Thomas Pocklington’s Gift Trustees v Hill and another

Rent Act 1977, section 49(4) — Regulated tenancy — Death of original tenant — Questions as to whether he was a contractual or statutory tenant at date of death and as to legal98 status of successive occupations by his two daughters — Appeal by landlords from decision of county court judge refusing them possession — Decision upheld but on a different ground and with a variation The house in question was let to the deceased tenant in the 1930s on a weekly tenancy and he lived there with his wife and family — His wife predeceased him and he died in 1982 — Both his daughters had married, but the elder had moved back into the house to look after her father when he became ill — The father died intestate and the elder daughter took out letters of administration and became the administratrix — She lived in the house for some months thereafter but left when her husband got a job out of London; she had no intention of returning — About two weeks before she left, her younger sister, the second defendant, moved into the house and had lived there ever since — In these circumstances, and faced with a marked lack of evidence, the judge had to decide whether the landlords were entitled to possession — This depended on the interpretation to be placed on events in the previous history — The judge decided that the father’s contractual tenancy had never been determined and that the elder daughter had obtained a contractual tenancy which had continued up to the date of the trial — The younger daughter had occupied the house with her sister’s consent — The landlords were therefore not entitled to possession against either defendant The Court of Appeal’s interpretation was somewhat different, although the result for the younger daughter, who remained in occupation, was the same — In following the sequence of events, the effect of section 49(4) of the 1977 Act had to be borne in mind — This provided that a notice of increase of rent could operate to convert a contractual tenancy into a statutory tenancy but only if the date specified in the notice of increase was later than the date on which the contractual tenancy could be determined by a notice to quit served at the same time as the notice of increase — The problem was that no copy of a notice of increase served on the father could be found and, despite some authorities cited by the plaintiffs, the court refused to infer from the mere fact of increases of rent made after registration that notices of increase of the required length must have been served — It followed that the elder daughter had to be treated as a contractual tenant after her father’s death — Was her contractual tenancy ever determined? — The judge thought not, but the Court of Appeal disagreed, although as it turned out it was no longer her contractual tenancy — Copies of 1984 notices of increase had become available and one of them, dated August 14 1984, gave notice of two increases, one to take effect on September 10 1984 and the other to take effect a year later, on September 9 1985 — The notice of the earlier increase was clearly insufficient, but the notice of the later increase was sufficient in length to convert the elder daughter’s contractual tenancy (if she still had it) into a statutory tenancy — ‘If she still had it’: these words raised the question of the legal effect of what had passed between the two sisters during the two weeks or so in January 1983 before the elder sister left the house for good The court came to the conclusion that the only realistic interpretation was that the elder sister had in January 1983 assigned her contractual tenancy to the younger — The transaction was not a surrender or an abandonment, the grant of a subtenancy, the creation of a licence or the taking in of a lodger — The result was that the elder sister had assigned her contractual tenancy to the younger before the notice of increase in September 1985 — The landlords were unaware of the assignment — In the circumstances the notice of increase must be treated as having been addressed to the younger sister, who thus became a statutory tenant — As such she was entitled to protection under the 1977 Act and the landlords’ action for possession must fail against her — Although the point was academic, they were entitled to an order against the elder sister — Appeal dismissed except to the extent that a possession order was made against her. The following cases are referred to in this report. Brock v Wollams [1949] 2 KB 388; [1949] 1 All ER 715, CA Marcroft Wagons Ltd v Smith [1951] 2 KB 496; [1951] 2 All ER 271 Solomon v Orwell [1954] 1 WLR 629; [1954] 1 All ER 874, CA Summers v Donohue [1945] 1 KB 376 This was an appeal by the landlords, the Trustees of the Gift of Thomas Pocklington, from the decision of Judge Phelan at the West London County Court dismissing their claim as plaintiffs against the defendants, Mrs Jean S Hill and Mrs Sullivan, for possession of a house at 78 Chesson Road, London W14. Mrs Hill was the elder and Mrs Sullivan the younger of the two daughters of the original tenant of the house, Mr Blake. The plaintiffs’ claim in the court below was effectively resisted only by Mrs Sullivan, who was in occupation, and she alone contested the appeal. Gerald Rabie (instructed by Ferris & Evans) appeared on behalf of the appellants; Alun Jenkins (instructed by Lawrence & Co, of Fulham) represented