Landlord and tenant — Rent — Whether section 48 of the Landlord and Tenant Act 1987 applies to an agricultural holding — Whether notice given pursuant to that section
holdings — Notice to pay rent — Whether effective notice to pay served pursuant
to Case D under the Agricultural Holdings Act 1986
The plaintiff
was the tenant of an agricultural holding under a five-year term from July 30
1987 at a yearly rent of £50,000 payable on the usual quarter days. The holding
included a manor house and several cottages. The tenant failed to pay the rent
in respect of the quarter days June 24 1990 to and including June 24 1991. By
notice dated August 7 1991 the defendant landlord gave notice pursuant to Case
D, Part I of Schedule 3 to the Agricultural Holdings Act 1986 requiring the
tenant to pay the arrears of rent within two months. On October 9 1991 the
landlord gave the tenant notice to quit the holding under Case D on the ground
that the notice to pay had not been complied with. A provisional liquidator of
the tenant company challenged the service of the notice to pay rent and
requested the landlord’s agents to state whether any notice under section 48 of
the Landlord and Tenant Act 1987 had been served. On December 2 1991 the
landlord’s agents sent a letter to the tenant’s agents referring to various
notices served by them establishing their address as a service address. By a
further notice dated December 3 1991 the landlord’s agents confirmed for the
purposes of section 48 their client’s address for service of all notices,
including notices in proceedings, and enclosed a further notice to pay rent.
The tenant’s
application for declarations that by reason of a failure to serve a notice
under section 48 of the 1987 Act no rent was due on August 7 1991, and that the
purported notices to pay rent of August 7 and December 3 1991 were invalid, was
allowed by Chadwick J: see [1992] 1 EGLR 88; [1992] 23 EG 112. The landlord
appealed, relying on the contentions advanced before Chadwick J, and the tenant
cross-appealed on the grounds that the failure to serve a notice under section
48 of the 1987 Act before December 3 1991 had in law the effect that rent which
would otherwise be due before that date was irrecoverable for all time,
alternatively that such rent did not become due until some later date, but was
not due on December 3.
cross-appeal dismissed in part on the following grounds: (1) ‘Premises’ in
section 46(1) of the 1987 Act means the subject-matter of the letting and
nothing in that section provides any guide which enables the court to discern
any limit to the meaning of ‘premises’ narrower than the subject-matter of the
letting; accordingly, the section applies to an agricultural holding which
included a dwelling-house. (2) No notice satisfying section 48 was given by the
landlord prior to December 3 1991 and it was not necessary to decide whether
the letter of December 2 1991 was such a notice, although in the context of the
correspondence it was so capable. (3) Section 48 does not provide that a
failure to serve a notice destroys the right to claim the rent due before such
service. All the rent in respect of which the notice of December 3 1991 was
served was ‘otherwise due from the tenant’ on that date; the notice was a valid
section 48 notice and upon its service the rent then became due. There was no
justification for any extension of time. (4) The notice to pay rent of December
3 was valid notwithstanding that it stated by reference to a schedule the
quarter days from which the arrears of rent were alleged to be due and unpaid.
In so far as the notice inaccurately asserted that the rent ‘otherwise due’ had
been due on and from the quarter days listed, it did not mislead and could not
reasonably have misled the tenant in any way; the statutory purpose of the
notice was fully satisfied.
The following
cases are referred to in this report.
Afovos
Shipping Co SA v Pagnan (R) & F .lli
[1983] 1 WLR 195; [1983] 1 All ER 449; [1983] 1 Lloyd’s Rep 335, HL
Bank of
Baroda v Panessar [1987] Ch 335; [1987] 2
WLR 208; [1986] 3 All ER 751
Bracey v Read [1963] Ch 88; [1962] 3 WLR 1194; [1962] 3 All ER 472
Dallhold
Estates (UK) Pty Ltd v Lindsey Trading
Properties Inc [1992] 1 EGLR 88; [1992] 23 EG 112
Dickinson v Boucher [1984] EGD 19; (1983) 269 EG 1159, [1984] 1 EGLR
12, CA
Horford
Investments Ltd v Lambert [1976] Ch 39;
[1973] 3 WLR 872; [1974] 1 All ER 131; (1973) 27 P&CR 88, CA
London
& Westminster Loan & Discount Co v London
& North Western Railway [1893] 2 QB 49
Maunsell v Olins [1975] AC 373; [1974] 3 WLR 835; [1975] 1 All ER 16,
HL
Official
Solicitor v Thomas [1986] 2 EGLR 1; (1986)
279 EG 407
Pickard v Bishop (1975) 31 P&CR 108; [1975] EGD 24; 235 EG 133,
[1975] 2 EGLR 1, CA
South
Tottenham Land Securities Ltd v R&A Millett
(Shops) Ltd [1984] 1 WLR 710; [1984] 2 All ER 614; [1984] EGD 96; (1983)
269 EG 630, [1984] 1 EGLR 115, CA
Urwick v Taylor (1969) EGD 1106; 212 EG 1275
Whitley v Stumbles [1930] AC 544; 46 TLR 555
This was an
appeal and cross-appeal by respectively the landlord, Lyndsey Trading
Properties Inc, and the tenant, Dallhold Estates (UK) Pty Ltd, from the
judgment of Chadwick J who on March 2 1992 had made declarations on an
application by the tenant.
David
Neuberger QC and Joanne Moss (instructed by Franks Charlesly & Co) appeared
for the appellants; Edward Bannister QC and Martin Rodger (instructed by Mills
& Reeve, of Cambridge) represented the respondents.
Giving the
first judgment, RALPH GIBSON LJ said: This is an appeal by Lindsey
Trading Properties Inc, defendants in the
the action. The judgment of Chadwick J is reported at [1992] 1 EGLR 88. I shall
refer to Lindsey Trading Properties Inc as the landlord, and to Dallhold
Estates (UK) Pty Ltd, who are the plaintiffs in the proceedings and respondents
to this appeal, as the tenant.
