Leasehold Reform Act 1967 as amended by Housing Act 1974, section 118–Claim by tenant to acquire freehold–Whether house within rateable value limit of section 1(1)(a) of 1967 Act as extended by subsection (6) added by 1974 Act–Rateable value on April 1 1973 £1,272–Sole issue whether requirement of section 1(6)(c) satisfied–Was tenancy ‘created on or before’ February 18 1966?–Original long tenancy created in 1961 was surrendered by tenant in 1973 and a new long tenancy granted to her–Question as to application of section 3(3) of 1967 Act–Act to apply ‘as if’ there had been a single tenancy beginning at same time as earlier term–Semantic argument as to difference between ‘deemed’ and ‘as if’–Held that the effect of section 3(3) was to enable the tenancy to be treated as having been created in 1961–All conditions for acquisition of freehold satisfied–Appeal from deputy county court judge allowed
This was an
appeal from a decision of Deputy Judge Nicholson at West London County Court
refusing a declaration sought by Mrs Helena Mary Bates, tenant of a house at 22
Campden Grove, London W8, that she was entitled to acquire the freehold of the
house under the Leasehold Reform Act 1967 as amended. The respondents were
Peter Wardle Pierrepoint and Sam Mendel, the executors of Major William Pitt,
who had been the freehold owner of the house.
Nigel Hague
and David Mole (instructed by Iliffe & Edwards) appeared on behalf of the
appellant; J S Colyer QC and Jonathan Gaunt (instructed by Gregory, Rowcliffe
& Co) represented the respondents.
Giving
judgment, MEGAW LJ said: This is an appeal from the judgment of Deputy Judge
Nicholson delivered in the West London County Court on August 11 1977 on an
application by Mrs Helena Mary Bates. The respondents to that application are
Mr Peter Wardle Pierrepoint and Mr Sam Mendel: they are the executors of the
late Major William Pitt, who unfortunately died, as I understand it, while the
application was pending.
Mrs Bates was
and is the tenant of a house, 22 Campden Grove, London W8, of which house Major
Pitt was the freehold owner. The question which the deputy judge had to decide
was whether, on facts not in dispute, Mrs Bates was, as she claimed, entitled
to a declaration that she is entitled to acquire the freehold of the house,
under the provisions of the Leasehold Reform Act 1967 as amended by section 118
of the Housing Act 1974. The deputy judge held that she was not so entitled.
She appeals.
The facts are
agreed. It is common ground that, for the purposes of the Act, the plaintiff
(as I shall call her) had a long tenancy at a low rent–that is, less than
two-thirds of the rateable value, on the appropriate day. It is agreed that in
this case the appropriate day is March 23 1965. It is agreed that the plaintiff
had the necessary 5-years’ residential qualification at the relevant time: that
is when, on June 30 1975, she gave her notice of leaseholder’s claim, as it is
called. It was the rejection of that claim by the freehold owner, now
represented by the defendants, which has led to these proceedings. The
question, and the sole question, in issue is whether, by reason of the rateable
value of the house on April 1 1973 being £1,272, the plaintiff is precluded
from claiming under the Act.
The original
limiting rateable value outside which the Leasehold Reform Act did not apply to
a property was, in the Greater London area, £400. The amendments introduced by
the Housing Act 1974, increased that limit. That was done partly because of
inflation and the effect of the new rating valuation lists. So far as Greater
London was concerned, the £400 became £1,000. But the amending Act also created
a higher limit which applied in certain specified cases. For the Greater London
area that higher limit was £1,500. The issue in this case is whether, on the
true construction of the Act, applied to the admitted facts, it is the £1,000
or the £1,500 limit on rateable value which applies to the plaintiff’s case.
The relevant rateable value being £1,272, if it is the £1,000 limit the
plaintiff fails: she would not be entitled to buy the freehold compulsorily or
to obtain a compulsory extension of the term of the lease. If, on the other
hand, it is the £1,500 limit which applies, she is entitled to succeed in her
claim.
