Landlord and Tenant Act 1954, section 24A — Trial of preliminary issue — Landlords’ application for interim rent by summons in proceedings by tenant for a new tenancy — Whether landlords’ summons invalid because of long delay between issue and service — Summons issued on March 20 1981 but, owing to oversight by landlords’ former solicitors, it was not served until May 5 1982 — After oversight discovered, landlords served new summons for interim rent on May 26 1982 — Tenants obtained leave to discontinue action for new tenancy and old tenancy came to an end on August 26 1982 — Under section 24A(2) of 1954 Act, if first summons remained valid interim rent could run from May 31 1981 (date specified in landlords’ notice under section 25) to August 26 1982; if first summons invalid interim rent could run only from May 26 1982 (date of application on second summons) to August 26 1982 — Rules of Court governing applications under Part II of 1954 Act considered — No time-limit specified under Order 97, rule 9A(1)(a), for service of a summons under that rule to determine interim rent — Lacuna in rules — Order 32, rule 3, not applicable — Paragraph 4 of 1976 Practice Direction on dates for hearing originating summonses for new tenancies under 1954 Act required that a summons to determine an interim rent under section 24A ‘must be served promptly’ — A delay of over a year between issue and service held to render the summons invalid — Hence the earliest date from which the interim rent could run was May 26 1982, the date of application on the second summons
This was a
trial of a preliminary issue arising in an action by tenants, Texaco Ltd, as
plaintiffs asking for a new tenancy under Part II of the Landlord and Tenant
Act 1954, the landlords, defendants in the action, being Benton & Bowles
Holdings Ltd. The present proceedings arose out of two summonses by the
landlords in the tenants’ action, for determination of an interim rent under
section 24A of the 1954 Act. The summonses were directed by the master to stand
as counterclaims in the action and it was directed that the question be tried
as a preliminary issue — what was the date as from which interim rent could be
ordered or ought to be ordered? The
premises in question were certain floors of 199 Knightsbridge, London SW1,
which were used as business premises.
Alan C Steynor
(instructed by Cartwrights, of Bristol) appeared on behalf of the plaintiffs;
Kim Lewison (instructed by Herbert Smith & Co) represented the defendants.
Giving
judgment, FALCONER J said: I have before me for decision a preliminary issue
arising in proceedings brought under the Landlord and Tenant Act 1954
concerning an application for interim rent under section 24A of that Act.
The matter
arises in this way. By an underlease dated April 29 1974 the defendants, as the
immediate landlords, demised under that underlease the property which is
mentioned in the title to the action, the third, fourth and fifth floors of 199
Knightsbridge, London SW1. They are business premises and were used as such by
the plaintiff tenants. Under the lease the term was expressed to expire on
March 24 1981. The initial rent provided for was £106,000 per annum, with
provision for a rent review, which in fact was never implemented, so the rent
remained at that figure. As I have said, the property was occupied by the
plaintiffs as tenants, I think as offices, and so the tenancy was protected by
Part II of the 1954 Act.
On November 27
1980 the landlord gave notice to terminate the tenancy under section 25 of the
Act. The date of termination specified in the notice by the landlord was May 31
1981. So the tenancy would, in the ordinary way, have continued after the
contractual term date at that old rent payable under the lease until the end of
May 1981.
On January 28
1981 the tenants served a counternotice indicating that the tenants were
unwilling to give up possession on the termination date, and on March 17 1981
the tenants, who are the plaintiffs in the present action, Texaco Ltd, served
an originating summons asking for a new tenancy under the provisions of section
26 of the Act, and the action so instituted is indeed the action with which the
papers are headed in this matter.
On March 20
1981 the landlords, that is to say the present defendants, issued a summons in
that tenant’s action asking for interim rent under section 24A of the Act. A
copy of the summons in fact did not reach the plaintiffs’ solicitors until May
5 1982, owing to an oversight of the defendants’ former solicitors. That
happened in this way. I should perhaps emphasise that the oversight was an
oversight of the defendants’ former solicitors and not the solicitors acting
for them now. The way in which the oversight occurred is explained in an
affidavit of Mr Trevor Blythe, a solicitor and a partner in the firm then acting
for the defendants.
