behalf of the tenants. Assuming that the
learned judge did have jurisdiction to deal with this matter, they contend that
nevertheless he ought, in his discretion, in the circumstances here prevailing,
to have stayed the proceedings before him in order to enable what I may call
the specific performance issue to be determined in the Chancery Division of the
High Court. It is submitted on behalf of the tenants that that would have been
the appropriate course for the hearing and determination of what, it is
suggested, may be complex and difficult issues of fact and law relating to
specific performance. Whether or not the proceedings under the Landlord and
Tenant Act 1954 would thereafter be resumed in the Mayor’s and City of London
Court would depend upon the outcome of the Chancery Division proceedings. I do
not think that it would be desirable, in the circumstances of this appeal,
since there are issues which may have to be determined hereafter, to say
anything which could be regarded as indicating a view on the merits of the
matter. I will content myself by saying simply this: I think that, in all the
circumstances of this case, the learned judge exercised his discretion
correctly. Accordingly, I would dismiss the appeal.
STEPHENSON LJ:
Can the judge go on with these proceedings in his court now that the other
proceedings have been started in the Chancery Division of the High Court? I agree with my Lord that he can. On
jurisdiction, I find the reasoning of the county court judge and the Court of
Appeal which approved it in Cornish’s case completely convincing. The
observations at the end of this court’s judgment in that case, which my Lord
has quoted, were admittedly obiter dicta, but I cannot doubt that if
they had been cited to the Court of Appeal in the Airport Restaurants case
Hodson LJ would not have there made the observations cited by my Lord on which
Mr Godfrey has fastened. And I agree in effect with the judge of the Mayor’s
and City of London Court, whose decision we are asked to reverse, that section
43A of the Act of 1954 made that observation obsolete in 1969 and supports his
own view that he has jurisdiction to determine the question, raised also in the
Chancery Division proceedings, as to the nature of the right under which the
tenants hold these premises and whether it amounted to a tenancy created in
equity by an agreement for a lease. Then should the judge go on with the
proceedings if, as I agree, he can?
Again I agree with the judge. Here the Airport Restaurants case
has some relevance, but not much, since each case of the exercise of judicial
discretion depends on its own facts. At one time I thought that the absence of
Mr Paget, the first defendant in the High Court proceedings, from the
proceedings in the Mayor’s and City of London Court might be a strong reason,
which the judge did not seem to have considered, for staying the proceedings
until the High Court proceedings had been concluded, notwithstanding the delay
that that would inevitably cause. But I am satisfied, on all the material that
has been put before us, that the judge was right to refuse any stay or
adjournment for this purpose; and like my Lord, without saying any more I too
would dismiss the appeal.
SIR JOHN
PENNYCUICK: I agree with both the judgments which have been delivered. Once
satisfied on the issue of jurisdiction, as I am satisfied by the judgment of
the Court of Appeal in Cornish v Brook Green Laundry Ltd, I am
far from being persuaded that the learned judge here exercised his discretion
wrongly by refusing a stay of the county court proceedings pending
determination of the action in the Chancery Division. On the contrary, on the
particular facts of the present case, his decision seems to me to be eminently
fair and sensible. So far as I can see, no such technicalities of equity law
are involved in the case as make it particularly appropriate for hearing by the
Chancery Division. I would dismiss this appeal.
The appeal
was dismissed with costs.