The appeal
raises questions as to whether section 48 of the Landlord and Tenant Act 1987
applies to tenancies of an agricultural holding; by what date any notice was
given by the landlord under that section; and whether an effective notice to
pay was served by the landlord under Case D of Part 1 of Schedule 3 to the
Agricultural Holdings Act 1986 (AHA).
The facts are
set out in the judgment of Chadwick J. I shall repeat a brief summary:
The landlord,
a company incorporated and having its registered office in Panama, is owned and
controlled by Mr Jorg Bolag, who is resident in Switzerland. The landlord is
the freehold owner of an agricultural and sporting estate of 940 acres in
Hertfordshire, which was let to the tenant by a lease dated July 30 1987. The
estate includes a manor house, Upp Hall, and a number of cottages, some of
which are occupied by estate workers. The estate is an agricultural holding for
the purposes of the AHA.
The tenant is
a company incorporated in Western Australia. On August 9 1991, a provisional
liquidator of the tenant company was appointed by an order of the Federal Court
of Australia and on August 14 1991 a provisional liquidator was appointed in
England. On January 24 1992 an administration order was made by Chadwick J to achieve
a more advantageous realisation of the tenant company’s assets.
The lease is
for a term of five years from July 30 1987 at a yearly rent of £50,000, payable
by equal quarterly payments in advance on the usual quarter days and provides
for payment to Franks Charlesly & Co, solicitors, of Hulton House, London,
or to such other agent as the landlord should from time to time notify to the
tenant. At the time of the grant of the lease the landlord was Wydgee Pastoral
Co Ltd of Perth, Western Australia; the tenant was Teilas Pty Ltd also of Perth
and the present landlord was party to the lease as surety. The circumstances in
which the tenant acquired the leasehold interest and the landlord acquired the
freehold reversion are not relevant.
The tenant did
not pay the rent provided to be paid by the terms of the lease on June 24,
September 29 and December 25 1990, or on March 25 and June 24 1991: a total of
£62,500. On August 7 1991 a notice was served on the tenant in Perth requiring
the tenant to pay within two months the rent due in respect of the estate, said
to be £62,500. The notice was said to be given ‘in accordance with Case D in
Part 1 of Schedule 3 to the AHA’ by Franks Charlesly & Co, solicitors and
authorised agents for the landlord of Hulton House, 161-166 Fleet Street,
London EC4.
No rent was
paid in response to that notice. No rent was paid on the next rent day,
September 29 1991. On October 9 1991 Frank Charlesly & Co, as agents for
the landlord, gave notice to the tenant to quit the estate on July 30 1993 for
the ground and reasons set out in Case D, namely failure to comply with the
written notice of August 7 1991. By section 26(1) of AHA, upon service by the
tenant of a counternotice, it is provided that a notice to quit shall not have
effect unless, on an application by the landlord, the tribunal consent to its
operation; but in certain cases, including Case D in Schedule 3, consent of the
tribunal to operation of the notice to quit is not required. On failure to pay
rent within two months of service of a valid notice to pay, the tenant loses
the protection of the AHA: see Pickard v Bishop (1975) 31
P&CR 108*.
*Editor’s
note: Also reported at (1975) 235 EG 133, [1975] 2 EGLR 1.
(vi) By letter of October 31 1991 the tenant’s
solicitors asked Franks Charlesly whether any notice had been served under
section 48 of the Landlord and Tenant Act 1987. That section, as material to
this case, provides as follows:
(1) A landlord of premises to which this Part
applies shall by notice furnish tenant with an address in England and Wales at
which notices (including notices in proceedings) may be served on him by the
tenant.
(2) Where a landlord of any such premises fails
to comply with sub-section (1), any rent or service charge otherwise due from
the tenant to the landlord shall (subject to subsection (3)) be treated for all
purposes as not being due from the tenant to the landlord at any time before
the landlord does comply with that subsection.
Subsection (3)
has no application to this case. The application of section 48 is defined by
section 46(1):
This part
applies to premises which consist of or include a dwelling and are not held
under a tenancy to which Part II of the Landlord and Tenant Act 1954 applies.
The word
‘dwelling’ in that phrase is defined by section 60(1) as:
. . . a
building or part of a building occupied or intended to be occupied as a
separate dwelling, together with any yard, garden, outhouses and appurtenances
belonging to it or usually enjoyed with it;
The letter of
October 31 1991 also enclosed a copy of the notice requiring arbitration of the
notice to quit dated October 9 1991. The landlord’s solicitors were asked to
state if they were not in fact instructed to accept service on behalf of the
landlord. By letter of November 4 the tenant’s solicitor requested confirmation
that the landlord’s solicitors were authorised to accept the notice requiring
arbitration and by further letter of the same date it was asserted, on behalf
of the tenant, that there were:
reasonable
grounds to expect that the notice to quit may be defeated on the grounds . . .
that the landlord does not appear to have complied with the requirements of
section 48 of the 1987 Act.
By letter of
November 8 1991 the tenant’s solicitors wrote:
to confirm
that the landlord’s solicitors are both instructed to accept service and
acknowledge receipt of the notice requiring arbitration.
By a letter of
November 12 1991 the landlord’s solicitors confirmed receipt of the notice
requiring arbitration and expressed surprise at the tenant’s request in
relation to section 48 since ‘you and your clients have known where to serve
notices on the landlord and indeed have served counternotices for the landlord
here’. By letter of November 28 1991 the tenant’s solicitors asked whether it
was admitted that no section 48 notice had been served and in reply, on
December 2 1991, the landlord’s solicitors, with reference to the matter of the
section 48 notice, referred the tenant’s solicitors to a number of matters
including ‘various notices served by this firm on behalf of [the landlord]
establishing us as a service address and, of course, you have served purported
counternotices to Lindsey upon ourselves’. By amendment of the notice of appeal
in this court the landlord has contended that the passage cited from that
letter of December 2 1991 was, in context, an effective notice under section
48(1) of the 1987 Act.
