Landlord and tenant — Forfeiture — Whether mortgagee barred from relief in forfeiture by section 138(7) of the County Courts Act 1984
By an
assignment of July 17 1987 Mr Karimi-Nick acquired a lease dated September 2
1983 of a flat at 22 West Kensington Court, West Cromwell Road, London W14,
granted by the appellant’s predecessor in title, Newcom Ltd, for a term of 99
years less 28 days from June 14 1978 at a low rent. Mr Karimi-Nick paid a
substantial premium of which £61,000 was advanced by the respondent, United
Dominions Trust Ltd. On March 17 1988 judgment was given to Newcom Ltd against
Mr Karimi-Nick on its claim for arrears of service charge in the sum of
£2,146.92 together with costs. An order was made that, if the arrears were not
paid by April 14 1988 and costs within 14 days of taxation, Mr Karimi-Nick
should give up possession of the flat. On April 13, Mr Karimi-Nick paid the
arrears and on June 28 1988 he was given formal notice that the costs had been
taxed in the sum of £362.15; no payment of the costs was made. Judgment for
possession was executed. The appellant, Shellpoint Trustees Ltd, acquired the
interest of Newcom Ltd on May 18 1988. The respondent was unaware that the
judgment had been executed until December 1990 and on February 25 1991 it
commenced proceedings by originating summons seeking relief from forfeiture. On
the hearing of a preliminary issue, Mr David Neuberger QC (sitting as a deputy
judge of the Chancery Division) held that the respondent was entitled to relief
from forfeiture: see [1992] 2 EGLR 74. The appellant appealed.
the respondent was an ‘underlessee’ of the flat. For the purposes of section
138 of the County Courts Act 1984 the respondent was a ‘lessee’ within the
meaning of subsections (2), (5) and (7). Because it did not make an application
under subsection (9C) within the six-months period limited by subsection (9A)
it was barred, by virtue of subsection (7) and the decision in Di Palma
v Victoria Square Property Co Ltd [1986] Ch 150, from all relief,
including relief in the High Court.
The following
cases are referred to in this report.
Di Palma v Victoria Square Property Co Ltd [1986] Ch 150; [1985] 3
WLR 207; [1985] 2 All ER 676, CA
Doe d
Wyatt v Byron (1845) 1 CB 623
Grand
Junction Co Ltd v Bates [1954] 2 QB 160;
[1954] 3 WLR 45; [1954] 2 All ER 385
Matthews v Dobbins [1963] 1 WLR 227; [1963] 1 All ER 417, CA
This was an
appeal by the defendant, Shellpoint Trustees Ltd, from a decision of Mr David
Neuberger QC (sitting as a deputy judge of the
plaintiff, United Dominions Trust Ltd, was entitled to relief from forfeiture
in relation to a flat at 22 West Kensington Court, West Cromwell Road, London
W14.
Michael
Daiches (instructed by Binks Stern) appeared for the appellant; Simon Berry QC
and Andrew Goodman (instructed by Hill Bailey) represented the respondent.
Giving judgment,
NOURSE LJ said: The first question arising on this appeal is whether the
right of a mortgagee of a lease to claim relief against forfeiture has been
barred by section 138(7) of the County Courts Act 1984.
The lease,
which was made on September 2 1983, was a headlease of a flat at 22 West
Kensington Court, West Cromwell Road, London W14, for a term of 99 years less
28 days from June 24 1978 at a low rent. It contained provisions for service
charges to be payable and recoverable as rent and a proviso for re-entry on
non-payment thereof. On July 17 1987 the lease was assigned to Mr Ali
Karimi-Nick for a substantial premium, of which £61,000 was advanced by the
plaintiff, United Dominions Trust Ltd, on a first legal charge of the lease.
Thereafter, Mr Karimi-Nick was registered at the Land Registry as proprietor of
the lease and the plaintiff was registered as the first chargee.
