Landlord and tenant — Appeal by landlords from decision of county court judge rejecting their application for possession of premises used as a repair shop — Premises, originally consisting of an open yard on which a lean-to shed had been erected, had been let to the respondent by a tenancy agreement for a term of 7 years from 1977 at a rent of £2,600 a year, payable by weekly payments of £50 — Appellant landlords subsequently offered to extend the term of the respondent’s tenancy until 1991 at the higher rent of £65 per week with a three-year rent review — Respondent was not, however, happy with this arrangement and did not take up the offer — There was a long and confusing correspondence between the appellants and the respondent’s solicitors in the course of which there appeared to be various misunderstandings — Eventually the appellants brought proceedings for possession against the respondent in the county court, based on a section 25 notice served under the Landlord and Tenant Act 1954 — The judge found that, some time after the appellants’ offer above mentioned, there had been an oral agreement to grant the respondent an extended tenancy until 1991 at the old rent of £50 per week, with one rent review in 1984 — The Court of Appeal held, in the light of Jenkin R Lewis & Son Ltd v Kerwan, that this must have taken effect as an agreement to surrender the existing term and to create a new term — They also agreed with the judge in rejecting a submission that the respondent through his solicitors had repudiated the agreement in question — The correspondence on which the appellants relied did not show a repudiation of the oral agreement for an extended tenancy at £50 per week but an intention to decline the offer of a new lease at £65 per week — Appeal dismissed
The following
cases are referred to in this report.
Jenkin R
Lewis & Son Ltd v Kerman [1971] Ch 477;
[1970] 3 WLR 673; [1970] 3 All ER 414; (1970) 21 P&CR 941, CA
Walsh v Lonsdale (1882) 21 ChD 9
This was an
appeal by Bush Transport Ltd, the landlords, plaintiffs in an action before
Judge Parker at the West London County Court, against the judge’s decision in
favour of the defendant tenant, the present respondent, Hughie Nelson,
dismissing the appellants’ application for possession of Bush Garage, 2a Godolphin
Road, Shepherds Bush, London W12.
Roger Smith
(instructed by Webber & Co) appeared on behalf of the appellants; Jonathan
Chrispin (instructed by W R Bennett Emanuel & Co) represented the
respondent.
Giving
judgment, SLADE LJ said: This appeal involves a long, and somewhat complicated,
story, but the point which ultimately falls for decision by this court is a
short one and, if I may say so, the case has been argued with admirable economy
on both sides.
It is an
appeal by the plaintiffs in an action, Bush Transport Ltd, from a judgment of
His Honour Judge Parker, given in the West London County Court on December 20
1985. On that occasion he dismissed an application by the plaintiffs for
possession of certain premises known as Bush Garage, 2a Godolphin Road,
Shepherds Bush, London W12, but ordered that they should recover the sum of
£925 from the defendant, Mr Hughie Nelson, for the use and occupation of the
premises from November 1 1984 to the date of the hearing. He made no order as
to costs.
In his judgment
the learned judge described the case as a very troublesome and puzzling one,
and I am not surprised. The history of the matter is as follows. The defendant
began to occupy the premises in or about November 1977 and has occupied them
ever since. When he acquired them they consisted of an open yard upon which a
lean-to shed had been erected. He paid £50 a week for his occupation, and he
says that he spent considerable capital sums on the premises in 1978 and 1979,
and indeed later.
On November 1
1979 a formal agreement was entered into between the plaintiffs and the
defendant, by which the plaintiffs let the premises to the defendant for a term
of seven years from November 1 1977 at a yearly rent of £2,600 payable by equal
weekly payments of £50 in advance. This document, which called itself a lease,
was only executed under hand, so I shall call it ‘the 1979 tenancy agreement’.
It recorded that the first of the weekly payments had been made on November 1
1977.
