Farrell and another v Alexander

Sale of lease from Church Commissioners of flat in Little Venice proposed to be by assignment, and £400 deposit paid on £4,000 premium disguised as payment for about £1,000-worth of fittings etc–Church Commissioners then apply clause in lease allowing them to insist on a surrender–Transaction completed on basis of a new lease from commissioners after surrender by lessee and payment of balance of £3,600 to lessee by incoming tenant–Transaction held not to be a sham–Majority finds that the deal was a payment of £4,000 to secure lessee’s surrender and that this did not contravene the provisions of the Rent Act against premiums–Action for recovery of excess element in the £4,000 fails despite dissenting opinion of Lord Denning–Previous Court of Appeal decision in Zimmerman v Grossman cannot be dismissed as per incuriam This was an appeal by Mrs Colette Denise Gina Farrell and her daughter, Miss Suzanne Deirdre Farrell, from a judgment of Judge Lloyd, at Wandsworth County Court on June 11 1974 dismissing their claim to recover as an illegal premium an appropriate proportion of £4,000 paid to the respondent, Mrs Jacinthe Marian Alexander, as part of a transaction by which the appellants obtained a tenancy of Flat 20F, Randolph Crescent, London W9. Mr W Blum (instructed by Hutchings, Hutchings & Plum, of Torquay) appeared for the appellants, and Mr D M Barnes (instructed by Theodore Goddard & Co) represented the respondent. Giving a reserved judgment, LORD DENNING said: There is an attractive part of London called Little Venice. It is so called because of Regent’s Canal. This case is about a flat there. By a lease dated February 4 1970 the Church Commissioners let the flat, 20F Randolph Crescent, to the respondent, Mrs Alexander. The term was 7 1/2 years from September 29 1969. The rent was £650 a year for the first three years and £800 for the next 4 1/2 years. It was a protected tenancy, that is, a contractual tenancy with a regulated rent. The lease contained a provision for the rent to be varied so as to be equal to the registered rent. After being there three years, Mrs Alexander determined to sell the flat. She put it into the hands of estate agents. They issued particulars in these words: ‘Lease 4 1/4 years. Rent £800 per annum. Rates payable £198.77. Price £4,500 (to include the fitted carpets, curtains and kitchen equipment and certain other items, such as the many spot lights).’  That asking price of £4,500 was in reality the price which Mrs Alexander was demanding for the assignment of the lease. The furniture and fittings etc were only worth £1,002, and the balance was payable for the assignment of the tenancy. Mrs Alexander had paid no premium herself for the lease, but here she was, after three years, asking £4,500. She was advised to ask this sum because the estate agent thought she could get it. Any incoming tenant would be glad to get a protected tenancy, for he or she would get security of tenure after the 4 1/2 years had expired and would only have to pay the registered rent. The first appellant, Mrs Farrell, was just such an incoming tenant. She lived in Worcestershire and wanted to find a flat for her daughter, who had obtained a post in the Victoria and Albert Museum. Mrs Farrell offered to pay £4,000, and Mrs Alexander accepted. Mrs Farrell paid a deposit of £400 to the estate agents. The agents wrote to the solicitor for Mrs Alexander on January 25 1973: ‘We write to inform you that our mutual client, Mrs Alexander, has accepted an offer of £4,000, made subject to contract, for the fixtures and fittings etc to be included in the sale at the time of the assignment of her leasehold interest in the above property. The proposed assignee is Mrs C D Farrell, and her solicitors are Braby Waller & Co. We are in possession of 10 per cent deposit.’  They wrote a similar letter to Mrs Farrell’s solicitors. Those letters show clearly that the estate agents regarded the proposed transaction to be an assignment of the tenancy, together with the furniture and fittings. There is a letter, too, from Mrs Alexander, showing that she also regarded it as an assignment. The estate agents put the furniture and fittings at £4,000 but their real value was only £1,002. If the transaction had been completed in that form, it would clearly have been illegal. It would be prohibited by section 89 of the Rent Act 1968, and Mrs Farrell could have recovered the excess £2,998 from Mrs Alexander under section 88. But it was not completed in that form. When the estate agents approached the Church Commissioners for their consent, they suggested that, instead of an assignment, there should be a surrender by Mrs Alexander of her lease to the landlords, and then a grant by the landlords of a new lease to Mrs Farrell. This was in accordance with a clause in the lease to Mrs Alexander which the Church Commissioners often insert in their leases. We considered it in Greene v Church Commissioners for England [1974] Ch 467, and expressed some doubt as to its validity. The solicitors for Mrs Farrell were agreeable for the transaction to go through in this way, so on March 6 1973 they wrote to the Church Commissioners, saying: ‘Although initially it was the intention to assign the existing lease to our client, it is now proposed that Mrs69 Alexander’s lease be surrendered and a new lease granted.’  In the result, the solicitors, instead of preparing an assignment, prepared a memorandum of agreement in these words: 1. Subject as hereinafter mentioned, the present lessee shall, immediately prior to completion of the new lease hereinafter mentioned, surrender to the landlords with vacant possession ALL THAT her estate and interest in the premises known as Flat F, 20 Randolph Crescent . . . being a lease for 7 1/2 years from September 29 1969. 2. The completion of the said surrender shall be subject to acceptance of the same by the landlords, and to the simultaneous grant by the landlords to the new lessee of a new lease with vacant possession for the term of nine years from December 25 1972 at £850 per annum exclusive. 