Chiltern Railway Company Ltd and another v Patel
| Jurisdiction | England & Wales |
| Judge | Lord Neuberger of Abbotsbury,Lady Justice Arden,Lord Justice Mummery |
| Judgment Date | 08 February 2008 |
| Neutral Citation | [2008] EWCA Civ 178 |
| Date | 08 February 2008 |
| Docket Number | Case No: B2/2007/1680 |
| Court | Court of Appeal (Civil Division) |
[2008] EWCA Civ 178
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON CIVIL JUSTICE CENTRE
(HIS HONOUR JUDGE COWELL)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Neuberger Of Abbotsbury
Lord Justice Mummery and
Lady Justice Arden
Case No: B2/2007/1680
Mr S Merali (instructed by Messrs Merali & Co) appeared on behalf of the Appellant.
Mr A Winter (instructed by Messrs Hollingworth Bissell) appeared on behalf of the Respondent.
This is an appeal against orders for possession made on 24 May 2007 in respect of two shops, by HHJ Peter Cowell in the Central London County Court. Those orders were made in the light of his conclusion that the leases of those shops granted to the appellant, Mrs Bella Patel by the respondent, Chiltern Railway Company Limited, were excluded from the protection of Part II of the Landlord and Tenant Act 1954.
The legal background is as follows. The Act applies to tenants who occupy business premises (see section 23). By section 24 such a tenant has the right to apply to the court for a new tenancy which can only be refused on specified grounds, some of which carry with them a right to compensation from the landlord. Section 24 also provides that a business tenancy shall continue past its contractual term date unless and until determined by a notice, which complies with the requirements of sections 25, 26 or 27. Section 38 generally renders void any agreement (which I shall call an “exclusion agreement”) which precludes a tenant of business premises from exercising her rights under the Act.
However, since 1969 the Act has included provisions whereby parties who are to be the landlord and the tenant under a tenancy of business premises can enter into a valid exclusion agreement. Certain formalities have always been required before such an exclusion agreement can be effective. Until 2003, the prior sanction of the court on the application of both parties was required. However, a different regime now applies. Section 38A(3) now provides that an exclusion agreement:
“…shall be void unless —
(a) the landlord has served on the tenant a notice in the form, or substantially in the form, set out in schedule 1 to the Regulatory Reform (Business Tenancies) (England and Wales) Order; and
(b) the requirements specified in schedule 2 to that Order are met.”
The form of notice in schedule 1 to the Order explains that the tenant is giving up the rights given by the Act and emphasises the importance of getting professional advice. The notice also states that, if it is received more than fourteen days before the tenant is committed to the lease, he or she must sign a declaration and (in bold type) that, if the notice is received later than that, the tenant must sign a “statutory” declaration, and for that purpose a visit to a solicitor (or someone empowered to administer oaths) will be required.
The principally relevant part of the Order for present purposes is schedule 2, and all references to paragraphs in this judgment are to paragraphs in that schedule. Paragraph 2 says that the notice referred to in section 38(A)3 must, subject to paragraph 4, be served “not less than fourteen days before the tenant enters into the tenancy”. Paragraph 3 which applies “if the requirement in paragraph 2 is met” stipulates that the tenant must, before entering into the tenancy, “make a declaration in the form, or substantially in the form, set out in paragraph 7”. Paragraph 4 applies “if the requirement in paragraph 2 is not met”: in other words if a notice is not served on the tenants at least fourteen days before the tenancy is granted. It states that before the tenancy is granted, the landlord must serve a notice on the tenant and the tenant must:
“make a statutory declaration in the form, or substantially in the form, set out in paragraph 8.”
Paragraph 5 provides:
“A reference to the notice, and, where paragraph 3 applies, the declaration, or, where paragraph 4 applies, the statutory declaration, must be contained in or endorsed on the instrument creating the tenancy.”
In the form of declaration set out in paragraph 7, the tenant and the tenant's address must first be stated. The tenant must then “declare” first, that he or she proposes to take a tenancy of the premises as identified from the landlord who must be named for a term whose commencement date must be stated; secondly, that the tenant proposes to agree the provisions of sections 24 to 28 of the Act are to be excluded from the tenancy; thirdly, that the landlord has, “not less than fourteen days before” the tenant is committed to the tenancy, served a notice; and fourthly, that the tenant has read the notice and accepts the consequences of the proposed agreement. The form ends: “DECLARED This … day of …”
The form of statutory declaration set out in paragraph 8 is very similar, but it has the following differences. First, the tenant must not merely declare but must “solemnly and sincerely declare”. Secondly, the service of a notice by the landlord is not stated to have been effective at any particular time. Thirdly, before the words “DECLARED … day of …” are the words “and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act 1835”. and fourthly, after the words “DECLARED …day of …” are the words “before me,” (signature of person before whom declaration is made)” and then:
“A commissioner for oaths or A solicitor empowered to administer oaths or (as appropriate).”
The relevant facts of the present case are as follows. On 15 March 2005 Chiltern granted Mrs Patel leases of two shops on the concourse of Marylebone Station in London. Each lease was for a term contractually expiring on 17 July 2006, and each lease was subject to an exclusion agreement. On 3 August 2004, long before the fourteen day period referred to in paragraph 2, Chiltern served a notice on Mrs Patel in respect of each lease. Those notices clearly comply with the requirements of section 1 to the Order.
On 10 March 2005, five days before the execution of each lease, Mrs Patel made a statutory declaration in respect of each lease in the form stipulated in paragraph 8. When the leases were granted, each of them contained —purportedly pursuant to the provisions of paragraph 5 —in clause 8 a statement that the landlord, Chiltern, had served a notice under section 38A(3) on 3 August 2004 and a statement that the tenant Mrs Patel had made a statutory declaration in accordance with paragraph 8 on 10 May 2005. When the leases expired contractually in July 2006, Chiltern claimed possession of the two shops. Mrs Patel resisted the claims on the basis of two arguments. The first argument relied on an alleged estoppel; the second argument was that the requirements of section 38A(3)(b) had not been satisfied and so the tenancies were continuing under section 24. Both these arguments were rejected by HHJ Cowell. My Lady, Arden LJ, refused permission to appeal on the first argument, as she considered that the judge was plainly entitled to reject the contention that an estoppel had been established on the facts he had found. However, she granted permission to appeal on the second argument which raises a short point of law to which I now turn to consider.
Mrs Patel's argument is, of course, the same in relation to each lease, and for the sake of clarity I shall deal with it by reference to one of them. She relies on the fact that the notice in the present case was served in accordance with the requirements of paragraph 2, i.e. more than fourteen days before the lease was entered into, that it follows that paragraph 3 applied, that she should therefore have made a declaration in accordance with paragraph 7, and that under paragraph 5...
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