The defendant
used the premises as a repair shop. The learned judge found that for some time
there continued what he described as a ‘reasonable relationship’ between the
defendant and the plaintiffs, and in particular with a Mr Little, who had a 50%
shareholding in the plaintiff company. The plaintiffs themselves held no more
than a leasehold interest in the premises. In the beginning of 1980 they
entered into a new agreement with their head landlords which not only increased
the rent payable by the plaintiffs in respect of the premises sublet to the defendant,
but also provided for a rent review every three years, beginning in 1982. The
plaintiffs’ lease was to run for twelve years from September 29 1979 until
1991.
Early in 1980
Mr Little, who appears to have been more concerned about the triennial rent
review provision than the rent immediately payable, spoke to the defendant and
suggested that if he was willing to pay £65 per week, with a three-yearly rent
review, the plaintiffs would be willing to extend his lease until 1991, when
their own term ended.
The defendant
consulted solicitors about this proposal. There followed a long correspondence.
Some of the letters contained in that correspondence were marked ‘Without
Prejudice’, but privilege has clearly been waived in respect of all of them now
before the court. On May 12 1980 the defendant’s solicitors wrote to the
plaintiffs referring to the rent payable under the 1979 tenancy agreement and
saying:
Nevertheless
we understand that you have been demanding from him
the defendant
rent of £65
per week which he has paid. You are not entitled, of course, to any increase in
rent until the Lease granted in 1979 expires.
However Mr
Nelson says that he understands that you have recently had an increase in rent
imposed against you by your Landlord in order to get a new Lease of 12 years
from 1980 and he is therefore prepared entirely without prejudice if you will
grant him a Lease for 12 years from 1980 at a rent of £65 per week until 1
November 1984 with a rent review on that date to carry the rent on to the end
of the term then he would be prepared to enter into such a Lease provided
further, of course, that you obtain a consent from your
We await your
early reply to this letter.
That letter was
not answered. It is common ground that rent was not paid at the rate of £65 per
week.
By a further
letter of May 29 1980 the defendant’s solicitors wrote to the plaintiffs
saying:
You have not
replied to our letter May 12 and the offered rent beyond that reserved by the
Lease of November 1 1979 is now withdrawn.
That letter was
written without prejudice, but in an open letter of the same date they asserted
that, despite the terms of the 1979 tenancy agreement, the plaintiffs had been
demanding rent at the rate of £65 per week; they said that the defendant would
pay only the rent reserved by the 1979 tenancy agreement, namely £50 per week,
and that they understood that he had already overpaid the plaintiffs. The
defendant continued to pay £50 per week. The learned judge found that it was
not paid regularly but in lump sums on certain occasions, and there were
arrears.
On July 3 1980
the defendant visited the plaintiffs’ premises. There then ensued a discussion
between the defendant and Mr Little; I shall have to revert to the evidence as
to this discussion later in this judgment. It is, however, common ground that
at the end of the meeting the defendant took away with him a typed document
which was addressed to the defendant and signed by Mr Little and Mr
Ackland-Snow, another director of the plaintiff company, dated July 3 1980.
That document read as follows:
Dear Sirs,
Re:- Occupation of Premises near to
Goldhawk Road, W12. This is to certify that while Bush Transport Ltd, of 164
Dalling Road, London W6 is the lessee of the piece of land at the rear of
numbers 152-154 Goldhawk Road, Shepherds Bush, London W12 they will allow
Hughie Nelson of 32 Elm Way, London NW 10 to carry out his business at ‘Bush Garage’
until September 1 1991, at the weekly rent of £65.00: four weekly in advance,
with a rent review every three years as from 1st September 1979. Conditional to
the following:-
1. H Nelson to keep up to date with his
payments.
2. Keep premises in a reasonable state of
repair.
3. H Nelson will insure and keep insured the
above said premises against loss or damage by fire and such other risks he may
from time to time deem desirable.
Yours
faithfully
pp Bush
Transport Limited
There then
followed the two signatures to which I have referred. For the time being I
shall continue simply to refer to the correspondence.
On January 7
1981 the defendant’s solicitors wrote to the plaintiffs an important letter. It
was headed with a reference to the premises and read:
As you know,
we act for Mr Hughie Nelson.
