Inclusive Technology Ltd v Williamson
| Jurisdiction | England & Wales |
| Judge | Lord Justice Carnwath,Lady Justice Smith,Lord Justice Hughes |
| Judgment Date | 07 May 2009 |
| Neutral Citation | [2009] EWCA Civ 718 |
| Docket Number | Case No: B5/2008/2773 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 May 2009 |
[2009] EWCA Civ 718
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER DISTRICT REGISTRY
CHANCERY DIVISION,
His Honour Judge Raynor
Before: Lord Justice Carnwath
Lady Justice Smith and
Lord Justice Hughes
Case No: B5/2008/2773
REF. NO: 7l531013
Mr Lander appeared on behalf of the Appellant.
Mr Elleray appeared on behalf of the Respondent
(As Approved)
Lord Justice Carnwath:
This is a claim for compensation under section 37A of the Landlord and Tenant Act 1954, which is headed “Compensation for Possession Obtained by Misrepresentation”. Subsection (2) provides:
“Where—
(a) the tenant has quit the holding—
(i) after making but withdrawing an application under section 24(1) of this Act; or
(ii) without making such an application; and
(b) it is made to appear to the court that he did so by reason of misrepresentation
or the concealment of material facts,
the court may order the landlord to pay to the tenant such sum as appears sufficient as compensation for damage or loss sustained by the tenant as a result of quitting the holding.”
The section in its current form is derived from a Law Commission recommendation made in 1992 (Law Com 208), but not given effect until 2004 by means of a statutory order under the Regulatory Reform Act 2002.
As the Law Commission report explains (see para.2.85 ff), the Act originally provided a remedy where a court order refusing a new tenancy was caused by misrepresentation or concealment, but it did nothing to protect a tenant who preferred not to incur the costs of putting the landlord to proof of his intent in court. Thus the new protection extends to cases both where the tenant does apply for a new tenancy but withdraws the application, and where, as in the present case, he makes no such application at all.
The Commission's report gives no guidance as to the interpretation of the words “misrepresentation or concealment”, which are the same as in the original section. We have been referred to no authorities directly on the point. I start from the position, therefore, that we should approach them as ordinary English words to be read in context. I note in parenthesis that the section gives the court a discretion whether to award compensation, but it is not suggested that there are any grounds for refusing compensation in this case if the statutory grounds are otherwise made out.
The facts
Units 1 and 2 Gateshead Business Park, Delph, were let to the tenant by the landlord on 1 February 2001 for a term of six years ending on 31 January 2007, at a rent which increased from year to year, but by the last year of the term had reached about £35,000 per annum. Under the 1954 Act the tenancy of business premises continues at the end of the contractual term, and the tenant has the right to a grant of a new lease, except in certain defined circumstances. One is that “on the termination of the current tenancy” the landlord intends to demolish or reconstruct or carry out substantial work of construction, and could not reasonably do so without obtaining possession (section 30(1)(f). If he wishes to rely on this section, he must serve a notice to that effect under section 25. The expression “on the termination of the current tenancy” makes clear that it is not enough for the landlord to have some generalised intention in the indeterminate future. He has to show an intention to start to carry out the work on which he relies within a reasonable time after the termination: see Method Developments Ltd v Jones [1971] 1 All ER 1027.
In this case, as the judge found, the landlord had by June 2006 formed a genuine intention to refurbish the units, and he had been advised that the works could not be carried out with the tenant in occupation. He had previously in February warned the tenant of the possibility that he might require possession for such works. There is also evidence of a conversation in April or May with the landlord's agent, Mr Sedgwick, in which he told the tenant that there was to be refurbishment work, and that the paper-work was being prepared. On 7 June, the landlord served a notice under section 25 in prescribed form terminating the tenancy on 31 January 2007, and stated that he would oppose the grant of a new tenancy under section 30(1)(f). The covering letter referred to the previous exchanges regarding the future refurbishment of units 1 and 2, and said that it was “…necessary to obtain vacant possession to carry out the intended work.”
