Cardshops Ltd v Davies
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WIDGERY,LORD JUSTICE BUCKLEY |
| Judgment Date | 03 February 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0203-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 February 1971 |
[1971] EWCA Civ J0203-2
In The Supreme Court of Judicature
Court of Appeal.
(Civil Division)
(From: His Honour Judge Bulger — Newport County Court)
Lord Justice Edmund Davies
Lord Justice Widgery and
Lord Justice Buckley
In the Matter of the Landlord and Tenant Act 1954
and
In the Matter of 41 High Street Newport Monmouthshire;
Mr. ROBERT REID (instructed by Messrs. Stuart Hunt & Co.) appeared on behalf of the Appellants (Applicants).
Mr. DAVTD WILLIAMS, (instructed by Messrs. Ewan Davies & Son, Cardiff) appeared. On behalf of the Respondents (Respondents).
LORD JUSTICE EDMUND DAVTES: This is an appeal from the decision of His Honour Judge Bulger, sitting in Newport, on the 30th June of last year, in relation to the tenants' application under Part II of the Landlord and Tenant Act, 1954. for a new tenancy of No.41 High Street, Newport. The tenants had taken over an existing lease by assignment some four to five years previously and had thereafter carried on the business of sellers of greeting cards, with stationery forming probably something in the nature of a side-line. The new tenancy that they sought under section 26 of the Act was specified as a term of 14 years at a rent of £ 2,500 per annum and (as they put it) "Other terms to be the same as in existing lease". The important term of the existing lease, for the purpose of this appeal, is that contained in clause 7 of the lease of the 19th January, 1960, granted to the tenants' predecessors in title. This provided that the tenancy would not be assigned "without the previous consent in writing of the Lessors (which consent shall not be unreasonably withheld)".
The answer of the landlords to the application was, first, that they did not oppose the granting of a new tenancy? but, secondly, that they objected to the terms proposed by the applicants in three respects: first, that instead of 14 years there should be substituted a term of 21 years, from the 24th June, 1970? secondly, that for the rent of £ 2,500 per annum there should be substituted a rent of £ 4,400 for the first seven years, with provisions thereafter for rent reviews at seven-year intervals; and thirdly, that "For 'the other terms being the same as in the existing lease' should be substituted a provision 'for 'the other terms to be in accordance with the form of lease annexed hereto'". The draft lease annexed contained (inter alia) aclause whereby the tenants covenanted not to assign, underlet or part with the possession of the demised premises or any part thereof — in other words, an absolute prohibition against assignment
The proceedings spread over three days. First of all, there was. a hearing on the 25th March of last year. The oral evidence was confined to that day. We were told that on that occasion learned counsel for the tenants said that the only dispute related to the rent and the duration of the lease. Mr. David Williams, who was present on that occasion, informs this Court that nobody was asked to say whether the final form of the clause in relation to assignment was regarded as having any possible impact upon either the duration of the new tenancy, if it were granted, or the rent in respect thereof.
On the 29th April the learned judge gave his reserved judgment. Again we have the advantage of Mr. David Williams's assistance as to what then happened. Apparently on that occasion it emerged for the first time that there was a contested issue in relation to the covenant against assignment. The tenants on their part said that they were not prepared to accept the absolute prohibition that the landlords sought. The landlords then offered to make the prohibition a qualified one, but said that they desired to have added to that qualified prohibition an undertaking by the tenants that, in the event of their contemplating an assignment, they would first of all offer a surrender of the term to the landlords.
That was, to my way of thinking, a contest of considerable importance, the outcome of which, I should have thought, might— I say no more than that — be regarded as having a very important bearing upon the determination of the important matter of rent, if indeed not also upon the duration of the tenancy. But theposition was left in a somewhat curious way. The learned judge arrived at and announced his decision. He said that he fixed the rent at £ 3,600, hut added that the clause in relation to assignment would he left to he negotiated.
In arriving at his figure of £ 3,600, the learned judge had before him the competing evidence of experts given at the first hearing, and also a letter which the solicitors to the South Wales Electricity Board had sent to those acting for the landlords on the 24-th March — that is, the day before the first hearing. The terms of the letter are important. The solicitors wrote: "I am writing to confirm that my clients, the South Wales Electricity Board, are prepared to rent the above premises for the unexpired balance of the 21-year lease, for the sum of £ 3,750 per annum, exclusive of rates, subject to approval by the Board at their Meeting on the 3rd April. It is also subject to agreement being reached as to the condition of the upper floors of the property, prior to the lease being entered into".
Judging by such notes as we have before us, the learned judge certainly took that letter into consideration. How far it affected his ultimate decision it is impossible to say. There was, for example, evidence before him that the letter could be discounted as the Electricity Board were next-door neighbours, and that in consequence their figure of £ 3,750 was not a true reflection of rental values.
Section 34 of the Act provides that, in default of agreement between the parties, the rent under the new tenancy "may be determined by the court to be that at which, having regard to the terms of the tenancy (other than those relating to rent) the holding might reasonably be expected to be let in the open market by a willing lessor…." The learned judge said that the ElectricityBoard's offer could be "discounted". I take his words to mean that while he had to advert to the figure of £ 3,750 he must not without more be regarded as deciding that was the rent at which the holding might reasonably be expected to be let in the open market by a willing lessor. If that was his approach, I think it was entirely justified. This solitary client who had manifested interest in the property might, for a variety of reasons, withdraw or fail to complete. It is further to be observed (as Mr. Reid has pointed out) that the figure of £ 3,750 was put forward with considerable qualifications: for example, it was subject to approval by the Electricity Board at their next meeting: it was subject also to agreement being reached regarding the condition of the upper floors of the property: finally, the letter mentions no detailed terms of any kind. The learned judge would therefore be entitled, I repeat, to say that £ 3,750 was not the figure which he must take as fixing the market rental of this property.
On the 30th June the matter again came before the court. Mr. David Williams says that on that occasion no point was taken that the judge had at the previous hearing wrongly fixed the rent before the final version of the covenant in relation to assignment had been arrived at: accordingly, he says that it is not now open to the tenants to take the...
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