Landlord and Tenant Act 1954 — Failure of county court to serve originating application for new tenancy on landlord — Whether tenant entitled to leave to serve the originating application out of time
The appellant,
who held a seven-year lease of ground-floor premises of a shop in Edenbridge,
Kent, which expired on March 31 1992, made a request to the respondent landlord
on April 22 1991 for a new tenancy under section 26 of the Landlord and Tenant
Act 1954; the respondent replied, making no objection to the grant of a new
tenancy but suggesting a higher rent. On July 4 1991 the appellant’s solicitors
sent a form of originating application for a new tenancy under Part II of the
1954 Act to East Grinstead County Court, with a copy for the landlord and a
request for the issue of a summons. The county court stamped one copy of the
originating application, assigned a cause number to the proceedings and
returned a stamped copy to the appellant’s solicitors. In accordance with CCR
1981, Ord 7, r10(1)(b) it was the duty of the county court to serve the
proceedings on the respondent by first-class post; the county court did not
serve the proceedings on the landlord by post or in any other way. On September
30 1991 the landlord’s solicitors wrote to the tenant’s solicitors inquiring as
to whether proceedings for renewal had been issued and by a letter dated
October 1 1991 the tenant’s solicitors confirmed that proceedings had been
issued. On November 29 1991 the landlord’s solicitors stated that they had not
received the originating application and contended that the tenant had lost her
right of statutory renewal because of the expiration of the time-limit. On
January 9 1992 the tenant’s solicitors issued an application seeking leave to
serve the originating application out of time, which the landlord opposed. On
February 26 1992 Judge Lovegrove QC dismissed the tenant’s appeal from the
decision of the district judge dismissing her application for leave to serve
out of time. In his judgment the judge accepted that he had a discretion to
extend time, but decided he would not grant an extension because of the
prejudice to the landlord and the two-month delay of the tenant in pursuing the
question of service after the landlord’s solicitors’ letter of September 30
1991. The tenant appealed.
not served within two months of the date of issue and application to extend is
not made within four months of the date of issue, the county court has
jurisdiction on proper grounds being shown to extend time for service and to
treat the failure to extend and serve as an irregularity. There was a good
reason and a satisfactory explanation on behalf of the tenant for the failure to
apply for extension before the validity of the proceedings expired. The
following factors were relevant in exercising the discretion to extend: that
until January 1992 the landlord had raised no objection to a new tenancy; that
the difference over rent was unlikely to prove an insuperable stumbling block;
that but for the court’s error the application would have been duly served;
that the tenant did not learn of the error in time to cure it; and that the
delay in service has of itself caused the landlord no prejudice, since the
landlord’s change of circumstances, whereby she wanted possession of the
premises for herself, would have occurred even if she had been served in time.
The judge’s exercise of discretion was demonstrably wrong in that he had given little
or no weight to these considerations.
The following
cases are referred to in this report.
Baxendale
(Robert) Ltd v Davstone (Holdings) Ltd
[1982] 1 WLR 1385; [1982] 3 All ER 496; (1983) 45 P&CR 127; (1982) 264 EG
713, [1982] 2 EGLR 65, CA
Bernstein v Jackson [1982] 1 WLR 1082; [1982] 2 All ER 806
Kleinwort
Benson Ltd v Barbrak Ltd [1987] AC 597;
[1987] 2 WLR 1053; [1987] 2 All ER 289; [1987] 2 Lloyd’s Rep 1, HL
Leal v Dunlop Bio-Processes International Ltd [1984] 1 WLR 874;
[1984] 2 All ER 207, CA
Lewis v Wolking Properties Ltd [1978] 1 WLR 403; [1978] 1 All ER
427; (1978) 36 P&CR 140; (1977) 245 EG 655, [1978] 1 EGLR 40, CA
This is an
appeal from the decision of Judge Lovegrove QC, who on February 26 1992 had
dismissed an appeal from a decision of the district judge dismissing an
application by the tenant, Beryl Elizabeth Louise Ward-Lee, for leave to serve
an originating application seeking a new tenancy out of time on the landlord,
Collette Linehan.
Timothy
Fancourt (instructed by Stephens & Scown, of Truro) appeared for the
appellant; Ben Patten (instructed by Lufflum & Ainsworth, of Sutton)
represented the respondent.
