Application for leave to appeal out of time–Leave sought to appeal from decision against landlords on the operation of a rent review clause in a lease for 21 years–Decision given before the rulings of the House of Lords in United Scientific Holdings Ltd v Burnley Borough Council and Cheapside Land Development Co Ltd v Messels Service Co–Claim that if leave to appeal given the decision appealed against would probably be reversed–Application granted
This was a
motion for leave to appeal out of time from a decision by Judge Fay, sitting as
a deputy judge of the Queen’s Bench Division, on November 1 1974. The judge had
dismissed the plaintiff landlords’ action on the ground that the procedure to
obtain a rent increase under the provisions of a lease between the parties had
not been initiated in time.
W Goodhart
(instructed by Hicks Arnold Rose Johnson) appeared on behalf of the applicants;
D R N Hunt (instructed by Wright, Son & Pepper) represented the
respondents.
Giving
judgment, ROSKILL LJ said: In 1972 the Property & Reversionary Investment
Corporation Ltd issued proceedings against their lessees, a Mr and Mrs Templar,
in connection with a rent review clause in a lease entered into for 21 years
from March 25 1965 at an initial yearly rental of £1,656. These proceedings
came before His Honour Judge Fay sitting as a deputy judge of the Queen’s Bench
Division, and Judge Fay determined these proceedings in favour of the tenants.
That decision was given on November 1 1974, when the learned judge dismissed
the plaintiffs’ action on the ground that the steps to obtain the rent increase
had not been previously initiated before March 25 1972. We have not seen a transcript
of his judgment, but it would seem that he followed the line of cases then
prevailing and took the view that time was of the essence and as the plaintiffs
(the landlords) had failed to comply with their obligations under the lease,
properly construed, they had lost their entitlement under the rent review
clause. That, broadly speaking, was in line with the view taken in two
decisions of this court, first in United Scientific Holdings Ltd v Burnley
Borough Council and secondly in Cheapside Land Development Co Ltd and
others v Messels Service Co. But on March 23 last the House of Lords
declared those two decisions to have been erroneous.
Mr Goodhart
has therefore claimed, and Mr Hunt has agreed, that we may assume, though he
has made no submission, that in the light of the decisions of the House of
Lords, Judge Fay’s judgment, if appealed to this court, would be held to be
wrong. We express no view as to whether that is right or not. It is in the
light of that present position, that the plaintiffs have now applied to this
court for leave to appeal out of time. They are, of course, a long way out of
time, for it is now some 2 1/2 years since Judge Fay gave his decision. But it
is said by Mr Goodhart that the reason why this court should now give leave to
appeal out of time is because this is a case where the parties are in a
continuing contractual relationship and that it is wrong that that relationship
should still continue and will continue, under the 21 years’ lease, until 1986
to be governed by a decision of Judge Fay which, on the assumption I have
already mentioned, is to be taken as erroneous.
He relied on a
decision of this court, Re Berkeley (1944) 171 LT 303. In that case
there had been earlier decisions at first instance. Then there was a subsequent
decision of this court which showed that the earlier decisions were wrong, and
it was sought to appeal out of time against the second of those decisions. The
Master of the Rolls, Lord Greene, at p 305, said:
It seems to
me that the principle to be extracted is this. It is not sufficient for a party
to come to court and say: ‘A subsequent decision of a superior court has said
that the principle of law on which my case was decided was wrong.’ The court will immediately say to him: ‘That
bald statement is not enough for you. What are the circumstances? What are the facts? What is the nature of the judgment? Who are the parties affected? What, if anything, has been done under it?’
and so forth. In other words, the whole of the circumstances must be looked at.
If the court, in the light of those circumstances, considers it just to extend
the time, then it will do so. That seems to me to be the proper principle and
it is entirely in accordance with the view taken by this court in the most
recent case under this rule of Gatti v Shoosmith (1939) 161 LT
208; [1939] Ch 841.
It is
therefore plain that it is not enough for Mr Goodhart to say that the recent
decisions of the House of Lords clearly show that Judge Fay’s decision was
wrong. He must show there are special reasons why he should be allowed to argue
that the judgment should not stand.
At one point
Mr Goodhart sought to contend that the plaintiffs might be in a difficult
position when next the rent review clause can be invoked in 1979 and said that,
notwithstanding the decisions of the House of Lords, they would be bound to
comply with Judge Fay’s judgment–there being, as he contended, issue estoppel
between the parties. Mr Hunt did not accept that, and indeed offered an
undertaking that no question of issue estoppel would be raised in 1979 and that
the lessees would accept that the plaintiffs would be then entitled to base
their claim for rent review in accordance with the decisions of the House of
Lords. We cannot speculate as to the future. The real point here, as Mr
Goodhart ultimately accepted, is whether it is right that these parties should
have their continuing contractual relationship governed by a lease, the terms
of which have assumedly been erroneously construed in the court below.
We think that,
notwithstanding the way in which Mr Hunt put his case, the plaintiffs should be
left to receive the lower rent for the next 18 months or so and thereafter
become entitled to claim the higher rent in accordance with the House of Lords’
decision and that there are special circum-
light of Berkeley’s case, accepted that he could not claim any new rent
retrospectively, even if the appeal out of time ultimately succeeds. That is
clearly right, and upon his undertaking not to claim any increased rent, if his
appeal succeeds, before any date before Midsummer Day next, I take the view
that leave to appeal out of time should be given, and accordingly I would allow
the motion.
Agreeing, CUMMING-BRUCE
LJ said: I would only add this: The court has considered whether there are
special circumstances which bring into play the principles described by the
Master of the Rolls in Berkeley’s case, where the Master of the Rolls
stated that the court has to look at all the circumstances, and here the
context of this application is that there is a lease, whereby the landlord has
a right to seek a rent review periodically to keep in step with the market
movements of such a lease, which included clauses defining the substantive
obligations of the parties and a clause, or clauses, laying down the procedural
steps required to enable the lessors to avail themselves of their rights for
rent review. What was decided in this case by the learned judge was there had
been a procedural default by the landlord in relation to certification in the
time limited by the lease for a review of rent, and as a result of that
decision, the landlords lost their right to the rent review that they would
otherwise have had under the lease.
Now that the
House of Lords has decided that the proper construction of the contract is
other than that decided by the learned judge, I agree that there are special
circumstances here because it does not seem just that future obligations
between the parties to the lease should depend upon the construction now shown
to be wrong.
Leave given
to appeal out of time, both sides’ costs to be paid by the plaintiffs in the
action.
