Landlord and Tenant Act 1954, Part II, section 25(5) — Provision that landlord’s notice under section 25 is not to have effect unless it requires tenant to notify the landlord whether or not he will be willing to give up possession — Difficulty caused by different wording in different editions of the Landlord and Tenant Act 1954, Part II (Notices) Regulations — Landlord’s notice in present case required the tenant to give a counternotice only if it was not willing to give up possession — County court judge held, but with reluctance, that the landlord’s notice was invalid because it did not require the tenant to notify the landlord if it was willing to give up possession — Appeal from judge’s decision allowed
the Court of Appeal was called upon to deal with a matter which had been a
problem for a number of county court judges and had been the subject of a
recent decision by Judge Paul Baker QC, sitting as a High Court judge, in
Baglarbasi v Deedmethod Ltd — The landlord in the present case had served the
section 25 notice in the form prescribed by the 1983 edition of the Landlord
and Tenant Act 1954, Part II (Notices) Regulations, which differed from the
form in the earlier 1957 regulations and from the amendment regulations in 1989
— The form used by the landlord required the tenant to give a counternotice
only if it was not willing to give up possession and did not require a
counternotice if it was willing to do so — This was not literally in accordance
with section 25(5) of the Act, which required a counternotice ‘whether or not’
the tenant was willing
the main issue as to the validity of the landlord’s notice in the light of
section 25(5), the tenant raised two other objections, which were repeated in
the respondent’s notice but were dismissed by the Court of Appeal and need only
be mentioned here, a point about the name of the tenant and a point about the
identity of the premises covered by the landlord’s notice — As regards the main
issue, the Court of Appeal considered that the validity of the landlord’s
notice could be supported on any one of three grounds — First, as a matter of
purposive construction, it cannot have been the intention of Parliament that
the validity of the landlord’s notice should depend on its requiring a positive
counternotice when the landlord himself did not require such a counternotice:
Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd and Lock v Pearce supported this view
— Second, as the assumed requirement was for the benefit of the landlord alone,
it could be waived by him alone — Third, if the question was whether the
landlord’s notice under section 25(5) provided the tenant with the real
substance of the information it required, the answer clearly was that it did;
the tenant was told that it had to give a counternotice if it was not willing
to give up possession, an important reminder in view of section 29(2) — The
result was that Judge Paul Baker QC had reached the correct decision in the
Baglarbasi case — Appeal allowed
The following cases are referred to in
this report.
Baglarbasi v Deedmethod Ltd [1991] 2 EGLR
71; [1991] 29 EG 137
Barclays Bank Ltd v Ascott [1961] 1 WLR
717; [1961] 1 All ER 782
Bolton’s (House Furnishers) Ltd v Oppenheim [1959] 1
WLR 913; [1959] 3 All ER 90, CA
Carradine Properties Ltd v Aslam [1976] 1 WLR
442; [1976] 1 All ER 573; (1975) 32 P&CR 12
14 Grafton Street, London W1, De
Havilland (Antiques) Ltd
v Centrovincial Estates (Mayfair) Ltd, In re [1971] Ch 935; [1971] 2 WLR
159; [1971] 2 All ER 1; (1971) 22 P&CR 18
Graham v Ingleby (1848) 1 Exch 651
Kammins Ballrooms Co Ltd v Zenith Investments
(Torquay) Ltd [1971] AC 850; [1970] 3 WLR 287; [1970] 2 All ER 871; (1970)
22 P&CR 74; [1970] EGD 761; 216 EG 31, HL
Lock v Pearce [1893] 2 Ch 271; 62 LJ
Ch 582; 68 LT 569; 41 WR 369
Long Acre Securities Ltd v Electro Acoustic
Industries Ltd [1990] 1 EGLR 91; [1990] 06 EG 103
Morrow v Nadeem [1986] 1 WLR 1381;
[1987] 1 All ER 237; (1986) 53 P&CR 203; [1986] 2 EGLR 73; 279 EG 1083, CA
Price v West London Investment Building
Society Ltd [1964] 1 WLR 616; [1964] 2 All ER 318, CA
Tegerdine v Brooks (1977) 36 P&CR 261;
[1978] EGD 49; 245 EG 51, [1978] 1 EGLR 33, CA
This was an appeal by the landlord, Clive
Norman Austin Stanford, from a decision of Judge Michael Cook, at Epsom County
Court, that a notice under section 25(5) of the Landlord and Tenant Act 1954
served on the tenant, Bridgers, a firm of estate agents, relating to premises
at 70 High Street, Epsom, Surrey, was invalid.