Giving the
judgment of the court, SIR THOMAS BINGHAM MR: This appeal raises a
question of some practical importance on the powers of the county court to
extend time for the service of proceedings. We give the judgment of the court.
The applicant
was the tenant of ground-floor premises at Edenbridge, Kent, where she ran an
antique shop. She held the premises under a seven-year lease, which was due to
expire on March 31 1992. The respondent was her landlord. We shall refer to the
parties as ‘the tenant’ and ‘the landlord’.
On April 22
1991 the tenant made to the landlord a request in writing for a new tenancy
under section 26 of the Landlord and Tenant Act 1954. She proposed a term of 12
years and an annual rent of £2,750, with four-yearly reviews.
On May 15 1991
the landlord’s solicitors acknowledged receipt of this notice. They stated that
the landlord had no objection to the grant of a new tenancy, but they suggested
a rent of £7,500.
On July 4 1991
the tenant’s solicitors sent a form of originating application for a new
tenancy under Part II of the 1954 Act to East Grinstead County Court, with a
copy for the landlord and a request for the issue of a summons. The county
court stamped one copy of the originating application, assigned a cause number
to the proceedings and returned a stamped copy to the tenant’s solicitors. The
county court also issued, stamped, numbered and sent to the tenant’s solicitors
a summons addressed to the landlord, although in accordance with usual practice
no date for a hearing was fixed. All this was done on July 5 1991.
The tenant’s
solicitors did not indicate any wish that they or the tenant should serve the
summons or the originating application on the landlord personally. It was
accordingly the duty of the county court to serve the proceedings on the
landlord by first-class post at the address stated in the request for the
summons (CCR 1981, Ord 7, r10(1)(b), (2)). The county court did not serve the
proceedings on the landlord by post or in any other way. Nor, in sending the
stamped, dated and numbered documents to the tenant’s solicitors, did the
county court indicate that the landlord had not been served. The natural
inference was that the county court had served the landlord in accordance with
the rules. That was what the tenant’s solicitors assumed.
Under the
county court rules, an answer to the tenant’s application should have been
filed by the landlord within 14 days of service (Ord 43, r 2(1), Ord 9, r
18(3)). In this case no answer was forthcoming because the landlord had not
been served. The absence of an answer might have alerted the tenant’s
solicitors to the fact that the landlord had not been served. It did not do so.
This was not at all surprising in the circumstances. The existing tenancy still
had some eight months or so to go. The landlord had not objected to the grant
of a new tenancy or to any of the proposed terms save the rent. There was
nothing to suggest that agreement could not be reached on rent, as it usually
is. The tenant was obliged to make application to the court in order to
preserve her right to claim a new tenancy (1954 Act, sections 24(1), 29(3)).
But if matters followed their usual course the application would never come to
a hearing, and lack of activity on the landlord’s part would not have appeared
at all significant. The tenant’s solicitors were not at fault in failing to
suspect that the landlord had not been served and it was not argued that they
were.
The silence
was broken on September 30 1991 when the landlord’s solicitors wrote to the
tenant’s solicitors as follows:
Further to
our correspondence last May we enquire whether your client has issued
proceedings for renewal of her tenancy alternatively whether it is her
intention to vacate the property next April.
Please let us
know either way as our client wishes to make her arrangements for re-letting if
applicable. If you have issued proceedings please effect service upon us as
Miss Lineham’s solicitors.
The tenant’s
solicitors were clearly somewhat surprised to receive this letter. They replied
by return of post in a letter dated October 1:
We thank you
for your letter of the 30th ultimo. Proceedings were issued on the 4th July
last and we quoted your client’s name c/o your office as the name and address
of the respondent. A sealed copy of the application was received from the East
Grinstead County Court on the 9th July.
We are
surprised that you have not heard from the court because we sent them a copy of
the Originating Application for service. The Case Number allocated by the Court
is 9101767.
The tenant’s
solicitors received no answer to that letter for nearly two months, during
which they neither wrote again nor made inquiry of the landlord’s solicitors or
the county court to discover what (if anything) had happened. But on November
29 the landlord’s solicitors wrote again:
In reply to
your letter of 1st October last we did not receive the Originating Application and
nor were we authorised to do so. In consequence we believe that your client is
now out of time and that she has lost her right of statutory renewal.
