Landlord and Tenant Act 1954–Applications for new tenancies–Withdrawal of applications–Leave sought to discontinue proceedings–Entitlement to compensation under section 37(1) of Act as amended–No compensation if tenants were required to proceed, as new tenancies were no longer sought–Leave to discontinue granted on undertaking by tenants not to claim compensation
This was a
summons by the plaintiffs, Young, Austen & Young Ltd, tenants of two sets
of rooms in Tavistock House South, Tavistock Square, London WC1, seeking leave
under RSC Ord 21, rule 3(1) to discontinue proceedings under the Landlord and
Tenant Act 1954 for the grant of new tenancies of the rooms. The defendants,
the British Medical Association, who were the landlords, contended that such
leave should be given only if the plaintiffs undertook not to claim any
compensation under section 37(1) of the 1954 Act as amended by section 11 of
the Law of Property Act 1969.
J S Colyer QC
(instructed by Kenneth Brown, Baker & Baker) appeared on behalf of the
plaintiffs; M A F Lyndon-Stanford (instructed by Hempsons) represented the
defendants.
Giving
judgment, WHITFORD J said that the plaintiffs were the occupiers of rooms on
the fifth floor of Tavistock House South (no 1 lease) and on the fourth floor
(no 2 lease). In January 1974 the landlords served an invalid notice under
section 25 of the Landlord and Tenant Act 1954 to end the tenancies. In May
1974 the plaintiffs served on the landlords two requests for new tenancies.
Counternotices were served under section 26 on the ground that the landlords
required the rooms for their own business. In the first place the landlords had
been prepared to relet, then later they did not wish to do so but to occupy the
rooms for their own business,
premises but not the no 2. Eventually the plaintiffs said they did not wish to
stay or seek a renewal of their tenancies, but wished to withdraw the
applications and sought leave to discontinue the proceedings under Rules of the
Supreme Court, Ord 21, rule 3(1).
The landlords
contended that it would be wrong to give leave to withdraw without an
undertaking being given by the plaintiffs that they would not seek the
compensation to which, in law, they were entitled under section 37(1) of the
1954 Act as amended by Section 11 of the Law of the Property Act 1969.
The landlords
said that if the tenants had to proceed with their applications then in view of
the fact that they were not going to seek an order for new tenancies the
applications would be dismissed. No compensation would be payable under section
37(1) in that case. The landlords accordingly contended that it would be wrong
for leave to be given to withdraw without some term being imposed which would
preserve for the benefit of the landlords the position as to compensation which
would have resulted if the action had proceeded.
It seemed to
him (his Lordship) that the situation was straightforward. Upon a withdrawal of
an application the plaintiffs were entitled to compensation under section
37(1). The plaintiffs contended that if the statute provided, as it did, for
compensation, it would be wrong that the court should impose a term which
deprived them of that compensation, and that to do so would be going against
the provisions which Parliament had specifically enacted. Also it was said that
the plaintiffs were in this position only because the amount of the
compensation was such that the matter had to be brought in the High Court and not
in the county court. If the matter could have been brought in the county court
they could have withdrawn without leave and the possibility of the imposition
of the term relating to compensation would not have existed.
On the last
point, the plaintiffs had to come to the High Court and the court had
the duty of considering all the circumstances of the case. The defendants
submitted that the principle was clear and its application to the circumstances
of this case must lead to the conclusion that in fairness leave to discontinue
ought not to be granted without imposing a term for compensation and that
unless such a term was imposed there would be injustice to the defendants.
It was a
little troubling that if this was a proceeding which could have been brought in
the county court the imposition of such a term could not have been possible. It
might be that this was a matter which was never in the contemplation of those
responsible for the amendment to section 37 of the 1954 Act. Prior to the
amendment the right to compensation arose only after there had been a decision
adverse to the tenant. It might possibly have been thought that to force the
parties to a hearing in circumstances where it would be likely to be apparent
to the tenants that they would not succeed in opposing a section 30(1)(g)
objection would be unnecessarily onerous and that therefore they should be
granted the right to withdraw.
What was never
in contemplation was a circumstance such as this where basically the rea on why
the tenants wanted to withdraw was not that they feared that they would be
unable to resist the objection of the landlords. but that they no longer wanted
the tenancies. In those circumstances it would not be right to give leave to
discontinue without imposing a term. It might be that the injustice, if there
was any, lay in the fact that it was impossible, if proceedings were brought in
the county court, for a term of that character to be made.
Leave to
discontinue would be granted on an undertaking by the plaintiffs that they would
not claim any compensation pursuant to section 37(1) of the Landlord and Tenant
Act 1954 as amended.
