Landlord and Tenant Act 1954, section 24A–Question of commencement date for payment of interim rent under section 24A–Rent held to be payable as from date of commencement of proceedings by lessors under section 24A until date of cessation of continuation of tenancy under section 64–Stream Properties Ltd v Davis followed–Dictum by Lord Denning MR in a subsequent case that the court could determine the interim rent to take effect from the expiry of the old lease not followed
This was an
application by the lessors, Westminster City Council, brought by way of
counterclaim following discontinuance of proceedings by the lessees, Victor
Blake (Menswear) Ltd, for a new lease, to determine the interim rent payable
under section 24A of the Landlord and Tenant Act 1954 in respect of premises at
61-69 Charing Cross Road, London WC2. In fact the amount of the interim rent
had been agreed at the rate of £17,000 per annum and the date up to which such
rent should be payable had also been agreed. The sole question remaining was
the date of commencement of the interim rent.
M Rich
(instructed by Paisner & Co) appeared on behalf of the plaintiff company; B
Green (instructed by E Woolf, solicitor to Westminster City Council)
represented the defendant council.
Giving
judgment, MR MICHAEL WHEELER QC said: In the forn in which they have arrived
before me the present proceedings are concerned solely with a short point of
law. The plaintiff company originally commenced proceedings for a new lease
under Part II of the Landlord and Tenant Act 1954, but those proceedings were
subsequently discontinued on terms that an application which the defendant, the
City of Westminster, had commenced in the meantime under section 24A of the Act
for the determination of the interim rent should proceed by way of
counterclaim; and it is that so-called counterclaim which now comes before me.
The rent payable during the interim period–and both sides will understand what
I mean by that–is agreed at £17,000 per annum, and the sole question before me
is as to the commencement date from which that interim rent is payable. It is
also common ground that the date to which that interim rent is payable is May 3
1978.
Two choices
are offered to me for the commencement date. One is June 20 1977, which is the
date of the City of Westminster’s application under section 24A of the Act. The
other is November 14 1975, which is the date of the expiry of the notice given
by the City of Westminster under section 25 of the Act. There is thus a
difference between the two dates of some 21 months, so that there is a not
insubstantial sum in issue.
Very briefly
the relevant dates are as follows. On August 19 1966, the Greater London
Council (then the forerunner as lessor of the City of Westminster) granted a
lease to a firm of outfitters; it was determinable by either side on six
months’ notice at any time after December 25 1968 at a rent of £5,250 per annum
exclusive of rates. That lease subsequently became vested, on the one hand, in
the present plaintiff, Victor Blake (Menswear) Ltd, as lessee and, on the other
hand, in the City of Westminster as landlord. On May 7 1975 the council gave
notice under section 25 of the Act, determining the tenancy as from November 14
1975. On May 12 1975 the tenant’s solicitors served a counter-notice, and on
September 2 1975 the tenant issued an originating summons for a new tenancy
under Part II of the Act, which by agreement was adjourned indefinitely in the
hope that the matter might be settled by negotiation. As I have indicated, the
council’s section 25 notice expired on November 14 1975. But the negotiations
seem to have lasted for a considerable time and it was not until May 1977 that
they finally broke down.
In
consequence, on June 20 1977 the council commenced proceedings under section
24A of the Act for the determination of the interim rent which was to be
payable. On February 3 1978 the plaintiff company was granted leave to
discontinue its originating summons on terms that the council’s summons–that is
for the determination of interim rent under section 24A–should proceed by way
of counterclaim. On May 3 1978, that is three months later, the tenant vacated
the premises and the continuation tenancy under section 64 of the Act came to
an end.
I have been
taken through the not uncomplicated sections of Part II of the Landlord and
Tenant Act 1954 in a very helpful way and I have formed a fairly clear picture
of how they are intended to operate. I do not propose to set them out in
detail, for this reason. There is in existence a decision of Pennycuick V-C (Stream
Properties Ltd v Davis [1972] 1 WLR 645) which directly covers the
point which I have to decide, namely the commencement date for the interim
rent. I do not think it would serve any useful purpose if I were to set out the
facts and the judgment in that case, although both are relatively short.
Suffice it to say that I respectfully find the Vice-Chancellor’s reasoning and
construction of section 24A wholly convincing: and even if I felt free to do so
(which I do not) I should not wish to differ from that decision.
Now it is
perfectly true that that judgment has come in for what I think might be
described as passing criticism from no less a source than Lord Denning MR in Secretary
of State for Social Services v Rossetti Lodge Investment Co Ltd
(February 18 1975). Mr Green, who appears for the defendant in the case before
me, has very helpfully produced a photostat of the judgment of the Master of
the Rolls in that case. And Mr Rich, who appears for the plaintiff, has studied
the transcripts of all three judgments in the Court of Appeal. It is, I think,
clear that the point which the Master of the Rolls takes as to the construction
of section 24A was not one which it was appropriate for either side in that
appeal to have argued, at least in any depth. Moreover, this seems
to me to be underlined by the fact, as both counsel before me accept, that, in
one respect at least, the Master of the Rolls was in error in his
interpretation of the relevant sections of the Act because, when dealing with
the date when the old tenancy came to an end, he had overlooked the effect of
section 64 of the Act.
It is true
that Orr LJ, having given a reasoned judgment, appears also to have stated that
he agreed with everything that the Master of the Rolls had said. Scarman LJ on
the other hand certainly does not appear to have commented on the point which
is before me or to have concurred in the obiter dicta of the Master of
the Rolls which was as follows:
It appears,
however, that in Stream Properties Ltd v Davis the
Vice-Chancellor, Sir John Pennycuick, held that an interim rent could only take
effect as from the date when the application for the interim rent was made. I
do not, as at present advised, accept that decision. The power to determine
interim rent was introduced by the Law of Property Act 1969, which inserted a
new section 24A into the 1954 Act. I think that section 24A should be given a liberal
interpretation in accordance with the manifest intention of the section. Under
it the court can determine the interim rent to take effect as from the expiry
of the old lease.
With the very
greatest respect to Lord Denning MR I do not find in the above extract any
compelling reason for not following the clear and cogent reasoning adopted by
Sir John Pennycuick in Stream Properties Ltd. Moreover, although there
are many respects in which the 1954 Landlord and Tenant Act is open to
criticism, it is, as I think both counsel before me accept, possible for a
landlord who is aware of his rights to avoid the possible hardship which might
otherwise arise and to which attention was drawn (prior to the amendment of the
1954 Act) by Wynn-Parry J in an earlier case, Re No 88 High Road, Kilburn
[1959] 1 WLR 279. In other words, a landlord who knows his rights can put in
his notice under section 24A at such a time that, even on the construction of
section 24A which Vice-Chancellor Pennycuick has adopted, it will enable him to
avoid any substantial hardship.
In these
circumstances, with the consent of both sides and although faced with an
apparent conflict between two distinguished judges, I have not thought it
necessary or appropriate to reserve judgment as I might otherwise have done in
order to set out my reasons in greater detail.
The judge’s
order was that the rent would be determined at the rate of £17,000 per annum
for the period from June 20 1977 until May 3 1978.
The plaintiff
company was awarded the costs of the application to determine the interim rent.