The facts can
be briefly summarised as they were put before us by Mr Hague for the plaintiff.
On April 7 1961 a lease of 22 Campden Grove was granted by Major Pitt, the
freehold owner, to a Mrs Ann Demetriades. She was the mother of the present plaintiff,
Mrs Bates. That lease was from March 25 1961 for the term of 27 3/4 years, with
a rent of £80. It was dated April 7 1961. It was, therefore, a long lease,
being over 21 years. The £80 was below two-thirds of the rateable value at the
relevant date. On March 23 1964 Mrs Demetriades died. Her executrix was the
plaintiff, Mrs Bates. Mrs Bates, with complete propriety, on November 10 1964,
made an assent in her own favour, the result of which was to vest the lease in
herself.
In 1973
negotiations took place between Major Pitt and Mrs Bates or their respective
representatives. As a result of those negotiations the lease dated April 7 1961
was surrendered by Mrs Bates, who was now the tenant under that lease. That was
immediately followed, as a part of the same agreement as involved the
surrender, by a new lease, which was again at a rent of £80; it was for 29 1/4
years, to run from September 29 1973. A premium was to be paid, and no doubt
was paid, by Mrs Bates to Major Pitt in the sum of £5,250. That new lease was
dated December 18 1973. So the original tenancy terminated on December 18 1973
and Mrs Bates immediately became entitled to the long tenancy involved in the
new lease.
On June 30
1975 Mrs Bates gave notice of her leaseholder’s claim; and that set in motion
the machinery which has resulted in these proceedings. The date of that notice
is for certain purposes the relevant time. For example, that is the relevant
date under which Mrs Bates must be able to show
tenancy.
As to the
relevant statutory provisions, since I take the view that there is no ambiguity
in those relevant provisions and that the answer to be given to the sole
question in this case, on the basis of those relevant provisions, is clear, I
do not, with very great respect both to the submissions of counsel for the
defendants and to the lengthy and very carefully prepared judgment of the
learned deputy judge, propose in this judgment either to read or to refer to more
of the statutory provisions than section 1 (1) (a), section 1 (6) and section 3
subsections (2) and (3), of the Act, and to state shortly what appears to me to
be the answer. I fear it is the opposite answer to that which was in the end
arrived at by the learned deputy judge after a much more elaborate discussion
of the statutory provisions and related matters than I find it necessary to
undertake in this judgment.
Section 1(1)
of the Leasehold Reform Act 1967, reads:
This Part of
this Act shall have effect to confer on a tenant of a leasehold house,
occupying the house as his residence, a right to acquire on fair terms the
freehold or an extended lease of the house and premises–where (a) his tenancy
is a long tenancy at a low rent and subject to subsections (5) and (6) below
the rateable value of the house and premises on the appropriate day is not (or
was not) more than £200 or, if it is in Greater London, than £400.
In that
subsection, the words ‘subject to subsections (5) and (6) below’ were added by
amendment by the Housing Act 1974.
Subsection (6)
of section 1 reads:
If, in
relation to any house and premises–(a) the appropriate day for the purposes of
subsection (1)(a) above falls before April 1 1973, and (b) the rateable value
of the house and premises on the appropriate day was more than £200 or, if it
was then in Greater London, £400, and (c) the tenancy was created on or before
February 18 1966, subsection (1)(a) above shall have effect in relation to the
house and premises as if for the reference to the appropriate day there were
substituted a reference to April 1 1973 and as if for the sums of £200 and £400
specified in that subsection there were substituted respectively the sums of
£750 and £1,500.
That
subsection was added by the 1974 Act.
It is not in
dispute that the plaintiff’s tenancy fulfils the conditions of paragraphs (a)
and (b) of subsection (6) which I have just read. The issue is whether her
tenancy satisfies the further condition laid down in paragraph (c)–‘the tenancy
was created on or before February 18 1966.’