The landlord
then delivered to the tenant in Perth on December 3 1991 a letter of that date,
which reads:
We enclose by
way of service on behalf of our client Lindsey Trading Properties Inc, Notice
to Pay Rent under the Agricultural Holdings Act 1986.
This is
without prejudice to any other Notices served or demands made in respect of the
outstanding rent and also without prejudice to our contention that section 48
of the Landlord and Tenant Act 1987 has been complied with.
We would
confirm on behalf of our client and for the purposes of Section 48 aforesaid
that our client’s address for service of all Notices, including Notices in
proceedings, is care of this firm.
The notice
enclosed, in form 1 in the Agricultural Holdings (Forms of Notice to pay Rent
or to Remedy) Regulations 1987, said ‘that I require you to pay within two
months from the date of service of this Notice the rent due in respect of the
above holding (Upp Hall estate) as set out below’. Under the ‘particulars of
rent not paid’ there was, in effect, set out in an appendix the following:
|
Date when due |
Amount due |
|
24th June 1990 |
£12,500 |
|
29th September 1990 |
£12,500 |
|
25th December 1990 |
£12,500 |
|
25th March 1991 |
£12,500 |
|
24th June 1991 |
£12,500 |
|
29th September 1991 |
£12,500 |
|
Total |
£75,000 |
It has been common ground that the letter of December 3 1991 was in
itself an effective notice for the purposes of section 48 of the 1987 Act. The
contention for the tenant has been that, nevertheless, the notice to pay was
defective because of defects in form and by reference to the time at which
unpaid rent could properly be held to have become payable: in particular, even
if the letter removed the legal requirement created by section 48(2), that
‘rent otherwise due from the tenant to the landlord shall be treated for all
purposes as not being due from the tenant to the landlord at any time before
the landlord does comply with subsection (1)’, nevertheless this notice to pay
was fatally defective in form because it asserted that the unpaid rent was due
on the quarter days listed whereas in truth the arrears became due only on
delivery to the tenant of the letter of December 3 1991.
On January 27
1992 the tenant commenced these proceedings by originating summons. The
declarations sought at the trial were, in summary, that: (i) on the true construction
of section 48 of the 1987 Act no rent was due from the plaintiff to the
defendant under the lease of July 30 1987 on August 7 1991 and December 3 1991;
and (ii) that the notices of August 7 and December 3 1991 purporting to be
notices to pay rent were invalid and of no effect. The primary contention of
the landlord was that Part VI of the 1987 Act had no application to land held
under a tenancy of an agricultural holding.
Before
Chadwick J in March 1992 undertakings were given by the landlord to extend time
for compliance with the notice to pay rent of December 3 1991 until, at latest,
the seventh day after the final determination of the action, including any
appeal.
Grounds of
decision of Chadwick J
The judgment
of the learned judge is reported* and I shall state his grounds in brief
summary.
*Editor’s
note: See [1992] 1 EGLR 88.
The primary
question was whether the word ‘premises’ in section 46(1) of the 1987 Act is to
be given the meaning which it bears in ordinary legal parlance, namely the
subject-matter of a letting, or some more limited meaning which would not
extend to the agricultural holding let under the lease of July 30 1987.
The word
‘premises’ is capable of a wide range of meanings: reference was made to Maunsell
v Olins [1975] AC 373; to Whitley v Stumbles [1930] AC
544; and to Bracey v Read [1963] Ch 88. Within that wide range
the meaning which it was intended to have for the purposes of the 1987 Act must
be determined by construing the words used in the Act.
To that end it
was necessary, first, to consider the 1987 Act as a whole in order to see
whether some ‘overall statutory purpose’ could be identified from which the
word ‘premises’ must take its meaning. After reference to the long title of the
1987 Act; to the terms of Parts I, II and III of the Act which apply only to
flats; to Parts IV and V which apply both to flats and to dwellings other than
flats; and to the various sections in Part VI, in which section 48 is included,
Chadwick J concluded that it was impossible to regard the 1987 Act as having a
single theme or purpose which should colour the court’s approach to the meaning
of the word ‘premises’ in section 46(1).
Further, it
was not possible to identify any context in Part VI of the Act, or in the Act
as a whole, which points to a particular meaning of the word ‘premises’ other
than the definition in section 46(1).
Since the
requirement there is simply that the premises ‘consist of or include a
dwelling’, the word ‘premises’ must be taken to have a wider meaning than
dwelling, which word is defined in section 60(1) of the Act as ‘a building, or
part of a building occupied or intended to be occupied as a separate dwelling,
together with any yard, garden, outhouses and appurtenances belonging to it or
usually enjoyed with it’. Thus, the word ‘premises’ can include land which is
the subject-matter of the same letting: but how much land?
The express
exclusion in section 46(1) of business tenancies to which Part II of the 1954
Act applies shows that the word ‘premises’ could include premises held under
such a tenancy. Part II of the 1954 Act does not apply to tenancies of an
agricultural holding: section 43(1) of that Act. It therefore appeared that
Parliament understood that, if tenancies of an agricultural holding were to be
excluded from the definition in section 46(1), express provision was necessary.
Nothing in
section 46(1) provides any guide which enables the court to discern any limit
to the meaning of the word ‘premises’ narrower than the subject-matter of the
letting.
The second
question was stated thus: was any notice under section 48(1) of the 1987 Act
given prior to December 3 1991? For the
reasons set out in his judgment Chadwick J rejected each of the candidates
proposed on behalf of the landlord.
