Expiration of lease — Application for new lease — County court failing to serve landlord with proceedings — Expiration of time-limit for service — Application for leave to serve out of time — Refusal of application upheld by High Court — Court of Appeal allowing appeal against that refusal and granting extension of time to effect service of proceedings.
The applicant was 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. On April 22 1991 she made a request to the landlord 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-year reviews.
On May 15 1991 the landlord’s solicitors acknowledged receipt of the notice and 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 the county court with a copy to the landlord and a request for the issue of a summons. 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. Accordingly, it was 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: County Court Rules 1981, Ord 7, r 10(1)(b),(2). The 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 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. The failure to serve the landlord was not discovered until after the expiration of the limitation period for service of the proceedings.
On January 9 1992 the tenant’s solicitors issued an application seeking leave to serve the originating application out of time. The landlord opposed the application because her circumstances had changed and she now needed the property for herself. The application was refused as was an appeal against that refusal. The 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 the extension because of the prejudice to the landlord and, the apparent delay of two months before the tenant pursued the question of service after discovering the problem. The tenant appealed.
Held The appeal was allowed. The judge’s order was set aside and the tenant granted such extension as she required to effect service of the proceedings.
1. A party such as the tenant seeking an extension of time for service after the validity of the proceedings had expired and after expiry of any relevant limitation period had to 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. The tenant had discharged those 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 that until September 4 1991 when the period for service expired. It would be most unjust if she paid the penalty for the court’s error.
2. Time-limits such as these were intended to be short; it was incumbent on parties to comply with them; and if extensions were granted readily time-limits would very quickly become a dead letter. Thus the decision to extend had to be sparingly exercised.
3. On the other hand it was relevant to consider that: (a) the landlord until January 1992 raised no objection to the new tenancy; (b) the difference over rent was unlikely to prove an insuperable stumbling block; (c) but for the court’s error the application would have been duly served; (d) the tenant did not learn of the error in time to cure it; and (e) the delay in service had of itself caused the landlord no prejudice, since her change of circumstances would have occurred even if she had been served in time. In those circumstances there were strong grounds for granting the extension sought.
4. That conclusion did not entitle the 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.
5. In this case the judge had given little or no weight to considerations (a) and to (d) and he held that there was no prejudice to the landlord without recognising that this was not caused by the tenant’s delay. Therefore his order would be set aside.
Timothy Fancourt (instructed by Stephens & Scown, of Truro) appeared for the appellant/tenant; Benedict Patten (instructed by Lufflum & Ainsworth, of Sutton) appeared for the respondent/landlord.
