Landlord and Tenant Act 1954 — Discontinuance of tenants’ action claiming a new tenancy — Landlords’ summons claiming interim rent under section 24A of Act — Question as to whether landlords’ claim remained alive or perished with discontinuance of plaintiff tenants’ action — Whether landlords’ claim ‘parasitic’ in this sense — Plaintiffs contended that as the defendant landlords had not obtained a direction that their countersummons for interim rent should stand as a counterclaim it must necessarily fall when the action was discontinued — Defendants contended that their claim stood in its own right and also submitted that as the plaintiffs’ discontinuance had been without leave, their action remained alive, with the result that the defendants’ countersummons remained alive also — This latter submission was rejected by the judge, who held that the action had been effectively discontinued without leave — The main issue was whether, as there had been no formal direction that the defendants’ summons for interim rent should stand as a counterclaim, it remained merely an application in the tenants’ action and could not, therefore, survive it — After considering in detail the rules of court and the decisions of the Court of Appeal in McGowan v Middleton, The Saxicava, and Michael Kramer & Co v Airways Pension Fund Trustee Ltd, the judge held that the defendants’ application for interim rent by their countersummons under Order 97, rule 9A, was a wholly distinct claim, in substance an originating application in the nature of a counterclaim — It therefore survived the discontinuance of the plaintiffs’ action for a new tenancy — Judgment for defendants on this preliminary point
This was a
preliminary issue which the Master directed to be tried in an action commenced
by originating summons by which the plaintiffs, Artoc Bank & Trust Ltd,
claimed a new tenancy of the sixth floor of Byron House, 7-9 St James’s Street,
London SW1. The defendants, Prudential Assurance Co plc, landlords within the
meaning of the 1954 Act, took out a summons in the proceedings claiming an
interim rent in accordance with section 24A of the Act.
Nicholas R
Warren (instructed by Jaques & Lewis) appeared on
Assurance Co plc) represented the defendants.
Giving
judgment, FALCONER J said: I have before me for decision a preliminary point in
this action which is a proceeding under the Landlord and Tenant Act 1954.
The material
facts are as follows. The defendants are the head lessees of a property known
as Byron House, 7-9 St James’s Street, London SW1. By an underlease not
material for present purposes the defendants had leased the first, fourth,
fifth and sixth floors of the property to an underlessee (not a party to these
proceedings). The sixth floor was leased by a subunderlease to a fourth party
(not a party to these proceedings) for a term expiring on September 19 1982. By
assignment the unexpired residue of the subunderlease had vested in the
plaintiffs. On February 23 1982, the underlessee served a request pursuant to
section 26 of the Act seeking a new tenancy but only in respect of the first
floor and part of the fourth floor. The defendants in their capacity as
landlords of the plaintiffs within the meaning of the Act served on the
plaintiffs a notice under section 25 of the Act specifying as the date for
termination of the subunderlease September 29 1982. On March 19 1982 the
plaintiffs served a counternotice, stating that they would not be willing to
give up possession of the sixth floor on the date stated and on June 17 1982
issued the originating summons which commenced this action, claiming a new
tenancy of the sixth floor, the summons being served on the defendants on or
about June 17 1982. On July 20 1982, the defendants took out a summons in these
proceedings under Order 97, rule 9A, claiming an interim rent pursuant to
section 24A of the Act from the plaintiffs. No evidence was filed in relation
to either of those applications because, it is common ground, the parties were
negotiating. It seems to have become apparent to the plaintiffs that the rent
for any new lease of the sixth floor would be too high for them and by letter
dated March 21 1983 the plaintiffs by their solicitors gave notice pursuant to
Order 21, rule 2(3A), discontinuing the action.
I should read
the relevant portions of that letter. The first-paragraph I need not read. The
second paragraph reads:
Please take
notice that pursuant to the Rules of the Supreme Court, Order 21, rule 2(3A),
the plaintiff Artoc Bank & Trust Ltd, hereby discontinues this action and
wholly withdraws the originating summons herein. In view of the provisions of
section 64 of the Landlord and Tenant Act 1954, our clients’ tenancy will
terminate at the expiration of a period of three months from today. Please
acknowledge receipt of this letter.
