Gldlow-Jackson v Middlegate Properties Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STAMP,LORD JUSTICE ROSKILL |
| Judgment Date | 07 November 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J1107-2 |
| Date | 07 November 1973 |
| Court | Court of Appeal (Civil Division) |
[1973] EWCA Civ J1107-2
In The Supreme Court of Judicature
Court of Appeal
Appeal by Applicant, Patricia Ann Laura Gidlow-Jackson from Judgment of His Honour Judge Figgis on 30th November 1972 at the Bloomsbury and Marylebone County Court.
The Master of the Rolls (Lord Denning),
Lord Justice Stamp and
Lord Justice Roskill.
In the Matter of premises situate at and known as 82 Hereford Road, London, W.2 and
In the Matter of the Leasehold Reform Act 1967
Mr. NORMAN PRIMOST (instructed by Messrs. Malkin Callis and Sumption) appeared on behalf of the Appellant Applicant.
Mr. A. J. BALCOMBE, M. C., and Mr. NORMAN STOGDON (instructed by Messrs. Lieberman Leigh & Co.) appeared on behalf of the Respondent.
1. THE FACTS
Mrs. Gidlow-Jackson has a long lease of No. 82 Hereford Road, Paddington. It is due to expire in 1978. She claims to acquire the freehold under the Leasehold Reform Act, 1967. She fulfils all the requirements save this one point: Was her tenancy "at a low rent"?
The facts are these: In 1850 or thereabouts the then free-holders let a plot of land (with nothing on it) to the then leaseholder on a building lease. It was for 99 years, expiring on 25th December 1950. The ground rent was £8 a year. The leaseholder was to erect a house on the plot and keep it in repair throughout the term and deliver up in repair at the end. The leaseholder built a house five stories high with many rooms. During the 19th century it was a gentleman's town house: but in the 20th century it changed its character altogether. The lease changed hands like many other houses in the district. The purchasers of the lease let off the rooms as single rooms furnished, at high rents. These were often occupied by prostitutes. The landlords were unable to stop it. The tenants did no repairs. The houses were in a deplorable condition. They were grossly overcrowded. There was only one W. C. inside for all, and one at the end of the back yard.
At the end of this lease, on 25th December 1950, the then tenant was living in the basement and the front room on the ground floor. He furnished all the other rooms each with a bed, carpet and easy-chair. He let them as single rooms for bed and breakfast. There were ten to twelve sub-tenants living there. They paid him about £30 a week in all, that is, £1,560 a year, out of which he paid his outgoings.
After the lease came to an end, the landlords allowed the then tenant to stay on. They did not make him got rid of the subtenants. They did not make him do any repairs or make any improvements. They let the house to him at a rent of £90 a year. This was known by both sides to be a temporary arrangement because the landlords had in hand a scheme to cover all the houses in the area. Under this scheme the tenants were to repair the houses and make improvements to them, and in return get a reduction in rent.
This scheme was carried out in the years 1950 to 1954. So far as No. 82 was concerned, it was let to the sitting tenant for £90 a year from 25th December 1950, onwards. On 29th October, 1952, the Estate let No. 82 to the sitting tenant for 14 years from 25th December 1950, at a rent of £90 a year. The tenant covenanted not only to do the repairs, but also to do works of improvement to the house. The landlord agreed that on completion of the work the rent should be reduced to £70 a year. By 22nd July 1953, the work had been completed. The costs of repairs and improvements had been some £1500. The surveyor gave his certificate that the improvement had been done. So from 22nd July 1953, onwards the rent was only £70 a year. Under the lease the tenant entered into a full repairing covenant for all external and internal repairs, structural and decorative.
The improvements done by the tenant were such as to make them suitable for multiple occupation by many sub-tenants. A bathroom was added. Lavatories were added. Wash-basins were put into every bedroom, with hot and cold running water. Obviously the landlords permitted sub-letting to respectable people. These improvements must have entailed a new plumbing system altogether, with cisterns, boilers, and so forth. No evidence was given as tothe exact amount of the expenditure on improvements, I do not suppose it could have been, seeing that it was twenty years ago. But I should have thought it was some hundreds of pounds.