As to the
third question, whether there had been an effective notice to pay under Case D,
after reference to the regulations, SI 1987 No 711, and to para 10 of Part II
of Schedule 3 to the AHA, Chadwick J held that a notice would not comply with
the regulations if the information which is required to be included in the
prescribed form is inaccurate. The notice served on August 7 1991 was invalid
because at that date, by reason of section 48(2), no rent was due from the
tenant. As to the notice to pay rent served with the letter of December 3 1991,
since the rent had not become due until receipt of the letter, the information
required to be included in the prescribed form was inaccurate since it was
there asserted that the rent was due on the quarter days from June 24 1990 to
September 29 1991. Reference was made to Pickard v Bishop (1975)
31 P&CR 108, to Dickinson v Boucher (1983) 269 EG 1159,
[1984] 1 EGLR 12 and to Official Solicitor v Thomas [1986] 2 EGLR
1.
Appeal and
cross-appeal
The
contentions of the landlord are those advanced before the judge. The tenant has
submitted that Chadwick J was right for the reasons given by him and has
contended that the decision of the judge should be affirmed or varied on
additional or alternative grounds, namely that:
(i) failure to serve notice under section 48 of
the 1987 Act before December 3 1991 had in law the effect that rent which would
otherwise have been due before that date was irrecoverable for all time;
(ii) or, such rent did not become due until the
contractual rent day following service, and thus no rent was due on December 3
1991;
(iii) or, such rent did not become due until a
reasonable time had elapsed after service of the notice and therefore, again,
no rent was due at any time on December 3 1991;
(iv) finally, such rent was not due at earliest
until midnight on that day, and therefore a notice to pay rent served on the
same day was premature.
The
submissions of Mr David Neuberger QC, on the primary question, included the
following:
The word
‘premises’ in its natural and ordinary meaning in section 46(1) does not extend
to include a farm: see Maunsell v Olins at p386G-H per
Lord Wilberforce and per Viscount Dilhorne pp383H to 384A. Lord Reid
expressly agreed with the speech of Lord Wilberforce. These passages indicate
that the natural meaning of ‘premises’ is buildings of some sort.
The 1987 Act
is housing legislation only and, in the context of such legislation, that
natural meaning of the word ‘premises’ is the more clear: in Maunsell’s
case at p389G Lord Wilberforce said:
Nobody can be
unaware that the law relating to tenancies of agricultural land is one of
considerable political import and delicacy and I am very reluctant to
believe that the particular aspect of this law which relates to subtenancies,
treated with evident circumspection in 1948, would have been dealt with in a
general provision such as appears in section 41 of the Act of 1954.
Further, at
p384E, Viscount Dilhorne said:
The use of
the word ‘premises’ is not, in my opinion, sufficient to justify the conclusion
that Parliament intended to restrict the common law rights of the owner of the
freehold of a farm.
To exclude
business premises under Part II of the 1954 Act (section 46(1) of the 1987
Act), but not to exclude agricultural holdings, would be extraordinary because
business tenancies have the same sort of protection in relation to notices (see
section 66 of the 1954 Act and section 23 of the Landlord and Tenant Act 1927)
as agricultural tenancies have under section 93 of AHA. There can be no logic
in, and there should not be attributed to Parliament assent to, the giving of
protection under section 48 to a tenant of a 1,000-acre agricultural estate
with several houses on it, but not giving the same protection to a tenant of a
house who happens to use one room as his professional surgery.
The law
relating to agricultural holdings was consolidated in the AHA: it would be
surprising if by ‘a side wind’, and without express reference to agricultural
holdings, the 1987 Act impinged upon the relationship between the landlord and
tenant of an agricultural holding.
Upon the
tenant’s contentions, section 3 of the Landlord and Tenant Act 1985 would apply
to any agricultural holding with a dwelling or dwellings on it; but section 3
should not be so widely construed not least because by section 3(3) a criminal
offence is created.
The word
‘premises’ in section 46(1) of the 1987 Act and in section 3(1) of the 1985 Act
should be held to mean either: (a) a building being a single unit of habitation
or a building or buildings containing one or more units of habitation in either
case with ancillary land or other buildings (eg garage, paddock or orchard); or
(b) a building or buildings containing one or more units of habitation which
would not be excluded from being ‘premises’ simply because it included yards,
gardens, outhouses or appurtenances belonging to or enjoyed with the unit of
habitation, but it would be excluded if it contained more land.
Further, ‘a
dwelling’ in the phrase ‘premises which consist of or include a dwelling’, in
section 46(1), should not be read as meaning ‘dwellings’: see Horford
Investments Ltd v Lambert [1976] Ch 39 at pp46D to 47D and 52C-G.
Such a restrictive reading is consistent with the purposes of the 1987 Act
which, when read as a whole, should be taken as being to protect tenants in
their homes.
The scope of
the 1987 Act can be seen from the long title: the reference to ‘connected
purposes’ should not be seen as sufficient to permit the Act to be treated as
extending to agricultural holdings.
Nothing
indicates that the mischief at which section 48(1) was directed in the case of
housing accommodation was seen by Parliament as requiring attention in the case
of agricultural holdings, but not in the case of lettings of business premises
under Part II of the 1954 Act.
The provisions
of section 49 (extension of circumstances in which notices are sufficiently
served) are unlikely to have been intended by Parliament to extend to
agricultural holdings, to which a separate set of provisions are applied by
section 93 of the AHA.
The provisions
of section 52 in Part VII of the 1987 Act, which provide that the county court
shall have jurisdiction to hear and determine any question arising under any
provision of section 46 to section 48, do not accord with, and should be taken
as showing that they were not intended to apply to, the provisions for
arbitration under the AHA.
The reference
to the ‘Secretary of State’ in section 53, presumably the Secretary of State
for the Environment, as contrasted with the minister for agriculture or the
Lord Chancellor, supports the contention that the powers there given were not
intended to apply to agricultural holdings.
As to the 1985
Act, sections 1 to 3 (of which section 3 contains the reference to ‘a tenancy
of premises which consist of or include a dwelling’) derive from sections 121
and 122 of the Housing Act 1974 and it is therefore unlikely that they could
have been intended to apply to agricultural holdings.
