Landlord and Tenant Act 1954, Part II, section 24A — Procedural problems in regard to landlords’ right to apply for interim rent — Whether landlords’ summons for interim rent invalid because it did not specify a return date — Whether a summons for interim rent must be served within 12 months from its date of issue — Whether anything in rules requires prompt service — Whether it was correct to extend the time for service — Texaco Ltd v Benton & Bowles (Holdings) Ltd and Waddon v Whitecroft Scovell Ltd considered — Master’s order varied — Leave to appeal given because of novel point
remarkable for the number of summonses to which the question of interim rent
under section 24A of the Landlord and Tenant Act 1954 gave rise — The landlords’
original summons, which by an oversight was not served, did not specify a term
date but was issued ‘for a date and time to be fixed’, a practice not uncommon
in the Chancery Division and almost invariable in the Commercial Court — It was
a year later before the landlords discovered that the summons had not been
served — When they discovered the oversight they sent a copy of the summons to
the tenants’ solicitors, who immediately took the point that the summons was
invalid because not served within a year of issue — The landlords then issued a
second summons for interim rent and on this occasion served it shortly
afterwards — The landlords also applied for and obtained an extension of time
for the service of the first summons — The tenants then issued a summons to set
aside the order extending time and to strike out the first summons on the
ground that a summons for interim rent should be served promptly — When this
tenants’ summons came before a master he suggested an additional ground, namely
that the landlords’ summons was invalid from its inception for want of a
specified return date — The master upheld the point and struck out the summons
— To complete the story of the summonses, the landlords subsequently issued two
further summonses, one to amend the second summons for interim rent by
substituting a specified return date and one, being a third summons for interim
rent, specifying a return date from the outset — All three summonses, as well
as the appeal from the master’s order striking out the first summons, now came
before Millett J
of his judgment Millett J dealt with the statutory background, the relevant
practice directions and the respective interests of landlords and tenants in
regard to interim rent procedure — He referred to the case of Texaco Ltd v Benton &
Bowles (Holdings) Ltd and mentioned a forthcoming ‘new and compendious practice
direction for the Chancery Division’ — He then determined the specific
questions which had arisen in the present case:
interim rent to contain a specific return day; the views of Falconer J in
Texaco Ltd v Benton & Bowles (Holdings) Ltd were not followed — The disputed
summons in the present case was therefore validly issued
served promptly; indeed, it was not served within a year of its issue — Even in
the absence of a practice direction requiring prompt service a summons for
interim rent must be served within 12 months of its date of issue
order for the extension of time for service of the summons, but in Millett J’s
opinion the time ought not to have been extended — The practice ought to have
been the same as for the service of a writ after the expiry of a limitation
period, as set out by the House of Lords in Waddon v Whitecroft Scovell Ltd
varied the master’s order in respect of the first summons by declaring that it
was valid when issued, but he set aside the vacation master’s order for extending
the time for service and set aside service of the summons — The second summons
was also valid when issued and did not need any amendment; it was not disputed
that it was issued promptly — The remaining summonses required no order
The following cases are referred to in
this report.
Michael Kramer & Co v Airways Pension Fund
Trustees Ltd (1976) 246 EG 911
Texaco Ltd v Benton & Bowles Holdings Ltd
[1983] EGD 183; (1983) 267 EG 355, [1983] 2 EGLR 62
Waddon v Whitecroft Scovell Ltd [1988] 1
WLR 309; [1988] 1 All ER 996, HL
This was an appeal by the defendant
landlords, General Accident Life Assurance Ltd, from an order of Master Gowers
striking out the defendants’ summons for an interim rent in an application for
a new tenancy under Part II of the Landlord and Tenant Act 1954 by the
plaintiff tenants, Coates Brothers plc.
Dennis Levy QC and Rhodri Davies
(instructed by Edwin Coe) appeared for the appellants (defendants); Kim Lewison
(instructed by Waltons & Morse) represented the respondents (plaintiffs).