In his
affidavit in para 4 he says:
On March 17
1981 the solicitors for the plaintiffs sent to my firm the originating summons
in these proceedings
that is the
main action
to enable me
to accept service on behalf of the defendants. It was my intention to endorse
acceptance of service on the originating summons and to return it to the
plaintiffs’ solicitors together with the summons for the determination of an
interim rent. 5. As can be seen from the summons, it had originally been dated
March 19 1981, but it was not actively issued until the 20th. I had on March 19
written to the plaintiffs’ solicitors returning the originating summons
endorsed with acceptance of service and advising them that the acknowledgement
of service had been filed. I had expected the interim rent summons to have been
issued at the same time and envisaged adding a post-script or writing a second
letter enclosing a copy of the interim rent summons by way of service. 6. As
the summons was not issued on the 19th as intended, the letter was sent
nevertheless and the summons was issued the following day. However, having been
issued, the summons was placed on the file with no copy being sent to the
plaintiffs’ solicitors as I had intended. This was a simple oversight on my
part and was not the result of any conscious decision. I then had no reason to
refer to the file again until March 1982 as the subject-matter of the
proceedings, that is to say the proposed new tenancy, was left with the
surveyors for the respective parties to negotiate;
and he says in
para 7 that:
It was only
when those negotiations failed that I was asked to obtain the first appointment
for the hearing of the plaintiffs’ application.
How the
plaintiffs came to find out about the existence of the summons emerges from the
correspondence which is exhibited to the affidavit of Mr Humphries, who is the
manager of the corporate property department of the plaintiff company, Texaco
Ltd. As appears from that bundle of correspondence, on April 27 1982 the tenants,
who were the plaintiffs, telexed to Mr Blythe of the
prepared to withdraw the application for a new tenancy of the above premises
and vacate on July 31 1982. Agents have been instructed to lodge a summons for
leave to discontinue’, and so on.
That was
answered by a telex from Mr Blythe of the defendants’ solicitors on April 28
1982, that is to say, as I understand, the next day, and although this was
marked ‘Without prejudice’, as there is a succeeding letter privilege has been
waived, as I understand it. In that telex in para 2 it stated: ‘Leave to
discontinue will presumably be granted on terms that our clients’ application
for interim rent stand as a counterclaim’, and so on. That appears to be the
first intimation to the plaintiffs of the existence of an application for
interim rent. On April 4 1982 they telexed back to Mr Blythe referring to his
telex of April 28 requesting that he should provide urgently details of the
following: ‘(1) any summons issued for interim rent’, and I need not read the
rest.
Then on May 5
there was an answer by letter to that last telex in which the defendants’
solicitors said: ‘The summons for interim rent, a copy of which we attach, was
issued on March 20 1981.’ So effectively
the summons was not issued until May 5 1982.
I should,
while dealing with the circumstances, point out that in Mr Humphries’
affidavit, para 4, it is explained that the summons for direction in the action
or further hearing procedure in the action took place before the master on
April 1 1982; but it seems — and there is no challenge to this piece of
evidence as I understand it — that even at that stage there had been no mention
at the hearing by those representing the defendants of the existence of a
summons of March 20 1981.
It will be
seen, of course, from those dates that the summons was effectively served over
a year after its issue. It is the plaintiffs’ case, that is to say the tenants’
case, that because of that failure to serve the summons of March 20 1981 until
well over a year later it is invalid and of no effect.
Going back to
the general background of the matter, as I think will already have emerged the
tenants’ action had been adjourned generally for negotiations, as is usual in
these sort of proceedings, to take place, and, as will have been indicated
already from my reciting certain of the correspondence, the tenants eventually
changed their mind about asking for a further tenancy and asked the court
through a master to discontinue their proceedings, and by order of the master
on May 26 1982 they got leave to discontinue. On the same day they served
notice of discontinuance, and it is common ground, I think, that the combined
effect of the application to the court and the notice of discontinuance was
that the tenancy finally came to an end on August 26 1982.
On May 26 1982
a further summons was taken out by the defendants asking for interim rent under
section 24A to cover the position, it having been already indicated, I think,
that the plaintiffs were going to take the point that the first summons had
never been properly served and was invalid.
