Bankway Properties Ltd v Penfold-Dunsford and Another
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,PILL LJ |
| Judgment Date | 10 April 2001 |
| Neutral Citation | [2001] EWCA Civ 528 |
| Docket Number | Case No: B2/2000/2998 CCRTF |
| Court | Court of Appeal (Civil Division) |
| Date | 10 April 2001 |
[2001] EWCA Civ 528
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BRIGHTON COUNTY COURT
HIS HONOUR JUDGE KENNEDY QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill and
Lady Justice Arden
Case No: B2/2000/2998 CCRTF
Miss Clare Padley (instructed by Messrs Triggs Wilkinson Mann for the Respondents)
Mr Stephen Knafler (instructed by Brighton Housing Trust for the Appellants)
Introduction
This is an appeal from the order dated 18 August 2000 of His Honour Judge Kennedy QC sitting in the Brighton County Court. By this order the Judge granted possession to the claimant Bankway Properties Limited ("Bankway") of Flat 1, 54/55 Marine Parade, Brighton ("the property") and gave judgment for outstanding arrears of rent in the sum of £12,261.25. The Judge also gave the defendants permission to appeal and certified the case as one suitable to be transferred to the Court of Appeal under CPR 52.14(a).
The facts as found by the Judge are as follows. By an agreement in writing dated 15 February 1994 ("the agreement") and expressed to be an assured tenancy agreement made pursuant to the Housing Act 1988 ("the Act of 1988"), Artesian Competitor plc ("Artesian") granted to Mr David Penfold-Dunsford and Mr Bryan Charles Leech (the appellants) a tenancy of the property from 15 February 1994 to 16 February 1995 at an initial rent of £4,680.00 per annum payable by equal monthly instalments of £390 per month. The rent payable under the agreement was subject to increase in accordance with clause 8(b) on "the review dates" defined as 16 February 1995 and every 12 months thereafter. Clause 8(b) provided as follows: -
"… (b) The rent which shall be payable under this Agreement shall be: -
(i) Until the first review date the initial rent
(ii) During each successive review period until (and inclusive of) the day prior to the last review date a rent (the new rent) equal to the greater of: -
i. The rent payable immediately prior to the relevant review date plus 10% thereof or
ii The rent payable immediately prior to the relevant review date plus the percentage increase in the Retail Price Index
a. In the case of the first review date between the Base Figure and the figure for the month preceding the first review date and
b. In the case of the second and subsequent reviews between the figure for the month preceding the previous review date and the figure for the month preceding the relevant review date
iii The then current open market rent for the Property to be agreed between the parties hereto or in the absence of agreement to be assessed by an independent surveyor appointed by the Landlord such surveyor acting as an expert and not as an arbitrator and whose decision as to the amount of the current open market rent for the property shall be final
(iii) From the last Review Date the sum of twenty five thousand pounds per annum"
The last review date was defined as 11 February 1996.
The Judge found that at the time of the grant of the tenancy the appellants were in receipt of housing benefit to the knowledge of the landlord who knew and intended that the rent would be paid by way of housing benefit. In addition he found in effect that the annual rent of £25,000 substantially exceeded what any tenant for this property could hope to pay.
The Judge made the following findings as to the circumstances in which the appellants signed the agreement. They moved into the property on 15 February 199They received a letter of that date from the landlord in (so far as material) the following terms:
"Re: 54/55 Marine Parade, Brighton Flat 1
The enclosed Tenancy Agreement sets out the terms upon which Artesian Competitor plc is prepared to let the above property to you. It is an important document which imposes upon both parties certain contractual and legally enforceable obligations. It is therefore most important that you fully appreciate the terms of the Tenancy Agreement and, if you have any doubts, that you take legal advice BEFORE signing the Agreement.
In particular, we wish to draw your attention to clause 8 of the Agreement pursuant to which the rent will be increased and pursuant to which you may terminate the Tenancy by not less than one month's written notice, such notice not to expire earlier than [15/8/1994].
