Landlord and Tenant Act 1954, Part II — Time-limit under section 29 (3) for application for new tenancy — Application within time but covering part only of holding — Effect of amendment after expiry of time-limit — Tenancy comprised a ground-floor shop with basement storage area, a ground-floor studio and three flats on first, second and third floors — Tenant occupied shop and basement storage for a ladies’ boutique and the ground-floor studio and first-floor flat as her home — The second- and third-floor flats were sublet to persons who had no connection with her business — Tenant’s originating application for a new tenancy, following the usual preliminary notices, was made within time but referred only to ‘the ground-floor shop premises at 32 Rosslyn Hill, Hampstead’ — Subsequently, but outside the section 29 (3) time-limit, the description was amended to read ‘Shop and premises situate at 32 Rosslyn Hill, Hampstead’ — This was an appropriate description for an application, although any order made for a new tenancy would have to exclude the second- and third-floor flats — Landlords opposed the amendment and the county court judge ruled that it must be disallowed as amounting to a new originating application made out of time — The application must therefore be treated as limited to the ground-floor shop premises — Held on appeal that there was power under Ord 15 of the County Court Rules 1981 to amend an originating application and that the court would itself exercise the discretion which the judge had failed to exercise — G Orlik (Meat Products) Ltd v Hastings & Thanet Building Society followed — A submission by the landlords that to allow the amendment would be to deprive them of a vested right acquired as a result of the expiry of the time-limit was rejected — Appeal allowed
The following
cases are referred to in this report.
Beardmore
Motors Ltd v Birch Bros (Properties) Ltd
[1959] Ch 298; [1958] 2 WLR 975; [1958] 2 All ER 311
Davies v Elsby Bros Ltd [1961] 1 WLR 170; [1961] 1 All ER 672, CA
Fernandez v Walding [1968] 2 QB 606; [1968] 2 WLR 583; [1968] 1 All ER
994; (1967) 19 P&CR 314; [1968] EGD 9; 205 EG 103, CA
Olley v Hemsby Estates (1965) CLYB 2205
Orlik (G)
(Meat Products) Ltd v Hastings & Thanet
Building Society (1974) 29 P&CR 126; [1975] EGD 104; 234 EG 281, [1975]
1 EGLR 70, CA
Williams v Hillcroft Garage Ltd (1971) 22 P&CR 402; [1971] EGD
430; 218 EG 1163, CA
This was an
appeal by the tenant of a shop and premises at 32 Rosslyn Hill, Hampstead,
London NW3, Mrs Hancock, who carried on business there under her maiden name of
Nurit Bar, from the decision of Judge Brooks, at Bloomsbury County Court, in
regard to her application for a new tenancy under Part II of the Landlord and
Tenant Act 1954. The respondents were the landlords, Pathwood Investments Ltd.
Paul Morgan
(instructed by Herbert Oppenheimer Nathan & Vandyk) appeared on behalf of
the appellant; Norman Primost (instructed by Jacobson Ridley) represented the
respondents.
Giving the
first judgment at the invitation of Dillon LJ, GLIDEWELL LJ said: The first and
major question which arises on this appeal is: can an originating application
for a new tenancy under section 24 of the Landlord and Tenant Act 1954 be
amended after the time-limit provided by section 29(3) of the Act for making an
application has expired?
The facts
which give rise to this application are these: by a lease dated May 28 1964 the
respondent landlords demised a shop and premises at 32 Rosslyn Hill, Hampstead,
for a term of 21 years from May 28 1964.
The applicant,
Mrs Hancock, who carries on business in her maiden name of Nurit Bar, and to
whom I shall refer as the tenant, took an assignment from the original lessee
on November 4 1977.
The premises,
the subject of the lease, comprise a ground-floor shop with a basement storage
area; a ground-floor studio, and three flats on the floors above. The tenant
occupies the shop and the storage for her business of a ladies’ boutique, and
the ground-floor studio and the first floor as her home. The second- and
third-floor flats are sublet by her to persons unconnected with her business.
