Croydon (Unique) Ltd v Wright (Crombie and Another intervening)
| Jurisdiction | England & Wales |
| Judge | SIR CHRISTOPHER STAUGHTON,LORD JUSTICE PILL,LADY JUSTICE BUTLER-SLOSS |
| Judgment Date | 29 July 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0729-26 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 July 1999 |
| Docket Number | CCRTI 1999/0058/2 |
[1999] EWCA Civ J0729-26
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EPSOM COUNTY COURT
(HIS HONOUR JUDGE HULL QC)
Royal Courts of Justice
Strand
London WC2
Lady Justice Butler-sloss
Lord Justice Pill
Sir Christopher Staughton
CCRTI 1999/0058/2
and
MR P TEVERSON (Instructed by Messrs Arnold Fooks Chadwick, London, W1Y 8AR) appeared on behalf of the Intervenors
MR S ARMSTRONG (Instructed by Messrs A M Tzourou & Co., Surrey, CR2 8LH) appeared on behalf of the Appellant
Mrs Crombie and her son, whom I will call the Creditors, have sought to intervene in this action brought by Croydon Unique Ltd ("the Landlords") against Mr Wright ("the Tenant").
The Landlords and the Tenant are successors in title to the original parties to a lease dated 17 th August 1987. The premises were a first-floor flat at 28 Sutton Court Road, Sutton, Surrey, and the lease was for 125 years.
On 20 th August 1993 the Creditors obtained a charging order nisi upon the Tenant's interest in the flat at Sutton Court Road, and in another property which does not feature in this litigation, to secure payment of the sum of £233,887.96 owed by the Tenant to the Creditors. The condition in the order was –
unless ("nisi") the contrary be shown before the Registrar at the Registrar's Chambers, 412 Thomas More Building, Royal Courts of Justice, Strand, at 11.45 in the forenoon of 18 th October 1993.
A caution was registered on behalf of the Creditors at the Land Registry on 24 th August 1993.
The order was not in fact made absolute until 23 rd March 1998; but nothing yet turns on that period of delay. It is conceded in the outline argument for the Landlords
(1)that the Creditors were to be treated as equitable chargees by virtue of the charging order nisi from the time when it was made; and
(2)that such an order may create a proprietary interest and can, if registered, bind third parties who receive the property.
There came a time, as lawyers tend to say, when the Tenant was in arrears with the rent of the flat. Judgment was given against him in the Epsom County Court on 30th October 1996 in favour of the Landlords. The terms of the order were as follows:
1. The court has decided that you should give the plaintiff possession of
FLAT 3
28 SUTTON COURT ROAD
SUTTON
SURREY
because you have not paid the rent due under the terms of your lease.
2. You must also pay to the plaintiff £468.75 for unpaid rent, £ for use and occupation of the property and £185.00 for the plaintiff's costs of making the application for possession.
3. You must pay the total sum of £653.75 to the plaintiff on or before 30TH OCTOBER 1996.
4. If you pay the unpaid rent and costs as set out in paragraph 3, the existing lease will continue and the plaintiff will no longer be entitled to possession of the property under this order. If you do not pay the amounts owing, the plaintiff can take steps to evict you and your goods may be sold or other enforcement proceedings taken to obtain payment. This is called 'enforcing the order and money judgment'.
The order was wrong. Section 138(3) of the County Courts Act 1984 required that a period of not less than 4 weeks should elapse before the order for possession could take effect, if by then the Tenant had not paid the arrears of rent and costs. Instead it was an order for possession on the very day that it was made, unless the amount due was then paid. We do not know how the order came to be made in that form.
The Creditors were not told of the Landlords' application to the court for possession, or the order made. They only heard of it when the Landlords' solicitors applied to close the leasehold title on the register, in December 1997, and the Land Registry informed the Creditors of that application. The Creditors then applied to be joined in the Landlords' action in the Epsom County Court, where nothing had happened for sixteen months.
On 7 th August 1998 District Judge Keogh gave leave to the Creditors to intervene, set aside the possession order, and made provision for a further hearing. However, there was an appeal to Judge Hull QC by the Landlords, which was allowed on 18 th December 1998. The Creditors now appeal to this court by leave of Judge Hull.
