Landlord and tenant — Landlords, having obtained an order for possession on the ground of forfeiture of the lease, went into possession — Judge’s order was subsequently reversed by Court of Appeal — Tenants thereupon brought an action against landlords claiming damages of a substantial nature alleging wrongful entry by landlords in breach of express covenant for quiet enjoyment and implied covenant not to derogate from grant — The facts were that the Court of Appeal had reversed the forfeiture decision on the ground that the notice served by the landlords under section 146 of the Law of Property Act 1925 was invalid for failing to specify a reasonable time for remedying the breach which was the subject of complaint — In the present action the plaintiff tenants were claiming that the acts carried out by all parties pursuant to the judge’s forfeiture order were unlawful and gave rise to a cause of action — Held, rejecting this claim, that acts done pursuant to an order of the court which is valid until reversed cannot be wrongful — As a matter of public policy people must be entitled to act in pursuance of a court order without being at risk of acting unlawfully — If this were not so there could be great confusion — Support for this view can be found in the decision of the Privy Council in Isaacs v Robertson and to some extent in Order 59, rule 13(1) — Judgment for defendant landlords
The following
cases are referred to in this report.
Isaacs v Robertson [1985] AC 97; [1984] 3 WLR 705; [1984] 3 All ER
140, PC
Official
Custodian for Charities v Mackey [1985] Ch
168; [1984] 3 WLR 915; [1984] 3 All ER 689
Rodger v Comptoir d’Escompte de Paris (1871) LR 3 PC 465
This was a
preliminary point of law in a second action in which the tenants, Hillgate
House Ltd, claimed damages against the landlords, Expert Clothing Service &
Sales Ltd, in respect of the taking of possession of Hillgate House, 13
Hillgate Street, London W8, under a forfeiture order made in the first action
when the landlords were the plaintiffs and the tenants the defendants.
David
Neuberger (instructed by Baker Bell & Baker, of Southwick, West Sussex)
appeared on behalf of the plaintiffs; Paul Collins (instructed by Brecher &
Co) represented the defendants.
Giving
judgment, SIR NICOLAS BROWNE-WILKINSON V-C said: This is a preliminary point of
law which comes before me in this way. In an action between Expert Clothing
Service & Sales Ltd as plaintiffs, and Hillgate House Ltd as defendants,
the plaintiff landlords obtained an order for possession on the grounds of
forfeiture of the lease. The plaintiff landlords went into possession pursuant
to that order, but the order of the judge was subsequently reversed by the
Court of Appeal*. In this second action, the tenants, Hillgate House, are
claiming damages arising from that taking of possession by the landlords during
the period between the judgment at first instance and the judgment of the Court
of Appeal.
*Editor’s
note: Reported at [1985] 2 EGLR 85; (1985) 275 EG 1011 and 1129.
Shortly
stated, the facts are these. The tenants were under an obligation to
reconstruct the premises by September 28 1982. In fact, the tenants failed to
do so, and on October 8 1982 the landlords served a section 146 notice which
did not require the breach to be remedied, or a reasonable time for it to be
remedied, since in the landlords’ view the breach was incapable of remedy. On
October 26 1982 the landlords issued a writ claiming forfeiture; that writ was
served, either on the same day or shortly thereafter.
The action
came before His Honour Judge Baker on April 2 1984.
declined to give relief against forfeiture. He made an order in these terms:
1. That the
First Defendants
that is to say
the tenant
do deliver up
to the landlords forthwith possession of the property,
and it is then
described.
The tenants
applied to the judge for a stay but it was refused. That application for a stay
was not repeated before the Court of Appeal. Pursuant to the judge’s order, on
April 2 or very shortly thereafter the landlords re-entered the premises. The
landlords remained in possession until April 2 1985 on which date the Court of
Appeal gave judgment on the appeal. They reversed the decision of the learned
judge, holding that the section 146 notice was invalid by reason of its having
failed to specify a reasonable time for remedying the breach, as a result of
which there had never been any valid forfeiture of the term.
In this second
action, the tenants by their statement of claim allege that wrongly, and in
breach of the express covenant for quiet enjoyment and the implied covenant not
to derogate from grant, the landlords entered on to the premises on April 2
1984 and excluded the tenants from those premises until April 2 1985. By reason
of those facts the tenants say that they have suffered damage of a substantial
nature — in the region of £100,000.