On November 19
1984 the landlords gave notice to terminate the tenancy of what is described as
‘the shop and premises’ — that termination taking effect on the expiry of the
lease on May 28 1985. The notice indicated that the landlords would not oppose
an
section 25 (2) of the Act.
On January 10
1985, again in time, the tenant gave a counternotice and indicated that she was
not willing to give up possession of the premises.
Section 32 (1)
of the Landlord and Tenant Act 1954 provides:
Subject to
the following provisions of this section, an order under section 29 of this Act
for the grant of a new tenancy shall be an order for the grant of a new tenancy
of the holding; and in the absence of agreement between the landlord and the
tenant as to the property which constitutes the holding the court shall in the
order designate that property by reference to the circumstances existing at the
date of the order.
The phrase
‘the holding’ is defined in section 23 (3) as:
. . . 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.
In this case
the exclusion in that definition had the effect of excluding the flats on the
second and third floors from ‘the holding’ — since they were occupied by
persons totally unconnected with the business. It follows, and it is agreed by
the parties, that ‘the holding’ within section 23 (3) comprised the
ground-floor shop with basement storage, and the ground-floor studio and
first-floor flat occupied by the tenant.
On March 8
1985 an originating application to the county court for the grant of a new tenancy
was made by solicitors acting on behalf of the tenant. This begins:
In the matter
of the Landlord and Tenant Act 1954 and In the matter of ground floor shop
premises at 32 Rosslyn Hill Hampstead London NW3.
It then names
the tenant and the landlords and indicates that the tenant is applying for the
grant of a new tenancy pursuant to Part II of the Landlord and Tenant Act 1954,
and continues:
The premises
to which this application relates are the ground floor shop premises at 32
Rosslyn Hill Hampstead London NW3. The rateable value of the premises is £597
— which the
parties are agreed is the rateable value attributable to the shop alone, and
does not include the rateable value of the studio behind or any of the flats.
Under the
particulars of the current tenancy of the premises, the last subpara reads:
‘Whether any, and if so what, part of the property comprised in the tenancy is
occupied neither by the tenant, nor by a person employed by the tenant for the
purposes of the business carried on by the tenant in the premises’ and the
answer is ‘None’, which in the circumstances is not merely wrong but
astonishingly so.
Why the
application in terms was expressed to apply only to the ground-floor shop
premises when the holding, as a moment’s thought makes clear, applies to the
shop premises and to the flat occupied by the tenant is not clear and to my
mind does not matter.
That
application was made within the time limited by section 29 (3) and that time
expired on March 19 1985.
There was then
correspondence between solicitors with regard to rent which was inconclusive,
and it was not until July 1985, as a result of some indication from the tenant,
that her solicitors woke up to the fact that the application did not cover the
whole of the holding.
On July 29 1985,
without leave, they filed what purported to be an amended application, and a
yet further amended application on August 19 1985. It is the first amendments
which are material in the present case, because, by those amendments, the
description of the premises is altered so that instead of reading ‘ground-floor
shop’ it reads (after amendment) ‘shop and premises situate at 32 Rosslyn Hill
Hampstead’, which is of course an accurate description of the premises
contained in the lease and is appropriate to an application for a new tenancy
of the holding.
After the
second set of amendments, it became apparent that what the solicitors were then
doing was seeking to apply for a new tenancy of the whole premises; but it is
now conceded that the order for a new tenancy cannot include the second- and
third-floor flats — and indeed that was made clear by a telex sent by the
tenant’s then solicitors on December 5 1985.
Since that
date, the nature of the respective contentions of the parties has been clear.
The tenant has been seeking to amend her original application (or her claims to
have amendments made to the original application) so that the court will be
dealing with an application for a new tenancy of the holding, including her own
flat. The landlords have been taking the attitude that she is not entitled so
to amend.
In pursuance
of that attitude, on November 25 1985 the landlords applied to the court for an
order that the amendments to the originating application should be disallowed.
