Landlord and tenant — County Courts Act 1984 section 138 — Forfeiture of lease — Whether ‘all rent in arrear’ in section 138 includes sums due between date of forfeiture and date of relief by payment into court
The plaintiffs are the landlords under a
lease dated April 3 1984 of a flat of which the defendants are the tenants. On
June 6 1995 the landlords issued proceedings by writ in the High Court against
the tenants claiming possession of the flat on the grounds of forfeiture and
arrears of ground rent and service charges amounting to £2,695.79. The action
was transferred to the county court and the tenants paid into court a total of
£3,909.43 by July 31 1996. On January 9 1997 the deputy district judge declared
that the landlords were entitled to possession of the flat as the lease had
been forfeited for failure to pay arrears of rent and service charges in the
sum of £2,791.93 and ordered that the defendants give up possession within 14
days unless the sum of £2,791.94 and the plaintiffs’ costs up to August 15
1996, but not thereafter, were paid. The plaintiffs appealed contending that
the deputy judge was wrong in holding that ‘all the rent in arrear’ in section
138 of the County Courts Act 1984 did not include sums that had fallen due
between the date of forfeiture and the date upon which relief would be obtained
by payment.
arrear’ in subsections (2) and (3) of section 138 of the County Courts Act 1984
means rent in arrear at the date of service of the proceedings.
The following cases are referred to in
this report.
Canas Property Co Ltd v KL Television Services
Ltd [1970] 2 QB 433; [1970] 2 WLR 1113; [1970] 2 All ER 795; (1970) 21
P&CR 601; [1970] EGD 445; 214 EG 1494, CA
Dendy v Evans [1910] 1 KB 263
Escalus Properties Ltd v Robinson [1996] QB
231; [1995] 3 WLR 524; [1995] 2 EGLR 23; [1995] 31 EG 71, CA
Howard v Fanshawe [1895] 2 Ch 581
Liverpool Properties Ltd v Oldbridge Investments
Ltd [1985] 2 EGLR 111; (1985) 276 EG 1352, CA
Meadows v Clerical Medical & General Life
Assurance Society [1981] Ch 70; [1980] 2 WLR 639; [1980] 1 All ER 454;
(1979) 40 P&CR 238; [1980] 2 EGLR 63; 255 EG 883
United Dominions Trust Ltd v Shellpoint Trustees Ltd
[1993] 4 All ER 310; (1993) 67 P&CR 18; [1993] 2 EGLR 85; [1993] 35 EG 121,
CA
This was an appeal by the plaintiffs,
Maryland Estates Ltd, from a decision of Deputy District Judge Clapham, in
proceedings for arrears of rent and possession against the defendants, Yair Bar
and Freda Bar Joseph.
Graham Clark (instructed by Malthouse
Chevalier) appeared for the plaintiffs; Arthur Moore (instructed by Jim
McKenzie & Co) represented the defendants.
Giving judgment, JUDGE DIAMOND QC
said: This case raises a point of some general interest and difficulty as to
the proper construction of section 138 of the County Courts Act 1984. For this
reason, I reserved judgment and directed that the judgment should be treated as
given in open court.
The plaintiffs are the freehold owners of
13 Brondesbury Park, London NW6. By a lease dated April 3 1984, the predecessor
in title of the plaintiffs demised a flat on the second floor of that building
(known as flat 3) to the defendants for a term of 125 years in consideration of
the payment of £24,000 and an annual rent of £75 for the first 33 years of the
term rising thereafter to £150 pa for the next 33 years and thereafter to £300
pa. By clause 4(23) of the lease the defendants covenanted to pay their due
proportion of the cost of the cleaning, maintenance, repair renewal, decorating
and insurance of the flats and the building and it was provided that such ‘sum
or sums shall be regarded and (sic), be and recoverable as rent’.
Clause 6 contained a usual forfeiture clause to operate ‘if the rent hereby
reserved or any part thereof shall be unpaid for twenty one days after becoming
payable’.