Nigel Meares (instructed by Tussauds)
appeared on behalf of the appellant; David Elvin (instructed by Frere
Cholmeley) represented the respondent tenants.
Giving judgment, LLOYD LJ said: We
are grateful for the arguments which counsel addressed to us yesterday.
In this case we are concerned with the validity
of a notice given by a landlord to determine a business tenancy under Part II
of the Landlord and Tenant Act 1954. The tenancy agreement is dated
February 28 1986. It relates to the ground-floor and first-floor office
premises at 70 High Street, Epsom, Surrey. The landlords named in the tenancy
agreement are John Edwin Marchington of Tavistone, Bookham Common, Great
Bookham, Surrey, and Clive Norman Austin Stanford of 70 High Street, Epsom,
Surrey. The tenant is a company called Bridgers. The tenant’s registered office
is given as 10 North Street, Leatherhead, Surrey. The term of the lease was
from January 1 1986 until March 20 1990. It will have been noticed that one of
the two named landlords, the respondent to these proceedings, occupied premises
at the same address as the subject-matter of the tenancy. We are told that he
occupied the second floor.
On June 23 1989 the landlord gave notice
under section 25 of the Act to terminate the tenancy on March 21 1990, the day
after the contractual date of termination. The notice was in the prescribed
form then current, as required by section 25(1) of the Act. It is said by the
tenant that the notice is invalid for three separate reasons. First, it does
not name Bridgers as the tenant, but a company called Hamptons. Second, it
relates to the whole of the premises at 70 High Street and not just to the
ground and first floors. Third, it does not comply with the requirements of
section 25(5) of the Act. Section 25(5) provides:
A notice under this section shall not
have effect unless it requires the tenant, within two months after the giving
of the notice, to notify the landlord in writing whether or not, at the date of
termination, the tenant will be willing to give up possession of the property
comprised in the tenancy.
The notice in the present case, though on
the prescribed form, does not follow the precise language of section 25(5).
Para 4 of the notice reads:
If you are not willing to give up
possession of the property comprised in the tenancy on the date stated in
paragraph 3, you must notify us in writing within two months after the giving
of this notice.
Thus the notice requires the tenant to
notify the landlord in writing within two months if he is not willing to give
up possession, which has conveniently been called a ‘negative counternotice’.
It does not require the tenant to notify the landlord whether or not he is
willing to give up possession, in other words to notify the landlord if he is
willing to give up possession. This has been conveniently called a ‘positive
counternotice’. It is said by the tenant that this is a fatal flaw and that as
a consequence the landlord’s notice is invalid, though it was in the prescribed
form.
His Honour Judge Michael Cook, sitting in
the Epsom County Court, decided the first two issues in favour of the landlord.
But with evident reluctance he decided the third issue in favour of the tenant.
The last sentence of his judgment reads: ‘If the matter goes to the Court of
Appeal I hope they will be able to say that I am wrong.’
The landlord now appeals on the third
issue. The tenant has issued a respondent’s notice on the first and second
issues.
The third issue is a question of some
importance, since it reveals a prima facie inconsistency between the
requirements of section 25(5) of the Act and the form prescribed by the
regulations in force at the relevant time under section 66 of the Act. We are
told that a number of county court judges have had to grapple with this
problem. Some have gone one way, some the other, so our decision is said to be
eagerly awaited. Moreover, there must have been many notices given by landlords
on the form then current which, if the judge is right, are now shown to have
been invalid. There is only one High Court decision on the point, namely the decision
of His Honour Judge Paul Baker QC sitting as a judge of the High Court in a
case called Baglarbasi v Deedmethod Ltd. He came down in favour
of the landlords. Unfortunately the case is only very briefly reported — in
[1990] EGCS 155.* There is no relevant
decision in the Court of Appeal.
*Editor’s note: Now fully reported at
[1991] 29 EG 137 and p 71 ante, [1991] 2 EGLR 71.