3. Upon completion, the new lessee shall pay to the present lessee the sum of £4,000 for the carpets, curtains, chattels, fixtures and fittings in the said premises in accordance with the inventory agreed between the parties, and 10 per cent of the said sum of £4,000 shall be paid to the agents as stakeholders. That memorandum was signed on March 30 1973, and on the same day Mrs Farrell paid the balance of the £4,000. Mrs Alexander gave this receipt: I hereby acknowledge to have received the sum of £4,000 from Mrs Farrell and Miss Farrell, being the consideration for the purchase of the fixtures, fittings, chattels and other equipment in and about the above property as at March 30 1973. It is plain, therefore, that to outward appearances nothing was paid for the new tenancy, but £4,000 was paid for the furniture and fittings. Seeing that they were only worth £1,002, the balance of £2,998 must have been paid for the grant of the new tenancy. But it was not paid to the landlords, the Church Commissioners. If it had been paid to them, it would have been plainly illegal, being prohibited by section 85 of the 1968 Act, and the excess sum of £2,998 could have been recovered under section 88. But the £2,998 was not paid to the landlords. It was paid to the outgoing tenant, Mrs Alexander. It is said that, because the £2,998 was paid not to the landlords but to the outgoing tenant, the transaction was perfectly lawful. This would be a most remarkable result. If it is correct, it opens up a great gap in the Rent Acts. It means that sitting tenants can exploit the housing shortage to their own great advantage, but that landlords cannot. Nor can statutory tenants, but contractual tenants can do so, provided they get the co-operation of the landlords. And who can say what tenants will pay to landlords under the counter, so to speak, for this co-operation?  The Church Commissioners are willing to co-operate without being paid, but other landlords might want a share in the money, so long as nobody knew about it. I turn, therefore, to the statutes to see if they permit this great gap to be driven through them. In times of housing shortage, Parliament has had to step in to help those in need. It has passed legislation so as to prevent landlords from evicting tenants and to restrain landlords from increasing rents. At the same time it has sought to stop people from exploiting the shortage. It has enacted provisions which make certain acts unlawful, as follows. First, if a landlord, on granting a new tenancy, requires or receives any sum from the tenant in addition to the rent, he is guilty of an offence and is liable to repay the amount. This was laid down by section 1 (2) of the Act of 1915, section 8 (1) of the Act of 1920 and section 85 (1) of the Act of 1968. Secondly, if a contractual tenant, on assigning his tenancy to an incoming tenant, requires or receives any sum from the incoming tenant as the price of the assignment, he is guilty of an offence and liable to repay the amount; likewise, if on assigning his tenancy, he sells the furniture and fittings to the incoming tenant and requires an excessive price for them which is more than their real value, he is guilty of an offence and liable to repay the excess. These provisions were first introduced in sections 2 and 3 of the Act of 1949, and appear now in sections 86, 88 and 89 of the Act of 1968. Thirdly, if a statutory tenant (who could not, of course, assign his tenancy) takes any money from an incoming tenant as the price of giving up possession to him, he is guilty of an offence and liable to repay the amount. This was introduced in section 15 (2) of the 1920 Act and appears in section 13 of the 1968 Act. And lastly, if a statutory tenant makes an arrangement with his landlord by which a new tenant is allowed into the house, the statutory tenant cannot require or receive any sum from the incoming tenant as the price of letting him in. This provision was introduced by section 17 (4) of the Act of 1957, and is now in section 14 of the 1968 Act. One might think that those provisions would be effective to prevent people exploiting the housing shortage for their own advantage. But the lawyers have devised a scheme by which, it is said, a contractual tenant can exploit the shortage to his own advantage. It is this: instead of assigning his tenancy to an incoming tenant, he can make an arrangement with the landlord by which he (the outgoing tenant) surrenders his existing tenancy to the landlord, and the landlord at the same time grants a new tenancy to the incoming tenant. The landlord cannot charge any premium to the incoming tenant, but the outgoing tenant can do so, and can retain the money for his own benefit. As a camouflage, the outgoing tenant calls it payment for the furniture and fittings, but it is in reality a payment for the new tenancy. I must say that this device of the lawyers seems to me to be plainly in contravention of the statutes. I will take the 1968 Act. If you should read through section 85, 86, 87 and 89, you will see the words ‘any person’ used in each of those sections. To my mind they mean the same thing in each section. They mean what they say, ‘any person.’  They include the landlord. That is obvious from section 85 (1), which speaks of the ‘grant’ of a tenancy. They include a tenant. That is obvious from section 86 (1), which speaks of the ‘assignment’ of a tenancy. They include a landlord as well as a tenant. That is obvious from sections 87 (2) and 89 (1), both of which speak of the ‘grant, renewal, continuance or assignment’ of a tenancy, all in one breath. So the meaning of ‘any person’ is obvious. It includes a landlord or a tenant. To my mind this device of the lawyers is contrary to section 85 (1), which says: 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 [which includes any fine or other like sum and any other pecuniary consideration] . . . shall be guilty of an offence. ‘Any person’ includes an outgoing tenant. By this device he requires the payment of money as a condition of his surrender and the grant of a new tenancy by the landlord. The device is contrary to section 89 also. That says: Any person, who in connection with the proposed grant, renewal, continuance or assignment, on terms which require the purchase of furniture, of a protected tenancy–(a) offers the furniture at a price which he knows, or ought to know, is unreasonably high, or otherwise seeks to obtain such a price for the furniture . . . shall be liable to a fine. . . . Take this very case. There was a grant of a protected tenancy by the Church Commissioners to Mrs Farrell. In connection with that proposed grant, Mrs Alexander, or her agents, offered the furniture at a price which they knew, or ought to have known, was unreasonably high. The words ‘in connection with the proposed grant’ clearly cover this case. To my mind, when the outgoing tenant or her agents obtain money by this device, it is plainly illegal as being contrary to sections 85 and 89 of the 1968 Act, and the excess sum over and above the real value of the furniture and the fittings can be recovered by the incoming tenant under sections 88 and 90 of the Rent Act 1968. I turn now to the authorities. There are only two cases in the books on a surrender and new lease. The first is Rem-70 mington v Larchin [1921] 3 KB 404. That was decided on section 8 of the Act of 1920. The judges held that ‘a person’ in that section meant ‘a landlord’ and not ‘a tenant.’  