Mr Karimi-Nick
fell into arrear with payments of service charge and on February 3 1988 the
lessor issued proceedings in West London County Court against him. On March 17
1988 the lessor obtained judgment for the recovery, against the defendant, of
possession of the flat and the sum of £2,146.92 for arrears of service charge,
together with costs on scale 2. The defendant was ordered to pay the amount of
the arrears into court by April 14 1988 and the amount of the costs within 14
days of taxation. The order then provided that unless payment of the said sums
was made by the said dates Mr Karimi-Nick should thereupon give possession of the
flat to the lessor. On April 13
Mr Karimi-Nick
duly paid the amount of the arrears. On June 28 1988 he was given formal notice
that the costs had been taxed in the sum of £362.15, which amount was payable
into court within 14 days, but no such payment was made. Thereafter it appears
that there were negotiations between the lessor and Mr Karimi-Nick which proved
unsuccessful. Eventually, on February 20 1990, the judgment for possession was
executed and the flat re-entered. Meanwhile, on May 18 1988, the freehold
reversion to the lease had been acquired from the lessor by the defendant,
Shellpoint Trustees Ltd.
Pursuant to
Ord 6, r 3(1)(f) of the County Court Rules 1981, the particulars of
claim in the lessor’s action against Mr Karimi-Nick duly stated the name and
address of the plaintiff as being a person who was entitled to claim relief
against forfeiture. The plaintiff knew of the proceedings and of the judgment
for possession and it entered into correspondence both with solicitors acting
for Mr Karimi-Nick and with solicitors acting for the defendant. However, it
did not protect itself by applying to be joined in the proceedings and it did
not become aware that the judgment had been executed until December 1990. On
February 25 1991, rather more than a year after execution had taken place, the
plaintiff commenced these proceedings by issuing an originating summons in the
Chancery Division claiming relief against forfeiture.
The
application came before Mr David Neuberger QC, sitting as a deputy judge of the
Chancery Division, when both parties agreed that he should determine as a
preliminary issue the question whether the court had jurisdiction to grant the
plaintiff the relief sought by the originating summons. He decided that it did
and, with his leave, the defendant now appeals to this court.
Before the
judge the defendant’s case was that the plaintiff’s right to claim relief was
barred by section 138(7) of the County Courts Act 1984; alternatively, by
section 210 of the Common Law Procedure Act 1852. By reason of the decision of
this court in Di Palma v Victoria Square Property Co Ltd [1986]
Ch 150 it is now accepted by the plaintiff that if the case falls within
section 138(7) its right to relief is barred not only in the county court but
also in the High Court, in which event it is unnecessary to go on and consider
the effect of section 210. Having therefore started by hearing argument on
section 138(7) alone, we now give judgment on that question.
Following the
decision in Di Palma v Victoria Square Property Co Ltd,
section 138 of the County Courts Act 1984 was amended by section 55 of the
Administration of Justice Act 1985, which came into force on October 1 1986.
The marginal note to the section reads ‘Provisions as to forfeiture for
non-payment of rent’. The following subsections of the amended section are
directly material to the question we have to decide. Subsections (1), (2) and
(3) provide:
(1) This section has effect where a lessor is
proceeding by action in a county court (being an action in which the county
court has jurisdiction) to enforce against a lessee a right of re-entry or
forfeiture in respect of any land for non-payment of rent.
(2) If the lessee pays into court not less than 5
clear days before the return day all the rent in arrear and the costs of the
action, the action shall cease, and the lessee shall hold the land according to
the lease without any new lease.
(3) If–
(a) the action does not cease under subsection
(2); and
(b) the court at the trial is satisfied that the
lessor is entitled to enforce the right of re-entry or forfeiture,
the court
shall order possession of the land to be given to the lessor at the expiration
of such period, not being less than 4 weeks from the date of the order, as the
court thinks fit, unless within that period the lessee pays into court all the
rent in arrear and the costs of the action.
