· A valid claim for double rent
under the Distress for Rent Act 1737 arises only where (a) the tenant holding
over after his own notice to quit is in fact a trespasser; and (b) the landlord
treats him as such
Where a tenant
refuses to quit after the proper determination of its tenancy, two statutes
passed in the 18th century allow the landlord to seek compensation amounting to
either double value or double rent. The precise ambit of these provisions and
the circumstances in which a claim can be made have rarely been litigated in
modern times. Accordingly, the recent decision of the Court of Appeal in Ballard
(Kent) Ltd v Oliver Ashworth (Holdings) Ltd [1999] 19 EG 161 makes
interesting reading for those advising landlords and tenants. It also
highlights the difficulties faced by property litigators when formulating a
claim.
The dispute in Ballard
originated in the change to the law on break notices made by the House of
Lords in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997]
1 EGLR 57. In 1996 the defendant tenant’s solicitor served a break notice. Unfortunately,
instead of specifying a termination date of 24 September 1996, the notice
incorrectly specified 25 September 1996. On 23 September 1996 the landlord’s
solicitors wrote to the tenant taking the point (rightly, as the law then
stood) that the notice was invalid and that the tenant was therefore bound by
the lease for its full duration (ie for a further 10 years). That letter also
indicated that, without prejudice to this stance, should the tenant treat the
lease as at an end but fail to vacate, the landlord would be entitled to claim
double rent under the Distress for Rent Act 1737.
However, the
litigation department then sent a letter to the tenant intimating that, should
rent for the September 1996 quarter not be paid, proceedings would be commenced.
Although the tenant still viewed the lease as having been validly determined,
it did remain in possession and, in November 1996, the landlord followed up its
threat and commenced proceedings for rent. It was not until the end of December
1996 that this claim was amended so as to add, as an alternative, a claim for
double rent under the 1737 Act. The final twist came with the decision in Mannai,
which, in effect, retrospectively validated the tenant’s break notice. Once
it was clear that the tenant had indeed terminated the lease on 24 September
1996, the dispute focused on the amount the tenant was required to pay for its
period of occupation after that date.
Briefly, the effect
of section 18 of the 1737 Act is that where a tenant serves a notice terminating
the tenancy and then fails to deliver possession on the date stated in that
notice, the landlord is entitled to receive double rent until the date on which
the tenant vacates. Before the trial judge it was accepted that the 1737 Act
covered the circumstances of the present case. As a result, the prime question
was whether or not the landlord had lost its right to double rent as a result
of its initial demand simply for rent under the tenancy and its subsequent
commencement of proceedings only for that rent. However, in the Court of Appeal
the more fundamental question of whether the Act applies where the landlord
does not treat the tenant as a trespasser arose and, ultimately, proved to be
the crucial one.
The common law has
long recognised that where a party who knows that he has two inconsistent
rights makes it clear to the other side that he is choosing to rely on one of
them, he cannot later try to claim the benefit of the other.
The tenant in the
present case therefore contended that the landlord, knowing that it had a right
to double rent, had elected to demand and sue for the rent owing under the
tenancy and could not now claim double rent under the 1737 Act. However, the
Court of Appeal agreed with the trial judge that this doctrine of election did
not apply in the present type of case because the landlord did not have two
inconsistent rights. The landlord had only one right, depending on whether or
not the tenancy had been validly terminated. Since the tenant’s break notice turned
out to be good, the landlord could only ever have treated the lease as at an
end; it had never been entitled to regard the lease as continuing. Any
suggestion that Doe d Cheny v Batten (1775) 1 Cowp 243 is
authority to the contrary was firmly rejected. Although in that case it was
suggested that the acceptance of rent might operate as a waiver of the right to
double value (under the Landlord and Tenant Act 1730), this observation was not
necessary to the decision and was felt by the court to be devoid of analysis or
reasoning.
It is worth noting
that a landlord can lose its right to double rent under the doctrine of waiver
by estoppel. However, this was not pleaded in the present case, it appears,
because there was no evidence to support it. It would need to have been shown
that the tenant had actively relied on the landlord’s overt choice to claim
rent rather than double rent, a requirement that is not essential to the
doctrine of election.
However, all was
not lost for the tenant because in the Court of Appeal Laws LJ raised concerns
over the ambit of section 18, a point not previously considered. He concluded
that section 18 was ambiguous, not as to its ‘internal’ meaning, but as to its
scope. This meant that he was entitled to look at the whole Act, including its
recitals and preamble, together with any related Act (here the 1730 Act) in
order to decide its meaning.
Having done this,
he was satisfied that the intention of parliament was that the right to double
rent ‘only arises where: (a) the tenant holding over after his own notice to
quit is in fact a trespasser (thus, the notice must be valid); and (b) the
landlord treats him as such.’ Hence, in
the present case the landlord’s initial stance of treating the tenancy as
continuing (presumably, without clearly preserving any alternative) was fatal
to the claim for double rent.