Section 32 of Housing Act 1961 — Liability to keep installations in dwelling-house in repair and proper working order — Construction of section 33(5) — Agreement for lease preceding execution of lease — Whether a lease for a term of less than seven years or a lease for seven years — Definition of ‘lease’ as including ‘an agreement for a lease’ — If the length of the term was properly calculated from the date of the agreement for the lease, it was a lease for seven years; if from the date of execution of the formal lease, it was a lease for less than seven years — Held that in the present case, where the terms had been agreed and there had been part performance by entry into possession, the length should be taken from the date of the agreement — An agreement for a lease for a term of seven years or more is not caught by section 32, provided that the term begins on or after the date of the agreement, whether or not it is followed by a formal lease — Although the result of this, if it had stood alone, would have relieved the landlords from liability under section 32 of the 1961 Act, they were estopped from denying liability under that section through having accepted fair rent registrations and demanded rents on the basis of assuming such liability — Landlords could take steps to have the fair rent corrected to reflect the true position in regard to repairs — Tenant’s appeal allowed on estoppel point
This was an
appeal by David Seaford, tenant of a flat, 72 Herga Court, Sudbury Hill,
Harrow, from a decision of Judge Honig at Willesden County Court in an action
by the landlords, Brikom Investments Ltd, for possession and arrears of rent.
The landlords claimed arrears of rent calculated on the basis that they were
subject to the repairing liabilities under section 32 of the Housing Act 1961,
but at the same time claimed that they were not liable under that section. The
judge decided in favour of the landlords on the section 32 point, but did not
deal with the estoppel point.
I E Jacob
(instructed by J E Kennedy & Co, of Harrow) appeared on behalf of the
appellant; N B Primost (instructed by A E Hamlin & Co) represented the
respondents.
Giving the
judgment of the court, ORMROD LJ said: This appeal concerns the liability, as
between the appellant tenant and the respondent landlords, for certain internal
repairs, as defined in section 32(1)(b) of the Housing Act 1961 in respect of
Flat 72, Herga Court, Sudbury Hill, a block of flats owned by the respondents,
Brikom Investments Ltd.
The appellant
puts his case in two alternative ways. First, he relies upon section 32 of the
Housing Act 1961 under which there is to be implied into any lease to which the
section applies a covenant by the landlord, inter alia, to keep certain
installations in the dwelling-house for the supply of water, gas, electricity,
etc in repair and working order, notwithstanding a covenant by the tenant in
the lease to the contrary. Alternatively he says that the landlord, in the
events which have happened, is estopped from disputing his liability for the repairs
referred to in the defence and counterclaim.
The first
point, which raises a difficult question of constructions of sections 32 and 33
of the 1961 Act, was decided against him by his Honour Judge Honig, sitting at
Willesden County Court, on June 27 1980. The second point was not specifically
dealt with by the learned judge.
By section
33(1) of the 1961 Act section 32 applies, subject to the provisions of the
section, to
any lease of
a dwelling-house granted after the passing of this Act, being a lease for a
term of less than seven years.
So the question
is whether the appellant had a lease for less then seven years or for seven
years. He contends that his lease was for less than seven years; the landlords
contend that the lease was for seven years.
The dates in
the case are, therefore, important. It is common ground that this flat was
vacant in October 1969 and that the landlords’ letting agents, Stackpole &
Co, introduced the appellant to the flat in that month. He was shown a specimen
lease for a term of seven years, which was the standard form used by the
respondents. He decided to take the flat on the proposed terms. His references
had to be approved by the managing agents, Waite & Sons, on behalf of the
landlords, who approved them in due course, and, on November 1 1969, he was
allowed into possession and paid in advance a proportion of the quarterly rent
in respect of the period November 1 1969 to December 25 1969. He also signed
the counterpart of the lease on that day. The landlords did not immediately
execute the lease and it is not known precisely when they did so, but the lease
itself bears the date November 12 1969. It was sent by post to the tenant, who
received it on November 15 1969. The evidence was that the date on the lease
was filled in by the landlords’ solicitors but that it was ‘somewhat
fortuitous’, depending upon the conveyancing clerk’s arrangements for stamping.
The habendum
of the lease provides that the tenant is to hold the premises from November 1
1969 for a term of seven years at an annual rent of £385 payable by equal
quarterly instalments, but it is clear that the lease was not executed by the
landlords until some days after November 1 1969, and not delivered until
November 15 1969. So, once again, the problem arises of determining, for the
purposes of a statutory definition, the length of the term of a lease.