Subsection (4)
gives the court power to extend the period specified under subsection (3) at
any time before possession of the land is recovered in pursuance of the order
under that subsection. Subsection (5) provides:
If–
(a) within the period specified in the order; or
(b) within that period as extended under
subsection (4),
the lessee
pays into court–
(i) all the rent in arrear; and
(ii) the costs of the action,
he shall hold
the land according to the lease without any new lease.
Subsection (6)
is immaterial. Subsection (7) provides:
If the lessee
does not–
(a) within the period specified in the order; or
(b) within that period as extended under
subsection (4),
pay into
court–
(i) all the rent in arrear; and
(ii) the costs of the action,
the order
shall be enforceable in the prescribed manner and so long as the order remains
unreversed the lessee shall, subject to subsections (8) and (9A), be barred
from all relief.
Subsections
(8) and (9) are immaterial. Subsections (9A), (9B), (9C) and (10) provide:
(9A) Where the lessor recovers possession of the land
at any time after the making of the order under subsection (3) (whether as a
result of the enforcement of the order or otherwise) the lessee may, at any
time within six months from the date on which the lessor recovers possession,
apply to the court for relief; and on any such application the court may, if it
thinks fit, grant to the lessee such relief, subject to such terms and
conditions, as it thinks fit.
(9B) Where the lessee is granted relief on an
application under subsection (9A) he shall hold the land according to the lease
without any new lease.
(9C) An application under subsection (9A) may be
made by a person with an interest under a lease of the land derived (whether
immediately or otherwise) from the lessee’s interest therein in like manner as
if he were the lessee; and on any such application the court may make an order
which (subject to such terms and conditions as the court thinks fit) vests the
land in such a person, as lessee of the lessor, for the remainder of the term
of the lease under which he has any such interest as aforesaid, or for any
lesser term.
In this
subsection any reference to the land includes a reference to a part of the
land.
(10) Nothing in this section or section 139 shall
be taken to affect–
(a) the power of the court to make any order
which it would otherwise have power to make as respects a right of re-entry or
forfeiture on any ground other than non-payment of rent; or
(b) section 146(4) of the Law of Property Act
1925 (relief against forfeiture).
Section 139 is
immaterial. Section 140 defines, for the purposes of sections 138 and 139, the
expressions ‘lease’, ‘lessee’, ‘lessor’, ‘underlease’ and ‘underlessee’. It is
unnecessary to read the section in full. It is enough to say that ‘lease’
includes an original or derivative underlease; and that ‘lessee’ includes (a)
an original or derivative underlessee, and (b) the persons deriving title under
a lessee. It is to be noted that there is no express provision in section 140
limiting the application of the definition to cases where the context so admits
or requires.
It is common
ground that a legal chargee of a lease is either a derivative underlessee or a
person deriving title under a lessee within section 140; cf Grand Junction
Co Ltd v Bates [1954] 2 QB 160, at pp168 to 169. For present
purposes, except where it is necessary to distinguish between a legal chargee
or mortgagee on the one hand and an underlessee by subdemise on the other, it
is convenient to refer to each of them as an underlessee and the lease under
which he holds as an underlease.
I find it
convenient to start by considering section 138 in its unamended form. That
section provided a special code for forfeiture proceedings, but only for
non-payment of rent and only in respect of property within the county court
jurisdiction. It is important to note that in the cases where relief was
afforded by the section no discretion was given to the court as to the terms on
which it should be afforded. If the lessee made payment either under subsection
(2) or under subsection (5), the relief was automatic. Conversely, if the
lessee did not make payment he was automatically barred from relief by
subsection (7).
The effect of
the lessor’s commencement of proceedings against Mr Karimi-Nick was that the
lessor, and later the defendant, was thereafter proceeding by action in a
county court to enforce against Mr Karimi-Nick a right of re-entry or
forfeiture within section 138(1). The stated result was to bring the section
into effect. At one time I thought it a possible view of subsection (1) that
the lessor was also proceeding to enforce the right against the plaintiff, on
the ground that a forfeiture of the lease would necessarily work a forfeiture
of the plaintiff’s underlease. But, on reflection, I prefer the view that it is
only against a party to the action that the lessor can be said to be proceeding
for the purposes of subsection (1).
