Britannia Building Society v Earl
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUTLER-SLOSS,LORD JUSTICE McCOWAN |
| Judgment Date | 08 November 1989 |
| Judgment citation (vLex) | [1989] EWCA Civ J1108-5 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 89/1071 |
| Date | 08 November 1989 |
[1989] EWCA Civ J1108-5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL. CIVIL DIVISION
ON APPEAL FROM THE BLOOMSBURY COUNTY COURT
HIS HONOUR JUDGE DOBRY Q.C.
Royal Courts of Justice
Lord Justice Butler-Sloss
and
Lord Justice McCowan
89/1071
CASE NO. 8830815
and
MR B. KEITH Q.C. and MISS A. McALLISTER (instructed by Messrs Daniel and Harris) appeared on behalf of the appellants.
MR D. NEUBERGER Q.C. and MISS F. GRAHAM (instructed by Messrs Howard Kennedy) appeared on behalf of the respondents.
I will ask Lord Justice McCowan to give the first judgment.
This is an appeal against a judgment of His Honour Judge Dobry Q.C. given at Bloomsbury County Court on 17th February 1989 whereby he ordered that the appellants give up possession of premises known as 12A, Stuart Tower, Maida Vale, London W.9 within 28 days of the date of his order.
The respondents to this appeal (the plaintiffs in the action) were the mortgagees of the premises under a mortgage deed between themselves and the mortgagor, one Anthony John Earl, who was the first defendant in the action. The mortgage deed was dated 4th October 1985 and the total amount advanced was £43,630. By the date of the hearing of the action the mortgage payments due to the plaintiffs from the first defendant were in the region of £5,000. The first defendant did not contest the claim for possession and was, indeed, neither present nor represented before the judge.
However, after the plaintiffs had brought the proceedings, at that stage against the first defendant alone, it was discovered that two brothers called Amin were in occupation of the premises and they were joined as second defendants. They are the appellants before this court. It emerged—and these facts were not in dispute before the learned judge—that a bare three weeks after entering into the mortgage deed the first defendant let the premises to the second defendants, who have lived there ever since and paid rent to the first defendant for so doing in accordance with their tenancy. The first they heard of these proceedings, or that the tenancy had been granted to them after the date of the mortgage and in breach of it, was when they were served with a notice that the warrant of possession was about to be executed, They promptly applied for the warrant to be suspended (and the Registrar of the court so ordered) and that they be joined as second defendants.
Their tenancy was for nine months from 25th October 1985. It is not in dispute that after the expiry of that period, as between the first and second defendants, the second defendants became statutory tenants.
On the other side of the coin, however, these facts were undisputed:
1. The mortgage deed pre-dated the tenancy agreement;
2. The mortgage deed prohibited any purported letting of the the property without the consent of the plaintiffs; and
3. No such consent was sought or obtained by the first defendant.
In those circumstances, three arguments were advanced on behalf of the second defendants before the learned judge. One of those has been abandoned before us. Of the two that remain, the first is put like this: It is said that by reason of being statutory and not contractual tenants a possession order can only be made against the appellants under the provisions of section 98 of the Rent Act, irrespective of whether proceedings are brought by the landlords or by the mortgagees as holders of the title paramount.
It is necessary that I should have regard to certain sections of the Rent Act 1977. Section 1 reads:
"1. Subject to this Part of this Act, a tenancy under which a dwelling-house (which may be a house or part of a house) is let as a separate dwelling is a protected tenancy for the purposes of this Act.
Any reference in this Act to a protected tenant shall be construed accordingly."
Section 2(1):
"(1) Subject to this part of this Act—
(a) after the termination of a protected tenancy of a dwelling-house the person who, immediately before that termination, was the protected tenant of the dwelling-house shall, if and so long as he occupies the dwelling-house as his residence, be the statutory tenant of it…."
I need not read further in that section, but I turn to section 98 of the Act. Sub-section (1) reads:
"(1) Subject to this Part of this Act, a court shall not make an order for possession of a dwelling-house which is for the time being let on a protected tenancy or subject to a statutory tenancy unless the court considers it reasonable to make such an order and either—
(a) the court is satisfied that suitable alternative accommodation is available for the tenant or will be available for him when the order in question takes effect, or
(b) the circumstances are as specified in any of the Cases in Part I of Schedule 15 of this Act."
