Norman v Simpson

 

Norman v Simpson

LANDLORD AND TENANT; Leases, Rent, Other Landlord and Tenant

COURT OF APPEAL

SCOTT, DU PARCQ AND MORTON LJJ

8, 9, 30 NOVEMBER 1945

Landlord and Tenant – Covenant not to sub-let – Breach by tenant – Landlord aware of continuing breach – Rent restriction – Sale of premises – Claim for

possession against sub-tenant – “Lawfully or unlawfully sub-let” – Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 (c 17), ss 5(5), 15(3) –

Rent and Mortgage Interest Restrictions Act, 1923 (c 32), s 7(1).

In 1937 the owner of a house, by a written agreement, leased it to C, for three years from 25 March 1937, the tenant agreeing not to sub-let without the written

consent of the landlord. The house was one to which the provisions of the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, applied. On the

determination of the tenancy, C continued in occupation as tenant from year to year with the landlord’s consent. In the spring of 1940, C sub-let the house,

furnished, to the appellant at a weekly rent, and in September 1940, the terms of the sub-tenancy were changed to an unfurnished letting, without C on either

occasion obtaining the consent of the landlord. Throughout the material period rents were paid by C to the landlord who, although aware of the sub-letting

without consent, did not comment on it either to C or to the appellant. On 12 June 1944, the landlord gave C notice to quit on 25 March 1945, which was

accepted. 􀂭 74􀀉 Subsequently the property was sold to the respondent who refused to accept the rent from the appellant and brought an action in the county

court for possession and for mesne profits. The appellant, in his defence, pleaded that the premises were “lawfully sub-let” in that the breach of the agreement

against sub-letting had been waived by the original landlord’s acceptance of rent from C with full knowledge of the position. Alternatively, the appellant

claimed protection under the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, s 15(3). The county court judge made an order granting the

All England Law Reports 1936 - books on screen™

All ER 1946 Volume 1

Preamble

respondent possession and mesne profits. The appellant appealed:—

Held – [Du Parcq LJ dissenting]: The question of whether a sub-letting was unlawful or not, within the meaning of sect 15(3) of the 1920 Act, depended on

the existence of the original landlord’s right of re-entry. On the facts here, the original landlord’s right of re-entry was lost by reason of the acceptance of rent

from C after knowledge of the breach of the agreement. The premises were, therefore, “lawfully sub-let” to the appellant when C’s tenancy was terminated.

Notes

Under the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, s 15(3), a sub-tenant is entitled, on determination of the head-lease, to become the

tenant of the head-lessor provided that the premises “have been lawfully sub-let” to him. It is held that premises have been “lawfully sub-let” when the head

lessor has no subsisting right of re-entry, and that the time for ascertaining this is immediately before the head-lease came to an end, ignoring the earlier

history of the sub-tenancy.

As to what Amounts to Waiver, see Halsbury, Hailsham Edn, Vol 20, pp 254–257, paras 287–289; and for Cases, see Digest, Vol 31, pp 497–503, Nos

6427–6504.

Appeal

Appeal by the defendant from an order of His Honour Judge Thesiger, made at Barnstaple County Court, and dated 24 July 1945. The facts are fully set out in

the judgment of the majority of the court, delivered by Morton LJ.

R L Edwards for the appellant.

D F Brundrit for the respondent.

30 November 1945. The following judgments were delivered.

MORTON LJ [delivering the judgment of the majority of the court]. In this case the respondent claims, as against the appellant and his wife, possession of a

dwelling-house, known as “The Lodge,” situate at Berrynarbor, in the County of Devon, and also mesne profits from 26 March 1945. The respondent alleges

that the appellant and his wife are trespassers. The appellant and his wife in their defence say:

‘The first defendant [the appellant] has been since Sept. 29, 1940, and still is lawfully in possession of the said premises with his wife (the second

defendant) and his three children under a contractual tenancy at the yearly rent of £156. Alternatively, if the said tenancy has been determined (which is

not admitted) the defendants are entitled to the protection of the Rent Restriction Acts, 1920–1939.’

