Landlord and tenant — Liability of original tenant for arrears of rent — Whether original tenant liable for rent during continuation tenancy under Part II of the Landlord and Tenant Act 1954 — Whether original tenant liable for interim rent — Whether tenancy and not term continued by the 1954 Act
underlease dated July 9 1985 the plaintiff demised 74 Grosvenor Street, London
W1, to the defendant firm for a term commencing December 1 1984 and ending
March 25 1990 at a rent of £70,000 pa — By a licence dated September 13 1988
the defendant assigned the term of the lease to Warrington plc — On July 5
1989, the plaintiff served on Warrington plc a notice under section 25 of the
Landlord and Tenant Act 1954 terminating the lease on March 25 1990 — Following
a counternotice given by Warrington plc to the plaintiff, and an application to
the High Court for a new tenancy under Part II of the 1954 Act, the plaintiff
issued a summons for the determination of an interim rent pursuant to section
24A of that Act — Warrington plc served notice discontinuing the application
for a new lease and its occupation of the premises was terminated on February 5
1991 — The plaintiff and Warrington plc consented to an order in the interim
rent proceedings that Warrington plc would pay £200,000 pa from March 25 1990
for so long as the lease continued under the provisions of the Act — Warrington
plc paid £60,794.24 towards its liability for interim rent but it then went
into receivership, leaving a balance of £113,452.05 unpaid — The plaintiff
claimed this sum from the defendant as the original tenant — By clause 5(g) of
the lease the expression ‘the said term’ was stated, where the context admits,
to include not only the term thereby granted but also the period of any holding
over or any extension thereof whether by statute or at common law — The
defendant denied liability for any rent during the period of the continuation
tenancy, submitting that
continuation of the contractual term — Alternatively, if the defendant was
liable for rent during the continuation tenancy, this was restricted to the
rent reserved in the lease itself
judicial opinion to the effect that the contractual term granted by the tenancy
continues during the period of holding over by the 1954 Act — It follows that
the term of the lease was extended by the 1954 Act and clause 5(g) came into
play — The effect of the decided cases is that the words ‘tenancy’ and ‘term’
bear the same meaning and are interchangeable: see Weinbergs Weatherproofs
Ltd v Radcliffe Paper Mill Co Ltd, H L Bolton (Engineering) Co
Ltd v T J Graham & Sons Ltd and Cornish v Brook Green
Laundry — The opinion of Nourse J in GMS Syndicate Ltd v Gary
Elliott Ltd is to be preferred to that of Mr D Perrett QC (sitting as a
deputy judge of the Queen’s Bench Division) in City of London Corporation
v Fell — The defendant’s liability is not restricted to the original
rent of £70,000 because the effect of section 24A is that the court determines
the statutory rent during the period of holding over
The following
cases are referred to in this report.
Bolton
(HL) (Engineering) Co Ltd v Graham (TJ) &
Sons Ltd [1957] 1 QB 159; [1956] 3 WLR 804; [1956] 3 All ER 624, CA
Castle
Laundry (London) Ltd v Read [1955] 1 QB 586;
[1955] 2 WLR 943: [1955] 2 All ER 154
City of
London Corporation v Fell [1992] 1 EGLR 95;
[1992] 02 EG 172
Cornish v Brook Green Laundry Ltd [1959] 1 QB 394; [1959] 2 WLR 215;
[1959] 1 All ER 373; [1959] EGD 116; (1959) 173 EG 307, CA
GMS
Syndicate Ltd v Gary Elliott Ltd [1982] Ch
1; [1981] 2 WLR 478; [1981] 1 All ER 619; (1980) 41 P&CR 124; [1981] EGD
331; 258 EG 251, [1981] 1 EGLR 37
Junction
Estates Ltd v Cope (1974) 27 P&CR 482;
232 EG 335
Plesser
(A) & Co Ltd v Davis (1983) 267 EG 1039,
[1983] 2 EGLR 70
Weinbergs
Weatherproofs Ltd v Radcliffe Paper Mill Co Ltd
[1958] Ch 437; [1958] 2 WLR 1; [1957] 3 All ER 663
This was a
claim for arrears of rent by the plaintiff, Herbert Duncan Ltd, the leasehold
owner of 74 Grosvenor Street, London W1, against the defendant, Cluttons, a
firm of chartered surveyors.
