Landlord and Tenant Act 1954, Part II — Whether landlord’s notice under section 25 to terminate tenancy was invalid on the ground that it was defective in point of form — Whether, if so, the tenant had waived the invalidity, or was estopped from questioning the validity, of the notice — The form of notice used was out of date because it stated (Note 3 in Form 7 in the Appendix to the Landlord and Tenant (Notices) Regulations 1957) that the rateable value limit for county court jurisdiction was £2,000, whereas it had been increased by then to £5,000 — Whether form was ‘substantially to the like effect’ as the form prescribed — Bond v Graham and Sun Alliance & London Assurance Co Ltd v Hayman discussed — Held that the form used was substantially to the like effect as the prescribed form — Held further that in any case on the facts the tenant was estopped from disputing the validity of the notice — Cases on this point considered
In this case
the plaintiffs, British Railways Board, sought declarations establishing that a
notice served by them on the defendants, A J A Smith Transport Ltd, under
section 25 of the Landlord and Tenant Act 1954 was a valid and effective notice
to determine the defendants’ tenancy of premises comprising a warehouse and
adjoining land at Clitheroe, Lancashire.
Derek Wood QC
and J L Hand (instructed by Evan Harding, British Railways Board) appeared on
behalf of the plaintiffs; William Goodhart QC and J Dowse (instructed by J L
Lumley, of Clitheroe) represented the defendants.
Giving
judgment, JUDGE FITZHUGH QC said: In this matter I am asked to determine,
firstly, whether a notice given by the plaintiff, British Railways Board (‘the
landlord’) as the landlord of premises comprising a warehouse and adjoining
land in a former goods yard at Clitheroe in Lancashire and served on the
defendant company (‘the tenant’) as tenant of those premises on or about
December 4 1979 pursuant to a provision of section 25 of the Landlord and
Tenant Act 1954, was a valid notice effective to terminate the said tenancy,
and, secondly, whether on the date specified in the said notice as extended by
sections 24 and 64 of that Act, the said tenancy will terminate and the
landlord will become entitled to possession of the premises.
Immediately
prior to the giving of the notice, the tenant held the premises under the terms
of an agreement dated March 31 1978 which provided that the tenancy should be
terminable by either party giving to the other six months’ notice in writing
expiring at any time.
On December 4
1979 the landlord gave notice to the tenant terminating its tenancy on June 14
1980 and indicating that it would oppose the grant of a new tenancy on the
ground (f) mentioned in section 30(1) of the Act, namely that on the
termination of the tenancy the landlord intended to demolish or reconstruct the
whole or a substantial part of the premises or to carry out substantial work of
construction on the whole or part of them, and that it could not reasonably do
so without obtaining possession of the premises. The notice was given in the
Form 7 prescribed by Appendix 1 to the Landlord and Tenant (Notices) Regulations
1957, as amended, save for one error to which I shall refer later.
By letter
dated January 25 1980 the tenant’s solicitor served notice under section 29(2)
of the Act that the tenant was not willing to give up possession of the
premises as required by the notice and stated that it was the tenant’s
intention to apply to the court for a new tenancy.
On March 31
1980 the tenant formally applied to the Blackburn County Court for the grant of
a new tenancy. The application came before Vice-Chancellor Blackett-Ord on June
3 and 4 1980. Both parties were then represented by leading counsel. The only
issue before the learned Vice-Chancellor was whether the landlord had the
intention required by section 30(f) of the Act. He was not asked to deal with
the terms of any new tenancy in the event of his finding that the landlord did
not have the requisite intention: that would be something to be left to
negotiations between the parties and settled by the court only in default of
agreement between them. The learned Vice-Chancellor found the landlord had the
requisite intention and he dismissed the application. No point was taken before
the learned Vice-Chancellor that the notice of termination was bad, and indeed
the tenant had not then raised the point.