I go next to
subsection (5), to which the argument in this court has mainly been directed,
it being common ground that if the plaintiff as ‘the lessee’ could have made
payment under that subsection, it was likewise ‘the lessee’ for the purposes of
subsection (7). The submission of Mr Simon Berry QC, for the plaintiff, as to
subsection (5) is that in a case like the present, where the action is brought
by the freeholder, the expression ‘the lessee’ cannot include an underlessee.
That submission is based primarily on subsection (10)(b), which provides that
nothing in section 138 shall be taken to affect section 146(4) of the Law of
Property Act 1925. Mr Berry says that it is section 146(4) which provides for
relief against forfeiture in favour of an underlessee and that Parliament
cannot have intended that he should have a parallel right to relief under section
138(5).
The short
answer to that submission is that the two provisions are not parallel. Relief
under section 146(4) is discretionary, whereas relief under section 138(5) is
automatic. Moreover, to my mind the words ‘Nothing in this section . . . shall
be taken to affect’ suggest that Parliament was concerned not to ensure that
subsection (5) should not apply to underlessees, but rather to make it clear
that nothing in section 137 was to replace or vary the effect of section
146(4).
There can be
no doubt that once the wording of subsection (5) has been subjected to close
analysis it is seen to be far from ideal. Relying on the unrestricted
definition contained in section 140, Mr Michael Daiches, for the defendant,
submits that there is no ground for excluding an underlessee from the
expression ‘the lessee’, even where the action is brought by the freeholder. He
says that once the underlessee has made the payment required by subsection (5)
it has the effect that it is stated to have. Here, as Mr Daiches himself
acknowledges, comes the difficulty. The stated effect is that ‘he shall hold
the land according to the lease without any new lease’. The difficulty is that
those words do not expressly restore the headlease. However, Mr Daiches submits
that ‘he’ is the underlessee; that the lease according to which he shall hold,
or rather continue to hold, the land is the underlease; and that he cannot continue
so to hold it without the unconditional restoration of the headlease no less
than the underlease. Thus the effect of subsection (5) is to restore
unconditionally all the leasehold interests in the property.
Mr Berry seeks
to counter that argument by saying that if subsection (5) contemplates the case
of a payment by the underlessee, then, by reason of the decision of this court
in Matthews v Dobbins [1963] 1 WLR 227, the payment is treated as
a payment made by the headlessee. Thus ‘the lessee’ referred to is the
headlessee and it is he who shall hold the land according to the headlease.
This ingenious argument must also be rejected. I do not propose to say anything
about Matthews v Dobbins, which was referred to at various stages
in the argument, except that the assistance, if any, to be derived from it is,
in my opinion, limited to the construction of subsection (1), as to which I
have taken the view that is favourable to the plaintiff. However, the real
objection to Mr Berry’s submissions as to the construction of subsection (5) is
that, as Mr Daiches submits, there is simply no ground for excluding the
underlessee from the wide definition of ‘the lessee’ in section 140. Moreover,
Parliament’s adoption of the final words of subsection (5) can be explained in
a manner I shall now relate.
In my
judgment, the key to the true construction of subsection (5) lies in subsection
(2), as illuminated by a valuable argument based by Mr Daiches on the earlier
legislation and the decision of the Court of Common Pleas in Doe, dem Wyatt
v Byron (1845) 1 CB 623, a decision not cited below. In order that that
argument may be more readily understood, it is necessary to observe that the
stated effect of subsection (2), which applies where ‘the lessee’ pays off the
arrears of rent and costs not less than five clear days before the return day,
is that ‘the action shall cease, and the lessee shall hold the land according
to the lease without any new lease’. Except for the additional provision for
the cessation of the lease, the stated effect is the same as that under
subsection (5).
