Green v Church Commissioners for England
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE CAIRNS,Sir ERIC SACHS |
| Judgment Date | 24 July 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J0724-1 |
| Date | 24 July 1974 |
| Court | Court of Appeal (Civil Division) |
[1974] EWCA Civ J0724-1
In The Supreme Court of Judicature
Court of Appeal
Appeal by the Church Commissioners for England from declaration and order of His Honour Judge Leslie at Bloomsbury and Marylebone County Court on 25th October, 1973.
The Master of The Rolls (Lord Denning)
Lord Justice Cairns and
Sir Eric Sachs
In the Matter of Section 53 of the Landlord and Tenant Act 1954 and In the Matter of an under lease dated 29th September 1970 of the premises known as Flat 6 Stuart Tower London W.9.
Mr. A.J. BALCOMBE, Q.C., and Mr. RICHARD MOSHI (instructed by Messrs. Radcliffes & Co.) appeared on behalf of the Church Commissioners for England, Appellants.
Mr. STANLEY BURNTON (instructed by Messrs. Max Bitel Greene & Co) appeared on behalf of the Respondent, Mr. Greene.
This case raised a point of widespread application. It concerns a clause, now common in leases, by which the landlord can insist on a surrender. The question is whether it ought to be registered as a land charge?
The facts are these: On 29th September 1970, Sutherland Avenue Investment Ltd. let a flat in Maida Vale to Mr. Sinclair. The lease was for 7 ½ years at a rent of £456 for the first 3 years and £504 for the last 4 years. It contained a clause by which the tenant was allowed to assign the whole of the lease if he had the landlord's written consent. But this was subject to a proviso giving the landlord a right to have the lease surrendered to him. The question is whether this proviso is an "estate contract" which had to be registered. So I will set the relevant clause out in full and, for case of reading, put subsidiary phrases in brackets:
"The Lessee hereby covenants with the Lessor."
That the Lessee shall not assign or part with the possession of the whole of the demised premises without the previous consent in writing of the Lessor.
PROVIDED ALWAYS that if the Lessee desires to assign the whole of the demised premises as aforesaid he shall first, by notice in writing to the Lessor or the Agent, offer to surrender these presents (on the next subsequent quarter day or if that be within twenty-eight days of the said notice then upon the second subsequent quarter day) without any consideration, and the Lessor or the Agent may (within twenty-one days of the service of such notice upon it or them) accept such offer, the acceptance to be in writing (and without prejudice to all rights and remedies of the Lessor hereunder in respect of any antecedent claim or breach of covenant) PROVIDED ALWAYS that if the said offeris not accepted by the Lessor or the Agent within the said twenty-one days it shall be deemed to have been rejected".
In short this clause meant that if the lessee desired to assign his lease he had to get the consent of the lessor. But even before asking for consent, he had first to offer to surrender his lease. The object of the proviso was obviously to enable the lessor to take advantage of a rise in rents. In the absence of this proviso this would be the position: If rents rose during the 7 ½ years - so that a higher rent was obtainable for the flat - then the lessee would himself be able to assign the remainder of his term at a premium - because the assignee would pay money to get the flat at the lower rent contained in the lease. But by means of this proviso the lessee was prevented from doing this. The lessor could insist on a surrender and let at the higher rent. In short, the lessor would get the benefit of the rise in rents and not the lessee.
There is a note in the Encyclopedia of Forms and Precedents which says that this proviso should be protected by registration as on estate contract under class C(iv): see volume 11 (4th edition page 321). But in this case the lessor did not register it.
In April 1972, Mr. Sinclair asked the Sutherland Company for a licence to assign the term to Mr. Greene. They gave him written permission, Mr. Greene had a search made at the Land Registry. There was no entry registered in respect of the proviso. So Mr. Greene agreed to take an assignment. On 13th May 1972, Mr. Sinclair assigned to Mr. Greene the remainder of the term (which had then nearly six years to run).
