Jones v Wrotham Park Settled Estates

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Diplock,Lord Salmon,Lord Edmund-Davies,Lord Fraser of Tullybelton,Lord Russell of Killowen
Judgment Date13 Dec 1978
Judgment citation (vLex)[1978] UKHL J1213-1

[1978] UKHL J1213-1

House of Lords

Lord Diplock

Lord Salmon

Lord Edmund-Davies

Lord Fraser of Tullybelton

Lord Russell of Killowen

Jones (Widow)
(Respondent)
and
Wentworth Securities Limited
(Appellants)

Upon Report from the Appellate Committee to whom was referred the Cause Jones (Widow) against Wentworth Securities Company Limited, That the Committee had heard Counsel as well on Monday the 30th and Tuesday the 31st days of October last as on Thursday the 2nd and Monday the 6th days of November last upon the Petition and Appeal of Wentworth Securities Company Limited whose registered office is at 51 Green Street, London W1Y 4BT praying that the matter of the Order set forth in the Schedule thereto, namely an Order of Her Majesty's Court of Appeal of the 26th day of January 1978 so far as regards the words "in lieu of the determination of the Lands Tribunal that the price payable for the freehold estate in the house and premises number 45 Wellesley Crescent Potters Bar Hertfordshire under section 9 of the Leasehold Reform Act 1967 is £4000·00 (Four thousand pounds) and the price payable for the concurrent lease dated 6th October 1963 is nil there be substituted a determination that the price payable for the freehold estate in the said house and premises is £50·00 (Fifty pounds) and the price payable for the concurrent lease dated the 6th day of October 1963 is £250·00 (Two hundred and fifty pounds)" might be reviewed before Her Majesty the Queen in Her Court of Parliament and that the said Order so far as aforesaid might be reversed, varied or altered or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament might seem meet; as also upon the Case of Lena Jones lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 26th day of January 1978 in part complained of in the said Appeal be, and the same is hereby, Set Aside so far as regards the words "in lieu of the determination of the Lands Tribunal that the price payable for the freehold estate in the house and premises number 45 Wellesley Crescent Potters Bar Hertfordshire under section 9 of the Leasehold Reform Act 1967 is £4000·00 (Four thousand pounds) and the price payable for the concurrent lease dated 6th October 1963 is nil there be substituted a determination that the price payable for the freehold estate in the said house and premises is £50·00 (Fifty pounds) and the price payable for the concurrent lease dated the 6th day of October 1963 is £250·00 (Two hundred and fifty pounds)": And it is further Ordered, That the determination of the Lands Tribunal of the 15th day of October 1976, "that the price payable for the freehold estate in the house and premises is £4,000 and the price payable for the concurrent lease dated 6th October 1963 is nil", be and the same is hereby, Restored: And it is hereby Declared, That the Case stated by the Lands Tribunal and dated the 23rd day of February 1977, having been amended pursuant to an Order of this House of the 2nd day of November 1978, be answered in the affirmative so far as regards the second question in the amended fourth paragraph: And it is further Ordered, That the Cause be, and the same is hereby, remitted back to the Lands Tribunal to do therein as shall be just and consistent with this Judgment.

Lord Diplock

My Lords,

1

I have read in advance the speech of my noble and learned friend, Lord Russell of Killowen, and for the reasons which he gives, which I too find compelling, I would allow this appeal.

2

One must start with the assumption that the intermediate lease between Wentworth Securities Ltd. ("Wentworth") as landlord and Wrotham Park Settled Estates ("Wrotham") as tenant is not a sham; that is to say, that however disadvantageous it may appear to be financially to Wrotham (an unlimited company), if at any time a tenant occupying the demised premises as his residence exercises his right under the Leasehold Reform Act 1967 to acquire the freehold or an extended lease, Wentworth will nevertheless enforce and Wrotham will comply with the covenants of the lease relating to the rent that will become payable by Wrotham to Wentworth in that event. The effect of those covenants, as my noble and learned friend points out, is to increase the price at which the freehold can be acquired by the resident tenant under the relevant provisions of the Act to a figure substantially greater than that at which it could have been acquired by him if the intermediate lease had not been made; though they make no difference to the terms on which the resident tenant could acquire an extended lease. The existence of the covenants, if they are to be treated as valid and effective for the purpose of assessing the price payable by the resident tenant for acquiring the freehold under the Act, will act as a financial deterrent to him from acquiring the freehold instead of exercising his alternative right under the Act to acquire an extended lease. It is not for your Lordships to speculate what fiscal or other advantages Wentworth and Wrotham hope to derive from the course they have chosen to adopt. It is evident from the care and ingenuity with which the scheme has been devised that the two companies entered into it with their eyes open to what its financial consequences to them will be if it is held to be valid.

3

My Lords, it would seem most unlikely that either the draftsman of the Leasehold Reform Act 1967, or those members of either House of Parliament by whose votes it was passed, had envisaged the possibility that any ground landlord would enter into an intermediate lease in the precise terms adopted by Wentworth and Wrotham or in any other terms which would have the same economic consequences as between ground landlord and intermediate tenant. If it had been envisaged it seems likely that the draftsman would have done something about it to prevent its having the effect of enhancing the price payable by the resident tenant for the freehold; but how he would set about achieving this and what words he would have used to do so is a matter of pure speculation.

4

My Lords, I am not reluctant to adopt a purposive construction where to apply the literal meaning of the legislative language used would lead to results which would clearly defeat the purposes of the Act. But in doing so the task on which a court of justice is engaged remains one of construction; even where this involves reading into the Act words which are not expressly included in it. Kammins Co. v. Zenith Investments [1971] A.C. 850 provides an instance of this; but in that case the three conditions that must be fulfilled in order to justify this course were satisfied. First, it was possible to determine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless this third condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. Such an attempt crosses the boundary between construction and legislation. It becomes a usurpation of a function which under the constitution of this country is vested in the legislature to the exclusion of the courts.

5

My Lords, in the instant case I do not find it possible to state with any certainty what words would have been inserted in the Act to fill the gap that has now been revealed by the intermediate lease granted by Wentworth to Wrotham. Any suggestion that the parliamentary intention was that, notwithstanding the existence and terms of any intermediate lease, the price to be paid by the resident tenant for the freehold was to be the investment value of the reversion subject only to his own lease (as extended) must be discarded for the reasons given by my noble and learned friend. The notion that Parliament would have inserted in the Act a clause limited to requiring that covenants in an intermediate lease in the precise terms of those in the lease by Wentworth to Wrotham should alone be ignored in assessing the price of the freehold is fanciful; and might indeed have converted the Bill into a hybrid Bill for which a special procedure must be followed in Parliament. But what Parliament would have done somewhere between those two extremes is, as I have said, a matter of pure speculation.

Lord Salmon

My Lords,

6

With some reluctance I agree that, for the cogent reasons stated by my noble and learned friend Lord Russell of Killowen, this appeal must be allowed: and I add only a few observations of my own.

7

On the 6th October 1973 Wentworth Securities Ltd. were, amongst other things, the freeholders of an estate at Potters Bar, Hertfordshire, on which stood about 100 houses, all of which had been let to their tenant occupiers from 1961 for 87 years at a yearly rental of £15; the tenant occupiers having paid for the building of their homes. On 6th October 1973 the freeholders granted concurrent leases to a company called Wrotham Park Settled Estates (with which it had connections) of all the houses on the Potters Bar estate (including the...

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