Metrobarn Ltd v Gehring

Fair rent registered for flat on an unfurnished basis–Premises subsequently let, before the Rent Act 1974 came66 into operation, on a furnished basis and at a rent higher than the registered figure–Recoverable rent held to be the higher one notwithstanding the passing of the 1974 Act–Order for possession unless £900 odd was paid in a short time upheld on appeal This was an appeal by Mrs Celia Gertrude Gehring, of 63 Benhurst Court, Leigham Court Road, Streatham, London SW16, from a judgment of Judge MacDonnell at Lambeth County Court on February 18 1976 ordering the appellant’s husband, Mr John Gehring, to pay the respondents, Metrobarn Ltd, of Grosvenor Street, London W1, arrears of rent amounting to £954, and granting an order for possession suspended on conditions as to payment. Mr S J Sedley and Mr E A Bano (instructed by Mr J K Woolley of Lambeth Community Law Centre) appeared for the appellant, and Mr P H Collins (instructed by Cowan, Lipson & Rumney) represented the respondents. Mr Gehring, the first defendant in the action, took no part in the appeal. Giving judgment, CAIRNS LJ said that Mr Gehring was tenant of the flat. At the outset he was the only defendant. The second defendant was his wife, and she asked to be joined because the marriage had broken up, her husband had left her and she was now living in the flat with their child. What happened was that in February 1973, at a time before the defendants came on the scene and when only unfurnished tenancies were protected under the Rent Act, the rent officer registered the rent of this flat as £400 a year. On June 1 1974 Mr Gehring took a six months’ tenancy of the flat with furniture at a rent of £20 a week. There was an option for renewal, but it was not exercised. There was at the outset of the hearing in the county court an issue whether the furniture was sufficiently substantial to make the tenancy a furnished tenancy under the Rent Act 1968, but before judgment was given it was accepted that the furniture was sufficiently substantial for that purpose. On August 14 1974, during the currency of the six months’ tenancy, the Rent Act 1974 came into operation and the tenancy then became a protected one under section 1 of that Act. After November 30 1974 the defendants continued in occupation, and it was now common ground that the husband became a statutory tenant. In January 1975 he left, and it was agreed that since then he had continued to be the statutory tenant, the wife occupying the flat by reason of her rights under the Matrimonial Homes Act 1967. In these circumstances, the wife said that the rent recoverable was the registered rent, and that more than this had already been paid. The landlords said that the registered rent was registered under Part IV of the Act of 1968, which dealt only with unfurnished tenancies, and that the rent for the furnished tenancy was now the contractual one of £20 a week. The county court judge held that registration of a rent under Part IV of the 1968 Act did not operate to fix the rent payable under a furnished tenancy of the premises. He said that it would be absurd if after a good deal of furniture had been installed a fair rent fixed for an unfurnished tenancy should continue to apply. He gave the respondents judgment for £954, with an order for possession of the flat within 28 days, the order to be suspended on payment of £23 arrears by March 18, £23 by April 18, and the balance of £908 by May 18 1976. Mrs Gehring appealed, submitting that in the events which had happened no arrears had arisen. Alternatively she said that the condition of suspension whereby as large a sum as £908 was to be found so soon was wrong in principle. Mr Sedley, who had presented a very interesting argument on the appellant’s behalf, sought to refute the argument as to absurdity by saying that the landlord could immediately apply for the registration of an increased rent. Counsel drew the court’s attention to section 44 (3) of the Act of 1968. The presence or absence of furniture, he said, would be a circumstance taken into account in registering a fair rent. If the argument presented for the appellant was right, the effect of the Act of 1974 would be to displace a rent which was a lawful rent up to August 14 1974 in favour of a rent which would be manifestly inappropriate, and to place on the landlord the onus of getting it changed. Mr Sedley said that this was the necessary result of section 1 of the 1974 Act. He said that once a furnished tenancy became a protected tenancy it became subject to all the incidents attached by the 1968 Act to protected tenancies, one of which was that once a rent had been registered under Part IV of the Act of 1968 no higher rent, with immaterial exceptions, could be recovered until such higher rent had been registered. He (his Lordship) saw no reason to interpret section 1 of the 1974 Act as carrying the implication that a Part IV registration effected in relation to unfurnished lettings should have effect in relation to a furnished letting. What had to be registered under Part IV was a fair rent. What would be a fair rent for an unfurnished letting would not be a fair rent for a substantial furnished letting. If the registration under Part IV was to apply to furnished lettings, then in his (Cairns LJ’s) judgment much clearer words than the general words of section 1 of the Act of 1974 would be required to bring about that result. He therefore agreed with the county court judge as to what was the recoverable rent of these premises. Mr Sedley went on to submit that the county court judge was wrong in law because, having purported to grant a suspension of the operation of the order for possession under section 11 of the 1968 Act, he granted what was not really a suspension at all, the £900 odd being something which it was plainly impossible for either of these defendants to pay. That argument seemed to him (his Lordship) quite unsustainable. What was given by section 11 was a discretion to the judge to suspend. It could not be said that a suspension for three months, with monthly payments in the meanwhile and then a large payment at the end of the period, was not a suspension. It clearly was. The only way in which it would be possible to make any sort of attack on the order made below was by seeking to convince the Court of Appeal that the judge’s exercise of his discretion was plainly wrong. He (Cairns LJ) was by no means satisfied that it was. The interests of landlords as well as those of tenants had to be taken into account. The appellant with the assistance of her husband and the assistance of friends might be able to provide this admittedly large sum; there was no evidence as to whether she could or not. But it could not be said that it was unreasonable, if she could not provide it, that then the landlords should be entitled to possession. This ground of appeal should accordingly be rejected also, and the appeal as a whole should be dismissed. Agreeing, LAWTON LJ said that in 1974 Parliament had in at least one context appreciated that there might have to be a carry-over from one type of possession to another. By section 54 (5) of the Act of 1974, special provision was made for the carry-over of a registered rent under Part VI of the 1968 Act into the new legal situation created by the 1974 Act. Parliament did not see fit to make any special provision for a carry-over from a fair rent situation under Part IV into the new protected furnished tenancies which came into existence under the 1974 Act, and he (his Lordship) would infer from that that Parliament had not intended that the fair rent provision in the 1968 Act in relation to unfurnished tenancies should apply, automatically, to the furnished tenancies which were brought within the 1974 Act. SHAW LJ also agreed, and the appeal was dismissed. Applying for leave to appeal to the House of Lords, Mr Sedley said that the point affected a great many tenants and landlords, and county court judges throughout London had been taking opposite views about the construction of this legislation. Leave was refused, but a stay granted for 28 days pending any application to the House, to continue if the application for leave to appeal was granted; both branches67 of the stay being conditional on payment of current rent of £20 a week and £23 a month off the arrears. Mrs Gehring was stated to have been granted a legal aid certificate on April 23 1976. A sum of £200 had been paid into court voluntarily by the Lambeth Community Law Centre as security for the costs of the appeal. The court made an award of costs in favour of the landlords to the extent of the amount of the security.