The judge found that that letter, taken with the notice, meant what it said, which is that the landlord had formed the necessary intention at the time of the letter. It had been submitted to him that the letter added nothing to the notice, and that the notice by itself implied no present intention, but did no more than indicate an intention to rely on subparagraph (f) in due course at the hearing, as permitted by the well-known case of Betty's Cafés Ltd v Phillips Furnishing Stores Ltd [1959] AC 20.
That finding has been challenged in a Respondent's Notice on various grounds, but for my part I think it is unassailable, and I would have reached exactly the same view on the material we have been shown.
Returning to the story, in a conversation on 16 August, which the tenant recorded in a note which the judge accepted as accurate, the landlord confirmed that:
“… he was still serious about wishing the tenant to move out, and still intended to carry out the works previously mentioned.”
The tenant offered to pay an increased rent equivalent to £45,000 if he could stay in occupation, but apparently the landlord was looking for a rent of at least £54,000 per annum after refurbishment. The judge found that by the end of September, the landlord had decided to “hold fire”, although:
“He still intended to carry out the works… in the future when the circumstances were right.”
He added (paras 36 and 37):
“I find that various factors led to the defendant's decision. He was concerned with the cost implications of the more extensive work suggested by his architect, Mr Barnes. Mr Sedgwick by about autumn of 2006 was sounding a note of caution, having regard to the fact that prospective enquiries for premises were with a view to purchase rather than rent. In any event, I accept the defendant's evidence that whilst in September 2006 he had decided to hold firehe still intended to carry out the works of re-cladding in the future, when the circumstances were right. The following month, he instructed Mr Sedgwick to market the premises, and I am satisfied that when those instructions were given, the defendant, as appears from what is stated in paragraph, no longer intended to carry out the re-cladding works either forthwith on the termination of the tenancy or, indeed, with what could properly be considered a reasonable time thereafter.”
Those latter words I take to be a reference to the interpretation of the section to which I have referred.
The effect of that finding as to the change of the landlord's position was that he was no longer in a position to rely on an intention to carry out the works at the end of the tenancy within the terms of the section. The tenant was not informed of this change in position by the landlord. At the end of November, the tenant signed a lease for other premises in a nearby building called Riverside Court. Mr Littler, the Director of the tenant company, gave evidence of this state of mind is important, which the judge accepted (para 38)::
(checked to audio as no bundle available)
“On 29 November 2006, the claimant signed a lease for part of the ground floor at Riverside Court, obtaining a lease for part of the first floor in the following year. Mr Littler accepts that these are substantially better premises than units 1 and 2. His evidence, which I accept, is that he believed the claimant had no option but to vacate the premises because he believed, as he had been informed, that the defendant intended to carry out the works referred to in the letter dated 5 June 2006. On the receipt of the section 25 notice and letter, he had undertaken some research, although he did not seek legal advice, and reached the understanding that if a landlord intended to refurbish the premises, and if the works in question required the vacating of the premises, then a new lease would not be granted.”
He vacated the units on 15 December 2006.
Subsequently, Mr Littler,, became aware that the refurbishment works had not been carried out. He carried out his own investigations between April and July of the following year, and that led to him starting the present proceedings for compensation.
That is, I think, all the facts one needs to provide the background to the discussion.
The judge held that there had been neither misrepresentation nor concealment. His essential reasoning can be found in three paragraphs of his judgment, which I should read. The first is at paragraph 51(b), where he said this:
“The statute plainly extends the remedies previously available to a tenant in the event of misrepresentation or concealment of a material fact. Prior to its enactment, the tenant would have had a claim if possession had been obtained by fraud or misrepresentation, but would have had no remedy if it had been obtained by innocent or, absent a duty of care, negligent misrepresentation. Furthermore, the contract not being one of uberrimae fidei no duty in general would arise to disclose material facts, although a failure to disclose in certain circumstances might render a...
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