Landlord and Tenant Act 1954 –– Termination of tenancy –– Effect of section 64(1)(c) –– Landlord serving section 25 notice –– Tenant applying for new tenancy –– Tenant ceasing occupation prior to term date –– Whether tenancy continuing until expiration of three months after final disposal of proceedings –– Whether tenant liable for rent after term date
The appellant tenants held a lease of business premises for a term ending on 24 June 2000. On 3 December 1999, the respondent landlord served a notice, under section 25 of the Landlord and Tenant Act 1954, terminating the tenancy on the contractual term date. On 26 January 2000, the tenants served a counternotice stating that they were not willing to give possession, and, on 21 March, applied to the county court for a new tenancy. On 13 June, the tenants vacated the premises, and, on 16 June, their agents returned the keys to the landlord. On 22 August, on the landlord’s application, the district judge made an order that the tenants’ application for a new tenancy be struck out, and that the tenancy should continue, with rent payable thereunder, for a period of three months from the making of the order. Under the order, a rent of some £64,000 was payable up to 22 November. The tenants’ application to delete the part of the order that provided for the payment of rent after 24 June 2000 was dismissed on appeal by the county court judge. The tenants appealed.
Held: The appeal was allowed. A tenancy for a fixed term comes to an end at common law upon expiry of that term. A notice under section 25 of the 1954 Act cannot terminate the tenancy unless it has been continued under section 24(1). A notice under section 25 is therefore of no effect if the tenancy is not continued by section 24(1). The tenancy is not continued if it expires on the term date by effluxion of time. The tenants were not in occupation on the term date, and the tenancy did not therefore continue. The section 25 notice was of no effect in terminating the tenancy within three months of the final disposal of the tenants’ application to the court as required by section 64(1)(c); section 64(1)(c) was not satisfied and there was no interim continuation of the tenancy. The tenants were therefore not liable for the rent after 24 June 2000.
The following cases are referred to in this report.
Arundel Corporation v Financial Training Co Ltd unreported 27 March 2000
Benedictus v Jalaram Ltd (1989) 58 P&CR 330; [1989] 1 EGLR 251
Caplan (I&H) Ltd v Caplan (No 2) [1963] 1 WLR 1247; [1963] 2 All ER 930
Esselte AB v Pearl Assurance plc [1997] 1 WLR 891; [1997] 2 All ER 41; (1998) 75 P&CR 30; [1997] 1 EGLR 73; [1997] 02 EG 124
Green v Bowes-Lyon; sub nom Bowes-Lyon v Green [1963] AC 420; [1961] 3 WLR 1044; [1961] 3 All ER 843; (1961) 180 EG 429, HL
Long Acre Securities Ltd v Electro Acoustic Industries Ltd [1990] 1 EGLR 91; [1990] 06 EG 103
Morrisons Holdings Ltd v Manders Property (Wolverhampton) Ltd [1976] 1 WLR 533; [1976] 2 All ER 205; (1975) 32 P&CR 218; [1976] 1 EGLR 70; 238 EG 715, CA
Pike v Michael Nairn & Co [1960] Ch 553; [1960] 2 WLR 897; [1960] 2 All ER 184
Wheeler v Mercer [1957] AC 416; [1956] 3 WLR 841; [1956] 3 All ER 631; (1956) 168 EG 520, HL
Zenith Investments (Torquay) Ltd v Kammins Ballrooms Co Ltd (No 2) [1971] 1 WLR 1751; [1971] 3 All ER 128, CA
This was an appeal by the tenants, Surrey County Council, from a decision of Judge Hull QC, dismissing the tenants’ appeal from a decision of District Judge Sturdy, who had dismissed the tenants’ application to amend an order made by District Judge Coni on an application by the landlord, Single Horse Properties Ltd, in proceedings by the tenants under Part II of the Landlord and Tenant Act 1954.
Nicholas Dowding QC and Mark Wonnacott (instructed by the solicitor to Surrey County Council) appeared for the appellants; Kim Lewison QC and Wayne Clarke (instructed by Berwin Leighton Paisner) represented the respondent.