Our authority
to accept service dated 30th September last is hereby revoked.
At this point
the tenant’s solicitors did make inquiry of the county court. They were told
that a note in the court records suggested that the summons and application had
been sent to them for service, but this had not been done and they did not
(until now) know that the court’s understanding was otherwise. In early
December 1991 the tenant’s solicitors, following a suggestion made by the
court, asked the landlord’s solicitors to consent to late service, but the
landlord’s solicitors declined to do so.
On January 9
1992 the tenant’s solicitors issued an application seeking leave to serve the
originating application out of time. The landlord opposed. In an affidavit
sworn on her behalf her solicitor said that her financial and personal
circumstances had changed substantially since May 1991 when she had given her
counternotice: she now sought the property for herself and would be prejudiced
if the tenant’s application were allowed. The district judge dismissed the
application on January 21 1992. The tenant appealed. For purposes of the appeal
the landlord made an affidavit in which she deposed:
Since giving
the Landlord’s Counter Notice my financial position has deteriorated due to the
loss of my husband’s financial support. He has been in a Psychiatric Hospital
as a result of an attempted suicide. He is now in a Rehabilitation Centre but I
do not know whether he will be fit for employment again or whether we will
resume co-habitation. I have a 16-year old daughter who is studying for GCSE
who I am supporting. In the circumstances I need to obtain the maximum income
possible from the said shop and I believe this will be achieved as a business
proprietor rather than as a Landlord.
Judge
Lovegrove QC dismissed the tenant’s appeal on February 26 1992. In the course
of his judgment the learned judge accepted that he had a discretion to extend
time and that he had to balance the parties’ competing interests, but decided
that he should not grant an extension because of the prejudice to the landlord
and (it would seem) the two-month delay of the tenant in pursuing the question
of service after the landlord’s solicitors’ letter of September 30 1991.
Against that
judgment the tenant now appeals with leave granted by this court. The issues
are whether the county court had a discretion to extend time and, if so,
whether it was a discretion which could and should have been exercised on the
facts of this case. Before the judge the existence of some discretion appears
to have been assumed. On appeal to this court the existence of such a
discretion was at first challenged. But in argument counsel for the landlord
did not contend that there was no discretion, only that the court’s discretion
could not properly have been exercised in the tenant’s favour on the facts
here.
It is first
necessary to review the relevant County Court Rules. In doing so we make
reference to the corresponding rules of the Supreme Court since it is not
suggested that there is intended, in any relevant respect, to be a dichotomy of
practice between the two courts.
Ord 7, r 20 of
the County Court Rules provides:
20. (1) The
time within which a summons may be served shall, unless extended under the
following provisions of this rule, be limited
(a) where leave to serve the summons out of
England and Wales is required under Ord 8, r 2, to a period of 6 months;
(b) in any other case to a period of 4 months,
beginning with the date of issue of the summons.
(2) subject to paragraph (3) the court may extend
the period of service of a summons from time to time for such period, not
exceeding 4 months at any one time, beginning with the day next following that
on which it would otherwise expire, as the court may specify, if an application
for extension is made before that day or such later day (if any) as the court
may allow.
(3) Where the court is satisfied on an
application under paragraph (2) that, despite the making of all reasonable
efforts, it may not be possible to serve the summons within 4 months, the court
may, if it thinks fit, extend the period of service for such period, not
exceeding 12 months, as the court may specify.
Ord 43, r6(3)
of the CCR substitutes a period of two months for the periods of four months
and six months in the case of originating applications under section 24 of the
1954 Act. These rules correspond with RSC Ord 6, r 8 and Ord 97, r 6(3). On the
facts here the two-month period for service expired on September 4 1991, at
which time the tenant and her solicitors did not appreciate that the county
court had fallen down on its duty to serve the proceedings on the landlord.
Ord 13, r 4 of
the CCR provides:
4. (1) Except
as otherwise provided, the period within which a person is required or
authorised by these rules or by any judgment, order or direction to do any act
in any proceedings may be extended or abridged by consent of all the parties or
by the court on the application of any party.
(2) Any such period may be extended by the court
although the application for extension is not made until after the expiration
of the period.
