Patoner Ltd v Alexandrakis

Rent Act 1977 — Appeal against order for possession of flat granted in county court — Position of subtenant — Headlease contained a general restriction on subletting but permitted subletting of a part without consent on terms which provided for a substantial part of the rent to represent payment for the use of furniture, which enabled the letting to be determined within 12 months and ‘which are otherwise consistent with the letting of high-class furnished accommodation’ — The head landlords, having obtained possession as against the tenant, then sought a possession order against the defendant subtenant and the question arose as to whether the defendant was a lawful subtenant or not — If unlawful the defendant could not claim protection under section 137 of the 1977 Act — It was held by the assistant recorder that the subtenancy was unlawful as it was in breach of the covenant against subletting in the head lease — On the evidence the subtenancy was not a furnished letting at all (there being only one or two articles of furniture) and therefore was not let on terms ‘consistent with the letting of high-class furnished accommodation’ — The subtenancy was accordingly unprotected and the plaintiffs were entitled to a possession order — Held by the Court of Appeal that the possession order was correctly made — Appeal dismissed This was an appeal by the tenant, E Alexandrakis, against a possession order granted by Mr Assistant Recorder Trench, at West London County Court, to the ‘head’ landlords, Patoner Ltd, in respect of Flat A at 5 Emperor’s Gate, London SW7. Paul Staddon (instructed by Oliver O Fisher & Co) appeared on behalf of the appellant; Miss Erica Foggin (instructed by Pritchard Englefield & Tobin) represented the respondents. Giving the first judgment at the invitation of Purchas LJ, BROWNE-WILKINSON LJ said: This is an appeal from a decision of Mr Assistant Recorder Trench, sitting at the West London County Court, when he granted to the plaintiffs, Patoner Ltd, possession of Flat A, 5 Emperor’s Gate, London SW7, which was in the occupation of Mr Alexandrakis, the defendant. Mr Alexandrakis appeals to this court. 5 Emperor’s Gate is a large Victorian house split into flats. The entire house was purchased in 1968 by the plaintiff company, at which date furnished houses were not protected by the Rent Acts. The intention of the plaintiff company was to buy for investment purposes, the scheme being that they would grant a lease of the house as a whole to four partners who would then sublet to tenants. The plaintiff company itself did not furnish the flats; that was left to the tenants. The transaction was carried out by a lease dated June 11 1968 in which the plaintiffs let the entire house to the four partners for a term of 14 years expiring on May 31 1982. The terms of the lease, in clause 2(xvii), dealt with assignment and underletting: (a)  Not to assign charge underlet or part with possession or licence to occupy part of the demised premises (except as expressly permitted in sub-clause (c) hereof) (b)  Not to assign charge underlet or part with possession of or grant a licence to occupy the whole of the demised premises without the prior written consent of the Landlords such consent not to be unreasonably withheld. (c)  Not to part with possession of or give licence to occupy any parts of the demised premises less than the whole except that the tenant shall be permitted to sublet parts without consent on terms (i) which provide for a substantial part of the rent or licence fee to represent payment for the use of [forfeiture] (ii) which enable the letting to be determined within twelve months (iii) which are otherwise consistent with the letting of high-class furnished accommodation. (It is common ground that the word ‘forfeiture’ in (c)(i) is a mistyping for ‘furniture’). The term granted by the lease became vested in a limited company, Anro Properties Ltd. In June 1981 Anro Properties purported to grant to Mr Alexandrakis the subtenancy of Flat A. The learned judge found that the contents of the flat, as let to Mr Alexandrakis, did not include a bed, table, chairs, and so on. He found that there was only one carpet, one chair and curtains in the front room. He records: ‘Mr Alexandrakis correctly described it as almost bordering on the unfurnished.’ The plaintiff company, having obtained possession as against Anro Properties, then proceeded to seek possession from Mr Alexandrakis. It is common ground in this court, though it was not below, that if Mr Alexandrakis’ lease from Anro was lawful and valid, he enjoys the protection of the Rent Acts as against the plaintiff company. If, on the other hand, the subletting by Anro to Mr Alexandrakis was unlawful, being in breach of the covenant against assignment and subletting in the headlease, then Mr Alexandrakis does not enjoy security of tenure and the judge’s order was right. The matter, therefore, turns on whether in the circumstances the grant of a subtenancy by Anro was in breach of the clause in the headlease which I have read. The learned judge found that it was. In an admirable judgment he deals with this part of the case in these words: The next question was whether the tenancy was lawful or not. It is important to remember that only if the tenancy was lawful at the time proceedings were instituted could the subtenant claim protection under the Rent Act. I have received evidence from Mr Kaye as to what he considered to be a high-class furnished letting. In my opinion Mr Kaye’s standards are somewhat high; I wonder whether the absence of central heating would in fact render a letting not high class and whether the exterior need be well decorated. To decide whether or not the letting is furnished or otherwise I look to the ordinary meaning of the word furnished — was there enough furniture there to enable the house to be lived in: see Megarry on Rent Acts on p 137 and Rintoul v Herman [1949] Estates Gazette Digest 132. In this case there were no bed, tables, chairs and so on. Only one carpet, one chair and curtains in the front room. Mr Alexandrakis correctly described it as almost bordering on the unfurnished. The furniture provided by Anro was not such to enable the flat to be described as a furnished letting, high class or otherwise. In these circumstances it is unnecessary to decide whether or not the rent was too low to be consistent with a high-class furnished accommodation. Therefore the letting by Anro to Mr Alexandrakis was in breach of covenant.’ Mr Staddon, who has appeared on behalf of Mr Alexandrakis, has attacked that part of the learned judge’s decision. Dealing with the subparas in subclause (c) in turn, he first submits that the learned judge’s finding, if directed to showing that the case could not fall within the exemption in (c)(i), is defective, since the learned judge was not directing himself to the matter raised by (c)(i), which is the ratio between the rent attributable to furniture and the rent attributable to the premises. I would accept Mr Staddon’s submissions on that point, but, in my judgment, the learned judge was not considering (c)(i) at all. Subclause 17(c)(ii) does not affect the case. The question, therefore, is whether the subletting could be regarded as lawful, not having the landlord’s consent, as being a letting on terms ‘which are otherwise consistent with the letting of high-class furnished accommodation’. I read the learned judge’s judgment as saying that he was not bound to consider whether this was or was not a high-class letting. In this case it was not a furnished letting, and therefore it could not have been let on terms which were consistent with the letting of furnished accommodation. For myself I think the judge was quite right in that view. Mr Staddon says that (c)(iii) is not directed to terms dealing with the quantity of furniture but to matters other than the furniture itself, terms ‘otherwise’ relevant to a high-class furnished letting. I can see no necessity so to read it. As Mr Staddon has emphasised, (c)(i) is not dealing with the amount of furniture but with the proportion of the rent attributable. Miss Foggin very fairly summed it up by saying that the terms of the tenancy can only be consistent with the letting of high-class furnished accommodation if sufficient furniture is provided to enable the place to be lived in; the terms cannot be consistent with such a letting if insufficient furniture is provided. That, in effect, is what the judge has said in this case. There was here insufficient furniture to enable the house to be lived in; there was, therefore, a letting on terms which did not provide for sufficient furniture for that purpose; accordingly, following the remarks of Lord Greene in Rintoul v Herman, it is not a furnished letting and therefore cannot have been let on terms which were consistent with a letting of furnished accommodation. 125 A point was made that the actual document whereby the premises were let to Mr Alexandrakis was not produced. If anybody could produce it as between these two parties, it would be for Mr Alexandrakis to do it. In the absence of the agreement being produced by the party in whose custody it was, the learned judge was entitled to assume that the terms of the letting were consistent with what had happened, ie a letting on terms which provided inadequate furniture. For those reasons, though I have great sympathy for Mr Alexandrakis, who appears to have been misled by Anro in his dealings with this property, I am afraid he has no protection under the Rent Acts and the learned judge’s order for possession was rightly made. I would dismiss the appeal PURCHAS LJ agreed and did not add anything. The appeal was dismissed with costs, the defendant’s liability for the purposes of legal aid being assessed at nil.