Jonathan Brock
(instructed by Forsythe Kerman) appeared for the plaintiff; Barry Denyer-Green
(instructed by Wray Smith & Co) represented the defendant.
Giving
judgment, TUDOR EVANS J said: I give judgment in open court at the
request of both counsel. This is a summons by the plaintiff for the
determination of a point of construction and/or law under Ord 14A of the Rules
of the Supreme Court. If the arguments are resolved in the plaintiff’s favour,
the plaintiff asks for final judgment under Ord 14. There is also a summons for
judgment under Ord 14 in respect of a claim for dilapidations.
There is no
dispute as to the facts relating to the summons under Ord 14A. The plaintiff is
the leasehold owner of premises at 74 Grosvenor Street, London W1. By an
underlease (‘the lease’) dated July 9 1985, the plaintiff demised the premises
to the defendant for a term beginning on December 1 1984 and ending on March 25
1990 at a rent of £70,000 pa payable by equal quarterly payments in advance.
Pursuant to a licence dated September 13 1988 between the plaintiffs, the
defendant and Warrington plc (‘the assignee’), the defendant assigned its
interest in the lease to the assignee for the residue of the term.
On July 5
1989, the plaintiff served on the assignee a notice under section 25 of the
Landlord and Tenant Act 1954 terminating the lease on March 25 1990. The
assignee gave notice to the plaintiff that it was not prepared to give up
possession of the premises and on November 23 1989 applied to the High Court
for a new tenancy under Part II of the Act. On December 18 1989 the plaintiff
issued a summons for the court to determine an interim rent pursuant to section
24A of the Act. But the assignee subsequently served notice discontinuing the
application for a new lease, thereby bringing its occupation of the premises to
an end on February 5 1991. The plaintiff and the assignee then agreed and on
February 18 1991 a consent order was made in the proceedings for an interim
rent that the assignee would pay £200,000 pa from March 25 1990 for so long as
the lease had continued under the provisions of the Act. The assignee paid
£60,794.24 towards its liability for interim rent but it then went into
receivership, leaving a balance of £113,452.05 outstanding. The plaintiff
claims this sum from the defendant as the tenant.
The question I
have to determine is whether the defendant, as the original tenant under the
lease, is liable, on the true construction of the lease and/or as a matter of
law, to pay the interim rent of which the balance remains unpaid.
On behalf of
the plaintiff, Mr Brock submitted that since the assignee held over after the
termination of the lease and since the defendant by an original covenant in the
lease is bound to pay the rent for such period of holding over, it must follow
that the defendant is liable for the balance of the interim rent due to the
plaintiff. The relevant clauses are these:
(1) By clause 1 of the lease dated July 9 1985,
the plaintiff demised the premises to the defendant:
. . . to hold
the demised premises unto the lessee for a term commencing the 1st day of
December [1984] and expiring on the 25th day of March [1990] (hereinafter
called ‘the said Term’) yielding and paying therefor during the said Term the
rent of £70,000 . . .
(2) By clause 2(1)(a), the defendant covenanted:
. . . to pay
the yearly rent hereinbefore reserved and made payable at the times and in the
manner at and in which the same is hereinbefore reserved . . .
The words
‘hereinbefore reserved’ in clause 2(1)(a) refer to the words ‘the said term’ in
the habendum and that phrase is defined by clause 5(g) of the lease as follows:
The
expression ‘the said term’ shall where the context admits include not only the
term hereby granted but also the period of any holding over or any extension
thereof whether by statute or at common law.
