Leasehold Property (Repairs) Act 1938 — Adjourned summons raising question as to whether lessors were entitled to leave to commence proceedings against lessees for damages for breach of repairing covenant — General repairing covenant by lessees — Severe defects in stonework of front wall which might cause injury to passing pedestrians — Remedial work carried out by lessors in view of urgency before they gave notice to lessees under section 146(1) of the Law of Property Act 1925 — Held that section 146(1) contemplated that the breach alleged had not been remedied at the time when lessor served section 146(1) notice — This interpretation was reinforced by section 18(2) of the Landlord and Tenant Act 1927 — The reference in section 1(2) of the 1938 Act to a notice under section 146(1) of the 1925 Act meant a notice relating to a breach of covenant which at the date of service had not yet been remedied — Held accordingly, but ‘with surprise and regret’, that the court had no jurisdiction to give the lessor leave to commence proceedings under the 1938 Act
This was a
summons heard originally by the district registrar but adjourned into court at
the request of the defendants, A D P Tanner, M Armstrong and M E Portch,
trustees of the Tonbridge and Mailing Conservative Association, of 91 High
Street, West Mailing. The district registrar had indicated that he was minded
to grant leave to the lessors, SEDAC Investments Ltd, to commence proceedings
under section 1(5)(e) of the 1938 Act.
R C Pryor
(instructed by Argles & Court, of Maidstone) appeared on behalf of the
plaintiffs; Richard Fernyhough (instructed by Warners, of Tonbridge)
represented the defendants.
Giving
judgment, MR MICHAEL WHEELER QC said: I think it might be a kindness if I say
at the outset that I have come to the conclusion, with considerable regret,
that I have no jurisdiction to grant leave.
This is a
procedure summons which gives rise to a short but difficult question of law,
namely as to whether the plaintiffs, who are lessors under a lease dated
November 18 1974, are, on the facts of the case, now entitled to leave to
commence proceedings against the lessee defendants for damages under section
1(2) of the Leasehold Property (Repairs) Act 1938 for breach of a repairing
covenant, notwithstanding that the lessors had themselves remedied the breach
before purporting to give the lessees a notice such as is specified in section
146(1) of the Law of Property Act 1925.
The facts are
relatively simple. The lease in question was for a term of 14 years from August
24 1974. In clause 2(2) there was a general repairing covenant by the lessees,
and in clause 2(4) the lessors had a right to call upon the lessees to remedy a
breach and if the lessees failed to do so the lessors could themselves remedy
it. It is common ground that no attempt was made by the lessors to invoke the
machinery of that latter subclause.
On April 25
1980 a representative of the lessees, a Mr Fisher, noticed that some of the
stonework on the front wall of the demised premises (which were used by the
local Conservative Association) was loose and that fragments of the front wall
at first-floor level were falling on to the pavement below. Accordingly, he
immediately informed the lessors (through a Mr Tidball) to enable them to
ascertain whether their insurance provided adequate cover against any claim for
injury which might be sustained as a result of the falling stonework. Mr
Fisher’s evidence is that he did not at that time know whether the lessees were
under any legal obligation to maintain or repair the wall. Mr Tidball took
prompt action and on the very same day instructed a Mr Laker, who was a
chartered engineer, to make an immediate inspection of the front wall of the
premises.
As to what
happened next, I cannot do better than quote from Mr Laker’s affidavit,
paragraphs 3 and 4:
3. On April 25
1980 I was instructed by Mr J Tidball, a director of the plaintiff company, to
make an inspection of the front wall of the building at no 91 High Street, West
Malling. He told me that he had received a telephone call from the tenants to
the effect that the stonework on the front of the building appeared to be
loose. I made an immediate inspection of the front wall of the building the
same day. My inspection revealed that the stonework facing on the righthand
side of the window to the main first floor office, as viewed from the High
Street, had moved out from the main face of the wall by half an inch at sill
level and one and a half inches at its head. Furthermore, above the head of the
window was a 10 in high void. Much of the mortar jointing had perished and
there was movement in the stonework under hand pressure and from vibration
caused by passing lorries. I formed the view that the stonework might fall if
subjected to any unusual vibration, and that if that happened severe injury
might be caused to a passing pedestrian. I therefore telephoned Mr Tidball and
advised him of the state of the building, the danger to pedestrians, and that
his insurance might not protect him against liability for any damage caused by
falling stonework.