The tenant appealed
against the order made by the learned Vice-Chancellor and claimed:
That the
applicants are entitled to a new tenancy of the above mentioned premises and
that it may be ordered that these proceedings be remitted to the Blackburn
County Court to determine the terms of such new tenancy in accordance with the
above mentioned Act.
Before the
appeal was heard the tenant changed its leading counsel: it instructed Mr
Goodhart in place of the leading counsel who had represented it before the
learned Vice-Chancellor. Mr Goodhart represented the tenant in the Court of
Appeal, and he has represented it before me in this matter. As a result of
advice given by Mr Goodhart, the tenant’s solicitor wrote to the landlord’s
solicitor on November 17 1980 in the following terms:
I was advised
late this afternoon by leading counsel that the notice to terminate dated
December 4 1979 was invalid due to its form. The form is of the older type and
does not comply with Statutory Instrument 1969/1771.
It is not
intended to raise this point at the forthcoming hearing on Monday, November 24
1980. However, I reserve the right to raise the matter in any future or further
proceedings.
The appeal
came on for hearing a few days later, namely on November 25 1980, and in his
judgment in the appeal Lawton J records the events of that day.* He says:
When Mr
Goodhart rose to open the appeal he informed us that there were two points
which could be taken on behalf of the applicants; one which was dealt with in
the notice of appeal and one other which went to the validity of the notice
terminating the lease, which he said he did not propose to deal with before us.
The court was
somewhat surprised at this because it seemed to us that what Mr Goodhart on
behalf of the applicants was doing was blowing hot and cold. He was asking the
court to say that his clients were entitled to a new lease. They could only be
entitled to a new lease if the existing lease had been duly terminated, but he
went on to say that, on some other occasion if this court did say that his
clients were not entitled to a new lease, his clients might say that the
original lease had never been properly determined. This was an unusual
situation for the court to be met with and it was one which we did not find
attractive — the more so as there were indications that this appeal, which has
little merits as I shall demonstrate shortly, was one step in a delaying action
to avoid giving up possession of the premises in dispute. . . . We gave Mr
Goodhart an opportunity of considering what he
should be put to his election as to whether he wanted to go on with this appeal
or abandon it and take some other proceedings elsewhere to establish that his
lease had never been properly determined. But, after argument, it occurred to
us that there were difficulties in that approach. . . . Nowadays, under an
amendment to the Landlord and Tenant Act 1954 which has become section 43A of
that Act, the applicants in the Blackburn County Court could have pleaded their
case in the alternative. They could have said that the notice purporting to
determine the tenancy issued pursuant to the Landlord and Tenant Act 1954 was a
bad one. Alternatively, if it was a good notice, they could have asked for a
new tenancy pursuant to the terms of that Act. They had done nothing of the
kind; and it did occur to us that it might be a sensible course to order the
applicants to amend their originating application in the Blackburn County Court
so as to raise the issue as to whether the original notice served by the
respondents was a valid notice, and also to amend their notice of appeal so
that all the matters in dispute could be dealt with in this court.
This was a
course which Mr Wood on behalf of the defendants was willing to consent to, but
he went on to point out that he would not thereby be abandoning any defence of
estoppel which he might have. Mr Goodhart, on behalf of the plaintiffs,
submitted that this court had no jurisdiction to order any such amendment of
the pleadings. We adjourned to consider the matter which had arisen and,
without making any finding as to whether we had or had not jurisdiction to
order an amendment of the type which we had discussed in argument with counsel,
we came to the conclusion that we should give Mr Goodhart an opportunity of
opening the appeal as it stood on the notice of appeal. It was pointed out to
him by Brandon LJ that he was, if he wished, at liberty not to go on with his
appeal. He elected to go on with it as it was put in the notice of appeal and
he advanced arguments in support of that appeal.
I, for my
part, make no findings as to the legal consequences as to what has happened. It
may be that hereafter counsel will have to argue what those consequences are
but, for the purposes of my judgment, I am going to confine myself to the short
facts in this case and the law applicable to them.