But at that time there was nothing to prevent a tenant from taking a premium on the assignment of his lease. It had recently been so held in Mason, Herring and Brooks v Harris [1921] 1 KB 653. If there was nothing to prevent it on an assignment, there was no reason to prevent it on a surrender and new grant. Atkin LJ expressly mentioned that point. Afterwards, in 1949, the rule about assignment was altered. ‘A person’ was forbidden to take a premium on an assignment of tenancy: see section 2 (2) of the 1949 Act. Clearly ‘a person’ there included a tenant. The 1949 Act thus gave a different meaning to ‘a person’ to that which had been given in Remmington v Larchin, and it renders that case no longer of authority on the meaning of the statute. Furthermore, the judges in Remmington v Larchin found the case one of much difficulty. The one argument which turned the scale was that section 8 was a penal provision and on that account ought to be given a narrow construction limiting a ‘person’ to a ‘landlord.’  Nowadays that rule of interpretation is much discredited. It is not to be applied simply because the penal provision is difficult to construe, but only when it is truly ambiguous, so as to be capable of two meanings: see Bowers v Gloucester Corporation [1963] 1 QB 881 and R v Ottewell [1970] AC 642 at p 649. It has to give way to the much better rule that the courts should look to the mischief and interpret the statute so as to effect a remedy, even though it is a penal provision, especially when it carries a civil remedy too. We do that every day in cases under the Factories Acts. In my opinion, Remmington v Larchin is no authority on the interpretation of section 85 of the 1968 Act. The second case is Zimmerman v Grossman [1972] 1 QB 167, where this court does seem to have held that a tenant could lawfully demand a premium on a surrender and new lease. But the court there regarded the earlier case of Remmington v Larchin as binding on them. I think they were wrong in so doing. Remmington v Larchin was decided in the early days on the old Act of 1920. The statute had been altered afterwards beyond measure, especially in 1949, when it prohibited a premium on ‘assignments.’  Moreover, the court seems to have thought that Parliament in the later statutes impliedly approved of Remmington v Larchin, and by re-enacting section 2 (1) of the 1949 Act in substantially the same terms as section 8 of the 1920 Act intended to make that decision applicable to the 1968 Act. Indeed, Widgery LJ said that it was as if Parliament had added in parenthesis, ‘(It is the intention of Parliament that these words be given the meaning given to them in Remmington v Larchin).’  I am afraid that I take a different view. The court was not referred to the stream of recent authority in which it has been said emphatically that by re-enacting a statute in the same words, Parliament does not thereby approve every wrong decision that the courts had given to those words: see Royal Crown Derby Porcelain Co v Russell [1949] 2 KB 417; Dun v Dun [1959] AC 272; Re Yeovil Glove Co [1965] Ch 148 at p 283; and R v Blane (1894) 13 QB 769, referred to in R v Bow Road Justices [1968] 2 QB 572 at p 583. As I read the judgment in Zimmerman v Grossman, this court, left to themselves, would have held that ‘any person’ in section 85 of the 1968 Act meant any person. They only decided differently because they thought they were bound by Remmington v Larchin. Zimmerman v Grossman is thus not an authority on the meaning of the statute. It is only an authority on the doctrine of judicial precedent, and as such it is erroneous. Sufficient to say, however, that it is no authority on the meaning of the words ‘any person.’ Finally, I would say this. The words of the 1968 Act are plain. They admit of no doubt. They cover this case. No court is entitled to throw over the plain words of a statute by referring to a previous judicial decision. When there is a conflict between a plain statute and a previous decision, the statute must prevail. That appears from the decision of the House of Lords in Campbell College Belfast v Commissioner of Valuation for Northern Ireland [1964] 1 WLR 912. In my opinion, therefore, Remmington v Larchin is no authority on the present Act, and Zimmerman v Grossman was wrongly decided, so much so that I do not think it is binding upon us. I have often said that I do not think 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. I would allow the appeal, accordingly. LAWTON LJ: The trial judge dismissed the plaintiffs’ claim because he thought that the decision of this court in Zimmerman v Grossman [1972] 1 QB 167 (Davies, Widgery and Karminski LJJ) bound him. Three questions arise. First, did that case apply?  Secondly, if it did, would this court be justified in not following it?  Thirdly, if it did not, how should the relevant provisions of the Rent Act 1968 be construed and applied? The Master of the Rolls has summarised the facts. I am going to take the unusual course of making my own summary, so that I can deal in my own way with the plaintiffs’ main submission, which was that the transaction under consideration was not what it purported to be. In January 1973 young Miss Farrell, one of the plaintiffs, wanted to rent an unfurnished flat in West London. She went to a firm of estate agents. They had one to offer, but at a price. It was Flat F, 20 Randolph Crescent, W9. She was told that she could have the remainder of a lease which had 4 1/2 years to run for £4,500. With her mother, who is a doctor practising in the country, and is the other plaintiff, she inspected the flat. She met the tenant, Mrs Alexander, the defendant, who in February 1970 had been granted a 7 1/2-year lease by the Church Commissioners. The defendant pointed out various fittings such as a cooker and a refrigerator which were to go with the flat on transfer. The plaintiffs liked what they saw, and Mrs Farrell was prepared to finance the acquisition. On January 22 1973 Miss Farrell went back to the agents and told them that she liked the flat. They asked her to make an offer. She did: £4,000. The agents, who were in fact sub-agents, telephoned the main agents, who were willing to accept the offer. Miss Farrell was told. She handed over a cheque for £400 as a deposit. In her evidence Miss Farrell said nothing about her acceptance and payment of the deposit being ‘subject to contract,’ but the estate agents treated it as such and claimed to hold the £400 as stakeholders. In her dealings with the estate agents nothing seems to have been said about the legal form which the transaction was to take, but at the trial the defendant’s counsel accepted that what was contemplated by the plaintiffs and the defendant at this stage of the transaction was an assignment. Solicitors were instructed by both parties. By letter dated January 25 1973 the main agents told the defendant’s solicitors that they had accepted ‘an offer of £4,000, made subject to contract, for the fixtures and fittings etc to be included in the sale at the time of the assignment of her leasehold interest. . . .’  