Maryland Estates Ltd v Joseph
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BELDAM,MRS JUSTICE BRACEWELL |
| Judgment Date | 23 April 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0423-15 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | CCRTF 97/1497 CMS2 |
| Date | 23 April 1998 |
[1998] EWCA Civ J0423-15
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(HIS HONOUR JUDGE DIAMOND QC)
Royal Courts of Justice
Strand
London WC2
Lord Justice Beldam
Mrs Justice Bracewell
CCRTF 97/1497 CMS2
MR N DOWDING QC (Instructed by Messrs Malthouse Chevalier, London SW18 4DX) appeared on behalf of the Appellant
MR A J MOORE (Instructed by Messrs Jim McKenzie & Co, London NW3) appeared on behalf of the Respondent/Second Defendant
Thursday, 23 April 1998
On 20th March 1998 after argument the court announced its decision to allow the appeal, giving our reasons later. We now give our reasons.
The appellant, Maryland Estates Ltd. ("the landlord"), is the freehold owner of 13 Brondesbury Park, London NW6. The building is divided into flats. By a lease dated 3rd April 1984, the landlord's predecessor in title let Flat 3 to the respondents ("the tenants") for a term of 125 years from 24th June 1983 at an initial annual rent of £75 for the first 33 years of the term, payable by equal half-yearly instalments in advance on 24th June and 25th December each year. By cl. 4(23) of the lease the tenants covenanted to pay a service charge which was to be regarded as, and recoverable as, rent. The lease contained in cl. 6 a proviso for re-entry in the usual form if the rent reserved, or any part thereof, should be unpaid for 21 days after becoming payable whether formally demanded or not. By 1994 the tenants had fallen into arrears in payment of the rent and service charges on the due dates, and on 6th June 1995 the landlord issued proceedings in the Queens Bench Division claiming possession of the premises, £2,695.79 arrears of rent and service charges up to and including 25th December 1994. Thereafter the landlord claimed mesne profits from the date of service of the writ until possession. The writ was served on the tenants and shortly thereafter they entered a defence and counterclaim in which they denied that any sums were due and owing and denied that the landlord was entitled to forfeit the lease, counterclaiming relief from forfeiture. On 6th March 1996 by its reply and defence to counterclaim the landlord said in para. 10:
"The Plaintiff will grant relief from forfeiture to the Defendants upon payment within a reasonable time of all sums claimed in the Statement of Claim, statutory interest, any further sums falling due upon the reinstatement of the Lease and the Plaintiff's costs of the action to be taxed if not agreed."
After close of pleadings the proceedings were remitted to the Central London County Court. In an attempt to discover the extent of disagreement between itself and the tenants, the landlord sought interrogatories and on 9th August 1996 obtained a peremptory order for discovery. By 15th August the tenants had made payments into court of £2,791.93 representing the amount of the rent claimed to be outstanding at the date of the writ and interest and a sum of £1,177.50 in satisfaction of the landlord's costs. The latter sum was less than the amount stated by the landlord's solicitors to have been incurred in bringing the proceedings.
The tenants failed to comply with the order for discovery and on 28th October 1996 the landlord applied to the Central London County Court for a declaration that it was entitled to possession of the premises for non-payment of rent and for an order that the tenants should give up possession unless within 28 days of judgment being obtained they paid the rent and service charges claimed and sums falling due since the issue of the summons in respect of rent and service charges which by that date totalled £5,958.90, together with interest. The landlord's application was heard by Deputy District Judge Clapham on 9th January 1997 who made the declaration that the landlord was entitled to possession of the flat because the rent and service charges due under the lease were in arrears to the extent claimed and that the landlord had the right of re-entry or forfeiture but he ordered that the tenants should give up possession of the property unless within 14 days of agreement or taxation of the landlord's costs the tenants paid to the plaintiff the arrears of rent of £2,791.93 and the landlord's costs as taxed or agreed. From an agreed note of the judgment it appears the deputy district judge considered that he had no power under s.138(3) of the County Courts Act 1984 to order the tenants to pay more than the arrears of rent of £2,791.93, the sum due at the date of service of the writ upon them because the words in ss.(3):
"…all the rent in arrears"
only referred to the rent due at the date of service of the writ. From that order the landlord appealed to His Hon. Judge Diamond Q.C. On 17th October 1997 he confirmed the district judge's order in these terms:
"(a) The Defendants do give possession of the property unless they comply with the terms set out in Paragraph 2(b) hereof.