Unless that condition is fulfilled for the purposes of the Act, then the
tenancy with which we are concerned is of a house of which the rateable value
is greater than £1,000 and the provisions of this subsection bringing in houses
below the rateable value of £1,500 would not apply.
Section 3 of
the Act (which is a part of the original Leasehold Reform Act 1967, not of any
subsequent amendment thereto) contains a definition, by subsection (1), of
‘long tenancy,’ which I need not read.
Subsection (2)
reads:
Where the
tenant of any property under a long tenancy at a low rent, on the coming to an
end of that tenancy, becomes or has become tenant of the property or part of it
under another tenancy (whether by express grant or by implication of law), then
the later tenancy shall be deemed for the purposes of this Part of this Act,
including any further application of this subsection, to be a long tenancy
irrespective of its terms.
The word in
that subsection on which great stress was laid by the learned deputy judge was
the word ‘deemed.’ Apart from that, that
subsection is not directly relevant to the case which we have to consider.
Subsection (3)
is the vital subsection.
Where the
tenant of any property under a long tenancy, on the coming to an end of that
tenancy, becomes or has become tenant of the property or part of it under
another long tenancy, then in relation to the property or that part of it this
Part of this Act shall apply as if there had been a single tenancy granted for
a term beginning at the same time as the term under the earlier tenancy and
expiring at the same time as the term under the later tenancy.
The tenancy
under which the plaintiff was actually holding, apart from the effect of that
statutory provision, was a tenancy made in the year 1973 and, therefore, would
not fulfil the condition of section 1(6)(c) that the tenancy was ‘created on or
before February 18 1966.’ But that
subsection, by what at any rate at first sight would appear to be its clear and
unambiguous meaning, provides that, in a case such as the present, where one
long tenancy has existed and has been surrendered, with a new tenancy following
directly upon it, and subject to other conditions which are unquestionably
fulfilled in this case, those two tenancies are, by virtue of this subsection,
to be treated for the purposes of Part I of the Act as a single tenancy. ‘This
Part of this Act’–that is, Part I of the Leasehold Reform Act 1967 as
amended–‘shall apply as if there had been a single tenancy.’ I see no possible ambiguity in those words.
The subsection goes on: ‘. . . granted for a term beginning at the same time as
the term under the earlier tenancy.’ The
earlier tenancy was granted in the year 1961. So this statutory, notional,
single tenancy has been granted for a term beginning in 1961.
At first
sight, since this Part of this Act is to apply as if those matters which are
set out there were the truth, and as subsection (6)(c) of section 1 is within
Part I of the Act, it would seem to be the inevitable consequence of the
statutory hypothesis that the date on which this statutory, notional, single
tenancy was granted was before February 18 1966. It was granted, as a result of
these ‘as if’ provisions, in 1961.
That, in
effect, is the simple submission which is put forward by Mr Hague for the
plaintiff in this court. He has supported it by various other reasons which he
has advanced which in the circumstances I do not find it necessary to recount,
though that is by no means to suggest that they are not of validity.
What, then, is
the answer offered to that apparently simple and clear meaning of the
words? Mr Colyer says that the answer
which he offers on behalf of the defendants differs, at least in emphasis, from
the way in which it was put by the learned deputy judge. Mr Colyer, as I
understand it, concedes that, if it had not been for the use of the word
‘deemed’ in subsection (2) of section 3, he would have been, at least, in great
difficulty in submitting that any meaning could be given to subsection (3)
other than the meaning which I have set out above as the natural, unambiguous,
meaning. That meaning would entitle the plaintiff to succeed by bringing the
tenancy within paragraph (c) of subsection (6) of section 1 as to the relevant
date of its creation. But, says Mr Colyer, the use of the phrase ‘shall apply
as if’ has got to be treated as involving, as he put it, a ‘different shade of
meaning,’ in what he called ‘this hypothetical world,’ from the meaning that
would have been given to the subsection if the word ‘deemed’ had been used
instead of the words ‘as if.’ In the
context, he says, ‘as if’ should be treated as producing a different meaning
from the meaning which would have been produced by ‘deemed,’ if ‘deemed’ had
been used in section 3(3). ‘Deemed’ is used in subsection (2): so, says Mr
Colyer, it is right to assume that the legislature, or the draftsman, or
whoever is the person to whom one looks for intention in these matters, must
have intended that there should be at any rate a different shade of meaning in
subsection (3) in relation to this statutory hypothesis by using the words ‘as
if’ instead of the word ‘deemed.’