Giving judgment, ARDEN LJ said:
1. This case raises the issue of whether, where a landlord has served a notice under section 25 of the Landlord and Tenant Act 1954 (the 1954 Act), and the tenant has served a counternotice on the landlord and has made an application for a new tenancy, the tenant ceases to be liable for rent if it changes its mind about wanting a new tenancy and goes out of occupation prior to the contractual term date (referred to below as “the term date”). The point turns on the true construction of section 64(1)(c) of the 1954 Act, set out below.
Statutory framework
2. In broad terms, the statutory framework is as follows. Part II applies to “any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes”: section 23(1). Such a tenancy continues until determined in accordance with Part II of the Act: section 24(1). The landlord may determine the tenancy by giving notice under section 25(1). If he does so, the tenant may claim a new tenancy if, within two months, he gives the landlord written notice (commonly called a “counternotice”) that he is not willing to give up possession of the premises, and not later than two nor more than four months after receiving the notice he applies to the court for a new tenancy: sections 24(1), 29(2), 29(3). A tenant under a tenancy for a fixed period exceeding one year may also make a request for a new tenancy: section 26(1). A tenant may determine a tenancy that is continued by section 24(1) by giving notice to quit, or, if the tenancy is for a fixed term, by three months’ notice in writing to expire at the end of the term or on any quarter day thereafter: section 27. Section 64 provides for the continuation of tenancies where an application has been made to the court, so that they do not expire before the expiry of three months following final disposal of the application for a new tenancy.
3. The relevant provisions of the Landlord and Tenant Act 1954 are sections 23, 24, 25, 26, 27, 29 and 64, which (as now in force) provide in material part as follows:
Tenancies to which Part II applies
23(1) Subject to the provisions of this Act, this Part of this Act applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes.
(2) In this Part of this Act the expression “business” includes a trade, profession or employment and includes any activity carried on by a body of persons, whether corporate or unincorporate.
(3) In the following provisions of this Part of this Act the expression “the holding” in relation to a tenancy to which this Part of this Act applies, means the property comprised in the tenancy, there being excluded any part thereof which is occupied neither by the tenant nor by a person employed by the tenant and so employed for the purposes of a business by reason of which the tenancy is one to which this Part of this Act applies…
Continuation of tenancies to which Part II applies and grant of new tenancies
24(1) A tenancy to which this Part of this Act applies shall not come to an end unless terminated in accordance with the provisions of this Part of this Act; and, subject to the provisions of section twenty-nine of this Act, the tenant under such a tenancy may apply to the court for a new tenancy ––
(a) if the landlord has given notice under section 25 of this Act to terminate the tenancy, or
(b) if the tenant has made a request for a new tenancy in accordance with section twenty-six of this Act.
(2) The last foregoing subsection shall not prevent the coming to an end of a tenancy by notice to quit given by the tenant, by surrender or forfeiture, or by the forfeiture of a superior tenancy, unless –
(a) in the case of a notice to quit, the notice was given before the tenant had been in occupation in right of the tenancy for one month; or
(b) in the case of an instrument of surrender, the instrument was executed before, or was executed in pursuance of an agreement made before, the tenant had been in occupation in right of the tenancy for one month.
(3) Notwithstanding anything in subsection (1) of this section ––
(a) where a tenancy to which this Part of this Act applies ceases to be such a tenancy, it shall not come to an end by reason only of the cesser, but if it was granted for a term of years certain and has been continued by subsection (1) of this section then (without prejudice to the termination thereof in accordance with any terms of the tenancy) it may be terminated by not less than three nor more than six months’ notice in writing given by the landlord to the tenant;
(b) where, at a time when a tenancy is not one to which this Part of this Act applies, the landlord gives notice to quit, the operation of the notice shall not be affected by reason that the tenancy becomes one to which this Part of this Act applies after the giving of the notice.