Part II of the
Landlord and Tenant Act 1954 applied to the premises. The assignee held over
under the provisions of section 24(1) of the Act, which provides:
(1) A tenancy to which this Part of this Act
applies shall not come to an end unless terminated in accordance with the
provisions of this Part of this Act; and, subject to the provisions of section
20 of this Act, the tenant under such a tenancy may apply to the court for a
new tenancy —
(a) if the landlord has given notice to terminate
the tenancy, or
(b) if the tenant has made a request for a new
tenancy in accordance with section 26 of this Act.
It must
therefore follow, submitted Mr Brock, that there was a holding over by statute
within the meaning of clause 5(g) and the defendant has therefore covenanted to
pay the rent during ‘the said term’, which phrase includes the period of
holding over.
On behalf of
the defendant, Mr Denyer-Green submitted that the defendant was not liable for
any rent during the period of holding over. A distinction must be drawn between
the continuation of a tenancy and the continuation of the contractual term. Mr
Denyer-Green contended that the effect of the language of section 24(1) is
merely to continue the relationship of landlord and tenant with a right to
occupy but that it does not extend the contractual term and therefore there can
be no obligation to pay the rent. The section simply confers a statutory right
to continue in occupation, upon such terms as to interim rent as the landlord
and tenant may agree or the court may impose, until the tenancy is terminated
as the result of a landlord’s notice or until a new tenancy is granted. Mr
Denyer-Green submitted that since the term cannot be extended into the period
of holding over by the Act, then clause 5(g) by its language does not come into
play and the defendant cannot be liable for the rent during the period of
holding over.
There is a
formidable body of judicial opinion against the construction of section 24(1)
which was advanced by Mr Denyer-Green. Before I refer to the cases, I should
mention that the learned editors of Woodfall’s Law of Landlord and Tenant
(28th ed), para 22.042, express an opinion, citing authority, to some of which
I shall refer, which is contrary to the argument for the defendant.
. . . section
24(1) provides for the old tenancy simply to carry on. This it does quite
automatically without any notice or other action needed to be given or taken by
either party. In this respect the statutory continuation under section 24 is
like a statutory tenancy under the Rent Acts, but there the resemblance ends. Under
the Rent Acts the statutory tenancy is not a tenancy at all; it is a mere
personal privilege of exemption from eviction. But section 24 of the Landlord
and Tenant Act continues the existing tenancy with a statutory variation as to
the mode of determination. If the tenant holds over paying rent, which is
accepted, after the contractual end of his tenancy, he will be assumed to do so
under section 24 and not under a new tenancy at common law. The estate in the
land vested in the tenant is by statute prolonged until it is brought to an end
in one of the prescribed ways. So all the terms and conditions of the
contractual tenancy, save those relating to the termination
continuation tenancy under the Act.
A little
later the editors write:
It
— the
statutory continuation of the tenancy —
is not a
personal privilege of the tenant. It is a piece of property which he can assign
or dispose of to a third person provided it was not prohibited by the terms of
the contract.
The first case
to which it is convenient to refer is Weinbergs Weatherproofs Ltd v Radcliffe
Paper Mill Co Ltd [1958] Ch 437, a decision of Harman J (as he then was).
The question which fell to be decided was whether the landlord’s notice to quit
was effective in view of the fact that no notice to quit had been given in
accordance with section 25 of the 1954 Act. Harman J said at p 445, referring
to the words ‘a business statutory tenancy’ used by Sellers J (as he then was)
in Castle Laundry (London) Ltd v Read [1955] 1 QB 586:
This is a
convenient phrase so long as one does not confuse it with the so-called
statutory tenancy under the Rent Restrictions Acts, that, of course, being not
a tenancy at all, whereas having regard to the language used in the Act of 1954
the term must be thought of as continuing by way of a statutory extension (see
the observations of Denning LJ in H L Bolton (Engineering) Co Ltd v T
J Graham & Sons Ltd where the following appears: ‘In his Lordship’s opinion
the right view was that the common law tenancy subsisted with a statutory
variation as ‘to the mode of termination”). Sellers J also speaks of the
‘contractual relationship’ between the parties.