Doe, dem
Wyatt v Byron was a decision on section 4 of
the Landlord and Tenant Act 1730, the material part of which was in these
terms:
Provided
always, and be it further enacted by the authority aforesaid, That, if the
tenant or tenants, his, her, or their assignee or assignees, do or shall, at
any time before the trial in such ejectment, pay or tender to the lessor or
landlord, his executors or administrators, or his, her, or their attorney in
that cause, or pay into the court where the same cause is depending, all the
rent and arrears, together with the costs, then, and in such case, all further
proceedings on the said ejectment shall cease and be discontinued . . .
The lessor of
the plaintiff had demised premises to a lessee who, on becoming insolvent,
transferred all his interest therein, except for the last two days of the term,
to the defendants as trustees on behalf of themselves and his other creditors.
The lessor of the plaintiff brought an action for ejectment against the
defendants, who applied for a stay upon payment of the amount due for rent and
costs under section 4 of the 1730 Act. The lessor of the plaintiff contended
that that section applied only to tenants or their assignees, whereas the
defendants, by virtue of the two days retained by the lessee, were
underlessees. It was held that the defendants were entitled to a stay.
The basis of
the decision was the wording of section 2 and also, in the view of Cresswell J,
section 3 of the 1730 Act, which provided for forfeiture at law and for cases
where application was made for relief in equity respectively. Each of those
sections referred not simply to
or assignees, or other person or persons claiming or deriving title under the
said lease’. Having compared those words with the words of section 4, Sir
Nicholas Tindal CJ said, at p630:
It seems to
me that it would be singular to hold that a stricter and closer sense is to be
given to the word tenant in section 4, which is dealing with the relief
to be afforded to the lessee and those claiming under the lessee, than in
section 2, which deprives of remedy both lessees and sub-lessees. It is further
to be observed, that the fourth section does not, in terms, require the rent to
be paid by the person from whom it is due: the requisites of the act would be
as well answered by a payment by an intermediate party. I am therefore of
opinion that the fourth section — which is a remedial one, and is to be
construed accordingly — does comprehend persons circumstanced like these
defendants, and consequently that this rule should be discharged.
The judgments
of Coltman J and Cresswell J were to the same effect. Erle J based his
agreement on a narrower ground. He thought that the word ‘tenant’ in section 4
was used in what he called the modern sense, meaning the person against whom
the ejectment was brought.
In my opinion,
that decision ought properly to be treated as authority for the proposition
that the automatic relief against forfeiture afforded by section 4 of the 1730
Act could be achieved on payment by an underlessee of the arrears of rent and
costs, even in cases where the action was brought against the headlessee and
the underlessee was not a party to it. It is true that there the action was
brought against the underlessee and that the headlessee was not a party. But
neither the wide words of section 4 nor the broad terms in which the chief
justice expressed himself, from which Coltman J and Cresswell J must be taken
not to have dissented, suggest that the more restricted view favoured by Erle J
was correct.
Doe, dem
Wyatt v Byron is the bedrock of Mr Daiches’
argument on section 138(2), which he submits is a provision with the same
purpose and effect as section 4 of the 1730 Act. Thus, he says that it does not
matter that the plaintiff here is not ‘a lessee’ within subsection (1). The
decision of the Court of Common Pleas, coupled with the wide effect of section
140, shows that the plaintiff could have been ‘the lessee’ within subsection
(2) and could have paid off the arrears and costs accordingly. Mr Daiches takes
further comfort from the final part of section 4 of the 1730 Act, to which
reference has not yet been made. That part provides for a case where relief in
equity has been obtained, in which event the person or persons relieved ‘shall
have, hold, and enjoy the demised lands according to the lease thereof made,
without any new lease to be thereof made to him, her, or them’. Those words are
similar to the final words of subsections (2) and (5) of section 138.