Termination of tenancy by the landlord
25(1) The landlord may terminate a tenancy to which this Part of this Act applies by a notice given to the tenant in the prescribed form specifying the date at which the tenancy is to come to an end (hereinafter referred to as “the date of termination”):
Provided that this subsection has effect subject to the provisions of Part IV of this Act as to the interim continuation of tenancies pending the disposal of applications to the court.
(2) Subject to the provisions of the next following subsection, a notice under this section shall not have effect unless it is given not more than twelve nor less than six months before the date of termination specified therein.
…
(4) In the case of any other tenancy, a notice under this section shall not specify a date of termination earlier than the date on which apart from this Part of this Act the tenancy would have come to an end by effluxion of time.
(5) A notice under this section shall not have effect unless it requires the tenant, within two months after the giving of the notice, to notify the landlord in writing whether or not, at the date of termination, the tenant will be willing to give up possession of the property comprised in the tenancy.
(6) A notice under this section shall not have effect unless it states whether the landlord would oppose an application to the court under this Part of this Act for the grant of a new tenancy and, if so, also states on which of the grounds mentioned in section thirty of this Act he would do so.
Tenant’s request for a new tenancy
26(1) A tenant’s request for a new tenancy may be made where the tenancy under which he holds for the time being (hereinafter referred to as “the current tenancy”) is a tenancy granted for a term of years certain exceeding one year, whether or not continued by section twenty-four of this Act, or granted for a term of years certain and thereafter from year to year.
(2) A tenant’s request for a new tenancy shall be for a tenancy beginning with such date, not more than twelve nor less than six months after the making of the request, as may be specified therein:
Provided that the said date shall not be earlier than the date on which apart from this Act the current tenancy would come to an end by effluxion of time or could be brought to an end by notice to quit given by the tenant.
…
(5) Where the tenant makes a request for a new tenancy in accordance with the foregoing provisions of this section, the current tenancy shall, subject to the provisions of subsection (2) of section thirty-six of this Act and the provisions of Part IV of this Act as to the interim continuation of tenancies, terminate immediately before the date specified in the request for the beginning of the new tenancy.
…
Termination by tenant of tenancy for fixed term
27(1) Where the tenant under a tenancy to which this Part of this Act applies, being a tenancy granted for a term of years certain, gives to the immediate landlord, not later than three months before the date on which apart from this Act the tenancy would come to an end by effluxion of time, a notice in writing that the tenant does not desire the tenancy to be continued, section twenty-four of this Act shall not have effect in relation to the tenancy unless the notice is given before the tenant has been in occupation in right of the tenancy for one month.
(2) A tenancy granted for a term of years certain which is continuing by virtue of section twenty-four of this Act may be brought to an end on any quarter day by not less than three months’ notice in writing given by the tenant to the immediate landlord, whether the notice is given… after the date on which apart from this Act the tenancy would have come to an end or before that date, but not before the tenant has been in occupation in right of the tenancy for one month.
Order by court for grant of a new tenancy
29(1) Subject to the provisions of this Act, on an application under subsection (1) of section twenty-four of this Act for a new tenancy the court shall make an order for the grant of a tenancy comprising such property, at such rent and on such other terms, as hereinafter provided.
(2) Where such an application is made in consequence of a notice given by the landlord under section twenty-five of this Act, it shall not be entertained unless the tenant has duly notified the landlord that he will not be willing at the date of termination to give up possession of the property comprised in the tenancy.
(3) No application under subsection (1) of section 24 of this Act shall be entertained unless it is made not less than two nor more than four months after the giving of the landlord’s notice under section 25 of this Act or, as the case may be, after the making of the tenant’s request for a new tenancy.