We need not refer further to the appellant’s wife as her claim to remain in possession must stand or fall with the appellant’s claim. The county court judge

made an order granting the respondent possession and mesne profits, and the appellant appealed.

The facts of the case are as follows. On 16 March 1937 the freehold owner of “The Lodge” entered into a written tenancy agreement with one Conibear

as tenant. The tenancy was to be for three years from 25 March 1937, at a yearly rental of £68, and the last three sentences of the document were as follows:

‘The tenant agrees not to underlet the premises without the consent of the landlord in writing. The landlord agrees to execute all reasonably

necessary external repairs, and the tenant paying the said rent and observing the above conditions shall quietly hold and enjoy the said premises.’

On the determination of this tenancy in March 1940, Conibear continued in occupation, with the consent of the owner, as tenant from year to year. In the

spring of 1940 the appellant agreed to take the house furnished, as sub-tenant of Conibear, at a rental of £8 8s a week. Conibear omitted to obtain the written

consent of the owner to this sub-letting, and it would appear likely that the appellant knew nothing about this term in Conibear’s tenancy agreement. Some

two or three months later, the appellant told the agent of the owner 􀂭 75􀀉 about the sub-tenancy and that he was paying a rent of £8 8s a week. On 29

September 1940, the terms of the sub-tenancy were changed. The appellant, having brought his own furniture into the house, took a six-monthly tenancy of

the house unfurnished at a rental of £156 a year. No application was made to the owner for a written consent to this sub-letting of the house unfurnished.

Having regard to the terms of the Landlord and Tenant Act, 1927, s 19, it would seem that any application to the owner for a “written consent” would have

been a pure formality, as the owner would not have been able to withhold consent to such under-letting to the appellant, who appears to have been a

respectable and responsible tenant. However, there is no doubt that in failing even to apply for the written consent, Conibear was guilty of a breach of the

contract existing between the owner and himself.

In the summer of 1941, something went wrong with the kitchen boiler at “The Lodge.” The agent of the owner visited the house two or three times and

the necessary repairs were carried out at the owner’s expense. In the course of his visits the agent of the owner saw certain internal decoration work which

was in the course of being carried out, or had just been carried out, on the orders of the appellant and at his expense. During one of these visits the appellant

suggested to the owner’s agent that he might rent the house direct from the owner, and the owner’s agent said, “Why do you not buy the house?” The

appellant asked the price and the owner’s agent suggested he should see the owner. An interview then took place between the owner and the appellant at

which a purchase was discussed, but the parties were unable to agree on a price. The appellant offered to take the house direct from the owner, and, as he says

in his evidence:

‘I offered to pay the same rent, £78, for six months. I said all my furniture was there as we would like to live there permanently.’

However, the owner remarked that Conibear “had the lease” and the matter dropped. This conversation is relied upon as proving the owner’s knowledge that a

fresh sub-tenancy of the house unfurnished had been granted and that the rent was £156. In 1943 a gale damaged the wall in the garden of “The Lodge,” and

the owner came and inspected the damage, having first asked the permission of the appellant’s wife. The wall was later repaired at the owner’s expense.

Throughout the whole of this period, and right up to 25 March 1945, the owner accepted from Conibear the rent of £68 a year payable under his tenancy

agreement, and did not appear to have made any comment either to Conibear or to the appellant as to the absence of the owner’s consent to the under-letting.

On 12 June 1944, the owner gave Conibear notice to quit “The Lodge” on 25 March 1945. That notice was accepted by Conibear. Some time in 1944

All England Law Reports 1936 - books on screen™

All ER 1946 Volume 1

Preamble

the owner agreed to sell the freehold of “The Lodge” to the respondent; and in December 1944, the property was conveyed to him. The appellant paid his rent

of £156 a year to Conibear up to 31 January 1945. He has tendered the rent falling due after that date, and has paid into the county court the sum of £22 2s

claimed by the respondent in this action. The appellant’s sub-tenancy could not, of course, survive the termination of Conibear’s head tenancy, and his claim

to remain in possession depends entirely upon the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, s 15(3), which is in the following terms:

‘Where the interest of a tenant of a dwelling-house to which this Act applies is determined, either as the result of an order or judgment for

possession or ejectment, or for any other reason, any sub-tenant to whom the premises or any part thereof have been lawfully sub-let shall, subject to the

provisions of this Act, be deemed to become the tenant of the landlord on the same terms as he would have held from the tenant if the tenancy had

continued.’

