Landlord and Tenant Act 1954, Part II — Termination of business tenancy — Invalid section 25 notice by landlords acted upon by tenant — Second section 25 notice by landlords without defect of first notice — Tenant’s failure to apply for new tenancy in time in response to second notice — Whether tenant or landlords estopped from taking steps in their interests — Landlords held to be entitled to possession, although result said to be ‘harsh’ and ‘regrettable’
concerned the termination of the tenancy of an hotel — The landlords’ first
notice under section 25 of the 1954 Act was invalid because it named two only
out of the three joint landlords — Tenant in response gave the usual notice of
unwillingness to give up possession and applied within the time-limit to the
court for the grant of a new tenancy — The landlords subsequently realised that
their section 25 notice was defective and served a second notice in the names
of the three joint landlords — The tenant on this occasion duly gave notice of
unwillingness to give up possession but, unfortunately for him, failed to apply
to the court within the statutory time-limit for a new tenancy — The landlords
formally abandoned reliance on their first notice — At that stage the tenant
could have applied to the court within the time-limit for a new tenancy in
response to the landlords’ second notice, but she did not do so — The time for
doing so having expired, the landlords commenced possession proceedings against
the tenant — At the county court hearing both the 1954 Act proceedings and the
possession proceedings were by consent treated as before the judge — He held
that the tenant was estopped from waiving the defect in the first section 25
notice — Accordingly, as no application to the court had been made in response
to the second notice, the landlords were entitled to an order for possession —
The tenant appealed
was pointed out that the real question was not whether the tenant was estopped
from waiving the defect in the first notice but whether the landlord was
estopped from treating the first notice as invalid — It had been submitted on
behalf of the tenant that she had a continuing right to waive the defect in the
first notice and that the landlords had no right to serve a fresh notice until
the proceedings resulting from the first notice had been disposed of — The
court could see no justification for such a restriction on the landlords —
There appeared to be nothing to prevent the landlords from abandoning reliance
on their invalid notice and relying instead on their second, valid notice — The
result, as Ralph Gibson LJ said, was harsh and, in his view, regrettable, but
the statute did not empower the court to grant relief in a case of this kind —
The possession order was correctly made — Appeal dismissed
The following
cases are referred to in this report.
Morrow v Nadeem [1986] 1 WLR 1381; [1987] 1 All ER 237; (1986) 53
P&CR 203; [1986] 2 EGLR 73; 279 EG 1083, CA
Pearson v Alyo [1990] 1 EGLR 114; [1990] 25 EG 69, CA
Polyviou v Seeley [1980] 1 WLR 55; [1979] 3 All ER 853; (1979) 39
P&CR 164; (1979) 252 EG 375, [1979] 2 EGLR 63, CA
Sidney
Bolsom Investment Trust Ltd v Karmios & Co
(London) Ltd [1956] 1 QB 529; [1956] 2 WLR 625; [1956] 1 All ER 536, CA
Stile
Hall Properties Ltd v Gooch [1980] 1 WLR 62;
[1979] 3 All ER 848; (1980) 39 P&CR 173, CA
This was an
appeal by the tenant, Mrs Dorothy Draper, against a possession order made by
Judge Crane, at Northampton County Court, in possession and Landlord and Tenant
Act 1954 proceedings which were both before him by consent of the parties. The
landlords, plaintiffs in the possession proceedings and respondents to the
appeal, were John Edward Smith, Richard Clwyd Smith and Margaret Janet Smith.
The subject premises were the Wharf House Hotel and adjoining garage premises
at Welford Road, Husbands Bosworth, Leicestershire.
Alan Taylor
(instructed by John Partridge, of Rugby) appeared on behalf of the appellant;
Oliver Wise (instructed by Wartnabys, of Market Harborough) represented the
respondents.
Giving
judgment, DILLON LJ said: This is an appeal from a decision of His
Honour Judge Crane given in the Northampton County Court on May 10 1989. It
arises in relation to a tenancy which was at one time protected by Part II of
the Landlord and Tenant Act 1954. It is a further instance of the permutations
which can come about when solicitors, being merely human, endeavour to give
effect to the provisions of that Act as to the termination of business
tenancies and as to applications to the court for the grant of new tenancies.