The
defendants’ solicitor wrote on March 30 1983 in reply thereto and I should read
that letter, which is a short one. It reads:
I thank you
for your letter of March 21 1983 and I confirm that your clients’ tenancy will
determine on June 21 1983. Your clients will be responsible for payment of my
clients’ costs pursuant to Order 62, rule 10. I will write to you again
quantifying my clients’ claim for interim rent once I have obtained
instructions.
By a letter
dated May 9 1983 the plaintiffs’ solicitors replied and I shall read the last
paragraph of that letter. It reads:
With regard
to your clients’ claim for an interim rent, as no Order has been made by the
court that the landlords’ summons for an interim rent stands as a counterclaim,
we are of the view that as the tenant has discontinued the action and wholly
withdrawn the originating summons for a new tenancy, the landlords’ summons for
an interim rent has automatically fallen and that the court no longer has any
jurisdiction to determine an interim rent. Our contention is supported by the
note 97/9A/1 at p 1449 in the Supreme Court Practice 1982 Part I.
By a
subsequent letter dated October 19 1983, the defendants’ solicitors said — and
I read the relevant parts:
With regard
to the third paragraph of your letter of May 9, my view is that my clients’
summons is in substance a fresh claim albeit brought in your clients’
proceedings and remains in being notwithstanding that it has not been ordered
to stand as a counterclaim. In support of this opinion I would refer you to Michael
Kramer & Co v Airways Pension Fund Trustees Ltd 1976* Are you
prepared to concede the point? If not,
then it is my intention to have the issue between us determined as a
preliminary point.
*(1976) 246
EG 911
I need not
read the rest.
By a letter
dated December 15 1983 the plaintiffs’ solicitors made it apparent that they
did not accept that contention of the defendants and, as a result, the matter
came before the Master and the Master directed that the issue between the
parties should be tried as a preliminary issue and that is the issue now before
me.
The
plaintiffs’ contention, as indicated in the paragraph I have quoted from the
plaintiffs’ solicitors’ letter of May 9 1983, is that as a result of the
plaintiffs’ discontinuance of the action their own application for a new
tenancy fell and that any other application in the proceedings automatically
fell also; that the defendants not having obtained or even, indeed, asked for a
direction that their countersummons for interim rent should stand as a
counterclaim, as suggested in the note 97/9A/1 in the Supreme Court Practice
(at p 1449 in the 1982 edition) their countersummons remains an application in
the tenants’ action and fell when the plaintiffs discontinued the action.
The
defendants’ primary submission, based on the decision of the Court of Appeal in
Michael Kramer & Co v Airways Pension Fund Trustee Ltd, which
is reported in (1978) 246 EG 911, is that the defendants’ countersummons under
Order 97, rule 9A, is a claim which stands in its own right and is not to be
treated as parasitic to the plaintiffs’ claim for a new tenancy under their
originating summons so as to fall with that application of the plaintiffs on
discontinuance of that application. But the defendants also contend that the
plaintiffs were not entitled to discontinue without leave as they purported to
do by their solicitors’ letter of March 21 1983, because, so it is submitted
for the defendants, Order 21, rule 2(3A), has no application to Order 97 of the
Rules of the Supreme Court and that, accordingly, as no order has been made
granting leave to discontinue, the plaintiffs’ proceedings for a new tenancy
under their originating summons remain alive and the defendants’ countersummons
for interim rent must also remain alive.
It is
convenient and, indeed, logical to deal first with the latter contention.
Order 21, rule
2(3A), was added to Order 21, rule 2, by amendment, apparently to remove the
anomaly referred to by Bridge LJ in Covell Matthews & Partners v French
Wools Ltd [1978] 1 WLR 1477 at p 1486, and came into force on January 1
1983. It is as follows:
(3A). The
plaintiff in an action begun by originating summons may, without the leave of
the court, discontinue the action or withdraw any particular question or claim
in the originating summons as against any or all of the defendants at any time
not later than 14 days after service on him, of the defendant’s affidavit
evidence, filed pursuant to Order 28, rule 1A(2), or, if there are two or more
defendants, of such evidence last served, by serving a notice to that effect on
the defendant concerned.