Giving judgment, MILLETT J said:
This is an appeal by the defendant landlord from an order of Master Gowers
dated December 3 1990 striking out its summons for interim rent in an
application by the tenant for a new tenancy under Part II of the Landlord and Tenant
Act 1954 (‘the Act’). The case was heard in chambers but raises a point of some
general importance and I am, accordingly, giving judgment in open court.
The history of the proceedings is as
follows. The landlord served a notice on the tenant under section 25 of the Act
on April 12 1989. The tenant duly served a counternotice and, on August 4 1989,
issued an originating summons for the grant of a new tenancy.
On August 17 1989 the landlord issued a
summons for interim rent but, through an oversight in the offices of the
landlord’s solicitors, it was not served. The summons was issued in a form
which has become mereasingly common; it did not specify a return date but was
issued ‘for a date and time to be fixed’.
The date specified in the lease for the
expiry of the term thereby granted was December 22 1989, although the term was
continued by virtue of section 24 of the Act.
In August 1990 the landlord’s solicitors
discovered that the summons for interim rent had not been served. On August 30,
they sent a copy of the summons to the tenant’s solicitors by way of service.
The tenant’s solicitors immediately took the point that the summons was invalid
because it had not been served within a year of issue. Accordingly, on
September 19 1990, the landlord issued a second summons for interim rent and
served it shortly thereafter. It was also a summons for a date and time to be
fixed; it has been adjourned by the master and is also before me.
Alerted to the fact that the first
summons had not been served within a year, the landlord applied to the vacation
master (Master Cholmondeley-Clarke) for an order extending the time for service
of the summons. He extended the time for service from August 17 to October 17
1990.
On October 23 the tenant issued a summons
to set aside Master Cholmondeley-Clarke’s order and strike out the landlord’s
first summons on the ground that a summons for interim rent should be served
promptly and the master ought not to have extended the time for service where
the summons had not been served within 12 months of its issue.
The tenant’s summons came before Master
Gowers on December 3 1990. At his instigation, the tenant sought and obtained
leave to amend the summons to add an additional ground; namely that the
landlord’s summons was invalid from its inception for want of a specified
return date. Master Gowers upheld that submission and struck out the summons.
It followed that it was unnecessary for him to consider the question whether
the summons ought to have been promptly served and, if not promptly served,
whether the time for service was properly extended, since, in his view, the
summons was not validly issued in the first place. Moreover, he was of the
opinion that the failure to include a specified return date in the summons was
not a mere irregularity but a defect so fundamental that it could not be cured
by amendment. His order is now appealed to me.
The landlord has subsequently issued two
further summonses: one for leave to amend the second summons for interim rent
by substituting a specified return date for the words ‘for a date and time to
be fixed’ and one being a third summons for interim rent which specifies a
return date from the outset. All three summonses are before me as well as the
appeal from the order of Master Gowers.
Before I deal with the appeal, I ought to
say something about the statutory background and the practice directions which
have from time to time been in force in relation to applications for interim
rent.
The landlord’s right to apply for interim
rent was introduced into the Act by a statutory amendment made in 1969. It
takes the form of a new section, section 24A of the Act. The object of
inserting the new section is well known. It was largely to prevent tenants in
occupation of business premises at a historic rent which had become well below
the current market rent from remaining in occupation pending the determination
of their application for a new tenancy and dragging out the proceedings so that
they might enjoy the benefit of a low rent as long as possible.
Only the landlord can apply for an
interim rent. If he does make the application, then the court has power to fix
an interim rent from the date of the issue of the summons or the date specified
in the lease for the expiry of the term thereby granted, whichever is the
later. In the present case, therefore, if the first summons for interim rent
was valid, then the court has power to fix an interim rent as from December 22
1989. If, however, that summons was invalid (and if the invalidity cannot be
cured) then the landlord will be unable to recover an interim rent from
December 22 1989 until the date of the issue of a later and valid summons for
interim rent. The court has no jurisdiction to fix any date other than the date
of the issue of the landlord’s application for an interim rent as the date from
which the interim rent should be payable.
