Bickel v Duke of Westminster
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORR,LORD JUSTICE WALLER |
| Judgment Date | 08 July 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J0708-3 |
| Date | 08 July 1976 |
| Court | Court of Appeal (Civil Division) |
In the Matter of Section 53 of the Landlord and Tenant Act, 1954
and
In the Matter of seven leases each dated 14th July, 1947 of premises known as 5, 5a, 6 and 6a, 7 and 7a and 7b, 8, 8a, and 9 Burton Mews, London, S.W.1. in the City of Westminster
[1976] EWCA Civ J0708-3
The Master of The Rolls (Lord Denning) (Not present)
Lord Justice Orr and
Lord Justice Waller
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Order of His Honour Judge Ruttle, Westminster County Court
Mr MICHAEL ESSAYAN (instructed by Messrs Bootle Hatfield & Co.) appeared on behalf of the Appellants (Respondents).
Mr ROBERT REID (instructed by Messrs Whittington Tilling & Knight appeared on behalf of the Respondents (Applicants).
THE MASTER OF THE ROLLS (read by Lord Justice Orr): This is a difference between two highly respectable bodies of trustees. One is the Ancient Order of Foresters Friendly Society. The other is the Grosvenor Belgravia Estates. The difference is about nine houses in Burton Mews off Chester Square. Typical is no.5a in Burton Mews. It is owned by the Grosvenor Estates but is let to the Foresters on a long lease for 37¼ years, to expire at Christmas 1983. The rent is only £12 a year. The rateable value is £388 a year. So it is clearly a long tenancy at a low rent within the Leasehold Reform Act, 1967. But the Foresters cannot claim to enfranchise it because it is not occupied by them as their residence. They hold it only as an investment.
The house is sub-let by the Foresters to a lady on an underlease for 35½ years, which is due to expire at Christmas 1983, less three days. She occupies it as her residence and has done for some years. But she does not pay a low rent. She pays a high rent. So she cannot claim to enfranchise her underlease.
In this situation the Foresters and the lady have put their heads together. Their plan is for the Foresters to assign their head lease to the lady. If they do assign lawfully to her, then, after five years have elapsed, the lady will have the right to buy up the freehold from the Grosvenor Estates: because she will then be the tenant of a leasehold house on a long tenancy at a low rent. She will have occupied it as her residence, in right of that tenancy, for the previous five years. So by 1981 she will be entitled to buy the freehold from the Grosvenor Estates. She will get it at a very low price: because it is so ordered by the Statute. So it is worthher while now to pay the Foresters a good price for the head lease - because by so doing she is well placed to acquire the freehold in five years time.
But the Foresters cannot assign the head lease to the lady without the written consent of the Gorsvenor Estates. The head lease contains this express covenant:-
"…. The Lessee will not assign by deed the demised premises…. without the previous written consent of the landlord or his solicitor provided that such licence shall not be unreasonably withheld".
In 1974 the Foresters applied to the Grosvenor Estates for consent to an assignment to the lady. The Grosvenor Estates refused to give their consent. The Foresters say that the Grosvenor Estates are withholding their consent unreasonably. The difference is well set out in two letters. The Foresters' solicitors wrote:-
"…… The reason for our clients' request for a licence to assign is that they wish to dispose of the leases by sale in order to reinvest the funds in other investments…… They have chosen to assign to the holders of the Underleases…… Bankers references and personal references will be given……"
The solicitors for the Grosvenor Estate said:- "…… The Grosvenor Estate considers it should refuse consent for the assignments since it believes by so doing this will prevent the purchasers from enfranchising under the provisions of the Leasehold Reform Act, 1967".
It is to be noticed that in 1974 each of the subtenants offered to pay the Foresters £1100 or more for an assignment of the leases. So the total came to £10,000 or more. And the Grosvenor Estate offered to pay the Foresters £12,00for a surrender of the head lease. It looked as if an auction was going on. The Grosvenor Estate say they are still willing to negotiate any fair price for the surrender. But the Foresters insist that they will sell, if they can, their leases to the sub-tenants. The one question is: Are the trustees of the Grosvenor Estate withholding their consent unreasonably?