4. Mr Tidball
thereupon instructed me to arrange for the wall to be repaired and instructions
were given to proceed. The builders, having obtained permission to erect the
scaffold across the public footpath, erected it on May 1 1980; the work was
completed on May 9. I supervised the work of repair, in the course of which it
became apparent how unsafe the wall had been. In particular, as soon as a start
was made on taking down the stone facing much of it fell away, down on the
scaffold boards. This included stone work up to the string course, about 3 ft
above the window head. It was found that the mortar joints had perished.
Then in the
final paragraph (no 6) of his affidavit he says this:
In my opinion
it was essential in April 1980 for the front wall of the said building to be
repaired as a matter of the utmost urgency in order to prevent danger both to
the general public and to occupiers of and visitors to the above-mentioned
building.
The cost to
the lessors of getting this remedial work carried out was £2,754,25 and the
total cost (including Mr Laker’s fees and solicitors’ fees) was just under
£3,000.
The lessors
made no claim against the lessees in respect of this expenditure until January
5 1981, when the lessors’ solicitors served on the defendants (who are the
trustees of the ton bridge and Malling Conservative Association) what was
described in the heading as a ‘Section 146 Notice’ under which the solicitors,
as agents for the lessors, gave notice as follows.
It is
addressed to the tenants and refers to the lease under which they hold the
premises, and continues:
We, the
solicitors, hereby give you notice as follows, as agents for the landlord:
(1) By the
above-mentioned lease the lessee covenanted throughout the term to keep the
demised premises and all additions thereto, and the landlord’s fixtures
thereon, and the boundary walls thereof, and the drains, soil and other pipes,
and sanitary and water apparatus thereof in technical repair and condition.
(2) In breach
of the above-mentioned covenant you allowed the front wall of the said premises
to fall into disrepair.
(3) The
aforementioned breach has been remedied by the landlord and will require you to
make compensation of the following sums to the landlord being the cost to them
to remedying the said breach,
and those
costs are set out, totalling, as I have said, just under £3,000.
(4) If you
fail to comply with this notice it is the intention of the landlord to claim
damages against you for breach of the said covenant.
(5) You are
entitled under the Leasehold Property (Repairs) Act 1938 to serve upon the
landlord a counternotice claiming the benefit of the said Act.
(6) Such
counternotice must be served within 28 days of the date of service upon you of
this notice.
(7) Such
counternotice must be in writing and must be served upon the landlord by
handing the same to him personally, such counternotice shall also be
sufficiently served if it is left at the last known place of abode or business
of the landlord in the United Kingdom. Such counternotice shall also be
sufficiently served if it is sent by post in a registered letter addressed to
the landlord by name at the aforesaid place of abode or business, and if that
letter is not returned through the post undelivered, that service shall be
deemed to be made at the time at which the registered letter would in the
ordinary course be delivered.
Paragraph 8
gives the name and address for service of the landlord.
On January 20
1981, the lessees’ solicitors sent a counternotice under the Leasehold Property
(Repairs) Act 1938 as follows:
Counternotice
under the Act. As solicitors for
the lessees
upon whom you
have served a notice under section 146 of the Law of Property Act 1925 in
respect of premises situate at 91 High Street, West Malling, Kent, we hereby
give you notice that the said lessees claim the benefit of the Leasehold
Property (Repairs) Act 1938.
It is dated
January 20 1981.
This
counternotice was sent under cover of a letter which made it clear that the
giving of the counternotice was to be without prejudice to the lessees’
contention that the so-called ‘Section 146 Notice’ was void. There is therefore
no question of the sending of the counternotice acting as some form of waiver
or estoppel.
Two
last-minute affidavits were introduced during the hearing on behalf of the
lessees, without objection. The first, by a Mr Davies, who is the managing
director of a firm of builders, who gave his views as to what his firm would
have quoted if they had been asked to produce an estimate for the repairs in
April 1980. Mr Davies asserted that this would have produced a substantially
lower figure than that which the lessors have in fact incurred. Mr Davies also
made the point that he would have recommended the customer to make an
application for a local authority grant towards the cost of the repairs. I
understand that it is now too late to make such an application. The second
affidavit, by a clerk in the lessees’ solicitors, amplified Mr Davies’ evidence
on the aspect of a local government grant, but it was, I think, eventually
agreed that these two affidavits took the matter little further having regard
to the fact that on this summons I am solely concerned with an interlocutory
application for leave to commence an action for damages and not with the
merits or outcome of that action as such. For present purposes I am prepared to
assume that an application for a local authority grant might have been made in
April 1980 and that such an application might have been successful.
