John Sainesbury & Co (a firm) v Roberts

Possession of furnished premises–Order made shortly before Rent Act 1974–Judge should exercise discretion given by Act’s transitional provisions to rescind order unless landlord can point to relevant circumstances making such a course inequitable–Case remitted for rehearing This was an appeal by Mr John Alan Roberts, tenant of a dwelling-house at Long Ashton Road, Long Ashton, Bristol, from a judgment of Judge Russell at Bristol County Court on September 30 1974 refusing an application by him under paragraph 3 (3) of the Third Schedule to the Rent Act 1974 to rescind an order for possession of the dwelling-house made in favour of the respondents, John Sainesbury & Co, a firm, on July 29 1974, before the Act came into force, but varying the order by suspending its operation until November 30 1974. Mr R L Denyer (instructed by Hextall, Erskine & Co, agents for Cartwrights, of Bristol) appeared for the appellant, and Mr C F Sara (instructed by Jenkins, Moore & Co, of Bristol) represented the respondents. Giving judgment, MEGAW LJ said that the appeal raised an interesting and not altogether easy point on the construction of the Rent Act 1974. Since January 1972 Mr Roberts had been the tenant of the bungalow in question under a furnished letting. The original tenancy had expired and had been succeeded without a break in possession by successive tenancies. The last tenancy, dated November 23 1973, gave the tenant the right to reside in the premises for six months, so that it would have expired by effluxion of time on May 22 1974. Under the law as it then stood, the tenant was not protected by virtue of any legislation. In consequence, when he did not give up possession of the premises, the landlords instituted proceedings claiming possession and mesne profits. On July 29 1974 the county court registrar made an order for possession, but stipulated that the tenant might remain in possession until September 29 1974, though the suspension for the period August 29-September 29 was made conditional on payment of £78 to the landlords before August 29. The landlords were also given judgment for £252 for rent, mesne profits and costs. As he (his Lordship) understood it, there was no question, when the order was made, of any rent having been unpaid beyond the date on which it was due for payment. On July 31 the Rent Act 1974 was passed, and the relevant parts came into operation on a date in August. By section 1 (1): ‘On and after the commencement date, (a) a tenancy of a dwelling-house shall no longer be prevented from being a protected tenancy for the purposes of the Rent Act 1968 by reason only that, under the tenancy, the dwelling-house is bona fide let at a rent which includes payments in respect of the use of furniture. . . .’  That section, standing by itself, would only become operative when the Act came into operation, but the Act contained transitional provisions in Schedule 3, paragraph 3 (3) of which provided: Where a court has made an order for possession of the dwelling-house before the commencement date but the order has not been executed, the court, if of opinion that the order would not have been made if the tenancy had been a protected furnished tenancy when it came to an end, may, on the application of the person against whom it was made, rescind or vary it in such manner as the court thinks fit for the purpose of giving effect to section 1 of this Act. In this case the order for possession had been made before the commencement date of the Act but it had not been executed, and accordingly, so far, paragraph 3 (3) was operative. The tenant applied to the county court in September 1974 for an order under paragraph 3 (3) rescinding the order for possession, and, in the alternative, for an order postponing execution still further. The hearing of the application on September 30 was a short one. The judge’s note indicated that the tenant gave evidence that he was a married man with two children, that he had nowhere else to go, had paid the rent regularly, had applied for a house but had not got it, and had made application for a council house but had not got one because he had come from another area. The judge’s note showed that there was some cross-examination, but not what its effect was. He (the judge) varied the possession order and extended the time for another two months. He refused to rescind the order. The Court of Appeal also had before it a note prepared some two and a half months after the hearing, in which the judge said that he had seen the registrar’s note of July 29, which stated ‘Defence withdrawn,’ and that it had left him in some doubt as to whether ‘the order would not have been made if the tenancy had been a protected furnished tenancy when it came to an end.’  In any event, it seemed to the judge that the court should give weight to the words ‘or vary it in such manner as the court thinks fit,’ which he felt gave power to allow extensions longer than the77 one month that would have been given before the Act. It was accepted for the purposes of the appeal that the registrar’s order of July 29 1974 was an order for possession that would not have been made if the 1974 Act had been in operation on the date on which it was made. That order had been made simply and solely because it was a furnished tenancy, and there were then no other circumstances existing which would have justified the making of an order for possession against the tenant. That being the position, the first part of paragraph 3 (3) was shown to have been fulfilled. However, the judge’s note left him (his Lordship) in some doubt as to whether the judge thought that that was the position. It was possible that he was of the opinion that the tenant had failed to show that he complied with the conditions of the opening words of paragraph 3 (3), because it might be that the words ‘defence withdrawn’ were some indication that the order would have been made even if the 1974 Act had already come into force. If that was indeed the judge’s view, so that it affected his mind as to whether or not it was right to rescind the order, that would have been an error on his part. Mr Denyer, for the tenant, had submitted, first, that the judge had no discretion at all once it was accepted that the order for possession would not have been made if the Act had been in force. He (Megaw LJ) was unable to accept that. It was clear, both on the wording of paragraph 3 (3) and on the authority of Mouat-Balthasar v Murphy [1967] 1 QB 344, that there was a discretion in a judge whether or not to rescind the order which came into existence once it was shown that the order would not have been made if the Act had been in force. Mouat-Balthasar’s case was conclusive on that point. That case arose on section 20 (1) of the Rent Act 1965, which was to all intents and purposes the same as paragraph 3 (3) of Schedule 3 to the 1974 Act. The terms of the judgments, particularly that of Salmon LJ at page 258, made it clear that the county court judge did have a discretion which he had to exercise. When, however, one came to the manner in which the discretion had to be exercised, then having regard to the concluding words of paragraph 3 (3), once it was clear that the order would not have been made if the Act had been in force, discretion had to be exercised to rescind the order unless there were some reason shown to the judge why it would be in the circumstances unfair, unjust or inequitable to do so. Relevant factors, in that respect, might arise from the evidence of the tenant, or of the landlord; and there might be things which had happened since the original order was made. There might be relevant factors of hardship. He (his Lordship) would not seek to define or limit the scope of the circumstances which might be regarded as relevant. Here their Lordships had been told that the judge was not minded to hear evidence from the landlord. In all the circumstances it could not be said that he had applied his mind to the right principle in the exercise of his discretion, and the correct order was for the court to direct that the application be sent back for a further hearing, to be determined in the light of the general principle enunciated. ORR LJ agreed. Also agreeing, SIR GORDON WILLMER said that it was plain that the words of paragraph 3 (3) conferred a discretion on the court hearing an application, but the sting of that paragraph was in its tail, for it was made quite clear that the discretion had to be exercised in such manner as the court thought fit ‘for the purpose of giving effect to section 1 of this Act.’  The effect of section 1 was to bring furnished tenancies for the first time into line with unfurnished tenancies as far as security of tenure was concerned. Consequently, when it came to exercising discretion on an application under paragraph 3 (3), the court ought to take into consideration exactly the same considerations as it did in relation to unfurnished tenancies, which had been referred to in the case as ‘Rent Act grounds.’ The appeal was allowed, and the case remitted to Bristol County Court for rehearing of the tenant’s application.