I need not read more of this section.
In this context the respondents rely on a passage in Fisher and Lightwood Law of Mortgages, 10th Edition at page 358. It reads:
"The mortgagor being unable to confer on another a greater right than he himself possesses, his tenant claiming under a lease made after the mortgage without the privity of the mortgage, was, and in cases outside section 99 of the Law of Property Act 1925 still remains—like his lessor, liable to be ejected without notice, and he has no remedy except against the mortgagor."
The respondents also rely on the decision of the Court of Appeal in the case of Dudley and District Benefit Building Society v. Emerson and Another which is reported in [1949] Chancery, page 707. In that case the court held that a contractual tenancy granted by a mortgagor after the date of the mortgage which excluded the mortgagor's statutory power of leasing was liable to be defeated by the assertion by the mortgagees of their paramount title. At the beginning of his judgment (at page 711 of the report) Sir Raymond Evershed M.R. said:
"The case is not by any means, in my view, free from serious difficulty, and it is perhaps surprising that there has been no similar case before the court since the rent restriction legislation first operated; for the point, put in its briefest form, is this: Can a person in occupation of premises within the monetary limits prescribed by the Act, by virtue of a contract of tenancy between himself and a mortgagor, claim the protection of those Acts against a mortgagee claiming to assert his rights as mortgagee, where by the terms of the mortgage section 99 sub-section (1) of the Law of Property Act 1925 has been expressly excluded? Vaisey J. came to the conclusion that such a tenant could so claim protection and it is with natural diffidence that I find I have reached a different conclusion".
In the middle of page 718 the Master of the Rolls continued:
"The question has been debated whether the result would be the same if the mortgagor, Emerson, had determined the contractual tenancy, which he undoubtedly did create between himself and Goodlad, so that at any rate as between himself and Goodlad a statutory tenancy had arisen. I prefer for my part to express no view whether the result would be different if Goodlad could say: 'My right to remain here is not by virtue of any contract, or any estate which I derive from Emerson, but is by virtue of the statutory right to possession which, as between me and Emerson, the Act has conferred'. Mr Heathcote-Williams suggested that in that event the mortgagees could not succeed in ousting Goodlad, but I must not be taken to assent to that. As I have said, I find it unnecessary to decide it. It may be that there is an anomaly, but I am certainly not satisfied that, if there had been a statutory tenancy created in the way I have indicated, that that would have been necessarily sufficient to defeat the plaintiffs' rights."
I turn next to the concluding paragraph of the judgment of Sommervell L.J. which is to be found on page 723 of the report, where he says:
"The only other point on which I would like to add a word is this. It relates to the last argument of Mr Heathcote-Williams. It was suggested, and I think probably rightly, that if the mortgagor in a case like this sought to get possession as against someone to whom he had let the mortgaged property in the circumstances which we are considering, that person, if the property was a dwelling-house separately let, could assert as against the mortgagorthe benefits conferred by the Rent and Mortgage Restriction Acts, and, if he did so successfully, he would become a statutory tenant. It is unnecessary to decide what would be the position if a mortgagee, as against someone who had reached that position, sought to assert the right which the mortgagee is asserting in this case. All I want to say is that at the moment I do not myself feel that there would be any anomaly in coming to the same conclusion in those circumstances. Mr Heathcote-Williams submitted that there would be an anomaly. I do not myself feel that there would. Therefore, that part of the argument did not affect me in the conclusion to which I have come with regard to the other points. For these reasons, I think that this appeal must be allowed."
Jenkins L.J. agreed with the other two judgments.
The court was also referred to the case of Bolton Building Society v. Cobb [1966] 1 W.L.R. at page 1, where it was held that the Protection from Eviction Act 1964 did not protect a tenant in a situation comparable to the present as against the mortgagee.
Against this the appellants argue that a statutory tenancy is different in kind from a...
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