Mr Registrar Wakefield made an order to that effect; the tenant appealed, and
on May 21 1986 His Honour Judge Brooks dismissed the appeal. The tenant now
appeals to this court against the judge’s decision, with his leave.
The critical
part of the judge’s judgment is contained in para 8 of the approved note of his
judgment which we have before us, where he said this — after setting out the
respective contentions of counsel for the parties:
In my judgment
an originating application under the Act cannot be treated as a pleading.
Suffice it to say that pleadings have their own set of rules. An originating
application under the Landlord and Tenant Act 1954 is governed by the strict
provisions of the sections I have already referred to.
The amendments
sought by the appellant amount to what can only be described as a ‘new
originating application’ in which the appellant seeks to include four separate
flats, in addition to the shop premises. It is crucial in my judgment that an
application for a new tenancy under the Act should contain the precise
nature and extent of the premises the tenant wishes to hold as a new tenancy
and the application must be lodged within the time-limit prescribed. (I perhaps
ought to make it clear that provided the time-limit has not expired an
applicant would be entitled to amend his application.)
In this case
the appellant chose to limit her application to the ground floor of the
premises and in my judgment it is now not open to her to amend her application
to include other premises albeit comprised in the same tenancy. To do so would
be contrary to the provisions of section 29 of the Act.
It is quite
plain, therefore, that the basis of the judgment was that the judge had no
power to allow the amendments to stand. The amendments have been made — or are
purported to have been made — under Ord 15 r2 of the County Court Rules 1981,
which provide in subrule (1):
Subject to
Order 9, rule 2(3), and the following provisions of this rule, a party to an
action or matter may, without an order, amend any pleading of his at any time
before the return day by filing the amended pleading and serving a copy on the
opposite party.
Then by
subrule (3) it is provided:
The court
may, of its own motion or on the application of the opposite party, disallow an
amendment made under paragraph (1) and shall do so where it is satisfied that,
if an application for leave to make the amendment had been made under rule 1,
leave would have been refused.
Ord 15, r1,
applies to amendments made with leave.
Mr Morgan, who
appears for the appellant today — not having previously represented her, just
as Mr Primost, who appears for the landlords, had not previously represented
them — submits that the judge was wrong. There is power to amend an originating
application, under the rules to which I have just referred, and indeed under r
1 of Ord 15.
In that
submission he relies particularly on a decision of this court in G Orlik
(Meat Products) Ltd v Hastings & Thanet Building Society (1974)
29 P & CR 126. That was a case in which the tenant had made an application
for a new tenancy under the 1954 Act within the appropriate time-limit, but
which did not include in the proposed terms of the lease the right to use land
adjoining the building, the subject of the tenancy but owned by the landlord,
for the purpose of parking motor cars owned by the tenant.
After the
expiry of the four-month period within which the application could be made, the
tenant sought leave to amend the application by including a claim that the new
lease should permit such parking. That was refused on the ground that there was
no power to amend, but an appeal against that decision was allowed.
Giving the
judgment of the court, Stamp LJ said, towards the bottom of p 128:
When the
application came on for hearing before the judge, the tenants sought to claim
rectification of the pre-existing lease so that it should be altered in such a
way as to provide for the parking rights. It was pointed out that the court did
not have jurisdiction to entertain such a claim. The tenants then, it would
seem, abandoned any suggestion of rectification of the lease, but sought
instead leave to amend the proposals contained in their application so as to
include amongst them a term relating to the parking of their vehicles on, in
part, the landlords’ adjacent land. The application to amend was opposed by the
landlords, one ground being the ground urged in this Court, namely, that
because of the time-limits in section 29 (3) of the Act, which had by then
expired, there was no jurisdiction to give leave to amend. It does not appear
to have been suggested that the landlords were taken by surprise, but,
of course, if there were lack of jurisdiction the absence of any prejudice
created by the granting of leave would not be relevant.