The second
case is GMS Syndicate Ltd v Gary Elliott Ltd [1982] Ch 1, a
decision of Nourse J (as he then was). I must refer briefly to some of the
facts. The plaintiff was the landlord of premises, the upper part of which was
residential. The plaintiff sublet the ground floor and basement to the first
defendant who, with the consent of the plaintiff, sublet the basement to the
sublessees and they in turn assigned the benefit of the subtenancy to the
second and third defendants. The second and third defendants covenanted
directly with the plaintiff and the first defendant to observe the covenants
‘during the residue of the term granted by the underlease as extended by the
tenancy agreement’. After the expiration of the contractual term, the second
and third defendants held over under Part II of the Landlord and Tenant Act
1954. The basement was used for immoral purposes. There were covenants against
a user for any illegal and immoral purpose. The residents objected to the user.
Nourse J at p 7E said:
One of the
questions in these proceedings is whether that direct covenant expired with the
contractual term . . . or whether it continues while [the second and third
defendants] hold over (as they now do) under Part II of the Landlord and Tenant
Act 1954.
Nourse J held
at pp 9G and 10D:
The
convenient course will be for me to deal next with the question whether the
direct covenant by [the second and third defendants] with the plaintiff
contained in the deed of December 23, 1974, expired with the contractual term
on June 30, 1977, or whether it continues while [the second and third
defendants] hold over under Part II of the Landlord and Tenant Act, 1954. As I
have said, the material words are ‘and henceforth during the residue of the
term granted by the underlease as extended by the supplemental tenancy
agreement.’ On one reading of those
words it certainly might be said that the covenant expired with the contractual
term, on the ground that that, and no more, was the term granted by the
agreement of December 29, 1969, as extended by that of January 30, 1974. But it
seems to me that such a reading ignores the effect of section 24(1) of the Act
of 1954, which provides that a tenancy to which Part II applies shall not come
to an end unless terminated in accordance with the provisions of Part II. It is
now well established that this means that the term granted by the tenancy
continues by way of a statutory extension and with a statutory variation as to
the mode of determination: see for example, Cornish v Brook Green
Laundry Ltd [1959] 1 QB 394,409. In the circumstances, it seems to me that
the term granted by the first agreement as extended by the second is still
subsisting, albeit that it has been further extended by the Act of 1954. It is
still the same term. On that footing, it seems to me that the better reading of
the material words in the direct covenant is to construe the obligation as
continuing so long as [the second and third defendants] hold over under Part II
of the Act of 1954. I am fortified in that conclusion by the knowledge that the
rival construction would produce an anomalous state of affairs which cannot
have been within the contemplation of the parties to the deed.
The next case
to which I should refer is Cornish v Brook Green Laundry Ltd (supra),
a decision of the Court of Appeal consisting of Jenkins, Romer and Pearce
LJJ. It is unnecessary to refer to the facts save to say that both Brook Green,
who held a lease from the trustees, and the plaintiff, who was Brook Green’s
sublessee, held over after the termination of the lease under the protection of
Part II of the Landlord and Tenant Act 1954. The court had to decide whether,
in the period of holding over, Brook Green was the plaintiff’s landlord. This
required the court to consider the effect of section 24(1) of the Act. The
reserved judgment of the court was delivered by Romer LJ. He said at p 408:
By reason of
section 24(1) of the Act of 1954, both Brook Green’s tenancy from the trustees
and Mrs Cornish’s subtenancy from Brook Green continued in operation
notwithstanding that, as a matter of contract, they both expired in September
1956; and, as neither tenancy was terminated subsequently in any manner
authorised by the Act, the continuation of both tenancies was still effective
when, in September 1957, Brook Green gave notice of their intention to oppose
Mrs Cornish’s application for a new lease. In H L Bolton (Engineering) Co
Ltd v T J Graham & Sons Ltd Denning LJ considered the position
which arises from the continuation of a tenancy under the Act of 1954, and said
that in his opinion the right view was that the common law tenancy subsisted
with a statutory variation as to the mode of determination. In Weinbergs
Weatherproofs Ltd v Radcliffe Paper Co Ltd Harman J adopted the view
of Denning LJ and said that ‘having regard to the language used in the Act of
1954 the term must be thought of as continuing by way of statutory extension’.