Section 17 of
the 1985 Act derives from section 125 of the Housing Act 1974 and provides for
specific performance of a landlord’s repairing obligations. It would be
surprising, although not logically inconsistent with the AHA, if an
agricultural tenant could use this provision to obtain specific performance as
a basis of claim additional to the code provided by section 7 of the AHA and
the regulations (SI 1973 No 1473 and SI 1988 No 291) made thereunder which
provide for arbitration.
In answer to
these submissions Mr Edward Bannister QC, on behalf of the tenant, submitted,
in effect, that they left the reasoning of Chadwick J unimpaired.
Conclusion
on the primary question
Mr Neuberger
demonstrated, in my view, that it is fairly to be described as surprising that
Parliament should exclude tenancies within Part II of the 1954 Act from the
effects of Part VI of the 1987 Act, but include therein agricultural tenancies;
and he demonstrated that the application of Part VI to agricultural tenancies
was left to take effect without any such amendment of or addition to the
statutory code applicable to agricultural tenancies as might well have been
devised. Mr Neuberger, however, acknowledged in the course of his careful and
detailed examination of the provisions of the 1985 Act and of the 1987 Act that
the construction of section 46(1) adopted by Chadwick J could not be shown to
produce any clear conflict between the statutory provisions separately or
specially applicable to agricultural tenancies, on the one hand, and the
additional or cumulative provisions thus made applicable by section 46(1) of
the 1987 Act and section 3 of the 1985 Act, on the other hand. His list of
provisions which, it was said, were ‘unlikely’ to have been intended to apply
to agricultural tenancies was advanced as providing added force to the
contention, based upon the statements in Maunsell v Olins, that
the word ‘premises’ in section 46(1) should be given a restricted meaning, such
as those contended for by Mr Neuberger. For my part, I cannot accept the
submission as to the meaning of ‘premises’ in the context of the 1985 and 1987
Acts; and the asserted improbability that Parliament can have intended to apply
provisions, such as section 48, to agricultural holdings by way of addition to
the existing and unmodified statutory code is, in my judgment, incapable of
bearing the weight placed upon it for the purposes of Mr Neuberger’s argument.
As Mr Bannister, for the tenant, pointed out, it is not required of Parliament
that it should explain its decision as a matter of policy to exclude business
tenancies from the operation of section 46(1), but to include agricultural
tenancies.
The long title
of the 1987 Act may be looked at for the purpose of interpreting the statute as
a whole and of ascertaining its scope, although not for the purpose of
contradicting the clear and unambiguous language of particular provisions: see Halsbury’s
Laws vol 44, 1983, para 812. This long title shows, as is confirmed by
examination of the provisions in Parts I to V of the 1987 Act, that the statute
was primarily concerned with housing and the benefit of its provisions would be
enjoyed mainly by the tenants of flats, but, in my judgment, it is impossible
to say that the application of section 48 to agricultural tenancies is not a
connected purpose.
Mr Bannister,
for the tenant, in summary submitted that the landlord’s contention on this
part of the case:
(a) provided no explanation why Parliament
excluded business tenancies under Part II of the 1954 Act, but failed by
express words to exclude agricultural holdings;
(b) equated ‘premises’ in section 46(1) with
‘dwelling’, which is defined in section 60(1) of the 1987 Act, and thus
deprived the phrase ‘premises which consist of or include a dwelling’ of any
acceptable meaning; and
(c) ignored the fact that in other parts of the
1987 Act Parliament
section 1(2); section 2(1); section 3(2); section 21(2); and section 25(2).
For my part, I
agree with Chadwick J, substantially for the reasons set out in his judgment,
that the word ‘premises’ in section 46(1) means the subject-matter of the
letting.
As to the
second question, whether a notice under section 48(1) of the 1987 Act was given
prior to December 3 1991, I agree with Chadwick J that no such notice was
given. The requirement is that the landlord ‘by notice furnish the tenant with
an address in England and Wales at which notices (including notices in
proceedings) may be served on him by the tenant’. By section 54(1) such a
notice shall be in writing and may be sent by post. There is no prescribed form
for such a notice. Chadwick J proceeded upon the basis that such a notice must
state that the address given is the address at which notices, including notices
in proceedings, may be served on the landlord by the tenant; and that it would
not be sufficient to state an address which is shown to be such that, if notice
in proceedings were served on the landlord at that address, it would in any
particular circumstances be held to be effective service. In short, the tenant
is to be told at what address notices, including notices in proceedings, may be
served. In my judgment, Chadwick J was right to proceed on that basis.
In this court,
by amendment of the notice of appeal, Mr Neuberger submitted that the letter of
December 2 should be accepted as an effective notice in the context of the
correspondence conducted between the parties. For my part, I accept that a
letter may be properly construed for this purpose in the light of the preceding
correspondence and might be held to satisfy the requirement of section 48(1)
although the terms of the letter itself, without the help of that context,
could not be so construed. The final paragraph of the letter of December 2
could so qualify and the context in the correspondence might also be held to
show that the tenant’s solicitors were impliedly authorised to accept service
of such a notice. It is not, in my judgment, necessary to decide these
questions for the purposes of this part of this case. The letter of December 3
is and has throughout been accepted as a valid notice for section 48(1) and, on
the point of law which would be relevant to any difference in effect between a
notice of December 2 and a notice of December 3, the tenant cannot, for the
reasons which follow hereafter, in my judgment, succeed.
The third
question is whether there was service of an effective notice to pay under Case
D in Part I of Schedule 3 to the AHA. Chadwick J held that the notice of August
7 1991 was defective because at that date no rent was due by reason of section
48(2), and in that holding he was clearly right. As to the notice of December 3
1991, he held that the information as to the date upon which the unpaid rent
was due was inaccurate and therefore the notice was bad because of failure to
comply with the regulations. The unpaid rent was not due on the quarter days
stated, but became due only on receipt of the letter of December 3 1991. It
mattered not that the tenant was not in fact misled. There was need for strict
compliance with the statutory requirements in respect of notices to pay which
had been affirmed in Official Solicitor v Thomas. The defect in
this notice to pay was not in the nature of a misdescription, but was simply an
inaccurate statement as to the date when rent was due.
