O'Connor v Hume

This is an appeal from a decision of His Honour Judge Archer in a landlord and tenant case. The learned County Court Judge made an Order for possession on the basis that having regard to the contract of tenancy the Defendant tenant could not claim, as he was seeking to do, the protection of the Rent Acts. From that decision the Plaintiff tenant appeals.

The agreement of tenancy is dated the 6th October, 1952, and I had better read the first clause in full. "In consideration of the payment by the tenant to the Landlord of the sum of £47 the Landlord lets and the tenant takes the cottage and appurtenances at East Ashling Chichester in the County of Sussex known as 3 Cobdens Cottage, for a period of one year from the first day of October 1952 at a rental of 2/- per week". What happened was that there were various disputes between the parties to which I will refer later. The 5th October, 1953, came round. The tenant remained in occupation and on the 22nd December, 1953, the solicitors on behalf of the landlord served a notice to quit to take effect on the 1st February, 1954. The tenant remained, and the proceedings were brought in the County Court. Two shillings per week is below two-thirds of the rateable value and, therefore, if that had stood alone the landlord would plainly have been entitled to possession because the tenancy would have been outside the Act. But it was sought to adduce evidence below and in this Court to show that the agreement did not represent the real bargain between the parties. It was said that the real bargain between the parties, summarising it, was that the premises should be let for £1 a week. After trouble had arisen there was a letter from the landlord saying, "You made an offer of £52 per annum and I accepted it for one year only". If the £52 represented the rent, whether paid at once or in weekly sums, that would have been more than two-thirds of the rateable value of the premises. One thing is clear, and it is admitted by both sides, and that is that the basis of the negotiations was that the occupation should be for a year. The tenant was agreeing. The landlord made it quite clear that he did not want to part with possession for more than a year and whatever the agreement may be in law the tenant was accepting that basis. It is not the first example of a tenant having got into possession on an undertaking that he would surrender possession at a later date who when that date has come, seeks sometimes successfully, and sometimes unsuccessfully, to rely on the Rent Acts. The learnedjudge decided that this was a case in which there were no grounds for going behind the agreement.

Although it is unnecessary to come to a final conclusion on this first point in the case, for reasons which will emerge, it is right to draw attention at this stage to the operative legislation with regard to premiums. It is new contained in Section 2 of the Act of 1949 which prohibits premiums on the granting or assignment of tenancies, but that prohibition does not apply where the rent reserved is less than two-thirds of the rateable value of the dwelling-house. If the proper construction of this agreement, with any admissible extrinsic evidence, were that the £47 was a premium and the rent, with any sums which could properly be treated as rent, was only 2s. 0d, then it is plain — and this was the view of the learned County Court Judge — that the Plaintiff is entitled to an Order for possession.

We were referred to certain authorities which have indicated that particularly in this field of rent restriction if the Court is satisfied that the document purporting to set out the rights between the parties is a sham — and I am not attempting to define what a sham is — then the Court will accept and consider evidence as to the real bargain between the parties. I see no ground, having had the evidence and the letters read to us, for regarding this agreement as a sham, whatever that may mean. It is clear that there was no trickery or anything of that sort. The landlord made it perfectly plain that he wished the transaction arranged in this way at this low rent because he did not desire to part with possession for more than a year. The tenant's replies and the letters indicate, as, indeed, Counsel agreed, that that was well understood. As I have said, there is nothing contrary to the Act in agreeing to a premium in the case of a tenancy where the rent is below two-thirds of the rateable value. On the other hand, I think it is quite right to say that the Court would scrutinise a sum in such a case which was put forward as a premium. The sum is not so described in this case and there is no provision,as will have been realised from the clause, as to the time of payment or as to when it was to be paid. In my opinion, extrinsic evidence was permissible to deal with that. It is quite clear that it was never intended that that sum should be paid as a lump sum at or about the time the Defendant went into possession. According to his evidence, he was to pay 2s. 0d a week and the idea originally was that a balance of about 18s. 0d a week should be satisfied in produce, and the letters show that that was how the matter started to be worked cut. The produce was not satisfactory to the Plaintiff, who then started demanding money on a periodical basis spreading the £47 over the twelve months. The Defendant was advised that he was not liable to pay the balance of £47 and he got into arrears. There were various difficulties which appear from the letters. I think evidence was admissible to prove the intention of the parties, that the £47 should be periodic, spread over the year, because that is what the evidence leads to. On that basis I think there was a strong case made on behalf of the Defendant for submitting that the principle of the case of Rush v. Matthewswas applicable and that notwithstanding the distinction between the facts in that case and in this there should be added to the 2s. 0d a sum not technically rent but to be treated as rent for the purposes of the Rent Acts which would have brought the rent, for the purposes of those Acts, above the two-thirds provisions.

Apart from that point, however, in this Court Counsel for the Plaintiff took a further point in support of the learned Judge's conclusion. It was not necessary to take it and it was not taken before the learned Judge but, of course, in this Court the learned Judge's conclusions can be upheld on grounds which were not taken below. The point is based on the provision in the agreement "should the tenant be desirous of continuing his tenancy on a monthly tenancy at the said rent of 2s. 0d per week". The £47 even admitting the extrinsic evidence, was to be satisfied under the contract within the year and was in respect of the year. Atthe end of the year the tenant as I have said, did in fact stay on. It was submitted that he should be regarded as having stayed on as a statutory tenant, but he did not assert that position in any letter. I think the proper conclusion from the fact of his remaining as he did after the year indicated his desire to continue the tenancy, and the tenancy therefore continued at a rent of 2s. 0d per week under the agreement, and that sum is less than two-thirds of the rateable value. The notice to quit, therefore, operated on a tenancy to which the sections of the Act do not apply and the Plaintiff therefore is entitled to possession.

As against that, Mr. plume submitted, first of all, that we should disregard that part of the written agreement which refers to the period after the year was over. That was based on statements in the letters that the intention was that the tenancy should be for a year. I do not accept that. I...