Landlord and tenant — Appeal by landlords from county court order dismissing their application to strike out tenant’s proceedings for a new tenancy under Landlord and Tenant Act 1954 — Landlords’ application based on want of service of tenant’s originating application for new tenancy, which had been issued, but not served — There had been an agreement between the parties to waive time-limits while negotiations continued — At one point landlords purported to end the agreement as to time-limits, but nevertheless negotiations continued — An order for interim rent was made — Tenant changed his solicitors — Landlords made further proposals which were not taken up — More time elapsed and landlords applied to strike out proceedings for want of service — County court judge upheld deputy registrar’s decision dismissing landlords’ application and exercising his discretion under Order 7, rule 20(2) of the County Court Rules to extend time for service — Held by Court of Appeal, distinguishing Robert Baxendale Ltd v Davstone Holdings Ltd and Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd, that the County Court Rules gave a specific discretion to extend time, which had been properly exercised — Appeal dismissed
This was an
appeal by the landlords, Robert John Knight and Clare Ralph, from the decision
of the county court judge at Birmingham County Court, upholding an order of the
deputy registrar. The order dismissed the landlords’ application to strike out
the proceedings begun by the tenant for a new tenancy under the Landlord and
Tenant Act 1954. It also granted the tenant, Mohammed Ismail Ali, an extension
of time to serve his originating application.
J Y Randall
(instructed by Southall & Co, of Solihull) appeared on behalf of the
appellants; J S Colyer QC and Miss A R Barrington-Smyth (instructed by Sumal
Creasey & Co, of Leicester) represented the respondent.
Giving
judgment, EVELEIGH LJ said: The applicant in this matter is the tenant of the
respondents in the court below. Those respondents are now the appellants here.
On July 22 1981 the tenant served a tenant’s notice under section 26 of the
Landlord and Tenant Act 1954. That notice requested a new tenancy commencing on
March 22 1982. On September 9 1981 the landlord served a counternotice
indicating that he would resist the application upon the grounds that he
intended to demolish or reconstruct the premises. On November 26 the tenant
issued an originating application for a new tenancy. It has yet to be served.
On November 30
the tenant’s solicitors wrote to the landlords’ solicitors referring to their
agreement ‘to uplift’, as they say, the time-limits imposed by the rules. In
that letter we read the following:
The summons
has been brought into issue on the application by Mohammed Ismail Ali as tenant
for a new lease. The hearing is on ‘a date to be fixed’. The object of our
discussion this morning was to advise you of this and as it would appear that
both landlord and tenant wish to continue negotiations we have written to the
court to advise the court of this so that the matter can be left in abeyance
pending negotiations and we have agreed that general procedural steps will be
uplifted by agreement between the parties, it being understood: (A) that you
will wish to bring on an interim application for increased rental from the
operative date for increased rental, and (B) that application will be adjourned
generally by consent.
Those terms
seem to indicate that the parties wished to solve their differences by
negotiation if possible, and, if not, then the matter would have to be referred
to the court.
The tenant’s
solicitors did in fact write to the court on that same day, November 30, saying
that the application was entered for a date to be fixed and adding:
We have given
formal notice to the Respondents as to this and have agreed with them over the
telephone that procedural steps as to time will not be operative to allow the
parties time to continue their negotiations.
In January
1982, while negotiations were being conducted between the parties, the
landlords applied to the court to fix an interim rent. In the application it
was stated:
The grounds
upon which the Applicant claims to be entitled to the Order are: The Respondent
has commenced proceedings in this Court (Plaint Number 8180975) for a new Lease
of the said premises under Part II of the said Act and his tenancy is being
continued under S64 thereof and the rent under the existing tenancy is lower
than that prescribed by S24A.
Nothing
further of any relevance at least was done in so far as that application was
concerned until later in the year. But apparently nothing was being achieved by
negotiation, and on September 6 1982 the landlords’ solicitors wrote to the
tenant’s solicitors and said:
So far as the
Section 26 Notice of July 22 1981 and the consequential Notices and Court
Proceedings are concerned, we wish to make it clear that any agreement which
may have been expressly or impliedly reached to waive any time limits or other
provisions either of statute or of Court rules is hereby abrogated and we now
expect you promptly to proceed with the issue and or service of such documents
or Court proceedings as you may be advised. As you are aware, this firm has
instructions to accept service on behalf of our Clients. Our Clients will be applying
for a date to be fixed for the hearing of the interim rent application in the
very near future. We await hearing from you.