Order 28, rule
1A, is a new rule, introduced by amendment under the same statutory instrument
as amended Order 21, rule 2, by the addition of paragraph (3A) and has the
effect of introducing a strict timetable into the originating summons
procedure. For present purposes its material provisions are: Para (1):
In any cause
or matter begun by originating summons (not being an ex parte summons) the
plaintiff must, before the expiration of 14 days after the defendant has
acknowledged service, or, if there are two or more defendants, at least one of
them has acknowledged service, file at the office of the court out of which the
summons was issued the affidavit evidence on which he intends to rely.
I need not
read para (2) for present purposes.
Para (3)
reads:
Copies of the
affidavit evidence filed in Court under paragraph (1) must be served by the
plaintiff on the defendant or, if there are two or more defendants, on each
defendant before the expiration of 14 days after service has been acknowledged
by that defendant.
Para 4 reads:
Where a
defendant who has acknowledged service wishes to adduce affidavit evidence he
must within 28 days after service on him of copies of the plaintiff’s affidavit
evidence under paragraph (3) file his own affidavit evidence in the office of
the court out of which the summons is issued and serve copies thereof on the
plaintiff and on any other defendant who is affected thereby.
Para (5)
reads:
The plaintiff
on whom a copy of a defendant’s affidavit evidence has been served under
paragraph (4) may within 14 days of such service file in court other further
affidavits in reply and shall in that event serve copies thereof on that
defendant.
Para (6)
reads:
No other
affidavit shall be received as evidence without the leave of the court.
I need not
read paragraph (7).
Para (8)
reads:
The
provisions of this rule apply subject to any direction by the court to the
contrary,
and so on.
I need not
read paragraph (9).
It seems plain
and I assume that the reference in Order 21, rule 2(3A), to ‘the defendant’s
evidence filed pursuant to Order 28, rule 1A(2)’, which, it is common ground,
appears as such in the Queen’s Printer’s copy of the amending statutory
instrument, is an error and should read ‘pursuant to Order 28, rule
1A(4).’ I proceed on that assumption.
Mr Lawrence
for the defendants submitted that Order 21, rule 2(3A), has no application to
originating summonses for new tenancies made under the provisions of Order 97
governing applications for new tenancies under the Landlord and Tenant Act
1954. Under rule 6 of Order 97 an application for a new tenancy under section
24 of the Act must be made by originating summons, as was the plaintiffs’
application in this case. Under rule 7(1) of Order 97, on issuance of such an
originating summons, the plaintiff must file an affidavit verifying the facts
in his summons and rule 7(2) provides: ‘(2) Not less than four days before the
day fixed for the first hearing of the summons the defendants must file an
affidavit stating’, and there are three sets of facts under the paragraphs (a),
(b) and (c), which I need not read for present purposes.
Mr Lawrence’s
argument in support of his submission was as follows. He first pointed to rule
1 of Order 28 which provides:
The
provisions of this Order apply to all originating summonses subject, in the
case of originating summonses of any particular class, to any special
provisions relating to originating summonses of that class made by these rules
or by or under any Act; and, subject as aforesaid, Order 32, rule 5, shall
apply in relation to originating summonses as it applies in relation to other
summonses.
The next step
in his argument was that as under rule 7(1) and (2) of Order 97 the defendant
landlord has up to four days from the first hearing of the plaintiff tenant’s
summons under rule 6 to file his evidence, the provisions of Order 97, rule 7,
which are ‘special provisions’ within rule 1 of Order 28, are incompatible with
the provisions of Order 28, rule 1A, providing a timetable as to the service of
evidence and, accordingly, he submits, the provisions of Order 28, rule 1A, as
to evidence are not applicable to originating summonses under rule 6 of Order
97. That being so, it follows, Mr Lawrence argued, that Order 21, rule 3A,
which is tied to the service of the defendant landlord’s evidence under Order
28, rule 1A, cannot apply to — or, as he put it, ‘does not touch’ —
applications for new tenancies under Order 97.