Interim continuation of tenancies pending determination by court
64(1) In any case where ––
(a) a notice to terminate a tenancy has been given under Part I or Part II of this Act or a request for a new tenancy has been made under Part II thereof, and
(b) an application to the court has been made under the said Part I or the said Part II, as the case may be, and
(c) apart from this section the effect of the notice or request would be to terminate the tenancy before the expiration of the period of three months beginning with the date on which the application is finally disposed of, the effect of the notice or request shall be to terminate the tenancy at the expiration of the said period of three months and not at any other time…
4. In Esselte AB v Pearl Assurance plc [1997] 1 WLR 891*, the question arose as to whether a tenancy for a fixed term was prolonged by service by the tenant of a notice under section 27 of the 1954 Act. The tenant was no longer in occupation of the demised premises when that notice was served. The Court of Appeal held that section 27(2) was looking to the point in time when the notice took effect. At that point in time, the tenancy had to be one that was “continuing by virtue of section 24 of the Act”: p898E per Morritt LJ. Section 24(1) applies only to tenancies “to which Part II of the 1954 Act applies” (in the present tense). The only tenancies continued by that section were those
* Editor’s note: Also reported at [1997] 1 EGLR 73
† Editor’s note: Also reported at [1976] 1 EGLR 70
Background
5. In this case, the appellants were the tenants of an office building known as 7, 9, 11 and 13 Monument Hill, Weybridge, Surrey, under a lease granted on 24 July 1975 for 25 years, ending on 24 June 2000. They occupied the building as offices in connection with their function as a local education authority. The tenancy was one to which the 1954 Act applied while such occupation continued.
6. On 3 December 1999, the landlord, who is the respondent to this appeal, served on the appellants a notice, dated 30 November 1999, under section 25 of the 1954 Act. This notice terminated the tenancy on 24 June 2000. On 26 January 2000, the appellants served a counternotice, dated 24 January 2000, to the effect that they were not willing to give up possession on the termination date. On 21 March 2000, they applied to the county court for a new tenancy under the Act. On 10 April 2000, the respondent served an answer. On 15 May 2000, District Judge Dimmick gave directions by consent, with a view to trial of the application in September or October 2000.
7. However, on 13 June 2000, the appellants vacated the building. On 16 June 2000, their agent notified the landlord that it had done so, and returned the keys. Accordingly (and this is common ground), the appellants did not occupy the premises on the term date.
8. On 3 August 2000, the landlord applied for an order in the following terms:
The claimant’s application for a new tenancy be struck out. The said tenancy the subject of the application to continue with rent payable thereunder for a period of three months from the making of this order.
9. The ground on which the application was made was that the appellants had vacated the premises. On 22 August 2000, District Judge Coni made an order in the terms sought by the landlord. The order provided that the tenancy the subject of the claimant’s application was to continue with rent payable thereunder for a period of three months from the date of the order. On this basis, the appellants were liable to pay rent from 24 June 2000 to 22 November 2000, even though they had not been in occupation of the premises for any part of that period. The amount in question exceeds £64,000.
10. On 7 September 2000, the appellants applied for an order varying District Judge Coni’s order so as to delete that part of it that provided for payment of rent after 24 June 2000. The application was dismissed by District Judge Sturdy on 25 October 2000. The appellants appealed to Judge Hull QC. On 20 April 2001, he made an order dismissing the appeal. It is that order that is now under appeal.
11. The judge considered a number of authorities that were cited to him. He concluded that if, having set in train an application for a new tenancy, the tenants could vacate the premises immediately before the term date, the result would be inconvenient to the landlord. Following the application to the court by the tenants, the landlord might, for instance, refrain from seeking a new tenant. The critical question was the meaning of section 64(1)(c) of the 1954 Act. In his judgment:
the true construction of section 64 is to require the parties to ask, subparagraphs (a) and (b) being satisfied, this:
“apart from section 64 will the effect of the section 25 notice be to terminate the tenancy, (assuming that it will operate in due course to terminate the tenancy) before the expiration of three months beginning with the date on which the application is finally disposed of?”
Of course, it will not be possible to answer that question until three months before the date of termination specified in the notice. Up to that time, the application may be disposed of by order of the court, or by the tenants ceasing to occupy the premises, or ceasing to occupy them for the tenants’ business purposes, but thereafter, if I am correct in inserting the words in parenthesis, which I have mentioned, it will be clear that the effect of the section 25 notice will be to terminate the tenancy within the three months, assuming that it will in fact take effect. The possibilities of premature abandonment, surrender etc will not affect the operation of the statutory extension of the tenancy. In my view, that is the natural way to construe para (c) of section 64(1), both in view of the oblique language of the paragraph and the obvious common sense of the situation in which the parties are placed by the statutory provisions.