The short
answer to that, as it appears to me, is that the reason why the words ‘as if’
were used in subsection (3) of section 3, instead of ‘deemed,’ is, not that
there is some difference in connotation, or that it involves some slightly
different shade of meaning, but simply that, because of the form in which the
contents of subsection (2) and subsection (3) respectively were expressed, it
was grammatically easier, more convenient, and clearer to use the words ‘as if’
than
there was any intention to convey a different shade of meaning.
Supposing,
however, that it is right to pay attention to the fact that the word ‘deemed’
has been used in the one case and the ‘as if’ formula in the other, I am afraid
I am unable to accept the submission which was founded upon that basis by Mr
Colyer. The way in which he put it (I hope I am stating it correctly) was this:
‘The shade of meaning’ (he said) ‘which I suggest is that the draftsman is
imposing only an assumption as to the continuance of the term’ (that is,
the term of the lease) ‘in contrast with assumptions as to the date of the commencement.
Section 3(3) is directed to the continuance of the tenancy. In the
hypothetical world which is created by the draftsman by the use of the ‘as if’
formula, it does not follow that, though the tenancy is to be treated as if it
began on a certain date, the concept of creation before that date
becomes a relevant concept so as to be governed by section 3(3).’ In other words, Mr Colyer is drawing
attention to the fact–as was indeed stressed by the deputy judge–that the word
used in paragraph (c) is ‘created.’ Mr
Colyer says that one has got to look at the phrase as a whole: ‘the tenancy was
created on or before February 18 1966.’
Contrast that with the wording of subsection (3), which says ‘shall
apply as if there had been a single tenancy granted for a term
beginning’–and so on; so that the word ‘granted’ is used in one case and
‘created’ in the other.
While it is
possible to conceive of a term which has been created without its having
been ‘granted’–as, for example, possibly, if a tenancy were to arise by
operation of law–it is impossible to conceive of a case where a tenancy has
been validly granted and yet a tenancy has not been ‘created.’
The learned
deputy judge found support for his view as to the meaning of the word ‘created’
in contrast with the word ‘granted’ by reference to passages in a judgment of
Stamp LJ in Roberts v Church Commissioners for England [1972] 1
QB 278. To my mind Mr Hague is right in the submission that the passage in
question in Stamp LJ’s judgment, so far from supporting the defendants’ case,
tends to support the plaintiff’s submission; and, further, in the same case, in
the judgment of Russell LJ, it is clear that he was expressing the view that
the words ‘granted’ and ‘created,’ at any rate, can be synonymous.
To my mind,
the effect of subsection (3) of section 3 of this Act, in relation to paragraph
(c) of subsection (6) of section 1, is clear. There is no ambiguity about it.
The result is that, contrary to the fact, by statutory fiction the tenancy in
this case has got to be treated as fulfilling the requirements of paragraph (c)
of subsection (6) of section 1, so that the tenancy is to be treated as having
been created on or before February 18 1966–namely, in 1961.
Accordingly
all the conditions are fulfilled to entitle the plaintiff to succeed in this
case; and I would allow the appeal.
CUMMING-BRUCE
LJ and SIR BASIL NIELD agreed.
The appeal was allowed. The court made a declaration
that the appellant was entitled to acquire the freehold of the house and
premises known as 22 Campden Grove, London W8, pursuant to Part I of the
Leasehold Reform Act 1967 as amended. The appellant was awarded the costs in
the Court of Appeal and costs in the court below on Scale 4 with a certificate
under Order 47 Rule 21(2). Leave to appeal to the House of Lords was refused.