I do not
accept this argument. It seems to me that the provisions of Order 97, rule 7(1)
and (2), are not such as to exclude the application of the provisions of Order
28, rule 1A, to any originating summons for a new tenancy under Order 97, rule
6. As Mr Warren for the plaintiffs submitted, rule 7(1) and (2) of Order 97
merely requires affidavits from the plaintiff and the defendant stating the
matters respectively specified therein. One or other or both parties may well
wish to adduce, in addition, other evidence, such as expert evidence, dealing
with other aspects of the matters in issue than those so specified in rule 7(1)
and (2) and such other evidence would fall to be dealt with under the
provisions of Order 28, rule 1A. There is, therefore, no reason for regarding
Order 21, rule 2(3A), as inapplicable to originating summonses for new
tenancies under Order 97, rule 6, because of the reference in Order 21, rule
2(3A), to the defendants’ evidence filed pursuant to Order 28, rule 1A. It
follows that the plaintiffs’ notice of discontinuance by their solicitors’
letter of March 21 1982 was a valid notice effective to discontinue, without
leave, the plaintiffs’ action commenced by their originating summons of June 17
1982, and I so hold.
Having so
held, it is not necessary to consider the plaintiffs’ estoppel point also
argued by Mr Warren.
I come,
therefore, to the main issue between the parties arising from, on the one hand,
the plaintiffs’ contention that, the defendants not having obtained a direction
that their countersummons for interim rent should stand as a counterclaim, as
suggested in the note 97/9A/1 in the Supreme Court Practice, their
countersummons remains an application in the tenants’ action and fell when the
plaintiffs discontinued the action, and, on the other hand, the defendants’
primary submission that the defendants’ countersummons under Order 97, rule 9A,
is a claim which stands in its own right and is not to be treated as parasitic
to the plaintiffs’ claim for a new tenancy under the plaintiffs’ originating
summons so as to fall with that application on discontinuance of that
application.
In support of
the plaintiffs’ contention Mr Warren referred to Order 15, rule 2, and Order
28, rule 7, of the Rules of the Supreme Court which, he submitted, constituted
a complete code for the making of a counterclaim.
Order 15, rule
2, provides in subrule (1) as follows:
Subject to
rule 5(2), a defendant in any action who alleges that he has any claim or is
entitled to any relief or remedy against a plaintiff in the action in respect
of any matter (whenever and however arising) may, instead of bringing a
separate action, make a counterclaim in respect of that matter; and where he
does so he must add the counterclaim to his defence.
I need not
read subrule (2) for present purposes.
In subrule (3)
it is provided:
A
counterclaim may be proceeded with notwithstanding that judgment is given for
the plaintiff in the action or that the action is stayed, discontinued or
dismissed.
Clearly the
concluding words of subrule (1) contemplate a pleading for a counterclaim. But
there is no requirement for pleadings as such in actions begun by originating
summons, the procedure for which is governed by Order 28, Order 28, rule 7,
provides as follows in respect of counterclaims brought in actions commenced by
originating summons:
(1) A defendant to an action begun by originating
summons who has acknowledged service of the summons and who alleges that he has
any claim or is entitled to any relief or remedy against the plaintiff in
respect of any matter (whenever and however arising) may make a counterclaim in
the action in respect of that matter instead of bringing a separate action.
Subrule (2)
reads:
A defendant
who wishes to make a counterclaim under this rule must at the first or any
resumed hearing of the originating summons by the Court but, in any case, at as
early a stage in the proceedings as is practicable, inform the Court of the
nature of his claim and, without prejudice to the powers of the Court under
paragraph (3), the claim shall be made in such manner as the Court may direct
under rule 4 or rule 8.
I need not
read subrule (3), because it has no materiality for present purposes.
However, I
should refer to the note under this rule, that is to say, note 28/7/1. The note
reads:
This rule
lays down no procedure for these cases. It is suggested that the defendant
should serve on the plaintiff (and in the Chancery Division lodge in Chambers)
proposed points of counterclaim before the hearing of his application. The Court
can then give such directions as may be appropriate. Probably there would have
to be an order under rule 8, but in some cases the matter could be dealt with
on affidavits.