Appellants’ submissions
12. Mr Nicholas Dowding QC, for the appellants, submitted that the ratio in Esselte applies where notice has been given by the landlord under section 25 of the 1954 Act. He relies on the fact that, in Esselte, the court did not distinguish the earlier Long Acre case on the basis that a section 25 notice was served. Indeed, it rejected that distinction: see per Morritt LJ at p900. He submits that the same principle should apply where there is not only a notice by the landlord under section 25 but an application for a new tenancy. This view is supported by Woodfall on Landlord and Tenant (2001) paras 22-046 and 22-046.1, note 3.
13. Mr Dowding relies upon the fact that in section 24(2) there is no reference to expiry by effluxion of time. Where a tenant goes out of occupation, the tenancy does not continue by virtue of the Act, and, accordingly, there is no need for section 24(2) to mention expiry by effluxion of time. If the tenancy were forfeited after the section 25 notice was served, the tenancy would end on the date of forfeiture. Mr Dowding submits that if his proposition is not correct, the landlord can extend the tenants’ liability for rent even though the tenant obtains no benefit, since the tenant has gone out of occupation.
14. Mr Dowding submits that section 64 extends only the date of the expiry of the section 25 notice. Accordingly, that section can operate only if the section 25 notice is effective to determine the tenancy.
15. Mr Dowding places emphasis on the words “the effect of the notice” in section 64(1)(c). These words do not apply if the tenant leaves the premises before the contractual term date, because the notice has no effect. The argument to the contrary substitutes for these words a reference to the term date. The judge considered the question of whether the date in the section 25 notice was earlier than the section 64 date.
16. Mr Dowding submits that in Esselte the balance was struck firmly in favour of the tenant and that the result for which he contends reaches the same policy decision. He relies upon the unreported decision of Mr Recorder Blunt QC, sitting as a deputy judge of the Technology and Construction Court, in Arundel Corporation v Financial Training Co Ltd unreported 27 March 2000. He held that section 64 operated by deferring the effect of the landlord’s section 25 notice, and that where a section 25 notice had no operation because the tenant had ceased to occupy the premises by the term date, section 64 could not continue the tenancy: see para 55. Mr Dowding submits that Part II of the 1954 Act is designed to protect only tenants who are in occupation.
17. The judge failed to appreciate that the objection that he saw to the appellants’ construction was also endemic in a situation where the landlord serves no section 25 notice and does not know whether the tenant will go on the contractual term date.
18. Mr Dowding contends that it was not open to the judge to make the assumption that the notice, once given, would operate in the future to terminate the tenancy.
19. Mr Dowding submits that Benedictus v Jalaram Ltd [1989] 1 EGLR 251 is distinguishable. In that case, the tenant remained in possession
20. Mr Dowding submits that it matters not that the tenants invoke the jurisdiction of the court by making an application to it unless statute provides that it has the effect of continuing the tenancy. It was unnecessary to mention cesser by effluxion of time in section 24(2) because the tenancy that expires by effluxion of time is not one where the tenant is in occupation on the contractual term date, and, accordingly, it is not one to which Part II of the Act applies. The fact that section 24(2) preserves forfeiture shows that section 64 must be subservient to section 24.
21. Section 64(1)(c) is speaking as to the present, not the future. The word “would” is used because the reader is to assume that section 64 is not there. Mr Dowding gives us an example of the use of the expression: “but for your height you would be a good basketball player”. This is a statement as to the present abilities of the addressee, not as to whether he would be a good basketball player in the future. Likewise, in section 64(1)(c) the question “what is the effect of the notice?” is to be asked as at the contractual term date. The notice has no effect before that date. If parliament had meant that a comparison should be made between the date specified in the section 25 notice with the position at the end of three months following final disposal of the application, it would have said so. The effect of the section is to extend the date upon which the notice or request takes effect. For instance, under section 26(5), where a request is served, the tenancy terminates immediately before the date specified in the request for the beginning of the new tenancy. Accordingly, section 64 applies only if the notice is potentially a good notice, and that depends upon the tenant being in possession on the contractual term date. On the respondent’s submission, the date of termination is set in stone when a notice or request is served.