Mr. Greene went into occupation, He spent about £3,000 in furniture, fitted carpets, and fittings.
In June 1973, the Sutherland Company assigned their interest to the Church Commissioners who thereupon became the lessors direct of Mr. Greene.
In July 1973, Mr. Greene asked the Church Commissioners for licence to assign. He found a man who was perfectly respectable and responsible. This man was ready to pay Mr. Greene £3,000 for the furniture, fittings, etc. But the Church Commissioners refused permission. They said, quite frankly, that their policy was "to take surrenders and not permit assignments".
This put Mr. Greene in a difficulty, he could not assign the lease at all. All he could do was either to stay in the flat himself or to surrender it to the Church Commissioners. If he surrendered it, he would have to take out all the fitted carpets and so forth that he had installed; and no doubt suffer a big loss on them. If he did not surrender it, he would have to stay there himself (which he did not want to do) paying the stipulated rent for it.
Paced with this difficulty, Mr. Greene took proceedings in the County Court. He is a solicitor. So he knew his way about. He sought a declaration that he was entitled to assign the lease. He put it on three grounds: (1) that the proviso (entitling the lessor to insist on a surrender) was void because it was an "estate contract" which had never been registered; (2) that it was void because it was a means by which the lessor could unreasonably refuse his consent to an assignment, contrary to Section 19(1) of the Landlord and Tenant Act 1927; (3) that the lessors had unreasonably refused their consent.
The point about registration was taken as a preliminary issue. The Judge decided that the proviso was void against Mr. Greene forwant of registration. The Church Commissioners appeal to this Court.
If this proviso was an "estate contract", it was void against Mr. Greene because it was not registered before he took the assignment of the lease, see section 4(5) of the Land Charges Act 1972. So the question is whether it was an "estate contract". This is defined by section 2(4) which defines a land charge of class C(iv) in these words:
"…an estate contract is a contract by an estate owner …, to convey or create a legal estate, including a contract conferring either expressly or by statutory implication a valid option to purchase, a right of pre—emption, or any other like right".
The word "convey" includes every assurance of an interest in property, see the definition in section 17(1). It includes, therefore, the surrender of term of years. This is admitted.
The question is, therefore; Was this proviso, a "contract" to surrender? In the first place, the Church Commissioners say that the proviso was not a "contract" within the opening words of Class C(iv). They say that the only contracts which need to be registered under the opening words are contracts which have been concluded so as to be binding on both sides. If a contract is only binding on one side (like a binding option to purchase or a right of pre—hemption or an offer that is made irrevocable for good consideration) then it is not a "contract" within the opening words of Class C(iv). For this interpretation the Church Commissioners rely upon the dicta of Mr. Justice Buckley in Beesly v. Hallwood Estates (1960) 1 W.L.R. 549 at pages 555/557; and of this Court in Shiloh Spinners Ltd. v. Harding (1972) 1 Ch. at pages 344, 350.
I cannot accept that interpretation of the word "contract" in the opening words. Mr. Justice Buckley relied on Holby v. Matthews (1895) A.C. 471. That was a case under the Factors Act 1889. in which the House of Lords construed the words "a person having agreed to buy goods". It meant, they said, a person who has bound himself to buy, and did not include a person who had an option to buy. I regard that as a special interpretation of words in a special context. I do not think that case is of any assistance in construing the words in this context. So I put it on one side.
Much more help is to be found by the word "including" in Class C(iv). That words is very appropriate to show the wide meaning which the Legislature attributes to "contract" in the opening words. It uses the word "contract" in a sense which includes, a valid option to purchase or a right of pre-emption. So it does include contracts which are binding on one side only. The word "including" is used so as to remove any doubt as to the width of the word "contract" in the opening words. It makes it clear that it is used in the wide sense, which includes an offer binding on one side, which the other can accept or reject as he pleases.
Mr. Justice Buckley realised that this was the proper meaning to be attached to the word...
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