This
corresponds in effect to RSC Ord 3, r 5.
Lastly, we
should refer to Ord 37, r5 of the CCR, which (so far as relevant) provides:
5. (1) Where
there has been a failure to comply with any requirement of these rules, the
failure shall be treated as an irregularity and shall not nullify the
proceedings, but the court may set aside the proceedings wholly or in part or
exercise its powers under these rules to allow any such amendments and to give
such directions as it thinks fit.
(2) No
application to set aside any proceedings for irregularity shall be granted
unless made within a reasonable time, nor if the party applying has taken any
step in the proceedings after knowledge of the irregularity.
This broadly
corresponds to RSC Ord 2, r 1.
The effect of
RSC Ord 6, r8 has recently been the subject of authoritative exposition by the
House of Lords in Kleinwort Benson Ltd v Barbrak Ltd [1987] AC
597. It was there held that Ord 6, r 8(2) should be read as subject to an
implied term that the power to extend the validity of a writ should be
exercised only for good reason, a somewhat less stringent test than that of
‘exceptional circumstances’ previously favoured. Where the application for
extension is made after a writ has ceased to be valid and after the relevant limitation
period has expired, an applicant has not only to show good reason for the court
to exercise its power to extend but also to give a satisfactory explanation for
his failure to apply for extension before the validity of the writ expired. We
have no doubt that this reasoning should be applied by analogy to Ord 7, r20 of
the CCR.
This rule does
not, however, solve the tenant’s problems, for even if she were able to show
good reason and give a satisfactory explanation, the court’s power to extend in
a case under section 24 of the 1954 Act is limited to a period not exceeding
two months. The primary two-month period expired on September 4 1991. An
extension of two months under Ord 7, r20(2) would have carried her only to
November 3 1991. By that date she had neither served the landlord nor applied
to the court.
A somewhat
similar case came before this court in Lewis v Wolking Properties Ltd
[1978] 1 WLR 403*. At that time the period provided both for service and for
renewal of an originating application of this kind was one month. The tenants
applied to the county court on August 23 1976. The court tried to serve the
landlords, but could not do so because the landlords had left the address given
for service. The tenants’ solicitors accordingly asked the landlords’
solicitors for the landlords’ correct address. The landlords’ solicitors
replied on September 17, six days before expiry of the one-month period allowed
for service, giving no address for the landlords but agreeing to accept service
if the summons had been timeously issued. The tenants’ solicitors did not
accept that invitation to serve the landlords’ solicitors. Instead, they
repeated their request for the landlords’ address on September 21. The address
was given on
landlords’ solicitors took the point that service was out of time unless
application for an extension had already been made. At that stage the tenants’
solicitors applied to the county court for an extension, which was granted and,
as the Court of Appeal held, rightly granted.
*Editor’s
note: Also reported at (1977) 245 EG 655, [1978] 1 EGLR 40.
At the time of
that case the CCR were somewhat different. The rule which then corresponded to
what is now Ord 7, r20 contained two provisions which have now disappeared.
First, the subrule which permitted extensions to be granted was subject to the
proviso:
That the time
shall not be extended for any period unless the application is made within the
currency of the last preceding period.
Second, the
rule provided:
Where the
summons has not been served within the time allowed for service by this rule,
the action shall be struck out.
The landlords
in Lewis accepted that if there was a discretion to extend time on
application made after expiry of the initial one-month period the case was a
proper one for exercise of the discretion in the tenants’ favour, but they
argued that, if service was not effected and application for extension not made
within the initial one-month period, the court had no choice but to strike out
the action.
The Court of
Appeal did not accept that argument. It construed the rule which then
corresponded to Ord 13, r 4 as giving a broader power to extend than the then
equivalent of Ord 7, r 20. There was accordingly a discretion to extend time,
although a discretion to be sparingly exercised. Under the rules as they then
stood, Ord 13, r 5 (now Ord 13, r 4) opened with the words ‘Subject to the
provisions of these rules. . . ‘. The court held that that qualification was
intended to apply to rules (of which an example was given) where words plainly
inconsistent with Ord 13, r 5 were used, and the rule in question used no such
inconsistent words. The present Ord 13, r 4 opens, ‘Except as otherwise
provided . . .’, but that does not, in our view, mean anything different from
‘Subject to the provisions of these rules’, unless it makes even clearer the
need for specific inconsistency.