In our
judgment no ground has been shown for holding that there is no jurisdiction to
allow an applicant to amend, after the four months’ period, the proposals
contained in an application to the court made within that period. Counsel for
the landlords is right in saying that the Act is strict, and uses strict
language, in its time provisions. We are, however, unable to see anything in
the Act which deprives the court of jurisdiction to grant leave to the
applicant to amend the detail of his proposals after the expiration of the four
months’ limit. The decision of this Court in Williams v Hillcroft
Garage Ltd, if not a direct authority for that proposition, provides, at
the least, most persuasive indication that it is correct. Accordingly, we
reject this second ground put forward in support of the appeal.
Apart from Williams
v Hillcroft Garage Ltd (1971) 22 P & CR 402 there referred to, Mr
Morgan also referred us to another decision of this court, Olley v Hemsby
Estates only reported (as far as he is aware) in the Current Law Year
Book for 1965, para 2205, where landlords, on serving a notice under
section 25 of the 1954 Act on a tenant, stated that they would oppose the grant
of a new tenancy. However, when the tenants applied to the county court for a
new tenancy, the landlords filed an answer saying that they would not oppose
the grant — apparently they had changed their minds in the interim as the
result of some redevelopment proposals which they had in mind. They then
changed their minds again and sought leave to amend their answer so as to
indicate that they would oppose the grant of a new tenancy. The county court
judge, in effect, allowed the amendment — he did so in a slightly different way
— which led to an appeal against his decision, in which it was held that the
amendments were properly allowed under Ord 15 r 1 of the County Court Rules.
In my
judgment, this submission of Mr Morgan is correct. I take the view that even if
strictly we are not bound to conclude that, in this case, the judge was wrong
to say that he had no jurisdiction, nevertheless the authorities to which I
have referred are the clearest indication that there is power to amend and that
he should have considered whether or not to exercise it. It is, however, only
fair to the judge to say that, so far as one can ascertain, he was not referred
to any of the authorities on this point to which reference has been made before
us.
One then turns
to consider, since the judge did not exercise any discretion himself, how we
should exercise the discretion which he had. Mr Primost urges us to follow the
general principle that the courts will not deprive a party of a vested right
acquired as the result of the expiry of a time-limit. For that proposition,
which is undoubted, he referred us to Beardmore Motors Ltd v Birch
Bros (Properties) Ltd [1959] Ch 298, a decision of the late Harman J, which
was a decision under the 1954 Act and was specifically approved by this court
in Davies v Elsby Brothers Ltd [1961] 1 WLR 170 — a case not
concerned with the Landlord and Tenant Act.
I need not
make any further reference to the authorities, because the principle is
undoubted. The question is whether it applies here.
Mr Morgan’s
answer is that it does not. He reminds us that under section 32 (1) the court’s
power is only to grant a new tenancy of the holding. What constitutes the
holding is for the court, at the hearing, to decide — unless there is agreement
between the parties. Once a valid application for a new tenancy had been made —
and in this case it is conceded it was made — then, Mr Morgan submits, the landlords
had no right to resist a new tenancy of the whole of the holding. Thus, they
were not deprived of any vested right, since they had no vested right to resist
an application for a new tenancy, including the flat occupied by the tenant.
All the amendment does is to make clear what had hitherto not been clear and
which had been wrongly stated — that is to say, what constituted the holding
which was misdescribed in the original application.
Mr Primost
seeks to answer that by saying that there was indeed an agreement between the
landlords and the tenant as to what did constitute the holding. His argument is
that the tenant’s originating application which described the premises of which
the new tenancy was sought as ‘the shop’ was a description of the holding and
was an offer to the landlords to agree that that — that is the shop only —
constituted the holding for the purposes of the Act. That offer, he submits,
was accepted when, as they did, the landlords made an application for an
interim rent which they, in turn, limited to the interim rent of the shop
premises.