*The
judgments in the Court of Appeal were fully reported at (1981) 257 EG 1257,
[1981] 1 EGLR 54
The learned
Lord Justice then considered the short facts, and having done so, he continued:
There is
nothing whatsoever in this appeal except its use for the purposes of delay. It
is a use of which I disapprove. I would dismiss the appeal.
I would add
this. As a result of our decision to hear this appeal and not to deal with the
matter by way of amendment of the pleadings, it may be that further proceedings
will be necessary. It is not for me to make any comment about the form those
proceedings should take or what defences should be available to anybody. All I
do wish to say is this. They may be taken in a county court in Lancashire and
it is to be hoped that the circuit administrator of that circuit and the county
court judge who is asked to deal with the matter will do everything in his
power to ensure that any further proceedings are dealt with with the maximum
possible speed and, in so far as it is possible to abridge time, time should be
abridged. The same should apply if there are further proceedings in the High
Court.
Brandon LJ
delivered a short concurring judgment in which he said he regarded the appeal
as coming as near to an abuse of the court as it is possible to go without
crossing the line. Templeman LJ expressed his agreement with both judgments.
The appeal was dismissed with costs.
The delay
caused by the appeal covered a period in which building costs escalated, and
the costs of the proposed building work is now given as £996,000 as against the
earlier estimate of £750,000 made while the appeal was pending. Building costs
continue to escalate, and the board is justifiably concerned that the tenant
might not give up possession of the premises on February 25 1980 when the
interim tenancy under section 64(1) of the Act will expire.
Against that
background the landlord issued the originating summons herein on December 8
1980, and the hearing has been expedited.
The hearing
has involved the consideration of technical points of law. I am, of course,
well aware that if I consider that the technical submissions made by Mr
Goodhart on behalf of the tenant are sound in law then, notwithstanding the
strictures of the Court of Appeal and the consequences which might follow, it
is my plain duty to say so, and that is the basis on which I have considered
this matter and formed my judgment.
The matter
raises two points: firstly, whether the notice of December 4 1979 was valid or
invalid and, secondly, if the notice was invalid, whether the tenant has waived
the invalidity or elected not to rely on it or is estopped from questioning its
validity. The sections of the Act relevant to this application are section
25(1) and section 66(1). Section 25(1) provides:
The landlord
may terminate a tenancy to which this Part of this Act applies by a notice
given to the tenant in the prescribed form specifying the date at which the
tenancy is to come to an end (hereinafter referred to as ‘the date of
termination’): Provided that this subsection has effect subject to the
provisions of Part IV of this Act as to the interim continuation of tenancies
pending the disposal of applications to the court.
Section 66
provides:
Any form of
notice required by this Act to be prescribed shall be prescribed by regulations
made by the Lord Chancellor by statutory instrument.
The form of
the section 25 notice prescribed by the Lord Chancellor pursuant to the power
under the last-mentioned section is contained in the Landlord and Tenant
(Notices) Regulations 1957 (SI 1957 no 1157), which came into operation on July
9 1957 but have subsequently been amended. It provides by Regulations 3 and 4
thereof:
3. In
these Regulations, unless the context otherwise requires:
(a) ‘The Act’ means the Landlord and Tenant Act
1954.
(b) A form referred to by number means the form
so numbered in the Appendix to these Regulations.
4. The
forms in the Appendix to these Regulations, or forms substantially to the like
effect, shall be used for the following purposes, that is to say:
. . .
(vii) a notice under the provisions of section 25 of
the Act, being a notice terminating a tenancy to which Part II of the Act
applies shall . . . be in Form 7.
Note 3 in that
Form reads:
Where the
rateable value of the premises (excluding any part which is not occupied by the
tenant or by an employee in his business) does not exceed £500 an application
for an order for the grant of a new tenancy must be made to the County Court
and in any other case it must be made to the High Court.