The tenant in
the present case naturally relies very strongly on this authority. If the court
was there able to save the tenants’ proceedings, although their solicitors knew
of the failure to serve within the period for service and could have served the
landlords’ solicitors in time, she argues that the same result should follow
here.
In Robert
Baxendale Ltd v Davstone (Holdings) Ltd [1982] 1 WLR 1385* there
were two cases before the Court of Appeal. In each the tenants had failed,
within the period allowed for service (by this time two months), either to
serve or to apply for an extension of time to serve. In one case the tenants
had obtained an order extending time, in the other not. The rule corresponding
to Ord 7, r20 was in the same form as in Lewis, above, and the Court of
Appeal relied on that authority in holding that, while a discretion to extend
time existed, it was a discretion to be sparingly exercised and not to be
exercised where no justification could be shown for failing to serve in time.
*Editor’s note:
Also reported at (1982) 264 EG 713, [1982] 2 EGLR 65.
The authority
on which the landlord principally relies is Bernstein v Jackson
[1982] 1 WLR 1082. In that case a district registrar made an order for
substituted service of a writ the validity of which had expired over two years
before, which had never been renewed and which he did not renew. On the
defendant’s application to set aside a default judgment entered against her,
the judge held that the writ was not valid for service since it had not been
renewed under RSC Ord 6, r8, but that this was an irregularity which could (and
should) be cured under RSC Ord 2, r1. The Court of Appeal took a different
view. Dunn LJ said at p1089D:
I do not
think that the judge could have extended the writ under RSC Ord 6, r8 and, that
being the case, I think that there is great force in his [counsel’s] submission
that RSC Ord 6, r8 provides a compendious code for the extension and renewal of
writs, and that it is not the type of irregularity which was envisaged could be
dealt with by the provisions of RSC Ord 2, r1. But, assuming that it could, in
my view this was such a fundamental defect in the proceedings that the judge
should not have exercised his discretion to make an order under RSC Ord 2 r1.
Slade LJ
agreed at p1089M:
If a specific
application to renew the writ had been before him [the judge], I do not think
that he could have properly extended its validity for the reasons already given
by Dunn LJ. Correspondingly, I do not think that the plaintiffs can be in a
better position than they would have been if such a specific application had
been [made] before the judge.
This reasoning
suggests, on our understanding, that retrospective renewal for the necessary
period was not permissible under Ord 6, r 8 and that the failure to renew was
not a defect which could be cured under Ord 2, r 1. It is, however, noteworthy
that no reference was apparently made to RSC Ord 3, r 5 and Lewis was
not cited.
The Court of
Appeal had occasion to reconsider Bernstein v Jackson in Leal
v Dunlop Bio-Processes International Ltd [1984] 1 WLR 874. In that case
the plaintiff suffered personal injuries on May 27 1978. He issued a writ at
the end of the relevant limitation period on May 20 1981. On May 18 1982, the
penultimate day of the writ’s validity, without the leave of the court and
without any order of renewal, the writ was served on the defendants out of the
jurisdiction. The defendants applied to set aside service and dismiss the
action on June 10 1982. The plaintiff applied on July 19 1982 for renewal of
the writ under RSC Ord 6, r 8, and for leave to serve out of the jurisdiction.
Before the district registrar the plaintiff in effect succeeded. But he failed
on the defendants’ appeal to Neill J, who held (applying Bernstein v Jackson)
that he could not and in any event should not grant the plaintiff the relief he
sought.
The Court of
Appeal upheld Neill J’s exercise of discretion, but differed on the question of
jurisdiction. In a leading judgment with which May LJ and, subject to one
reservation, Slade LJ agreed, Stephenson LJ said of the court’s judgment in Bernstein
v Jackson at p879C:
If Dunn LJ
meant to say that the judge had no power to extend the validity of the writ under
Ord 6, r8(2), even if an application to extend had been made, I respectfully
consider that he was ignoring the terms of Ord 6, r8(2); if he meant to say
that the judge had no power to treat the failure to extend the writ as an
irregularity under Ord 2, r1, again I have to disagree with him . . .