Although none
of the cases to which I have referred was directly concerned with the effect of
holding over in circumstances such as exist in the present case, there is a
consistent body of judicial opinion to the effect that the contractual term
granted by the tenancy continues during the period of holding over by statute.
The words of section 24(1) are: ‘A tenancy to which this Part of this Act
applies shall not come to an end . . .’. Unless, therefore, it is valid to
construe the word ‘tenancy’ in the limited sense for which Mr Denyer-Green
contends and not as being synonymous with the contractual term save for the
question of termination, it must follow that the term of the lease was extended
by the Act and then it must follow that clause 5(g) does come into play,
contrary to the submission of Mr Denyer-Green.
I have been
referred to the decision of Mr Desmond Perrett QC (sitting as a deputy judge of
the Chancery Division) in City of London Corporation v Fell
(unreported, July 10 1991)*. The same point arose on the facts of that case as
exist in the present, save that the lease in that case did not contain any
clause such as clause 5(g). The plaintiff, the lessors, had granted a lease of
business premises to the defendant for a period of 10 years from March 25 1976.
In 1979 the lessees assigned the demised premises for the residue of the term.
At the expiration of the term, the assignees held over under the provisions of
Part II of the Act of 1954. But in December 1986 the assignees were
compulsorily wound up. The plaintiff contended that the contract between the
original parties to the lease continued during the statutory extension of the
contractual lease and thus the tenant remained liable for the rent since the
obligation to make payment continued. The defendant argued that the lease
defined the extent of time during which the defendant, as original lessee,
remained liable for the payment of rent and that, the rent having been paid by
the lessee during the contractual term, the lessor was not entitled to any
further payment.
*Editor’s
note: Now reported at [1992] 1 EGLR 95 ante.
The judge held
that it was the tenure of the business premises and not the original term which
was sustained by the operation of the Act, that is to say, it was the tenancy
and not the term that was carried over.
The cases to
which I have been referred were cited to the judge and I must relate how he
distinguished them. Having referred to the observations of Denning LJ (as he
then was) in H L Bolton (Engineering) Co Ltd v T J Graham & Sons
Ltd (supra) and having quoted the passage from the judgment of Harman J in Weinbergs
Weatherproofs Ltd v Radcliffe Paper Mill Co Ltd (supra) the judge
continued [at p 174]:
. . . But it
appears from Denning LJ’s judgment in Bolton Engineering that at no time
was he referring to anything other than ‘the tenancy’; that is to say, the
right to occupy pursuant to the lease, and that it was this tenancy or right to
occupy which subsisted with the statutory variation by reason of the Act.
Denning LJ made no mention of ‘the term’ in its strict sense as continuing. It
was in no way essential to his decision in Weinbergs that Harman J
should have an eye to any difference in meaning between the words ‘tenancy’ and
‘term’, but, in my view, if he was basing himself upon Denning LJ’s view as
expressed in Bolton Engineering, he was using the word ‘term’ as if it
were synonymous with ‘tenancy’. In my view, and for the purposes of the instant
case, the words ‘tenancy’ and ‘term’ must bear their precise meaning and are
not to be regarded as interchangeable, as they clearly were in the context of
their use by Harman J.
