Firstcross Ltd (formerly Welgelegen N. v) (Respondents (Plaintiffs) East West (Export/Import) Ltd (Defendants) Kiku Mahboob (Appellant (Defendants)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON,LORD JUSTICE DUNN,SIR STANLEY REES |
| Judgment Date | 19 March 1980 |
| Judgment citation (vLex) | [1980] EWCA Civ J0319-3 |
| Docket Number | 7933309 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 March 1980 |
[1980] EWCA Civ J0319-3
In The Supreme Court of Judicature
Court of Appeal
On Appeal from Bloomsbury and Marylebone County Court
Lord Justice Stephenson
Lord Justice Dunn and
Sir Stanley Rees
MR. G. BENNETT (instructed by Messrs. Gentle Mathias & Co.) appeared on behalf of the Appellant (Defendant).
MR. R. C. PRIOR (instructed by Messrs. C. M. Alfille & Co.) appeared on behalf of the Respondents (Plaintiffs).
This is an appeal by the defendants. East West (Export/Import) Limited and Kiku Mahboob, against an order for possession made by His Honour Judge Leslie in the Bloomsbury & Marylebone County Court on 30th November last year.
The order was for possession of flat 430, Park West, near Marble Arch in this City in favour of Welgelegen N. V. They were the successors in title at one remove, or more, of Peachey Property Corporation Limited and have been succeeded since these proceedings were instituted by First cross Limited, who are now substituted as respondents to this appeal.
This flat was the subject of a printed tenancy agreement made on 24th November 1972. The tenancy was admittedly determined by a valid notice to quit given on 30th May 1979 and expiring on 30th June 1979. The tenancy of this flat was admittedly within the Rent Act which now provides by section 1 that "…a tenancy under which a dwelling-house (which may be a house or part of a house) is let as a separate dwelling is a protected tenancy for the purposes of this Act". But the first defendants are a limited company so that when the respondents' predecessors wanted to get possession of the flat, by paragraph 7 of their Particulars of Claim they pleaded: "The Defendants as a limited company is not entitled to the security of tenure afforded by the Rent Act 1977". By their defence filed after the second defendant, Mr. Mahboob, had been joined on 12th September and filed on 18th September, they admitted pretty well all the allegations made in the Particulars of Claim, except that made in paragraph 7 which Ihave read. As to that, they pleaded:
"…s the sole purpose of the demise to the First Defendant company was to provide a dwelling house for the Second Defendant. The agreement pleaded in Paragraph 1 contained a proviso that "the flat is for occupation by Kiku Mahboob only", and was signed by the Second Defendant as "Director Tenant". Throughout the said tenancy the premises have been occupied by the Second Defendant."
By paragraph 3:
"By reason of the matters aforesaid, it is denied that that said tenancy is excluded from the protection of the Rent Act 1977 by reason of the nominal tenant being a limited company."
Then there is a counterclaim repeating the defence and the "second defendant counterclaims a declaration that he is a protected tenant of the premises mentioned in paragraph 1 of the Particulars of Claim."
The learned county court judge held that he was bound by direct authority to reject the argument for the defendants that the defendant company was entitled to a statutory tenancy or had become the statutory tenant, and he held that the defendant company was not entitled to a statutory tenancy and the landlords were entitled to an order for possession.
In his Notice of Appeal and in his able and exhaustive submissions to this court Mr. Bennett, on behalf of both defendants, has made his main submission that which he made in the County Court, namely that the defendant company has since 30th June 1979 been a statutory tenant of this flat.
A statutory tenant is now defined in section 2 of the Rent Act of 1977 in this way.
"(1) Subject to this Part of this Act -
(a) after the termination of a protected tenancy of a dwelling-house the person who, immediately before that termination.was the protected tenant of the dwelling-house shall, if and so long as he occupies the dwelling-house as his residence, be the statutory tenant of it;"
But he then reinforced his main submission by an alternative submission that the second defendant is a statutory tenant of this flat. He concedes that the general rule, established by long-standing authority of this court, is that the tenancy granted to a limited company is not – protected by being given the security of the Rent Acts, but he contends that there may be rare exceptions. The effects of this tenancy agreement and this case take it out of that rule and the continuous occupation of this flat by the second defendant is sufficient in law to create a statutory tenancy either in the defendant company or in the second defendant.