With this letter they enclosed sale particulars, which set out the rateable value of the flat, £286. The solicitors could not have been told in plainer terms, if they knew any landlord and tenant law, that they were being asked to help the defendant to obtain an illegal premium on the assignment of a protected tenancy: see sections 1 (1) (a) and 86 of the Rent Act 1968. Undeterred by any knowledge they may have had, they started discussions with the plaintiffs’ solicitors to complete the transaction. The latter did know the legal position, and advised Miss Farrell that if she and her mother paid the £4,000 they might get back the greater part of it. When preparing the completion documents, the defendant’s solicitors ran into a snag. The defendant’s lease provided that if at any time she wanted to assign her interest in the flat she had first to offer to make an absolute surrender to her landlords, the Church Commissioners. If they did not accept the offer within 28 days they were to be deemed to have rejected it, and then the defendant would be free to assign in accordance with the terms of the lease. When the defendant approached the Church Commissioners about giving up possession of her flat, they told her that they would exercise their rights under the lease to accept a surrender. A new way of transferring the tenancy to the plaintiffs had to be found. The Church Commissioners stated that they would consider accepting the plaintiffs as tenants subject to their having satisfactory references and being found suitable when interviewed. They were interviewed, and their references were found to be satisfactory. The Church Commissioners were willing to grant them a lease for a term of nine years from December 25 1972 at a yearly rent of £850, reviewable at three-yearly intervals. They were to get a longer term than the defendant had had, and at a slightly higher rent. This was all very well for the plaintiffs; they were not required to pay any premium to the Church Commissioners. The defendant, however, wanted the agreed sum of £4,000, and she was not prepared to surrender her lease until she was sure of getting it. The solicitors on both sides discussed ways and means. They decided that the transaction should be effected by a contract between the plaintiffs and the defendant whereby the defendant was to surrender her lease to the Church Commissioners immediately before they granted a new lease to the plaintiffs, and upon such grant the plaintiffs were to pay the defendant the sum of £4,000 ‘for the carpets, curtains, chattels and fittings in the said premises.’ A contract giving effect to these terms was signed on March 30 1973. On the same day, completion took place at the offices of the Church Commissioners. Each of the three parties was represented by a solicitor. The plaintiffs’ solicitor handed to the Church Commissioners’ solicitor, and he accepted, a letter dated March 29 1973 approving the draft lease and enclosing a cheque for £212.50 in payment of a quarter’s rent from March 25 1973. The defendant’s solicitor then handed over her lease to the Church Commissioners. After the Church Commissioners’ solicitor had left the room, the plaintiffs’ solicitor handed to the defendant’s solicitor a banker’s draft for £3,600, being the agreed sum of £4,000 less the deposit of £400 paid on January 22 1973. A few days later the defendant’s solicitor sent the plaintiffs’ solicitor a receipt dated March 30 1973 for the £4,000. It purported to be a receipt for the purchase of ‘fixtures, fittings, chattels and other equipment in and about the above property as at March 30 1973.’  It was nothing of the kind. The plaintiffs admit that £1,002.00 represented a reasonable price for what passed with the tenancy, but they allege that even if this be an underestimate, a considerable part of the so-called purchase price should be treated as if it were ‘a premium required to be paid as a condition of the grant, renewal, continuance or assignment of the protected tenancy’: see section 88 of the Rent Act. At the trial the defendant accepted that this was so if the plaintiffs’ claim did come within sections 85 to 90 of the Rent Act 1968. A few days later the Church Commissioners executed a new lease in the terms agreed with the plaintiffs’ solicitors. There was no evidence that the Church Commissioners knew anything about the payment of £4,000. As soon as the transaction had been completed, the plaintiffs had someone value the chattels and fittings which had been transferred. The valuation they were given was £1,002. By letter dated July 23 1973 the plaintiffs’ solicitors claimed from the defendant repayment of £2,998 on the ground that this sum was an illegal premium. By letter dated July 30 1973 the defendant’s solicitors rejected the claim. They put their client’s case succinctly as follows: ‘The old lease was surrendered to the landlords and the new lease granted by the landlords without payment of consideration and the agreed price for the furniture, fixtures and fittings passed between different parties.’  On these facts the trial judge adjudged first, that the transaction which was completed was not an assignment, even if the defendant thought it was, but a surrender of a lease by the defendant and the grant of a new lease by the Church Commissioners to the plaintiffs; secondly, that the facts of this case could not be distinguished in any material way from those in Zimmerman v Grossman, with the consequence that that case applied and required him to dismiss the claim. Three submissions are now made against this conclusion. Counsel for the plaintiffs says first that the transaction should be regarded by this court as an assignment. The parties had intended that there should be an assignment. As late as March 13 1973 the defendant, as is shown by one of her letters, thought that she was going to assign her lease to the plaintiffs. The surrender and the grant of a new lease, it was said, were nothing more than a legal cloak to hide the real nature of what was being done. Secondly, counsel says that the Church Commissioners had delegated to the defendant the landlord’s functions of finding a tenant and granting a new lease, with the consequence that she stood in their shoes and that any requirements she might make for the payment of a premium should be deemed to be a requirement made by a landlord for the purposes of section 85 of the Rent Act 1968. Thirdly, it is submitted that Zimmerman v Grossman was a decision of this court given per incuriam; that it was wrongly decided and should not be followed. Mr Barnes, on behalf of the defendant, seeks to refute all of these submissions. He says first, that the transaction took effect in law as a surrender and a grant of a new tenancy and as nothing else; secondly, that on the evidence it is impossible to say that the Church Commissioners put the defendant in their place for finding a new tenant; and thirdly, that Zimmerman v Grossman was not decided per incuriam. It was a unanimous decision of this court and was binding. Only the House of Lords could say that it had been wrongly decided. In my judgment, on the evidence, Mr Blum’s contention that the transaction was an assignment got up in legal garb to look like a surrender and a grant of a