Mr Warren
submitted that under that code as to the making of a counterclaim the court
requires a formal pleading as a counterclaim and when, in an action commenced
by originating summons the defendant seeks to make a claim against the
plaintiff by way of counterclaim, unless the court makes an order for
particulars of claim of that claim, as suggested in the note to Order 28, rule
7, in the Supreme Court Practice, or an order under rule 8 of Order 28
(under which the court may, in particular, order that affidavits shall stand as
pleadings) there is no counterclaim properly made as such in the action and in
such case the claim, not having been made properly as a counterclaim in the
action, will not survive discontinuance of the action. In these proceedings Mr
Warren submitted that there is no pleading by the landlord setting up his counterclaim
— the landlord’s claim for interim rent has been made by a summon, as
contemplated by Order 97, rule 9A, but such a summons is not a pleading and, as
no order has been made by the Master under Order 28, rule 7(2) or rule 8, that
that summons should stand as a counterclaim, no counterclaim has been initiated
and the landlords’ application for interim rent by that summons must fail as
having fallen with discontinuance of the action.
I do not
accept the submission that a counterclaim in an action commenced by originating
summons must be made in the form of a formal pleading and it does not seem to
me that the authorities to which I was referred support that submission, quite
apart from the consideration that there is no requirement in Order 28 for pleadings
in an action commenced by originating summons.
In McGowan
and Another v Middleton (1883) 11 QBD 464 the Court of Appeal held
that by discontinuing an action after a counterclaim has been delivered a
plaintiff cannot put an end to the
that the Master of the Rolls at p 470 stated the principle thus:
The
plaintiff’s action being discontinued, that which is only a defence to it drops
with it; but anything beyond a defence, anything in the nature of a claim
against the plaintiff, must be treated separately and cannot be
discontinued.
I underline the
words ‘anything in the nature of a claim against the plaintiff’ as my emphasis.
In the Saxicava
[1924] P 131 the headnote, which is a short one, reads as follows:
A notice of
counterclaim contained in correspondence passing between plaintiff’s and
defendant’s solicitors is not sufficient to ‘set up’ a counterclaim within the
meaning of Order 21, rule 16, so that the counterclaim may be proceeded with if
the plaintiff’s action is stayed, discontinued or dismissed.
Per Bankes
and Scrutton LJJ. The counterclaim must at least be set up by some proceeding
which is either directed by or recognised by the rules and in respect of which
there is a record on the files of the court.
I think that
that indicates sufficiently the nature of the case.
At p 134
Bankes LJ, who gave the leading judgment, said, starting at the para beginning
near the bottom of p 134:
Now, the
difficulty in which defendants, who have within the meaning of the rules set up
a counterclaim, might be put in the event of the plaintiff discontinuing, had
to be met by a special rule — namely, Order 21, rule 16: ‘If, in any case in
which the defendant sets up a counterclaim, the action of the plaintiff is
stayed, discontinued, or dismissed, the counterclaim may nevertheless be
proceeded with.’ The object of that rule
and the necessity for it are obvious, because the right of counterclaim takes
its origin from section 24 of the Judicature Act of 1873, which gives the court
power to grant to a defendant all such relief against a plaintiff as the
defendant shall have properly claimed by his pleadings.
Then I can
omit a good deal of the rest of p 135 and pick it up about one-third of the way
from the bottom, where the learned lord justice says:
But it seems
to me that ‘set up’ can only refer to some step in the proceedings which is
either directed by or recognised by the rules, because it is in reference to
such matters only that the rules are dealing; and when it speaks of setting up
a defence it must mean set up in some proceeding which is recognised or
directed by the rules. Under Order 14 the proceeding is by way of affidavit,
but when one comes a stage further and refers to pleadings it seems to me that
Order 21, rule 16, in speaking of ‘setting up’, must refer to a setting up in a
pleading, or, at any rate, in some proceeding which is recognised or directed
by the rules, and which becomes part of the record, or something which is filed
in the court.
I draw
attention to the words ‘or, at any rate, in some proceeding which is recognised
or directed by the rules and which becomes part of the record, or something
which is filed in the court’.
It would, it
seems to me, be impossible to say that the summons for interim rent by the
defendants in the present action, made pursuant to the provisions of Order 97,
rule 9A, is not a proceeding ‘recognised or directed by the rules’ and it is
certainly something filed in the court which has become part of the record.
To the same
effect, Scrutton LJ, referring to the wording ‘in which the defendant sets up a
counterclaim’ in the rule (Order 21, rule 16) under consideration, said at p
138 in the first complete paragraph: ‘It appears to me that setting up a
counterclaim must be done by something which is recorded in the court.’