I have referred already to the
regulations then in force. The history of the regulations is as follows. Para
4(7) of the Landlord and Tenant (Notices) Regulations 1957 provides that a
notice under section 25 of the Act shall be in Form 7. Form 7, with minor
amendments, goes back to the original regulations made under the Act in 1954.
Para 2 of Form 7 reads:
You are required within two months after
the giving of this Notice to notify me in writing whether or not you will be
willing to give up possession of the premises on that date.
So there is no inconsistency between that
form and section 25(5) of the Act. But then came the Landlord and Tenant Act
1954 Part II (Notices) Regulations 1983 (SI 1983 No 133). Those regulations
came into force on April 1 1983. The relevant form is Form 1, which contains as
para 4 the para which I have already read. Finally there are the Landlord and
Tenant Act 1954 Part II Notices (Amendment) Regulations 1989 (SI 1989 No 1548).
They came into force on September 29 1989. Instead of para 4 of the 1983 form,
it goes back to para 2 of the 1957 form. Otherwise there are no relevant
changes.
What prompted the change back in 1989 we
do not know. Equally we do not know what prompted the change in 1983. But the
other changes made in 1983 appear to have been designed to make the form
simpler. The draftsman may have thought, with some justification, that the
landlord would only be interested in knowing if the tenant did not want to give
up possession and that section 25(5) was intended in somewhat inelegant
language to achieve that end. But whatever the reason, two things are clear:
first, that if there is any inconsistency, the subordinate legislation must
yield to the statute: see Price v West London Investment Building
Society Ltd [1964] 1 WLR 616 at p 625; and, second, the fact that the form
has been changed back in 1989 can throw no light at all on the solution to our
present problem.
What, then, does section 25(5) mean? Until that question has been resolved, it is
not possible to say whether there is indeed any inconsistency between section
25(5) and the 1983 form and whether, as a consequence, the notice in the
present case was invalid. On the face of it, I would accept that on its literal
construction, section 25(5) provides that a notice shall not have effect if the
landlord fails to require the tenant to give a positive counternotice, if he is
willing to give up possession, as well as a negative counternotice, if he is
not. But we are not bound to go by the literal construction of section 25(5).
We can adopt a purposive approach, as Lord Diplock pointed out in the leading
case on Part II of the Landlord and Tenant Act, Kammins Ballrooms Co Ltd
v Zenith Investments (Torquay) Ltd [1971] AC 850 at p 880. We can ask
ourselves what was the overall object which Parliament was intending to achieve
in this Part of the Act.
Applying that approach, it is at first
sight difficult to see that any purpose at all was served by requiring the
tenant to give a positive counternotice. However, Mr Meares in opening the
appeal referred us helpfully to the decision of Brightman J (as he then was) in
Re 14 Grafton Street, London W1, De Havilland (Antiques) Ltd v Centrovincial
Estates (Mayfair) Ltd [1971] Ch 935. In that case the tenants gave a
positive counternotice. Thereafter they wished to change their mind in order to
put themselves in the position of claiming compensation under some supervening
legislation. It was held that the positive counternotice, once given, was
irrevocable. So the actual decision does not help us. But Brightman J in the
course of his judgment asked himself the same question which we ask ourselves,
what purpose does a positive counternotice serve? I quote from his judgment at p 943.
In my view the purpose of section 25(5)
is to introduce an element of certainty into the relationship between the
landlord and the tenant. A tenant is not bound to serve a negative counter
notice before the end of the two month period allowed to him. He may pause for
that period of time while he makes up his mind. If however he does serve a
positive counter notice during the two month period, I think that he must abide
by what he has done. If that were not the case, the positive counter notice
would serve no purpose whatever compared with complete inaction, for in either
case the landlord would not know where he stood until the end of the two month
period. If a positive counter notice is revocable the tenant serving the same
would be able to serve a negative counter notice right up to the end of the two
month period. If on the other hand the tenant does nothing, he may likewise serve
a negative counter notice right up to the end of the two month period. It
follows that a positive counter notice would be wholly devoid of any function,
even that of courtesy, if it were revocable at the will of the tenant. I,
therefore, conclude that a positive counter notice is irrevocable; and that in
this case the tenants ceased to be able to serve a negative counter notice
after October 13, 1969, and that they lost their right to apply to the court
for an order for the grant of a new tenancy.
