Application for new tenancy–ease to withdraw sought–Action pending for specific performance of alleged binding agreement to grant lease–Leave to withdraw nevertheless granted on terms–Rent payable until ‘date of withdrawal’–Date of withdrawal normally date of judgment
This was an
application by Covell Matthews & Partners, tenants, for leave to withdraw
an application to the court to order a new business tenancy to be granted by
French Wools Ltd, landlords of premises at Lexington Street, Piccadilly Circus,
London.
Walter Blum
(instructed by May, May & Merrimans) appeared for the plaintiff tenants; J
C Harper (instructed by Theodore Goddard & Co) represented the landlord
defendants.
Giving
judgment, GRAHAM J said that the case related to business tenancies of premises
at Lexington Street, Piccadilly Circus, and that some of the points involved
were novel. The tenants were underlessees of the premises under the terms of an
underlease of March 8 1960. The landlords gave notice to the tenants under
section 25 of the Landlord and Tenant Act 1954 to terminate the tenancy as at
June 24 1973. On February 5 1973 the tenants gave notice that they were not
willing to give up possession of the premises, and on March 13 1973 the tenants
issued an originating summons seeking an order for a grant by the landlords of
a new tenancy under section 26 of the Act.
Negotiations
between the parties as to the terms and conditions of a proposed new lease took
place and the hearing of the originating summons was postponed from time to time.
There was a dispute as to whether terms for a new lease were finally agreed or
not. Some time later the tenants left the premises and on January 23 1976
served on the landlords an application for leave to withdraw their originating
summons. On January 25 1974 the landlords had written a letter to the tenants
stating that there was a binding contract to grant a new lease on the terms
therein set out, including the very considerable rise in rent of £5,600 to the
new rent of £30,000 a year. The landlords had recently begun proceedings for
specific performance of the alleged contract. In addition to those proceedings
the landlords had arranged for the issue of a summons on February 12 1976 to
determine the interim rent in accordance with section 24A of the Act
(introduced by the Law of Property Act 1969). The rent payable on that
determination would be so payable in accordance with section 24A (2) from the
date of the application, February 12 1976, since that was later than either the
date specified in the landlords’ notice under section 25 or in the tenants’
request for a new tenancy under section 26. Rent would continue to be payable
in accordance with the provisions of section 64 (2), if the application to
withdraw the application for a new tenancy was granted, until ‘the date of the
withdrawal.’ If leave were given the
withdrawal date was important because the quantum of any interim rent payable
would be much more if the date of withdrawal was the date of this judgment
rather than January 23 1976, when the application to withdraw was made, or the
date of the service of such application if that was the correct date.
A master on
March 20 1976 gave leave to the tenants to withdraw the summons of March 13
1973 and gave general directions on the landlords’ summons for the fixing of
interim rent. This latter summons had been issued on February 12 1976, which
was soon after the tenants’ application of January 23 1976 for leave to
withdraw their earlier application for a new tenancy.
The tenants
argued that they were entitled to withdraw their application for a new tenancy
if they did not wish to go on with it and, although there was a discretion
under Order 21, Rule 3, which governed the case because leave was required, a
plaintiff ought not to be compelled to litigate if he did not want to. But it
was accepted that protection might have to be given to the defendant. It was
further argued that the application could be dealt with separately from, and
need not have any effect upon, the decision which the court would have to give
on the question whether or not the parties had themselves entered into a
binding agreement for a new lease. On the first point and on the difference in
effect of discontinuance and dismissal, Mr Blum cited Stahlschmidt v
Walford (1879) 4 QB 217, Fox v The Star Newspaper Co Ltd [1889]
1 QB 636 and [1900] AC 19, and J T Stratford & Son Ltd v Lindley (No
2) [1969] 1 WLR 1547. It was also pointed out that the rent in this case was
not much more than £5,000, which would have enabled the matter to be dealt with
in the county court, and that under Order 18 of the County Court Rules no leave
to withdraw would have been required. The principles to be culled from the
cases were that the court would normally allow a plaintiff to discontinue if he
wanted to and if no injustice was caused to the defendant. It was not desirable
that a plaintiff should be compelled to litigate against his will. The court
should grant leave if it could without injustice to the defendant, but in so
doing should be careful to see that the defendant was not deprived of some
advantage which he had already gained in the litigation, and should be ready to
grant him adequate protection to ensure that any advantage he had gained was
preserved.
Mr Harper, for
the landlords, argued that the tenants’ application ought to be regarded as
having been overtaken by the agreement for a new lease which the landlords
contended had been entered into between the parties, and that the most
convenient course would be to adjourn the proceedings until the trial of the
action for specific performance and to leave all outstanding matters to be
dealt with in that action. To do that, however, would deprive the tenants of
their right to have their application for leave to discontinue decided if it
was found that they could do so
had some fear that a refusal of leave to withdraw might have some adverse
influence upon the decision in the specific performance action, whereas the
landlords feared the opposite. The specific performance action was a separate
question, however, and no judge trying it would be influenced by the decision
in the present application.
The master was
correct in granting the tenants leave to withdraw their application for a new
tenancy. At the same time, for the landlords’ protection, the order being for
leave to discontinue and not for dismiss, the tenants should be put on terms
that: (1) they should not make any fresh application for a new tenancy: (2) the
grant of leave should be expressed to be given without prejudice to the
landlords’ contention that a binding agreement had been reached between the
parties and to the effect of such agreement if it was eventually decided that
it was binding; (3) an order for costs against the tenants should be made.
The question
remained what was the correct date to assign as the date of withdrawal within
the meaning of section 64. The tenants said it should be the date of the
application to discontinue the application for a new tenancy, ie January 23
1976, and the landlords said it should be the date of judgment. The landlords
said that there could not be any withdrawal before leave to withdraw had been
given and the date must be the date when leave was given. The tenants said that,
as in any normal case where notice was required, it was the date of service of
the notice which crystallised the position, never mind how much time elapsed
before the decision actually granting such application was given. It was argued
that the date of service was a certain date and the date of the decision
uncertain and one which depended on innumerable factors outside the control of
the parties, such as availability of counsel and the state of the list. If the
correct date was that of the decision it was true that uncertainty was created
and, further, that at a time of rising rents it would be to the landlords’
advantage to find excuses for delaying the hearing of the application. However,
he (his Lordship) thought that the argument calling for certainty of date could
not prevail and that the date of withdrawal should be the date of judgment. The
notice was not a notice to fix a time for anything but merely fixed the
landlord with notice of the tenant’s intention to ask for leave to withdraw.
There was force in the argument of Mr Harper that in such a case, if the tenant
thought that the landlord was trying to delay matters, he could come to the
court, which had a discretion to fix the date of withdrawal at whatever date
was just. Here there was nothing to show avoidable delay or unusual
circumstance and the normal rule should apply. The date of withdrawal should be
the date of the judgment.
The court was
informed by counsel that it had been agreed that the date of the judgment
should be deemed to be July 5 1976 because there had been an adjournment at the
landlords’ request.