We understand
that you have demanded from him rent in excess of that reserved by the Lease
which you granted to him on 1st November, 1979 which will not expire until
1986.
We also
understand that our client has paid you sums in excess of the rent reserved.
Our client
will no longer do so and we are getting out an account showing the up to date
position, of which a copy will be forwarded to you in due course. Please do not
approach our client with accounts for rent which is not due, demand excess rent
or offer him a Lease. He already has a Lease and is perfectly satisfied with
it.
If you wish to
dispose of your interest in these premises, please let us have details of the
price required and our client will consider whether it is worth his while to
purchase.
We shall be
writing to you again quite shortly with an account showing the date up to which
our client has discharged the rent, which we think is some time in the Autumn
of 1981.
On January 14
1981 Mr Little’s wife, on behalf of the plaintiffs, wrote to the defendant’s
solicitors a letter in which she enclosed a statement of account purporting to
indicate the rent outstanding from the defendant.
On January 23
1981 the defendant’s solicitors wrote another important letter to Mr Little
headed in the matter of the premises and reading as follows:
Further to our
letter to you January 7 we have now checked the position with our client and
are informed that in fact the payment in the sum of £500 effected on November
17 1980 has not been taken into account in computing the figures set out in the
summary sent to us on January 14.
We are
accordingly instructed to write to you in order to inform you yet again not to
approach our client for rent which is not due or demand excess rent or offer a
Lease.
We sincerely
trust that no further unnecessary correspondence and expense will be entailed
by this matter.
On February 18
1981 the defendant’s solicitors wrote to Mr Little a letter which dealt solely
with accounting matters concerning rent; I need not refer further to it.
On March 16
1981 the plaintiffs’ solicitors again wrote to the defendant’s solicitors, in
effect complaining that rent had not been paid as due under the arrangements
between the parties. Nothing turns on the precise terms of that letter.
So far as the
documentation is concerned, I next come to a notice served by the plaintiffs’
solicitors on the defendant under section 25 of the Landlord and Tenant Act
1954, purporting to give him notice terminating his tenancy on November 1 1984.
That notice was dated February 24 1984.
On March 5
1984 the defendant’s solicitors wrote to the plaintiffs’ solicitors asserting
that the plaintiffs could not bring the tenancy to an end on November 1 1984,
on the grounds that Mr Little had ‘overlooked the agreement of July 3 1980
whereby the premises were let to our client for a term expiring September 1
1991’. They asserted that the notice was therefore invalid and they returned
it.
On March 9
1984 the plaintiffs’ solicitors replied, saying that the plaintiffs had no
knowledge of any tenancy agreement dated July 3 1980. I pause to say that this
was a rather surprising assertion in the light of what subsequently transpired.
On March 13
1984 the defendant’s solicitors replied enclosing a copy of the document of
July 3 1980.
On March 19
1984 the plaintiffs’ solicitors wrote to the defendant’s solicitors, saying
that they had taken the plaintiffs’ instructions, and asserting that the
plaintiffs had no knowledge of the document, and could only conclude that the
document was a forgery. At first sight this letter was even more surprising
than that of March 9, but it now appears that the plaintiffs’ solicitors had
taken their instructions not so much from Mr Little as from Mrs Little who, it
would seem, was probably not aware of the document of July 3 1980.
On March 21
1984 the defendant’s solicitors wrote to the plaintiffs’ solicitors expressing
astonishment at the allegations made in the letter of March 19. On April 18
they wrote saying that, without admitting the validity of the notice served,
the defendant was not willing to give up possession.
Against this background,
on November 2 1984 the plaintiffs issued the present proceedings against the
defendant seeking possession and arrears of rent and mesne profits. In their
particulars of claim they pleaded that the defendant was occupying the premises
under the 1979 tenancy agreement; that by virtue of the section 25 notice of
February 24 1984 they had duly terminated the tenancy on November 1 1984; that
the defendant had failed within the prescribed period to apply to the court for
a new tenancy; that accordingly the tenancy terminated on November 1 1984 and
that he remained in occupation of the premises as a trespasser.
