WX Investments Ltd v Begg
| Jurisdiction | England & Wales |
| Judge | Mr Justice Patten |
| Judgment Date | 13 May 2002 |
| Neutral Citation | [2002] EWHC 925 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CC/2001/APP/0774 |
| Date | 13 May 2002 |
[2002] EWHC 925 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Patten
Case No: CC/2001/APP/0774
Mr. M. Loveday (instructed by Vizard Oldham for the Claimant)
Mr. C. King (instructed by Freeman Box for the Defendant)
Mr. P. Clark (instructed by Plexus Law for the Part 20 Defendant)
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Hon. Mr. Justice Patten
Mr Justice Patten
Introduction
This is an appeal by the Claimant, WX Investments Limited, against the order of His Honour Judge Cowell made in the Central London County Court on 27th April 2001 dismissing its claim in this action. It concerns the rent payable in respect of premises at 123 St. John's Hill, London, SW11. These premises are let to the Defendant, Dr. Khalida Begg, as a doctor's surgery under a lease dated 12th February 1990. The lease was granted for a term of 20 years from and including 25th December 1989 at an annual rent of £15,000 subject to an upwards only review after every fourth year of the term. The rent review clause provides for the landlord to serve on the tenant what is described as a rent notice specifying the amount of the new rent payable with effect from the relevant date of review. The tenant may within 14 days after receipt of this rent notice serve on the landlord a counter notice specifying the rent which the tenant is willing to pay from the review date. If no such counter notice is served within the 14 day period then the rent specified in the landlord's rent notice becomes the rent payable from the review date. If a counter notice is served within the 14 days the lease provides for the parties to attempt to agree the new rent and in the absence of agreement for the rent to be determined by a surveyor acting either as an expert or (if the landlord requests) as an arbitrator. Time is made expressly of the essence in relation to the 14 day period for the service of the counter notice.
Clause 6 of the lease provides as follows:
"6. This Deed shall incorporate the provisions as to notices contained in Section 196 of the Law of Property Act 1925 as amended by the Recorded Delivery Service Act 1962."
The lease therefore incorporates into and applies to the provisions of the rent review clause the following parts of s196:
"(3) Any notice required or authorised by this Act to be served shall be sufficiently served if it is left at the last-known place of abode or business in the United Kingdom of the lessee, lessor, mortgagee, mortgagor, or other person to be served, or, in case of a notice required or authorised to be served on a lessee or mortgagor, is affixed or left for him on the land or any house or building comprised in the lease or mortgage, or, in case of a mining lease, is left for the lessee at the office or counting-house of the mine.
(4) Any notice required or authorised by this Act to be served shall also be sufficiently served, if it is sent by post in a registered letter addressed to the lessee, lessor, mortgagee, mortgagor, or other person to be served, by name, at the aforesaid place of abode or business, office, or counting-house, and if that letter is not returned through the post-office undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered."
For the reasons which I shall come to shortly it is the interpretation and application of s196(4) which is a central issue on this appeal.
On 22nd September 1997 the Claimant's predecessor in title as landlord, Long Acre Securities Limited, served a rent notice on Dr. Begg specifying a new rent of £19,500 per annum with effect from 25th December 1997. The notice was served by recorded delivery by the landlord's agent, Mr. John Broomfield, who practices on his own account as a surveyor and valuer from premises at 110 New Bond Street, London, W1 under the name of John Broomfield and Company. It is common ground that the 14 day period for the service of the counter notice expired on Monday 6th October 1997.
Upon receipt of the rent notice Dr. Begg faxed a copy to Mr. Richard Dawson of Charles Fraser Flemming Gibson MacNeil Limited, a firm of surveyors with premises in Reigate, seeking his advice about the proposed new rent. Mr. Dawson had previously acted for Dr. Begg in connection with the property in St. John's Hill. He passed the letter to a colleague, Mr. Peter Fraser, who is the Part 20 Defendant. Mr. Fraser advised Dr. Begg in a letter dated 23rd September 1997 that there were grounds for challenging the rent increase and offered to act on her behalf. He also told her that it would be necessary to serve a counter notice and enclosed a copy of the counter notice which he had prepared to send to John Broomfield & Company at their address in New Bond Street. Dr. Begg heard nothing further until she received a letter dated 28th October 1997 from CHP Management Limited enclosing a memorandum of rent increase to the sum of £19,500 with effect from 24th December on the basis that no counter notice had been served in time.
