Landlord and tenant — Forfeiture of lease — Attempt of former tenant, against whom forfeiture proceedings had been completed and landlords had re-entered, to reopen the question of relief against forfeiture by invoking the ancient equitable jurisdiction of the court — Notice of motion by defendant owners, under RSC Order 18, rule 19, or under the inherent jurisdiction of the court, to dismiss the summons as frivolous or vexatious or an abuse of the process of the court — It had been argued that, although the statutory jurisdiction under section 146(2) of the Law of Property Act 1925 could not be relied on, the court still had an equitable jurisdiction to grant relief in any circumstances in which the statutory jurisdiction was not available — Held that it was clear from the speech of Lord Wilberforce in Shiloh Spinners Ltd v Harding, as explained by Dillon LJ in Official Custodian for Charities v Parway Estates Developments, that such a submission was not sustainable — Decision of Nicholls J in Abbey National Building Society v Maybeech Ltd not followed — Lord Wilberforce’s reference to equitable jurisdiction not being ousted concerned cases outside the area of leases and underleases covered by s 146 — Originating summons dismissed as an abuse of the process of the court
This was a
notice of motion by the defendants, Metropolitan City Properties Ltd, that an
originating summons taken out by the plaintiff, Harlock Smith, should be
dismissed under RSC Order 18, rule 19, or under the court’s inherent
jurisdiction. The summons asked for relief from forfeiture under an equitable
jurisdiction which, the plaintiff claimed, had not been displaced by the Law of
Property Act 1925, section 146.
J Lynch
(instructed by Pumfrey & Lythaby, of Orpington, Kent) appeared for the plaintiff
in the originating summons; E J Prince (instructed by Broad, Riggall &
Godman, of Watford) represented the defendants.
Giving
judgment, WALTON J said: This is a notice of motion by the defendant for an
order under Order 18, rule 19 of the Rules of the Supreme Court 1965 or under
the inherent jurisdiction of the court that the originating summons herein be
dismissed on the grounds that it is frivolous or vexatious or an abuse of the
process of the court and that judgment be entered for the defendants for the
costs of the action including this application.
The
originating summons is an originating summons asking for relief from forfeiture
of a lease dated May 25 1954 made between the Prudential Insurance Co Ltd of
the one part and Fred Harlock of the other part, by which lease the Prudential
demised the property known as 13 Romberg Road, London SW17, to the said Fred
Harlock for a term of 77 years. That lease contained (and there is no argument
about this at all — no dispute between the parties) a proviso for re-entry in
the case of breach of covenant. A schedule of dilapidation was served together
with a section 146 notice in August 1984. The notice was not complied with and
the respondents, the then landlords, re-entered as against the applicant, the
tenant, in December 1984.
One would have
thought that that would have been the end of the matter because section 146(2)
of the Law of Property Act 1925 provides:
Where a
lessor is proceeding, by action or otherwise, to enforce such a right of
re-entry or forfeiture, the lessee may, in the lessor’s action, if any, or in
any action brought by himself, apply to the court for relief, and the court may
grant or refuse relief, as the court, having regard to the proceedings and
conduct of the parties under the foregoing provisions of this section, and to
all the other circumstances, thinks fit; . . .
Again it is
common ground that, the landlord having re-entered in December 1984, he is no
longer proceeding, by action or otherwise, to enforce the right of re-entering,
and therefore section 146(2) is applicable.
However, what
has been said by Mr Lynch on behalf of the tenant is simply this. The ancient
equitable jurisdiction relating to relief from forfeiture has not been
displaced in relation to leases by section 146 of the Law of Property Act 1925
but exists quite independently thereof in full force, vigour and effect. Of
course the first comment which must be made upon that startling submission is
that if it were to be so it would make a complete nonsense of subsection (2),
because instead of the restriction ‘Where a lessor is proceeding, by action or
otherwise’, one might just as well write, ‘Where a lessor is proceeding, by
action or otherwise, or has in fact proceeded and obtained possession already’.
