Cadogan Estates Ltd v McMahon
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STUART-SMITH,LORD JUSTICE LAWS,MR JUSTICE JONATHAN PARKER |
| Judgment Date | 25 May 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0525-16 |
| Docket Number | CCRTF 1999/0317/2 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 May 1999 |
[1999] EWCA Civ J0525-16
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WEST LONDON COUNTY COURT
(HIS HONOUR JUDGE COTRAN)
Royal Courts of Justice
Strand, London W2A 2LL
Lord Justice Stuart-Smith
Lord Justice Laws
Mr Justice Jonathan Parker
CCRTF 1999/0317/2
MR PAUL STADDON (instructed by Messrs Oliver Fisher, London W8 5EH) appeared on behalf of the Appellant (Defendant).
MR ANTHONY RADEVSKY (instructed by Messrs Lee & Pembertons, London SW1X 0BX) appeared on behalf of the Respondent (Claimant).
I will ask Lord Justice Laws to give the first judgment.
This is a defendant's appeal brought with leave of Lord Justice Brooke against an order for possession of a dwelling-house made on 18 February 1999 by His Honour Judge Cotran at the West London County Court. The plaintiff was the landlord and the defendant the tenant of Flat 9, 85–89 Lower Sloane Street, under the terms of a statutory tenancy which, pursuant to the Rent Act 1977, came into existence upon the expiry of a lease which had, I understand, been entered into by the parties' respective predecessors in title on 15 August 1979.
Section 98(1) of the Rent Act 1977 permits the court to make an order for possession of premises let on a statutory tenancy if it is reasonable to make an order and the circumstances are as specified in any of the cases set out in Part I of Schedule 15 to the Act. There is no challenge to the judge's finding that it was reasonable to make the order and it is therefore unnecessary to rehearse the facts which led him to do so.
The appeal raises a short point of law which I will explain directly. First, it is convenient to look at the terms of Case 1 of Schedule 15. That provides so far as relevant as follows:
"Where… any obligation of the protected or statutory tenancy which arises under this Act, or
(b) in the case of a statutory tenancy, any other obligation of the previous protected tenancy which is applicable to the statutory tenancy, has been broken or not performed."
Section 3(1) of the 1977 Act provides:
"So long as he retains possession, a statutory tenant shall observe and be entitled to the benefit of all the terms and conditions of the original contract of tenancy, so far as they are consistent with the provisions of the Act."
Proviso 1 to the lease contains, among other things, a proviso for re-entry should the tenant become bankrupt. It is not necessary to read out the text which appears at page 27 of the bundle.
The defendant was made bankrupt on 17 March 1998. The plaintiff issued proceedings for possession of the flat asserting that, having regard to the proviso for re-entry, the defendant's bankruptcy amounted to a breach of an obligation within Case 1 of Schedule 15, giving rise to a claim for possession under that case. That claim was upheld by the judge who duly made the order under appeal.
Mr Staddon for the defendant contends, first, that proviso 1 does not create an obligation within the meaning of the Rent Act at all. He submits, secondly, that if that is wrong and an obligation was created, then it was not an obligation which was carried through to the statutory tenancy being, as he submitted, inconsistent with the concept of statutory tenancy.
There is a paucity of authority on the question whether a proviso for re-entry upon bankruptcy creates an obligation upon the tenant. There is one case in the English jurisdiction and that is a decision of this court in Paterson v. Aggio [1987] 2 EGLR 127. There the Court of Appeal had to decide whether bankruptcy amounted to a breach of an obligation arising from a proviso for re-entry whose terms were not noticeably different from those in this case. However, the question arose in a context different from that with which we are dealing. In that case, if the proviso imposed an obligation not to go bankrupt, then section 52 of the Housing Act would have applied and the tenancy would be a protected shorthold tenancy. That was the plaintiff landlord's contention. It is convenient to cite this passage first from May LJ's judgment at page 128 D:
"There has throughout been only one point in this case. The landlord, who is the respondent before us, granted the tenants what she contended was a protected shorthold tenancy within section 52 of the Housing Act 1980. The tenants contended that their tenancy was not one within section 52 and that they were accordingly entitled to the protection of the Rent Act 1977. The learned judge held against the tenants' contentions and made the order for possession.
The relevant provisions of the Housing Act 1980 are contained in section 52(1)(a) and are to this effect:
'A protected shorthold tenancy is a protected tenancy granted after the commencement of this section which is granted for a term certain of not less than one year nor more than five years and satisfies the following conditions, that is to sayÄ
(a) it cannot be brought to an end by the landlord before the expiry of the term except in pursuance of a provision for re-entry or forfeiture for non-payment of rent or breach of any other obligation of the tenancy;'"
And then at F on the same page:
"The tenants' contention has been that on the proper construction of his proviso for re-entry the tenancy could be brought to an end before the expiry of the fixed term if, for instance, the tenants should go bankrupt or make a composition with their creditors. It was submitted that there is no 'obligation' in the tenancy agreement on the tenants not to go bankrupt. Thus the tenancy agreement did not satisfy section 52(1)(a) of the 1980 Act which I have quoted and consequently could not be a protected shorthold tenancy."
It is necessary to cite a major part of the learned judge's recital of the landlord's argument since, as I shall show, he accepted it. At 129E May LJ says this:
"Finally, on the question of pure construction, counsel [for the landlord] suggested that if the inquisitive bystander had asked the tenants whether they were, under the terms of their tenancy agreement, obliged not to go bankrupt, or not to make a composition with their creditors, or not to leave the premises vacant and unoccupied for more than 21 days, the common sense and reasonable answer would have been in the affirmative.
Counsel for the landlord further developed his argument in this way. The proviso for re-entry with which this case is concerned was a condition of the tenancy agreement. See Woodfall, Landlord and Tenant, vol 1, para 1-1840 on p 820. Further, it was a condition which ran with the land and related to the tenancy (see Woodfall op cit at the top of p 461) and was therefore properly to be considered as an obligation of the latter. In addition, a proviso for re-entry on, for instance, the bankruptcy of the tenant is nothing unusual...
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Cadogan Estates Ltd v McMahon
...1980 and not to the provisions of the Rent Act 1977, but I agree with the opinion of Laws L.J. in the Court of Appeal in this case [1999] 1 W.L.R. 1689, 1693E that it would be anomalous to hold that a proviso for re-entry in the event of bankruptcy, contained in a tenancy which has become ......
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