Mr Bannister
submitted that the judge’s conclusion should be upheld for the reasons which he
gave and, in addition, he contended that his conclusion should be upheld on the
additional grounds stated in the respondent’s notice. In summary he submitted:
(i) the use of a Case D notice by a landlord
towards an exclusion of the section 26 protection is in the nature of a
forfeiture proceeding and requires there to have been some default on the part
of the tenant before it can be invoked and, accordingly, a Case D notice served
at the same time as a notice complying with section 48 must be ineffective;
(ii) that the use of Case D is in the nature of a
forfeiture proceeding is established by the decisions of this court in Pickard
v Bishop; and the requirement of default for Case D is established by Urwick
v Taylor (1969) EGD 1106*; Bridge J;
(iii) at the very lowest, the landlord must allow
the minimum time required for the process of effecting payment: see Bank of
Baroda v Panesser [1987] Ch 335;
(iv) the better view is that the ‘arrears’, made
due by compliance with section 48, do not become due and payable until the next
contractual rent day: see the reasoning in South Tottenham Land Securities
Ltd v R&A Millett (Shops) Ltd [1984] 1 WLR 710† at pp714H to
715B;
(v) alternatively, the ‘arrears’ should be held
not to become due and payable until a reasonable time after compliance by the
landlord with section 48: see London & Westminster Loan & Discount
Co v London & North Western Railway [1893] 2 QB 49, at p54;
(vi) and, last, if all these submissions be
rejected, the tenant should be allowed until the end of the day, upon which the
landlord complied with section 48, to make payment of what then became due: Afovos
Shipping Co SA v Pagnan (R) & F .lli [1983] 1 WLR 195 at p201B:
I take it to
be a general principle of law not requiring authority that where a person under
an obligation to do a particular act has to do it on or before a particular
date he has the whole of that day to perform his duty.
*Editor’s
note: Also reported at (1969) 212 EG 1275.
† Editor’s
note: Also reported at (1983) 269 EG 630, [1984] 1 EGLR 115.
For my part, I
cannot accept the submissions on this part of the case put forward for the
tenant. The contention that failure to serve a section 48(1) destroys the right
to claim the rent otherwise due before service of a notice was not formally
abandoned. It was not pursued in argument. It is, I think, unarguable for the
simple reason that the section does not so provide.
All the rent
in respect of which the notice of December 3 1991 was served was ‘otherwise due
from the tenant’ on that date, ie it was due but for the effect of section
48(2). The letter of December 3 was a valid notice under section 48(1). This
provision can be given no effect in derogation of the landlord’s legal rights
beyond that required by the terms of the enactment. The rent ‘otherwise due’,
therefore, is to be treated as not due from the tenant ‘at any time before the
landlord does comply with’ section 48(1); but such rent becomes due at the time
when the landlord so complies and continues due thereafter. There is no
justification for any extension of the period of time over which the rent is
treated as not due whether until the end of that day, or for a reasonable time,
or until the next rent day. The cases cited for this purpose are, in my
judgment, of no relevance. No question of construction of contractual
obligations arises as to when the rent was ‘otherwise due from the tenant’. The
rent in respect of which the notice was served was due from the tenant when he
received the notice.
As to the
ground upon which the judge held the notice to pay rent to be invalid, I have,
after some hesitation, found myself unable to accept it.
The
restriction on operation of notices to quit, contained in section 26 of AHA,
‘shall not apply in any of the Cases set out in Part I of Schedule 3 to this
Act’: see section 26(2). It is provided by Case D:
At the date of
the giving of the notice to quit the tenant had failed to comply with a notice
in writing served on him by the landlord, being either —
(a) a notice requiring him within two months
from the service of the notice to pay any rent due in respect of the
agricultural holding to which the notice to quit relates, or
(b) a notice requiring him within a reasonable
period specified in the notice to remedy any breach by the tenant that was
capable of being remedied of any term or condition of his tenancy which was not
inconsistent with his responsibilities to farm in accordance with the rules of
good husbandry,
and it is
stated in the notice to quit that it is given by reason of the said matter.
The
requirement in Case D is that the notice requires the tenant within two months
from the service of the notice to pay any rent due.
The
Agricultural Holdings (Forms of Notice to Pay Rent or to Remedy) Regulations
1987 (SI 1987 No 711) requires, by regulation 3, that ‘a notice to pay rent
shall be in form 1’. By regulation 2(2)
form substantially to the same effect’.
Para 1 of the
form reads as follows:
I hereby give
you notice that I require you to pay within two months from the date of service
of this notice (note: this notice may not be served before the rent is due) the
rent due in respect of the above holding as set out below:
Particulars
of rent not paid:
Date when
due Amount due
The form
contained information to the tenant as to the effect of the notice and the
steps open to the tenant in response to it.
The statutory
purpose of the requirement of the giving of the notice in the prescribed form
is to identify to the tenant the payments of rent which the landlord alleges to
be due and to give to the tenant the information which the tenant requires in
order to protect his rights. If the rent alleged to be due is not in fact due
the notice may be held to be invalid: see Dickinson v Boucher
(1983) 269 EG 1159 where Oliver LJ , [1984] 1 EGLR 12(as he then was) said at
p1162:
The court
decided in [Pickard v Bishop] . . . that the notice to pay,
although it did not have to comply with any prescribed form under the 1948 Act,
must comply strictly with the requirements of the section; that the notice must
get the landlord right; that the notice in that case had not purported to be
served by the landlords . . .; and that, accordingly, it was a bad notice. The
judgment of the Master of the Rolls . . . makes it clear what the ratio of the
decision was. He refers to the meaning in the Act of the word ‘landlords’ . . .
in reference to the notice: ‘It requires payment of the rent due to Mr
Arkwright, the previous owner, who was not the ‘landlord’ . . .
