Leave to bring forfeiture proceedings notwithstanding restrictions in Leasehold Property (Repairs) Act 1938 can be given only on adequate proof by landlords of a prima facie case as to existence of dilapidations etc–Fact that a schedule of dilapidations has been served on the tenant is not enough, a surveyor or other appropriate witness must be called to make out a case which, if ultimately accepted, would support a forfeiture–Further point on application of Civil Evidence Act 1968–Landlord’s application to go back for rehearing
This was an
appeal by Mr Maurice Jackson from an order of Judge Granville Smith at Edmonton
County Court on December 6 1974 granting the respondents, Charles A Pilgrim
Ltd, leave to proceed for forfeiture of a lease of a shop and premises at 62
Fore Street, Edmonton, not withstanding the restrictions imposed by the
Leasehold Property (Repairs) Act 1938.
Mr R Hayden
(instructed by Norman Cecil & Martin) appeared for the appellant, and Mr D
Parry (instructed by Price, Williams & Ostler) represented the respondents.
Giving
judgment, MEGAW LJ said: This is an appeal from an order made by Judge
Granville Smith in the Edmonton County Court on December 6 1974. The order was
made in proceedings by Charles A Pilgrim Ltd (whom I shall call ‘the
landlords’) on the one hand, and Maurice Jackson (whom I shall call ‘the
tenant’) on the other hand. The landlords, by an assignment of the reversion in
February 1972, became freeholders of a shop and premises known as 62 Fore
Street in Edmonton. The tenant held by virtue of an assignment from a previous
tenant on January 22 1971. The relationship thus existed between the parties of
landlord and tenant. On June 27 1972 the landlords prepared and served a
document described as ‘Notice of works required to be done.’ No doubt (though we have not been privileged
to see the document) it was concerned with alleged dilapidations of the
premises. On February 25 1974 the landlords sent to the tenant a schedule of
dilapidations which was in fact dated February 14 1974. That schedule again we
have not seen, but we are told that it contained a statement of a substantial
number of alleged dilapidations of the premises. In fact, the figure which was
put in that schedule as the cost of repair of the dilapidations totalled over
£7,000. On March 6 1974 a notice was served by the landlords on the tenant
under section 146 of the Law of Property Act, purporting to give the tenant
three calendar months within which to remedy the alleged breaches of the
tenant’s covenant. A counternotice was served by the tenant on March 13 1974
under the provisions of the Leasehold Property (Repairs) Act 1938.
The
application out of which the present appeal arises was an application brought
by the landlords under the provisions of the 1938 Act, asking for leave to
bring proceedings for forfeiture of the lease. The application, dated July 9
1974, specified as the grounds on which the landlords claimed to be entitled to
the order to take proceedings to recover possession, two of the grounds
specified in section 1(5) of the 1938 Act. They were the grounds in paragraphs
(a) and (d) respectively of that subsection. The first was ‘that the immediate
remedying of the breaches is requisite for preventing substantial diminution in
the value of the applicants’ reversion’: that is paragraph (a) of subsection
(5). The second was ‘that the breaches can be immediately remedied at an
expense that is relatively small in comparison with the much greater expense
that would probably be occasioned by postponement of the necessary work’: that
is paragraph (d) of the subsection. The tenant filed his answer on September 3
1974, following an order for directions given by the registrar in the county
court. By that answer the tenant admitted the existence of the landlord and
tenant relationship in respect of the premises, but denied that there were any
breaches of covenant or that it was right that the landlords should be given
leave for proceedings to be taken. In that answer there was no suggestion put
forward, either explicitly or, as I read it, by inference, of any lack of good
faith on the part of the landlords. Whether or not, if such a point was to be
taken, it ought to have been included in the answer, is a matter which I need
not stay to consider. The fact is that there was no suggestion of lack of bona
fides, fraud, or any such matter in the answer that was put forward. The
hearing of the application took place before Judge Granville Smith on November
25 1974. He, it would appear, had made up his mind at the end of the hearing of
the application, but at the request of the solicitor who was appearing for the
tenant he postponed giving his formal decision until December 6, when he gave
his decision granting leave to the landlords to bring the proceedings. The
tenant was thereafter given leave by the learned judge to appeal to this court
against that decision.
