Jessamine Investment Co Ltd v Schwartz

A subtenant who acquires possessory title as against the mesne landlord does not thereby lose the protection of the Rent Acts as against the freeholder This was an appeal by Jessamine Investment Co Ltd, freeholders of a house at 29 Evering Road, Stoke Newington, London N16, from a judgment of Judge Roger Willis at Shoreditch County Court on June 23 1975 dismissing their claim against their tenant, Mrs Miriam Schwartz, for possession of the premises. L Bromley QC and R Campbell (instructed by Gale & Phelps) appeared for the appellants, and R Bernstein QC and R Tager (instructed by Rose & Birn) represented the respondent. Giving the first judgment, SIR JOHN PENNYCUICK said that there were two issues before the court: (1) whether Mrs Schwartz as statutory subtenant had acquired a possessory title as against the mesne landlord, and (2) whether, if so, she had thereby lost the protection of the Rent Acts as against the freeholder. On November 19 1875 the freeholder’s predecessor in title demised the house in question and another one in Evering Road to James Slater for a term of 99 years commencing on December 25 1874. The leasehold interest was severed in 1924, and the leasehold of the house with which the court was concerned was assigned to a Mrs David. The freehold was also severed at some time. In about 1937 Mrs David granted a weekly tenancy to Mrs Schwartz, then Mrs Levy, and her husband. The rent was 35s a week, which was increased to £2 shortly before or after 1939. At that point the contractual tenancy ceased and a statutory tenancy came into effect. During the war, Mrs David went to live in Cheltenham and made no further demand for the rent. Nothing turned on the precise date when rent ceased to be paid; it was by 1945 at the latest. Mr and Mrs Levy had not withheld the rent; they simply did not know where Mrs David was. In 1948 Mr Levy died and Mrs Levy became the sole statutory tenant. In 1973 Mrs Schwartz, as she had become by that time, applied to be registered as proprietor of the premises with a possessory title, as the period of limitation had expired in her favour in 1957. She had no knowledge of the existence of any leasehold interest. The registration did not take effect, and the headlease expired by effluxion of time on December 25 1973. After protracted correspondence between solicitors, the freeholder began an action for possession. The judge found for Mrs Schwartz, basing his decision on section 75(1) of the Land Registration Act 1925. An alternative basis which depended on Part I of the Landlord and Tenant Act 1954 had been abandoned by counsel. Mr Bromley, for the freeholder, contended that a statutory tenant could acquire possessory title by non-payment of rent, as had been established in Moses v Ludgrove [1952] 2 QB 533, and it was plain that section 9(2) of the Limitation Act 1939, dealing with periodic tenancies without a lease in writing, squarely covered the facts of the case. By the operation of the proviso to the subsection, Mrs Schwartz acquired a possessory title against Mrs David 12 years after the date of the last payment of rent. Having regard to the decision in Fairweather v St Marylebone Property Co Ltd [1963] AC 510, Mrs David’s title was extinguished as against Mrs Schwartz in 1957 but continued to exist as against the freeholder until 1973. The crucial question that thus arose was whether Mrs Schwartz’s acquisition of the leasehold interest by way of possessory title destroyed her interest as a statutory tenant as against the freeholder. He (his Lordship) thought not. He agreed with Mr Bromley for the freeholders that section 18 (2) of the Rent Act 1968 was inapplicable to the case of a person who had once been a subtenant but no longer was so at the date when the headlease determined. Nevertheless the general provision in section 3 (1) concerning conversion of protected tenancies into statutory tenancies operated in Mrs Schwartz’s favour. When she acquired Mrs David’s lease, the headlease continued to exist; she was then no longer a subtenant, but her new direct relationship with the freeholder was insufficient to determine her statutory tenancy. The character of her occupation had not changed, and she had in no way lost the protection of the Rent Acts. The appeal should be dismissed. STEPHENSON LJ, concurring, said that it would be unjust that the Limitation Act, which was intended to protect the tenant, should operate to do her harm. MEGAW LJ, also concurring, said that he was not altogether satisfied that section 9 (2) of the Limitation Act applied where a landlord, by his own conduct, prevented a tenant from paying rent. For the purposes of this appeal, however, he would accept the decision in Moses v Ludgrove. The appeal was dismissed with costs, and leave to appeal to the House of Lords refused.