The defendants failed to pay the ground
rent and service charges promptly and on June 6 1995 the plaintiffs issued a
writ in the High Court. In their statement of claim endorsed on the writ they
alleged that a balance of £2,695.79 was due from the defendants in respect of
ground rent and service charges, that they had served on the defendants
a notice pursuant to section 146 of the Law of Property Act 1925, which had not
been complied with and that as a consequence the lease became liable to
forfeiture by the service of the writ and the plaintiffs were entitled to
possession of the demised property. The plaintiffs claimed possession of the
flat together with ‘£2,695.79 or such sum as is payable to the date of the
service of the writ’ together with mesne profits, costs and statutory
interest.
The defendants contested the amount of
the plaintiffs’ claim for service charges. They further counterclaimed for
relief from forfeiture upon such terms as the court should think fit.
On October 6 1995 the case was
transferred to Central London County Court. On March 7 1996 an order was made
by consent that the defendants should serve a reply to interrogatories within
14 days; that the defendants should serve a list of documents and that there
should be an exchange of witness statements on or before May 1 1996.
The defendants failed to comply with this
order. They did however pay two sums into court; a sum of £2,000 paid into
court on November 16 1995 and a further sum of £1,969.43 paid into court July
31 1996.
On August 9 1996 the plaintiffs obtained
an ‘unless’ order relating to the service by the defendants of a reply to
interrogatories. By this time it had become common ground between the parties
that the arrears of rent outstanding at the commencement of the action amounted
to the sum of £2,791.93. The defendants proposed terms for relief from
forfeiture under the provisions of section 138 of the County Courts Act 1984.
The plaintiffs put forward a counterproposal. No agreement was reached.
On October 28 1996 the plaintiffs applied
for an order that judgment be entered against the defendants on the ground that
the defendants had failed to comply with the ‘unless’ order of August 9 1996. A
draft of the form of judgment sought by the plaintiffs was attached to the
application. In essence the order sought by the plaintiffs fell into two parts:
first, a declaration that the plaintiffs were entitled to possession of the
flat because rent and service charges due under the lease were in arrears in
the sum of £2,791.93 and the plaintiffs consequently had a right of re-entry or
forfeiture; second, an order that the defendants should give up possession of
the flat unless within 28 days of the judgment the defendants paid: (i) the
arrears of rent and service charges of £2,791.93; (ii) sums falling due since
the issue of the summons in respect of rent and service charges amounting to
£5,958.90; (iii) interest on sums (i) and (ii); and (iv) payment of the
plaintiffs’ costs, the latter to be paid within 14 days of agreement or
taxation.
On January 9 1997 the plaintiffs’
application came before Deputy District Judge Clapham. The judge granted the
first part of the relief claimed by the plaintiffs. He declared that the
plaintiffs were entitled to possession of the flat because the rent and service
charges due under the lease were in arrears in the sum of £2,791.93 and the
plaintiffs consequently had the right of re-entry or forfeiture. He refused
however to make the second part of the order sought by the plaintiffs. Instead,
he ordered that the defendants should give up possession of the property unless
within 14 days of agreement or taxation of the plaintiffs’ costs the defendants
should pay to the plaintiffs the arrears of rent of £2,791.93 and the plaintiffs’
costs as taxed or agreed. The order further provided that the costs referred to
were the costs incurred by the plaintiffs up to and including August 15 1996
but none thereafter and that the costs were to be taxed if not agreed on scale
1. It is clear from an agreed note of the judgment that the judge considered
that he was bound to apply section 138(3) of the County Courts Act 1984 and
that the words in that subjection ‘all the rent in arrear’ referred to the rent
due at the date of forfeiture, ie the date of service of the writ.
The plaintiffs appealed from this order
contending that the judge was wrong in holding that the words ‘all the rent in
arrear’ in section 138 did not include sums that had fallen due between the
date of forfeiture and the date upon which relief would be obtained by payment.
Section 138
It was common ground between the parties
on the hearing of the appeal that section 138 contains a complete code as to
the circumstances in which and the terms on which a defendant is to be granted
relief from forfeiture in a ‘rent only’ case in the county court and that there
is no room for the application of general equitable principles in such a case.