The summons in
the present case was issued on June 3 1981 and was heard by the district
registrar on August 10 1981. Having heard argument, he indicated that he would
grant the lessors leave to commence proceedings under section 1(5)(e) of the
Act of 1938, but at the lessees’ request he adjourned the summons into court.
Thus it is that it comes before me.
So much for
the facts. I must now turn to the law. Section 1(2) of the Leasehold Property
(Repairs) Act 1938 (as amended) provides that a right to damages for breach of
a repairing covenant in a lease to which that Act applies (such as the lease in
the present case) is not to be enforceable unless the lessor has served on the
lessee within the time there mentioned ‘such a notice as is specified in
subsection (1) of section 146 of the Law of Property Act 1925’; and where such
a notice is served the lessee has 28 days in which to serve a counternotice on
the lessor claiming the benefit of the Act of 1938. Under section 1(3) of the
Act the effect of the lessee serving a counternotice is to preclude the lessor
from taking any proceedings for damages for breach of the repairing covenant
otherwise than with the leave of the court.
The purpose of
the Act of 1938 was conveniently summarised by Lord Denning MR in Sidnell
v Wilson [1966] 2 QB 67 at p 76 as follows. He said:
It
the notice
did not
comply with the Leasehold Property (Repairs) Act 1938 as amended by section 51
of the Landlord and Tenant Act 1954. That Act was passed shortly before the war
because of a great mischief prevalent at that time. Unscrupulous people used to
buy up the reversion of leases, and then bring pressure to bear on the tenants
by an exaggerated list of dilapidations. The Act applied to leases for seven
years or more which had three years or more to run. In such cases Parliament
enacted that the landlord, when he gives a notice under section 146 of the Law
of Property Act 1925 to make good
counternotice.
But, as Harman
LJ pointed out in the same case, at p 79: ‘Like most remedial Acts of that
sort, it catches the virtuous in the net which is laid for the sinner.’
I should
stress at the outset that in the present case nothing that the lessors have
done comes within a mile of the type of mischief which the Act of 1938 was
designed to stop.
Section 146(1)
of the Law of Property Act 1925 provides as follows:
(1) A right of
re-entry or forfeiture under any proviso or stipulation in a lease for a breach
of any covenant or condition in the lease shall not be enforceable, by action
or otherwise, unless and until the lessor serves on the lessee a notice —
(a)
specifying the particular breach complained of; and
(b) if the
breach is capable of remedy, requiring the lessee to remedy the breach; and
(c) in any
case, requiring the lessee to make compensation in money for the breach;
and the
lessee fails, within a reasonable time thereafter, to remedy the breach, if it
is capable of remedy, and to make reasonable compensation in money, to the
satisfaction of the lessor, for the breach.
It will be
seen (i) that section 146(1) relates to a breach of any covenant and not
merely to a breach of a repairing covenant; (ii) that the section is primarily
concerned with claims for and relief against forfeiture; and (iii) that the
notice which it requires the lessor to give is one which must contain the
information referred to in paragraphs (a), (b) and (c) of section 146(1). The concluding
lines of the subsection clearly contemplate that the breach complained of has
not been remedied at the time when the lessor serves his notice because, in
effect, they give the lessee a reasonable time after service of the
lessor’s notice in which to remedy the breach. Moreover, this concept of the
lessor’s notice having been served at a time when the breach still requires to
be remedied is in my judgment consistent with the natural interpretation of the
language used in paras (a), (b) and (c).
This
conclusion is, I think, reinforced by consideration of section 18(2) of the
Landlord and Tenant Act 1927. That is a subsection which is to be construed as
one with section 146 of the Act of 1925 and relates to provisions regarding
covenants to keep or put premises in repair. By subsection (2) a right of
re-entry or forfeiture for breach of a repairing covenant is not to be
enforceable unless the lessor proves (i) that the fact ‘that such a notice as
is required by section 146 of the Law of Property Act 1925 had been served on
the lessee’ was known to the lessee, underlessee or person who had last paid
the rent and (ii) ‘that a time reasonably sufficient to enable the
repairs to be executed had elapsed’. Here, too, as it seems to me, the
legislature is assuming that at the time when the lessor serves what I will
call his ‘section 146 notice’ the breach of the repairing covenant will not
have been remedied.
