Leasehold Reform Act 1967–Claim to acquire freehold–99-year lease of shop with living accommodation above–Shop part made self-contained during tenancy–Term ended in 1973 but for many years previously shop part had been sublet and not used by tenant–Rent accepted on behalf of lessor for two years after expiry of term–Joint effect of leasehold Reform Act 1967 and Part I of Landlord and Tenant Act 1954–Whether long tenancy continued as to whole premises, including both shop part and living accommodation, after expiry of term–If not, living accommodation alone not a ‘house’ within 1967 Act–Finding of intention to abandon occupation of shop–Acceptance of rent after expiry of term not in the circumstances evidence of intention by landlord to create new tenancy–Claim to acquire freehold fails
This was an
appeal from an order made on May 5 1977 at Shoreditch County Court by His
Honour Deputy Judge Hunter, to the effect that the appellant, Mrs Esther Ethel
Baron, was not entitled to have conveyed to her the freehold in premises at 8
Abney Park Terrace, Stoke Newington, London N16. The building consisted of a
shop downstairs with living accommodation above, which originally was served by
one entrance. Later, a hallway was constructed in order to provide two separate
entrances, so that the two parts of the premises were separate and
self-contained, save that on the ground floor there remained a meter and
stopcock which served the upstairs living accommodation.
The appellant
advanced the two contentions: (1) that at the material time, after the
expiration of a long lease in 1973, she was, under Part I of the Landlord and
Tenant Act 1954, a tenant of the whole building; (2) that by accepting rent
after the expiry date, and by serving a section 146 notice, the landlord by
operation of law in effect granted a new tenancy of the whole of the premises.
J S Colyer QC
and Paul de la Piquerie (instructed by Leonard Kasler & Co) appeared on
behalf of the appellant; Edwin Prince (instructed by Felton & May, of West Drayton)
represented the respondent.
Giving the
first judgment at the invitation of Stamp LJ, GEOFFREY LANE J said that on
April 7 1876, a 99-year lease on the premises was executed for a term
commencing on March 25 1874 and expiring on March 25 1973. Some time before
1973 the reversion vested in the respondent. In 1931 the term vested in a Mrs
Clara Baronovitch (the premises then being undivided) and her husband ran a
hardware shop on the ground floor. In about 1944 he closed that shop and no
business was carried on by him or any member of his family in the downstairs
premises for the remainder of the term. In 1950 Clara died, and the leasehold
title vested in her husband, who was by then known as Mr Baron. The appellant
was Mr Baron’s second wife, having married him, his lordship thought, in June
1952.
In 1956
alterations were made to the ground floor to provide separate entrances to the
ground floor and the upstairs living accommodation. A stopcock and meter on the
ground floor continued to serve the upstairs accommodation, but apart from
these necessary exclusions the separation between the two parts of the premises
was complete.
In 1956 Mr
Baron granted a sublease of the ground-floor shop premises to a Mr Hyams for 14
years, with an option to renew for a further seven years. In fact the option
was not exercised, and, after some holding over, the agreement was terminated
on March 24 1972. There was then a period of short tenancies of the shop,
extending until after the expiry of the long term on March 25 1973. Neither of
the Barons took the premises back in the sense of carrying on business there,
and Mr Baron died on November 17 1974. Thereafter Mrs Baron continued to live
upstairs, and continued to pay full ground rent for two years.
The agreed
facts in regard to the second aspect of the case, the effect of the payment and
acceptance of rent after the expiry of the long term and the service of a
notice under section 146 of the Law of Property Act 1925, were as follows. On
January 14 1974, Mrs Baron paid £10.50 to the landlord (then a partnership of
three gentlemen, one being the respondent). That payment was for rent due from
March 25 to December 25 1973. On May 5 1975, a second payment was made of
£17.50, representing five quarters’ rent from December 25 1973 to March 25
1975. Mrs Baron took the money to the offices of the managing agents, and paid
it in over the counter (as she had always done) to a junior clerk. It was not
returned. On July 29 1976, the landlord served a notice under section 146 of
the Law of Property Act 1925 on Mrs Baron requiring her to remedy alleged
breaches of covenant to repair the premises, including the ground-floor shop
premises.
There were
before the deputy county court judge three main issues:
(1) Was the building a ‘house’ within the 1967
Act? He held that it was, and, as there
was no cross-appeal on that aspect, it did not fall to be debated here.
(2) Did the provisions of Part I of the 1954 Act
operate so as to continue the tenancy of the whole building, groundfloor shop
and upstairs living accommodation?
(3) By accepting rent from the appellant in the
manner described after the term date, and by serving the section 146 notice,
did the landlord, by operation of law, in effect grant a new tenancy of the
whole of the premises to the tenant?
The appellant
had to show that, at the date of her notice under the 1967 Act (August 23 1976)
she was a tenant of the house on a long lease as defined in section 3 of that
Act. In order to show that she was notionally the tenant of a ‘house’ at the
time of the notice of claim, which was a considerable time after the expiry of
the original term, she had to rely on section 3(5), which brought into play
Part I of the Landlord and Tenant Act 1954. That subsection provided that the
long tenancy included any period during which the tenancy was continued under
Part I of the 1954 Act.