What happened
at the hearing can be briefly described. Counsel for the landlords, in his
opening address to the judge, indicated to the judge–because, rightly, he
thought that it was proper to call the judge’s attention to the authority–the
decision of this court in Sidnell v Wilson [1966] 2 QB 67. As
counsel interpreted that decision, and as he invited the judge to interpret it,
that meant that it would be inappropriate to hear formal evidence from the
surveyor who had prepared the schedule of dilapidations, and who was in fact
present in the court available to give evidence if required. Counsel went on
then to open, at very considerable length, the details of the dilapidations on
which the landlords were relying. He did that by going through the schedule of
dilapidations to which I have referred, together with, I think, a supplemental
schedule which had been prepared by the same surveyor in October 1974. That
involved very considerable detail, and a very lengthy disquisition on the part
of counsel to explain what were the supposed dilapidations.
submitted to the judge that the landlords’ application should be treated as
having failed because no evidence had been given to support it, and without
evidence the application could not succeed. The basis of the suggestion of lack
of evidence, of which, we are told, the solicitor had attempted to make
representations earlier during the course of the opening address of counsel for
the landlords, was that counsel had simply read the schedule of dilapidations
and so forth prepared by the surveyor, and the surveyor had not been called to
give evidence; he had not been sworn; there was no affidavit from him; and
there was no agreement between the parties that the schedules should be
accepted as evidence of the facts stated therein. Whether the objection was
expressed precisely in that form it is unnecessary to consider; but that, as I
understand it, was the substance of the objection that was taken. The learned
judge then rejected that submission. Counsel for the landlords invited the
learned judge to allow the surveyor (who, as I have already said, was present
and available to give evidence) to be sworn and to give evidence. But the
judge, apparently because of the way in which he read the authority of this
court in Sidnell’s case, decided against that application made at that
stage by counsel for the landlords; and accordingly there was no evidence given
other than the evidence contained in the written reports, in so far as it was
properly to be treated as evidence. Thereafter there was a further, perhaps
curious, little episode. The solicitor representing the tenant then sought to
call evidence, on behalf of the tenant, to be given by a partner in a firm of
surveyors. Counsel for the landlords objected to that evidence, on the basis of
pursuing logically the position that had already been taken up in relation to Sidnell’s
case. The judge decided to hear the evidence, and did hear it. Then, according
to the note that we have had, at the end of the hearing (presumably for the
second time from what we have heard) the solicitor submitted that the court had
wrongly admitted both the schedules and the expert’s reports put forward on
behalf of the landlords.
So the judge
reserved his decision. He gave it on December 6. We have had provided to us
today a copy of the notes of that judgment taken by counsel for the landlords,
which was approved by the learned judge, as amended by him, on December 13 of
last year. The learned judge refers to the question whether or not evidence
ought to have been given on oath or in some formal way; but, by reference to a passage
in the judgment of Harman LJ in the Sidnell case, he expressed the view
that it would have been a waste of time to have had the evidence given, that it
was not required, and that therefore there was no substance in the objection
that had been taken on behalf of the tenant. The judge, of course, had well in
mind, and indeed pointed out, that this was an application for leave to bring
proceedings, and he may have regarded it (and properly so) as being something
which was very undesirable that there should be a full hearing on an
application for leave to take proceedings, since the same matters, if leave was
given, would have to be gone through again for a second time when the
proceedings were brought as a result of the leave. But his ruling involved more
than that. The appeal to this court on behalf of the tenant is simply based on
this: that the learned judge was wrong in his ruling; that there was nothing in
Sidnell’s case which justified the ruling that he gave; that the learned
judge, in granting leave, had done so without anything that could properly be
called evidence; and that as the onus was on the landlords to show by evidence
that there was a prima facie case, the decision to grant leave should
not stand. In the notice of appeal this court is asked on that basis to reverse
the judge’s decision and to refuse leave, or alternatively to order that there
should be a fresh hearing. In my view, the learned judge unfortunately did
misinterpret the effect of the decision of this court in Sidnell’s case.