In the case of
Impex Transport Aktieselskabet v A G Thames Holdings Ltd [1981] 1
WLR 1547, Robert Goff J (as he then was), after considering the Saxicava
case and certain other authorities, said at p 1556 at H:
It follows,
in my judgment, that, on the balance of authority under the old rules, a
counterclaim could be ‘set up’ for the purposes of Order 21, rule 16, when a
pleading in the form of a counterclaim was served, or when some equivalent
document which was ordered to take the place of a pleading was served. If that
is right, I can see no reason to apply any different construction to the present
Order 15, rule 2(3).
I think, with
great respect, that that statement as to when a counterclaim could be set up
should be widened by the addition of some wording such as ‘or which was
recognised or directed by the rules and became part of record or was filed in
the court’ after the words ‘to take the place of a pleading was served’, in
view of the passages I have cited above from the judgments of Bankes and
Scrutton LJJ in the Saxicava case.
That being so,
the defendants’ countersummons for interim rent, having been made pursuant to
and in accordance with Order 97, rule 9A, and duly served on the plaintiffs, is
not disqualified by reason of its form from being a counterclaim which can
survive the plaintiffs’ discontinuance of their action.
As to its
nature, as a claim, Mr Lawrence relied strongly on the decision of the Court of
Appeal in the Kramer case (1978) 246 EG 911 already referred to above,
in support of the defendants’ primary submission. The case concerned
proceedings in the Westminster County Court under the Landlord and Tenant Act
1954 in which the tenants (the appellants) had applied for a new tenancy and
the landlords (the respondents) for the determination of an interim rent. The
tenants gave notice of discontinuance of their application but the learned
county court judge held that the landlords’ application for interim rent was
not defeated by the discontinuance. The case is very pertinent to the question
now before me and merits some close consideration. I must refer to a number of
passages in the judgment of Stephenson LJ with which Bridge and Cairns LJJ
agreed, so that it is in effect the judgment of the court.
I should read
first the opening passage in the judgment of Stephenson LJ. He says:
The matter
arises under a lease granted to the tenants, a firm of solicitors, Michael
Kramer & Co, by the respondents, Airways Pension Fund Trustee Ltd, on
February 16 1968. What was then granted was a business tenancy or subtenancy of
premises
and there the
address is set out
It was a
tenancy of the fourth floor and part of the fifth floor of that building for
seven years from September 29 1967 at an annual rent of £2,800.
On March 29
1974 the landlord served a notice under section 25 of the Landlord and Tenant
Act 1954 to determine that tenancy on October 5. On April 4 the tenants wrote a
letter, to be taken as counternotice that they were not willing to give up the
premises, as required by subsection (2) of section 29 of the Act. On July 25
the tenants applied under section 24 of the Act for a new tenancy for 14 years
from October 5 of 1974 at an annual rent of £4,200 and they made that
application to the High Court. The landlords informed the tenants that they did
not object to the proposed rent, but they did object to the new tenancy. On
November 28 the matter was transferred from the High Court to Westminster
County Court under section 63 of the Act. As a result of a decontrol notice
dated February 12 1975 the freeze upon business rents which had been imposed by
the counter-inflation legislation was lifted by virtue of the Counter-Inflation
(Business Premises) Order of 1975.
On April 30
the landlords applied for a determination of an interim rent under section 24A
of the 1954 Act, and, I must add, because it is a matter of cardinal importance
to Mr Green’s submission on behalf of the tenants, under Order 13, rule 1, of
the County Court Rules. That application was adjourned until the hearing of the
tenants’ application, and before the hearing of either could come on, the
tenants on July 17 gave notice of discontinuance in these terms: ‘Take notice
that the plaintiffs wholly discontinue this action’.
On July 31
the learned county court judge heard the tenants’ application for a new
tenancy, coupled with the counter-application, if I may call it that, by the landlords
for an interim rent. He heard argument on the question of whether the
landlords’ application for the determination of the interim rent had, as the
tenants contended, lapsed by reason of the tenants discontinuing their action
or application for a new tenancy. On that matter he reserved his judgment and
on September 24 he gave judgment, rejecting the tenants’ submission. He said
that the landlords’ application, in his opinion, ‘instituted proceedings under
section 24A which are quite distinct from the proceedings instituted by the
tenants’ application for a new tenancy, although the former was made in the
course of the latter. The landlords’ application cannot, therefore, be brought
to an end by the tenants’ unilateral discontinuance of their new tenancy
application’.
