Harmohinder Singh Gill (as Trustee of the Gillcrest UK Pension Scheme) v Lees News Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Popplewell,Lord Justice Dingemans |
| Judgment Date | 12 October 2023 |
| Neutral Citation | [2023] EWCA Civ 1178 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-000285 |
[2023] EWCA Civ 1178
Lord Justice Lewison
Lord Justice Popplewell
and
Lord Justice Dingemans
Case No: CA-2023-000285
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
MR JUSTICE RICHARDS
[2023] EWHC 403 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Nicholas Grundy KC (instructed by Lawcomm Solicitors) for the Appellant
Joanne Wicks KC and Ben Walker Nolan (instructed by David Cooper & Co) for the Respondent
Hearing dates: 05/10/2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 12/10/2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This appeal concerns a landlord's opposition to the grant of a new tenancy pursuant to Part II of the Landlord and Tenant Act 1954 (“the Act”). The procedure is initiated either by the landlord serving notice under section 25 of the Act terminating the current tenancy; or by the tenant making a request for a new tenancy under section 26. If the landlord serves notice under section 25, and wishes to oppose the grant of a new tenancy, the notice must state the grounds of opposition. If the tenant initiates the process by requesting a new tenancy, the landlord may serve a counter-notice opposing the grant of a new tenancy, stating the grounds on which it will be opposed. In either case, there is no power to amend the grounds of opposition. The grounds on which a landlord may oppose the grant are contained in section 30 (1) of the Act. The grounds with which we are concerned are:
“(a) where under the current tenancy the tenant has any obligations as respects the repair and maintenance of the holding, that the tenant ought not to be granted a new tenancy in view of the state of repair of the holding, being a state resulting from the tenant's failure to comply with the said obligations;
(b) that the tenant ought not to be granted a new tenancy in view of his persistent delay in paying rent which has become due;
(c) that the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant's use or management of the holding…”
The particular questions that arise are:
i) By reference to what date or dates must the grounds be established?
ii) What is the scope of the value judgment that is implicit in the phrase “the tenant ought not to be granted a new tenancy”?
The relevant facts
Lees News Ltd (“the tenant”) was the tenant under two business leases of premises in London W10 (the “premises”). The principal minds behind the tenant are Mr and Mrs Nathan who are husband and wife. The landlord is Mr Gill in his capacity as trustee of the Gilchrest UK Pension Scheme (the “landlord”). Part II of the Act applied to both leases.
Clause 2 (8) (a) of the leases contained a covenant to repair and keep the premises in good and substantial repair to the satisfaction of the landlord or the landlord's surveyor. Clause 2 (8) (b) contained a covenant in the following terms:
“If at any time during the term whether by reason of age or state of dilapidation or any requirement of any competent authority or otherwise it shall become necessary for the purposes of putting or keeping any building or structure from time to time comprising the demised premises or any part thereof in a first class condition and state of repair to rebuild such building or structure or any part thereof then the Tenant shall at their own cost and with all practical speed and under the direction and to the reasonable satisfaction of the Landlords' Surveyors and in accordance with plans and specifications to be previously approved by them in writing carry out such rebuilding”
On 31 August 2018 the tenant made a request for new tenancies under section 26 of the Act. The landlord served counter-notices opposing the grant, relying on grounds (a), (b) and (c) (set out above) and, in addition, ground (f) (demolition or reconstruction). The last ground failed, and there is no appeal against that.
Following a two day trial, HHJ Monty QC (“the judge”) found that at the date when the counter-notices were served:
i) The premises were in substantial disrepair as a result of the tenant's breach of its repairing covenant.
ii) The tenant had persistently delayed in paying rent.
But he went on to decide that the substantial disrepair had been remedied by the date of the hearing; and that the delay in payment of rent was minor and would not recur. There were other breaches of covenant, but they, too, were minor. Accordingly, he decided that the landlord had not established that the tenant “ought not” to be granted a new tenancy, and ordered new tenancies to be granted. The landlord's appeal was dismissed by Richards J. The landlord now brings this second appeal. Since this is a second appeal, our focus must be on the decision of the trial judge.