The order that
the master made on May 26 1982 had some clerical errors, and it was corrected
by his order of December 6 1982; and under the corrected order both summonses
of the defendants, that is to say the original one of March 20 1981 and the
second (as it were) reserve one of May 26 1982, were ordered to stand as
counterclaims in the action, and then, of course, the order went on to order
that the action should be discontinued.
Additionally —
and this arises out of both summonses which stand as counterclaims — it was
ordered: ‘That the following question be tried as a preliminary issue, that is
to say: What is the date from which interim rent in respect of the
above-mentioned premises can be ordered or ought to be ordered?’. That is the
matter before me today.
Under the
Landlord and Tenant Act 1954, section 24A provides as follows:
(1) The landlord of a tenancy to which this Part
of this Act applies may — (a) if he has given notice under section 25 of this
Act to terminate the tenancy; or (b) if the tenant has made a request for a new
tenancy in accordance with section 26 of this Act, apply to the court to
determine a rent which it would be reasonable for the tenant to pay while the
tenancy continues by virtue of section 24 of this Act, and the court may
determine a rent accordingly.
(2) A rent determined in proceedings under this
section shall be deemed to be the rent payable under the tenancy from the date
on which the proceedings were commenced or the date specified in the landlord’s
notice or the tenant’s request, whichever is the later.
It is common
ground, and I think rightly so, that in that subsection where there is a
reference to ‘proceedings’ the proceedings referred to there are the
proceedings under this section 24A, that is to say the application for interim
rent, and in the present case that would be either the defendants’ summons of
March 20 1981 or May 26 1982, whichever may be the appropriate one.
Subsection (3)
of the Act I need not read for present purposes. It is not material for my
present purposes, the determination of the preliminary issue. It goes to the
quantum of any interim rent to be ordered under the section.
As was pointed
out by Megarry J (as he then was) in the case of English Exporters (London)
Ltd v Eldonwall Ltd [1973] Ch 415, at p 425, the jurisdiction under
section 24A is merely discretionary; but there is no discretion as to the date
from which any interim rent is to run if it is decided that interim rent should
be ordered. That is stated quite specifically in subsection (2) of section 24A.
It is either the date on which the proceedings — that is to say the application
under the section — were commenced or the date specified in the landlord or
tenant’s notice or request, whichever is the later.
Mr Lewison for
the defendants submits that under the discretion given under the section a
court can say, in the exercise of that discretion, yes or no to whether an
interim rent should be ordered in any particular case, but once it has said yes
it cannot say it should run from a date other than that specified under
subsection (2). In my judgment, that submission is right.
If the first
summons of March 20 1981 is valid, notwithstanding the failure to serve it
until May 5 1982, the date from which interim rent would run under subsection
(2) would be May 31 1981, which was the date specified in the landlords’ notice
under section 25, and that is later than the date of the issue of the summons,
March 20 1981. If the first summons, the summons of March 20 1981, is invalid
and the defendants have to rely on the second summons, it is common ground that
the date from which interim rent would run, if it is to be ordered, would be
the date of that summons, which is May 26 1982; and therefore as the tenancy
finally ended on August 26 1982, that would be a period of only three months
for which the interim rent would run, whereas if the first summons is valid it
would be for a period from May 31 1981 to August 26 1982.
Going back for
a moment to the wording of the preliminary issue, which I read again, ‘What is
the date from which the interim rent in respect of the above-mentioned premises
can be ordered or ought to be ordered?’, the particular wording, as I
understand it, is intended, in the case of the words ‘can be ordered’, to raise
the jurisdiction point, as to whether or not the summons of March 20 1981 is a
valid one, and therefore a summons on which the court can consider an
application under section 24A, and the succeeding words ‘or ought to be
ordered’ are really intended to go to the discretionary aspect.