The judge found (and it is not in dispute before me) that Mr. Fraser sent the counter notice to John Broomfield and Company by First Class recorded delivery on 24th September 1997. It was not returned undelivered. What happened was that on the morning of 25th September 1997 two attempts were made to deliver the counter notice. Mr. Broomfield's office does not open until 9:30a.m. and he is frequently out of the office. He employs one member of staff, a secretary, but she frequently arrived late. On both occasions when the postman called the office was closed and in accordance with usual practice the letter containing the counter notice was therefore returned to the delivery office in New Oxford Street at about 10:50a.m.. A further attempt was then made to deliver it on 30th September. This was a Tuesday. The postman attempted to deliver the notice at 9:05a.m. and again found the office was closed. On this occasion (unlike the first) he left a P739 "When you were out" card which stated in terms that the item of mail would be kept for one week before being returned to the sender. To prevent this it could either be collected from the delivery office on production of the card or would be re-delivered if the card was returned to the delivery office with a new delivery date entered in the appropriate box. On 30th September Mr. Broomfield completed the P739 card requesting re-delivery on 10th October. The counter notice was delivered to him and accepted at 9:30a.m. on that day.
Dr. Begg declined to pay rent at the increased rate of the £19,500 per annum and on 5th November 1999 Long Acre Securities Limited issued proceedings in the Central London County Court for the recovery of the arrears of rent and interest. A defence was filed on 20th December 1999 denying liability for the arrears on the ground that when the attempt was made to deliver the counter notice on 30th September staff at Mr. Broomfield's office refused to accept delivery because Mr. Broomfield was absent on holiday and only he was authorised to sign for recorded delivery items. This allegation was based on inaccurate information obtained from the Post Office which was not substantiated at the trial. The defence also contained a Part 20 claim against Mr. Fraser. A defence to this claim was served by Mr. Fraser largely adopting the defence of Dr. Begg.
On 3rd May 2000 District Judge Hasan directed the trial of a preliminary issue as to whether a valid counter notice had been served. Given that on the pleadings as they stood this was the only real issue in the action it is difficult with respect to the District Judge to see what purpose this order was intended to achieve. In any event the trial of the preliminary issue took place before His Honour Judge Cowell on 14th and 15th March 2001. The learned judge heard evidence from Mr. Fraser and Mr Broomfield together with a witness from the Post Office. At the end of the hearing he gave an ex tempore judgment in which he made the findings of fact about the delivery of the counter notice to which I have already referred. More controversially however he also found that when filling in the date of 10th October on the P739 card Mr. Broomfield knew that the item to which the card related might very well be the counter notice from Dr. Begg which to his knowledge had to be served by 6th October. By specifying 10th October he therefore, in the judge's words, ensured that the letter would not be returned to Dr. Begg or its sender and would arrive out of time. In reaching this conclusion Judge Cowell rejected Mr. Broomfield's explanation that as at 30th September he believed that he might be going away to Ireland and therefore chose 10th October to avoid any clash with his holiday plans. The judge described this evidence as a dishonest excuse. Mr. Broomfield in fact remained in London in the week beginning 29th September and during the following week.
Notwithstanding the view which he formed of Mr. Broomfield's actions in relation to the choice of the 10th October date Judge Cowell held that a valid counter notice had not been served within the 14 day period permitted by the lease. Following the decision of Scott J in Stevenson and Sons v. Orca Properties Limited [1989] 2 EGLR 129 he construed the phrase "in the ordinary course be delivered" in s196(4) of the Law of Property Act as requiring (in cases of recorded delivery) the signing of a receipt by an available recipient. On the facts found by him this did not occur...
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