Let me read one passage from the judgment of Lord Denning MR at the bottom of
page 77 of the report. The Master of the Rolls said this:
Now what has
the landlord to prove in order to get leave?
Has he actually to prove a breach by the tenant or has he only to show a
prima facie case of breach?
[Counsel] for the tenant admitted, as I think rightly, that the landlord
need only show a prima facie case of a breach by the tenant. That is all
he is required to do. After all, the application for leave is only an interlocutory
application. It cannot be supposed that the landlord has to prove his whole
case as if it were the trial. It must be sufficient if he shows a prima
facie case, by which I mean a case which, if believed, would enable him to
succeed.
While that
stresses the necessity for the judge hearing such an application to do all that
he can to ensure that this is not turned into what I may call a full-scale
battle, there is nothing in that passage which in my judgment indicates that in
the absence of agreement between the parties, the landlord’s application for
leave can properly be decided on the basis of something which is not evidence:
not evidence because it has not been given on oath, has not been given on
affidavit, and is not the subject of agreement between the parties that it
shall be taken as a written statement evidencing the facts stated therein
without the author of the statement being called. The passage from Harman LJ’s
judgment which, as I have already mentioned, the learned judge quoted as supporting
the decision that he made, was this (at p 79C):
Now having
got so far, the county court judge approached the matter on the footing that it
was necessary that it should be proved before him that a breach had occurred.
If that be right, one of the effects of the Act is to make two actions flourish
where one flourished before. Having proved that a breach has occurred for the
purpose of getting leave, you have to prove it all over again for the purpose
of the action. I do not think that can have been meant. What must have been
meant was that the applicant must show a prima facie case, and it is
enough if that is what he does.
I can quite
follow, with all respect, how the learned judge in this case regarded that as
being an indication that in the view of Harman LJ, it was not necessary for the
landlord to prove something in the sense of giving evidence. But when one looks
at the passage as a whole, I am quite satisfied that that is a misunderstanding
of the passage, and that the learned Lord Justice is saying the same as the
Master of the Rolls had said in the passage I have already quoted. He is not
saying that it is unnecessary that there should be evidence: he is saying that
all that is required from (in that case) the landlord, in order to obtain leave,
is that he should show a prima facie case. But in my view the prima
facie case has to be shown by means of evidence which is evidence in the
proper sense of the word. The parties, of course, can always agree that certain
facts shall be admitted, or they can agree that a document, without its author
being called, shall be taken as being evidence of the facts stated therein. In
the absence of such agreement, there must be proof in the sense that the
procedure of the court for proving a matter shall have been duly followed. It
therefore follows, though I think it is extremely regrettable that this matter
should have come forward in the way in which it has, that I take the view that
the learned judge arrived at the wrong decision.
There was put
forward on behalf of the landlords in this court the contention that even
though Sidnell’s case might not have justified the learned judge in
doing what he did, nevertheless it was a proper case in which the provisions of
the Civil Evidence Act 1968 could properly be invoked to support the conclusion
at which the learned judge arrived: that is to say, that under the Civil
Evidence Act, either (as counsel originally submitted) section 4 (1), or (as he
later submitted) section 2, the surveyor’s reports and schedules could have
been treated as evidence: the judge had a discretion so to do, and in the
circumstances he ought to be treated as having
his decision. I am afraid that I cannot take that view. Whatever might have
been the position under the Civil Evidence Act (and I do not propose to express
any view on that) if the learned judge had been asked to give effect to the
provisions of that Act, it would be wrong to allow the landlords now to have
the benefit of that Act, assuming that it could properly have been applied in
their favour, since no reference was made to that Act at the hearing, no
application was made to the judge for the admission of evidence under that Act,
and the tenant’s representative had no opportunity to make submissions with
regard thereto.
