Landlord and Tenant Act 1954, section 24A — Whether county court had jurisdiction under section 24A to determine an interim rent notwithstanding that after the application under section 24A, but before the hearing of the application, the landlords had assigned the reversion — Both the original landlords and the assignees of the reversion were before the county court and the Court of Appeal — Held that the county court judge was correct in deciding that he had jurisdiction to make the order — The tenancy continues and the rent continues to be payable after the assignment — The order made by the county court judge was not a money order payable by a party but an order for the determination of rent payable under the tenancy — It was immaterial whether rights to the interim rent had been specifically assigned or not — The assignors had a duty to the assignees of the reversion to safeguard the latter’s interests — Appeal from county court judge’s order dismissed
This was an
appeal by the tenant of business premises, Mr Leonard Joseph Bloomfield,
solicitor, from part of a decision by Judge Macnair at West London County Court
in proceedings brought by the tenant for a new tenancy of premises at 28 Old
Brompton Road, Kensington, London SW7. The order against which the tenant
appealed was an order for payment of an interim rent under section 24A of the
1954 Act. The landlords who had applied for an interim rent, Ashwright Ltd, had
assigned their reversion to Shelgate Property Co Ltd before the hearing of that
application. Shelgate Property Ltd were added as a party before the hearing.
C P F Rimer
(instructed by Lawrence Bloomfield & Co) appeared on behalf of the
appellant; Robert G Lamb (instructed by Michael Freeman & Co) represented
the respondents.
Giving
judgment, LAWTON LJ said: This is an appeal by a tenant of business premises, a
Mr Leonard Joseph Bloomfield, against part of the judgment of His Honour Judge
Macnair, given in the West London County Court on February 19 1982, whereby he
adjudged that Mr Bloomfield was liable to pay an interim rent of the premises
of which he was the tenant at the rate of £2,340 per annum. The appeal raises a
novel point. There seems to be no previous case, certainly in this court,
dealing with it. The main point in this appeal can be stated in these terms. Mr
Bloomfield, by his counsel, has submitted that, when a landlord makes an
application pursuant to section 24A of the Landlord and Tenant Act 1954 for the
determination of an interim rent, and before the determination is made he
assigns his reversion to another, the county court loses its jurisdiction to
make a determination, and for this reason. As from the date of assignment the
landlord who has applied no longer has any interest in the application and the
landlord to whom the reversion has been assigned is not properly before the
court and therefore is not entitled to be the beneficiary of any order made on
an application by the original landlord.
The facts out
of which the appeal arises are lengthy but can be summarised for the purposes
of this judgment fairly shortly. By a lease dated February 11 1957 Mr
Bloomfield acquired from the Alliance Economic Investment Co Ltd a lease of the
four upper floors of 28 Old Brompton Road, Kensington. His lease was for a term
of 21 years from February 25 1957 at a rent of £600 per annum. The lease
provided that he should use the premises as a dwelling-house and partly for the
purposes of his practice as a solicitor.
Some time in
September 1973 the reversion to that lease was acquired by Ashwright Ltd, who
then became Mr Bloomfield’s landlords. On March 13 1978 Ashwright Ltd gave
notice under section 25 of the Landlord and Tenant Act 1954 to Mr Bloomfield
specifying that September 14 1978 was the date of termination of his tenancy
and stating that they would oppose the grant of a new tenancy on the ground set
forth in section 30(1)(g) of the 1954 Act, namely, that on termination of the
tenancy they intended to occupy the holding for the purposes, or partly for the
purposes, of a business to be carried on by them therein. On May 4 1978 Mr
Bloomfield gave notice to Ashwright Ltd that he was not willing to give up
possession of the premises. On July 7 1978 he applied to the West London County
Court for a new tenancy. There were the usual pleadings in this class of
dispute. Litigation began. It was long-drawn-out, largely because there were
two distinct issues. The first was whether Ashwright Ltd were entitled to rely
on section 30(1)(g). That issue, for various reasons into which it is unnecessary
to go, had to be dealt with on a number of occasions. In the end it was decided
by the county court judge, His Honour Judge Corcoran, that they were not so
entitled. The next stage of the proceedings, which was also for some reason
drawn out over many months, was whether Mr Bloomfield should have a new lease
and on what terms. That issue was not finally determined until February 19
1982. A new lease being granted, its terms had to be settled. We understood
from counsel that the new lease did not start to run until some time in the
late spring or the early summer of 1982. All the time from 1978 until February
19 1982 Mr Bloomfield had been under a legal obligation to continue paying rent
at the rate of £600 per annum, which was the rent fixed in 1957. No doubt he
considered himself a lucky man. Equally it seems likely that Ashwright Ltd
considered themselves unlucky and they decided to take advantage of the
provisions of section 24A of the Landlord and Tenant Act 1954.