It is not disputed that “The Lodge” is a dwelling-house to which that Act applies. It would appear that the Legislature has in mind two classes of sub-tenants,

namely, sub-tenants to whom the premises have been lawfully sub-let and sub-tenants to whom the premises have been unlawfully sub-let. It is not easy to see

exactly what sub-tenants fall within the latter class, but we think the most reasonable explanation of the subsection is that premises are in a state of being

“unlawfully sub-let” within the subsection if the head lessor has a subsisting right of re-entry, and are in a state of being “lawfully sub-let” when the head

lessor has no such right.

􀂭 76􀀉

It is still necessary, however, to consider the effect of the words “have been.” These words indicate that the county court judge, in considering this

matter, has to look back into the past, and the question is: How far back must he look? We think there are two possible constructions of the four words “have

been lawfully sub-let” on the footing that our view as to the meaning of the word “lawfully” is correct. Construction (a) is that those four words refer only to

the original sub-letting, and that if the original sub-letting was such as to give rise to a right of re-entry in the head lessor, the sub-tenant does not come within

the sub-section. Construction (b) is that the sub-tenant is within the sub-section if the head lessor had no subsisting right of re-entry immediately before the

head tenancy came to an end, and that the earlier history of the sub-tenancy is irrelevant. For our part, we accept construction (b) and reject construction (a).

Sect 15(3) has remained unamended throughout the subsequent Rent Restriction Acts, and in our view construction (b) is not inconsistent with the words used,

and is exactly in accordance with the general scheme and intention of the 1920 Act, and of the subsequent Acts.

The provisions in the 1920 Act relating to recovery of possession by landlords are directed to prolonging, beyond the term of their contractual tenancy,

the possession of persons lawfully in possession of houses coming within the scope of the Act. This particular sub-section contemplates a case where the head

tenant of a house is unable or unwilling to resist his landlord’s claim to possession, but where some other person is actually occupying the house, or part of it,

and desires to remain in occupation. We should have thought that the relevant question in considering whether that person’s possession should be prolonged,

is: What was that person’s status immediately before the interest of the head tenant was determined? Was he, at that time, a sub-tenant lawfully in possession

or was he not? The earlier history of his possession seems to us to be wholly unimportant. We are not inclined to construe the relevant words as relating only

to the time at which the sub-letting began, if they will fairly bear some other construction.

It has been argued that construction (a) is more in accordance with the literal meaning of the words used. The words “have been,” it is said, point to the

beginning of the sub-letting. We think, however, that the words “have been” were used instead of the word “are” or “is” because the sub-section is dealing

with cases in which the interest of the head tenant “is determined,” and a sub-tenancy cannot live beyond the interest of the head tenant. It may well have

been thought inappropriate to speak in the present tense of the premises being lawfully sub-let in these circumstances. In this connection it is perhaps of some

assistance to compare the words “have been lawfully sub-let,” in sect 5(5) of the 1920 Act and in the subsection now under consideration with the words “is

lawfully sub-let” in the repealed sect 2(1) of the 1923 Act and in sect 7(1) of the 1923 Act. Counsel for the appellant relied strongly upon the words “in such

circumstances” in the last-mentioned sub-section and contended that it supplies a statutory interpretation of the sub-section under consideration, but we think

this is putting the matter too high. We are content to say that the explanation which we have given of the use of the words “have been” gains some support

from the other statutory provisions to which we have referred, and that the language of the subsection now under consideration does not compel the court to

adopt construction (a). This being so, we adopt construction (b) for the reasons we have already stated.

Turning again to the facts of the case before this court, we are prepared to assume, in favour of the respondent, that the house was “unlawfully sub-let” to

the appellant in 1940 in the sense that the sub-letting gave the owner of the house then a right to re-enter. Even so, the appellant is, in our judgment, protected

by the section because the owner accepted rent from Conibear with full knowledge of the sub-letting and thereafter the right to re-enter was gone. We have

stated the facts very fully, because counsel for the appellant put forward certain further contentions based on the later conduct of the owner, but on the view

which we take of the construction of the sub-section it is unnecessary to consider these further contentions.

