Application by tenants to set aside as irregular a judgment for possession, arrears of rent and mesne profits on the ground that it was entered for a larger sum than the landlords were entitled to claim — Appeal from refusal of judge (upholding refusal of master) to set judgment aside — The facts were that the landlords in their claim had
This was an
appeal by Westbourne Hill Properties Ltd, tenants of commercial premises at
16-18 Greyhound Road, London W6, and defendants in an action for possession
brought by their landlords, Morris Gore Ltd, against a refusal by Patrick
Garland QC, sitting as a deputy judge of the Queen’s Bench Division, to set
aside as irregular a judgment entered in favour of the landlords, the present
respondents.
Stephen Martin
(instructed by Liebermann, Leigh & Co) appeared on behalf of the
appellants; Dennis Matthews (instructed by S Farren & Co) represented the
respondents.
Giving the
first judgment at the invitation of Stephenson LJ, GRIFFITHS LJ said: By a
lease dated March 25 1968 the plaintiffs let commercial premises at 16-18
Greyhound Road, London W6, to the defendants for a term of 21 years. At all
times material to this appeal the rent of those premises was £2,200 a year,
payable by equal quarterly instalments of £550 on the usual quarter days. On
September 28 1979 the plaintiffs commenced an action against the defendants in
which they claimed possession of the premises on the ground of forfeiture for
non-payment of rent and rent due for the whole of the years 1977 and 1978 and
the first two quarters of 1979, a total of £5,500, against which they gave
credit for sums of £1,200, received on November 2 1977, and £1,000, received on
January 11 1978, paid in respect of arrears of rent, reducing the sum claimed
to £3,300. They also claimed mesne profits.
The plaintiffs
obtained a judgment under Order 14, but on appeal to the judge that judgment
was, by agreement, set aside upon condition that the defendants paid the sum
claimed, namely £3,300, into court. Eventually, on December 18 1980 that action
came to an end by the plaintiffs’ discontinuing the action upon terms that the
sum of £3,300 should be paid out to the plaintiffs but that the plaintiffs
should pay the defendants their taxed costs. The defendants have now
discovered, and the plaintiffs do not dispute it, that a further payment of
£550 on account of arrears of rent had been paid to the plaintiffs on April 24
1978. If the defendants had been aware of this payment, and if the plaintiffs
had not overlooked it, no doubt credit would have been given for it in that
action.
On February 6
1981 the plaintiffs again sued the defendants for possession of these premises,
arrears of rent and mesne profits. In this action they claimed £3,300 in
respect of rent, which was for the last two quarters of 1979 and the whole of
1980, and a further sum of £183.94 in respect of insurance premiums. The
plaintiffs gave credit for a sum of £1,024.84 in respect of the defendants’
taxed costs which they had been ordered to pay in the previous action. The
plaintiffs did not, however, give credit for the £550 that they had received in
respect of arrears of rent on April 24 1978. The defendants failed to give any
notice of intention to defend and so, on March 10 1981, the plaintiffs entered
judgment for possession of the premises and the sum claimed, namely, £2,459.08.
The defendants applied to have the judgment set aside on the ground that it was
an irregular judgment because it was entered for a larger sum than the
plaintiffs are entitled to claim in this action.
Both the
master and the judge refused to set aside the judgment and the defendants now
appeal to this court, asserting that the judgment should be set aside as
irregular on the ground that it was entered for a larger sum than was actually
due to the plaintiffs at the time judgment was entered.
If I may say
so, Mr Martin has presented this appeal on behalf of the defendants in a most
attractive and skilful manner. He submits that the plaintiffs were compelled,
as a matter of law, to give credit in this action for the sum of £550 which had
inadvertently been left out of account in the compromise of the earlier action.
He has cited three authorities of respectable antiquity, starting in the 17th
century with William Clun’s Case (1613) 10 Co Rep 127a; and two 19th-century
cases, Nash v Gray (1861) 2 F&F 391, and De Nicholls v
Saunders (1870) LR 5 CP 589. These authorities establish that where a
tenant has paid a sum of money in respect of rent to his landlord before the
rent is due, the money is paid subject to the implied condition that the
landlord will apply it to the discharge of the rent when it falls due.
I need read
only one very short passage from the judgment of Wills J in De Nicholls
v Saunders. He says, at p 594,
. . . payment
of rent before it is due is not a fulfilment of the obligation imposed by the
covenant to pay rent, but is, in fact, an advance to the landlord, with an
agreement that on the day when the rent becomes due, such advance shall be
treated as a fulfilment of the obligation to pay rent.
That principle
cannot avail the defendant in this case, because the £550 which was paid in
April 1978 was not paid as an advance payment in respect of any rent claimed in
this action; it was paid in respect of rent arrears that had accrued before
April 1978. Mr Martin has therefore argued that the payment of the £550 was
subject to a further implied condition that if the landlord did not apply the
payment to arrears of rent, he would apply it to any future rent that might
fall due. No authority is cited to support this submission; it is argued that
it would be inequitable not so to hold.
I cannot
accept that the payment of money due in respect of arrears of rent is subject
to any such implied condition. Of course, equity will protect a defendant in
such a situation by permitting him to set up in his defence an equitable
set-off in respect of the £550 if he is minded so to do. But in my view the
plaintiffs were entitled to claim the arrears of rent which they seek in this
action, and they were under no obligation in law to give credit in that claim
for the sum in respect of arrears of rent which they received and which was
paid in respect of an earlier period.
Accordingly, I
have come to the clear view that this was not an irregular judgment and it is
not a ground for setting the judgment aside.
However, in
the course of argument Mr Matthews has very sensibly conceded that at some
stage the plaintiffs would clearly have to give credit for this sum of £550
which they had received and which they had overlooked when bringing their
earlier action; so, with the consent of Mr Matthews on behalf of the
plaintiffs, it appears that the sensible course to take is to amend the
judgment that has been entered, and to reduce it by the sum of £550. If this is
done it appears to me that there are no grounds upon which the defendants can
complain that they have been inequitably treated.
There were
certain other matters advanced in an affidavit sworn by Mr Randall on behalf of
the defendants, but they were not urged in argument before this court and I
deal with them by saying that they show no ground upon which it would be
possible to set aside this regular judgment, obtained because the defendants
did not give notice of intention to defend.
To this
limited extent, and with the consent of the plaintiffs, I would allow this
appeal.
ACKNER LJ
said: I agree, for the reasons given by my Lord, that this was a regular
judgment. The defendants’ proper course would have been to have applied under
Order 13, r9 to set aside that judgment in so far as it included the claim for
£550, thus reducing the judgment to some £1,900. In regard to that sum there
was no defence either on the merits, nor was there any defence to the claim for
forfeiture.
Having regard
to the course that Mr Matthews has very sensibly agreed to adopt, I agree with
the ultimate course that has been decided to be adopted.
Also agreeing,
STEPHENSON LJ said: If this judgment were irregular, Mr Martin’s attractive
argument would derive some support from some of the authorities cited in the
notes in the Supreme Court Practice to Order 2, r2 and Order 13, r9. But, for
the reasons given by my Lords, I cannot regard this judgment as being
irregular, and I agree that the appeal should be allowed to the extent
indicated.
The appeal
was allowed to the extent indicated in the judgments, the respondents to have
the costs of the appeal except costs of, and occasioned by, the respondents’
notice.