The tenancy agreement is certainly peculiar. It is an agreement, as I have said, on a printed form, made on 24th November 1972 "BETWEEN PEACHEY PROPERTY CORPORATION LIMITED" on the one part, and the defendant company of the other "(hereinafter called'the Tenant') Whereby the Landlords agree to let and the Tenant agrees to take all that flat numbered 430 … to hold the same unto the Tenant for a term from the 18th day of November 1972 to the 31st day of January 1973 subject to either party giving to the other at least 14 days' clear notice of intention to allow the said term to determine by effluxion of time on the last mentioned date". Then there is a provision for paying the rent of £25.55 per week payable monthly in advance on the first day of every calendar month; then come a number of tenants' covenants, more suitable to a personal tenant than to a corporation like the defendantcompany and by (g) of Clause 1, which sets out the tenants' covenants, the tenant agrees and warrants as follows:
"(g) Not to allow more than two persons (inclusive of the Tenant) to reside or regularly to sleep in the Flat.
(h) To use and occupy the Plat as a private dwelling in one occupation only and not to permit or suffer the same to be used or occupied for any other purpose whatsoever.
(1) Not to assign or underlet or part with possession of the Flat or any part thereof or to share occupation thereof."
The counterpart of this agreement we have is signed by the second defendant as the tenant director and after the place for the signature of Peachey Property Corporation there are written these words: "Providing the flat is for occupation by Kiku Mahboob only." That is signed by Mr. Mahboob, the second defendant, again as a director tenant, over a printed stamp giving the defendant company's name and address.
The only evidence given before the county court judge in view of the admissions made in the defence was the evidence of the second defendant. He was asked in re-examination about this proviso and he said that Peachey Properties added the proviso that the flat was only to be occupied by him. "They said they wanted to put this in and I agreed." In response to a question by the judge he said: "It did not seem to matter that the tenancy was not in my name." In examination-in-chief he had told the judge that the defendant company was his father's company, his father being its managing director and having the controlling interest in it. He himself was appointed a director of it in 1970 and ceased to be a director in 1973 I when he formed his own company, a company called K. M. I..(London)Limited, a trading company. At the start of the tenancy the rent was paid to the landlords by cheques drawn on the defendant company's account. In 1973 when he formed his company the cheques were paid by K. M. I.. (London) Ltd., but at the insistence of new management from March 1979 onwards the practice reverted to payment of rent by the defendant company but thenceforward the second defendant reimbursed the defendant company.
The facts upon which Mr. Bennett, on behalf of the defendants, relies are those set out in his Notice of Appeal, in which he says that in holding that the defendant company could not become a statutory tenant of the premises because it is a limited company the judge failed to have any or sufficient regard to the facts of Clause (h)(1) of the agreement, which I have read, then of the express proviso, which I have read, clause (1) which I have read: then (4):
"the occupation of the said premises by the second defendant was not made contingent upon his being a director of, employed by or in any other way associated with the first defendant;
(5) the sole express purpose of the Tenancy Agreement was to provide residential accommodation exclusively for the second defendant, who has occupied the said premises continuously as his residence from 24th November 1972 to date."
Mr. Bennett submits that the protection of the second defendant in his occupation of the flat serves the purpose and philosophy of the Rent Acts, former and present, to provide a degree of security for residential occupiers. Usually that purpose would be defeated by protecting the tenancies of limited companies, but not so here. The provision in Clause1(1) prohibiting assignment makes his occupation sufficiently personal to give rise to a statutory tenancy. He concedes that if the second defendant is a statutory tenant and remains in occupation, and dies, his widow if she is living there with him at his death becomes a statutory tenant after him under the provisions of section 2 and Part I of Schedule 1 of the Rent Act 1977. That would not, says Mr. Bennett, be the result if the defendant company were the statutory tenant because the company would have no such successors as are described in Part I of Schedule 1.
The question is, can the facts of this case give rise to a statutory tenancy in favour of a resident occupier at the termination of a contractual tenancy with a limited company? Mr. Bennett would, I think, submit that that question is stated too widely because his answer to it depends so much on the precise...
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