The judge
distinguished the judgment of the court in Cornish v Brook
Green Laundry in which the passage from the judgment of Harman J was
cited with approval by the court, saying [at p 174]:
The Court of
Appeal in that case were not concerned to differentiate between the words
‘term’ and ‘tenancy’ in their task of ascertaining whether the landlord was a
competent landlord within the meaning of Part II of the 1954 Act, and the
precision in interpretation which seems to me to be essential in this case was
unnecessary to the decision in Cornish . . . It is clearly the law (see Cornish)
that when the contractual tenancy is by reason of Part II to be thought of as
continuing by way of a statutory extension, the tenancy continues upon the same
terms as were contained in the contractual lease before its expiry. That is to
say, the landlord and the party entitled to the tenancy as continued by statute
are bound by the same covenants as were contained in the original contractual
lease. The contractual lease, after expiry of the contractual term, defines the
rights and obligations of the parties to the statutory extension of the
tenancy. That statutory arrangement holds no benefit to the original lessee. If
he is not in possession at the date of expiry of the contractual term, he is
afforded no right to possession. He is not privy to the statutory consequences
in any way. Whether an assignee of the original lease elects to hold over after
the expiry of the contractual term is a matter entirely beyond the control of
the original lessee.
As to the
judgment of Nourse J in GMS Syndicate v Gary Elliott Ltd, the
judge held [at p 175]:
. . . Nourse
J adopts the use of the word ‘term’ as being that which Part II of the Act is
extending. Although I do not doubt that the learned judge would have reached
the same conclusion had he referred to the extended term as ‘the common law
tenancy subsisting on the same terms’ it is in my view not correct to hold that
Part II extends ‘the term’, if by that is meant the original contractual
period, for the original lessee has no tenancy or right of occupation after the
expiry of the term and it is the assignee in occupation whose rights are
extended by the statute, albeit upon the same conditions and subject to the same
covenants as governed the rights of the original parties to the lease. Thus, I
do not differ from Nourse J’s conclusion that a landlord may successfully sue
an assignee in possession, or sublessee in possession, in respect of breaches
of covenant during the period of statutory extension of the tenancy. But I
respectfully decline to follow the proposition on p 10 at B: ‘It is now well
established that the term granted by the tenancy continues by way of statutory
extension’.
In my opinion,
it is inescapable from the authorities to which I have referred that it was
held in them that the contractual term continues during the period of holding
over, subject to the statutory variation as to determination. I consider that
the effect of the decisions in those cases is that the words ‘tenancy’ and
‘term’ bear the same meaning and are interchangeable. Harman J in Weinbergs
Weatherproofs Ltd v Radcliffe Paper Mill Co Ltd made his
observations in direct contemplation of the language of Denning LJ. In the
quoted passage from H L Bolton (Engineering) Co Ltd v T J Graham
& Sons Ltd, when Denning LJ said that the common-law tenancy subsisted
with a statutory variation as to the mode of termination he was, as I
understand the language, stating expressly that all features of the tenancy
(that is the contract) subsisted, except that termination could take place only
in accordance with the statutory provisions. In Cornish v Brook Green
the Court of Appeal observed that Harman J adopted the language of Denning LJ.
If the
argument for the defendant in this case is correct, the learned editors of Woodfall’s
Law of Landlord and Tenant have also fallen into error because, in a
passage I have already cited, they state that all the terms and conditions of
the contractual tenancy save termination continue and they use the word
‘tenancy’ in the context of all the terms and conditions of the contract, thus
equating the two terms.
I am faced
with two persuasive authorities, the decision in the City of London case
and the observations of Nourse J in the GMS Syndicate case, fully backed
by the other authorities to which I have referred. I prefer to follow the
opinion of Nourse J that it is well established that the term granted by the
tenancy does not come to an end but continues into the period of holding over
with the statutory variation as to the mode of determination.