In the great majority of cases the
tenant’s application for a new tenancy is followed by negotiations between the
parties or their surveyors with a view to fixing the rent of the new tenancy to
be granted and (since 1969) of the amount of any interim rent to be paid. In
such cases there is no need for these questions to be determined by the court
unless the negotiations break down.
It is in the interest of the landlord to
issue the summons for interim rent as soon as possible since, as I have said,
the court cannot award an interim rent from any date preceding the issue of the
summons. If the summons contains a specified return date and the parties do not
need the rent to be determined at that stage, they may by consent ask the
master to adjourn the first hearing of the summons sine die. That was
formerly a common practice.
In order to avoid the necessity for
taking a fixed return date with the intention of then adjourning the hearing of
the summons sine die, the practice arose of issuing a summons without a
fixed return date but in the form of the summons issued in the present case;
that is to say, for a date to be fixed. Upon service of the summons on the
tenant, either party could then apply to fix a date for the first hearing of
the summons. If neither side applied to fix a date, the effect was the same as
if, after a first hearing, the proceedings had been adjourned sine die
with liberty to restore. But, while it is in the landlord’s interest to issue
the summons as soon as possible, failure to serve it on the tenant could mean
that the tenant remained in ignorance of the issue of the summons and would be
unable to apply to the court for an early date for the hearing should he so
desire it.
That could work to the disadvantage of
the tenant, for, whereas the tenant is given a choice by the Act when the court
determines the amount of rent to be payable under the new tenancy and may
decline to take up the new tenancy if he cannot afford to pay the new rent, he
is not given a similar right in the case of an interim rent. Once the amount of
the interim rent is fixed, the tenant is obliged to pay it, and, although he
may abandon his application for a new tenancy and thus bring to an end his
obligation to pay the interim rent for the future, he would have no alternative
but to pay the amount of the interim rent from the date of issue of the
landlord’s summons until three months after the abandonment of his application
for a new tenancy. If the landlord were to issue a summons for an interim rent
and not serve it
an inescapable liability of which he was entirely ignorant. On the other hand,
prompt service of the summons for an interim rent could well influence the
tenant to abandon his application for a new tenancy. It is, therefore, of the
greatest importance that the landlord’s summons should be served promptly.
A practice direction made in 1976 ([1976]
1 WLR at p 201) contained a paragraph to the following effect:
4 If the landlord wishes the court to
determine an interim rent under s.24(a) of the Landlord and Tenant Act 1954 but
is content that the determination should await the determination of the
application for a new lease and in reliance on the procedure specified above
the originating summons has not been brought on for hearing, he may likewise
issue a general summons for the determination of the interim rent which states
the hearing as being for a day to be fixed instead of for a date and time. Such
a summons must be served promptly and it may be brought on for hearing by
either party on a day to be fixed by the court on not less than two days’
notice to the opposing party.
That practice direction recognised the
current practice of serving the landlord’s summons for an interim rent for a
date to be fixed, but required the summons to be issued promptly.
In Texaco Ltd v Benton &
Bowles (Holdings) Ltd*, a summons for interim rent was issued by the
landlord for a day to be fixed, but was not served for more than a year.
Falconer J, in reliance on the practice direction, struck out the summons. In
the course of his judgment, he observed that Ord 32, r3 of the Rules of the
Supreme Court contained a requirement that a date for the hearing be specified
in the summons and that the service of the summons was governed by the return
date. He then went on to consider the terms of the practice direction, observed
that it required the service to be made promptly and, accordingly, struck out
the summons because it had not been served promptly. He did not consider
whether the practice direction was valid or whether a summons for a date to be
fixed, in conformity with the practice direction, could be validly issued.
*Editor’s note: Reported at (1983) 267 EG
355, [1983] 2 EGLR 62.
On December 8 1986 a further practice
direction, cancelling obsolete practice directions, included para 4 of the 1976
practice direction among those to be cancelled. The grounds upon which it was
thought to be obsolete have not been discovered, despite the industry of
counsel, and I am unaware of them. A new and compendious practice direction for
the Chancery Division is due to be promulgated very shortly, and it will be
found to contain a paragraph to the same effect as para 4 of the 1976 practice
direction. However, the present case must be determined on the basis that no
such practice direction is currently in force.
