Starside Properties Ltd v Mustapha
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EDMUND DAVIES,LORD JUSTICE CAIRNS,LORD JUSTICE LAWTON |
| Judgment Date | 21 February 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J0221-1 |
| Court | Court of Appeal (Civil Division) |
[1974] EWCA Civ J0221-1
Lord Justice Edmund Davies,
Lord Justice Cairns and
Lord Justice Lawton.
In The Supreme Court of Judicature
Court of Appeal
(Appeal of Defendant from Order of His Honour Judge Fife, Bromley County Court, June 26, 1975.)
MR ROGER ELLIS, (instructed by Messrs. Armstrong & Co.) appeared on behalf of the Appellant (Defendant).
MR ISAAC JACOB, (instructed by Messrs. Cowan Lipson & Rumney) appeared on behalf of the Respondents (Plaintiffs).
This is a defendant's appeal from the order of His Honour Judge Fife sitting at the Bromley County Court on the 26th June, 1973. On February 1st, 1973, the same learned Judge made an order, (1) declaring that the defendant was a licensee of the plaintiffs in relation to No. 68 Knighton Park Road, S.E.26., (2) adjudging that the plaintiffs were entitled to recover possession of those premises, and (3) ordering that the defendant give possession to the plaintiffs on the 30th April, 1973. Three days before the last-mentioned date, that is to say, on April 27th, the defendant applied for an order extending the time for delivery of possession for a period of eight weeks from April 30th on grounds to which I shall refer later. The eight weeks' period sought expired on June 25th, and it was the next day that the application was heard. The defendant then asked that her time be extended to July 13th on the ground that she had already contracted to sell the premises at a figure which would have brought her in a profit of between £3,000 and £4,000, and that completion was fixed for the 12th July. But her application was dismissed, the learned judge holding (with a certain amount of reluctance, as he put it) that he had no jurisdiction to entertain it. It is against this second order that the defendant now appeals.
The material facts are not in dispute. In November, 1970 the plaintiffs agreed to sell the freehold of No. 68 Knighton Road to the defendant for £5,950. The plaintiffs' letter of November 9th, 1970, confirmed the terms of this agreement. It required the defendant to pay an initial deposit of £350 (which she did), and thereupon she entered into occupation as alicensee pending completion of the sale on the conditions therein set out. Thereby the defendant undertook to pay 10 per cent. interest per annum on the purchase price of £5,950, less the initial deposit of £350, which amounted to £46. 13. 4. a month, and also to pay a further £16. 13. 4. monthly off the purchase price and towards what was described as the total deposit of £1,250. The later parts of the letter must be quoted verbatim.
Paragraph 4 was in these terms: "On or before one month after you have paid a total deposit of £1,250 off the purchase price (being the aggregate of the said initial deposit of £350 and the instalments referred to … above) we will complete the sale and you will complete the purchase of the property and thereupon pay us the balance of the purchase price of £4,700. Nothing in this Agreement contained shall prevent you from paying us the balance of the said total deposit at any time whereupon completion shall take place in accordance with this paragraph.
Paragraph 5 provided: "On receiving a request from you in writing we undertake to leave the said balance of the price outstanding on the security of a first mortgage of the property for ten years carrying interest at the flat and non-reducing rate of 10 per cent. per annum repayable by monthly instalments of £78. 6. 8. each the first such payments to be made one month after completion."
Then paragraph 7 provided; "If you are in arrear with your payments of interest and/or deposit for a period exceeding fourteen days we shall have the right to rescind the contractand forfeit all sums paid by you by way of deposit and you will forthwith vacate the property."
The defendant went into possession of the premises. For a time she duly paid the instalments agreed upon. But thereafter she fell into arrears, falling to pay the instalments due on May 9th and June 9th, 1971. On June 12th, 1971, the plaintiffs' solicitors wrote to her in these terms: "Under Clause 7 of the contract our clients have the right to rescind the contract and to forfeit all sums paid by you by way of deposit if you are in arrears with your payments of interest find/or deposit for a period exceeding 14 days. You are more than 14 days in arrears with your deposit and interest and we therefore hereby give you notice rescinding the said contract pursuant to Clause 7 thereof. The contract also provides that on rescindation of the contract you will forthwith vacate the property. We hereby terminate the licence conferred upon you by Clause 5 of the said contract and require you to vacate this property within 14 days of to-day's date." The letter went on to indicate that in the event of non-compliance with that demand proceedings would be instituted.