It has been
held in many cases, of which Earl of Cadogan v Guinness [1936] 1
Ch 515, Roberts v Church Commissioners for England [1972] 1 QB
278 and Bradshaw v Pawley [1980] 1 WLR 10, are examples (arising,
however, in connection with different statutes) that a term, defined in a deed
as beginning from a date prior to the delivery of the deed, say for 10 years
from such a date, is not a term of 10 years. It is a shorter term beginning
from the date of delivery of the deed and ending 10 years from the earlier date
specified in the lease (see per Clauson J, as he then was, in Earl of
Cadogan v Guinness at p 518), or, as Stamp LJ put it in Roberts
v Church Commissioners at p 285:
It is well
settled that the habendum in a lease only marks the duration of the tenant’s
interest, and that the operation of the lease as a grant takes effect only from
the time of its delivery.
Mr Jacob, for
the tenant in this case, accordingly submits that, although the habendum refers
to a term of seven years from November 1 1969, the actual term created by the
lease is two weeks short of seven years and is, accordingly, a lease for a term
of less than seven years and, therefore, falls within section 32.
The question
to be decided, however, is what does this phrase ‘being a lease for a term of
less than seven years’ mean in the context of section 33. Mr Primost, for the
landlords, drew attention to the subsection (5), which reads:
(5) In the application of this section to a lease
granted for a term part of which falls before the grant, that part shall be
left out of account and the lease shall be treated as a lease for a term
commencing with the grant.
He submitted
that if subsection (1) is construed in accordance with the principle laid down
in the cases cited subsection (5) is wholly unnecessary because in any event
the term cannot start before the grant. So he says section 33(1) must refer to
the term as described in the habendum, namely, seven years from November 1
1969; the term in the present case is therefore not a term of less than seven
years. This submission, however, does not help him because if he is right such
a lease is caught later by the same subsection (5); the part falling before the
grant must be left out of account, and the term computed from the date of the
grant. So, he is back to square one!
This is
obviously an unsatisfactory conclusion. It is difficult to believe that
Parliament intended that the application of section 32, which seriously affects
the rights of landlords and tenants, should depend on something so essentially
fortuitous as the date of the delivery of the lease. Fortunately, there is
another way of approaching the problem which the learned judge in the court
below in substance adopted.
This Act
(unlike the Acts with which this court was concerned in other cases) contains a
definition section which defines the word ‘lease’ in relatively broad terms.
Section 32(5) provides that ‘lease’ includes, inter alia, ‘an agreement
for a lease . . . and any other tenancy’, and the word ‘term’ is to be
construed accordingly.
In the present
case there was, undoubtedly, an agreement for a lease of seven years beginning
on November 1 1969, made by the parties on or before that date, because by that
time the terms of the lease as set out in the specimen lease or in the
counterpart had been agreed and there had been part-performance by entry into
possession and payment and acceptance of rent.
In Roberts
v Church Commissioners there was, as Russell LJ emphasised, no agreement
for a lease of the length required to satisfy the terms of section 3(1) of the
Leasehold Reform Act 1967, namely a tenancy for a term of years certain
exceeding 21 years. ‘Tenancy’ in that Act means a ‘tenancy in law or equity’
(section 37(1)). At p 284 of his judgment Russell LJ suggested a test which the
tenant must pass to fulfill that definition, namely, that he
must at some
point of time be, or have been, in a position to say that, subject to options
to determine, rights of re-entry and so forth, he is entitled to remain tenant
for the next 21 years, whether in law or equity.
The tenant in
the present case is in a position to fulfill that test, substituting seven years,
which is the relevant period under the 1961 Act. So if this is the right
approach to the 1961 Act, as we think it is, we are entitled to hold that for
the purposes of section 33(1) there was an agreement for a lease, and therefore
a lease as defined, for a term which was not less than seven years.
But the
landlords have still to get over section 33(5), the language of which is not
very apt to agreements for a lease unless the words ‘granted’ and ‘grant’ are
to be read as equivalent to ‘made’. If this is permissible the subsection will
still be effective to prevent the mischief at which it was presumably directed,
that is, to prevent a landlord granting or agreeing to grant a lease for less
than seven years and back-dating the term so as to make it seven years from
some anterior date. We do not think that such a construction does undue
violence to the language of these sections read as a whole.
If this goes
beyond the limits of construction, we think the same result follows from the
application of section 33(3), which deals with consecutive leases. The tenant
in this case was a person who immediately before the lease was granted — that
is, delivered — was the lessee under another lease, ie under the agreement for
the lease which for the purpose of these provisions is to be regarded as a
lease. So he is within subsection (3)(a). The other lease — that is, the
agreement for the lease — was not a lease to which section 32 applies because
it was for not less than seven years; so subsection (3)(ii) is satisfied and,
accordingly, section 32 does not apply.
In our
judgment, therefore, an agreement for a lease for a term of seven years is not
caught by section 32, provided that the term begins on or after the date of the
agreement, whether or not it is followed by a formal lease. Accordingly we
would hold, in agreement with the learned judge in the court below, that
section 32 does not apply to the lease in the present case, and that the
liability for internal repairs is governed by the terms of the original lease.
That, however, does not dispose of this appeal, because if the appellant is
right on the estoppel point he will still be entitled to succeed in this
action.