Mr Daiches has
also referred us to provisions in the county court legislation in order to
establish the link between section 4 of the 1730 Act and section 138. A limited
jurisdiction in forfeiture proceedings for non-payment of rent was first given
to the county court by section 52 of the County Courts (Amendment) Act 1856.
That section contained a provision that if the tenant should five clear-days
before the return day of the summons pay into court all the rent in arrear and
the costs, ‘the said action shall cease’; in other words, a provision similar
to section 138(2), but without the words ‘and the lessee shall hold the land
according to the lease without any new lease’. Section 139 of the County Courts
Act 1888 was to the same effect. But new, or perhaps I should say revived, wording
was introduced by section 6 of the County Courts (Amendment) Act 1934, the
preconsolidation Act which was followed by the County Courts Act of that year.
Section 6
repealed section 139 of the 1888 Act and introduced the new provisions as to
forfeiture for non-payment of rent contained in the first Schedule to the
amendment Act. The provisions of para (a) and the first part of para (c) of
para 1 of the Schedule were to the same effect as those of subsections (2) and
(5) respectively of section 138; that is to say, they provided that the lessee
‘shall hold the land according to the lease without any new lease’ with an
additional provision for the cessation of the lease in para (a). Those
provisions have remained in the same form ever since. Mr Daiches has submitted
that the words ‘the lessee shall hold the land according to the lease without
any new lease’ in section 138(2) are mere surplusage, because it has already
been provided that the action shall cease. He accordingly submits that the
purpose and effect of subsection (2) are exactly the same as those of the
material parts of sections 4 of the 1730 Act, 52 of the 1856 Act and 139 of the
1888 Act.
In my opinion,
Mr Daiches’ argument on section 138(2) is correct and I accept it in its
entirety. He was also prepared to advance a similar argument on subsection (5).
But, in my view, a view unshaken by Mr Berry’s later submissions, that was
unnecessary. If the argument is sound as to subsection (2), it must equally be
sound as to subsection (5). The only material difference in wording between the
two subsections is the express provision for the cessation of the action in
subsection (2), which does not appear in subsection (5). This difference
appears to be explicable on the ground that subsection (5) can come into
operation only after an order for possession has been made under subsection
(3), at which point the action can fairly be described as having ceased.
I turn to a
brief consideration of section 138 as amended by section 55 of the
Administration of Justice Act 1985. Evidently, the amendments were made because
the consequences of the decision in Di Palma v Victoria Square
Property Co Ltd were considered to be unduly harsh to lessees. They were
broadly designed to equate the position in the county court under section 138
with the position in the High Court. Subsection (9A) accordingly enables ‘the
lessee’ to apply for relief, at the discretion of the court, within six months
from the date on which the lessor recovers possession after the making of an
order under subsection (3). The effect of relief being granted is then
expressed by subsection (9B) in terms similar to those of subsection (5). If
the amendments had ended there, it could not have been doubted, on the basis of
the views already expressed, that ‘the lessee’ in subsections (9A) and (9B) had
the same meaning as it has in subsections (2), (5) and (7). However, the
presence of subsection (9C), with its specific reference to a person with an
interest under a lease derived from the lessee’s interest, has given Mr Berry
an additional ground for arguing that the views already expressed are
incorrect. He submits that, if they were correct, the derivative underlessee
would already have been included in subsection (9A), thus making subsection
(9C) otiose.
Mr Daiches’
answer to this submission is that the relief available under subsections (9A)
and (9C) is discretionary and not automatic. It was therefore perfectly natural
that the same distinction should be made in regard to the form of relief to be
granted to headlessees and underlessees respectively as is made by section 146
of the Law of Property Act 1925; subsection (9C) being the equivalent of
section 146(4) in the case of underlessees. I agree with Mr Daiches. But it can
also be said, and with greater force, that in re-enacting section 138 in its
amended form Parliament could not have intended to produce such major changes
in the existing effect of the section without clear words.