Any reading of a statute in a manner of that nature which makes absolute
nonsense of what is quite clearly an essential provision of subsection (2) just
cannot be right on that ground alone. Fortunately one does not have to rely
merely upon that obvious and logical deduction.
In Shiloh
Spinners Ltd v Harding in the House of Lords in [1973] AC 691 Lord
Wilberforce considered the limits of the court’s equitable jurisdiction to
relieve from forfeiture and the limits upon it; that was a case in which the
jurisdiction was involved in a case concerning the assignment of a lease, but
outside the area covered by section 146. The very persuasive argument put in
front of the House of Lords was that because section 146 dealt with, and, quite
clearly, by dealing with, limited, defined and made clear, the equitable
jurisdiction in relation to relief from forfeiture of leases and underleases,
Parliament had by implication limited the right of the court to grant relief
from forfeiture outside the cases of leases and underleases expressly dealt
with in the section. What Lord Wilberforce said about that argument was this:
Secondly, a
point of more difficulty arises from the intervention of Parliament in
providing specific machinery for the granting of relief against forfeiture of
leases:
Pausing there,
Lord Wilberforce never uses language inaccurately: when he says ‘specific
machinery for the granting of relief against forfeiture of leases’ he means
exactly that. That is the specific machinery provided. That and that only. He
continues:
see Law of
Property (Amendment) Act 1859 . . . Common Law Procedure Act 1852, Law of
Property Act 1925, Leasehold Property (Repairs) Act 1938 and other statutes.
This, it is said, negatives an intention that any corresponding jurisdiction
should exist outside the case of leases. I do not accept this argument. In my
opinion where the courts have established a general principle of law or equity,
and the legislature steps in with particular legislation in a particular area
here that is
precisely and exactly what the legislature has done. It has stepped in with
particular legislation in a particular area, namely forfeiture of leases and
underleases. By so stepping in it has provided the specific machinery for the
granting of relief against the forfeiture of leases. Lord Wilberforce
continued:
it must,
unless showing a contrary intention, be taken to have left cases outside that
area
if I may
comment on that, that is to say outside leases and underleases
where they
were under the influence of the general law. To suppose otherwise involves the
conclusion that an existing jurisdiction has been cut down by implication, by
an enactment moreover which is positive in character (for it amplifies the
jurisdiction in cases of leases) rather than negative. That legislation did not
have this effect was the view of Kay LJ in Barrow v Isaacs & Son
. . . when he held that covenants against assigning — excluded from the
Conveyancing Act 1881 — were left to be dealt with according to the ordinary
law.
What Lord
Wilberforce is saying in the plainest possible terms is: ‘Look, the legislature
has interfered with the old equitable jurisdiction to grant relief against
forfeiture in the case of leases and underleases, but outside that area it has
left the jurisdiction where it was.’ If,
I may add, the situation had been that even by stepping in with the specific
legislation, Parliament had not in fact interfered one bit with the equitable jurisdiction,
then it is quite clear that Lord Wilberforce would have said: ‘I do not know
what you are talking about. However much legislation there has been, the
equitable jurisdiction, even in the case of leases, as well as outside them, is
left precisely where it is.’ That, of
course, is precisely what he did not say.
The matter is
again assisted by the very helpful observations of Dillon LJ in the case of Official
Custodian for Charities v Parway Estates Developments (In Liquidation)
[1985] 1 Ch 151*. The relevant passage from Dillon LJ’s judgment is at the top
of p 162. I may say that it appears that Mr Lynch, in seeking to rely upon the
very clear and, if I may say so, obviously clear words of Lord Wilberforce to
which I have already referred, in supporting his argument, was not alone in completely
misconstruing them, because apparently that is precisely what Mr Edward Nugee
QC did in the case to which I am now referring. If I may start at the bottom of
p 164, Dillon LJ said this:
Being unable
to rely on the section, Mr Nugee on behalf of the defendant submits that the
court in its equitable jurisdiction has, in any appropriate case, power to
grant relief against forfeiture of any property interest.