The letter
also made reference to a contention that had been put forward during
negotiations on behalf of the tenant to the effect that the Leasehold Reform
Act 1967 applied to the premises and the tenant might be in a position to take
advantage of that.
On October 8
the tenant’s solicitors replied to the landlords’ letter, saying that the
letter breached an understanding that had been reached over the telephone
between the solicitors, to the effect that, as the tenant’s papers were with
counsel, the tenant’s solicitors would take counsel’s opinion and the matter
should be left in abeyance until both the landlords and tenant were in
possession of counsel’s advice. The letter went on to say that they hoped to
obtain that advice within 14 days and then respond fully to the landlords’
solicitors’ letter.
The landlords’
solicitors wrote on October 22 acknowledging the tenant’s solicitors’ letter
and enclosing a copy of an application which was to be heard on November 3 in
respect of the fixing of interim rent.
On October 27
the tenant’s solicitors wrote and, among other
other property comprised in the same block as the tenant’s premises had been
enfranchised.
On November 5
the landlords’ solicitors wrote proposing terms for the grant of a lease of the
premises. The solicitors for the tenant acknowledged the letter and said they
were taking their client’s instructions. Subsequently on November 24 the
tenant’s solicitors put forward counter-proposals and said that consideration
was being given to the proposals received.
On November 29
the landlords’ solicitors wrote:
We note what
you say in regard to our letter of the 5th instant. However, our Clients
instructed us at that time that their proposals were to be open for acceptance
only for a limited period of 14 days which has now expired. If you can confirm
that your client is willing to accept the terms as set out in our letter of the
5th instant and without variation, then we shall seek our Clients further
instructions as to whether these terms are still available.
They wrote
again on December 21 saying:
We do not
appear to have received from you the Interim Rent that was ordered by the
Birmingham County Court on November 3 1982. We note that there is already
outstanding under the terms of the Interim Rent order the sum of £1,800 and
further on the 25th instant a further sum of £600.00 becomes due.
The tenant’s
solicitors on January 4 sent the money then due.
By February 17
the tenant had changed his solicitors. His new solicitors wrote to the
landlords’ solicitors saying:
Please note
we now act for Mohamed Ismail Ali, the tenant of the above premises and we have
been requested to forward to you a cheque for £600.00 which we understand is
the balance of the rent. Kindly acknowledge safe receipt.
Subsequently,
on February 21, the landlords’ solicitors wrote to the tenant’s new solicitors
putting forward proposals for a new lease of the premises; they were in terms
similar to those already communicated to the previous solicitors. The new
solicitors replied to that: ‘We thank you for your letters . . . As soon as we
have taken our client’s instructions, we will be in touch with you.’
No more was
heard from those solicitors and, after a period of approximately four months,
namely, on June 23 1983, the landlords applied to strike out the proceedings
for want of service. I should have mentioned that the letters relating to the
proposals for a new tenancy were marked ‘without prejudice’.
The deputy
registrar dismissed the application and granted an extension of time for
service. The landlords appealed to the county court judge, who upheld the order
of the registrar. The appellants now appeal to this court. The extension of
time was granted under Order 7, rule 20, of the County Court Rules. By the
County Court Rules it is provided that service of an originating summons shall
be made within two months of its issue in cases coming under the Landlord and
Tenant Act. Order 7, rule 20, subrule (2) reads:
The court may
extend the period for service of a summons from time to time for such period
I leave out
the intervening words
as the court
may specify, if an application for extension is made before that day or such
later day (if any) as the court may allow.
Before this
court it is contended that the learned judge either had no discretion or
wrongly exercised his discretion in granting an extension of time. The court
has been referred to the case of Robert Baxendale Ltd v Davstone
Holdings Ltd [1982] 1 WLR 1385. There the court emphasised that the Act was
taking away from a landlord rights that he otherwise had and that an
exceptional case had to be made out for a tenant to be granted an extension of
time under the rules. Counsel has said that in this case the principles
enunciated in Robert Baxendale Ltd should be applied and this court
should insist upon strict compliance with the rules, because no exceptional
case had been made out. Whether or not the rigidity of the case of Robert
Baxendale Ltd is still to be adhered to, I do not seek to discover. That
case was decided when the rules of the county court were differently worded,
and it may be that the difference in wording will be material in considering
whether or not the court should treat a case today with that same strictness.