The defendant,
by his defence and counterclaim, denied that the tenancy had come to an end and
pleaded that
by an oral
agreement of unknown date made between the plaintiffs’ servant or agent one
Little and the defendant and evidenced in writing by a document dated July 3
1980, the plaintiffs varied the said lease by inter alia granting the defendant
a term expiring on September 1 1991.
He denied that
the notice of February 24 1984 was a valid notice terminating the tenancy.
Further or in the alternative he pleaded that, if it was a valid notice, the
plaintiffs were estopped from relying on it by reason of the document of July 3
1980. By his counterclaim he asked that if, contrary to his contention, it
should be found that he had become liable to forfeiture, he should be granted
relief from forfeiture.
The defence
and counterclaim was followed by a lengthy reply and defence to counterclaim,
which was subsequently amended. By this amended pleading the plaintiffs
admitted the document of July 3 1980 and its terms, but pleaded in effect that
there was never any concluded agreement between the parties on the terms of
that document. They pleaded in the alternative that if there was a concluded
agreement in the terms evidenced by the document, the defendant had repudiated
it by refusing to pay the increased weekly rent of £65, and also by the terms
of the letter from his solicitors to the plaintiffs of January 7 1981.
At the hearing
the learned judge heard evidence from, among other persons, Mr Little and the
defendant. They gave conflicting accounts of what had happened at the meeting
on July 3 1980. I think the learned judge sufficiently accurately summarised Mr
Little’s evidence as to this conversation as follows:
Mr Little
says that there was a discussion and agreement was reached in
typed out by Mr Little. The letter recorded that the rent was to be increased
and there were to be rent reviews and was subject to three conditions. There
was evidence that up till then the obligation was on the landlords to insure
the premises. They had not in fact insured the premises. Mr Little when asked
seemed rather muddled about it. Something must have caused Mr Little to put
this proviso in the letter. Perhaps Mr Little was more aware of the need for
this at the time. Mr Little says the letter was a gesture of good intent and he
expected Mr Nelson to take it to his solicitor who would then draw up a formal
agreement.
The learned
judge went on to say that this last point was consistent (as indeed it was)
with the plaintiffs’ amended reply.
He then
proceeded to summarise the defendant’s evidence as to this meeting, and again I
think sufficiently accurately:
Mr Nelson
says that on July 3 after the discussion he was presented with the document. He
took it away and within a short time brought it back and said he was not happy
with it because he wanted to spend a considerable sum of money on renovating
the premises and wanted Mr Little to contribute towards the costs. Mr Little
refused says Mr Nelson but agreed, if Mr Nelson was going to spend substantial
sums, instead of Mr Little making a contribution the rent would stay at £50 per
week until the expiry of the original agreement and he could stay until 1991
with the rent being subject to review every three years. In other words there
was to be a new lease incorporating those conditions and the rent was to stay
at £50 per week until then. Later Mr Nelson spent money on improvements and
took on responsibility for insurance. It is said that Mr Little had no real
reason to want the premises improved and it was no real advantage to him. Mr
Little says it was not really discussed.
Thus the
defendant’s evidence actually given to the learned judge did not exactly accord
with his pleading. He was asserting to the trial judge that, following the
signature of the document of July 3, an oral agreement was concluded between
him and the plaintiffs under which the plaintiffs granted him a tenancy until
September 1 1991 at a rent of £50 per week, but otherwise on the terms of the
document of July 3 1980. It appears that no case based on estoppel in the
strict sense was put forward on behalf of the defendant at the hearing; his
case seems to have been argued on the footing that the alleged oral agreement
amounted to a variation of the original lease, or a new agreement, the effect
of which was, in either case, to give him a term expiring on September 1 1991.
The learned
judge held that there was an agreement in the terms alleged by the defendant.
As to that he said:
I have come
to the conclusion that while Mr Little was not interested in the improvements
Mr Nelson wanted to do the improvements and was concerned about how to pay for
them if the rent was increased. Mr Little was not concerned at that time, only
in the future when the rent was reviewed. I think it more likely than not that
Mr Little took the view that £50 per week would be alright if there was a rent
review in Nov 1984 and thereafter every three years. I take the view that Mr
Little assented to the suggestion that was made. Mr Nelson went away and no
formal agreement was drawn up.