Since both counsel were in agreement on this matter, I have had no occasion to
consider the extent of the jurisdiction of the county court under the 1984 Act,
as subsequently amended, to grant relief from forfeiture, but assume the
position to be as agreed between counsel.
Section 138 provides as follows:
(1) This section has effect where a
lessor is proceeding by action in a county court (being an action in which the
county court has jurisdiction) to enforce against a lessee a right of re-entry
or forfeiture in respect of any land for non-payment of rent.
(2) If the lessee pays into court or to
the lessor not less than 5 clear days before the return day all the rent in
arrear and the costs of the action, the action shall cease, and the lessee
shall hold the land according to the lease without any new lease.
(3) If —
(a) the
action does not cease under subsection (2); and
(b) the
court at the trial is satisfied that the lessor is entitled to enforce the
right of re-entry or forfeiture
the court shall order possession of the
land to be given to the lessor at the expiration of such period, not being less
than 4 weeks from the date of the order, as the court thinks fit, unless within
that period the lessee pays into court or to the lessor all the rent in arrear
and the costs of the action …
(4) The court may extend the period
specified under subsection (3) at any time before possession of the land is
recovered in pursuance of the order under that subsection.
(5) If —
(a) within
the period specified in the order; or
(b) within
that period as extended under subsection (4), the lessee pays into court or to
the lessor —
(i) all
the rent in arrear; and
(ii) the
costs of the action,
he shall hold the land according to the
lease without any new lease.
(6) Subsection (2) shall not apply where
the lessor is proceeding in the same action to enforce a right of re-entry of
forfeiture on any other ground as well as for non-payment of rent, or to
enforce any other claim as well as the right of re-entry or forfeiture and the
claim for arrears of rent.
(7) If the lessee does not —
(a) within
the period specified in the order; or
(b) within
that period as extended under subsection (4), pay into court or to the lessor —
(i) all
the rent in arrear; and
(ii) the
costs of the action,
the order shall be enforceable in the
prescribed manner and so long as the order remains unreversed the lessee shall,
subject to subsections (8) and (9A), be barred from all relief.
Issue
It was accepted by both sides, as is
obviously correct, that this is a case where ‘a lessor is proceeding by action
in a county court (being an action in which the county court has jurisdiction)
to enforce against a lessee a right of re-entry or forfeiture in respect of any
land for non-payment of rent’: see subsection (1).
It was further accepted by both sides
that this is to be treated as a ‘rent only’ case. Once the lease provided that
service charges should be deemed to be sums due by way of additional rent, the
service charges are to be treated, for the purposes of claiming relief against
forfeiture, as rent: see Escalus Properties Ltd v Robinson [1996]
QB 231*. Accordingly, the plaintiffs are not seeking ‘to enforce any other
claim as well as the right of re-entry or forfeiture and the claim for arrears
of rent’: see subsection (6).
*Editor’s note: Also reported at [1995] 2
EGLR 23
It was further accepted and had (I was
told) been determined at an earlier stage that, notwithstanding the payments
into court made by the defendants, the action had not ‘ceased’ under subsection
(2).
Finally, there was apparent agreement
between counsel that the hearing before the district judge on January 9 1997
was a ‘trial’ or was to be treated as though it were a ‘trial’ and that the
district judge had rightly been satisfied that the lessor was entitled to
enforce the right of re-entry or forfeiture: see condition (b) of subsection
(3).
In these circumstances, it is clear that
the court is under a mandatory duty to make an order that possession of the
flat be given to the plaintiffs at the expiry of not less than four weeks from
the date of order ‘unless within that period the lessee pays into court or to
the lessor all the rent in arrear and the costs of the action’. The sole issue
is what is meant by the words ‘all the rent in arrear’.
Mr Graham Clark’s primary submission for
the landlords was that ‘all the rent in arrear’ means all the rent in arrear at
the date on which the order for relief takes effect. Alternatively he submitted
that it refers to all the rent in arrear at the date of trial, ie the date on
which the order is made.