It follows
that the terms, save that as to termination, continued during the holding over
by the assignee and, specifically, the liability to pay the rent. Mr
Denyer-Green’s submission would mean, as Mr Brock pointed out, that a defendant
or assignee holding over would not, for example, be liable for the rates. In
this lease, the lessee covenanted ‘from time to time and at all times during
the said term’ — which is a defined phrase by clause 5(g) — ‘to pay the rates
and other outgoings’. If Mr Denyer-Green is correct, who will pay the rates in
a situation in which a tenant or assignee holds over under the lease, a holding
over which the landlord cannot determine?
The phrase ‘the said term’ is used in many of the tenant’s covenants in
this lease and from the nature of these covenants these phrases have to cover a
period of holding over; for example, apart from the rates, the covenant to keep
in good and substantial repair the whole of the demised premises.
I was referred
to cases in which a landlord had sought to recover rent from a guarantor. In Junction
Estates Ltd v Cope (1974) 27 P&CR 482, guarantors joined in a
lease for seven years covenanting that the tenant would pay the rent. The lease
was assigned and the assignees remained in possession after the term under the
provisions of the Act of 1954. They failed to pay the whole of the rent due.
The lease was forfeited and the landlord claimed the unpaid rent from the
guarantor. The action failed. McKenna J held that, upon its proper
construction, the guarantee clause applied only to the lease during the
seven-year term and not to any statutory extension of the term. The case does
not, as I understand it, lay down any general principle applicable in the
present case. It turned on the construction of the relevant clause but McKenna
J observed that if the landlord wanted to impose a longer liability then he
should make it clear in the language of the guarantee.
The question
here is whether the plaintiff has done so in the present case. In a second
guarantee case, A Plesser & Co Ltd v Davis (1983) 267 EG
1039, [1983] 2 EGLR 70, French J followed Junction Estates Ltd v Cope
and doubted the relevance of the judgment of Nourse J in GMS Syndicate
to the case which was before him. But he did not question the remarks of Nourse
J which I have already considered.
I therefore
hold that the old tenancy or term (which words are interchangeable in meaning)
continues into the period of a holding over under section 24(1). The question
is whether clause 5(g) provides that the defendants shall be liable for the
payment of rent during the period of holding over. It is worthwhile recalling
the language of clause 5(g):
The
expression ‘the said term’ shall where the context admits include not only the
term hereby granted but also the period of any holding over or any extension
thereof whether by statute or at common law.
The holding
over within the meaning of the clause was pursuant to the Landlord and Tenant
Act. The clause provides that ‘the said term’ shall include the period of
holding over. The words ‘the said term’ carry one back to the habendum and the
obligation by clause 2(1)(a) ‘to pay the . . . rent hereinbefore reserved’,
that is, during ‘the said term’. In my judgment, the defendant’s liability to
pay rent during the period of holding over follows inexorably.
Mr
Denyer-Green submitted that if all his contentions fail, as I fear they have,
and if the defendant is liable for the rent during the period of holding over,
as I have held it is, then the liability is restricted to the original rent,
£70,000 pa. The provision in the habendum is ‘yielding and paying . . . during
the said term the rent of £70,000’. It follows, argued Mr Denyer-Green, that the
liability must be limited to £70,000 during the said term, that is including
the period of holding over. Mr Brock submitted that this approach is wrong
because, pursuant to section 24A of the Act of 1954, it is the court that
determines what is the statutory rent which it would be reasonable for the
tenant to pay during the period of holding over. I was attracted to Mr
Denyer-Green’s argument but I think that Mr Brock is right and that the court
determines, albeit here by a consent order, recording the agreement between the
plaintiff and the assignee, the rent under section 24A. As Mr Brock pointed
out, it is in the nature of a statutory rent review.
I therefore
answer the question under Ord 14A in favour of the plaintiff. It follows that
the plaintiff is entitled to judgment for £113,452.05 under Ord 14. The claim
for dilapidations has been agreed between the parties. It is agreed that there
will judgment for the plaintiff, the damages to be assessed by an official
referee and I make that order accordingly.
Judgment for
the plaintiff with costs. Leave to appeal to the Court of Appeal.