Then, at the
end of his judgment, the learned judge said:
I have come
to the conclusion that an agreement had been reached that Mr Nelson was to have
a tenancy until 1991 at a rent of £50 per week with a rent review in November
1984.
He went on to
find, implicitly, that there had been performance, or part performance, of the
agreement by the defendant. This finding has not been challenged on behalf of
the plaintiffs before this court, because there was evidence before the learned
judge that during the months, or years, following July 1980, and more
particularly, I think, from 1981 onwards, the defendant had spent substantial
sums on the property.
The learned
judge rejected the plaintiffs’ submission that the defendant had repudiated the
agreement. He accordingly dismissed the claim for possession but gave judgment
for the plaintiffs for £925, which he found due to them in respect of the use
and occupation of the premises since November 1984.
In their
notice of appeal the plaintiffs attack the learned judge’s decision on a number
of grounds. Grounds 1 to 5 are essentially narrative. Grounds 6 to 8 in effect
attack his finding that there was such an oral agreement as the defendant
alleged. Grounds 9 to 11 read as follows:
(9) The learned judge failed to deal at all with
the issue raised by the plaintiffs in their reply that the agreement under
which they had agreed to grant the defendant a term expiring in 1991 had been
repudiated by the defendant by his solicitors’ said letter of January 7 1981
though the said letter was equally capable of being repudiation even if the
said agreement had been in the terms alleged by the defendant rather than those
of the letter of July 3 1980.
(10) Alternatively the learned judge dealt with
the said issue by finding that the said letter was written as a result of a
misunderstanding between the defendant and his solicitors and overlooked the
point that the defendant’s solicitors had apparent authority to write the said
letter and he was bound by its contents.
(11) The learned judge erred in law by failing to
hold that the said letter of January 7 1981 was a repudiation of any prior
agreement to grant the defendant a new lease or an extended term.
Mr Smith, on
behalf of the plaintiffs, having seen the learned judge’s notes of evidence,
now accepts that there was material on which he could make the finding of fact
attacked in paras (6), (7) and (8) of the notice of appeal; accordingly, these
particular grounds have not been pursued before us. Grounds (9) to (11) are the
only material ones for the purposes of this appeal.
Since the
learned judge found that an oral agreement of the nature alleged by the
defendant had been concluded, this involved an implicit finding that an oral
agreement had been concluded which amounted either to a variation of the 1979
tenancy agreement or a new agreement, the effect of which was, in either case,
to give the defendant a term expiring on September 1 1991.
The judgment
of this court in Jenkin R Lewis & Son Ltd v Kerman [1970] 3
All ER 414, which is referred to in Mr Smith’s skeleton argument, shows that
where a landlord and tenant wish that the period of the subsisting term of a
tenancy shall be extended, this object can be achieved only either by granting
the tenant a reversionary lease to take effect on the expiry of the existing
lease or by the surrender of the existing term and the creation of a new term
for the extended period: see per Russell LJ at p 419 G to J of the
report.
In the present
case the oral agreement which the learned judge found to have been concluded
between the parties within the short time after July 3 1980 was clearly not
intended by either of them to take effect merely as the grant of a reversionary
lease. In these circumstances I accept Mr Smith’s submission that the agreement
could only have taken effect, if at all, as an agreement to surrender the
existing term and to create a new term. That much, I think, is common ground.
Furthermore,
since the agreed new term exceeded three years in length, it could not have
been created by parol, in view of the provisions of section 54 of the Law of
Property Act. The oral agreement, therefore, could amount to no more than an
executory agreement for the lease. As Mr Smith has pointed out, while a tenant
in occupation pursuant to an agreement for a lease is to be treated as holding
under the same terms in equity as if the lease had been granted, in view of the
doctrine of Walsh v Lonsdale (1882) 21 ChD 9, he can only rely on
that doctrine if he is entitled to specific performance of the relevant
agreement. Mr Smith has referred us to a passage in Snell’s Principles of
Equity, 28th ed p 592, which states the principle that a plaintiff who
seeks to enforce a contract by way of specific performance must show that he
has performed, or has been ready and willing to perform, all terms and
conditions to be performed by him, and that he has not acted in contravention
of the essential terms of the contract.
