Quennell v Maltby
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BRIDGE,LORD JUSTICE TEMPLEMAN |
| Judgment Date | 15 November 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J1115-3 |
| Docket Number | Plaint No. 78. 00168 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 November 1978 |
[1978] EWCA Civ J1115-3
The Master of the Rolls
(Lord Denning)
Lord Justice Bridge and
Lord Justice Templeman
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the Lewes County Court
(His Honour Judge Granville Wingate)
MR. P. de la PIQUERIE (instructed by Messrs. Anscomb Hollingworth, Solicitors. London) appeared on behalf of the Plaintiff (Respondent).
MR. D. LAMMING (instructed by Messrs. Donne, Mileham &Haddock, Solicitors, Brighton) appeared on behalf of the Defendants (Appellants).
We need not trouble you, Mr. Lamming, to reply.
If the judgment of the judge below is right, it will open a gap in the protection which is offered to tenants by the Rent Act. I will first give the facts.
Mr. Quennell is a gentleman who lives in Cheyne Row in London. But he is the owner of a large house in Lewes. It is No. 6 Wallands Crescent, Lewes, with about 9 bedrooms. He has an agent in Lewes who looks after it for him. The house is very suitable for students In 1973 the agent let it to some students of the University Of Sussex. Two of them became the tenants. They were Mr. Maltby and Mr. Jack. They were let into possession for a term of one year at a rent of £90 a month, expiring on 31st December 1974. They had other students there with them, about nine students in the house.
Whilst Mr. Maltby and Mr. Jack were tenants Mr. Quennell borrowed money from Barclays Bank and mortgaged this house to secure the loan. It was only for the sum of £2,500. He executed a legal charge on the 13th August 1974 in favour of Barclays Bank to cover any moneys which might from time to time be owing to the bank. In that legal charge there was this clause 4 which is in common form:
"During the continuance of this security no statutory or other power of granting or agreeing to grant or of accepting or agreeing to accept surrenders of leases or tenancies of the Mortgaged Property or any part thereof shall be capable of being exercised by the Mortgagor without the previous consent in writing of the Bank".
That meant thereafter from the 13th August 1974 so long as this legal charge subsisted to the bank, Mr. Quennell could not let the premises or accept surrenders without the consent in writing ofthe bank.
The tenancy of Mr. Maltby and Mr. Jack came to an end at the end of December 1974. The house was then relet to two other students, a Mr. Quilter and a Mr. Lyeth, again for a year. It was not relet to Mr. Maltby because it was thought he was going to the United States. As it happened Hr. Maltby did not go to the United States. In fact he stayed on living in the house. So did several other students.
At all events, the important thing to note is that the bank did not give its consent to this letting to Mr. Quilter and Mr. Lyeth. No one asked the bank for its consent. No one realised it was necessary. No one interfered and nothing happened. That year 1975 passed. Then at the end of that year there was a fresh letting. This was between Mr. Quennell as landlord and Mr. Maltby and a Mr. Lupton as tenants. That tenancy lasted until December 1976. Again no one asked the bank for consent. No one realised it was necessary. And from January 1977 onwards the tenants remained as statutory tenants, paying the rent to the agents.
The position then arose that Mr. Quennell wanted to get possession of the house. If he could get vacant possession, he could sell it at a high price. It might be worth £30,000 to £40,000 with vacant possession. Mr. Quennell started proceedings for nuisance and annoyance, but he dropped them. Then he went to lawyers for advice. After consulting them, in October 1977 Mr. Quennell went to the bank and told them about the tenants in the house. The bank had not heard before about the various changes in the tenancies. Even when they were told the bank made it clear that they had no intention of taking any proceedings to enter the property or to turn the tenants out or anything of that kind. The bank were not concerned to get possession.
Then Mr. Quennell's lawyers in London advised him that there was a good way in which possession could be achieved. This is what it was: Mr. Quennell's wife, Mrs. Quennell, paid off the hank. She paid the £2,500 which was owing to the bank and took a transfer of the charge. The bank transferred it to her by a transfer dated the 17th January 1978.
Then Mrs. Quennell brought proceedings against the tenants Mr. Maltby and Mr. Lupton seeking possession. She said that she stood in the shoes of the bank: and, seeing that the tenancy was granted without the consent of the bank, it was void. So she could recover possession.
The Judge accepted this submission. He held that the wife, Mrs. Quennell, was entitled to possession of the premises and could turn Mr. Maltby and all the other students out of the house.
Now it has been held that, when the bank holds a charge and there is a clause in it whereby there are to be no tenancies granted or surrendered except with the consent of the bank in writing, then in those circumstances, if the mortgagor does thereafter grant tenancies without the consent of the bank, then those tenancies are not binding on the bank, and the tenants are not entitled to the protection of the Rent Acts. That was decided in Dudley and District Benefit Building Society v. Emerson & anr. (1949) Chancery Division 707. Mrs Quennell relies on that case. She says that, as transferee of the legal charge, she stands in the shoes of the bank and can obtain possession.
The Judge accepted that submission. His decision, if right, opens the way to widespread evasion of the Rent Acts. If the owner of a house wishes to obtain vacant possession, all he has to do is charge it to the bank for a small sum. Then grant a new tenancy without telling the bank. Then get his wife to pay off the bankand take a transfer. Then get the wife to sue for possession.
That indeed was what happened here. In October 1977, when Mr. Quennell went to the bank, he told them about the tenancies. They said that they did not intend to take proceedings. So he got Mrs. Quennell to do it. In evidence, she said: "I paid £2,500. This was for my husband. I took the Charge to make the debt to his Bank less onerous. I was aware he...
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