(b) If, within the period set out below, the Defendants do pay to the Plaintiff the following sums, then the existing lease will continue and the Plaintiff will no longer be entitled to possession of the property under this Judgment:—
(i) Arrears of rent £2,791.93 within 28 days.
(ii) The Plaintiff's costs as taxed or agreed within 14 days of agreement or taxation."
Such costs only to be payable up to and including August 1996.
"4. The Plaintiff do pay the Second Defendant's costs from 15th August 1996 to be taxed if not agreed. Legal Aid Taxation of the Second Defendant's costs."
He further ordered sums to be paid by way of interest and that:
"In the event that the lease does not continue and the Plaintiff do take possession of the property, the Plaintiff do recover against you the sum of £2,791.93 together with Mesne Profits to be assessed."
From this order the landlord now appeals.
On the face of it the issue is a narrow one which turns upon the interpretation to be given in s.138(3) to the phrase "all the rent in arrears". But the tenants' argument, which found favour with the district judge and His Hon. Judge Diamond, is based on a wider foundation. The tenants argue that the jurisdiction of the County Court to grant relief from forfeiture for non-payment of rent is different from, and not as wide as, the jurisdiction of the High Court. Further it is separate from the jurisdiction exercised in equity to grant relief. Historically the right to grant relief from forfeiture has developed differently in the County Court and in the High Court so that the power to grant relief given in s.138 is to be strictly construed and confers by sec.138(3) power to make an order for possession on terms that only the rent in arrears at the date of service of the writ or summons is payable together with the landlord's costs incurred.
On the other hand the landlord argues that if the very restricted meaning of "all rent in arrears" is adopted and orders for relief from forfeiture are made in the form of the order in the present case, a landlord entitled to forfeit a lease will, to recover sums due to him, be forced to return to the court more than once and possibly several times to obtain judgment resulting in a multiplicity of proceedings. If the proceedings had remained in the High Court, the terms on which relief from forfeiture is granted would not be so constrained; thus landlords who commence proceedings in the High Court would resist any move to transfer them to the County Court. Underlying the controversy between the parties is the question which has been considered by the courts from time to time, of the effect of the exercise by a landlord of his right to claim forfeiture for breach of covenant under the lease and the status of the lease after service on the tenants of a writ claiming possession. In Meadows v. Clerical Medical and General Life Assurance Society [1981] Ch 70 Sir Robert Megarry V.C. at page 74 said:
"A number of authorities were discussed in argument, but none of them had any direct bearing on this problem. It seems clear that the mere issue of a writ claiming forfeiture of a lease does not bring about a forfeiture. On the other hand, there is authority for saying that as soon as such a writ is served, there is a forfeiture, though not until judgment will it be determined whether the forfeiture was justified."
At page 75 he observed:
"There are, of course, curiosities in the status of a forfeited lease which is the subject of an application for relief against forfeiture. Until the application has been decided, it will not be known whether the lease will remain forfeited or whether it will be restored as if it had never been forfeited. But there are many other instances of such uncertainties. When the validity of a notice to quit is in dispute, until that issue is resolved it will not be known whether the tenancy has ended or whether it still exists. The tenancy has a trance-like existence pendente lite; none can assert with assurance whether it is alive or dead. The status of a forfeited underlease which is the subject of an application for relief seems to me to be not dissimilar; at least it cannot be said to be dead beyond hope...
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