In 1963,
following an increase in the jurisdiction of the county court, the rateable
value was increased to the figure of £2,000, and the regulations were amended
to substitute the figure of £2,000 for the figure of £500, and, after the
further increase in the jurisdiction of the court under section 6 of the
Administration of Justice Act 1973 the Lord Chancellor made further amending
regulations, namely the Landlord and Tenant (Notices) Regulations 1973 (SI 1973
no 792), which provided that in note 3 to Form 7 there should be substituted a
reference to £5,000 for the reference £2,000.
Accordingly,
on December 4 1978, when the landlord served his notice under section 25 of the
Act, note 3 of the notice ought to have mentioned the figure of £5,000 and not
£2,000 as the limit of the jurisdiction in the county court. In fact, in the
notice the limit was erroneously declared to be £2,000. Save in that one
respect the notice was in the prescribed form. The rateable value of the
premises was £372.
The question
arises: was the notice ‘substantially to the like effect’ as the currently
prescribed form notwithstanding the one error as to the limit of the
jurisdiction of the county court? The
same error appeared in the notice which had been served in the case of Bond v
Graham decided by Shaw J (as he then was) on July 23 1975, and his
decision was published in (1975) 236 EG 563, [1975] 2 EGLR 63. There the
rateable value of the relevant premises was £1,480. The tenant did not make an
application for a new tenancy and after the notice expired the landlord claimed
possession of the premises. The tenant resisted the claim, alleging that the
notice was ‘fatally flawed’ and that his position had been affected by the
flaw. The learned county court judge held that the defendant could not have
been and was not misled by the statement complained of and that if the
defendant had relied on the notice he would still have ended up in the right
court, and accordingly the learned judge reached the conclusion that the form
served the requirements of the Act of 1954, and that it was ‘substantially to
the like effect’ as the prescribed form and made an order for possession.
It seems that
the attention of the learned judge had not been directed to the case of Sun
Alliance & London Assurance Co Ltd v
1 WLR 177. In that case there was a different error in the notice. The notice
followed a still older form in which note 2 thereof had declared that notice of
willingness to give up possession had to be given within two months ‘after
receiving the notice’ instead of ‘after the giving of the notice’. Again there
was no application for the new tenancy, and after the notice expired the
landlord sued for possession of the premises. The tenant conceded that in that
particular case the time of ‘giving’ and ‘receiving’ the notice was in fact the
same. The learned county court judge took the view that in that particular case
the notice was ‘substantially to the like effect’ as the notice in the
prescribed form, and he made an order for possession. The Court of Appeal
dismissed the appeal but held that the learned county court judge was wrong to
have taken into account in the particular case that there was no difference in
time between the date when the tenant was given notice and the date when he
received the notice for if, on their true construction, the words used in the
old form did not mean substantially the same as the new words which should have
been used, the notice in the old form was bad and could not be validated
because the particular individual on whom it had been served had not been
prejudiced by any difference in their meaning. MacKenna J at p 185 says:
The judge
decided the present case against the tenant because on its particular facts the
giving and the receiving of the notice were truly simultaneous. I think that
that was wrong. If the form used was not substantially to the like effect as
the prescribed form, the notice was invalid. It is, I think, irrelevant that on
the facts of the particular case, the giving and the receiving were
simultaneous, so that it did not matter to the tenant which words were used.
The case is to be decided on a comparison of the two forms without regard to
those facts.
In the case
before me Mr Goodhart for the tenant says unashamedly that he is seeking to
ensure that the tenant can continue possession of the premises as long as
possible. He properly acknowledges that Bond v Graham is, as he
put it, ‘completely against me’. But he submits that in considering the
validity of any particular form of notice that form has to be valid in all the
circumstances: there cannot be a form which may be valid in some cases and
invalid in others. That I accept. He points to the difference in the figures in
the notices. He accepts that even if a tenant of premises of a rateable value
between £2,000 and £5,000 relied on the notice and made application to the High
Court instead of the county court the application could, and no doubt would, be
transferred to the High Court from the county court under section 63 of the
Act, and no doubt the costs would be borne by the party whose conduct had made
the application for transfer necessary. But he says costs in the High Court are
usually more substantial than costs in the county court, and there may well be
tenants who will be deterred from instituting proceedings in the High Court
when they might not be deterred from instituting proceedings in the county
court; hence the form would not be valid in all the circumstances.