That section
was introduced into the Landlord and Tenant Act 1954 by the Law of Property Act
1969. There were probably two reasons for its introduction. First, experience
between 1954 and 1969 had shown that some tenants who anticipated a rise in
their rent following the grant of a new lease had delayed the day of judgment.
The second reason was that by 1969 inflation was beginning to rear its head in
the United Kingdom. Those who were wise for some years before 1969, when
granting leases, introduced into them rent review clauses. Mr Bloomfield’s
first landlords had not had the foresight to do anything of that kind. So on
the face of it there was reason for Ashwright Ltd to apply under section 24A
for the determination of an interim rent. It is accepted in this appeal by Mr
Bloomfield’s counsel that they were so entitled and that they took the
appropriate steps to obtain a determination of an interim rent. Inevitably the
determination could not take place on the day when they made their application
or indeed shortly after they had made it. Parliament in 1969 should, in my
judgment, be taken to have appreciated that there were likely to be delays
between the issuing of an application for the determination of an interim rent
and the order making the determination. I am also of the opinion that
Parliament would have appreciated in 1969 that between the making of an
application and determination of an interim rent there might be a transfer of
the reversion. It might come about by insolvency, liquidation in the case of a
company, death, settlement or sale. All those kinds of transaction are common
and the statutory provision would obviously have to be construed against the
background of business life. The 1954 Act deals with business premises.
What happened,
however, which complicates this story, was this: some time in or about August
1981 Ashwright Ltd assigned their reversion to the lease to a company called
Shelgate Property Co Ltd. The assignment was never produced to the West London
County Court. As a result Mr Bloomfield was never apprised of what was in it,
nor was the county court judge, nor have we been. We do not know anything about
its terms. It is likely to have been an assignment for value, but it would, in
my judgment, be wrong to make any inference as to whether it provided for any assignment
of such rights as Ashwright Ltd had to an award of interim rent.
After the
assignment had been executed, on August 27 1981 Shelgate Property Co Ltd gave
notice to Mr Bloomfield under what purported to be the provisions of Order 40,
rule 18, of the County
to the proceedings started by Ashwright Ltd upon their undertaking to be bound
by the order dated July 17 1980 as reamended upon July 29 1980 in so far as the
said order provided for a new tenancy of the premises to be granted to the
applicant. It also went on to ask that Ashwright Ltd be discharged from the
proceedings. The registrar was not willing for Ashwright Ltd to be so
discharged and he refused to make the order. No doubt he had in mind, when
refusing to allow Ashwright Ltd to be discharged, that they had already
incurred a potential liability for costs to Mr Bloomfield. Whatever may have
been his reasons for refusing to allow Ashwright Ltd to be discharged, the fact
remains that they were not discharged and they continued to be before the court
on their own application for the determination of an interim rent. The
registrar did, however, allow Shelgate Property Co Ltd to be added. So the
position was that, after the making of the registrar’s order, which was dated
September 11 1981, there was before the court the landlord who had made the
application and the party who, as from the date of the assignment, had become
Mr Bloomfield’s landlords: the pair of them were both there.
The hearing
was in February 1982. Mr Rimer appeared on behalf of Mr Bloomfield. Mr Lamb
appeared on behalf of both Ashwright Ltd and Shelgate Property Co Ltd and he
was instructed by one solicitor acting for both companies. Mr Rimer, as soon as
he had an opportunity, invited Judge Macnair’s attention to the fact that it
was part of his submission that the judge had no jurisdiction to determine the
rent of 28 Old Brompton Road, because of the assignment of the reversion by
Ashwright Ltd to Shelgate Property Co Ltd. The learned judge rejected the
arguments which Mr Rimer put before him and made an order in favour of the
respondents — and I deliberately phrase my judgment in that way. It is dated
February 19 1982 and, for some reason which is immaterial for the purposes of
this judgment, was amended on May 5 1982.
It is
necessary now to look at the form of his order. It was in two parts. The first
I will describe as the body of the order. The second I will describe as the
schedule. The first part provided that a new lease should be granted to the
applicant for a period and at the rent and on the terms set forth in the
schedule. The schedule identified the property as 28 Old Brompton Road, London
SW7. The term was fixed at seven years and the lease was to be granted by
Shelgate Property Co Ltd. Another paragraph in the schedule provided that the
rent under the new lease should be £3,600 per annum. Then the schedule went on
in these terms:
It is further
ordered that pursuant to section 24A of the Landlord and Tenant Act 1954 the
interim rent of the aforementioned premises be determined at £2,340 per annum.
It is to be
noticed that the order fixed the rent. It was not an order for the payment of
money. Still less was it an order for the payment of money to any particular
person. It was almost certainly in that form because it seems to have followed
the words of the statute, to which I now turn.