The matter
came before me first on an application to strike out the claim as disclosing no
cause of action. But after the argument had developed for a time it became
clear that it raised quite a difficult point of law unsuitable to be dealt with
by way of striking out. I therefore directed that the case should go forward on
the basis of a formulated preliminary issue, which has been agreed in the
following terms:
Can an action
for trespass, and/or breach of covenant for quiet enjoyment, and/or derogation
from grant, be maintained by a tenant against his landlord who has entered on
to the demised premises and excluded the tenant therefrom following the making
of an order for possession in forfeiture proceedings by a High Court judge
whose decision is subsequently reversed by the Court of Appeal?
Mr Collins for
the landlord puts his case broadly in two ways. First he says that during the
period during which the learned judge’s order was in force there was no lease.
The effect of the judge’s order, he says, was to put an end to the lease; so
that until it revived by the reversal of the judge’s decision by the Court of
Appeal, there was no right to possession in the tenant, no relevant covenant
for quiet enjoyment, no question of derogation from grant. He submits that the
order of the judge, so long as it is in force, was decisive as to the existence
or non-existence of the term.
He relies in
support on the decision of Scott J in Official Custodian for Charities v
Mackey [1985] Ch 168. The facts there were very complicated. I think it
is sufficient for my purposes to explain that at the time the matter came
before Scott J on an application for an interim injunction, the Court of Appeal
had declared that the lease in question had been forfeited and that the tenant
(Parway Estates Developments) was not entitled to relief against forfeiture.
However, there was pending an application to the House of Lords for leave to
appeal. It was therefore possible that the House of Lords would reverse the
Court of Appeal judgment and reinstate the decision of the trial judge that
there had never been a forfeiture, or alternatively give relief against
forfeiture. The question arose because receivers appointed by mortgagees of the
tenant were in receipt of the rents and profits of the land and wished to go on
receiving them in respect of the period after the Court of Appeal judgment
declaring the lease, together necessarily with any mortgage on it, to have been
forfeited.
In that
context, Scott J says:
On the other
hand, if the House of Lords should give Parway leave to appeal, and if Parway’s
appeal to the House of Lords should succeed, the lease will stand as though it
had never been forfeited. This will be the result whether Parway succeeds on the
waiver point, in which case there will be shown never to have been a
forfeiture, or whether Parway succeeds in claiming relief from forfeiture.
Then I can
omit certain words.
The reversal
by the House of Lords of the Court of Appeal order and the restoration by the
House of Lords of the relief from forfeiture granted to Parway by the deputy
judge would, therefore, retrospectively reinstate the lease, the mortgages and
the status of the first and second defendants as receivers, and would
retrospectively validate the management acts of the receivers done since July
19 1982. It would retrospectively disentitle the plaintiffs to receipt of the
rents or monies paid or payable by sub-lessees or occupiers of the property
since the Court of Appeal order, and would retrospectively invalidate any
arrangements made by the plaintiffs with those sub-lessees or occupiers by way
of management of the property.
What may be
done by the House of Lords with the forfeiture action and with the Court of
Appeal order is obviously a matter of speculation. What is not a matter of
speculation is that at present the first and second defendants have no title or
right as receivers to do that which they are now doing, that is to say,
collecting rents and managing the property. What is not a matter of speculation
is that at present the plaintiffs are entitled to the property freed from the
lease and, subject to the mortgagees’ claims for relief under section 146(4),
freed from the mortgages.
On the basis
that the receivers under the Court of Appeal order had no right at that time to
be collecting rents since the lease had gone, Scott J granted the injunction
restraining the receivers from continuing to collect the rents.
Mr Collins
says that the latter part of the passage that I have read shows that in the
view of Scott J there was not at the time in question any right or title to the
lease, notwithstanding the fact that the House of Lords might subsequently
reverse the Court of Appeal decision. In one sense that is right. But I think
what the learned judge was there directing his mind to, as the earlier part of
the passage indicates, was the position at the moment that he was dealing with
it, namely, before the House of Lords had heard the matter. I do not think he
is saying that if the House of Lords should have reversed the Court of Appeal
decision there would, during the time in question, never have been any title or
right or lease in existence during the intermediate period between the Court of
Appeal decision and the House of Lords decision.
Certainly, in
my judgment, the correct analysis is this. The claim in the present case was a
claim to forfeit the lease. The order of Judge Baker declared that the tenants
had forfeited. When the case went to the Court of Appeal, the Court of Appeal declared
that they had not forfeited*. In my judgment, as the Court of Appeal’s judgment
discloses, the true view all along was that the lease had remained in
existence. What was in doubt was what was the true legal effect.