the respondent. Giving judgment, BINGHAM LJ said: The trustees appeal against an order of His Honour Judge Phelan in the West London County Court dismissing their claim as plaintiffs against both defendants for possession of a house at 78 Chesson Road, London W14. The plaintiffs’ claim was effectively resisted in the court below only by the second defendant, Mrs Sullivan, and she alone resists the appeal. The plaintiffs are freehold owners of the house. At some unknown date during the 1930s the plaintiffs’ predecessors in title let the house to a Mr Blake on a weekly periodic tenancy. The contractual rent is not now known. Mr Blake lived in the house with his wife and family. In April 1981 his wife died. Shortly thereafter he became ill and the first defendant, Mrs Hill, who is his daughter, moved into the house to look after him. On June 25 1982 he also died. He was intestate, but Mrs Hill took out letters of administration and became his administratrix. Mrs Hill continued to live in the house for some months, but in January 1983 her husband got a job away from London and she and her family left, intending never to return. About two weeks before she left the second defendant Mrs Sullivan, who is Mrs Hill’s younger sister, moved back into the house and she has lived there ever since. The crucial question for the judge’s decision was whether the plaintiffs were entitled to recover possession of the house against Mrs Sullivan. The answer to that question depended on what right, if any, Mrs Sullivan had to remain in the house. That raised, among others, the question what, if any, right Mrs Hill had to pass on. That in turn raised the question what right Mrs Hill acquired from her father on his death, it being accepted that if he died a contractual tenant she became a contractual tenant, and if he died a statutory tenant she became a statutory tenant by transmission. So the first question was whether Mr Blake’s contractual tenancy was ever determined. The learned judge considered this question first and concluded on the evidence that Mr Blake’s contractual tenancy had never been determined. Mrs Hill therefore became the contractual tenant of the plaintiffs. He next considered whether Mrs Hill’s contractual tenancy had ever been determined. He concluded that it had not. That meant that her contractual tenancy continued up to the date of trial, and there was no doubt that Mrs Sullivan occupied the house with her consent. The learned judge accordingly decided that the plaintiffs were entitled to possession against neither defendant, and accordingly declined to decide other questions which had been argued but which that decision made hypothetical. I begin, as the judge did, by considering whether on the balance of probabilities it was proper to infer that Mr Blake’s contractual tenancy had been determined at some time before his death. I use the word ‘infer’ because, on any showing, the direct evidence bearing on the question was sparse. At the outset of his clear and helpful argument Mr Rabie for the plaintiffs accepted: (1)  that he could not show service of a notice to quit on Mr Blake at any time; and (2)  that he could not show that the rent payable under Mr Blake’s original contractual tenancy must be treated as having continued until the end of 1972. 99 From this it follows that Mr Blake’s original contractual tenancy must be treated as having continued until the end of 1972. Mr Rabie, however, relied on the events which followed. At that time Mr Blake’s tenancy was subject to the Rent Act 1968. On April 10 1973, on the application of the plaintiffs’ agents and pursuant to the provisions of that Act, an increased fair rent of £6 per week exclusive of rates was registered. On June 25 1976 in like circumstances an increased fair rent of £8.50 per week exclusive was registered. On July 17 1979 an increased fair rent of £11.50 per week exclusive was registered, this time under the Rent Act 1977. On May 27 1982 a further increased fair rent of £18.50 per week exclusive was registered, also under the 1977 Act. The provisions of the 1968 and 1977 Acts are for present purposes indistinguishable, and I make reference to the later Act. Section 45(1) and (2) in effect allow a landlord to recover up to the registered fair rent ‘for any statutory period of a regulated tenancy of the dwelling-house’, but no more. Section 49 provides: (1)  Any reference in this section to a notice of increase is a reference to a notice of increase under section 45(2) of this Act. (2)  A notice of increase must be in the prescribed form. (3)  Notwithstanding that a notice of increase relates to statutory periods, it may be served during a contractual period. (4)  Where a notice of increase is served during a contractual period and the protected tenancy could, by a notice to quit served by the landlord at the same time, be brought to an end before the date specified in the notice of increase, the notice of increase shall operate to convert the protected tenancy into a statutory tenancy as from that date. Thus notice of increase served under the 1968 or 1977 Acts could operate to convert a contractual tenancy into a statutory tenancy but only if the date specified in the notice of increase is later than the date on which the contractual tenancy could be determined by a notice to quit served at the same time as the notice of increase. The plaintiffs’ problem was that they could