Application in Chancery Division for relief from forfeiture for non-payment of rent–Forfeiture resulting from consent order in proceedings in Queen’s Bench Division–Question whether consent order deprived applicants of right to claim relief–Answer depends on whether there is an express or implied agreement to surrender such right–Agreement to surrender right implied in present case–In any case applicants had by their actions affirmed the terms of the order–Further, there was no present payment or tender of amount due–Relief refused
This was an
application by Richard Thomas Raby Howard and his son, Thomas James Edward
Howard, for relief from forfeiture of their tenancy of Matching Hall Estate, a
large farm near Harlow, Essex, for non-payment of rent. There had been
proceedings under Order 14 in the Queen’s Bench Division and the order for
possession had been made by consent. The application for relief was made, not
in the action in the Queen’s Bench Division, but in these separate proceedings in
the Chancery Division. The present plaintiffs had been the defendants in the
Queen’s Bench action.
A C L Thornton
(instructed by Stoneham, Langton & Passmore) appeared for the plaintiffs;
Walter Blum (instructed by Frere, Cholmeley & Co) represented the defendant
board.
Giving
judgment, GOULDING J said: This is a motion by the plaintiffs, a father and son
named Howard, against the defendant, the Central Board of Finance of the Church
of England. The plaintiffs were formerly tenants of the defendant in respect of
a large farm known as the Matching Hall Estate in Essex. The plaintiffs ran
into financial difficulties, their rent got in arrear and after a good deal of
time had elapsed the defendant ultimately took proceedings for the rent. An
application was made in the Queen’s Bench Division under Order 14. Discussions
were then carried on between the legal advisers of both parties and finally in
the presence of both parties themselves. The result was that agreed terms were
come to which were embodied in a consent order made by Master Elton in Queen’s
Bench Chambers on July 22 last. I must read the whole of that order. It reads:
Upon hearing
counsel for the plaintiffs and the solicitors for the defendants by consent it
is ordered that on the plaintiffs undertaking to purchase a dwelling-house up
to the value of £25,000 for the first defendant and his present wife for their
lives, they to pay the outgoings and repairs. Also on his undertaking in
respect of the Matching Hall Estate to make no claims for repairs or
improvements and the plaintiffs undertaking not to claim for dilapidations. The
second defendant is to have first refusal of Hoggs Farmhouse. Judgment to be
entered for the plaintiffs for: (1) Possession forthwith of the whole estate
save of Matching Hall and Hoggs Farmhouse and in relation to them possession on
29th day of September 1976. Leave to issue writ of possession accordingly
without further order. (2) £12,700 arrears of rent. (3) Mesne profits agreed at
£12,700. (4) Interest on arrears of rent agreed at £372.65. (5) Plaintiffs’
costs agreed at £250.
I should have
said, what I think must be obvious, that in the Queen’s Bench action the
plaintiff was the present defendant, the Central Board of Finance, and the
defendants were the present plaintiffs, Mr Howard senior and Mr Howard junior.
The background
of that order is described at length in an affidavit by the first plaintiff,
the older Mr Howard. After describing the disappointment of hopes that he had
had of satisfactory financial arrangements he continues:
However, no
such arrangements have been agreed and I was faced, a few days before the
hearing of the summons, with the prospect of losing my livelihood and my house
since I was not at that time able to raise any money to pay the outstanding rent.
The landlords’ agent had indicated to me at the meeting of April 9 1976 that if
I was turned out of the farm, the landlords would buy a grace and favour house
for me and my wife to live in rent free for the rest of our lives. As the date
for the hearing of the summons approached I was advised by my solicitor that I
should consent to judgment being entered against me for possession in return
for the landlords buying me this grace and favour house. I was also advised by
my solicitor that unless I consented to judgment it was unlikely that I would
be able to obtain a grace and favour house from the landlords and I would
therefore be without any home at all. Since no agreement had been reached with
the landlords about the financial future of the farm business I agreed, on the
day before the hearing, to judgment for possession and for the outstanding rent
to be entered against me in return for a grace and favour house for myself. On
the day of the summons I arrived with my solicitor and my son arrived with his solicitors.