new lease is untenable. A sham transaction can only come about if those interested want it to be a sham: for an example, see Barnes Corporation v Conqueror Property Co Ltd [1944] QB 96. There were three parties to the transaction under consideration in this appeal. The Church Commissioners were not taking part in a sham. They wanted to exercise their rights under the lease granted to the defendant in February 1970, which was nearly two years before the plaintiffs and the defendant started negotiations. They had reserved their rights for the protection of their own interests, and the strong inference is that they wanted them in order to exercise more effective control over who was to be in possession of their property than was possible under the usual form of covenant against assigning or underletting without consent. When they came to exercise their rights in March 1973, they acted with deliberation. They took up the plaintiffs’ references and interviewed them in order to assess their suitability as tenants. They did not accept them merely because the defendant had put their names before them. They cannot be said to have left the choice of tenants to the defendant. When the transaction took on its legal garb, its clothes were real and suitable71 for the occasion. The defendant was released from the covenants in her lease. The plaintiffs entered into covenants with the Church Commissioners and in return got a substantial term of years and a protected tenancy. There was no assignment. It follows that the defendant had not received any part of the £4,000 in connection with an assignment of a protected tenancy. That disposes of Mr Blum’s first submission. It also disposes of his second. The Church Commissioners had not delegated to the defendant their functions as landlords of finding a tenant and granting a new lease. Mr Blum has contended that they had in order to bring this case within a possible exception to the principle enunciated in Zimmerman v Grossman. In his judgment in that case, Widgery LJ had envisaged the possibility of such an exception: he made no finding as to its existence, because the evidence in that case would not have supported a finding that the landlord had delegated his functions to the outgoing tenant. Similarly, on the evidence in this case there could be no such finding. Once the evidence about an intention to assign is assessed for what it is, namely the background history, in my judgment the facts of this case are indistinguishable from those in Zimmerman v Grossman. In that case the plaintiff, the tenant for a term of three years of a flat within the Rent Act 1968, wished to move elsewhere. His landlords agreed to accept a surrender from him and grant a new lease to a suitable tenant if he introduced one to them. The plaintiff met the defendant, who wished to take the flat. She orally agreed with the plaintiff to buy the fixtures and fittings in the flat for £300 provided the landlords agreed to accept her as a tenant. They did, and granted her a new lease. The defendant paid the plaintiff £100 and refused to pay the balance on the ground that the £300 was far in excess of the true value of the fixtures and fittings (the county court judge found this to be so) and was in consequence an illegal premium by virtue of section 85 (1) of the Rent Act 1968. The plaintiff’s claim for the balance of £200 succeeded. The facts in Zimmerman v Grossman in turn were indistinguishable from those in Remmington v Larchin [1921] 3 KB 404, which was another decision of this court (Bankes, Scrutton and Atkin LJJ) on a similar provision in the Increase of Rent and Mortgage Interest (Restrictions) Act 1920, and to the same effect as Zimmerman v Grossman. Since this case on its facts cannot be distinguished from the two earlier cases, why would they not be followed?  The only ground put forward on behalf of the plaintiffs was that the law had developed between 1921 and 1972 and that the 1972 decision had been made per incuriam. It was pointed out by Mr Blum that nowhere in the report of the arguments and of Widgery LJ’s judgment is there any reference to sections 13 to 15 of the Rent Act 1968. This is so. These sections relate to statutory tenancies. Section 13 forbids statutory tenants to demand payment as a condition of giving up possession. Section 15 makes any person requiring such payments guilty of a criminal offence. The submission was that if the court had been referred to these sections and had considered them, it would have appreciated that Parliament had intended to stop people making money out of the transfer of protected tenancies, whatever the circumstances and the legal garb in which the transaction was dressed. I do not accept that sections 13 to 15 affect the construction of sections 85 to 90 to anything like the extent suggested. It matters not, however, because the court now knows that counsel for the plaintiff in Zimmerman v Grossman did refer the court to section 13. We have learned this from the court reporter, Mrs E M Wellwood, who reported this case for the Law Reports. She has let us have her note-book. She made a note of counsel’s reference to section 13 and of the argument which he based on it. It follows that Zimmerman v Grossman was not a case where this court had construed a statute in ignorance of another relevant statutory provision: see Young v Bristol Aeroplane Co Ltd [1944] 1 KB 718 at p 729. The reason Mr Blum put forward for submitting that Widgery LJ’s judgment (with which the other members of the court agreed) had been made per incuriam is accordingly unsound. In the course of argument Widgery LJ’s judgment was closely examined, as was the decision in Remmington v Larchin. It became clear that we would have to consider once again the circumstances in which this court can disregard its own earlier decisions. For me, Young v Bristol Aeroplane Co Ltd provides the authoritative decision. It has stood without criticism from the House of Lords for 31 years. It has been followed time and time again. I regard it as a part of the law which it is my judicial duty to apply. The only ground for not following Zimmerman v Grossman which could possibly apply is that Widgery LJ’s judgment was per incuriam. As I have already stated, the reason submitted by Mr Blum for saying it was has no factual foundation. Before I wrote this part of this judgment, I had the advantage of reading that which the Master of the Rolls has just delivered. I decided that it was necessary for me to make a detailed analysis of Widgery LJ’s judgment. The report of the case sets out in detail the arguments put forward by counsel on behalf of the unsuccessful defendant. He invited the court’s attention to the legislative history of section 85 of the 1968 Rent Act. He submitted that the Landlord and Tenant (Rent Control) Act 1949 was of considerable importance, because it defined ‘premium’ for the purposes of the Act as a payment ‘in addition to the rent,’ and it prohibited the requiring of a premium on the assignment of a tenancy. It was the absence in the 1920 Act of any reference to an assignment which had inclined Atkin LJ in Remmington v Larchin to the opinion that under that Act ‘a person’ meant ‘a landlord’ and not ‘a tenant.’  