produce no copy of any notice of increase served on Mr Blake at any time. They were therefore obliged to ask the court to infer, from the fact of the increases themselves, that on some occasion a notice of increase had been served which would convert Mr Blake’s protected tenancy into a statutory tenancy by giving the length of notice required under section 49(4). In asking the court to draw this inference the plaintiffs relied on four authorities: Summers v Donohue [1945] 1 KB 376, Brock v Wollams [1949] 2 KB 388, Marcroft Wagons Ltd v Smith [1951] 2 KB 496 and Solomon v Orwell [1954] 1 WLR 629. These cases do indeed show, as Denning LJ put it in Marcroft (at p 504), that: when a tenant has been in occupation for many years, the court may have to act on very slight indications in determining whether or not a statutory tenancy has arisen. In my judgment, however, these cases must be applied with very considerable caution because all of them were decided under the Acts of 1920 and 1923, which differed in their effect from those with which we are concerned. The effect of section 3(2) of the 1920 Act was to make ‘any agreement to increase the rent without a formal notice in the form prescribed by the Act invalid and illegal’ (per MacKinnon LJ in Summers at p 380). Furthermore, section 1(1) of the 1923 Act had the effect that any notice of increase served under the 1920 Act would determine an existing contractual tenancy, even if the notice given would have been inadequate for a notice to quit. Where, therefore, as in those cases, there was evidence that the rent had in fact been increased, it was natural to infer that the notice of increase which the law required had been given, and that notice automatically acted as a notice to quit. The Acts with which we are concerned do not, however, as I understand, prohibit agreement to increase the rent provided the rent agreed does not exceed the level of the registered fair rent, and a notice of increase does not operate to convert a contractual into a statutory tenancy unless the requirements of section 49(4) are observed. These considerations make it very much harder to draw any inference from the mere fact that the rent was increased. Although no notices of increase survive from this period, the judge’s attention was drawn to a notification of registration of a registered rent dated April 10 1973 and to copies of rent register entries dated June 25 1976, July 17 1979 and May 25 1982. Counsel for Mrs Sullivan pointed out that in none of these cases was the date of registration 28 or more days before the date when the increase became effective. This was the notice necessary for an effective notice to quit. He accordingly suggested that in all probability any notice of increase had not given enough notice to convert the contractual tenancy into a statutory tenancy. The judge appears to have been impressed by this argument. It was, however, submitted to us for the plaintiffs that the registered ‘effective from’ date only governed the date from which the increase could be charged and did not support the inference that agents acting for the plaintiffs had given notice of increase to take effect on the ‘effective from’ date. We see force in this, but it is evident that in two cases the date of registration was some months later than the ‘effective from’ date and in one case it was the same day; it is not unlikely that the agents were keen to obtain the increased rent at the earliest possible date. In my view, these documents do not help Mrs Sullivan, as the judge perhaps thought. But nor do they help the plaintiffs. At the end of the inquiry we are left with no evidence that the rent was during this period increased, but that fact does not have the significance it had under the earlier Acts. The learned judge declined to draw the inference that a notice in proper form to convert the nature of the tenancy had probably been served. Even if he had treated the rent registration documents as neutral he would, I think, have been of the same mind. I am not persuaded that his conclusion was wrong; indeed, in the almost total absence of evidence which faced him, I think he was right. If, therefore, Mrs Hill is to be treated as the contractual tenant following her father’s death (as it is accepted that she should, if he was a contractual tenant when he died), it is next necessary to ask, as the judge did, whether her contractual tenancy had ever been determined. The judge ruled that it had not. I have reached a different conclusion, although only on grounds which were admittedly never argued before the judge. Increased fair rents were registered on August 7 1984 (effective from September 9) and July 15 1986 (effective from September 9). In these cases the notices of increase sent to the tenant were available. As the matter was put before the judge, it appeared that the notice on the first occasion was dated (probably) August 14 1984 and may have been sent later, giving notice that the increase was to be effective from September 10 1984, and on the second occasion the notice was sent on August 22 1986, to take effect on September 15. On these facts the judge was bound to hold, and did, that the notices did not act as notices which would convert the nature of the tenancy under section 49(4). Before us, counsel for the plaintiffs took a point not argued below but which, as a point of pure law which could not have been affected