A few minutes before the time for the summons to be heard, I was told by my
solicitor that the landlords had raised the question of dilapidations. I at
once said "What about the money I’ve spent on improvements over the
years?" No further discussion was
possible as it was time to enter the master’s room and the terms of the consent
order were that I would drop my claim for improvements in return for the
landlords dropping their claim for dilapidations as well as agreeing to buy me
a grace and favour house for my wife and I to live in rent free for the rest of
our lives. I would stress that I only agreed to these terms because at that
date there was no prospect of my being able to raise any money to pay the
arrears of rent. Furthermore, I would observe that the undertaking with regard
to both dilapidations and improvements was one made with me alone and was not
made with my son.
I have also
got some evidence about the making of the consent order from Mr Presland, a
solicitor acting for the defendant board. He mentioned that it was agreed on
that occasion that the defendant board would not seek to enforce the money
judgment except by way of retaining the proceeds of sale of the harvest and to
the extent that there might be a surplus after deduction of the costs of
harvesting, that was to go to the plaintiffs. That, however, was not embodied
in the consent order, although counsel for the defendant board says they would
still honour it.
Now, the
Howards, the present plaintiffs, have commenced proceedings seeking under the
equitable jurisdiction (as regulated by statute) relief from forfeiture
incurred for non-payment of rent. It is, I think, unfortunate that an
originating summons for that purpose should have been issued in this division
rather than application being made in the Queen’s Bench Division and if
possible in the action in which the consent order was made. However that may
be, both parties have desired me to deal with the matter, which is one of
urgency (certainly from the point of view of the defendant board) and I have
ccordingly heard today’s motion.
The principle
on which the court exercises the equitable jurisdiction has been frequently
stated and for present purposes I can put it in this way: that relief will be
granted, save in exceptional circumstances, on payment or tender of all that is
due for rent and costs and provided that rights of third parties will not be
interfered with.
Mr Blum,
appearing for the defendant board, the landlords, has relied on a number of
points in resisting the application for relief in the present case. Some of the
points seem to me sound; others unsound. I will mention some of them, but not
quite all. First of all, Mr Blum relies on the fact that the order was made by
consent in compromise of the action by which the board, the landlords, sought
to enforce forfeiture of the lease. He submits that in the circumstances which
the first plaintiff and Mr Presland have described in their affidavit it can
plainly be inferred that the agreement was made on the footing that it was a
final disposal of the litigation between the parties and that by necessary
implication the tenant would not subsequently seek relief from forfeiture.
That, counsel submits, is really plain when you see that the landlord was to
provide a house worth £25,000 for the first defendant and his present wife for
their lives rent free and the second defendant to have the first refusal of the
house he was living in. Mr Blum submits that really it is obvious that the
tenants were giving up any further rights they might have in the premises.
In the case of
Nance v Naylor [1928] 1 KB 263, a case in the Court of Appeal,
the circumstances were that the landlord had signed judgment for possession and
subsequently sought to execute the judgment by a writ of possession and then an
agreement was made to give the tenant extra time to get out on an undertaking
by him to pay a money judgment. That was held not to deprive the tenant of the
right subsequently to proceed for relief from forfeiture, which he did, very shortly
afterwards, before the date for giving up possession under the agreement had
arrived. Atkin LJ said this:
I can quite
understand that an agreement might be entered into on the terms that if time
were given the respondent would surrender his right to claim relief against
forfeiture; or that an agreement might be made upon such terms that an
agreement to surrender the right to relief must necessarily be implied; but it
is a question of inference in each case whether such a term should be implied.
For my part I find great difficulty in implying such a term in a case where
there is no evidence that the respondent knew anything about his right to
relief against forfeiture.
