Pennycook v Shaws (EAL) Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Sir Martin Nourse,Lord Justice Thorpe |
| Judgment Date | 12 February 2004 |
| Neutral Citation | [2004] EWCA Civ 100 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 February 2004 |
| Docket Number | Case No: B2/2003/0578 PTA |
[2004] EWCA Civ 100
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF
JUSTICE, CHANCERY DIVISION
(The Hon Mr Justice Pumfrey)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Thorpe
Lady Justice Arden and
Sir Martin Nourse
Case No: B2/2003/0578 PTA
Judith Jackson QC (instructed by asb law) for the Appellant
William Geldart (instructed by Hallmark Atkinson Wynter) for the Respondent
This is an application for permission to bring a second appeal, with the appeal to follow if permission is granted and an extension of time against the order dated 28 November 2002 of Pumfrey J whereby he allowed an appeal against the order of HHJ Cox sitting in the Lambeth County Court.
The facts are very simple. The respondent to this appeal (whom I shall call the tenant) is the tenant of premises known as 130 Railton Road, Herne Hill, London. The tenancy was a tenancy to which Part II of the Landlord and Tenant Act 1954 applies. The tenancy was due to expire on 25 March 1999 and it continued after that date by virtue of section 24 of the 1954 Act. The appellant is the landlord of these premises and I shall refer to it as the landlord. On 4 July 2001 the tenant served an invalid notice under section 26 of the 1954 Act. Section 26(1) and (2) provide as follows:-
"26 Tenant's request for a new tenancy
(1) A tenant's request for a new tenancy may be made where the tenancy under which he holds for the time being (hereinafter referred to as "the current tenancy") is a tenancy granted for a term of years certain exceeding one year, whether or not continued by section twenty-four of this Act, or granted for a term of years certain and thereafter from year to year.
(2) A tenant's request for a new tenancy shall be for a tenancy beginning with such date, not more than twelve nor less than six months after the making of the request, as may be specified therein: …"
The notice under section 26 did not comply with section 26(2) since it required a new tenancy to be granted on 6 July 2001.
On 8 November 2001 the landlord served a notice under section 25 of the 1954 Act. Section 25(1) and (5) provide as follows:-
"25 Termination of tenancy by the landlord
(1) The landlord may terminate a tenancy to which this Part of this Act applies by a notice given to the tenant in the prescribed form specifying the date at which the tenancy is to come to an end (hereinafter referred to as "the date of termination"):
…
(5) A notice under this section shall not have effect unless it requires the tenant, within two months after the giving of the notice, to notify the landlord in writing whether or not, at the date of termination, the tenant will be willing to give up possession of the property comprised in the tenancy."
The landlord relied on certain breaches of covenant. On 4 December 2001 the tenant served a counter notice which, in response to that part of the landlord's notice which complied with section 25(5), stated in error that the tenant would be willing to give up possession of the property. I will refer to a counter-notice in this form as a "positive counter notice" and to a counter notice which states that the tenant is not willing to give up possession of the property as a "negative counter notice". This follows the classification used by Brightman J in Re 14 Grafton Street [1971] 1 Ch.935, to which I refer below.
The error in the counter notice was spotted before the two months for serving a counter notice had expired. On 4 January 2002, the tenant served a negative counter notice. He subsequently applied to the County Court for the grant of a new tenancy in pursuance of section 24(1) of the 1954 Act (as amended), which provides as follows:-
"24 Continuation of tenancies to which Part II applies and grant of new tenancies
(1) A tenancy to which this Part of this Act applies shall not come to an end unless terminated in accordance with the provisions of this Part of this Act; and, subject to the provisions of section twenty-nine of this Act, the tenant under such a tenancy may apply to the court for a new tenancy:
(a) if the landlord has given notice under section 25 of this Act to terminate the tenancy, or
(b) if the tenant has made a request for a new tenancy in accordance with section twenty-six of this Act."