Respondent’s submissions
22. Mr Kim Lewison QC submits that a number of dates are relevant for different purposes in Part II. He also points out that under section 26 there is no requirement for the tenancy to be a tenancy to which Part II of the Act applies, and, accordingly, section 26 is not dependent upon occupation by the tenant. He further submits that certain sections show that Part II of the 1954 Act has a concern for the landlord’s income stream by requiring the tenant to give three months’ notice of termination. He refers to sections 24(3), 27 and 36(2).
23. With respect to section 64, Mr Lewison submits that the material words are “would be”, not “would have been”. Accordingly, the words are words of futurity. The crucial question is: as at what date does the question posed by section 64(1)(c) need to be answered?
24. Mr Lewison relies upon dicta by Cross J in I&H Caplan Ltd v Caplan (No 2) [1963] 1 WLR 1247 and Pike v Michael Nairn & Co [1960] 2 All ER 184; [1960] Ch 553. In Caplan, Cross J (at p1253) held that the effect of section 64(1) was to extend the tenancy as from the date of the issue of proceedings, and, in addition (at p1254), that if the tenant went out of occupation before making an application for a new tenancy, the landlord would be able to apply for an order dismissing the summons. However, in Caplan, the tenant did not cease to occupy the premises before the contractual term date. Cross J made useful observations about the circumstances in which a company that ceases physically to occupy premises can be said to have ceased to occupy them. In Pike, Cross J held that the effect of section 64(1) was to extend the existing tenancy. However, in that case, it was not contended that the tenancy had terminated by effluxion of time.
25. In short, Mr Lewison submits that, by issuing the summons in March 2000, the appellants had brought the statutory scheme into effect. If the tenants ceased to occupy the premises after that date, they could go to the court for an order bringing the proceedings to an end. If they had not been in occupation before the issue of the summons, the landlord could apply to dismiss the proceedings on the ground that the tenants had no standing to make the application.
26. Mr Lewison also relies upon Zenith Investments (Torquay) Ltd v Kammins Ballrooms Co Ltd (No 2) [1971] 1 WLR 1751. In that case, the tenant filed an application for the grant of a new tenancy that was ultimately held to have been too early and therefore did not comply with Part II of the 1954 Act. In subsequent proceedings, the question arose as to the liability of the tenant for rent following the invalid application. The Court of Appeal held that the application was none the less an application for the purposes of section 64. Russell LJ pointed out (at p1755) that if the tenant made a hopeless application, the landlord would be able to apply to the court to strike it out. Sachs LJ observed at pp1757-1758 that:
the manifest object of section 64 as a whole was to ensure that during the periods, sometimes prolonged, while litigation between landlord and tenant was pending and neither party knew whether a new tenancy would be granted, there should yet be certainty as between them relating to their interim obligations.
27. Mr Lewison also relies upon the recommendations made by the Leasehold Committee (the Jenkins Committee) in its final report (Cmd 7982, 1950), which led to the 1954 Act, and, in particular, recommendation 18 at p78, that a tenant who has duly given notice to the landlord of his claim to renewal should, notwithstanding the expiration or determination of his contractual tenancy, be entitled to remain in possession until disposal of his claim.
28. Mr Lewison also relies upon Benedictus. He argues that both Stocker and Bingham LJJ took the view that the making of an application was the invocation of the court’s jurisdiction. Having done that, the tenant was liable to pay rent for the period of its occupation. Accordingly, the tenant could not approbate and reprobate and claim that it never had a tenancy to which Part II applied because it was not in occupation. Mr Dowding submits in reply that the dicta in Benedictus and Zenith are of little assistance. The same applies to Caplan and Pike. When these cases were decided, it was not clear that the material date for the purposes of tenancies to which Part II of the 1954 Act applied was the term date.