Counsel went on to point out that the Rent Act 1965 had amended section 2 of the 1949 Act, and that these amendments had been re-enacted in section 85 of the 1968 Act but with the significant change that ‘a person’ had become ‘any person.’  He is reported as saying (see page 170): ‘The words ‘any person’ are very wide words. They can include a person, other than the landlord, who is in a position to impose a condition on a tenant in connection with the grant, renewal or continuance of a tenancy.’  It follows that the court had before it all the relevant statutory provisions and had been alerted to the arguments which could be founded on those provisions. Widgery LJ reviewed the whole of the legislative history. He examined the judgment in Remmington v Larchin in detail, and went on to consider the argument that the statutory changes made after 1920 had rendered that decision irrelevant. He dealt with it in these terms: I have considered this argument and I recognise the weight attached to it, but standing by itself it ignores another argument which I find of greater force, and that is the well-known principle of construction, that where Parliament has re-enacted specific words, which have already been the subject of judicial interpretation, it is presumed that Parliament when re-enacting those words intends them to have the meaning which the courts have put upon them in their earlier use. He construed section 2 (1) of the 1949 Act ‘as though it had added, in parenthesis, ‘it is the intention of Parliament that these words be given the meaning given to them in Remmington v Larchin’.’  Whether Widgery LJ was right or wrong in the way he dealt with this argument (and I am of the opinion he was right), there was nothing per incuriam about what he said. He next examined the decision of the House of Lords in Elmdene Estates Ltd v White [1960] AC 528. It was not directly in point, but Remmington v Larchin had been discussed, and nothing had been said to throw doubt on its correctness. The 1965 Rent Act changes were next scrutinised in detail, and Widgery LJ decided that there was nothing in the 1965 Act to prevent Remmington’s case remaining good law: see p 180-F. He went on as follows: 72 The Act of 1965 has been repealed. It has been replaced by the Rent Act 1968. The Act of 1968 is a consolidating Act. It may be true that there are, here and there, amendments of consequence, but it is in the main a consolidating Act, and although the layout of the provisions of section 85 differs significantly from the layout of the corresponding provisions in the Act of 1965. I can find nothing–either in the language used or in the format of the legislation–to cause me to depart from the wellknown principle that consolidating Acts presumably are not intended to change the law. Now it was the 1968 Act which had changed ‘a person’ to ‘any person.’  The passage in Widgery LJ’s judgment which I have just quoted shows that this change, to which the Master of the Rolls has attached so much importance, was considered. It was not overlooked per incuriam. Being of the opinion that Zimmerman v Grossman is binding on this court, I have not thought it appropriate to consider whether that case and Remmington v Larchin were rightly decided. Nevertheless, because of the importance which the Master of the Rolls has attached to the change in wording to ‘any person’ I feel justified in inviting attention to the Consolidation of Enactments (Procedure) Act 1949, which enables ‘corrections and minor improvements’ to be made in Bills consolidating enactments. A stringent procedure is laid down for identifying such ‘corrections and minor improvements’ and for affording opportunities for discussion: see section 1. ‘Corrections and minor improvements’ are defined in section 2 as follows: ‘Corrections and minor improvements’ means amendments of which the effect is confined to resolving ambiguities, removing doubts, bringing obsolete provisions into conformity with modern practice or removing unnecessary provisions or anomalies which are not of substantial importance, and amendments designed to facilitate improvement in the form or manner in which the law is stated, and includes any transitional provisions which may be necessary in consequence of such amendments. If the change from ‘a person’ in the 1965 Act to ‘any person’ in section 85 of the 1968 Act has the effect which the Master of the Rolls is of the opinion it has, one consequence would be that tenants who were not ‘persons’ under the 1965 Act, and were therefore immune from criminal prosecution, would have become liable to prosecution under the 1968 Act. I would not consider this change in the law either a correction or a minor improvement. As did Zimmerman v Grossman, this appeal has revealed a gap which Parliament has left (whether wittingly or unwittingly I know not) in its attempts to prevent the exploitation of those in need of houses or flats. Many would think that this gap should be closed as quickly as possible. I certainly do. I would close it at once if I could; but, in my opinion, I could only do so by stretching the law. Adapting Shakespeare’s words, I might be doing a great right, but I would be doing a little wrong, and as Portia said: ‘Twill be recorded for a precedent; and many an error, by the same example, will rush into the state: it cannot be’: see Merchant of Venice, Act IV, Scene 1. I would dismiss the appeal. SCARMAN LJ: The plaintiffs, who are appellants in this court, sought by action in the Wandsworth County Court to recover a premium of £2,998 which they said was unlawfully required of them as a condition of the grant of a tenancy of an unfurnished flat. They in fact paid a sum of £4,000 as ‘key money,’ but it was admitted that £1,002 of the sum was referable to furniture and fittings. It was the outgoing tenant, the defendant in the action, who required and was eventually paid the premium as a condition of making the flat available to them. The claim was put in two alternative ways. First, reliance was placed on section 86 of the Rent Act 1968, and it was said that the premium was required as a condition of, or received in connection with, the assignment of a protected tenancy. Alternatively, reliance was placed upon section 85, and it was said that the premium was required as a condition of the grant of a protected tenancy. The county court judge negatived both ways of putting the claim. He held that the plaintiffs failed to make a case under section 86, because there was no assignment, and they failed under section 85, because the defendant was not their landlord; and the judge held that he was bound by a decision of this court, Zimmerman v Grossman [1972] 1 QB 167, to construe the prohibition contained in the section as limited to a landlord. I agree with Lawton LJ and the county court judge in their analysis and assessment of the facts. The transaction, when completed, was not an assignment, but a surrender of a lease by the defendant and the grant of a new lease by the landlords, the Church Commissioners, to the plaintiffs. True, the negotiations when they began were for an assignment of the lease of the outgoing tenant, the defendant: and the original bargain, subject to contract, was certainly for an assignment. The change in the character of the transaction, from an assignment by the defendant of her lease to a grant of a new tenancy by the landlords, occurred because the Church Commissioners, as landlords, wanted it done that way. There was nothing sham or bogus about the change: the solicitors to all concerned understood and accepted it, and completion was on the new basis. Is the absence of an assignment fatal to a claim based on section 86?  