*Editor’s
note: Also reported at (1984) 270 EG 1077, [1984] 1 EGLR 63.
† Editor’s
note: Also reported at (1984) 271 EG 995, [1984] 2 EGLR 69.
In substance
that is really what Mr Lynch has been submitting.
In particular
the court can, he submits, under its equitable jurisdiction grant relief to any
lessee against forfeiture of a lease in any circumstances in which the court’s
statutory jurisdiction to grant relief is not available.
That again is
in effect Mr Lynch’s submission.
Therefore, in
Mr Nugee’s submission there is no problem about jurisdiction; the only question
was whether the jurisdiction should be exercised, and that was a matter for the
deputy judge.
These
far-reaching submissions are founded on the decision of the House of Lords in Shiloh
Spinners Ltd v Harding [1973] AC 691 (which was not a landlord and
tenant case). Mr Nugee relies both on the general principles established in
that case as to the width of the jurisdiction and in particular on a passage in
the speech of Lord Wilberforce
which I have
already quoted. Then Dillon LJ continues with these telling words:
In my
judgment this particular passage in Lord Wilberforce’s speech is, on a true
appreciation, destructive of Mr Nugee’s arguments.
Just as, on a
true appreciation, it is destructive of Mr Lynch’s argument.
Where the
legislature steps in with particular legislation in a particular area, effect
must be given to that legislation, and in that particular area any wider
equitable jurisdiction is ousted. Parliament has stepped in initially by the
Conveyancing and Law of Property Act 1892 . . . and now by section 146(9) and
(10) in the particular area of relief against forfeiture of leases because of
the bankruptcy or liquidation of the lessee. The provisions of the subsections
make no sense unless they are regarded as comprehensive within that particular
area; in cases of certain types of tenancy listed in section 146(9) there is to
be no relief at all, and in other cases the insolvent lessee has a year only to
apply for relief, but if the leasehold interest is sold within that year, the
time-limit does not apply.
Mr Lynch
points out, and points out quite accurately, that that case was in fact dealing
with section 146(9) and (10) in the particular area of relief against
forfeiture of leases, but equally the same argument applies to subsections (1),
(2), (3), (4) and so on to (8), as well as (9) and (10). He cannot, and it
would be quite impossible to, suggest any rational distinction between them.
The only support which Mr Lynch can find for his proposition is the decision of
Nicholls J in Abbey National Building Society v Maybeech Ltd
[1985] Ch 190.(+) It is perfectly true
that in that case the learned judge decided that on its true construction
section 146(4) of the 1925 Act, which again was prefaced by the words ‘where a
lessor is proceeding, by action or otherwise, to enforce a right of
re-entering’, did not displace the court’s inherent equitable jurisdiction to
grant relief to a person claiming as underlessee where the lessee failed to pay
a sum other than rent due under the lease.
With great
respect to the learned judge, first of all he did not have the very helpful and
definitive comments of Dillon LJ to which I have referred, and second, in my
judgment, he does not appear to have appreciated, perhaps lacking those
particular comments of Dillon LJ, the precise effect of what Lord Wilberforce
was getting at. Returning really to the point from which I started, it is clear
to me that to give effect to the argument of Mr Lynch would be to turn
subsections (2) and (4) completely on their heads. I cannot think that where
Parliament has clearly laid down that something is to happen, and happen only,
where a lessor is proceeding by action or otherwise, that is intended to leave
the prior equitable jurisdiction untrammelled in any way so that precisely the
same result can be achieved in a situation where the lessor has proceeded and
has in fact properly obtained possession. The suggestion really is quite
fantastic.
For those
reasons it appears to me that the motion is well founded, and I shall therefore
give effect to it by dismissing the originating summons on the ground that it
is an abuse of the process of the court, and I shall enter judgment for the
defendants for the costs of the action including the motion.