As to the
rules of court governing applications under this particular Act, one has to go
to Order 97. Order 97, rule 2, provides that ‘All proceedings . . . under . . .
the Act of 1954 shall be . . . begun by originating summons’. Here, of course,
as a result the plaintiffs’ (who are the tenants) action was commenced by originating
summons for a new tenancy under section 26. For such an application the
governing rule as to the procedure is rule 6 of Order 97. Under subrule (1) of
rule 6 it provides what is to be stated in that application by the tenant in
his summons; subrule (2) provides who is to be the defendant or defendants; and
subrule (3) provides that ‘Order 7, rule 6 shall not apply to an originating
summons under this rule, and Order 6, rule 8, shall apply to such a summons as
it applies to a writ but with the substitution for the references to 12 months
of references to two months’. So that in effect an originating summons under
rule 6 by a tenant has a life of two months in which it must be served under
this rule, and thereafter, having regard to the provisions of Order 6, rule 8,
if it has not been served by that time, in order to be valid to be served it
has to be validated by an order of the court.
The procedure
for the sort of application we have in this case by landlords for interim rent
under section 24(A) is dealt with in rule 9A of Order 97, and that is as
follows:
(1) An application under section 24A of the Act
of 1954 to determine an interim rent shall — (a) if the tenant has begun
proceedings for a new tenancy under section 24 of the Act, be made by summons in
those proceedings, and (b) in any other case, be made by originating summons;
and subrule
(2) simply provides that the application may be heard and determined in
chambers. There is a note following that:
It is better
to ask the Master, on the first hearing, for a direction under Order 28, rule
7, that the summons stands as a counterclaim, it will not then automatically
fall if the originating summons is dismissed or discontinued.
Indeed, that is
what happened in this particular case and why in the order of the master, which
I have read, both the summonses of March 1981 and May 1982 were ordered to
stand as a counterclaim, the main action having by that order been
discontinued.
In the present
case, of course, the landlord’s application (the action being proceedings by
the tenant for a new tenancy) under section 24A by the summons was brought as a
summons in the tenant’s proceedings, so it comes under para (a) of subrule (1)
of rule 9A.
At first sight
it might seem difficult to see when the position mentioned under (b) would ever
arise, because that says: ‘In any other case be made by originating
summons.’ But it is suggested in a
footnote in vol 27 of Halsbury’s Laws, para 497, the footnote being no
13, which is referring specifically to para (b) of rule 9A, subrule (1), that:
This
situation
that is to say
the situation under paragraph (b) of the subrule
will only
arise where the tenant has applied to the court and has discontinued his
application, or where his application has been dismissed, and where the interim
continuation of the tenancy by the Landlord & Tenant Act 1954, section 64,
has not yet expired; in other cases there will be no subsisting tenancy in
respect of which to apply for an interim rent.
In sharp
contradistinction to the position obtaining under rule 6, which deals with
tenants’ applications to obtain a new tenancy, which effectively specifies the
period of two months in which the originating summons under that rule must be
served, otherwise it thereafter becomes invalid unless extended by the court,
there is no time period specified under Order 97, rule 9A, subrule (1), para
(a), for service of a summons made under that rule; and counsel on both sides
are agreed that there is a lacuna in the rules as a result.
Mr Lewison for
the defendants submits that in the absence of such a provision the summons
which has to be brought under para (a) of rule 9A, subrule (1) in the tenant’s
proceedings, that is to say as a summons in the main action, one is driven to
look back to Order 32, which deals with applications and proceedings in
chambers, and in particular Order 32, rule 3. It will be remembered that Order
32, rule 1 provides that except for a particular exception every application in
chambers, not merely ex parte, must be made by summons; rule 2 deals with the
issue of the summons, and rule 3, which deals with the service of the summons,
is as follows:
A summons
asking only for the extension or abridgement of any period of time may be
served on the day before the day specified in the summons for the hearing
thereof but, except as aforesaid and unless the court otherwise orders or any
of these rules otherwise provides, a summons must be served on every other
party not less than two clear days before the day so specified.
Mr Lewison
says that in all the circumstances that is the rule which must govern service
of the summons in this action, since there is no provision in the rules clearly
dealing with the particular kind of summons specified in para (a) of rule 9A,
subrule (1) of Order 97, and, that being so, in the present case the general
rule for service of the summons under Order 32, rule 3 would be that the time
for service would be two days before the date specified in the summons for the
hearing.
