Non-payment of rent — Cheque dishonoured but re-presented and paid — Expiration of time-limit for payment — Notice to quit — Whether stated case sent to arbitrator outside time-limit — Whether landlord waived right to forfeiture by acceptance of cheque — Appeal by landlord allowed
H was the tenant of an agricultural holding at Lower West Kimber, Northlew, Devon. S was his landlord. The rent was £1,700 pa, payable half-yearly in arrears. The tenant did not pay his half year’s rent on March 25 1990. The following day the landlord issued a statutory notice to pay the rent due within two months from the date of service. That notice was served on March 29 1990. Therefore, the last date for receipt of payment was May 29 under section 26(2) of the Agricultural Holdings Act 1986. On May 21 the tenant sent the landlord’s agent a cheque for £850 dated May 18 received on May 22 or 23. It was paid into the landlord’s agent’s client account. By a notice dated June 1 1990, the bank notified the landlord’s agents that the cheque had been returned marked “refer to drawer, please re-present”. The cheque was subsequently re-presented and honoured on June 5 1990. However, the landlord’s agents issued a notice to quit dated June 8 1990 relying on Schedule III, Part 1, Case D, of the 1986 Act, that the tenant had failed to comply with the notice dated March 26 requiring payment of the outstanding rent within two months. The tenant sought to challenge the effect of the notice by way of arbitration under the Agricultural Holdings (Arbitration on Notices Order) 1987. The provisions of para 7 of Schedule XI to the 1986 Act required the parties to submit their respective statement of cases within 35 days from the arbitrator’s appointment. The tenant allegedly failed to do so. The arbitrator stated a case on agreed facts for the opinion of the court. The landlord appealed against the county court’s findings.
Held The landlord’s appeal was allowed.
1. Before the 35 days began to run against them the parties had to know that the arbitrator had consented to act, unless they had advance notice of his acceptance. In the present case the parties had bound themselves by signing the notice of appointment and sending it to the arbitrator, his receipt of that document completed the tri-partite agreement. The untidy result that the parties to the arbitration would (unless the document was delivered by fax) be unaware of the precise time when their 35 days began to run could be avoided by making the appointment only complete on the arbitrator’s faxed acceptance. That was not done in this case and so the tenant’s statement of case was not delivered within the statutory period.
2. Moreover, the arbitrator did not have power to extend the 35-day time-limit, which was mandatory rather than discretionary.
3. Had the tenant’s cheque been cleared on its first presentment, the date of payment would have related back to the posting of the cheque and so would have been made within the two-month period.
4. When the cheque was returned marked “refer to drawer, please re-present” there had been no payment within the statutory period and a notice to quit served by the landlord was effective: see Luttenberger v North Thoresby Farms Ltd [1993] 1 EGLR 3.
5. The validity of that notice was not affected by the fact that the landlord accepted the rent before service of the notice to quit. On the agreed facts there was no basis for inferring an implied agreement for a new tenancy. Nor was there any legal basis for finding that the landlord had, by the mere acceptance of the rent due more than two months earlier, waived his entitlement to claim possession by notice to quit.
Barry Denyer-Green (instructed by Horwood & James, of Aylesbury) appeared for the landlord; Dirik Jackson (instructed by Bond Pearce, of Plymouth) appeared for the tenant.