There are, of
course, some of the less fortunate members of the community who might be
frightened by the costs of prospective litigation in the county court, not only
the High Court. But Part II of the Act of 1954 relates to business tenancies,
and I cannot think that a business tenant would really be deterred by the
difference in the legal costs involved: either he will have to make an
application to the court or else he will be driven out of business. I consider
the point theoretical rather than real. Mr Goodhart has not advanced any other
reason for suggesting the error might in any way prejudice any tenant in any
circumstances.
In these
circumstances I see no reason at all why, applying the test of the Court of
Appeal in the Sun Alliance case, I should not follow the view of Shaw J
(as he then was) in Bond v Graham and I do so. I hold that the
notice was valid being ‘substantially to the like effect’ as the prescribed
form.
If that view
be right then that is the end of the matter, but I think that I ought to go on
to deal with the second and more difficult point, to some extent at least, in
case it should be held that my view on the first point is wrong in law.
In the earlier
years of the operation of Part II of the Act of 1954 problems faced the
business tenant who might have thought that the particular section 25 notice
served on him was or might be invalid. If he sought to allege that the notice
was invalid then that issue might not be determined until the time-limit for
applying for a new tenancy had expired, with the result he would then be
debarred from making the application if the notice proved to be valid; but if,
on the other hand, he made an application for a new tenancy he might be held to
have waived any right thereafter to challenge the validity of the notice. There
were at least grave doubts as to whether the county court had jurisdiction to
determine the question of the validity. The appropriate procedure was
considered by the Court of Appeal in Airport Restaurants Ltd v Southend-on-Sea
Corporation [1960] 2 All ER 888. The headnote in that case reads:
Tenants who
had been given notice in the form prescribed by the Landlord and Tenant Act
1954, section 25(1) and the regulations made thereunder to terminate their
‘tenancy’ of business premises of which the rateable value did not exceed £500
applied to the county court for a new lease. Subsequently the tenants were
advised that the premises might in law be held by them under two tenancies, and
that the notice to terminate their ‘tenancy’ might therefore be invalid. The
tenants immediately issued a writ in the High Court claiming a declaration to
this effect, and then applied to the county court to adjourn the hearing of
their application for a new lease until after the conclusion of the High Court
proceedings. On appeal against a refusal of this application for adjournment.
Held: the
further hearing of the county court proceedings would be adjourned until
judgment in the High Court proceedings, because otherwise there would be a
grave risk of injustice to the tenants who, if they were forced to prosecute
their application for a new lease and failed thereon, might be held in the High
Court to have thereby estopped themselves from contending that the notice to
terminate the tenancy was invalid.
Hodson LJ (as
he then was) said at p 888:
The position
is that, an application for a new lease having been made, the landlords having
given notice of termination of the ‘tenancy’ — it has been conceded for the
purposes of this application that there is either one tenancy or two tenancies
of the premises here in question — the tenants at a late stage decided to
challenge the validity of the notice after they had themselves made their
application for a new lease, and, being unable to do that in the county court
proceedings, as soon as their attention was drawn to this point by counsel they
issued a writ in the High Court claiming a declaration that the notice was bad,
having regard to the fact that the notice on the face of it only referred to
one tenancy whereas in fact, according to their contention, there were two. The
defence put in in the High Court action was inter alia that the tenants had
waived their right to take this point by making the application for a new
lease. The plea was drawn in that form because of statements made at first
instance by Henn Collins J, in a case to which we have been referred, W
Davis (Spitalfields) Ltd v Huntley [1947] 1 All ER 246 where what he
said was, I think, an integral part of his judgment, and of dicta in the Court
of Appeal in Tennant v London County Council (1957) 121 JP 428
which cited with approval what Henn Collins J had said. The decision of Henn
Collins J went to the Court of Appeal, but there is no decision on the point of
waiver. In the Court of Appeal in Tennant v London County Council it
was pointed out by Romer LJ that the question whether or not there had been a
waiver must depend in each case on the facts of that particular case. . . . It
seems to me, however, that, having regard to the way in which this court deals
with matters of discretion, the overriding consideration in this case is that
there is a grave risk of an injustice to the tenants unless an adjournment is
granted. They did go on with their proceedings for a short time after their
application for an adjournment had been refused, and if they are forced to
continue with them and to prosecute their application for a new lease before
judgment is given in the High Court proceedings and if they fail, they may well
be estopped in the High Court proceedings from claiming that the notice was
bad.