The difficulty
is that the summons in question, and indeed I think the later summons, but
certainly the summons of March 20 1981, does not specify a particular date. It
is expressed as ‘Let all parties attend before the Master’, and the room is
given, ‘on a date to be fixed’, and then it goes on to specify the nature of
the application under section 24A.
As to how that
arises, I should now turn to a Practice Direction to be found in vol 2 of the Supreme
Court Practice at para 1040 AB on p 281 in the current edition, the
Practice Direction being headed ‘Chambers procedure — Dates for hearing
originating summons for new tenancies under the Landlord & Tenant Act
1954′. Apparently, it is almost universal practice in applications such as the
plaintiffs’ here for a new tenancy under the 1954 Act for the proceedings to be
adjourned while negotiations take place. That practice is recognised and
catered for in this Practice Direction. The Practice Direction has five
numbered paragraphs, and was issued by direction of the Vice-Chancellor in
1976. Para 4 is the relevant one for present purposes. It says:
If the
landlord wishes the court to determine an interim rent under section 24A of the
Landlord and Tenant Act 1954 but is content that the determination should await
the determination of the application for a new lease, and in reliance on the
procedure specified above the originating summons has not been brought on for
hearing,
I should
explain that is a procedure by which the originating summons is adjourned so
that negotiations can take place
he may
likewise issue a general summons for the determination of the interim rent
which states the hearing as being for a day to be fixed instead of for a fixed
date and time.
Pausing there,
that is obviously what happened in the present case. Reading on:
Such a
summons must be served promptly, and it may be brought on for hearing by either
party on a date to be fixed by the court on not less than two days’ notice to
the opposing party.
As I have
already mentioned, because of the application to discontinue, on which
discontinuance was ordered, at the hearing before the master the defendants
asked that the summons, or both summonses, should stand as counterclaims in
accordance with the Practice Note to be found adjacent to Order 97, rule 9A,
and following the suggestion in the Practice Direction both summonses, and in
particular the summons of March 20 1981, had been not marked with a specified
return date but with the words ‘On a date to be fixed’. But, of course, in the
events that have happened the requirement of the Practice Direction that a
summons must be served promptly had not been observed. The Practice Direction,
I observe, is apparently seeking to fill what the counsel before me have agreed
is a lacuna in the rules. Whatever else may be said on behalf of the
defendants, it cannot be said that the summons of March 20 1981 was served
promptly after its issue, whatever the cause of that failure to serve until
something over a year had passed.
Again, it is
to be observed that in Order 32, rule 3, upon which Mr Lewison relies, there is
a requirement that a date for the hearing be specified in the summons, and
under the rule the time for service is governed by that return date. Under para
4 of the Practice Direction, made, as I understand is the whole of the
direction, for the convenience of litigants in this field of litigation, a
defendant landlord can issue his summons in the plaintiff’s (tenant’s)
application for a further tenancy without specifying a particular date but on a
date to be fixed. The requirement in the Practice Direction, para 4, that a
summons must be served promptly is, in my view, a counterbalancing requirement,
otherwise, as in this case, a landlord defendant could issue a summons for
interim rent marked ‘On a date to be fixed’ and then proceed not to serve it
but sit on the summons more or less indefinitely without letting the tenant
know of the application. In this case the defendants have taken advantage of
the Practice Direction and they have not specified a particular return date in
this summons of March 20 1981, but on the other hand they have not complied
with, and seek to discount, as I understand the argument, the counterbalancing
safeguard of prompt service by invoking the language of Order 32, rule 3, which
is clearly based, in my judgment, on the summons having a date for hearing
specified therein.