THE LAW
Two propositions have been canvassed in this case as if they were propositions of law. The first proposition is that, in order to be reasonable, the landlord's refusal must be based on (i) either the personality of the assignee, or (ii) the user or occupation of the premises. If his reasons have nothing to do with either, then his refusal is unreasonable. Such is said to be the ground of the decision in Houlder Bros. v. Gibbs, (1925) Chancery, 198, 575, which was doubted in the House of Lords in Tredegar v. Harwood, (1929) Appeal Cases at pages 78, 82: but is said to be still binding in this Court.
If such be the law, then it follows that Grosvenor Estate cannot reasonably refuse consent to the assignment by the Foresters to the lady. The personality of the assignee cannot be impeached on any score, and her user and occupation of the premises cannot be criticised in any respect.
The other proposition is that, where a house is subject to the Rent Acts, the landlord cannot reasonably refuse his consent to a normal assignment during the contractual term, even though it means that the assignee will be able to stay on afterwards as a statutory tenant. Such is the result of Bookman v. Nathan, (1955) 1 Weekly Law Eeports, 815. But he can reasonably refuse it in the case of an abnormal assignment of the "fag end" of the contractual term, made for the purpose of givingthe assignee the benefit of the Acts. Such is said to be the result of Lee v. K. Garter Ltd, (1949) 1 King's Bench, 85; Swans on v. Forton, (1949) Chancery, 144; Dollar v. Winston, (1950) Chancery, 240. Those decisions are said to be binding on this Court. If they are good law, they bear a close analogy to the present case. This is an absolutely normal assignment of the lease for the last seven years of the term. It is not the "fag end" of the lease. There is nothing abnormal about it. The Grosvenor Estate cannot, therefore, reasonably refuse their consent, even though it means that the lady will be able afterwards to enfranchise the premises under the Leasdtiold Reform Act, 1967.
If those cases can properly be regarded as laying down propositions of law, I would agree that we ought to hold the landlords' refusal to be unreasonable. But I do not think they do lay down any propositions of law, and for this reason:- The words of the contract are perfectly clear English words: "such licence shall not be unreasonably withheld". When those words come to be applied in any particular case, I do not think the Court can, or should, determine by strict rules the grounds on which a landlord may, or may not, reasonably refuse his consent. He is not limited by the contract to any particular grounds. Nor should the Courts limit him. Not even under the guise of construing the words. The landlord has to exercise his judgment in all sorts of circumstances. It is impossible for him, or for the Courts, to envisage them all. When this lease was granted in 1947 no one could have foreseen that twenty years later Parliament would give a tenant a right to buy up the freehold. Seeing that the circumstances are infinitely various, it is impossible to formulate strict rulesas to how a landlord should exercise his power of refusal. The utmost that the Courts can do is to give guidance to those who have to consider the problem. As one decision follows another, people will get to know the likely result in any given set of circumstances. But no one decision will be a binding precedent as a strict rule of law. The reasons given by the Judges are to be treated as propositions of good sense - in relation to the particular case - rather than propositions of law applicable to all cases. It is rather like the cases where a Statute gives the Court a discretion. It has always been held that this discretion is not to be fettered by strict rules: and that all that can be properly done is to indicate the chief considerations which help to arrive at a just conclusion - see Blunt v. Blunt, (1943) Appeal Cases at page 525: Ward v. James, (1966) 1 Queen's Bench, 295.
I have studied all the previous cases and find little guidance in any of them to solve our present problems. The reason is simply because it is a new situation, consequent on the Leasehold Reform Act, 1967, which was never envisaged before. I would test it by considering first the position of the landlords - the Grosvenor Estate. They hold a large estate which they desire to keep in their hands so as to develop it in the best possible way. This would be much impeded if one house after another is bought up by sitting tenants. Further, if they are compelled to sell under the Leasehold Reform Act, they will suffer much financial loss, because the price is much less than the value of the house. Test it next by considering...
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