So the present situation is that the Landlords have the benefit of the lease being forfeited, when it is said to be worth £70,000, as compensation for the unpaid rent and costs amounting to £653. The Creditors no longer have any charge on the lease for the sum of £233,887 which they are owed by the Tenant. They had asserted in the County Court that they were prepared to discharge the Landlords' claim for unpaid rent, if there was relief from forfeiture. But that solution was rejected by the Circuit Judge.
Mr Wright, the Tenant, was present for the greater part of the hearing of this appeal. He told us that he had no knowledge of this action until he heard about it from the Creditors, and questioned whether the order for substituted service had been rightly made. We did not think it right to consider whether any remedy is available to him – always supposing that his financial position is such as to make it worthwhile for him to pursue the matter. If he does wish to do so, he must apply to the County Court. We expressed no view as to whether he would have a prospect of success, since the full facts were not before us. So we consider only the appeal of the Creditors.
The relevant legislation
We were referred to a large number of statutory provisions and decided cases, with admirable scholarship. But in what is to me an arcane topic, I confine myself to the material which is strictly necessary to a decision.
Section 138 of the County Courts Act 1984 provides as follows:
138. Provisions as to forfeiture for non-payment of rent
(1)This section has effect where a lessor is proceeding by action in a county court (being an action in which the county court has jurisdiction) to enforce against a lessee a right of re-entry or forfeiture in respect of any land for non-payment of rent.
(2)If the lessee pays into court or to the lessor not less than 5 clear days before the return day all the rent in arrear and the costs of the action, the action shall cease, and the lessee shall hold the land according to the lease without any new lease.
(3)If -
(a) the action does not cease under subsection (2); and
(b)the court at the trial is satisfied that the lessor is entitled to enforce the right of re-entry or forfeiture,
the court shall order possession of the land to be given to the lessor at the expiration of such period, not being less than 4 weeks from the date of the order, as the court thinks fit, unless within that period the lessee pays into court or to the lessor all the rent in arrear and the costs of the action.
(4)The court may extend the period specified under subsection (3) at any time before possession of the land is recovered in pursuance of the order under that subsection.
(5)If -
(a)within the period specified in the order; or
(b)within that period as extended under subjection (4),
(4),
the lessee pays into court or to the lessor –
(i)all the rent in arrear; and
(ii)the costs of the action,
he shall hold the land according to the lease without any new lease.
Further provisions were inserted by the Administration of Justice Act 1985 section 55, and these are the most relevant to the present dispute:
(9A)Where the lessor recovers possession of the land at any time after the making of the order under subsection (3) (whether as a result of the enforcement of the order or otherwise) the lessee may, at any time within six months from the date on which the lessor recovers possession, apply to the court for relief; and on any such application the court may, if it thinks fit, grant to the lessee such relief, subject to such terms and conditions, as it thinks fit.
(9B)Where the lessee is granted relief on an application under subsection (9A) he shall hold the land according to the lease without any new lease.
(9C)An application under subsection (9A) may be made by a person with an interest under a lease of the land derived (whether immediately or otherwise) from the lessee's interest therein in like manner as if he were the lessee; and on any such application the court may make an order which (subject to such terms and conditions as the court thinks fit) vests the land in such a person, as lessee of the lessor, for the remainder of the term of the lease under which he has any such interest as aforesaid, or for any lesser term.
In this subsection any reference to the land includes a reference to a part of the land.
In this case the Creditors first heard of the forfeiture at a time when more than six months had elapsed from the date when the Landlords recovered possession.
We were also referred to section 146(4) of the Law of Property Act 1925:
(4)Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture under any covenant, proviso, or stipulation in a lease, or for non-payment of rent, the court may, on application by any person claiming as under-lessee any estate or interest in the property comprised in the lease or any part thereof, either in the lessor's action (if any) or in any action brought by such person for that purpose, make an order vesting, for the whole term of the lease or any less term, the property comprised in the lease or any part thereof in any person entitled as under-lessee to any estate or interest in such property upon such...
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