The appellant,
Mrs Draper, was the lessee of business premises known as the Wharf House Hotel,
Welford Road, Husbands Bosworth in Leicestershire. She acquired by assignment
in 1972 the unexpired residue of a term of 21 years from January 1 1967 in
those premises, which had been granted by a lease of May 17 1967.
At some stage,
not later it would seem than December 1 1984, the reversion in the premises on
that term became vested in the respondents to this appeal, Mr John Edward
Smith, Mr Richard Clwyd Smith and Mrs Margaret Janet Smith. They held it
jointly.
On May 27 1987
the landlords’ solicitors, as their agent, purported to give Mrs Draper a
notice under section 25 of the 1954 Act to terminate her tenancy of the
premises on December 31 1987. The notice intimated that any application to the
court by Mrs Draper for a new tenancy would be opposed on the grounds mentioned
in paras (f) and (g) of section 30(1) of the Act.
Mrs Draper
duly gave a counternotice to that notice that she would not be willing to give
up possession and on September 8 1987 she applied to the court for the grant of
a new tenancy under the Act.
Some time
after that the landlords realised that their notice of May 27 1987 was
defective and failed to comply with the requirements of the Act because it
named two only of the three landlords as being the landlords. It omitted
altogether the name and address of Mrs Margaret Janet Smith. Therefore the
landlords’ solicitors wrote to the tenant’s solicitors on January 29 1988
explaining the inadvertent omission of Mrs Smith’s name from the notice and
they invited the tenant’s solicitors to agree to Mrs Smith’s being added as a
respondent for the hearing of the proceedings and to confirm that
notice.
The
authorities show that the omission of the name and address of one of the landlords
renders the notice invalid for the purposes of the Act and therefore
ineffective to terminate the protected tenancy of the tenant under the Act: see
Morrow v Nadeem [1986] 1 WLR 1381 and the more recent decision,
also of this court, in Pearson v Alyo reported in The Times
newspaper as having been decided on November 7 1989*.
*Editor’s
note: Also reported at [1990] 1 EGLR 114.
The tenant’s
solicitors replied by a letter of February 12. They gave notice that they would
be taking the point at the hearing, because as far as they could understand it
the rule was that a notice which does not correctly specify the name and
address of the landlord is not in the prescribed form and is invalid. They said
also:
Please note
that any other steps which we take in the proceedings concerning our client’s
application for a new tenancy are without prejudice to the issue which we will
take concerning the invalidity of our section 25 notice.
They also asked
for evidence as to how the landlords had acquired their interest, so that they
could consider the strength of the landlords’ application should the notice be
deemed valid. The point of that was whether the landlords had held their
interest for sufficiently long to be able to rely on the grounds on which they
were seeking to rely.
The
predictable — as it seems to me — consequence of that was that the landlords
decided to serve a further notice without prejudice to the contention that the
notice of May 27 1987 was effective. They served the further notice on June 23
1988. It was served without prejudice to the contention that the previous
notice was effective. It correctly named all three landlords and gave their
addresses. It purported to terminate the tenancy on December 31 1988 rather
than December 31 1987, as under the previous notice, and it stated that a new
tenancy would be opposed on the grounds mentioned in paras (c), (f)
and (g) of section 30(1) of the Act.
The tenant’s
solicitor duly gave the requisite counternotice to that, stating that she would
not be willing to give up possession of the property comprised in the tenancy.
That notice was said to be given without prejudice to the existing proceedings.
However, unfortunately the tenant failed to make any application to the court
within the prescribed time-limits in respect of the further notice. That is
crucial to what subsequently happened.
On October 7
1988 the landlords’ solicitors wrote to the tenant’s solicitor and formally
abandoned reliance on the first notice of May 27 1987. They asked the tenant’s
solicitor to confirm that he would take no further steps in the court
proceedings arising out of that notice. At that stage the tenant could still
have started fresh proceedings in respect of the notice of June 23 1988 but, as
I have said, she did not do that.