Well, the defendant did not comply, and on the 17th September the plaintiffs instituted county court proceedings claiming therein, "1. The declaration that the Defendant was a licensee of the Plaintiffs in the said premises. 2. Possession of the said premises. 3. The declaration that the Plaintiffs are entitled to forfeit and retain: (a) The initial Deposit of £350, (b) The payments of £63.33 per month received on and since the 9th day of December, 1970."
Various pleas were raised in the defence, but (with one exception) all were held invalid by the learned judge when he dealt with the proceedings on February 1st, 1973, and against his Judgment neither party appealed. The one plea which he upheld (and rightly, in my Judgment) was that Clause 7 of the agreement of sale imposed a penalty upon the defendant. The judge said: "One only has to consider the case where the defendant goes on paying regularly right up to a state where she has nearly accumulated a deposit of £1,250 and then defaults. If she loses all her payments to date it cannot be argued that this provision is not a penalty. It cannot be a penalty one year and not the next and therefore I am in no doubt that this is a penal provision." The defendant having counterclaimed relief from forfeiture, the learned judge went on to say that he considered it a proper case to exercise his discretion so as to relieve her from that penal provision. Accordingly, while making the declaration sought by the plaintiffs that the defendant was in occupation as a licensee, he said, "… in the circumstances I am going to postpone the order for possession that I am going to make for three months in order to enable the Defendant to raise the money to acquire this property from the plaintiffs at the original contract price."
The court's order was that the defendant surrender possession on the 30th April, but, pursuant to the terms of Clause 4 of the contract, she negotiated to raise sufficient money to buy off the plaintiffs, or, falling that, to fine someone prepared to buy the property from her on terms profitable to her. But as time was running out, on April 27th she made the application already referred to. On June 26th it wasdismissed, it being ordered that execution of the possession order be stayed pending appeal. The two questions raised before the learned judge were, (1) whether he had Jurisdiction to extend the time granted to the defendant by his order of February 1st; and (2), if he had, whether he ought to. He answered question (1) in the negative, and found it unnecessary to deal with question (2). He expressed his conclusion from the eases cited in this ways "… I have no jurisdiction in the ordinary case to vary an order drawn up. … I do not consider that the cases cited go beyond … forfeiture for nonpayment of rent"; and, since this was not such a case, he added: "Thus I do not accept that the cases cited provide any authority for my having jurisdiction to vary the order made on the 1st February."
The attack upon that finding by Mr. Ellis was by way of the following submissions: (1) The order of February 1st was made pursuant to the court's power to grant equitable relief against forfeiture. (2) The defendant's claim for relief was analogous to a claim for relief against forfeiture for nonpayment of rent. (3) Accordingly, the court had jurisdiction on June 26th to Grant the further relief sought, notwithstanding that it involved a variation of the February order.
On the other hand, in seeking to uphold the learned judge's order, Mr. Jacob has submitted: (1) That equity will not interfere with the bargain made between parties merely because it turned out to be improvident for one of them. (2) Equity will give "a limited and conditional relief" to purchasers who default in payment on the footing that a clause whereby instalment payments already made are forfeited is inthe nature of a penalty, provided that the defaulting party has obtained no profit from the agreement over and above the right to complete the contract on payment of the agreed instalments. (3) In such circumstances, a defaulter will be given a further chance and a further time to pay the money due only if he is able and willing to do so when he seeks that chance, the only exception to this condition being where relief against forfeiture for non-payment of rent is sought. (4) With one possible exception, the reported decisions do not show that any further relief from forfeiture will be granted "if (the defaulter) failed to take advantage of the limited relief which was extended to him." The quoted words are those of Lord Justice Romer in Stockloser -v- Johnson, which must later be referred to.
Was the learned judge right in holding that only in cases where relief from forfeiture for non-payment of rent is sought does the court have jurisdiction to vary the terms of its earlier...
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