Subsection (1) of that section provides that any person who requires a premium as a condition of the assignment of a protected tenancy is guilty of an offence. The defendant was, without doubt, requiring a premium as a condition of assignment right up to the time when, upon the insistence of the Church Commissioners, the nature of the transaction was changed. But to recover the premium the plaintiff has to show not only the commission of a criminal offence under section 86, but a case for recovery under section 90. Subsection (1) of section 90 provides the remedy for one who has paid an illegal premium. The relevant provision of the subsection is that ‘where under any agreement any premium is paid . . . and could not lawfully be required or received under . . . this Part of this Act,’ it shall be recoverable by the person by whom it was paid. Two preliminary points arise. First, it was not suggested in argument, and I do not accept, that there can be any recovery other than under the subsection. Secondly, the subsection refers (as do sections 85 and 86) to premiums ‘required or received.’  This is a distinction which in the present case I think we may disregard. I agree with the view tentatively expressed by Widgery LJ (Zimmerman v Grossman p 180-B) that receiving is an alternative to requiring. If a premium is paid because one who has it in his power to grant or withhold possession requires it as a condition of a protected tenancy, there is a requirement: if a premium is paid because the desperately eager applicant volunteers it as an inducement to him who can make the tenancy available, the premium, though not required as a condition, is received in connection with the grant or the assignment, as the case may be. We are considering a case in which the premium was required. The question is, under what agreement was the premium paid?  It was paid in two instalments: £400 on January 22 1973, when both parties were proceeding upon the basis of assignment, and £3,600 upon completion, when the agreement being completed was for the surrender of one tenancy and the grant of a new one. Upon completion, the earlier payment was treated, and brought into account, as an advance on account of the £4,000 then due. In my judgment, it follows that the whole of the £4,000, including the advance of £400, was paid under the surrender agreement, and it is not possible, therefore, to treat it as a payment upon condition, or in connection with an assignment. In my judgment, therefore, the absence of an assignment is fatal to a claim based on section 86. Thus analysed, the premium was paid under an agreement which provided for the grant of a protected tenancy. It would appear, therefore, at first sight, that it could be recovered as73 being illegal under section 85 (1), which so far as relevant provides: ‘Any person who, as a condition of the grant . . . of a protected tenancy, requires, in addition to the rent, the payment of any premium . . . shall be guilty of an offence.’  But no, the defendant who required it was not the landlord, and the Court of Appeal in Zimmerman v Grossman [1972] 1 QB 167 has held that the prohibition imposed by the subsection is limited to a landlord. In so holding, the court purported to follow Remmington v Larchin [1921] 3 KB 404, a decision of this court on the earlier legislation. Mr Blum, for the plaintiffs, sought to overcome the seemingly insuperable difficulty in two ways. He submitted first that on the facts, the defendant was the agent of the landlords to obtain a tenant, so that the premium she required could be treated as a premium required by her as their agent. The purpose of his submission was to take advantage of a possible way round the section suggested by Widgery LJ in Zimmerman’s case (p 181). I very much doubt whether any such way exists, but if it does, the facts of this case do not enable it to be taken. Unable, as I think he is, to distinguish Zimmerman v Grossman, Mr Blum was left with only one challenge, which he manfully accepted. He submitted that the decision of the court was per incuriam. He relied on a passage in Young v Bristol Aeroplane Co [1944] 1 KB 718 at p 729 which in justice to his argument I shall quote. Lord Greene MR said in that passage: Where the court has construed a statute or a rule having the force of a statute its decision stands on the same footing as any other decision on a question of law, but where the court is satisfied that an earlier decision was given in ignorance of the terms of a statute or a rule having the force of a statute the position is very different. It cannot, in our opinion, be right to say that in such a case the court is entitled to disregard the statutory provision and is bound to follow a decision of its own given when that provision was not present to its mind. Cases of this description are examples of decisions given per incuriam. Mr Blum commented that Widgery LJ’s judgment (with which, be it noted, the other members of the court agreed) contains no reference to sections 13, 14 and 15 of the Act of 1968. And in an argument, to which I think he was led by comments from the court, he stressed the apparent omission of Widgery LJ to have regard to sections 86 to 89 when construing section 85. Let me admit at once that, unembarrassed by authority, I would not read section 85 as limited to a landlord: ‘any person,’ the phrase used by the subsection, I would expect to mean ‘any person.’  But Zimmerman v Grossman is authority binding on this court unless we can truly say that the judgment was per incuriam. But was it per incuriam?  To say that the careful judgment of Widgery LJ, reviewing as it did the history of the relevant legislation, was per incuriam–a phrase in a foreign tongue which I translate as ‘Homer nodded’–smacks of absurdity. I do not know, and would not dream of inquiring, whether sections 13 to 15 were present to his mind: they could not have been decisive in any event. Equally, sections 86 to 89, whether or not he had them in mind, were relevant only as part of the context and could not have been decisive. Can one, however, extend the per incuriam exception so as to include a case where the only indication that Homer nodded is that one thinks the court put upon the words of the statute a meaning which they cannot bear, and one which leads to a result that appears to be contrary to the purpose of the statute?  