Mr Arthur Moore, for the tenants,
submitted that the district judge was right in holding that ‘all the rent in
arrear’ refers to the rent due at the date of forfeiture, ie when the writ of
summons was served on the defendants.
History of section 138
Section 138 of the County Courts Act is
the latest of a long series of similar enactments which can be traced back
through the County Courts Acts of 1959, 1934 and 1888 to section 52 of the
County Courts Act Amendment Act of 1856. When the 1856 Act was enacted, there
was already a statutory precedent for requiring the tenant to make a payment
into court as a condition of gaining relief from forfeiture. This was to be
found in a statute (4 Geo 2 Ch 28), usually known as the Landlord and Tenant
Act 1730.
The jurisdiction to grant relief against
forfeiture for non-payment of rent was part of the ancient jurisdiction of the
Court of Chancery. The Act of 1730 regulated the tenant’s right to begin
proceedings in equity for relief against forfeiture in a number of ways. For
example, section 3 of that Act provided that a lessee seeking relief in a court
of equity was not to be granted an injunction against the proceeding for
ejectment in the courts of the common law unless he paid into court ‘such sum
of money as the lessor … in the said ejectment shall, in his answer, swear to
be due and in arrear, over and above all just allowances and also the costs
taxed in the said suit’.
Perhaps, more relevantly, section 4 of
the Act of 1730 for the first time gave the tenant a procedural remedy in the
common law courts. The section provided that if the tenant should ‘at any time
before the trial in such ejectment’ pay or tender to the landlord or pay into
court ‘all the rent and arrears, together with the costs’ then all further
proceedings in the ejectment were to cease and be discontinued. The section did
not contain any machinery for the restoration of the lease. If the tenant
needed a court order relieving him against forfeiture (as opposed to merely
barring the ejectment) he would still need to file a bill in equity. The
section provided that if he should do so and obtain relief in equity he ‘shall
hold and enjoy the demised lands according to the lease thereof made without
any new lease thereof to be made to him’. It is possible that before the Act of
1730 the courts of law, without any statutory authority, granted similar
relief: see per Cozens Hardy MR in Dendy v Evans [1910] 1
KB 263, at p267. The relevant provisions of the Act of 1730 were re-enacted as
sections 211 and 212 of the Common Law Procedure Act 1852.
Section 52 of the County Courts Act
Amendment Act of 1856 introduced into the county courts, for the first time,
the general scheme which still prevails today, that at two different stages of
an action in the county court for possession of premises of relevant value, one
before and one after judgment, the tenant is given the automatic right to avoid
the execution of a warrant for possession by paying into court ‘all the rent in
arrear and the costs of the action’. In 1856 even the Common Law Courts had no
general power to give relief against forfeiture. They were first given that
power by the Common Law Procedure Act 1860 (a power now contained in section 38
of the Supreme Court Act 1981). Section 52 of the 1856 Act provided that if the
tenant did not pay into court ‘all the rent in arrear and the costs of the
action’ in accordance with the judgment, then a warrant for possession might be
issued and the defendant and all persons claiming through him ‘shall so long as
the Order of the Court remains unreversed, be barred from all relief in Equity
or otherwise’. The statute did not provide what were to be the consequences as
regards the forfeiture if the tenant did pay the outstanding rent and
costs into court. If he needed a court order relieving him from forfeiture
(which perhaps would not usually be necessary) he would still need to file a
bill in equity.
Section 180(1) of the County Courts Act
1934 appears to be the first of the county court statutes where the tenant is
expressly given relief against forfeiture. It was there provided for the first
time that ‘if within the period specified in the order, the lessee pays into
court all the rent in arrear and the costs of the action, he shall hold the
land according to the lease without any new lease’: see section 138 subsections
(2) and (5) of the 1984 Act.