I turn, first of all, to the question
whether the first summons for interim rent was valid when issued or, as Master
Gowers held, was invalid for want of a return date specified in the summons.
The master held that Ord 32, r3 requires every summons to contain a specified
return date. He said:
The truth of the situation, as far as I
understand the requirements of the Rules of the Supreme Court, is that the
question of the ultimate date for validity of service for the summons for
interim rent is irrelevant, since, as I understand the system under Ord 32, r3,
such a summons must state a specified date and time for a hearing. In my
judgment, a summons under Ord 32, which this is, before it has affixed the seal
of the Supreme Court, must state a specified date and time for its hearing and
this is such a fundamental requirement, for what might loosely be described as
the Ord 32, r3 system, that it cannot be cured under Ord 2, r1.
In my judgment, this is erroneous. Ord 32
governs applications and proceedings in chambers; r2 deals with the issue of a
summons. It provides that a summons is taken to be issued when it is sealed by
an officer of the appropriate office and that it may not be amended after issue
without the leave of the court. It contains nothing which requires it to
contain a specified date for the hearing. R3 deals with the service of the
summons. It is as follows:
A summons asking only for the extension
or abridgement of any period of time may be served on the day before the day
specified in the summons for the hearing thereof, but, except as aforesaid and
unless the court otherwise orders or any of these rules otherwise provides, a
summons must be served on every other party not less than two clear days before
the day so specified.
It is clear that Master Gowers was
founding himself on the concluding words of that rule: ‘a summons must be
served on every other party not less than two clear days before the day so
specified’, that is to say, specified in the summons. But, in my judgment, those
words do not require the summons to specify a day. All they do is to require
the summons to be served not less than two clear days before the day so
specified, if any. If none is specified then there is no time for
service laid down by the rule. The master was construing the rule, which is
concerned with the time for service of the summons, as if it was concerned with
its issue.
In my judgment, there is no requirement
in Ord 32, r3 for a summons to contain a specified return day, and the practice
— which is almost invariable in the Commercial Court and not uncommon in the
Chancery Division — for a summons to be issued for a day and time to be fixed
is not in contravention of Ord 32, r3, and the 1976 practice direction was not
an ultra vires attempt to circumvent the terms of Ord 32, r3.
It is true that in Texaco Ltd v Benton
& Bowles (Holdings) Ltd Falconer J observed that Ord 32, r3 requires a
summons to contain a specified return date, but, in my judgment, that was not
necessary to his decision (and, I think, logically inconsistent with it) and,
if it was intended to be a decision on the meaning of the rule, I decline to
follow it.
In my judgment, therefore, the summons in
the present case was validly issued. It was, however, plainly not served promptly.
Indeed, it was not served within 12 months of its issue. There was no reason
why it should not have been served as soon as it was issued, notwithstanding
the fact that the term granted by the lease had not then expired. The next
question, therefore, is whether there is any requirement that the summons be
served within a year of its issue. Had the 1976 practice direction requiring
prompt service remained in force, the landlord would clearly have been in
breach of it. I approach this case, however, on the basis that there was no
practice direction in force at the relevant time. Mr Levy, who appeared for the
landlord, submitted that, in the absence of any practice direction requiring
prompt service of the summons, no time for service is provided for and there
was no need for the landlord to seek an order extending the time for service.
In my judgment, however, even in the absence of a practice direction requiring
prompt service, a summons for interim rent must be served within 12 months from
the date of its issue.