Mr Blum
contends, and, in my judgment, he is right, that the terms embodied in the consent
order do constitute an agreement upon such terms that an agreement to surrender
the right to relief must necessarily be implied. When the learned Lord Justice
speaks of the want of evidence that the tenant knew anything about his right to
relief against forfeiture he was not, I think, dealing with a case in which the
tenant at the time of the relevant agreement had had any professional advice. I
do not conceive that it would be necessary for the landlord here to prove the
state of the tenant’s knowledge of the law, when he had solicitors acting for
him. That, accordingly, seems to me a proper reason for refusing relief.
If I am wrong
on that, another reason is provided by a second argument of Mr Blum, namely,
both the plaintiffs have acted since the date of the consent order in such a
way as to recognise and affirm its terms. The defendant board having taken
possession in accordance with the agreement has been spending money on the land
and incurring the risks of agricultural operations, plainly with the knowledge
of the plaintiffs. Indeed part of the expense incurred was the payment of wages
to the second plaintiff as a foreman on the farm. Further, correspondence has
taken place between the solicitors in which the plaintiffs clearly treated the
defendant board as being expected to go ahead with the provision of a
dwelling-house for the first plaintiff and to give first refusal on sale of the
farmhouse to the second plaintiff. In a claim for equitable relief of this sort
I do not think the plaintiffs can be allowed to approbate and reprobate, having
recognised the efficacy of the consent order in that way.
Thirdly,
relief is not given under this equitable jurisdiction unless the money is
available and paid or tendered to the landlord. Now here there is a sum of
something over £25,000 owing on the judgment, and expenditure on the farm
which, if relief were granted would redound to the plaintiffs’ benefit and
ought to be paid by them, amounts to another £16,000 or so. It would appear
that the harvest, to the benefit of which the plaintiffs were entitled, has
already produced some £21,000 and there will probably be a large sum at the end
of this month, but the end of this month is not today. The plaintiffs have
instructed their counsel to say the money could be found within 14 days, but no
further particulars are given of that. In any case it would not be right for me
to restrain the landlords’ legal rights under the order in expectation, which
might or might not prove well-founded, of the tenants producing the money at a
later date. The basis of relief from forfeiture is present payment or tender of
what is due.
On those three
grounds, which are alternative grounds, I think that the defendant board must
succeed.
There was a
fourth ground of which Mr Blum made a good deal. I mention it because I do not
think I am entitled to take it into account, though it may make me less sorry
than I would otherwise be at the decision to which I have been obliged to come.
On the evidence it appears to me unlikely that the plaintiffs, if the
forfeiture were relieved, could establish themselves in a satisfactory
financial position on this farm. Large debts have been incurred and receivers
have been appointed of a company and a partnership, in both of which the first
plaintiff at any rate is interested. There are two bankruptcy petitions pending
against him, though particulars have been given of ways in which he hopes to
deal with each, and his affidavit abounds with optimistic but vague references
to an unnamed backer, to other property owned by the first plaintiff, and to
agreements in principle of the sort which those who have sat in courts dealing
with matters of insolvency are all too familiar. However, in my judgment, on
the authority of such cases as Gill v Lewis [1956] 2 QB 1, the
net financial position of the plaintiffs is not a matter that should weigh with
me in granting or refusing forfeiture. Still less can I be influenced by the
suggestion Mr Blum made that the court should have regard to the probability
that this tract of more than 1,200 acres of agricultural land would be
efficiently and promptly used in the national interest. The national interest
in this country enters into the litigation of private rights and liabilities by
way of certain common law rules of public policy, like the rule against
restraint of trade, and by statutory legislation. There is no room left for a
judge, even in discretionary matters, to be influenced by political
considerations.
But, for the
three reasons I have mentioned, which appear to me good, I must refuse this
motion.
Judgment was
given for the defendant board with costs.