Construction of section 138
Mr Moore, for the tenants in the present
case, pointed out that a landlord who wishes to exercise a right of forfeiture
must both issue and serve a writ claiming to exercise his right of forfeiture
and that the service of this writ effects a notional re-entry by the landlord
on the demised premises. I accept this submission which is supported by the
judgment of Lord Denning MR in Canas Property Co Ltd v KL Television
Services Ltd [1970] 2 QB 433, at p442. It is indeed interesting to note
that both section 52 of the County Courts Act Amendment Act 1856 and section
139 of the County Courts Act 1888 expressly provided that:
where the landlord shall have the right
by law to re-enter for the non-payment (of rent) he may, without any formal
demand or re-entry, enter a plaint in the court of the district in which the
premises lie, for recovery of the premises, and thereupon a summons shall issue
to the tenant, the service whereof shall stand in lieu of a demand and re-entry
…
The next stage in Mr Moore’s argument,
which again I think is non-controversial, is that, once the notional re-entry
has been effected, the lease has what has been described as ‘a trance-like
existence’ (per Sir Robert Megarry V-C in Meadows v Clerical
Medical & General Life Assurance Society [1981] Ch 70*, at p75) or
enters what has been described as ‘a period of limbo’ per Parker LJ in Liverpool
Properties Ltd v Oldbridge Investments Ltd [1985] 2 EGLR 111, at
p112. The lessor has elected to treat the lease as being at an end but the
action of the tenant, at either of the two stages contemplated by section 138,
in paying ‘all the rent in arrear’ into court, may overrule the lessor’s
election and cause the tenant to ‘hold the land according to the lease without
any new lease’.
*Editor’s note: Also reported at [1980] 2
EGLR 63
During the period of limbo there is
considerable doubt as to the precise rights of the parties. There are
authorities which appear to say that the lease is terminated by service of the
writ so that, until it is restored, the relationship of landlord and tenant has
terminated and the tenant occupies the premises as a trespasser being liable
only for mesne profits and not for rent: see Canas Property Co Ltd
v KL Television Services Ltd (supra). There are other authorities
which suggest that the lease is not finally terminated until judgment is given
for possession: see Meadows v Clerical Medical & General Life
Assurance (supra) at p74. In any event, during the period of limbo,
the tenant ‘preserves an interest in the premises and for certain purposes may
properly say that the tenancy survives’: per Parker LJ in Liverpool
Properties Ltd v Oldbridge Investments Ltd (supra), but
whether or not the lease has strictly terminated, the landlord during this
period may not rely upon any of the provisions of the lease since to do so may
be interpreted as vacillation in his election to treat the lease as at an end.
He will therefore claim in his writ, as did the landlords in the present case,
rent up to the date of service of the writ and mesne profits thereafter.
Mr Moore therefore submits that as the
landlord’s writ will always claim rent up to the date of service and not
beyond, ‘all the rent in arrear’ in section 138 can only be read as referring
to the rent in arrear at the date of service. Mr Moore indeed went further and
submitted that as the tenant’s obligations to the landlord ceased on service of
the writ, it could not be said that he was liable for rent for the period after
service. He argued in the alternative that as the lessor, by service of the
proceedings, had unequivocally elected to treat the lessee as a trespasser, he
could not thereafter rely on the covenants in the lease as against the tenant.
I see very great force in these
submissions. They are reinforced, in my view, by the consideration that, if
they be correct, the tenant knows precisely what sum by way of rent he needs to
pay into court and, furthermore, if the tenant does not make a payment into
court five clear days before the return day, the judge at the trial can insert
a fixed sum in the order which it is the duty of the court to make. The judge
can order that possession of the land is to be given to the lessor at the
expiry of four weeks unless within that period the tenant pays the fixed sum
into court. If, on the other hand, Mr Clark is right that ‘all the rent in
arrear’ refers to the rent in arrear at the date of payment in, the judge will
not know at what stage within the four weeks the payment in will be made and so
he will be unable to insert any fixed sum in the order.
Mr Moore also submitted that the tenant
should be able to see what sum he needed to pay into court for the purpose of
exercising his right under subsection (2). He submitted that ‘all the rent in
arrear’ in subsection (2) can only refer to the rent claimed by the landlord,
ie the rent due up to service of the summons. The same words in subsection (3)
‘all the rent in arrear’ must have the same meaning. Again I see great force in
this.