On February 23
1989 the tenant’s time for starting proceedings for a new tenancy in response
to the second notice having by then expired, the landlords wrote claiming
possession of the premises:
As your client
has not made an Originating application in response to the Landlords’ Section
25 Notice served on her on 24th June 1988 her Lease of the property has
terminated on 31st December 1988 being the date specified in the Landlords’
Notice. We therefore require your Client to vacate the premises.
They state they
were prepared to allow her until March 31 1989 to do so and on April 6 1989 all
three landlords started a second action, claiming possession of the premises
against the tenant on the ground of the failure to make an application to the
court in due time in respect of the second notice.
On May 8 and
9, which was immediately before the hearing, which was fixed for May 10, the
tenant filed a reply in her Landlord and Tenant Act proceedings and a defence
in the possession action purporting to accept the validity of the first notice
of May 27 1987. At the hearing before Judge Crane on May 10 both proceedings
were treated by consent as being before the court. The judge held that the
first notice was invalid but that the tenant was estopped from waiving the
defect in the first notice. Therefore, as no application to the court for a new
tenancy had been made in response to the second notice, the landlords were
entitled to possession and in the second proceedings he made a possession order
against the tenant. The tenant now appeals to this court.
The real
question, as it seems to me, is not the question whether the tenant was
estopped from waiving the defect in the first notice but whether the landlord
was estopped from treating the first notice as invalid. It is common ground
between the parties that unless the tenant had agreed to treat it as valid, the
notice was invalid. The tenant wanted to say that the notice should be treated
as valid because only in that way could the tenant get a new tenancy. But, as
it seems to me, that could come about only by there being some estoppel against
the landlord.
On the facts
which I have recited I can see no basis for any such estoppel. It has been
argued by Mr Taylor, who did not appear in the court below, for the appellant
that the tenant had a continuing right to waive the defect in the notice and
the landlord had no right to serve a fresh notice until the proceedings
resulting from the first notice had been disposed of. He appeared to accept
that if there had been no proceedings following the first notice, the landlord
could have served a second notice.
The court has
no power in proceedings for a new tenancy to give leave to amend the statutory
notice, which is an essential precondition of the court’s jurisdiction in such
proceedings.
I cannot see
any reason why, if the tenant does not agree to treating an apparently invalid
notice as valid, the landlord should not immediately serve an unquestionably
valid notice.
We were referred
to certain decisions of this court in Stile Hall Properties Ltd v Gooch
[1979] 3 All ER 848 and Polyviou v Seeley [1979] 3 All ER 853,
where the Stile Hall Properties case was followed, in which it was held
that if a tenant serves a valid notice requesting a new tenancy but fails to
follow it up by applying to the court for a new tenancy within the requisite
time-limits, the tenant cannot thereafter, and before the notice expires,
withdraw the notice and serve a fresh one, whether for the same or a later
date. But the reason for that is that the tenant’s initial notice was valid and
it had effect under the scheme of the Act to set a termination date for the
tenant’s tenancy unless there was within due time an application to the court
for a new tenancy. That to my mind is a wholly different situation from the
situation in the present case, where the landlords’ first notice of May 27 1987
was invalid.
We were also
referred to authorities which show that if a landlord gives a notice
terminating a tenancy and saying that an application to the court for a new
tenancy will be resisted on specified grounds, the landlord in any subsequent
proceedings and the successor in title of the landlord are limited to those
specified grounds and cannot bring in further grounds. That all, again,
proceeds on the basis that the notice in which the grounds for resisting an
application for a new tenancy are specified is a good notice. If it is invalid,
then I can see nothing to preclude the landlord from relying in a second notice
on further grounds. In any event, if the landlord purports in a second notice
to rely on the original grounds and a further ground, even if the landlord were
not entitled to rely on the further ground it would not prevent the notice
being a valid notice to terminate the tenancy and a valid notice in respect of
the two grounds which had been specified in the previous invalid notice.
