NOTES OF CASES
| Published date | 01 March 1977 |
| DOI | http://doi.org/10.1111/j.1468-2230.1977.tb02420.x |
| Date | 01 March 1977 |
NOTES
OF
CASES
PREMIUMS
AND
PRECEDENT
IN
Farrell
v.
Alexander
the House of Lords decided a point of
considerable practical importance on the construction of section
85 of the Rent Act 1968, as well as making some interesting obser-
vations
on
statutory interpretation and construction and on the
power of the Court of Appeal to overrule its own decisions.
The facts of the case were that the appellants, Mrs. Farrell and
her daughter, brought an action to re,cover from the respondent,
Mrs. Alexander, a sum of money which was paid to the respondent
by the appellants in order to obtain the respondent’s protected
tenancy of a flat, such tenancy having four years unexpired. There
had been negotiations and, eventually, the respondent had accepted
an offer of
€4,000
for “fixtures and fittings.” The respondent
had proposed to assign her tenancy but the landlords had required
a surrender under the terms of the tenancy agreement with the view
to the grant of a new tenancy to the appellants. The transaction had
proceeded in this manner. Although no exact finding had been made
by the county court judge it was not disputed by the respondent
that the price of €4,000 was substantially in excess of the value of
the fixtures and fittings. The appellants sought to show that the
excess was an illegal premium and, as such, recoverable. They
relied
on
section 85 of the 1968 Act which is in these terms
(so
far as is material):
“
(1)
Any person who, as a condition
of
the grant, renewal or
continuance of a protected tenancy, requires, in addition
to
the
rent, the payment of any premium or the making of any loan
(whether secured or unsecured) shall be guilty of an offence
under this section.
(2)
Any person who, in connection with the grant, renewal or
continuance of a protected tenancy, receives any premium in
addition to the rent shall be guilty of an offence under this
section.’’
“
Where under an agreement
.
.
.
any premium is paid
.
. . and
the whole or any part of that premium could not lawfully be
required or received under the preceding provisions of this part
of this Act, the amount of the premium or, as the case may be,
so
much of it as could not lawfully be required or received,
shall be recoverable by the person by whom it was paid.”
Section 92 provides that in Part
VII
of the Act of 1968 in which the
above sections are contained the term
“
premium
”
includes
“
any
fine or other like sum and any other pecuniary consideration in
addition to rent.”
Further, section 90 (i) provides:
1
[I9761
2
All
E.R.
721.
216
Mar. 19771 NOTES
OF
CASES
217
The main submission relied
on
by the appellants was that the
words
“
any person
”
in section
85
(i) were wide enough to encom-
pass persons other than landlords and, indeed, the respondent on
the facts
of
the case. The respondent was able to cite two decisions
of the Court of Appeal
(Remmington
v.
Larchin
and
Zimmerman
v.
Grossman
9
in support of her contention that the words “any
person
”
did not support the construction submitted by the appel-
lants.
No
material distinction could be made between the facts of
these cases and the instant case.
If
the respondent’s contention was
correct, there was clearly a most important loophole in the pro-
visions of the 1968 Act. Indeed this loophole had been exploited
particularly after the decision of the Court of Appeal in
Zimmerman
v.
Grossman.
In the Court of Appeal the majority upheld the decision of the
county court judge in favour of the respondent. The judgments of
Lawton and Scarman
L.JJ.
largely dealt with the submission that
the decision of the Court of Appeal in
Zimmerman
v.
Grossman
had been reached
per incuriam
and should not therefore be followed
under the rule in
Young
v.
Bristol Aeroplane
Co.
Ltd.s
Both judges
decided that this was not the case and for them that concluded the
matter.
In his dissenting judgment Lord Denning M.R. concluded a
masterly analysis of the facts and the law with the view that
Zimmerman
v.
Grossman
was “wrongly decided.
So
much so
that
I
do not think it is binding on
us.”
He went on to say
6:
“
I
have often said that
I
do not think that this court should be
absolutely bound by its previous decisions, any more than the
House of Lords.
I
know it is said that when this court is satisfied
that a previous decision
of
its own was wrong, it should not
overrule it but should apply it in this court and leave it to the
House of Lords to overrule
it.
Just think what this means in
this case. These ladies do not qualify for legal aid. They must
go to the expense themselves
of
an appeal to the House of
Lords to get the decision revoked. The expense may deter
them and thus an injustice will be perpetrated. In any case
I
do
not think it right to compel them to do this when the result is
a
foregone conclusion.
I
would let them save their money and
reverse it here and now.”
Lord Denning’s words were strongly disapproved of
in
the judgment
of Lord Russell of Killowen in the House of Lords.‘
The appellants succeeded in their appeal
to
the House of Lords,
Lord Russell dissenting. It is convenient to analyse the decision
of the House by reference to the rhetorical questions posed by Lord
Simon
of
Glaisdale at the beginning of his speech:
3
i1971i
1
All E.R. 363.
4
[
19761
1
All E.R. 129.
5
[
19461 A.C. 163.
6
[I9761
1
All E.R.
at
p.
137.
7
[1976]
2
All
E.R.
at
p.
753.
4
VOL.
40
(2)
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