I have not overlooked the fact that the
Act of 1954 is not expressed to impose on the tenant an obligation to serve a
notice of either description within the two month period. All that the Act does
is to impose on the landlord, as a condition of a valid section 25 notice, the
obligation of informing the tenant that he is required to serve a notice one
way or the other within the two month period, and to place the tenant under a
disability if he fails to serve a negative counter notice. In my view, however,
it is a necessary implication from section 25(5) that a tenant is under a
statutory obligation to serve notice one way or the other within the two month
period, although I accept that there is no sanction imposed on him for ignoring
that obligation, except his inability to apply to the court.
Mr Elvin, for
the tenant, does not seek to support the last sentence of that passage which I
have quoted from Brightman J’s judgment,
judge’s view that the only purpose of the positive counternotice is to
introduce certainty into the transaction. By contrast, the negative
counternotice serves another obvious purpose, since it links in directly with
section 29(2) of the Act.
If that be right, as I believe it to be,
I ask myself next, what was the object of introducing certainty into the
transaction in the case of a positive counternotice? Was it for the benefit of the landlord or the
tenant or both? The answer to that
question must surely be that it was for the benefit of the landlord alone.
Mr Elvin sought to persuade us that
certainty could also have been for the benefit of the tenant. But, as Nourse LJ
pointed out in the course of the argument, the tenant must know already if he
is willing to give up possession. If he knows, how could the giving of a
positive counternotice make him more certain of that fact? So far from being a benefit to the tenant,
the only foreseeable consequence to him of giving a positive counternotice is
prejudicial. Once given, the notice cannot be withdrawn, as the judgment of
Brightman J demonstrates.
Mr Elvin points to another possible
benefit. He says that by being required to give a positive counternotice when
the tenant is willing to give up possession the tenant might be prompted to
give a notice under section 27 of the Act, thereby reducing his liabilities
under a burdensome tenancy. But I cannot believe that that was a benefit which
Parliament had in mind when section 25(5) was enacted. It seems quite clear to
me that the requirement to give a positive counternotice under section 25(5),
unlike the requirement to give a negative counternotice, was a procedural
provision introduced for the benefit of the landlord and the landlord alone.
Where does that take us? The landlord’s case can be put in three ways.
First, it can be put as a matter of construction of section 25(5) of the Act.
Parliament cannot have intended it to be a condition of the validity of the
landlord’s notice that it require a positive counternotice when the landlord
has chosen not to require a positive counternotice. Support for that purposive
approach is to be found in the case of Kammins v Zenith Investments.
I quote from the speech of Lord Diplock at p 881(D):
Upon the purposive approach to statutory construction
this is the reason why in a statute of this character a procedural requirement
imposed for the benefit or protection of one party alone is construed as
subject to the implied exception that it can be ‘waived’ by the party for whose
benefit it is imposed even though the statute states the requirement in
unqualified and unequivocal words. In this context ‘waived’ means that the
party has chosen not to rely upon the non-compliance of the other party with
the requirement, or has disentitled himself from relying upon it either by
agreeing with the other party not to do so or because he has so conducted
himself that it would not be fair to allow him to rely upon the non-compliance.
I quote also from Lord Pearson’s speech
at p 877. After referring to the judgment in Graham v Ingleby
(1848) 1 Exch 651, where Parke B said:
The question then is, what is the meaning
of the statute of Anne, which requires an affidavit of verification as a
condition precedent to a valid plea in abatement? If that enactment be intended for the sole
benefit of the plaintiffs, then the maxim applies ‘Quilibet potest renunciare
juri pro se introducto’
Lord Pearson continued:
In my opinion that cogent reasoning of a
strong court is applicable and should be applied in the present case to the
construction of the phrase ‘no application . . . shall be entertained’ in
section 29(3). The provision is solely for the benefit of landlords and not for
the benefit of other suitors or the rest of the Queen’s subjects, and it has no
discernible public policy for its object. Accordingly I am of opinion that the
requirements of section 29(3) are only procedural, and consequently the
landlords had a right to ignore or object to the tenants’ premature application
but could waive that right.
I pause to mention that the headnote
which quotes that sentence from Lord Pearson’s speech wrongly inserts the word
‘not’ before the word ‘waive’.