I can miss the
next sentence.
Then the
judgment of Stephenson LJ goes on:
In this
appeal Mr Green has, with learning and considerable courage in the face of
fairly early disclosed opposition on the part, I think, of each member of this
court, contended, first of all, that the learned judge was wrong to dismiss the
preliminary point and ought to have held that the landlords’ application lapsed
with the tenants’.
I just read
that to show what was in the forefront of the decision.
Then, a little
lower down on p 911 in the right-hand column, the learned lord justice says:
I have
omitted in my summary of the history of this matter one event and that is that
on July 29 1975 the landlords made a second application for a determination of
an interim rent, this time under a different county court rule, namely, Order
6, rule 4. They made that application ex abundanti cautela in case the
learned judge accepted the tenants’ submission that the first application was
one which he had no jurisdiction to hear because it had lapsed with the
discontinuance of the tenants’ application. That second
point taken by Mr Green on behalf of the tenants it does not arise for
consideration in this appeal.
The learned
lord justice goes on:
What does
arise for consideration is the rules on which Mr Green relies in support of his
interesting, but, he concedes, unmeritorious submission.
The learned
lord justice then read section 24A of the 1954 Act and I need not read that.
Then at the
bottom of p 911 he says:
If this
matter had remained in the High Court it is unlikely that there would have been
any preliminary point available to Mr Green. The Rules of the Supreme Court
contain a provision in Order 97, rule 9A(1)
and the learned
lord justice reads that. Of course, I have already read it.
He continues:
That means
that in the instant case, the tenant having begun proceedings for a new tenancy
under section 24, the rules of the High Court provide that the landlords’
application would have been made by summons in the tenants’ proceedings for a
new tenancy. Furthermore, it is provided by the Rules of the Supreme Court that
discontinuance of any proceedings usually requires the leave of the court.
and he cites
Order 21, rule 3.
I ought to
pause there, because, of course, that position has now been changed by the
amendment of Order 21. That has been amended, as I indicated earlier, by the
addition of subrule (3A).
The learned
lord justice went on: ‘In the county court there are two differences. First,
there is no rule regulating the making of applications under section 24A’ and
he cites a note on procedure of the County Court Practice, which I need
not be troubled about. He went on: ‘Next, there is no provision in the County
Court Rules requiring the court’s leave before a plaintiff can discontinue’,
and he cited Order 18, rule 1, out of the County Court Rules. That difference,
of course, has gone now by virtue of the change in the High Court Rules.
Then the
learned lord justice cited Order 13, rule 1, of the County Court Rules. I do
not think that I need read that, because, having read them, the learned lord
justice concludes in the left-hand column on p 913: ‘that the landlords’ two
applications were made in conformity with those rules’.
I can miss out
the paragraph at the bottom of the left-hand column on p 913 and pick it up at
the very last line, where it reads:
Mr Green
contends that there is nothing wrong in a landlord applying in the tenants’
proceedings under Order 13, rule 1, but, if he does so, he takes the risk of
having his application discontinued by the discontinuance of the tenants’
proceedings. If he wants to avoid that risk he ought to make his application by
an originating application under Order 6, rule 4, or by counterclaim so
designated. In this case, he has made it by interlocutory application in the
proceedings under Order 13, rule 1, and therefore it has gone with the
discontinuance of the tenants’ application. It is plainly laid down, both in
the County Court Rules and the Rules of the Supreme Court, that a counterclaim
does not fall with the discontinuance of the action in which it is made. Order
23, rule 6, of the County Court Rules provides: ‘Where the defendant sets up a
counterclaim and the claim of the plaintiffs is discontinued, struck out,
stayed or dismissed, the counterclaim may be proceeded with and the defendant,
on proof thereof, can have judgment.’
Order 15, rule 2, of the Rules of the Supreme Court is to the same
effect.