For these
reasons, I have come to a clear conclusion that the plaintiff was a ‘lessee’
within subsections (2), (5) and (7) of section 138 of the County Courts Act
1984 as amended; and that, since it did not make an application under
subsection (9C) within the six-month period limited by subsection (9A), it is
now, by virtue of subsection (7) and the decision in Di Palma v Victoria
Square Property Co Ltd, barred from all relief, including relief in the
High Court. On that footing it is unnecessary to go on and consider section 210
of the Common Law Procedure Act 1852.
The decision
of the learned deputy judge in the court below as to the effect of section
138(7) was based essentially on his view that, despite the wide definition of
‘lessee’ in section 140, the reference to ‘the lessee’ in section 138(5) must
be a reference to the tenant who holds under the lease; in other words, that
before a person can be ‘the lessee’ within subsection (5) there must be privity
of contract or estate between him and the lessor who is proceeding by action
within subsection (1). In disagreeing with that view, I wish to emphasise that
it seems very doubtful whether the judge had the benefit of an argument on
subsection (5) as detailed and conscientious as that advanced to us by Mr Daiches,
who did not appear below.
I would allow
the defendant’s appeal, answer the preliminary issue in the negative and
dismiss the plaintiff’s application for relief against forfeiture accordingly.
BUTLER-SLOSS
LJ agreed and did not add anything.
Also agreeing,
SIR CHRISTOPHER SLADE said: I also agree and will add a few words of my
own only because we are differing from the deputy judge, who has great
experience in landlord and tenant matters. In my judgment I will use the
expression ‘underlessee’ in the same sense as that in which my lord, Nourse LJ,
has used it — that is to say, as including a legal chargee of a lease such as
the plaintiff in the present case.
I have not
found this an easy one, but for the reasons given by Nourse LJ I, too, have
come to the conclusion that, in a case where a lessor is proceeding by a county
court action to enforce against a headlessee a right of re-entry or forfeiture
for non-payment of rent, it must be open to an underlessee of that headlessee,
even though not a party to the proceedings, to avail himself of the procedure
for obtaining automatic relief provided for by section 138(2) of the County
Courts Act 1984 — that is to say, by paying into court not less than five
clear-days before the return day all the rent in arrear and the costs of the
action. The wide and unqualified definition of ‘lessee’ in section 140 of that
Act, in my judgment, necessitates this construction of section 138(2), which is
supported by reference to the earlier legislation and the decision in Doe
dem Wyatt v Byron (1845) 1 CB 623.
The decision
of this court in Matthews v Dobbins [1963] 1 WLR 227, which
concerned section 191 of the County Courts Act 1959, the precursor of section
138, does not preclude such a construction if only because the court in that
case was at pains to point out that there was no evidence that the persons who
made the payment into court were underlessees of the lessee defendant: see at
p229 per Ormerod LJ and at p230 per Pearson LJ.
Once it is
accepted that in the case postulated at the start of my judgment the
underlessee qualifies as a ‘lessee’ for the purpose of obtaining the automatic
relief provided for by section 138(2) two conclusions must, in my judgment,
inevitably follow. First, the underlessee likewise qualifies as a ‘lessee’ for
the purpose of obtaining the automatic relief provided for by section 138(5).
Second, the underlessee who fails to avail himself of the procedure for
automatic relief provided for by sections 138(2) and 138(5) within the
specified time is, by virtue of section 138(7), ‘barred from all relief’,
subject only to his right to apply for relief under subsections (9A) and (9C)
within the specified six-month period. In view of the decision of this court in
Di Palma v Victoria Square Property Co Ltd [1986] Ch 150, ‘barred
from all relief’ means barred from all relief either in the county court or the
High Court.
For these
reasons, very shortly stated, and the reasons given more fully by my lord,
Nourse LJ, with whose judgment I am in entire agreement, I, too, would allow
this appeal and concur in the form of order which he proposes.
Appeal
allowed with costs here and below; application for leave to appeal to the House
of Lords refused.