The more
controversial part of Mr Smith’s submissions begins with his proposition that
the only possible construction to put on the defendant’s solicitors’ two
letters of January 7 1981 and January 23 1981 is that they evinced a clear
intention on the part of the defendant not to be bound by any agreement to give
him a new lease, and constituted a repudiation of any previous agreement for
the grant of an extended lease which might have previously subsisted.
As to this
submission, the learned judge said this:
I bear in
mind (and counsel for the plaintiffs stresses) the letter written by the
defendant’s solicitors on his behalf in January 1981 about demands for excess
rent and with a reference to a lease not being required. It is said that it is
not consistent with either the letter of July 3 1980 or the version given by Mr
Nelson. There was another letter from Mr Nelson’s solicitors saying again do
not demand further rent or offer him a lease. Said is consistent with
repudiation by Mr Nelson and not consistent with his version of the agreement
arrived at with Mr Little. In almost any case I would have found these
propositions irresistible. But having seen Mr Nelson in the witness box I can
well understand particularly as the solicitors had not seen the document of
July 3 1980 there may well have been a misunderstanding. The sum of £65 was not
asked for by Mrs Little who was doing the accounts but some request for it was
made by Mr Little. Mr Nelson’s understanding was that the rent was to remain at
£50 per week until November 1984. Having seen Mr Nelson I have concluded he
does have difficulty in explaining things. It is quite clear that in 1980 and
1981 Mr Nelson did spend substantial sums on improving the premises and I
cannot think he would have done that if there had not been an agreement with Mr
Little such as he alleges. He also says he increased the insurance because he
had improved the premises, in accordance with his
hesitation. The witnesses on both sides do not have a clear recollection of
what happened which does not make my task any easier. There was an appalling
muddle when the defendant referred in 1984 to the document of July 3 1980.
Then the judge,
in the final sentence of his judgment (which I have already quoted) reaffirmed
his conclusion that an oral agreement of the nature mentioned had been
concluded in 1980.
Before this
court Mr Smith has submitted that in dealing with this important issue of
alleged repudiation, the learned judge erred, first because there was no
evidence to support the view that the defendant’s solicitors had made any
mistake in writing the two letters in question; and second because the
solicitors were in any event the defendant’s agents, and he was bound by what
they said on his behalf. On the basis of the learned judge’s now undisputed
findings as to the existence of the oral agreement of 1980, and the fact that
the defendant’s solicitors had apparently never seen the document of July 3
1980 when they wrote the letters in question, I think there was evidence to
support the view that at the time when those letters were written there was a
misunderstanding between the defendant and his solicitors. However, this seems
to me to be irrelevant, because for my part I would entirely accept the
submission of Mr Smith that, whatever may have been the extent of their
understanding, or the extent of their actual authority, the defendant’s
solicitors had ostensible authority to act on behalf of the defendant in
writing the two letters in question, and that he must be bound by what they
said on his behalf. The crucial question, therefore, is: What is the true
meaning and effect of the two letters?
It has to be
borne in mind that the agreement found by the learned judge to have existed and
now alleged by the plaintiffs to have been repudiated is an oral agreement
concluded shortly after July 3 1980, under which, in effect, there was to be a
surrender of the existing tenancy, and the plaintiffs were to grant, and the
defendant was to take, a tenancy until 1991 at a rent of £50 per week, with a rent
review in November 1984. A statement as to the manner in which repudiation of
contractual obligations can take place is to be found in a short passage in Chitty
on Contracts, 25th ed, at para 1601, which I think Mr Smith was prepared to
accept as correctly stating the law:
If there is
an absolute refusal to perform, the other party may treat himself as
discharged. Short of an express refusal, however, the test is to ascertain
whether the action or actions of the party in default are such as to lead a
reasonable person to conclude that he no longer intends to be bound by its
provisions.