Harman LJ said
at p 890:
It does seem
to me that to allow two sets of proceedings to go on about the same, or
practically the same, matter in two different courts at one and the same time
must prima facie be a course which the court should avoid. If the county court
judge resumes the hearing while the High Court action is undecided he may very
well be deciding a matter which is purely of academic interest — in fact
sitting to hear a moot and not a judicial case at all.
The court
accepted an undertaking by counsel for the appellant to take every step
reasonably required to accelerate the High Court hearing.
The necessity
for dual proceedings to obtain a declaration as to the validity of the notice
to quit ended when section 13 of the Law
county court itself to make an appropriate declaration in a proper case.
In his
judgment in W Davis (Spitalfields) Ltd v Huntley [1947] 1 All ER
246, Henn Collins J said at p 248:
Where,
however, the tenant is asking for a new tenancy (under section 5(1) of the
Act), . . . he cannot have both the old tenancy and a new one. If he affirms
the position that he wants a new tenancy, he can only do so on the footing that
the old one is at an end. If and in so far as the tenant claims a new tenancy,
he is not thereafter entitled to say that the old one is still subsisting, and
he certainly is not entitled to do so any the more if he fails to obtain the
new tenancy and eventually claims compensation.
In Kammins
Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 it
was alleged that there had been a ‘waiver’ in relation to the time limit
imposed by section 29(3) of the Act of 1954, and Lord Diplock considered the
meaning of the word ‘waiver’ at pp 280 to 283 where he said:
So it becomes
necessary to consider whether the respondents did waive this requirement.
‘Waiver’ is a word which is sometimes used loosely to describe a number of
different legal grounds on which a person may be debarred from asserting a
substantive right which he once possessed or from raising a particular defence
to a claim against him which would otherwise be available to him. We are not
concerned in the instant appeal with the first type of waiver. This arises in a
situation where a person is entitled to alternative rights inconsistent with
one another. If he has knowledge of the facts which give rise in law to these
alternative rights and acts in a manner which is consistent only with his
having chosen to rely on one of them, the law holds him to his choice even
though he was unaware that this would be the legal consequence of what he did.
He is sometimes said to have ‘waived’ the alternative right, as for instance a
right to forfeit a lease or to rescind a contract of sale for wrongful
repudiation or breach of condition: but this is better categorised as
‘election’ rather than as ‘waiver’. It was this type of ‘waiver’ that Parker J
was discussing in Matthews v Smallwood [1910] 1 Ch 777.
The second
type of waiver which debars a person from raising a particular defence to a
claim against him, arises when he either agrees with the claimant not to raise
that particular defence or so conducts himself as to be estopped from raising
it. . . . The ordinary principles of estoppel apply to it.