The alleged
estoppel arises in a curious way. In 1975 the landlords applied, under the
terms of the Rent Act 1968, to the rent officer to register the rent of this
flat. The application itself has not survived but, on September 23 1975, the
rent officer determined the rent at the sum of £555 exclusive of rates with
effect from May 16 1975 and duly registered it. In the notification of
registration of rent the rent officer set out very clearly the basis of his
determination. Under the heading ‘Allocation of liability for repairs’ he
referred to the lease and added the words ‘and subject to the provisions of sections
32 and 33 of the Housing Act 1961’, plainly indicating that his assessment of
the rent was made on the basis that the landlords were liable for the repairs
specified in section 32(1)(b) and that the tenant’s covenant in the lease did
not apply to such repairs. This, of course, resulted in the registration of a
higher rent than would have been the case if the liability had been on the
tenant.
The landlords
did not object and thereafter demanded and received rent at the enhanced rate.
In June 1977 the landlords applied again for the registration of a fair rent.
After a full hearing, at which the landlords’ representative and several
tenants gave evidence, the rent assessment committee, on January 30 1978,
determined the fair rent of this and other flats in Herga Court. In the case of
Flat 72 it was accepted by both sides that sections 32 and 33 applied, and that
is that the landlords were liable for the section 32 repairs. On that basis the
fair rent for Flat 72 was assessed at £671.92 exclusive. Again the enhanced
rent was demanded and paid.
Another
application was made in 1979 resulting in the registration of a fair rent in
the sum of £930, still on the same basis.
About the same
time correspondence took place between the parties on the subject of repairs,
and it is clear that throughout the landlords accepted that they were liable
for the section 32 repairs; but in the event the tenant did the repairs, paid
for them, and withheld a proportion of the rent. Eventually the landlords
brought the present action for possession and arrears of rent at the enhanced
rate, and the tenant filed a defence claiming to set off the cost of the
repairs against the rent. Then, for the first time, the landlords disputed
their liability and claimed that section 32 did not apply to this lease. Thus,
in the same proceedings, they are seeking to recover arrears of the rent fixed
on the basis that they were liable for those repairs and claiming that they
were not liable for them.
In our
judgment it would clearly be inequitable to hold that the tenant was liable for
the full amount of the arrears of a rent which reflects, in part, that the
landlords were liable for the repairs, and at the same time that the tenant was
liable for the cost of such repairs.
This is the
classic situation which the doctrine of estoppel was designed to meet. Mr Jacob
put his case in alternative ways. Either the landlords, by demanding a rent
fixed on the basis of the rent officer’s allocation of liability for repairs,
represented that they accepted liability accordingly, or the landlords, by not
taking steps to have the registered rent changed so as to reflect the true
position and suing for the enhanced rent, had made their election and could not
be heard, in these proceedings, to assert a claim inconsistent with the
position they had adopted.
Mr Primost,
however, contended that the representation was a representation of law and not
of fact and, therefore, could not give rise to an estoppel, and that the tenant
was seeking to use the estoppel as a sword, that is, to recover the cost of the
repairs, and not, in the classic phrase, as a shield. He relied upon two cases,
London County Territorial and Auxiliary Forces Association v Nichols
[1949] I KB 35 and Kai Nam v Ma Kam Chan [1956] AC 358, in
neither of which had the party alleging estoppel acted to his detriment, nor
had the other party gained any advantage from the representation.
These
dichotomies are dangerously neat and apt to mislead. Representations of fact
shade into representations of law, and swords, with a little ingenuity, can be
beaten into shields, or shields into swords. In this case the shield may have
quite a sharp edge but it is none the less a shield and the representation was
essentially one of fact, ie that the landlords accepted liability for the
section 32(1)(b) repairs to the tenant’s flat in return for the enhanced rent.
We would hold that so long as the enhanced rent is claimed the landlords cannot
put the burden of the section 32 repairs on the
as to reflect the true position in regard to repairs, and will then be entitled
to the benefit of the tenant’s covenant. The appellant, therefore, succeeds on
this point.
The learned
judge in the court below attempted to deal with the matter on broad commonsense
lines by assessing the amount of excess rent paid by the tenant under the rent
officer’s assessments and allowing credit accordingly. But he had insufficient
material on which to estimate the amount of the over-payment and, in our
opinion, no jurisdiction to make such an adjustment, although he may have been
under the impression that the parties were consenting to his taking this
course. In fact, it seems clear from a letter from the tenant’s solicitors written
shortly after judgment was given that he had not agreed to it.
This appeal
must, therefore, be allowed.
The appeal
was allowed with costs. The case was remitted to the county court, to be heard
by Judge Honig if possible, and to be decided in the light of the above
judgment; the costs of the earlier hearing in the county court to be reserved
to the judge dealing with the further hearing. Leave to appeal to the House of
Lords refused.