Mr Clark, for the landlords, emphasised
the retrospective nature of relief from forfeiture. He said that relief, once
given, relates back to service of the writ; the original lease is restored as
if it had never been liable to forfeiture. The effect of section 138, he
argued, was that once the tenant had paid the appropriate sum into court, he
would ‘hold the land according to the lease without any new lease’. Mr Clark
therefore submitted that, assuming that the tenant’s obligation to pay rent
ceased on service of the writ, it would revive retrospectively on the
restoration of the lease and so the very action of the tenant in paying into
court the rent due up to the date of service would cause there to be further
arrears of rent which the tenant had not paid. It would, said Mr Clark, be an
extraordinary construction of section 138 that the moment the tenant paid into
court all the rent in arrear at the date of service, he would put himself in
breach of his obligation under the restored lease to pay rent from the date of
service to the date of payment in.
I was, at one stage, attracted by this
argument. But as I have considered the opposing arguments I have become less
attracted by it. Section 138 is designed to give the tenant a simple and
automatic right to oppose the forfeiture of his lease in the less complex type
of litigation which is to be expected in the county court. The section is
designed for use in fixed-date actions with an early return day. At two stages
of what should be a relatively speedy procedure the tenant is given the
automatic right to pay into court the rent in arrear and thereby to continue to
hold his premises according to his lease. In this context, if in some cases the
section produces rough and ready results, this may be inherent in the nature of
the summary remedy afforded to the tenant. The operation of section 138 can be
expected to be less refined than the discretionary remedy available in courts
of equity. Nor is it the case that the tenant’s construction will always
produce the result illustrated by Mr Clark. In many cases, the landlord will
recover a money judgment for (a) rent up to service of the proceedings and (b) mesne
profits thereafter, and the judgment will go on to provide that possession is
to be given up four weeks after the date of the court’s order unless the tenant
has meanwhile paid into court the sums comprised in (a). The effect of such a
judgment is that the landlord’s causes of action both for rent and for mesne
profits will merge in the judgment. If the tenant pays into court the sums
comprised in (a), this will satisfy only part of the judgment, but it will not
have the effect that the other, unsatisfied, part of the judgment thereafter
takes on the character of unpaid rent.
Mr Clark submitted that, if the tenant is
right, then section 138 produces a different effect from what he submitted was
the normal order made when, in other contexts, a tenant is granted relief from
forfeiture. Mr Clark pointed out that in Howard v Fanshawe [1895]
2 Ch 581, the minute of order required the plaintiff, as a condition for
obtaining relief, to pay the rent due up to and including the quarter day
before the order. This however was a claim for relief under the court’s
equitable jurisdiction and not under section 138 or its predecessors. Where the
court is exercising a discretionary remedy it can make whatever order it
regards as just in all the circumstances of the case. The order that the court
is required to make under section 138(3) is mandatory save as regards the date
on which possession of the land is to be given to the lessor.
I was referred to two recent decisions of
the Court of Appeal dealing with forfeiture for non-payment of service charges.
It is probably sufficient to say that I found neither of them helpful in
connection with the point I have to decide. In United Dominions Trust Ltd
v Shellpoint Trustees Ltd [1993] 4 All ER 310*, the issue was whether a
mortgagee who desired to obtain relief from the forfeiture of the premises was
bound by the code contained in section 138. It was held that he was. No point
concerning mortgagees arises in the present case. In the four cases reported
together of which the first was Escalus Properties Ltd v Robinson
[1996] QB 231 the question related to the terms on which the mortgagees could
obtain relief from forfeiture of long leasehold interests for non-payment of
ground rent or ground rent and service charges. In each case the court below
had held that the mortgagee was entitled to relief without any liability to pay
the landlord any mesne profits. The leases, having been granted at low
rents, mesne profits would have been of greater value to the landlord.
In only one case, that of Robinson, were the facts similar to those of
the present case, viz that the lease provided that service charges
should be deemed to be sums due by way of additional rent and should be
recoverable as such and that the case was brought in the county court.