Then the
learned lord justice, after referring to a note in Atkin’s Court Forms,
which I need not read, and a note to Order 37, rule 9, of the Supreme Court
Practice to which I have already referred and also to Order 28, rule 7(1)
and (2), continued, and I pick it up about three-quarters of the way down the
right-hand column on p 913. It reads:
Mr Green
contends that unless the application is in form a counterclaim or in form
originating it perishes with the discontinued action.
It is quite
true that the first application which the landlords have made is an application
under Order 13, rule 1, and is in a sense interlocutory. Indeed, such
applications are so described, I think, in Order 13, rule 1(1)(g), which refers
to their costs. (The learned judge referred to the landlords’ application of
April 30 as an ‘interim application’, by which he may have meant only that it
was an application to determine interim rent.)
But interlocutory though it may be, in the sense it is an application
made in the proceedings, none the less it is a separate application. That,
indeed, was recognised by the order of May 7 which was made by His Honour Judge
Ruttle ordering that that application for an interim rent be adjourned to the
date of the hearing, that is, to the date for hearing the tenants’ proceedings.
It was not an application made, as it could have been made, according to the
note in the County Court Practice, in any answer to the tenants’
application. It is perhaps to be noted that, unlike many a counterclaim,
although it relates to the same premises as the application, it really relates
to a separate matter. The tenants are applying for a new tenancy. The landlords
are counter applying for an increase in the rent payable under the continued
old tenancy.
I would have
thought, unless compelled by authority to the contrary, that it would be unjust
and unreasonable that such an application should be treated as so parasitic, to
use the learned judge’s phrase, as to fall with the tenants’ application. So
far from there being any authority compelling me to take the view which Mr
Green puts forward, there is the authority of this court on which the learned
judge relied in the case of McGowan v Middleton,
and then, for
the rest of that rather long paragraph, the learned lord justice cites some
passages, in particular the passage from the judgment of the Master of the
Rolls which I myself cited earlier and he also cites, I think, a passage from
the judgment of Bowen LJ.
Having done
that, halfway down the left-hand column on p 915, Stephenson LJ continues:
It seems to me
that those observations of the Master of the Rolls and Bowen LJ exactly cover
this case. It was following that decision that the rule was introduced into the
Rules of the Supreme Court which saved a counterclaim from dropping with the
discontinuance of the action. But I do not read the rule as intended to cut
down — if, indeed, it could — the principle which was enunciated in accordance,
it seems to me, with common sense, reason and justice in McGowan’s case.
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. By making the application in the
form in which it was made in the course of the tenants’ proceedings for
discontinuance instead of by a differently headed and worded application
alongside those proceedings, the landlords have not turned it into a perpetual
parasite. It can be detached and stand alone in its present form without any
alteration of its heading or wording. It would be unreasonable and unjust if,
by abandoning your attack, you could compel your opponent to call off his
counterclaim, particularly if it is mounted to obtain an objective of its own.
I do not find myself impelled by any argument, rules or authority put before us
to treat this counter attack, if it was correctly so described, as called off
by the tenants abandoning their attack. To do so would be, I think, to
disregard the realities of these two applications. They are quite distinct in
the relief which they claim. The one is, in the form in which it has been made,
and understandably made, independent enough of the other to survive its
discontinuance. For these reasons I regard the judgment of the learned judge as
entirely right on the preliminary point, and I proceed to consider the second
part of Mr Green’s argument for the tenants.
That important
last passage has direct application to the defendants’ application for interim
rent by their countersummons under Order 97, rule 9A, in the present case. In
my judgment, the defendants’ application by their countersummons made pursuant
to and in accordance with the provisions of Order 97, rule 9A, is not parasitic
to the plaintiffs’ application for a new tenancy but ‘is a wholly distinct
claim for independent relief’ and ‘is in substance an originating application’,
which, like the landlords’ application in the Kramer case, is in
substance a counterclaim.
Accordingly, I
hold that the defendants’ countersummons for interim rent has survived the
plaintiffs’ discontinuance of their application for a new tenancy and it
follows that the defendants succeed on the preliminary point.
I will hear
counsel as to the form of the order.
Defendants
were given leave to proceed with their application for an interim rent as if it
were a counterclaim and the case was referred to the Master for all further
questions concerning directions. Defendants were awarded their costs of this
preliminary point.