29. Mr Lewison further relies upon Bowes-Lyon v Green [1963] AC 420* as showing how the court looks to events that occur in the future when applying a statutory provision. Under section 44 of the 1954 Act, the relevant words were “tenancy which will not come to an end within fourteen months or less by effluxion of time or by virtue of a notice to quit already given by the landlord”. Lord Reid held that the court should look at the state of affairs as it existed on the day upon which it was necessary to determine the question of whether the tenancy qualified under these words. The fact that the position might change should be ignored: see pp435-436. Lord Morris of Borth-y-Gest and Lord Hodson gave judgment to the same effect: see pp443 and 447. In reply, Mr Dowding submits that Bowes-Lyon is distinguishable. The decision concerned section 44 of the 1954 Act (as originally enacted). The House of Lords placed emphasis upon the words “for the time being”, which appear in that section. The function of this section is to determine who the landlord is for the purposes of Part II. The effect of the decision is that the landlord has to be ascertained as at the time the question arises, and so the decision is of no real assistance.
* Editor’s note: Also reported at (1961) 180 EG 429
30. In summary, Mr Lewison submits that there is a single, logical scheme. The tenant can make a request for a continuation of his tenancy, in which case section 26(5) applies to continue his tenancy. That is the relevant provision for the purpose of section 24, and section 64 applies to postpone the date of termination. If the landlord serves a notice under section 25, that brings in section 64. By virtue of section 64, the tenancy is extended beyond the term date. This applies even if the application is invalid or is vulnerable to a particular defence: see Zenith. Section 64 is designed to achieve certainty. The landlord may not know whether a tenant who has ceased physically to occupy premises remains in occupation: see Caplan. Even when the facts are undisputed, the landlord may not know whether the tenant is in occupation for the purposes of his business. By making an application, the tenant has to assert that he is in possession. Part of the policy of the
31. By stating that the assumption should be made that the section 25 notice would, in due course, operate to determine the tenancy, the judge was inclined to the same conclusion as the House of Lords in Bowes-Lyon. In this case, the court had given directions for the matter to be listed in September or October 2000. The tenancy should be taken to continue for at least three months from that date or three months from the hearing date, otherwise the tenant, by moving out, deprives the landlord of a right that has already accrued. By making an application to the court, the tenant commits himself to the court procedure.
Conclusions
32. In my judgment, the answer to this case lies in the wording of section 64(1)(c). That subsection requires the court to determine whether, apart from section 64, “the effect of the notice or request” would be to terminate the tenancy before the date there specified. In making that determination, section 64(1)(c) authorises the making of one assumption, and one assumption only, namely that section 64 has not been enacted. Moreover, since a notice that is ineffective under the 1954 Act is of no effect, section 64(1) cannot apply unless the notice or request took effect under the relevant provision of the 1954 Act.
33. So the crucial question under section 64(1)(c) is whether, and, if so, when, the notice or request is effective to determine the tenancy under the relevant provisions of Part I or Part II of the 1954 Act.
34. In this case, the relevant notice is that served by the landlord on 30 November 1999 under section 25(1) of the 1954 Act. That notice specified 24 June 2000 as the date upon which the tenancy was to end.
35. A notice given under section 25(1) must relate to “a tenancy to which this Part of the Act applies”, but section 25(1) does not relate that requirement to the date of service of the notice, but rather to the act of termination for which the notice provides. A tenancy for a fixed term comes to an end at common law on the expiry of that term. Accordingly, the landlord’s notice under section 25(1) cannot terminate the tenancy unless it has been continued under section 24(1). Accordingly, those words in section 25(1) must, in my judgment, be read as a reference back to sections 23 and 24 of the 1954 Act. In any event, those sections are expressed to apply for the purposes of the whole of Part II.