Taking the Estate as a whole, the cost of the improvements proved to be so high that the tenants could not recoup themselves in a 14-yoar term. So the Estate decided to grant all tenants a 28-year term. They thought it fair to treat the tenant of no. 82 in the same way. So on 5th August 1953, the Church Commissioners made a fresh deed by which, in lieu of the 14 years, they granted the tenant a lease for 28 years from 25th December 1950 at the same rent - £70 a year - and on the same terms, i. e. full repairing covenants. This deed operated as a surrender on 5th August 1953, of the 14-year lease and a re-grant on that day of a 28-year lease.
So the tenancy which we have to consider is a tenancy of No. 82 Hereford Road, which commenced on 5th August 1953? and was for a term of 28 years, expiring on 25th December 1978, at a rent of £70 a year. It was a "long tenancy" within the 1967 Act, but was it at a "low rent"?
In 1959 the present tenant, Mrs. Gidlow-Jackson, acquired the tenancy: and she has occupied it as her home ever since: save that she has sub-let the second floor.
On 31st March 1971, she gave notice to the landlords, Middlegate Properties Ltd., that she desired to have the freehold. On 10th June 1971, the landlords gave her notice not admitting her right on these grounds:
"The tenancy is not to be regarded as a tenancy at a low rent within the meaning of Section 4 of the Leasehold Reform Act 1967, because at the commencement of the tenancy the rent payable under the tenancy exceeded two-thirds of the letting value of the property".
2. THE PROVISO TO SECTION 4(1)
Such being the facts, I must now refer to the material sections of the Leasehold Reform Act 1967.
"Section 4(1): For purposes of this Part of this Act a tenancy of any property is a tenancy at a low rent at any time when rent is not payable under the tenancy in respect of the property at a yearly rate equal to or more than two-thirds of the rateable value on the appropriate day (which in this case is 23rd March, 1965):
Provided that, a tenancy granted between the end of August 1939 and the beginning of April 1963 otherwise than by way of a building lease……shall not be regarded as a tenancy at a low rent if at the commencement of the tenancy the rent payable under the tenancy exceeded two-thirds of the letting value of the property (on the same terms)….
(5) When a question arises under that proviso, "it shall be presumed until the contrary is shown that the letting value was such that the proviso does not apply".
I would first explain the reason for the proviso to Section 4(1). It is best done by reference to to history of rating. Before the war valuation lists were made every five years. The latest list prepared for London was for the year 1935. In 1939 the War came and more urgent matters needed attention. No new valuation lists were made for the twenty-one years from 1935 to 1956. In 1956 new lists were made but these were based, not on, 1956 values but on 1939 values. In 1963 there were new lists based on the current values, and these came into force on 1st April 1963. These new lists reflected the tremendous increase in rents since 1935, and particularly since the War.
The rateable value for No. 82 Hereford Road was £66 in the 1935 list, and remained at £66 until the 1963 list came into force,on 1st April 1963. The rateable value was then increased to £182. That was the rateable value on 23rd March, 1965 - the appropriate day for and purposes of Section 4(1) - apart from the proviso. Now two-thirds of £182 is £121. Apart from theproviso, therefore, every long lease — granted 30 or 40 years ago - which reserved a rent below £121 would be a "low rent" and entitled the tenant to buy the freehold. That would be most unfair to the landlord. Inflation had caused rents to rise rapidly over the last 30 or 40 years. Take this very case. In 1950 the rack rent of No. 82 Hereford Road was £90 a year. That was not at that time a low rent or a ground rent. It was a rack rent. The legislature never intended to grant right to lessees at rack rents, but only to lessees at ground rents. The Act proceeded on the principle that, when a lease is granted at a ground rent, "the land belongs in equity to the landowners and the house belongs in equity to the occupying leaseholder", see Command Paper 2916, page 4. In order to protect the landlord, therefore, the legislature inserted the proviso to Section 4(1). Instead of taking the rateable value at 23rd March, 1965 (i. e. in this case £182), you had to take the "letting value" at the commencement of the tenancy (i. e. in this case at 5th August 1953). If the rent payable under the tenancy was less than two-thirds of the "letting value" at that time, then it was a "low rent", and not otherwise.
Now apply the proviso to this case, we know that the rent payable under the tenancy was £70 a year. That is, two-thirds of G £105. If, therefore, the "letting value" was £105 or more, then the £70 would be less than two-thirds of the "letting value" and it would be a "low rent" entitling the tenant to buy the freehold. But, if the "letting value" was £104 19s. lid., or anything less,then the £70 would be more than two-thirds of the "letting value". It would not be a "low rent" and the tenant would not be entitled to buy the freehold.
3. THE COURSE OF THE PROCEEDINGS
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