Then he goes
on:
In construing
section 24(2)(d) it must be recognised that it is a provision which
enables the landlord to forfeit the tenant’s interest and obtain possession, to
the great advantage of the landlord and great loss of the tenant. Now it is a
settled rule of construction that forfeiture clauses are to be construed
strictly. The party who seeks to enforce a forfeiture must comply strictly with
every requirement leading to it. So I would construe section 24(2)(d)
strictly so as to require the landlords to fulfil it to the letter.
Later, in his
judgment, Oliver LJ continued:
The
difficulty that arises, as it seems to me, in this case, is that where the
notice does go on to specify what the rent is and gets it wrong, it is then
difficult to say that the tenant has failed to comply, if he does not pay what
is demanded, with a proper notice under the Act. It is not simply that the
notice to quit is allowed to operate if the tenant does not, within two months
of the service of the notice, pay the rent due at the date of service to the
landlord. The notice to quit is to operate if, at the date of the giving of the
notice to quit, the tenant had failed to comply with a notice in writing served
on him by the landlord. So one is to ask, did the tenant fail to comply with a
proper notice, ie one with which he was bound to comply? Of course, he failed to comply here with the
obligation which was cast on him by the lease to pay his rent, but what was
required by the notice was that he should pay a sum of £650, that being
erroneously described as the rent due, and though no doubt he did not comply
with that, he was not, of course, bound to do so.
Finally,
Oliver LJ said at p1164:
It seems to
me that the approach of this court in Pickard v Bishop is one
which, albeit in that case applicable to a misdescription of the landlord, must
equally be applicable to the misstatement of the requirement with which the
tenant is notified that he must comply.
In this case,
the rent which was said in the notice to be due from the tenant was in fact due
when the notice was served, for the reasons stated above, and accordingly the
requirement with which the tenant was notified that he must comply was
accurately stated.
Does it matter
that the notice referred to the quarter days, upon which the arrears of rent
were unquestionably ‘otherwise due’ as ‘the date when due’ under the
particulars of rent not paid? Chadwick J
held that to be a fatal inaccuracy. In my judgment, it was not.
In Official
Solicitor v Thomas (1986) 279 EG 407, CA, Nicholls LJ, in a judgment
with which Slade LJ agreed, considered the validity of a Case D notice in which
criticism was directed at the description of the ‘term or condition’ of the
tenancy which, it was said, the tenant had broken. The inaccuracy was that the
arrangements whereby the tenant agreed to pay the interest charges consisted of
two supplemental agreements and not one only so that the particulars should
have read ‘supplemental agreements’ in the plural and not ‘supplemental
agreement’; and it was said that the location of the agreement should have been
identified by a reference to the memorandum and the correspondence. Nicholls LJ
said:
I cannot
accept the tenant’s submission to the effect that any inaccuracy in this
description, however trivial or immaterial or however obviously a slip, and
regardless of whether the tenant may be misled by it or not, is necessarily
fatal. So to decide, with regard to the part of the notice with which this
appeal is concerned, would be to carry the need for strict compliance with the
statutory requirements to an absurd length, and for no apparent purpose. In the
present case the description was terse, but it did identify the source as a
supplemental agreement (which, plainly, was being contrasted with the tenancy
agreement itself) and the essential subject matter of that agreement (payment
of interest on the landlord’s improvements). The only inaccuracy relied on is
the omission of letter ‘s’ after the phrase ‘supplemental agreement’. Given
that it is accepted for the tenant that, despite the inaccuracy and the
terseness, this tenant could not reasonably have been misled, in my view the
particulars given were good enough.
In this case
the reference to the dates when due in the schedule to the notice was intended
to identify the payments which the landlord asserted had not been made: that,
in my judgment, is plain on the face of the document and is put beyond question
in the context of the correspondence between the parties in which the tenant
had raised the question of compliance with section 48 and the landlord had
responded by serving a sufficient notice to satisfy the requirement of that
section.
In so far as
the notice inaccurately asserted that the rent ‘otherwise due’ had been due on
and from the quarter days listed, it did not mislead and could not reasonably
have misled the tenant in any way. Furthermore, it did not and could not affect
the clarity of the notice as to what the tenant was required to do or what the
effect would be if the tenant did not comply with it. To treat this notice as
invalid, therefore, would be to carry the need for strict compliance with the
statutory requirement to a length beyond any useful purpose. The statutory
purpose of the notice was fully satisfied. On this ground alone I would allow
this appeal.
Agreeing, HIRST
LJ said: On the point of construction, I entertained the gravest doubt
during the course of the argument whether Parliament can have intended by
section 48 in Part IV of the Landlord and Tenant Act 1987 to make provisions
affecting notices in the case of agricultural tenancies, seeing that they had
already enacted a detailed code for such notices in the previous year in
section 93 of the Agriculture Holdings Act 1986, which consolidated the
pre-existing statutes relating to agricultural holdings, subject to certain
amendments.
It also seemed
to me that the House of Lords decision in Maunsell v Olins [1975]
AC 373, while not binding authority in Mr Neuberger’s favour, provided very
strong support for his argument that the section should not be so construed.
However, after
very considerable hesitation, I have reached the conclusion that, for the
reasons given by Ralph Gibson LJ, it is not open to the court as a matter of
strict construction to construe the word ‘premises’ in section 48 otherwise
than as meaning the subject-matter of the letting, without any exception other
than that expressly provided for in relation to business tenancies.
So far as Maunsell’s
case is concerned, I have come to the conclusion that on careful examination
there are a number of important distinguishing features which render that case
much less favourable to Mr Neuberger than appears at first sight. These are as
follows:
The question
at issue was whether section 18(5) of the Rent Act 1968 applied to agricultural
holdings, with a result which would have greatly enlarged the rights of
subtenants of such holdings. It was in this context that Lord Wilberforce, in
the leading judgment with which Lords Reid and Dilhorne agreed, referred to the
political delicacy of
Gibson LJ. The requirements of section 48 of the 1987 Act in relation to
notices are in no way comparable in their impact or sensitivity.