Quite apart
from the fact that I am satisfied that the application for the interim rent
should have related to the premises comprised in the original tenancy, and not
a part, I cannot construe those two documents as constituting an agreement
between the landlords and the tenant as to what constituted the holding for the
purposes of section 32 (1) of the Act. Certainly, I cannot find, and do not
find, that the tenant was bound thereafter in a way which prevented the court
from exercising what was its undoubted duty to grant a new tenancy of the
premises constituting the holding.
That brings
one back to the question whether this court should exercise its discretion in
favour of the tenant. Once it is clear that the landlords were not being
deprived of any vested right, but merely of what might be described as a
possible windfall, then it is equally clear that while there must be some
detriment to the landlords, it is limited in extent.
On the other hand,
if this appeal fails, there will be substantial detriment to the tenant,
because she will not have the protection of the Act in relation to her
occupation of her home; and even if she managed to negotiate a new tenancy of
that flat — and one knows not if she will be able to do so — it may well be at
a rent which will not be that for which the Act itself would provide.
Accordingly,
in my judgment, it is quite plain that the detriment to the tenant
substantially outweighs that to the landlords — that is to say detriment to the
tenant if the appeal fails.
I would
therefore allow the appeal. I should say that we did allow Mr Morgan to put in
an affidavit from his client by way of further evidence in relation to one
point in the judgment, but although we did consider it, I for my part do not
find it necessary to refer to it because it did not seem to me to add anything
of value to the matters to which I have referred.
For those
reasons, I would allow the appeal.
Agreeing,
DILLON LJ said: Judge Brooks in the court below did not have the benefit of the
very clear and helpful argument and skeleton which we have had from Mr Morgan —
who, as my lord has said, did not appear for the tenant in the court below.
It is not in
dispute that the original form of application made by the tenant in March 1985
was a valid application to the court for a new tenancy under Part II of the
1954 Act. It is said that it was only a valid application in respect of the
ground-floor shop premises and basement storage which are part only of the
premises at 32 Rosslyn Hill comprised in the tenant’s lease.
It is said —
and found favour with the judge in the court below — that any amendment to
include a further part of the property comprised in the lease in the
application for a new tenancy is tantamount to a fresh application under the
Act, which is made out of time. However, as Mr Morgan has pointed out to us,
under section 32 of the Act an order under section 29 of the Act for the grant
of a new tenancy is to be an order for the grant of a new tenancy for the
holding, and in the absence of agreement between the landlord and the tenant as
to what constitutes the holding, the court must designate that property in the
order.
In this case
there is no possibility of arriving at the view that there has been any
agreement or contract between the landlords and the tenant that the holding is
only constituted by the ground-floor shop and basement storage. On the facts it
is common ground that the holding as defined in section 23 (3) of the Act
includes the ground-floor shop and basement storage, the studio on the ground
floor at the rear of the shop and the first-floor flat which is occupied by the
tenant.
As was pointed
out by Winn LJ in Fernandez v Walding [1968] 2 QB 606 at p 616B,
it is only the holding in respect of which the court has jurisdiction to grant
a new tenancy. There is no jurisdiction to grant a new tenancy of part of the
holding, except in the circumstances not relevant to the present case, covered
by section 31 A(1)(a) and (b) of the Act. Therefore, when the application which
was launched in March 1985 comes on for trial, the court’s duty and power will
only be to grant a new tenancy for the holding as truly defined.
The amendment
which the tenant desires and which the registrar and the judge have refused is
thus one which correctly describes the holding to which the application must
necessarily relate, and to allow such an amendment is, in my judgment, well
within the reasoning of Stamp LJ in G Orlik (Meat Products) Ltd v Hastings
& Thanet Building Society, to which Glidewell J has referred.
I agree
entirely with the judgment of Glidewell J and I would allow the appeal
accordingly.
The appeal
was allowed and the order below set aside; the respondents’ application to
disallow the amendments was dismissed. The appellant was awarded costs in the
Court of Appeal (other than costs of application to adduce fresh evidence) and
the costs below.