The
appropriate order then was Order 8, rule 5. That rule contained in paragraph
(2) the following words:
Where
reasonable efforts have been made to serve the summons within the said period
and service has not been effected, the registrar may, on application, order
that the time be extended for a further period not exceeding 12 months or for
successive periods not exceeding 12 months each. Provided that the time shall
not be extended for any period unless the application is made within the currency
of the last preceding period.
I do not read
the whole of that order, but those words do not now appear in the current
rules. Be that as it may, this case in my judgment is not a Baxendale
situation at all. A particular situation has arisen; in other words, a special
reason exists in the present case, namely, that the parties themselves agreed,
to use their own words, to uplift the rules. Consequently, as by mutual consent
the time envisaged by the rules has passed, there is no possible way in which
the rules can be strictly adhered to. Consequently, the matter is opened up for
the decision of the judge with a discretion, as I see it, unfettered by
authority.
On behalf of
the landlords it has been submitted that the learned judge should act by analogy
with the rules and apply a two months’ time-limit rigidly from the date of the
receipt of the landlords’ solicitors’ letter abrogating the agreement between
the parties. For myself, I can see that in many cases such a course may be
considered appropriate by the learned judge, but I see no obligation upon him
to follow such a course rigidly and to act by analogy with the decision in Robert
Baxendale Ltd.
The court was
also referred to the case of Kammins Ballrooms Co Ltd v Zenith
Investments (Torquay) Ltd [1971] AC 850. Relying upon that case, counsel
for the landlords has submitted that it is necessary at least for the tenant to
show that there has been by the landlords a waiver or an election or that the
landlord is estopped from taking the point that the tenant is out of time. But
that case was concerned with the application of strict statutory provisions. It
was held that those provisions, being for the benefit of the tenant, could be
waived and that the tenant might be able to establish an election made by the
landlord in his favour or show estoppel, but that those legal considerations
would have to be established. That case, as I say, was dealing with strict
rules or strict provisions of the statute. There was no provision in the
statute for an exercise of discretion. In the present case the rules of the
county court specifically make provision for the exercise of discretion in
granting an extension, and the limit sought to be placed upon the exercise of
that discretion on the basis of Robert Baxendale Ltd does not, as I have
said, apply in this case because the parties had taken the case by agreement
out of the application of the strict rules.
So therefore
one has to ask whether or not the learned judge improperly exercised his
discretion. I am not concerned to determine what order I would have made in
this case. The material then before the judge was that, while the solicitors
had indicated that they no longer would abide by the agreement to uplift the
time or the procedure rules, they had not replied in contentious terms to the
letter of October 8 which objected to the abrogation of the agreement, and they
continued to negotiate; they fixed the rent, dating back as it did to March
1982; and they envisaged it running forward to such period as remained by virtue
of section 64 of the Act to the tenant.
The tenant was
placed in some difficulty, as his affidavit showed, in obtaining documents in
the case from his previous solicitors. No specific prejudice was shown by the
landlords in the case. They had by their correspondence indicated that they
were willing to accept the applicant as a tenant provided the terms were right,
and there has been no suggestion that any contemplated development has been
prejudiced.
In all those
circumstances it seems to me that the landlords’ objection before the county
court judge was a formality in the extreme. If, as my lord, O’Connor LJ, has
suggested in the course of this hearing, the originating summons had been
served in time and the parties had then agreed not to proceed with the hearing
pending negotiations, the position would really not be substantially different
from what it is today. As Mr Colyer for the tenant pointed out, the landlords’
application for interim rent was made on the strength of the proceedings
already started in the court by the tenant. The landlords did not take out an
independent summons for that purpose. None of those points is conclusive, but
they are all relevant matters in the case for the exercise of his discretion by
the county court judge. I in those circumstances am quite unable to say that he
acted improperly, and I would dismiss this appeal.
In the course
of argument Mr Colyer on behalf of the tenant sought to submit that, as the
landlords had made an application for the assessment of interim rent in the
proceedings issued by the tenant, the county court judge had no jurisdiction to
strike out the proceedings in any event. This was a matter that was not argued
in that form before the county court judge and has not been argued here. There
was no respondents’ notice covering the point and this court has not dealt with
it.
Agreeing,
O’CONNOR LJ said: Like my lord, I can find no grounds for criticising the
learned judge in the exercise of his discretion in this case and, for the
reasons given by my lord, I agree that this appeal should be dismissed.
The appeal
was dismissed with costs.