For myself, I would agree with the Master of the Rolls that one can, in a proper case. But to do so, we must not merely be prepared to say that we prefer another construction to that favoured by the court whose decision is under challenge: we must be able to demonstrate that the words of the statute are capable of only one meaning and that the meaning attributed to them by the previous decision is an impossibility. Mistake, not a difference of opinion, is the criterion. Though I doubt whether the court in Zimmerman v Grossman was under any necessity to follow Remmington v Larchin, their reasons for doing so are entitled to respect, and may well be sound. They may have been wrong; but they did not fail to face the problem, and their answer, though I think another was open to them, is not to be treated as given per incuriam. Let me explain why. Remmington v Larchin was certainly a binding precedent until 1949, when for the first time Parliament made illegal the requirement of a premium upon the assignment of a tenancy. Section 2 (1) of the Landlord and Tenant (Rent Control) Act 1949, re-enacting the earlier legislation, provided that ‘a person’ shall not, as a condition of the grant of a tenancy, require the payment of a premium. But section 2 (2) introduced new law. It enacted, for the first time, that ‘a person’ shall not, as a condition of the assignment of a tenancy, require the payment of a premium, and ‘a person’ in the subsection clearly included an outgoing tenant. Did this new subsection modify the meaning previously attributed by this court in Remmington v Larchin to the words re-enacted in subsection (1), so that they also included a person other than the landlord?  In Zimmerman v Grossman at p 177 Widgery LJ posed the question and gave reasons for his conclusion that it was still necessary to follow Remmington v Larchin and to limit subsection (1) to a landlord, even though the case could have no application to subsection (2). This was a reasoned conclusion, and Widgery LJ himself commented on the weight of the argument he was rejecting. There can be two opinions, of course, upon the point. But it is not possible to dismiss the conclusion of Widgery LJ as being per incuriam: indeed, he may well have been right, even though some disagree with him. In 1968 the law was consolidated into the Rent Act 1968. There was however a change of wording. For the first time the relevant section, now section 85 (1), spoke of ‘any’ person requiring the premium. Did the substitution of ‘any’ for ‘a’ make all the difference, and enable the court in Zimmerman v Grossman to reject the authority of Remmington v Larchin? This was a question which in my judgment could have been answered either way. Had the Rent Act 1968 been a codifying statute, as counsel for the plaintiff in Zimmerman v Grossman erroneously submitted it was, the court could have applied its mind to the interpretation of the section unembarrassed by the case law on the earlier legislation: see Bank of England v Vagliano Brothers [1891] AC 107 at page 145. But it is not a codifying statute: it is a consolidating statute, ie one which purports without change of the law to reduce into one comprehensive enactment a number of previous separate enactments. In such a statute only ‘corrections and minor improvements’ may be embodied: Consolidation of Enactments (Procedure) Act 1949, section 1. Section 2 of the Act defines corrections and minor amendments in terms which my Lord, Lawton LJ, has already quoted. Reform of the law, alterations of substance, are not to be expected in a consolidating statute. The object of such an Act is ‘to reproduce the law as it stood before’: per Lord Hanworth MR in Gilbert v Gilbert and Boucher [1928] P 1 at p 7. Accordingly, it is well settled that there is a presumption that Parliament does not intend to alter the existing law when it enacts a consolidating statute: Maxwell, Interpretation of Statutes, 12th ed p 21, and cases there cited. Of course, the presumption can be rebutted; it must yield ‘to plain words to the contrary’: Grey v Inland Revenue Commissioners [1960] AC 1, per Viscount Simonds at p 13. Faced with this issue, the court in Zimmerman v Grossman felt itself unable to find that the change of wording effected by section 85 of the 1968 Act was such as to rebut the presumption and to introduce a reform of substance into the law. Bearing in mind the tenor of the Consolidation of Enactments (Procedure) Act, I think the court was abundantly justified in refusing to attribute to the new wording a meaning different from that attributed to the earlier wording74 of the provision. It was a perfectly reasonable view that the change of words would have to be much more drastic in character than those in the section to enable the court to have said that Parliament had intended, in the wrong sort of statute, to change the existing law. For these reasons, I am not prepared to say that Zimmerman v Grossman was a decision reached per incuriam, and I would dismiss the appeal. Nevertheless, I have immense sympathy with the approach of the Master of the Rolls. I decline to accept his lead only because I think it damaging to the law in the long term, though it would undoubtedly do justice in the present case. To some it will appear that justice is being denied by a timid, conservative adherence to judicial precedent. They would be wrong. Consistency is necessary to certainty, one of the great objectives of law. The Court of Appeal, at the very centre of our legal system, is responsible for its stability, its consistency, and its predictability: see my comments in Tiverton Estates Ltd v Wearwell [1974] 2 WLR 176 at page 196. The task of law reform, which calls for wideranging techniques of consultation and discussion that cannot be compressed into the forensic medium, is for others. The courts are not to be blamed in a case such as this. If there be blame, it rests elsewhere. Parliament has had since 1922 the opportunity to change the law, but has not taken it, and cannot be thought to have taken the opportunity in the Rent Act 1968, since to do so in that Act would involve a neglect by Parliament itself of its own enactment (the Consolidation Act of 1949). Parliament must use very plain words indeed to justify such a view of its intentions being accepted by the courts. I happen to think that a wrong turning was taken by the Court of Appeal in 1921. But only the legislature, or the House of Lords in its judicial capacity, can put the courts on what I believe to be the right road. The appeal was dismissed with costs. Leave to appeal to the House of Lords was granted.