For the tenant
it was suggested that the landlords’ application was in some way bogus, or
lacking bona fides, and that for that reason this court ought not to order a
new trial, but ought to reverse the judge’s decision and refuse leave. As I
have already said, there is no indication in the formal answer of any such
point being taken. All I would say here is that on what I have seen in the
matters that have come before this court, there is no justification for such a
suggestion. It would in my judgment be wrong in those circumstances, and unfair
to the landlords, that the decision of the learned judge should be reversed in
the sense that this court should say that leave will not be given. On the other
hand, I do not think that, in fairness to the tenant, it would be right to
uphold the decision of the learned judge. The only course, I think, which we
can properly and in fairness to both parties take in the circumstances is to
order that there shall be a fresh hearing of the landlords’ application. It is
no disrespect at all to the learned judge when I say that it is desirable that
it should come before a different judge, as I am sure the learned judge himself
would wish. It is in my view desirable that the further hearing should be
brought on with all possible expedition in the county court; and if my brethren
agree, no doubt that view will be indicated to those who are concerned. What
will happen on that fresh hearing I do not propose to speculate; but I do wish
to stress this, that though, in my judgment, Sidnell’s case does not
have the effect which the learned judge thought, it is an authority for the
proposition, which I think is clearly set out therein, that the application for
leave to bring proceedings in a matter of this sort is something which is very
different in kind from the full-scale hearing on the merits of the matter which
would be expected to take place should leave be granted. It is an application
for leave. There may be difficult questions of degree about how far it is
appropriate for matters to be tested at that stage, but what the landlord has
to show at that stage is nothing more than a prima facie case. I would
allow the appeal and direct a new trial.
ORR LJ: I
agree.
ROSKILL LJ: I
also agree. I desire to add a word or two on the last point which my Lord
mentioned at the end of his judgment. The present appeal is certainly not
conspicuously supported by merit; and for my part I have great sympathy with
the landlords. They by their counsel had available the requisite evidence which
might, if accepted by the learned judge, have enabled them to prove the
necessary prima facie case. But the learned judge, with all respect to
him, appears to have misunderstood the decision of this court in Sidnell
v Wilson to which my Lord has referred. He appears to have treated the
judgments of the Master of the Rolls and of Harman LJ as in some way enabling a
party seeking to make an application under the 1938 Act to put his case before
the court otherwise than in proper form and as absolving him from complying
with the ordinary rules of evidence. That, as my Lord has said, is not the
case. The quotation from Harman LJ’s judgment in our note of the learned
judge’s judgment leaves out the crucial passage, which is on p 79 of the
report, at letter F:
This was a
case which was to be judged as interlocutory applications on motion are judged.
If the applicant shows a case for it, he is prima facie entitled to have
his relief. That decides finally nothing between the parties.
An
interlocutory application on motion, of course, has to be properly supported by
appropriate evidence. In my judgment, the learned judge, objection having
apparently been taken on behalf of the tenant, was not entitled to deal with
this application by reference to the reports which were put before him without
being proved by the appropriate witness being called, or without their being
admissible under the Civil Evidence Act 1968 (which they certainly were not),
or for some other possible reason. Like my Lord, I think that this application
must go back to the county court for rehearing before another judge; and like
my Lord, I think that the rehearing should take place as soon as possible.
Enough time has already been spent unnecessarily in this case, through no fault
of the landlords.
An order was
made accordingly. Costs above and below were made costs in the application for
leave to be fixed at the conclusion of the rehearing. The landlords were
ordered to pay the costs of a motion for admission of fresh evidence which was
not pursued.