by evidence, we permitted to be argued. Counsel pointed out that the notice of August 14 gave notice of two increases, one to take effect on September 10 1984 and the second a year later on September 9 1985. Phased increases of this kind were permitted by the Act. While, therefore, the notice given of the earlier increase was on the findings insufficient to convert the protected tenancy into a statutory tenancy, the notice given of the later increase was quite long enough to have that effect. Mr Jenkins for Mrs Sullivan was unable to counter this argument, save by attempting to draw an analogy with uncertainty in notices to quit. There is, however, no uncertainty here. Section 49(4) does not apply on the first date given, but there is nothing to suggest that the subsection is inapplicable to a phased notice, and the notice was quite clearly enough for the section to apply on the second occasion. I therefore conclude that Mrs Hill’s tenancy (if she still had one) became a statutory tenancy on September 9 1985. That conclusion, however, makes it necessary to consider a question argued before the judge, but which he did not in the circumstances find it necessary to decide: what was the effect in law of what passed between Mrs Hill and Mrs Sullivan in January 1983? Mr Rabie for the plaintiffs urged us, if we reached this point, to determine the question. Mr Jenkins for Mrs Sullivan asked us to send it back to the judge, since he had made no finding on it. If there were further evidence to be called, or if the issue depended on credibility, the latter course would be unavoidable. The parties, however, deployed their full cases before the judge, expecting him to decide the question. We have the notes of evidence. The only relevant evidence is that of Mrs Hill and Mrs Sullivan. Plainly, the judge did not disbelieve either of them. His task would have been not to make findings of fact but to analyse the effect in law of informal acts done by the two sisters without regard to the nice legal implications of their conduct. I do not think that this is a task which we would be justified in remitting to the judge. Mrs Hill in a defence of her own composition said: ‘My father100 made the tenancy to me’. In her evidence she said (according to the note): . . . we moved out to Redditch and never intended to return. I said to my sister ‘You can move in if you like’. That’s how it went. It was Dad’s wish. . . . Nothing really was said. I can’t really recall words about the rent. Maybe it was ‘You pay and you can have it’. She came in and in two weeks then I left. . . . When I left I only wanted my sister to have it and get out myself. There were too many sad memories for me in that house. Mrs Sullivan said: She (Mrs Hill) asked me if I wanted to move back in. Nothing was said about rents to the landlord, we just carried on paying as normal. The first defendant was still there but she left in one or two weeks. . . . Although conduct of this kind does not lend itself readily to legal classification, it seems quite plain that Mrs Hill did not surrender the tenancy which she believed herself to have to the landlords. Equally plainly, as I think, she did not abandon the tenancy, as she would have done if she had simply left, leaving the house empty, without installing Mrs Sullivan in her place. I do not think this transaction can be realistically seen as the grant of a subtenancy, since on the evidence Mrs Hill plainly did not intend to retain any interest in the house and did not regard herself as under any obligation to the plaintiffs. For the same reason the transaction cannot be analysed as a licence. Plainly Mrs Sullivan was not Mrs Hill’s lodger. The only possible conclusion is, in my opinion, that Mrs Hill assigned her interest to Mrs Sullivan. This accords with the reality of the situation as I understand it, since they both believed she had something to transfer and they both believe that she was transferring it so that Mrs Sullivan would stand in her shoes as tenant. It is not suggested that there was any term of the contractual tenancy which forbade assignment. It follows that, in my judgment, Mrs Hill had in truth assigned her contractual tenancy before it would otherwise have been determined by notice in September 1985. The plaintiffs did not then know of the assignment and believed Mrs Hill to be the tenant still. In the circumstances the notice must, I think, be treated as addressed to Mrs Sullivan. Her contractual tenancy was then determined and she became a statutory tenant. But as such she is, in my judgment, entitled to protection under the Act and I do not understand the contrary to be suggested. It follows that the plaintiffs are not entitled to an order for possession against her. I think, although the point is entirely academic, that they are entitled to an order against Mrs Hill. It was further argued for Mrs Sullivan that the plaintiffs had granted her a new tenancy. Even on the basis of the evidence most favourable to her, I am not persuaded that the plaintiffs ever did so. It is not, however, necessary to express a concluded view. I would vary the judge’s order to the extent of making a possession order in the plaintiffs’ favour against the first defendant, Mrs Hill, but I would otherwise dismiss the appeal. MANN LJ agreed and did not add anything. The appeal was dismissed with costs. Legal aid taxation of the respondent’s costs was ordered.