Further support for the first way of
putting the landlord’s case is to be found in Lock v Pearce
[1893] 2 Ch 271. There the question turned on section 14(1) of the Conveyancing
Act 1881, now replaced by section 146(1) of the Law of Property Act 1925. It
requires the landlord before exercising a right of re-entry or forfeiture to
give notice specifying the breach, requiring the breach to be remedied if it
can be remedied and further requiring that the lessee make compensation in
money. It was argued in Lock v Pearce that the notice served by
the landlord was bad, since it did not require compensation in money. The
argument was rejected. The Court of Appeal held, as a matter of construction of
the section, that the landlord was not bound to ask for compensation if he did
not want it. I quote from Lord Esher’s judgment at p 276:
Therefore it seems to me that the meaning
of the section is that the breach must be remedied if it can be, and there must
be compensation besides that, if there is anything for which to compensate. I
go further, and say that the lessor need not, if he does not want any
compensation, ask for it. If he does not want compensation, why should he ask
for what he does not want?
Lindley LJ at p 279 said:
Then, as regards the notices required by
sect 14, sub-sect 1, the statute requires notice to be given specifying the
breach complained of, as the first thing, and, if the breach is capable of
remedy, requiring the lessee to remedy it, and ‘in any case requiring the
lessee to make compensation in money for the breach.’ Supposing the lessor does not want
compensation, is the notice to be held bad because he does not ask for it? There is no sense in that. The meaning is to
be found by looking a little further on. The sub-section begins by saying that
the right of re-entry or forfeiture shall not be enforceable unless proper
notice is given and the lessee fails within a reasonable time afterwards to
remedy the breach and to make reasonable compensation in money to the
satisfaction of the lessor. The sense of that is that the lessor must tell the
lessee what he wants done. The lessee is entitled to know what his landlord
complains of, and, if his landlord is entitled to compensation, whether he
wants compensation.
Mr Elvin argues that the language of
section 14(1), now section 146(1), is different from section 25(5), since it
does not say that the notice shall not have effect if the conditions are not
complied with. But, as Lord Diplock said in the Kammins case, the
purposive approach does not depend on the precise form of language used.
The second way of putting the landlord’s
case is that since the particular stipulation with which we are concerned in
section 25(5) was for the benefit of the landlord alone, it could be waived by
the landlord without the tenant’s consent. This is a universal principle, not
dependent on the presumed intention of Parliament in a particular case. It is
well illustrated in the field of contract by the following passage from Chitty
on Contracts, 26th ed, at para 1611:
Waiver of condition for benefit of one
party. Where
the terms of a contract include a provision which has been inserted solely for
the benefit of one party, he may, without the assent of the other party, waive
compliance with that provision and enforce the contract as if the provision had
been omitted. He will not be permitted to do so where the provision has been
inserted for the benefit of both parties or where there is in reality no
concluded agreement.
Mr Elvin argued that the landlord could
not in the present case rely on waiver because there is no evidence here that
the landlord had any knowledge of the right which he was purporting to waive.
This led Ralph Gibson LJ to put to Mr Elvin whether he was saying that the
landlord would be better off if he knew what he was doing than if he acted in
ignorant reliance on the form. Mr Elvin replied that that was indeed what he
was saying. But that could not be right. Knowledge of the party waiving a stipulation
for his benefit is an essential element in waiver of whatever variety, and by
whatever name it is called, when it is the other party to the transaction who
seeks to prevent him going back on the waiver. But here it is not the tenant
who was seeking to rely on the waiver of the landlord, as it was in the Kammins
case; it is the landlord himself.
The third way of putting the landlord’s
case is on the general principle stated by Barry J in Barclays Bank Ltd
v Ascott [1961] 1 WLR 717, approved by Nicholls LJ in Morrow v Nadeem
[1986] 1 WLR 1381* at p 1387. I quote from the judgment of Barry J. After
referring to the judgment of Hodson LJ in Bolton’s (House Furnishers) Ltd
v Oppenheim [1959] 1 WLR 913, Barry J continued:
As I understand Hodson LJ’s judgment, the
question which the court really has to consider is whether the statement or
notice given by the landlord has given the proper information to the tenant
which will enable the tenant to deal in a proper way with the situation,
whatever it may be, referred to in the statement of notice.