I was referred
to Bristol Cars Ltd v R K H Hotels Ltd (in liquidation) decided
by the Court of Appeal on March 20 1979 and reported in (1979) 251 EG 1279,
[1979] 2 EGLR 56. In that case the tenants had made a request for a new tenancy
under section 26 of the Act of 1954, but the notice was defective because the
date of the commencement was too early a date to be capable of inclusion in the
notice. Neither party observed the defect. The landlords did not give any
notice to the effect that they would oppose the grant of a new tenancy. The
landlords then applied in those proceedings under section 24A of the Act for an
interim rent, but they did not pursue that application. Later the landlord was
advised by counsel that the tenant’s request was bad and sought to avoid the
grant of the new tenancy. The reported judgment of Templeman LJ at p 1283
reads:
It seems to
me that in those circumstances the landlords are estopped from denying the
validity of the notice because they had, innocently, led the tenants to believe
that they would not oppose the grant of a new tenancy. Of course, not every
delay or every representation will support an estoppel. In the present case Mr
Marder has pointed out that the landlords did nothing, that they knew nothing;
and he said there was very great difficulty in assessing the particular date on
which, on this analysis, they become estopped from disputing the validity of
the request. But in my judgment there is no doubt or difficulty in the present
case. The inevitable conclusion from the facts which I have outlined is that
the date when the landlords were estopped occurred . . . certainly not later
than March 2 1977, when the landlords applied for their interim rent.
Accordingly, for my part I would hold that the landlords are estopped from
disputing the validity of the tenants’ requests.
Mr Goodhart’s
submissions, as I understood them, were as follows. The tenant has two
alternative rights; one to dispute the validity of the notice, and the other to
apply to the court for the grant of a new tenancy. He might, if he wished,
waive his right, but any waiver would have to be a voluntary waiver. The
alternative claims can properly be combined, and since 1969 have commonly been
combined, in a single application to the court notwithstanding the alternative
nature of the claims. It is not necessary, he said, for a tenant in presenting
his application to the court to choose one of the claims and abandon the other.
The view of Henn Collins J in W Davis (Spitalfields) Ltd v Huntley has
not been followed in later cases. He referred me to Rhyl Urban District
Council v Rhyl Amusements Ltd [1959] 1 WLR 465. The facts there are
altogether different. That was a case in which the plaintiffs had served a
notice to quit in respect of a yearly tenancy and the defendants had served a
section 26 tenant’s notice asking for a new lease; the notice being accompanied
by a letter recording that the notice was served without prejudice to the right
to claim that a lease was still subsisting. The plaintiffs then issued their
originating summons. The case raised a multiplicity of issues, and Harman J (as
he then was) said at pp 471-472:
The first
point taken is that the defendants, having asked for a new lease, must be taken
to have elected to rely upon their rights under the Act of 1954, and cannot now
be heard to say that the 1932 lease is still subsisting. This is a point akin
to estoppel and should have been, but it is not, taken in the pleadings, and I
was asked to hold that it was not open to the plaintiffs. It would, however, be
open to me to allow an amendment, and I propose to consider the merits of this
point as if I had done so. In my opinion, there is nothing in it. It is true
that in 1954 the defendants did by their notice under section 26 of the Act
demand a new lease, but they sent a covering letter on the same date stating
that this was a notice made without prejudice. In my judgment this shows that
there was no true election. The defendants were alleging the validity of the 1932
lease, but by way of insurance in case that proved wrong, they sought to
protect themselves under the Act of 1954, and I do not see why they should not
take this course. It was argued that the decision of Henn Collins J in W
Davis (Spitalfields) Ltd v Huntley was authority which I ought to
follow in this respect.
The learned
judge then considered the headnote to that case, and continued:
That case went
to the Court of Appeal, but that court did not deal with this point. It has,
however, been approved in Tennant v London County Council. In my
judgment, it does not apply here.
The tenancy
which the defendants here were desirous of retaining was the 1932 lease, which
the plaintiffs were alleging to be void, and not the yearly tenancy of which
notice to quit had been given under the Act by the plaintiffs. It was,
therefore, not a matter of waiving some point about the sufficiency of the
notice, but a claim that no notice could be given at all. It is said, further,
that by issuing the originating summons on February 21 1956 the defendants once
more elected to have a new lease, but it seems to me clear from the form of the
summons itself that the defendants did all they could there to preserve their
rights, and I am of opinion that, even if the plaintiffs are entitled to take
this point, it will not avail them.