I was referred
to the decision of the Court of Appeal in the case of Michael Kramer &
Co v Airways Pension Fund Trustees Ltd, a decision of the Court of
Appeal on June 18 1976, reported in (1978) 246 ESTATES GAZETTE 911, a case in
which the tenants sought to have set aside the decision of a county court judge
in relation to premises in which they had a subtenancy; they had applied for a
new tenancy and the respondents, that is to say the landlords, for the
determination of an interim rent. Subsequently, as happened in this case, the
appellants, that is to say the tenants, the plaintiffs, gave notice of
discontinuance of their application and the learned county court judge had held
that the respondents’ application for interim rent was not defeated by this
discontinuance, and he determined an interim rent substantially higher than the
rent payable under the subtenancy. In that case it had been argued that the application
by the landlords for interim rent was an interlocutory application under the
provisions of the County Court Rules and, as such, should fall with the
discontinuance of the action. Stephenson LJ, with whose judgment Cairns and
Bridge LJJ agreed, so it is a judgment of the court, did not accept that
argument; and in a passage which is on p 915 in the left-hand column, he said
this:
The
landlords’ application of April 30 is, in my judgment, not parasitic to the
tenants’ application of July 25 1974, but a wholly distinct claim for
independent relief. It is a claim distinct from the tenants’ proceedings for
relief independent of those proceedings. It does not drop or fall with the
discontinuance by the tenants of their own application, but it survives. It must
be treated separately, and it cannot be discontinued simply by the
discontinuance of the tenants’ proceedings. However described, and whatever its
form, the landlords’ application is in substance an originating application.
However labelled, it originates, or starts, or initiates a claim, in some sense
countering the tenants’ application though affording no defence to it, and has
its own distinct and separate life just as much as if it had been initiated by
what was in form an originating summons or application or had been ordered to
stand as a counterclaim, which in substance it was.
As I have
stated, although that was an appeal from a county court decision, and no doubt
involved consideration of the County Court Rules, the observation that I have
just read of Stephenson LJ is equally applicable to an application by a
landlord under section 24A whether in the county court or the High Court. It is
an originating application.
So far as
methods of originating proceedings in the High Court are concerned, a writ
under Order 6, rule 8 becomes invalid if it is not served within 12 months of
issue unless subsequently validated for a further period by order of the court.
An originating summons comes under the same rule by virtue of Order 7, rule 6.
There are, of course, special cases provided for. I have just a short while ago
referred to the special position of an originating summons under rule 6 of
Order 97. In that case it is provided that the 12 months’ period of validity of
what I might call an ordinary originating summons is reduced to two months
under the rule. Incidentally, I observe that under the Practice Direction that
seems to be reduced to a further period of one month, but that is not a matter
with which I am concerned.
It would be a
very strange situation if an originating application under section 24A of the
Act issued without a specified return date except for the words ‘On a date to
be fixed’ could be issued and made valid though not served until well over a
year after issue and without any intimation of its existence to the plaintiff
tenant, which is the situation here.
That, in my
judgment, cannot be right. In the absence of a specific provision in the rules
specifying the time for service of an application under Order 97, rule 9A,
subrule (1), paragraph (a), the matter, in my judgment, is governed by the
Practice Direction, which requires the application, if made by summons in the
tenant’s proceedings for a new tenancy to be served promptly. Promptly means
promptly. Solicitors acting for landlords in such proceedings should ensure
that a landlord’s summons under Order 97, rule 9A, subrule (1), paragraph (a),
for interim rent should be served promptly, and in the ordinary way it seems to
me that there should be no reason why such a summons should not be served
immediately after issue.
In this case,
in my judgment, in view of the long delay before service, a delay of over a
year, the summons was invalid by the time a copy of it was eventually sent to
the plaintiffs’ solicitors. It follows that the earliest date from which the
interim rent can run is that of the application on the second summons, that is
to say May 26 1982.
As to
discretion, although an argument on discretion was addressed to me by Mr
Steynor, for the plaintiffs, it was, as I understood it, essentially directed
against the possibility that the earlier summons should be held to be valid. I
see no reason, on any argument put before me or any material now before me, why
I should refuse, in my discretion, to order interim rent from May 26 1982 to
the final end of the tenancy on August 26 1982. I therefore answer the
preliminary issue in the summons that the date from which interim rent in
respect of the premises mentioned in the title of the action can and should be
ordered to run is May 26 1982. The question of quantum, of course, is for
consideration hereafter under the provisions of subsection (3) of section 24A.
The
plaintiffs were awarded costs of the hearing of the preliminary issue. The
summons was adjourned back to the master for consideration of quantum. Leave to
appeal was given to defendants.