*Editor’s
note: Decision reported at [1985] 2 EGLR 85; (1985) 275 EG 1011 and 1129.
Therefore, in
my judgment, Mr Collins is wrong on the first ground. In my judgment,
throughout the period between Judge Baker’s judgment at first instance and the
Court of Appeal judgment the lease was in existence and the obligations under
it remained. Pending the decision of the Court of Appeal there was a
misunderstanding of what the law was. But once the Court of Appeal had spoken,
the true position which had existed throughout was disclosed.
In my
judgment, Mr Collins’ alternative way of putting his case is, however, right.
On analysis what the plaintiffs are claiming in this case is that the acts done
by them, the tenants, and by the landlords, directly pursuant to the order of
the trial judge, themselves constitute a breach of legal duty which gives rise
for the first time to a cause of action. In my judgment, that cannot be right.
As the judgment of Scott J indicates, when an order is in force, and so long as
it is in force, it is to be obeyed and is in law correct. It is true that it
may be subsequently altered on appeal; but unless and until it is altered, it
is an order of the court and acts done under it are lawful.
The position
is clearly established in relation to contempt of court. For example, the
decision of the Privy Council in Isaacs v Robertson [1985] AC 97
shows that an order even irregularly made has to be obeyed, and failure to
comply with it constitutes a contempt, so long as it stands. So here, in the
absence of a stay, the order of Judge Baker ordering the tenants to deliver up
possession had to be obeyed. In my judgment, an act done pursuant to an order
of the court which at the time the act was done is valid cannot constitute a wrongful
act by the party doing it. So when one turns to the various causes of action
relied on here, in my judgment the taking of possession by the landlords under
the order of the court, which possession was given to them by the tenants under
the order of the court, cannot have constituted a trespass. Likewise, so long
as the order of the court persisted, the tenants had no immediate right to
possession, such as is necessary to found a cause of action in trespass, since
the order of the court directs that they do deliver it up. So the cause of
action in trespass, in my judgment, was not a good cause of action.
Similarly,
when one comes to the cause of action based on the covenant for quiet
enjoyment, it is a covenant that the tenant should enjoy without any
interruption by the landlord; but in my judgment it
were acting under an order of the court, any interruption was lawful at the
time it took place and cannot retrospectively be made unlawful.
Similarly, on
derogation from grant, in my judgment the doctrine of derogation from grant
cannot apply to acts done pursuant to a court order.
If the case
were otherwise, there would, in my judgment, be very great confusion. People
must be entitled to act in pursuance of a court order without being at risk
that they are thereby acting unlawfully. Public policy requires it. I am not in
any sense casting doubt on, or seeking to cut down, those cases to which I have
been referred which indicate that where a judgment is reversed, the objective
of the court should be to put back the litigants into the position in which
they should all along have been had the law been properly appreciated — cases
such as Rodger v Comptoir d’Escompte de Paris, reported in (1871)
LR 3 PC465. Those cases are concerned with reimbursing to the parties moneys
lost as a result of the execution of the judgment by the payment of money. They
are not cases, such as the present, in which it is sought to found a separate
cause of action on the carrying out of the court order.
In my
judgment, though I find the terms of RSC Ord 59, r 13(1) obscure, it gives me
some support in the view that I have reached. The rule reads as follows:
Except so far
as the Court below or the Court of Appeal or a single Judge may otherwise
direct — (a) an appeal shall not operate as a stay of execution or of
proceedings under the decision of the Court below; (b) no intermediate act or
proceeding shall be invalidated by an appeal.
As Mr Neuberger
in his persuasive argument indicated, and on this I am in agreement with him,
it is difficult to find out exactly what rule 13(1)(b) means. He suggests that
when it refers to something being invalidated by an appeal, it means being
invalidated by the bringing of the appeal, not by the order made on the appeal.
There are certain linguistic reasons in support of that view. However, I do not
think that can be right because when the rule refers to an ‘intermediate act or
proceeding’ it must be referring to something done between two dates, which can
only be the date of the decision in the court below and the date of the
decision in the Court of Appeal. Likewise, the word ‘invalidated’ is not very
easy to apply to the present case. Nobody is suggesting that the acts of the
landlords are invalidated. But in my judgment, giving it the best consideration
I can, I think it does indicate that in the absence of a stay, it is legitimate
for the successful party to proceed under the order of the judge below without
being at risk that thereafter the acts he is doing will be rendered unlawful,
or invalid, by the subsequent decision of the Court of Appeal.
For those
reasons, I answer the particular point of law in the negative. I will give
judgment for the defendants.