Not every
breach of covenant is capable of being remedied in law, as paragraph (b) of
section 146(1) recognises (for examples see Woodfall, Landlord and Tenant,
28th ed vol 1 p 863). But leaving that type of breach aside, it is clear from
section 146(1) that before a lessor can enforce a right of re-entry or
forfeiture two conditions must have been satisfied, namely (i) that the lessor
must have served a section 146 notice on the lessee and (ii) that the lessee
must have failed, within a reasonable time thereafter, to remedy the breach and
make reasonable monetary compensation for it.
That being the
position under section 146(1) itself, what is meant by the reference in section
1(2) of the Act of 1938 and section 18(2) of the Act of 1927 to ‘such a notice
as is specified in section 146(1) of the Law of Property Act 1925’? In my judgment it means — and means only — a
notice which contains the information required by paragraphs (a), (b) and (c)
of section 146(1). As I have already stated, the natural meaning of those
paragraphs is that they relate to a breach which, at the date of the service of
the notice, has not yet been remedied: and if that is the correct construction
of section 146(1) it is difficult to avoid the conclusion that the section 146
notice which the lessor has to serve under section 1(2) of the Act of 1938 as a
prerequisite to enforcing a right to damages for breach of a repairing covenant
is similarly a notice which relates to a breach which at the date of service
has not yet been remedied.
If this be so,
it would seem to follow that a lessor is no longer in a position to give a
valid section 146 notice if the breach in respect of which he desires to claim
damages has already been remedied.
In construing
section 1 of the Act of 1938 the following points appear to me to be relevant:
(i) under
section 1(2) the lessee’s right to give a counternotice claiming the benefit of
the Act does not arise unless and until the lessor has duly served a section
146 notice on the lessee.
(ii) under
section 1(3), once the lessee has given the counternotice the lessor can only
take proceedings for forfeiture or damages for breach of the repairing covenant
in question with the leave of the court.
(iii) the
importance which the Act attaches to the lessee’s right to give a counternotice
is underlined by section 1(4), which requires the lessor’s section 146 notice
to contain a conspicuous statement of the lessee’s right to give a
counternotice and relevant details of the manner and time of service: and a
notice which does not give that information is a bad notice (see Sidnell,
supra).
(iv) under
section 1(5), leave of the court is not to be given unless the lessor brings
himself within one or more of five separate heads: of these, the last (set out
in section 1(5)(e)) is that the lessor proves ‘special circumstances which in
the opinion of the court render it, just and equitable that leave should be
given’. It was under this head that the learned district registrar would have
been prepared to act in the present case.
(v) each of the
first four of the separate heads in subsection 1(5) imposes on a lessor who
seeks leave of the court to commence proceedings the need to prove that the
immediate remedying of the breach is required (my emphasis) for the
purpose there stated. Thus in subsection (5) also, the draftsman appears to be
contemplating that the breach will not yet have been remedied at the time when
the lessor seeks the leave of the court.
In the light
of the foregoing, it seems to me that the scheme of section 1 as a whole
contemplates a series of consecutive steps which must be taken before the court
can give leave to a lessor to enforce a claim for damages for breach of a
repairing covenant, namely:
(1) the lessor
must have served a section 146 notice which complied with section 1(2) and
section 1(4).
(2) the lessee
must then have served a counternotice which also complied with section 1(2).
(3) the lessor
must then have brought himself within one or more of the heads set out in
section 1(5).
If this be so,
the power of the court to give a lessor leave to commence proceedings as
contemplated by section 1(3) arises (and arises only) where the lessor has duly
served a section 146 notice and the lessee has then duly served a
counternotice. The whole scheme of section 1 appears to commence with — and to
hinge upon — the service of a valid lessor’s section 146 notice: and if,
therefore, I am right in holding that a section 146 notice, to be effective,
must be served before the breach is remedied, I am forced to the
conclusion that in a case such as the present, where the lessor remedied the
breach before attempting to serve a notice under section 146(1), he has thereby
put it out of his power to serve a valid section 146 notice at all, with the
result that he has deprived the lessee of his right to serve a counternotice:
and the consequence of this seems inevitably to be that the court has no
jurisdiction to give the lessor leave to commence proceedings for damages
because that jurisdiction arises, as I have already indicated, only when (and
because) the lessee has served a valid counternotice.