Although Falconer J, in Texaco Ltd
v Benton & Bowles (Holdings) Ltd, founded himself upon the existence
of the 1976 practice direction, there was, in my view, an alternative ground
for his decision. In my judgment, a summons for interim rent, although
interlocutory in form, constitutes a true originating process. It creates the
landlord’s cause of action for interim rent and, once issued, does not, like an
ordinary interlocutory application, fall if the tenant withdraws the
proceedings in which it is issued: see Michael Kramer & Co v Airways
Pension Fund Trustees Ltd (1976) 246 EG 911. Indeed, the application may be
made by originating summons and must be so made in some situations if, for
example, the tenant has withdrawn his application for a new tenancy before the
landlord has issued a summons for an interim rent. An originating summons would
have to be served within 12 months in order to comply with the rules. In my
judgment, it is not inappropriate to require a landlord’s summons for interim rent,
issued in the tenant’s application for a new tenancy, also to be served within
12 months of its issue. If that is right, then the landlord needed an order for
the extension of time.
The next question is whether the vacation
master was right in extending the time for service of the summons. In the case
of a writ, it is well established that a plaintiff must show good cause for an
extension, which in most cases requires a good reason to be shown for not
having served it during its validity. This is particularly the case where the
cause of action has become statute-barred.
The considerations to be taken into
account when deciding whether to renew a writ in such a case have been laid
down by the House of Lords in Waddon v Whitecroft Scovell Ltd
[1988] 1 WLR 309. The present is not a case where the landlord’s claim is
statute-barred but it bears a strong similarity to such a case since, unless
the landlord can maintain the first summons for interim rent, it must lose the
right to any interim rent for any period prior to the issue of a later summons.
Accordingly, the extension of the time for service of the summons affects the
substantive rights of the parties. In my judgment, therefore, the principles
enunciated by the House of Lords in Waddon’s case apply with equal force
to the present situation. The considerations which are involved in such
questions appear at p 313 of the report:
(1) The
power to extend the validity of the writ should only be exercised for good
reason.
(2) The
question whether such good reason exists in any particular case depends on all
the circumstances of that case. Difficulty in effecting service of the writ may
well constitute a good reason but it is not the only matter which is capable of
doing so.
(3) The
balance of hardship between the parties can be a relevant matter to be taken
into account in the exercise of the discretion.
(4) The
discretion is that of the judge [and not of the appellate court].
In the present case the discretion is
mine and, in my judgment, the fact that the landlord’s solicitors overlooked
the need to serve the summons is not a good reason for extending the time for
service. There was no difficulty in serving the summons promptly. The landlord
has not lost its right to an interim rent completely but only in respect of
that period during which, by its inadvertence, it had failed to serve the
summons or issue and serve another. There is no evidence that the tenant was
aware that the summons had been issued, albeit not served and, in my judgment,
time for service ought not to have been extended.
Accordingly, I reach the conclusion in
relation to the first summons for interim rent that Ord 32, r3, which applies
generally to summonses in all three divisions of the High Court, does not
require a date to be specified in the summons but may validly be issued for a
date to be fixed. The subsequent fixing of a date does not constitute an
amendment of the summons, as Master Gowers appears to have thought, but is
merely a further step in the proceedings which enables the summons to be heard.
Once the summons is served, either party may apply to chambers for the fixing
of a date for the first hearing. In the case of a summons for interim rent, it
is most important that the summons should be served promptly so that the tenant
is not deprived of an opportunity to fix an early date for the hearing of the
summons if he so wishes. When the forthcoming practice direction is in force
and requires prompt service then, in my judgment, failure to serve the summons
promptly may well lead to its being struck out. In the present case, there was
no express requirement for prompt service. A summons for interim rent, however,
is of the nature of an originating process and, as such, must be served within
12 months of its issue. The court may in a proper case extend the time for
service, but only by analogy with its practice in granting an extension of time
for the service of a writ after the expiry of the limitation period.
Accordingly, I shall vary the master’s
order by declaring that the summons was valid when issued, but I shall set
aside the vacation master’s order of September 28 1990 and set aside service of
the summons.
So far as the other summonses before me
are concerned, the effect of my judgment is that the second summons for interim
rent was also valid when issued and does not need any amendment. It is not
disputed that it was served promptly. Accordingly, the third and fourth
summonses require no order.
The defendants were awarded the costs of
the appeal.