The letters of
January 7 and 23 1981, relied on by the plaintiffs, did not contain any
explicit renunciation of any oral agreement. The question as I see it,
therefore, is whether they amounted to an implicit renunciation of it. The
answer to this question, in accordance with the principles I have stated, must
depend on whether a reasonable man in the shoes of the plaintiffs, on receipt
of one or both of those two letters, would have believed that the defendant had
no intention of carrying out his part under the oral agreement.
Mr Smith drew
our attention to the fact that Mr Little, in the course of his evidence, said
that when the plaintiffs’ solicitors received the letter of January 7 1981, he
took the view that the defendant did not want the new lease. But I think it is
not so much what Mr Little actually thought as what he could reasonably have
thought, which is the relevant question for this court. Mr Smith, in a forceful
argument, has directed our attention most particularly to the letter of January
7. He reminded us of the second sentence, in which the defendant’s solicitors
said:
We understand
that you have demanded from him rent in excess of that reserved by the Lease which
you granted to him on November 1 1979 which will not expire until 1986.
Though the
actual date of expiration of the 1979 tenancy agreement was incorrectly stated,
Mr Smith submitted, and I would be prepared to accept, that this was on the
face of it an affirmation by the defendant’s solicitors that he was relying on
his rights under the 1979 tenancy agreement.
Then Mr Smith
naturally stressed very strongly the sentence in the fifth paragraph of that
letter:
Please do not
approach our client with accounts for rent which is not due, demand excess rent
or offer him a Lease.
This, he
submitted, could mean only one thing, on any reasonable construction of that
sentence, namely that the defendant was not prepared to take up a new lease of
the premises.
However
forceful these submissions are, I think that the letter of January 7 1981 and
the other letter, of January 23 1981, containing similar phraseology, have to
be read against the context in which they were written and received. What is
perfectly clear from the terms of both letters is that, quite shortly before
the letters were written, there must have been some kind of offer by Mr Little,
or by the plaintiffs, to the defendant of a new lease. They cannot merely have
been referring to the document of July 3 1980. There must have been further
communications of one kind or another, which the defendant had interpreted as
an offer of something.
Unfortunately,
the evidence as to these communications is scanty in the extreme. However, we
do get a little indication of what was happening between the parties from the
evidence of Mr Little and from the defendant himself. Mr Little, in the course
of his evidence, having referred to the document of July 3, went on to say (I
am quoting from the learned judge’s notes):
I phoned
Nelson and asked him when he was going to start paying the £65.000 a week.
Can’t remember precisely what I said or he said. Doc 6 Bundle B
that is the
letter of January 7 1981
I remember
that letter, and when I got it I thought he did not want the new lease.
It thus seems
fairly clear, therefore, from Mr Little’s own evidence, that following the
conclusion of the oral agreement made in or about July 1980, he was making
requests, or demands, on the defendant to pay rent at the rate of £65 (not £50)
a week.
Then the
defendant, in the course of his evidence, deals with this point very briefly.
He was asked about the letter of January 7 and he said this:
I think I
asked them to write this letter. Forget why I wanted them to write this letter.
I suppose they
that must mean
the plaintiffs
had asked me
to pay at £65.00 a week. Never have paid rent at rate of £65.00 per week.
It is true
that, when one reads this evidence, one finds Mr Little saying that, on receipt
of the letter of January 7, he thought that the defendant did not want the new
lease. However, one important point appears to be common ground both in the
material evidence of the defendant and of Mr Little himself. The letter of
January 7 1981 had been preceded by a demand, or request, by Mr Little that the
defendant should pay rent at a rate, not of £50 per week, as had been provided
for by the oral agreement of 1980, but at a rate of £65.00 per week. This was
£15 per week more than the rent which the learned judge found to have been
agreed under the oral agreement.