Mr Goodhart
claims that the tenant has never voluntarily waived his right to challenge the
validity of the notice of December 4 1979 and, notwithstanding the dismissal by
the Court of Appeal of the claim for a new tenancy, he can still maintain the
challenge. That right, he says, would remain unaffected even by the grant of a
new tenancy. He says that the contractual tenancy, not having been lawfully
terminated, would continue in full force and effect until the new tenancy had
in fact become vested in the tenant pursuant to section 36 of the Act and upon
the vesting being effected the subsisting contractual tenancy would be
surrendered by operation of law. He says that so long as he made it perfectly
clear to the Court of Appeal on November 25 1980 that he was reserving his
position on the question of the validity of the notice then he could not be
taken to have waived his objection to the validity of the notice; he could not,
he claims, have been required to ‘abandon’ the claim for a new tenancy in order
to preserve the question of the invalidity of the notice. When asked by me why
he did not simply ask the Court of Appeal to adjourn the hearing of the appeal
until the question of the validity of the notice had been resolved, his answer
was that he did not ask for an adjournment because he thought that the Court of
Appeal would refuse an adjournment or, to use his own expression, ‘because
there would have been an explosion’. That was not a satisfactory answer, even
though ‘an explosion’ might well have been predictable. Mr Goodhart also sought
to distinguish the Bristol case on the ground that in that case the landlords
had positively indicated that they did not intend to oppose the grant of a new
tenancy.
For my part I
consider that the Rhyl case does not affect the
light of the terms of the letter which accompanied it and, if it were so
construed, the situation would be exactly the same as if there had been a
single application raising both a claim that the notice was invalid and the
claim for a new tenancy. Such a claim is perfectly proper and would not cause
an automatic waiver of the right the tenant may have had to dispute the validity
of the notice.
For my part I
am doubtful about going so far as to hold that the view of Henn Collins J in W
Davis (Spitalfields) Ltd v Huntley is a view which must be applied
with rigidity in all circumstances. Supposing the tenant honestly and reasonably
believed the only course open to him in order to obtain security of tenure for
his business was to make an application to the court for a new tenancy and, in
that belief, he made an application but discovered immediately afterwards that
he had strong grounds for disputing the validity of the notice and thereupon
sought to amend his application by asking the court additionally to determine
the question as to the validity of the notice, then I doubt whether leave would
or should be refused. Indeed, in the Airports Restaurants case, the High
Court proceedings were commenced after the application of a new tenancy and the
tenants had gone on with their application for a short time after the
application for an adjournment had been refused.
That being so
I prefer to base by judgment on the Bristol case and I hold that
whatever may have been the position before the claim for a new tenancy was
taken to the hearing before the learned Vice-Chancellor — and I do not decide
what any earlier position or positions was or were — on that date the tenant
must have lost any right it might have had to dispute the validity of the
notice, but, if that were not so, then at any rate it must have lost it at the
hearing before the Court of Appeal on November 25 1980 when the tenant knew all
the material facts and knew also that a new tenancy could be claimed only if
there had been a valid notice of termination and he elected to pursue that
claim. That conduct was inconsistent with any right it may have had to dispute
the validity of the notice. The tenant elected not to take the point and is now
estopped from doing so. The fact that Mr Goodhart then declared that he
proposed to reserve the point was of no effect. It is rather like the case of a
landlord who had a right to forfeit a lease accepting rent arrears due after
the right to forfeit had occurred on the basis that he accepted it only without
prejudice to this right still to claim forfeiture of the lease.
In view of the
foregoing I consider that the tenant’s claims before me are hopeless and that
the landlord is entitled beyond doubt to the declarations which it seeks, and I
make those declarations.
The
defendants were ordered to pay the plaintiffs’ costs on a common fund basis.