*Editor’s note: Also reported at [1986] 2
EGLR 73.
So the question, on that approach, is
whether the notice given under section 25(5) gave the tenant the real substance
of the information which he required. What he required to be told was the need
to give a counternotice if he was not willing to give up possession. The giving
of a positive counternotice was not information which he required, since the
giving of such a notice could do him no good. It could not, indeed, affect him
in any way, save prejudicially.
Looking at the abbreviated judgment of
Judge Baker in the Baglarbasi case, it seems as though he decided the
case in favour of the landlords on the first two grounds discussed above. I
would myself be willing to decide the case on all or any of the three grounds.
Accordingly I would hold that Baglarbasi was correctly decided and
that the judgment of the judge on this point in the present case must be
reversed. I reach that conclusion with the same satisfaction as it will
evidently give to the judge himself. I can imagine nothing more unjust than to
hold a notice bad when it has been given in the precise form required by the
regulations.
I turn to the respondent’s notice.
Section 25(1) requires the landlord’s notice to be given to the tenant. The
form specified by the regulations requires the landlord to insert the tenant’s
name. As I have already mentioned, the notice in the present case is addressed
to ‘Hamptons or other the sub-tenant of the premises disclosed in paragraph 2
below’ and not to Bridgers.
There is a family tree included among our
papers which sets out the relationship between Hamptons and Bridgers. They are
both subsidiaries, through separate holding companies, of Abaco Investments
plc. Bridgers and its immediate parent company are said to be dormant, but they
had directors at the relevant time, including Mr Dunsmore-Hardy; and, of
course, they have shareholders. Mr Elvin very properly showed us correspondence
passing between the parties between December 23 1987 and July 20 1990. It is
not suggested that Bridgers ever formally assigned the tenancy agreement to
Hamptons. But Hamptons were clearly running Bridgers’ business. From the
correspondence it appears that Mr Dunsmore-Hardy sometimes used one name,
sometimes the other and sometimes both. If there was confusion as to the true
position in the mind of the landlord then that confusion was undoubtedly caused
by the tenant itself.
So I turn to the first question, whether
the notice was given to the tenant. It was given by hand on June 23 1989 and it
was accepted by hand the same day. Presumably, somebody brought it down the
staircase. It was accepted on a form prepared by the landlord and was signed by
Lorraine McNeil for and on behalf of Hamptons. I have no difficulty in
inferring that the notice was given to a person who was de facto
carrying on the tenant’s business and was authorised by the tenant to accept
the notice on its behalf. In those circumstances I conclude that the notice was
given to the tenant.
The second question is whether the notice
named the correct tenant. Strictly, the answer to that question must be ‘No’.
The name is misstated. But that does not, in my view, make the notice bad. I
would be content simply to accept and adopt the finding of the judge on this
point. He quotes a passage from the decision of Goulding J in Carradine
Properties Ltd v Aslam [1976] 1 WLR 442:
I would put the test generally applicable
as being this: ‘Is the notice quite clear to a reasonable tenant reading
it? Is it plain that he cannot be misled
by it?’
He also quoted from Nicholls LJ’s
judgment in Morrow v Nadeem:
There might perhaps be an exceptional
case in which, notwithstanding the inadvertent misstatement or omission of the
name of the landlord any reasonable tenant would have known that that was a
mistake and known clearly what was intended.
Applying those tests, the judge held:
This is not a case of a notice being
given to the wrong company or tenant. There was never any doubt as to the
identity of the intended recipient of the notice but merely as to the name
under which they chose to be known at the date of service of the notice. I do
not therefore regard the use of the name Hamptons and not Bridgers as directing
the notice to the wrong recipient but even if I did take that view I would
regard this as four square within the words of Lord Justice Nicholls.
Mr Elvin argued that the tenant might
have been confused by the form of the notice, addressed as it was to Hamptons.
If, as a reasonable tenant, Bridgers were confused, which I do not for one
moment accept, that confusion was entirely self-induced.
The case is quite different in this
respect from Morrow v Nadeem, where the Court of Appeal found on
the facts that the tenant was indeed misled by the misstatement of the
landlord’s name. The misstatement of the landlord’s name in that case could
have had serious consequences for the tenant, unlike the misstatement of the
tenant’s name in the present case. So I would reject the tenant’s argument on
the first issue.