36. Esselte is summarised in para 4 of this judgment. In Esselte, the issue was the effectiveness of a notice served under section 27(2) of the 1954 Act. That subsection contains an express reference back to section 24, since it applies only if the tenancy is a “tenancy granted for a term of years certain which is continuing by virtue of section 24 of this Act”. That wording is different from that in section 25(1), but the important point is that the application of section 24 was directly in issue in Esselte. The appellant’s case there was that there was nothing in section 24 to continue the tenancy beyond its fixed term. Section 23(1) provides that Part II of the 1954 Act applies where the tenant occupies the demised premises for business purposes, but does not state when this condition must be satisfied. In Esselte, the appellant’s argument depended upon whether the expression “to which this Part of this Act applies” (qualifying the word “tenancy” and appearing in section 24(1) and elsewhere) referred to the tenancy when the notice took effect or whether it included the tenancy at some date in the past, so that it meant “a tenancy to which this Part of this Act applies or has applied”. Having considered sections 24 and 27 and the prior authorities in detail, Morritt LJ preferred the former view, and concluded (as explained above) that section 24(1) did not apply where the tenancy expired by effluxion of time on the term date. The other members of the court agreed with his judgment.
37. In my judgment, since, as I have explained, section 25 refers back to section 24, the conclusion in Esselte must apply for the purposes also of section 25(1). A notice under section 25(1) is thus of no effect if the tenancy is not continued by section 24(1). The tenancy is not so continued if it expires on the term date by effluxion of time: Esselte. Whenever the notice is served, there would be nothing for the landlord’s termination to “bite on”. Mr Lewison’s argument amounts to reading into Part II of the 1954 Act a concept whereby a tenancy is continued beyond its term date if, by then, the tenant has invoked the jurisdiction of the court by making an application to it. In my judgment, there is no room in section 25 for such a concept.
38. It follows from this conclusion that, in the present case, the section 25(1) notice was of no effect for the purpose of terminating the tenancy, and that, accordingly, it did not have the effect of terminating the tenancy within three months of the final disposal of the tenants’ applicaton to the court as required by section 64(1)(c). Accordingly, section 64(1)(c) was not satisfied, and there was not, and could not be, any interim continuation of the tenancy under the operative part of section 64(1). It follows that the tenants were not liable for rent referable to any period after the term date (24 June 2000) and that the appeal must be allowed.
39. In the circumstances, I agree with the conclusion of Mr Recorder Blunt QC in para 55 of his judgment in Arundel. Moreover, in my judgment, Mr Dowding is correct in his submission that the authorities upon which Mr Lewison relied, such as Caplan, are of little assistance because the exact point that arises in this case did not arise in those cases, and because, at the time of the decision of Cross J (in Caplan), it had not been clearly decided that occupation at the term date was required for the purposes of Part II. This was not clear until Esselte established that point.
40. A tenant who has served a counternotice under section 25, and made an application to the court, should inform the landlord if he ceases to occupy the demised premises before the term date so that the application to the court can be dismissed. If a tenant fails to do this, and the landlord is led by the tenant’s conduct to believe that the tenant continues in occupation, there is a risk that, in the events that happened, as in Benedictus, the tenant will be held to have estopped himself from denying that he was in occupation at the term date, and be liable for continuing rent accordingly.
41. The conclusions that I have reached as to the effect on section 64 of the service of a section 25 notice on a tenant who is no longer in occupation at the term date are supported by the passages in Woodfall upon which Mr Dowding relies. Mr Lewison and Mr Dowding are both editors of Woodfall, and Mr Lewison freely admitted that he was the contributor of these particular passages that were contrary to his argument. Mr Dowding did not, however, make the observations that had been made in the past by counsel who have found themselves in similarly fortunate circumstances: see, for example, Wheeler v Mercer [1957] AC 416* at p422. It is totally immaterial to the outcome of this case which of the two counsel was responsible for these passages. It is, however, a matter of commendation that busy practitioners find time to edit books of the stature of Woodfall. It is of great benefit to the practice and development of the law that practitioners, as well as legal scholars, continue to do so in all fields of law.
* Editor’s note: Also reported at (1956) 168 EG 520
42. SIR DENIS HENRY agreed and did not add anything.
43. POTTER LJ also agreed and did not add anything.
Appeal allowed.