I frankly
confess that I have reached this conclusion with surprise and regret.
Surprise,
because the scheme of section 146(1) itself (and more particularly as applied
by section 18 of the Act of 1927 and section 1 of the Act of 1938) appears to
make no provision whatsoever for the situation where the consequences of the
breach of the repairing covenant require (or might reasonably be thought to
require) urgent attention and where, for example, the lessor takes immediate
remedial action either of his own volition or, perhaps, because the lessee is
unable or unwilling to take the necessary action sufficiently promptly.
Regret,
because I can see no reason why, in such circumstances, the lessor should (as I
have felt bound to hold) be unable to apply to the court for leave to commence
proceedings for damages merely because of his failure to serve a notice which,
on the facts of the present case, would be unlikely to have had any effect
other than, perhaps, to produce a request by the lessee that the lessor should
put in hand the necessary repairs and that they should sort out the question of
the quantum of damages once that had been done. I see no merit in the argument
that by remedying the breach himself the
That is a point which might well be argued in the action for damages itself if
the lessor got leave to commence such an action: so, too, could the more
difficult question as to whether the lessor could establish a claim for damages
having regard to the limitation on damages imposed by section 18(1) of the Act
of 1927. But I see no reason in principle why the court should be unable to
give leave to commence proceedings for damages in any circumstances whatsoever
(and even, it would seem, in a ‘special circumstances’ case which might
otherwise come within section 1(5)(e) of the Act of 1938) merely because a
valid section 146 notice had not been served before the breach complained of
had been remedied.
It is true
that although under section 1(2) a claim for damages for breach of a repairing
covenant cannot be enforced by an action commenced prior to the last three
years of the lease except with leave of the court, the lessor ceases to be
under this restriction once the three-year period has been reached, provided
(and that will be the position in the case before me) the claim for damages
will not by then have become statute-barred. But I am bound to say that this
possible impact (or lack of impact) of statutory limitation on the
circumstances of any particular case seems to be undesirably and
unsatisfactorily fortuitous.
It is also
true, as was pointed out in argument, that in the present case the lessors
might have protected their position in other ways. For example:
(1) they might have invoked clause 2(4) of the
lease and called upon the lessees to remedy the breach; and they could have
reinforced this by seeking, or threatening to seek, a mandatory injunction on
the lessees to undertake the necessary remedial work: alternatively,
(2) they might have served a notice under section
146(1) (however general and imprecise the terms of that notice might, in the
circumstances, have had to be) and might have also stated that in view of the
urgency they regarded it as essential (and, ex hypothesi, as reasonable)
that the lessees should at least commence to remedy the breach within, say, 48
hours.
As to these
alternatives, they must, if they are valid, apply to any similar situation
whether more or less urgent than in the present case. Suffice it to say that I
do not consider either of them to be of any practical value in a case of real
emergency.
In the present
case, the basic trouble has arisen partly from the urgency of the repairs which
were undoubtedly required (Mr Laker’s evidence on this score is uncontroverted
and is accepted as correct by counsel for the lessees) and partly from the fact
that at the time when the damage to the wall was first noticed neither side
(and I state this as a fact rather than as a criticism) was apparently aware of
their respective legal rights and obligations. The lessees were unaware of the
nature and extent of their liabilities under the repairing covenant in the
lease: and the lessors were unaware of their rights under clause 2(4) of the lease.
So it was that
when the emergency arose (an emergency which the lessees themselves first
brought to the attention of the lessors) it was the latter who (rightly as the
factual position was to prove) took immediate emergency action. True it is that
they did so really on their own initiative and without, as their counsel
accepted, first giving the lessees the opportunity to take remedial action
themselves. But the fact remains that the emergency basically arose as a result
of the lessees’ failure to comply with their obligations under the repairing
covenant in the lease.
Nevertheless,
for the reasons which I have given, I feel bound to conclude that in the
present case the lessees are correct in arguing that the purported section 146
notice given by the lessors did not (and on the facts could not) comply with
the requirements of section 1(2) of the Act of 1938 and accordingly that I have
no jurisdiction to give leave to the lessors as contemplated by that section to
take proceedings to enforce their claim for damages for breach of the repairing
covenant.
But in case
this matter should go further, I wish to make it clear that if I felt that as a
matter of law I had such jurisdiction, I would, on the facts of this case,
unhesitatingly exercise my judicial discretion in favour of the plaintiffs.