Finally, we would ask you to note that it is a term of the Tenancy Agreement, and a condition of the Housing Act 1988, that a tenant occupying a dwelling house under an assured tenancy, occupies the property as his/her only or principal home, and that the property is not used for business purposes… ."
The letter did not, however, enclose the agreement. What happened was that the agent brought the agreement to the appellants at the property and invited them to read it. The Judge accepted that Mr Penfold-Dunsford did not read the lease properly. Nobody on behalf of the landlord or managing agents ever explained the rent provisions in the agreement. By implication the Judge also accepted that Mr Leech did not read the agreement before he signed it. (He also explains in his witness statement that he has a reading impairment).
By letter dated 14 January 1997 addressed to the appellants, an associated company on behalf of the landlord offered to vary the agreement. The terms which it offered were that
(1) the review date should be deferred indefinitely;
(2) the landlord should be entitled to specify a new review date but had to give at least five weeks' written notice ("a review notice");
(3) on the new review date the rent was to increase to £25,000 per annum;
(4) when the landlord gave a review notice specifying the new review date, the appellants were to be able to give 14 days' written notice terminating the agreement;
(5) the landlord was to be entitled to a serve a review notice at any time it thought fit.
These terms were accepted by the appellants who signed a copy of the letter on 17 January 1997.
Mr Penford-Dunsford read the letter dated 14 January 1997, but did not note that rent was to increase to £25,000 per year. (He explains in his witness statement that he had a serious heart attack in 1992 and would have found it very onerous to have read the agreement and the letter of 14 January 1997). By implication the Judge also accepted that Mr Leech did not notice the proposal that rent should be increased to £25,000 per annum.
In June 1988 the landlord changed to Bankway.
The Judgment of HHJ Kennedy QC
The Judge referred to A G Securities v Vaughan [1990] AC 417, (to which I refer below under the name of Antoniades v Villiers, the conjoined appeal, in which the tenants were successful) but distinguished that authority on the grounds that in that case the landlord was purporting to do two different and inconsistent things. The Judge also rejected a submission based on Interphoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433. In that case there was an onerous and unusual condition which had not been drawn to the other party's attention and therefore did not become part of the contract. The Judge held that that case did not assist because the appellants were given the contract to read, were asked to sign and did sign it. The Judge also distinguished White v Michael Callan & Partners, Times Law Reports, November 15 1993, page 572 as that was a case where it was alleged that the defendants intended to deceive and so to defraud the plaintiffs. (That case has not been cited on this appeal).
The Judge held that the Unfair Terms in Consumer Contracts Regulations 1994 were inapplicable because the agreement was entered into before 1 July 1995, the commencement date for the Regulations. He did not think that the 1997 letter was a contract but at most a waiver, and accordingly that letter was outside the Regulations.
The Judge expressed the view that if it had been pointed out to the appellants that they had two clear years under the original rent or a modest increase of it, he expected that they might have been prepared to say that they would take the two years and their chances thereafter. But this was surmise, not a finding. The Judge accepted that the appellants would have been desperate to obtain accommodation.
The Judge also rejected the submission by counsel (Mr Knafler) that clause 8(b)(iii) was an attempt to contract out of the Act of 1988, and therefore invalid. The Judge held that the landlords were perfectly entitled to offer a contract which may have had the effect of ousting the provisions of the Act of 1988. The contract would not be enforceable if there was a misrepresentation or if the landlord made it so complicated that nobody could understand what the contract provided, or if the landlord indicated that clause 8(b)(iii) would not be enforced. However the Judge held that none of those possibilities applied in this case. "It was a perfectly clear agreement deliberately designed to have the potential for allowing the landlord to acquire possession under the Housing Act". The Judge added in the final paragraph of his judgment:
"The only problem is that it is by a device, that is by arrears of rent which nobody ever expected to pay. That is the problem. It is a device. I do not for a moment say that there was anything devious or dishonest or concealed about it. It is a device. The real problem that I have is that if I find that these tenants recognised that there was a device and went along with it, then they would have a difficult job to persuade this court to help them. I do not see why they should be in any better position because they chose not to...
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