We would allow the appeal, order that the respondent’s claim be dismissed, and order the respondent to pay the appellant’s costs here and in the county

court.

􀂭 77􀀉

DU PARCQ LJ. The respondent in this case alleged in his particulars of claim that the premises in question were wrongfully occupied by the appellant and

his wife as trespassers. Unless they are protected by the Rent Restrictions Acts, they are rightly described as trespassers, because they claim to occupy the

premises only as sub-tenants, and the tenancy of their lessor has been duly determined. The only question in this case is whether they are protected by sect

15(3) of the 1920 Act. Is the appellant a “sub-tenant to whom the premises … have been lawfully sub-let?”

It cannot be doubted that the sub-letting to the appellant was in its inception unlawful. Conibear, who sub-let the premises, had agreed with the lessor

“not to underlet the premises without the consent of the landlord in writing.” He broke that agreement, and so sub-let the premises unlawfully. If at some date

subsequent to the granting of the sub-tenancy the lessor had given a written consent to it, or if the lessor had agreed to waive his lessee’s breach by an

agreement made under seal or for good consideration, it may well be that the sub-letting would have been rendered “lawful” within the meaning of sect 15(3).

These things did not happen, and in my opinion the sub-letting was and remains unlawful.

It was contended for the appellant that the respondent’s predecessor in title had so acted as to estop, or, as counsel for the appellant preferred to say, to

“preclude,” the respondent from denying that the sub-letting was lawful. I can find nothing in the evidence to support this contention. By the acceptance of

rent the owner, Miss Irwin, acknowledged the continued existence of the tenancy and waived the common law right of forfeiture which the lessee’s breach of a

condition in the tenancy agreement had, I think, given her, but she did not thereby acknowledge that the sub-letting was lawful. She has never, in my opinion,

so acted as to deprive herself of the right to recover damages against the lessee for his breach of contract. Her waiver of forfeiture no doubt had the result of

leaving the appellant and his wife in undisturbed possession. The lessee could not evict them since he could not derogate from his grant or rely on his own

All England Law Reports 1936 - books on screen™

All ER 1946 Volume 1

Preamble

unlawful act. The lessor, having waived the forfeiture, could not evict them while they remained in occupation with the leave and licence of the lessee. While

the lessee’s interest continued, they might thus be said to be lawfully in occupation of the premises. When that interest was determined they became

trespassers, since they were unable truly to assert that the premises had been “lawfully sub-let” to them. There is in my opinion no evidence of any act or

omission on the part of the respondent’s predecessor in title which can be held, according to any principle of law or equity, to preclude the respondent from

denying that the sub-letting to the appellant was lawful.

On these grounds, the respondent was in my opinion entitled to the order made in his favour by the judge, although I am unable to concur in the judge’s

reasons. I can find no evidence to support his conclusion that the owner, Miss Irwin, “licensed sub-letting” if by those words he means that she did anything

which either was equivalent to giving a consent in writing or rendered a consent in writing unnecessary. I am not satisfied that the judge is right when he says

that “what happened afterwards” (that is, after the grant of the sub-lease) “cannot affect the position arrived at,” if by that he means that it would not have been

possible for the lessor and lessee to render the sub-letting lawful in the ways which I have indicated. Further, I respectfully dissent from the view which the

judge appears to have entertained that no acts or omissions of the respondent’s predecessor in title could affect the respondent’s position. None the less I am

of opinion that the judge came to the right conclusion, and I would dismiss the appeal.

Appeal allowed with costs. Order for possession set aside. Leave to appeal to the House of Lords.

Solicitors: Brooks, Davidson & Bartley (for the appellant); Coode, Kingdon, Cotton & Ward agents for Crosse, Wyatt, Vellacott & Willey, Barnstaple (for the

respondent).

C StJ Nicholson Esq Barrister.

􀂭 78􀀉

[1946] 1 All ER 79