We were
referred also to certain comments of Denning LJ (as he then was) in Sidney
Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd [1956]
1 QB 529 where he said that where a tenant had requested a new tenancy and had
served a notice which was in fact, as the court held, a valid notice requesting
the new tenancy and the landlord had riposted by asserting that the notice was
not a valid request, the landlord was not estopped from subsequently
maintaining that the notice was valid, when the tenant had failed to apply to
the court for a new tenancy within the time-limits. The landlord was not
estopped, because his assertion that the notice was not valid was merely a
statement of his then present reaction to it and was not inviting the tenant to
take any particular action in reliance on the alleged invalidity.
That might go
to show that the letter which the tenant’s solicitors wrote on February 12 1988
did not raise any estoppel against the tenant, but the crucial question is
whether there is any estoppel against the landlords which precluded them from
taking the course that they did and maintaining correctly in law that the notice
was invalid.
I can see
nothing that prevents the landlords doing what they did. Consequently,
unfortunate though the consequences of failure to make application to the court
in due time after the second notice may be to the tenant, I am of the view that
this appeal must fail, because the possession order was rightly made.
Agreeing, RALPH
GIBSON LJ said: Mr Taylor, who did not appear in the court below and who,
as it seems to me, has done all that could
upon which the judge could hold that the tenant was estopped from raising any
point of waiver which might be open to him. I think that that submission is
probably right, because I cannot see that the tenant was saying that she would,
as she did, take the point of the invalidity and would not thereafter change
her mind about it. But we have not heard Mr Wise on the point, and I say
nothing more about it.
What is clear,
in my judgment, is that it does not matter whether the tenant was estopped or
not. If she is entitled to raise the point and to rely on waiver by her, she
can say only that she wishes to waive the invalidity of the first section 25
notice. She does not on this appeal argue that the notice was valid. She
accepts, as Dillon LJ has said, and rightly in my view, that it was invalid.
But under the name of waiver Mr Taylor claims on her behalf a right at any
stage and at her option, before the proceedings are disposed of by order of the
court, to require that the invalid notice be treated by the court as valid.
That right, as I understood the submission, is said to arise upon the proper
construction of the 1954 Act as a whole and notwithstanding the fact that the
landlords are not precluded by any conduct on their part from informing the
tenant that the notice was invalid, and from informing the tenant that they do
not intend any further to rely upon it, nor precluded from raising the point in
other proceedings.
The contention
seems to me to be based upon a misconception of the nature of waiver in this
context. When a tenant waives a defect in a notice, the tenant loses the right
to object to its invalidity thereafter. The landlord who has invited that
action cannot go back on it either. But, as Dillon LJ has explained in stating
the facts of this case, that did not happen. For my part I reject the
submission that the tenant has any such right as Mr Taylor has contended for.
It is not expressly given in the statutes and impossible in my judgment to hold
that it arises by any necessary implication. Mr Taylor acknowledged that it is
not necessary to protect the tenant from any injustice which would otherwise
occur to her. The misfortune she has suffered has not arisen out of the ability
of the landlord to take the point that his notice was invalid, but, as Dillon
LJ has explained, from the unfortunate failure to take the necessary procedure
following upon the service of the second valid notice.
The landlord,
of course, may be estopped from relying upon the invalidity of his own notice.
He may agree that it be treated as valid. But there is no finding, and there
was no plea and there is no evidence, that the landlords were in any way
precluded by their conduct from abandoning reliance upon their invalid notice
or from relying upon that invalidity for the purposes of demonstrating that the
tenancy was terminated by the second notice.
The result is
harsh and in my view regrettable. The real matters of substance between the
parties, namely whether there should be a new lease and, if there should be, at
what rent it should be granted and for what term, have not been heard or
decided. The statute gives no power in such circumstances to the court to give relief
against the consequences of honest error on the part of the legal adviser.
There is nothing that this court can do about it.
I agree that,
for the reasons which Dillon LJ has given, this appeal must be dismissed.
STUART-SMITH
LJ also agreed and did not add anything.
The appeal
was dismissed with costs.