In these
circumstances, whilst I accept that the matter is not entirely clear, I for my
part think that, on the evidence, the reasonable interpretation for the
plaintiffs to have placed on the particular passages in the two letters of
January 7 and January 23 1981, which are so heavily relied upon by them, is
that the defendant did not wish to be bothered with further proposals which
would involve him with payment of a rent of more than £50 a week and that he
was content to stand on his existing rights. In short, I think that the judge
was right to find that there had been no repudiation by the defendant of the
oral agreement which he found to have been made.
To put the
point in one sentence, in my view a man cannot be said to repudiate a contract
to take a lease at a rent of £50 a week by refusing an offer of a lease at £65
a week.
We are not
helped, as the learned judge was not helped, by the obscurity of much of the
evidence, but I think it is worth adding this comment. The subsequent conduct
of the plaintiffs seems to me hardly consistent with the view that there had in
January 1981 been any repudiation by the defendant of the oral agreement
providing for the surrender of the old lease and the grant of a new one. They
did not suggest that any repudiation had taken place. They were content to
allow him to continue on the premises, and indeed to incur substantial
expenditure on them. It was only several years later that they took the present
proceedings to obtain possession of the premises.
In all the
circumstances — though I reach this conclusion by a somewhat different route
from that taken by the learned judge — I think that he reached the right
conclusion, and I would dismiss this appeal.
Agreeing,
EASTHAM J said: In view of the fact that my lord has so fully and accurately
dealt with the documents in this case, it seems to me that this appeal falls
within a very narrow compass. Notwithstanding the terms of the respondent’s
defence in the court
effect that after the date of the important document of July 3 1980 he reached
an oral agreement with Mr Little of the appellant company, under which he was
to have a tenancy until 1991 at a rent of £50 per week until the expiration of
his current tenancy in 1984, but otherwise subject to the terms of the document
of July 3.
In spite of
the fact that that evidence was inconsistent with the terms of the defence and
some of the letters which the respondent’s solicitors wrote prior to the
hearing, the learned judge, who had the advantage of seeing both Mr Little, on
behalf of the appellants, and the respondent, in the witness box, came to the
conclusion that the respondent had established such an agreement.
When the legal
advisers to the appellants had an opportunity of seeing the judge’s notes of
evidence, very rightly, and very frankly, they came to the conclusion, which is
reflected in the skeleton argument on the appellant’s behalf, that there was
material on which the learned judge could make that finding relating to the
agreement alleged by the respondent. Accordingly, as appears from para 5 of the
skeleton argument, paras 6, 7 and 8 of the notice of appeal, which challenge
that agreement, were no longer to be pursued.
That leaves
only the possible question of repudiation, and if there was a repudiation,
whether that repudiation was accepted. The learned judge dealt with that upon
the basis that the letters alleged to constitute the repudiation are those of
January 7 1981 and January 23 1981. The learned judge thought that there had
been some misunderstanding as between the respondent to this appeal and his
solicitor; I agree with Mr Smith that if that is the only ground on which the
judge’s finding that there was no repudiation is founded, that would not be a
good ground. But as I think Mr Smith conceded, whether or not those letters, or
either of them, amounted to a repudiation depends on whether a reasonable man
in the shoes of the plaintiffs, on receiving those letters, would have believed
that the defendant had no intention of carrying out his part of the oral
agreement. We have all the material before us; we have the factual matrix,
namely, the previous negotiations by Mr Little, and, at any rate in my
judgment, when one comes to consider in particular the first letter on which
most reliance was placed, it cannot be construed by any reasonable person as
being a reference to not wanting, under the terms of the oral agreement, an
extended tenancy, but was declining what had been offered by Mr Little, namely,
a further lease to 1991 at a rent of £65.00 per week.
In my judgment
at any rate there was no repudiation, and it is therefore unnecessary to decide
whether it was accepted. If it were necessary to go on to that, I would have
had very considerable doubt that the so-called repudiation had been accepted,
by reason of the facts mentioned by my lord, Slade LJ, in his judgment.
I agree that
this appeal should be dismissed.
The
plaintiffs’ appeal was dismissed with costs. Legal aid taxation of respondent’s
costs was ordered.