The landlord applied to strike out the proceedings on the basis that they disclosed no prospect of success. On this application, HHJ Cox gave judgment in favour of the landlord.
Section 29(2) of the 1954 Act provides that, where the landlord has served a notice under section 25, the court cannot entertain proceedings for a new tenancy unless the tenant has duly given a negative counter notice:-
"29. Order by court for grant of a new tenancy
(1) Subject to the provisions of this Act, on an application under subsection (1) of section twenty-four of this Act for a new tenancy the court shall make an order for the grant of a tenancy comprising such property, at such rent and on such other terms, as are hereinafter provided.
(2) Where such an application is made in consequence of a notice given by the landlord under section twenty-five of this Act, it shall not be entertained unless the tenant has duly notified the landlord that he will not be willing at the date of termination to give up possession of the property comprised in the tenancy …"
Grafton Street
The leading authority on the question whether the tenant can serve a second counter notice in a different form is 14 Grafton Street above. The landlord's notice under section 25 was dated 27 September 1969 and it required possession to be given up on 1 April 1970. At that time, in order to claim compensation under section 37 of the 1954 Act, the tenant had to serve a negative counter notice and apply to the court for a new tenancy. On 13 October 1969, the tenant served a positive counter notice. Section 37 was amended by the Law of Property Act 1969 with effect from 1 January 1970 to remove the requirement that the tenant apply for a new tenancy. On 1 April 1970 the tenant vacated the premises and sought compensation. Two issues arose: first, whether the landlord acquired an indefeasible right to recover possession on 1 April 1970, without payment of compensation, before the amendment came into effect on 1 January 1970, and second, whether the amendment to section 37 of the 1954 Act had restrospective effect. Brightman J held that the landlord had acquired an indefeasible right to the property prior to 1 January 1970 and that accordingly the tenant had no right to compensation. It is to be noted that in this case there was neither the service of a negative counter notice nor the making of any application to the court. The landlord argued that the landlord acquired an indefeasible right to possession and that they acquired this right before the commencement of the Law of Property Act 1969 on 1 January 1970.
At pages 943 to 944, Brightman J reached a conclusion in favour of the landlord on two bases. The first basis was that the counter notice was irrevocable:-
"There was some discussion, unsupported by authority as I was told none existed, as to whether the tenants could, on or before November 27, have revoked their positive counter notice and given the negative counter notice required by section 29(2) to enable proceedings to be taken. In my view the purpose of section 25(5) is to introduce an element of certainty into the relationship between the landlord and the tenant. A tenant is not bound to serve a negative counter notice before the end of the two month period allowed to him. He may pause for that period of time while he makes up his mind. If however he does serve a positive counter notice during the two month period, I think that he must abide by what he has done. If that were not the case, the positive counter notice would serve no purpose whatever compared with complete inaction, for in either case the landlord would not know where he stood until the end of the two month period. If a positive counter notice is revocable the tenant serving the same would be able to serve a negative counter notice right up to the end of the two month period. If on the other hand the tenant does nothing, he may likewise serve a negative counter notice right up to the end of the two month period. It follows that a positive counter notice would be wholly devoid of any function, even that of courtesy, if it were revocable at the will of the tenant. I, therefore, conclude that a positive counter notice is irrevocable; and that in this case the tenants ceased to be able to serve a negative counter notice after October 13 1969, and that they then lost their right to apply to the court for an order for the grant of a new tenancy.
I have not overlooked the fact that the Act of 1954 is not expressed to impose on the tenant an obligation to serve a notice of either description within the two month period. All that the Act does is to impose on the landlord, as a condition of a valid section 25 notice, the obligation of informing the tenant that he is required to serve an notice one way or the other within the two month period, and to place the tenant under a disability if he fails to serve a negative counter notice. In my view, however, it is a necessary implication from section 25(5) that a tenant is under a statutory obligation to serve notice one way or the other within the two month period, although I accept that there is no sanction imposed on him for ignoring that obligation, except his inability to apply to the court.
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