*Editor’s note: Also reported at [1993] 2
EGLR 85
It was held by the Court of Appeal that
the clause invested the charge with the character of rent and that for the
purposes of claiming relief it was to be treated as such. It was further held
that, as the mortgagee had paid into court not less than five clear days before
the return date all the rent and service charge in arrear and also all the
costs of the action, the judge had correctly held ‘that the mortgagee was
automatically entitled to retrospective relief against forfeiture under section
138(2) of the County Courts Act 1984’ (p532E-G). No question arose as to
whether the mortgagee was liable to pay into court the rent and service charges
for the period between service of the summons and the date of payment in.
Reference was also made to section 20B of
the Landlord and Tenant Act 1985 and sections 81 and 82 of the Housing Act
1996. Neither, in my view, cast any light on the proper construction of section
138. I will only say that the effect of the 1996 Act, by preventing the
landlord from enforcing a right of forfeiture for service charges unless they
have first been agreed admitted or determined, should result in there being
fewer protracted cases in the county court concerning leases subject to forfeiture
so that section 138 will in the future be more likely to be confined to cases
which will be decided relatively quickly as was the original intention. It was
suggested that a landlord might have difficulty in preserving his right to
claim service charges under section 20B of the 1985 Act if the tenant’s
construction of section 138 is upheld, but I cannot see why this should be so.
Finally, I refer to what I understand to
be the underlying reason why, either in equity or by statute, a tenant is
granted relief from forfeiture for non-payment of rent, namely that the right
of forfeiture is regarded as the landlord’s security for the payment of rent by
his tenant and should not otherwise be used to benefit the landlord. In the
present case on both the rival contentions, the operation of section 138
seems to me to give effect to this principle. If the tenants are right, section
138 gives them the automatic right to avoid forfeiture by paying into court all
the rent in arrear at the date of service and if as a result further rent
becomes payable and is not paid, the landlords may begin new proceedings for
forfeiture, a course which may be required in any event if a tenant defaults in
the payment of rent. If, on the other hand, the landlords’ construction be right,
section 138 gives security to the landlords for not only payment of the rent in
arrear at the date of service, but also for any mesne profits which may
be lost by them during the whole course of pending proceedings, however
protracted, so long as on restoration of the lease they will take on the
character of rent.
In the end, however, I am impressed by
the point that the tenants’ construction requires them to pay into court a sum
which, at the time of payment in, constitutes ‘all the rent in arrear’, whereas
the landlords’ construction would require the tenants to pay prospective rent,
ie sums which will only be recoverable as rent once the payment into court has
been effected.
Conclusion
I therefore conclude, in agreement with
the district judge, that ‘all the rent in arrear’ in subsections (2) and (3) of
section 138 refer to the rent in arrear at the date of service of the
proceedings. Accordingly, the appeal will be dismissed.
I should, however, mention a subsidiary
matter. Neither side complained of the precise terms of the order made by the
judge that the arrears of rent and the plaintiffs’ costs as taxed or agreed be
paid into court ‘within 14 days of agreement or taxation’. Clearly, however,
this order is not correct. First, the time for payment in should run from the
date of the order and not from taxation and should be not less than four weeks.
Second, the question of how precisely the order should deal with the payment of
costs is not perhaps very clear. It is not necessary to deal with this point
and I have heard no argument upon it. It does seem to me, however, that, if a
taxation cannot be completed within whatever time is specified in the order,
the tenants may have to pay into court either the sum demanded by the landlords
in respect of costs or else a provisional sum in respect of costs fixed by the
court, leaving the tenants to recover back the excess if, on later taxation,
that sum is found to be excessive. If either party wishes to raise any of these
matters I will of course consider them provided that the court is notified
within seven days following receipt of this judgment. If no such notification
is received the order, as drawn up, will provide merely that the plaintiffs’
appeal from the order made on January 9 1997 is dismissed and that the
plaintiffs pay the defendants’ costs of the appeal to be taxed on scale 2 if
not agreed.