The trial judge's findings about the state of repair of the premises were as follows. The tenant served requests under section 26 of the Act seeking new leases of the premises on 31 August 2018. The landlord instructed Mr Dickinson of Daniells Harrison Chartered Surveyors to inspect the premises. Mr Dickinson produced a report dated 26 October 2018 (the “2018 DH Report”) setting out various items of repair and maintenance said to be required, particularly to the roof. On 31 October 2018, the landlord served counter-notices on the tenant opposing the grant of leases on grounds that included the disrepair ground. Lease renewal proceedings were commenced in the county court on 21 October 2019.
By the time pleadings closed in the county court proceedings, following answers to the landlord's Part 18 requests on 10 November 2020, the tenant's position was that the premises were not in substantial disrepair that arose by breach of its repairing obligation. Its position as regards the roof was that any defects had been remedied by works carried out by Mack Builders in 2017, before Mr Dickinson had inspected. That position was maintained in Mr Nathan's witness statement of 15 January 2021 in which he indicated a willingness to undertake “cosmetic changes” that were necessary.
In fact, contrary to the Nathans' stated position, on 6 October 2020 the tenant had entered into a contract with a building company called Let's Construction Ltd run by Mr Jason Hirrell, to carry out the work set out in the 2018 DH Report. The contract provided for the works to begin in April or May 2021 and to be completed by 26 July 2021 for a contract price of £30,000.
Moreover, the tenant disclosed no documents relating to its engagement of Let's Construction in its disclosure or answers to Part 18 requests. Even an updated disclosure list, prepared at a time when Mr Hirrell would have been actively carrying on the works, did not disclose the existence of the contract.
Let's Construction's engagement only came to light at an interlocutory hearing in early July 2021. There were case management directions in place that permitted both parties to serve expert evidence. The landlord was relying on expert evidence of Mr Colbourne and the tenant purported to rely on an undated report of Mr Hirrell of Let's Construction which contained no expert declaration and so did not comply with CPR Part 35. One of the items on the agenda for the 12 July 2021 hearing was whether the tenant should be relieved from sanctions and so be entitled to rely on Mr Hirrell's report. It emerged that Mr Hirrell's company was engaged by the tenant to perform works at the premises and so he was insufficiently independent to act as the expert. Faced with evidence that undisclosed works were going on at the premises, the judge ordered further disclosure of matters relating to works being conducted whether by Mr Hirrell or otherwise.
Following that hearing, the tenant realised that the works needed to be carried out quickly. Mrs Nathan, in particular, emailed Mr Hirrell saying that the works needed to be completed “ASAP”. The tenant also engaged the services of an independent chartered surveyor to advise, who said that 95 per cent of the works had been completed at a cost of about £50,000.
During the trial the landlord clearly expressed concern at the tenant's conduct. Both Mr and Mrs Nathan were cross-examined and asked to explain what looked like a suppression of relevant evidence. At [36] and [37], the judge summarised the explanations that Mr and Mrs Nathan put forward, and concluded at [38] and [40]:
“[38] It is unsatisfactory that the [tenant's] stated position, maintained throughout until recently, was that no major work was required, whilst at the same time carrying out works under a contract which apparently dated back to October 2020. The position in relation to disclosure is equally clearly unsatisfactory, as is the fact that there was no mention of works or Mr Hirrell or the contract until July 2021.
…
[40] Nonetheless, having heard Mr Nathan and Mrs Nathan give evidence, I am satisfied that there has been a genuine attempt to carry out the works in the Schedule, which commenced in accordance with the contract entered into with Mr Hirrell in October 2020. In my view, Mr Lane [counsel for the landlord] is right when he says that the delay in starting work was because Mr and Mrs Nathan hoped that Mr Nathan would be getting redundancy money from the Post Office when he gave up his sub-postmastership and that this would fund the work, but in any event I accept that the work was funded by Mr and Mrs Nathan personally by extending the borrowing on their residential...
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...break in the renewal lease to be exercisable on 6 months' notice. The one on discretionary termination grounds Gill v Lees News Ltd [2023] EWCA Civ 1178 This Court of Appeal decision clarifies that the court should look at the termination grounds under section 30 of the Act individually and......