There was a
snag from her point of view. The leasehold interest was continued only so far
as concerned ‘the premises qualifying for protection.’ If one read section 3(3) of the Landlord and
Tenant Act 1954, which was the material part, one found that one had to look at
the situation as it existed at the term date (March 25 1973) to see whether the
whole or only part of the premises would be the subject of a statutory tenancy
under the Rent Acts if this had been a protected tenancy. The appellant had to
rely on the 1954 Act in order to get her claim on its feet. But section 3 of
that Act seemed to make it abundantly clear that the situation might arise at
the end of a long lease that the tenant was entitled to Rent Act protection for
only part of the premises. Section 3(3) seemed peculiarly apt to cover the
precise circumstances in the present case. It read:
In this Part
of this Act the expression ‘the premises qualifying for protection’ means the
aggregate of the premises of which, if the tenancy in question were not one at
a low rent, the tenant would be entitled to retain possession by virtue of the
[Rent Act] after the coming to an end of the tenancy at the term date.
Thus one had
to find out what the Rent Act position would have been on the term date, on
March 25 1973. Was the then tenant the statutory tenant of the whole, or only
the upstairs part, of the property? Mr
Baron was then still alive, and it was conceded that, whatever his rights were,
they devolved upon Mrs Baron. Nor was it disputed that, if the tenant only had
protection for the upper floor and none in respect of the ground-floor shop,
the upper floor alone could not constitute a ‘house’ within the meaning of the
1967 Act.
The appellant
contended that, at the material date, she and her husband intended to resume
occupation of the ground floor and set up a business there as and when an
opportunity to do so arose. The landlord, on the other hand, contended that the
tenant was not then in physical occupation of the ground floor at all, because
it was sublet to a short-term tenant, and that the tenant had abandoned any
idea of possession or occupancy of the ground-floor shop at all. If a statutory
tenant abandoned or relinquished his occupation without any true intention of
returning, he lost his protection. The mere fact of subletting part of the
building did not of itself prove such relinquishment or abandonment, though it
might be evidence of it if it were accompanied by no intention to reoccupy.
The county
court judge in the present case had reached the same conclusion (although, of
course, only as to the shop part of the premises) as did the county court judge
in Skinner v Geary [1931] 2 KB 546 as to the tenant’s intention
to return, and his Lordship considered particularly apt the remarks of Slesser
LJ:
In this case
the county court judge has found as a fact that the appellant Geary is not in
actual occupation, that those who were in actual occupation were not there to
preserve the house as a residence for him, and that he did not intend to return
to the house in order to occupy it. On those findings the county court judge
was right in making the order which he did.
In Crowhurst
v Maidment [1953] 1 QB 23 it was held that the plaintiff was entitled to
an order for possession against a tenant who occupied the ground floor only,
having sublet the two upper floors as separate residences, and that this was so
although the two floors were not divided, the order being made without any
prejudice to the subtenants. It was there conceded that the defendant never at
any material time had occupied the two upper floors or any part of them, and
never had any intention of occupying any part of them. That case was
distinguished in Berkeley v Papadoyannis [1954] 2 QB 149, where
the tenant had at various times occupied the material part of the premises and
might do so in the future. Whether one looked at either of those cases, or at Tickner
v Hearn [1960] 1 WLR 1406, in the end the problem was this: on the
balance of probability, was it shown that the tenant had evinced an intention
to abandon his occupation of part of the premises? Or, here: had the tenant evinced an intention
to abandon the shop on the ground floor?
The above
cases served to demonstrate that it was necessary to look at all the
circumstances of the case. It seemed that in 1956, certainly, to put it at its
very lowest, the Barons had evinced an intention never to occupy that
ground-floor shop during the remainder of the currency of the long lease. That
being the case, it seemed that the judge was entitled to ask himself whether
that clear intention had ever been reversed thereafter. He said ‘No’ and his
Lordship agreed. By the time notice terminating Mr Hyams’ subtenancy was given
on December 7 1971, expiring in March 1972, Mr Baron was gravely ill, and any
hope of starting a business on the ground floor was no more than a pipe-dream.
There was no true intention to resile from what seemed to have been a plain
abandonment of occupation. There was ample evidence to justify the judge’s
finding that there was no firm intention to resume occupation of the shop part
of the premises.
As to the
second leg of the argument–that the landlord, by accepting money proffered as
rent by the tenant, granted, by operation of law, a new tenancy of the whole
premises–the principles were set out in Woodfall’s Landlord and Tenant
(27th ed) vol 1 at p 271, paragraph 653:
The question
is, quo animo the rent was received, and what the real intention of both
parties was. It is thought that the tendency of the courts nowadays is to
require rather more solid evidence of an intention to create a further tenancy
than was at one time the case. . . . The landlord may show that he accepted
rent from time to time under a mistake or in the knowledge that the tenant had
an existing or statutory right to remain. . . .
Sector
Properties Ltd v Meah (1974) 229 ESTATES
GAZETTE 1097, indicated that a judge was entitled to hear express evidence from
a landlord as to the animus with which he did receive rent. Mr Colyer
conceded this, but submitted that the judge in the present case paid too much attention
to such evidence and not enough to the non-speaking evidence of the landlord’s
intention. However, it was open to the judge, if he saw fit to accept the
landlord’s evidence, and to act upon it, as he did.
His Lordship
would dismiss the appeal.
ORR and STAMP
LJJ agreed.
The appeal
was dismissed. An order for costs was made, but the appellant’s liability was
assessed at nil. It was also ordered that the Law Society pay the appellant’s
costs unless it applied for the order to be stayed. An order was made for legal
aid taxation.