On the only remaining issue, the second
issue, Mr Elvin accepted that the tenant’s case was weaker, so if he fails on
the first issue he must fail on the second. Mr Elvin was right to make that
concession, for the tenant must have known that the landlord was himself
occupying the second floor, so he must have known that the notice could apply
only to the ground floor and the first floor. There was even less scope for the
tenant to be misled.
I would therefore allow the appeal.
Agreeing, NOURSE LJ said: The
general rule is that, in order to be valid, a landlord’s notice under section
25 of the 1954 Act must comply with all the requirements of the section.
Exceptionally, there are minor errors and omissions by which a notice will not
be invalidated. In Morrow v Nadeem [1986] 1 WLR 1381 this court
reaffirmed the test stated by Barry J in Barclays Bank Ltd v Ascott
[1961] 1 WLR 717, at p 722, and approved by another division of this court in Tegerdine
v Brooks (1977) 36 P & CR 261*. The notice must give the tenant the
real substance of the information which is necessary to enable him to deal with
the situation, whatever it may be, referred to in the notice. If it does that,
the notice will not be invalidated by error or omission.
*Editor’s note: Also reported at (1977)
245 EG 51, [1978] 1 EGLR 33.
The principal difficulty occasioned by
the landlord’s notice in this case arises out of its omission, in accordance
with section 25(5), to require the tenant to notify the landlord not only of
his unwillingness but also of his willingness, as the case might be, to give up
possession of the premises. On the face of it, such an omission, involving as it
does a failure to comply with the requirements of a subsection which provides
that a notice ‘shall not have effect’ unless they are complied with, ought to
be fatal to the validity of the notice. However, Mr Meares’ argument has
satisfied me that if you look below the surface you can see that the notice has
indeed given the tenant the real substance of the information which is
necessary to enable him to deal with the situation to which it refers. On that
footing, I do not see why the express words ‘shall not have effect’ should be
given any greater force than the implied invalidation which results under
section 25(1) from an omission, for example, to state with perfect accuracy the
name of the landlord at the bottom of the prescribed form of notice.
The key to the problem lies in section
29(2), which ties the tenant’s continued protection under the Act to his
notifying the landlord that he will not be willing to give up
possession, coupled with the absence of any advantage accruing to him from a
notification to the landlord that he will be willing to give up
possession. Despite Mr Elvin’s well-sustained argument to the contrary, I, like
Lloyd LJ, have been unable to discern any such advantage. From the tenant’s
point of view the certainty of his having to give up possession cannot be made
more certain by his notifying the landlord that he will be willing to give it
up. Moreover, the argument based on section 27 fails on the simple ground that,
as Mr Elvin accepts, a notification that the tenant will be willing to give up
possession and no more cannot take effect as a notice under that section and,
further, that section 25(5) does not require the landlord to bring it to the
notice of the tenant that he may be entitled to give a notice under section 27.
Accordingly, there being no advantage
accruing to the tenant from his notifying the landlord that he will be willing
to give up possession, the only information which is necessary to enable him to
deal with the situation to which the notice refers is that if he is unwilling
to give up possession he must notify the landlord accordingly. That information
was contained in the landlord’s notice in this case. It follows that it was not
invalidated by its failure to comply fully with the requirements of section
25(5).
It will be evident that I have found
myself able to decide this question by applying the general test established by
Morrow v Nadeem and the earlier authorities. But I would agree
that the same answer can be arrived at by the other route or routes apparently
taken by Judge Paul Baker QC in Baglarbasi v Deedmethod Ltd and
now more fully delineated in the judgments of Lloyd and Ralph Gibson LJJ.
As to the other two suggested defects in
the landlord’s notice, there is nothing which I wish to add to the judgment which
has been delivered by Lloyd LJ, except to emphasise that the validity of a
section 25 notice is to be judged, and judged objectively, at the date at which
it is given. The question is not whether the inaccuracy actually prejudices the
particular person to whom the notice is given, but whether it is capable of
prejudicing a reasonable tenant in the position of that person. Here it is
clear that neither the inaccuracy in regard to the tenant’s name nor that in
regard to the description of the demised premises would have been capable of
prejudicing a reasonable tenant.
I, too, would allow the landlord’s
appeal.