Slade LJ
expressly agreed that Ord 2, r1 gave the court jurisdiction to treat the
failure to extend the writ as an irregularity and to waive it accordingly.
Emphasis was, however, laid on the special circumstances needed to justify
renewal after expiry of a limitation period and it was largely for that reason
that the judge’s exercise of discretion was upheld.
In this case
also it does not appear that Lewis was cited or reference made to RSC
Ord 3, r5. Such reference could have strengthened only the conclusion which the
court reached on the jurisdictional question.
This review of
the authorities and the rules leads us to conclude that, even where an
originating application of this type is not served within two months of the
date of issue and application to extend is not made within four months of the
date of issue, the county court has jurisdiction on proper grounds being shown:
(1) to extend the time for service under Ord 13, r4 of the CCR; and (2) to
treat the failure to extend and serve as an irregularity and order the action
to proceed under Ord 37, r5.
Counsel for
the landlord did not press a contrary argument. Although the opening words of
Ord 13, r4 differ from those considered in Lewis, we have already indicated
that, in our view, the difference, if significant at all, strengthens the
tenant’s argument.
It was argued
for the landlord that, although the court had a discretion to extend time in
this case, it was one which could properly be exercised only by refusing an
extension. This was because Ord 7, r20 of the CCR, like RSC Ord 6, r8 (and Ord
11, r1), were of a special character such that it was impermissible to override
them. We prefer to say nothing about Ord 11, r1, which is not in issue here and
raises special questions. So far as Ord 7, r20 and Ord 6, r8 are concerned, the
submission is, in our judgment, unsound. It is not consistent with Lewis,
Robert Baxendale or Leal, and it is not supported by Bernstein
as explained in Leal. It is not supported by the wide terms of RSC Ord
2, r1 and Ord 3, r5 and CCR Ord 13, r4 and Ord 37, r5. And it is not, in our
view, consonant with the requirements of justice in some cases. It is one thing
to say that good grounds must be shown to justify a certain exercise of discretion;
it is quite another to emasculate a discretion by holding that it can be
exercised only one way.
We have
already accepted that a party (such as the tenant) seeking an extension of time
for service after the validity of the proceedings has expired and after expiry
of any relevant limitation period must show good reason for the court to
exercise its power to extend and also give a satisfactory explanation for the
failure to apply for extension before the validity of the proceedings expired.
We have no doubt that the tenant discharged these burdens. She took the correct
steps to issue her originating application in good time. It was entirely the
fault of the county court that the proceedings were not served. She was
reasonably unaware of this until after September 4 1991 when the period for
service expired. It would be most unjust if she paid the penalty for the
court’s error.
That
conclusion, we think, opens the door to consideration of more general matters
relevant to the exercise of discretion. The landlord’s solicitors were, at
best, remiss in failing to respond to the tenant’s solicitors’ letter of
October 1 until November 29, but those solicitors were even more remiss in
failing to pursue the question of service during that period, and even when they
learned the facts from the county court in early December they did not apply to
the court until a month later. Time-limits such as these are intended to be
short; it is incumbent on parties to comply with them; and if extensions were
granted at all readily the time-limits would very quickly become a dead letter.
That is why the discretion to extend must be sparingly exercised.
It is, on the
other hand, relevant that:
(1) the landlord until January 1992 raised no
objection to a new tenancy;
(2) the difference over rent was unlikely to
prove an insuperable stumbling block;
(3) but for the court’s error the application
would have been duly served;
(4) the tenant did not learn of the error in time
to cure it; and
(5) the delay in service has of itself caused the
landlord no prejudice, since her change of circumstances would have occurred
even if she had been served in time.
In these
circumstances there were, in our opinion, strong grounds for granting the
extension sought.
This
conclusion would not entitle this court to substitute its exercise of
discretion for that of the judge unless it were satisfied that the judge’s
exercise of discretion was demonstrably wrong. We think it was. He appears to
have given little or no weight to considerations (1), (2), (3) and (4) above;
and he held that there was prejudice to the landlord without recognising that
this was not caused by the tenant’s delay.
We therefore
allow the appeal, set aside the judge’s order and grant the tenant such
extension as she requires to effect service of the proceedings.
Appeal
allowed with costs.