Section 24A
comes in the second Part of the Landlord and Tenant Act 1954. Section 23 sets
out the tenancies to which that Part applies. It is accepted that Mr
Bloomfield’s lease was a lease of business premises to which the Act applies.
Section 24(1) is in these terms:
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 29 of this Act, the tenant under such a tenancy may apply
to the court for a new tenancy.
Then comes
section 24A. The side note reads as follows: ‘Rent while tenancy continues by
virtue of section 24.’ Subsection (1) is
as follows:
The landlord
of a tenancy to which this Part of this Act applies may, — (a) if he 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 26 of
this Act; apply to the court to determine a rent which it would be reasonable
for the tenant to pay while the tenancy continues by virtue of section 24 of
this Act, and the court may determine a rent accordingly.
The
jurisdiction is to determine a rent which it would be reasonable for the tenant
to pay while the tenancy continues. The rent so determined by the court applies
to the tenancy as long as the tenancy continues. In the circumstances of this
case the tenancy continued up to February 19 1982 and indeed would go on
continuing until the term created by the new lease started, which was in the
late spring or early summer of 1982. Subsection (2) is as follows:
A rent
determined in proceedings under this section shall be deemed to be the rent
payable under the tenancy from the date on which the proceedings were commenced
or the date specified in the landlord’s notice or the tenant’s request,
whichever is the later.
Once again it
is the rent which is attached to the tenancy which is to be determined and it
is to be a rent payable from the date on which the proceedings were commenced
or the date specified in the landlord’s notice or the tenant’s request. It
seems to me that the whole purpose of section 24A is to fix a rent for the
premises.
The ownership
of the reversion to the premises may pass from one person to another for
various reasons, but when there is such a transfer the tenancy goes on and the
rent which is payable in respect of the tenancy continues to be payable. The
court is concerned with determining that which is to be paid for the tenancy.
When Ashwright Ltd made their application for the determination of an interim
rent they were undoubtedly entitled to do so. We do not know whether they
specifically assigned any rights they may have had to an interim rent to
Shelgate Property Co Ltd. It seems to me it matters not, because when they did
assign their reversion to Shelgate Property Co Ltd they had a duty to the
reversioner to safeguard his interest. They had started the proceedings. The
proceedings were for the benefit of the reversion, although, as Mr Rimer
pointed out, the benefit was not specifically transferred to the new
reversioner under the provisions of section 141 of the Law of Property Act
1925. Nevertheless, Ashwright Ltd were, in my judgment, in good conscience,
bound to do what they could for their assignee. In the circumstances of this
case, albeit by good luck rather than planning, they did remain in the
litigation so as to be a party to it on the date when the judge came to
determine the interim rent. So it is not a situation such as Mr Rimer outlined
in the course of his submission, that from the date of their assignment they
had no interest whatsoever in the proceedings which were then under way. It is
also clear that Shelgate Property Co Ltd were before the court in a position to
get the benefit of any order which the judge might make on Ashwright Ltd’s
application. So the pair of them were before the court and every aspect of the
matter was covered by their presence. It is also pertinent to repeat what I
have already said, that the county court judge did not make a money order at
all. He merely determined the rent payable in respect of the tenancy. If
Ashwright Ltd and Shelgate Property Co Ltd could not agree as to who was to
receive the benefit of the order made by the judge, that was a matter for them
to litigate among themselves. It was not a matter for the county court’s
jurisdiction under section 24A of the 1954 Act.
In those
circumstances, it seems to me that the court did have jurisdiction to determine
the rent notwithstanding the assignment to which I have already referred.
Mr Rimer took
another point before the county court judge and repeated it before this court.
He pointed out that the opening words of section 24A are ‘The landlord of a
tenancy to which this Part of this Act applies may’, etc. His submission was,
and no doubt it was well founded, that the judge has a discretion to order an
interim rent. There may be circumstances when it would be unjust to make a
tenant pay an interim rent. I find it myself difficult to imagine such
circumstances, but no doubt others with a more fertile imagination that I have
can do so. Mr Rimer’s submission was that the learned judge in this case
misdirected himself by failing to take into account that Shelgate Property Co
Ltd had shown no particular reason why, as the ultimate recipients of the
interim rent, they should get any benefit at all. That seems to me to be a
wholly irrelevant consideration. Whether or not a particular landlord is rich
or poor, flush with money or nearly impoverished is irrelevant. What is relevant
is this: a tenant who has had the
benefit of a low rent for a long period after the determination of his
contractual tenancy and who wants and gets a new lease at a much higher rent
should pay a reasonable rent for the period between the end of his contractual
tenancy and the beginning of his new tenancy. That is the way I think Judge
Macnair approached his task in this case.
For my part I
can see nothing whatsoever wrong with the way in which he exercised such
discretion as he had.
I would
dismiss this appeal.
DILLON LJ
agreed and had nothing to add.
The appeal
was dismissed with costs.