Lord
Wilberforce stated at p389C that:
One suggested
alternative is to give to ‘premises’ a general meaning but to exclude from it
any property forming part of an agricultural holding. The basis for this would
be that agricultural holdings have a code of their own . . . and should not be
brought under the general provisions of the Rent Acts. I see the force of this,
but I think that a particular exception limited in this way would have received
specific legislative mention and this is not to be found.
The same
applies in the present case.
Lord Reid,
while agreeing with Lord Wilberforce’s speech, also cited at p383A-C a special
feature of the section in question which he considered to be ‘a fairly clear
indication that the draftsman did not have in mind any ‘superior letting other
than a letting for residential purposes’.’
There is no similar indication in the section presently under
consideration.
I am therefore
in agreement with Ralph Gibson LJ as to the construction of section 48.
I also agree
with Ralph Gibson LJ in his reasoning and conclusions on the issues relating to
the form and efficacy of the notice which was served, and would also, on this
ground only, allow the appeal.
Also agreeing,
PETER GIBSON LJ said: My first impression, on reading the Landlord and
Tenant Act 1987, was to doubt whether Parliament could have intended to include
agricultural holdings in such an Act without express reference to such
holdings. As a practical matter, the draft of the Bill and its carriage through
Parliament would no doubt have been the responsibility of the Department of the
Environment, not the Ministry of Agriculture, and it was not inconceivable that
the applicability of the provisions of Part VI of the 1987 Act to agricultural
holdings could have escaped attention. The word ‘premises’ in ordinary parlance
means buildings of some sort and Maunsell v Olins [1975] AC 373
shows that, in an appropriate context in housing legislation, it can properly
be interpreted in a way that limits its meaning (in that case to what are
dwelling-houses for the purposes of the Rent Acts) so as to avoid encroaching
on what is properly the preserve of the agricultural holdings regime.
Further, I
found it surprising that Parliament should be enacting provisions relating to
notices (in sections 48 and 49) and giving the county court jurisdiction (in
section 52) without express reference to the separate regimes for notices and
jurisdiction in the Agricultural Holdings Act 1986. I was also impressed by the
correspondence between the provisions to which Part VI applied and those to
which section 3 of the Landlord and Tenant Act 1985 applied. I was not
impressed by the point to which the judge drew attention that in the 1987 Act
there are references to the Rent (Agriculture) Act 1976: provisions to which
that Act applies are, in effect, outside the agricultural holdings regime and
within the Rent Acts regime.
However, I
have been persuaded by the careful judgment of the judge and the cogent
arguments of Mr Bannister that it is simply not permissible to cut down the
meaning of the words in section 46(1) so as to exclude agricultural holdings.
The words ‘premises which consist of or include a dwelling’ and the definition
of ‘dwelling’ in section 6(1) (‘a building or part of a building occupied or
intended to be occupied as a separate dwelling, together with any yard, garden,
outhouses and appurtenances belonging to it or usually enjoyed with it’) make
it plain that ‘premises’ means more than a dwelling (with its extended meaning)
and, like the judge, I find it impossible to find any satisfactory stopping
place short of giving the term its ordinary legal meaning of all that is the
subject-matter of a letting. The difficulty which Mr Neuberger had in
formulating alternative definitions of ‘premises’ seemed to me to underline
this point.
Maunsell v Olins with its different statutory context is plainly
distinguishable from the present case. Lord Wilberforce, after referring to the
argument that from ‘premises’ should be excluded property forming part of an
agricultural holding because such holdings have a code of their own, observed
([1975] AC 373 at p389): ‘I think that a particular exception limited in this
way would have received specific legislative mention and this is not found’.
Further, as Mr Neuberger, with his characteristic and commendable candour,
acknowledged, there is nothing in the 1987 Act which can be said to conflict
with the agricultural holdings regime. It cannot be said to have been
impossible for Parliament to have decided as a matter of policy that tenants of
agricultural holdings which include a dwelling-house should have the benefits
now afforded by Part VI of the 1987 Act. As for the 1985 Act it is, in my view,
significant that this Act contains an express exclusion of agricultural
holdings, albeit in a different context: see section 14(3).
Nor can I
accept Mr Neuberger’s argument that a ‘dwelling’ should not be read as
extending to dwellings. Premises which include two dwellings logically must
include one dwelling. In any event, I can see no contrary intention appearing
from section 46 to the application of the ordinary rule that words in the
singular are to be read as including the plural: section 6(c) Interpretation
Act 1978.
Accordingly,
for these and the other reasons given by Ralph Gibson LJ, I have concluded that
section 48 of the 1987 Act does apply to a tenancy of an agricultural holding
which includes a dwelling and so is applicable to the tenancy in question.
On what Ralph
Gibson LJ has called the second and third questions I am in entire agreement
with him and like him I would differ from the judge only on the notice of
December 3 1991. Because of the serious consequences for the tenant of an
agricultural holding, it is quite right, as Mr Bannister submitted, that strict
compliance with the statutory provisions should be required. However, I would
be sorry to see the law in this field develop the unattractively rigid features
that disfigured at least one other area of the law where strict compliance was
necessary (viz the law of bankruptcy prior to the Insolvency Act 1986),
and, for my part, I welcome the approach adopted in Official Solicitor v
Thomas [1986] 2 EGLR 1, whereby errors in completing a statutory notice
which could not reasonably have misled the tenant to whom it was addressed may
be held in appropriate cases not to invalidate the notice. For the reasons
given by Ralph Gibson LJ I too would allow the appeal on this ground alone.
Plaintiff to
have half of the costs of appeal; no order as to costs in the court below;
application for leave to appeal refused. Money paid into court by defendant to
be paid out.