Also agreeing, RALPH GIBSON LJ
said: I refer only to the section 25(5) point. The judge felt compelled to hold
that, although he
not comply with the clear wording of subsection (5) the notice was invalid. We
have had the assistance of citation of additional authorities which were not
before the judge, and in particular the Kammins Ballroom case and Lock
v Pearce. Reference to the Kammins case in this court gave rise
to a discussion as to the relevance of the concept of waiver to the point of
law raised on the construction and application of section 25(5) by the
appellant landlord. The notice served did not, in one sense, ‘require the
tenant to notify the landlord whether or not at the date of termination the
tenant will be willing to give up possession’ because it said only, in
accordance with the then prescribed form, ‘If you are not willing to give up
possession, you must notify us in writing’. I say ‘in one sense’ because, upon
considering the purposes for which Parliament enacted the requirement of
service of a section 25 notice in a prescribed form containing the statements,
advice and warnings required and contemplated by the section and provided by
the regulations then made, it might be thought that the substantial point in
the requirement of the counternotice about giving up possession was confined to
the negative notice, namely that the tenant was not willing. That was obviously
the view of the Department in making the 1983 regulations in the form
prescribed under which the notice was served.
For my part, I accept the submission made
by Mr Meares that any requirement that the tenant serve a positive notice
saying that he will not be willing to give up possession would be for the
benefit only of the landlord so far as concerns any benefit which is shown to
have been within the intention of Parliament to secure by the service of a
positive notice. Mr Elvin suggested that some benefits might accrue to the
tenant by his being required to give a positive notice, but I found the
suggestions unconvincing and speculative. The suggestions were, as I understood
the submission, that the tenant would thereby acquire certainty in that he
could not thereafter change his mind: see per Brightman J (as he then was) in
Re 14 Grafton Street [1971] Ch 935.
Next, Mr Elvin suggested that by being
required to direct his mind to the possibility of giving up possession he might
decide to serve a notice under section 27 to determine the tenancy at an
earlier date than that stated in the section 25 notice (reference was made to Long
Acre Securities Ltd v Electro Acoustic Industries Ltd [1990] 1 EGLR
91*). Lastly, it was said that the tenant might be assisted in some way, which
I regret that I did not follow, with reference to a claim for compensation
under section 37.
*Editor’s note: Also reported at [1990] 06
EG 103.
For my part, I think it to be clear, upon
consideration of the wording of the provisions of the Act and their working as
a whole, that no legislative purpose can be discerned in requiring the landlord
to require the tenant to serve a notice in writing that the tenant will be
willing to give up possession. If that be right, then this court can and should
hold that this notice, in the form prescribed by the 1983 regulations, was not
of no effect under section 25(5). Authority for taking that course is to be
found in Lock v Pearce, to which Lloyd and Nourse LJJ have
referred.
It is true that that part of the decision
was not strictly necessary, since the court also held that the application
before the court was never properly before the judge below. But the court
considered that they must decide the point and did so. Section 14 of the
Conveyancing Act 1881 provided that ‘a right of re-entry shall not be
enforceable by action unless or until the landlord serves a notice . . .
requiring the lessee to make compensation in money for the breach’. The notice
in that case did not so require. This court held, in effect, as I understand
the judgments, to which reference has been made, that since there was no
discernible legislative purpose in requiring the landlord to require in his
notice compensation which he did not want, the notice was not, by reason of the
omission of that requirement, defective. I take the same view of the omission
from this notice of the requirement that the tenant serve a notice saying
whether or not he was willing to give up possession. The notice was not, by
reason of that omission, defective and I would rest my decision upon that
ground.
I do not find it necessary to consider
the question of waiver. It is sufficient to say that I reject Mr Elvin’s
submission that, assuming the correctness of the conclusion as to the
construction of section 25(5) which I have expressed, a notice could be held to
be valid only if the landlord could show by evidence that he had applied his
mind to the matter and consciously chosen not to require service of a positive
notice. The concept of waiver, in so far as it is concerned with an intentional
decision not to insist upon or use a right, when it is asserted that the person
who has made that decision may not in law be permitted to act inconsistently
with it, seems to me to have no relevance in this case.
The appeal was allowed with costs in the
Court of Appeal and with costs below on scale 3; leave to appeal to the House
of Lords refused.
