Rent Act 1977 — Case 6 in Schedule 15 — Effect of vesting assent by executors in favour of a person not named as a beneficiary in the will — On the death of a tenant who held a tenancy subject to restrictions on assignment etc, his executors assented to the vesting of the tenancy in a person who was not in fact a beneficiary — No consent to the disposition made by assent was sought from the landlord, who refused to recognise the assent as effective to transfer the tenancy from the executors — In this the landlord was mistaken, having regard to Old Grovebury Manor Farm Ltd v W Seymour Plant Sales and Hire Ltd (No 2) and Governors of Peabody Donation Fund v Higgins — The landlord’s reversion was assigned to the present respondents who, as plaintiffs, brought an action for possession of the subject flat, relying on Case 6 in Schedule 15 to the 1977 Act, on the ground that the executors had assigned the whole of the dwelling-house without the consent of the landlord — Held, upholding the order for possession made by the county court judge, that Case 6 applied and that there was no evidence that the landlord had consented to the assignment — As to the question whether it was reasonable to make the order for possession, there was no ground for the submission that the judge had misdirected himself — He was entitled to take into account as a relevant factor that the execution of the assent in breach of covenant had put a person into possession who was able to qualify for a statutory tenancy when the contractual term ended — Appeal dismissed
This was an
appeal by the statutory tenant, Mrs Patricia McGrath, from a decision of Judge
Edwards at West London County Court, granting an order for possession of a flat
at 5c Nevern Square, London SW5, to the landlord, Pazgate Ltd.
Norman Primost
(instructed by Graham Harvey & Co) appeared on behalf of the appellant;
David Neuberger (instructed by Fairchild Greig & Wells) represented the
respondent.
Giving
judgment, FOX LJ said: This is an appeal from an order of His Honour Judge
Edwards at the West London County Court whereby he made an order for possession
in six months of a flat in the occupation of the first defendant at 5c Nevern
Square, London SW5.
By a lease of
July 27 1972 the premises were let by a Mrs Collins for a term of five years
from July 29 1972 to Mr John McGrath. Mr McGrath took the lease to provide a
home for his daughter-in-law (the first defendant) and her two young children,
who were then aged five and two. That situation arose because of the precarious
financial circumstances of Mrs McGrath’s (the first defendant’s) husband. There
are certain provisions of the lease which I ought to read. In clause 2(9) the
tenant covenants:
Not to charge
underlet or part with the possession of the demised premises (otherwise than is
provided in Clauses 2(10) and 2(11) hereof) nor to assign charge underlet or
part with the possession of any part thereof.
Then clause
2(10):
Not to assign
the demised premises as a whole without the previous consent in writing of the
Landlord such consent subject as hereinafter provided not to be unreasonably
withheld to an assignment to a respectable and responsible person PROVIDED
ALWAYS that if the Tenant desires to assign the demised premises as a whole as
aforesaid he shall first by notice in writing to the landlord offer to
surrender the Lease on the next subsequent quarter day or if that be within two
calendar months of the said notice then upon the second subsequent quarter day
without any consideration and the Landlord may within twenty eight days of the
service of such notice upon her accept such offer such acceptance to be in
writing and without prejudice to all rights and remedies of the Landlord
hereunder in respect of rent or breach of covenant. If the said offer is not accepted
by the Landlord or on her behalf within the said twenty eight days it shall be
deemed to have been rejected.
Clause 2(11)
is in these terms:
Not to permit
to be exhibited on or in any of the windows doors or other parts of the demised
premises any name or announcement whatsoever nor to use the same for any
illegal or immoral purpose but to use the demised premises as a private
residence for the occupation of his Son Michael David Blake McGrath and his
said Son’s Wife and their children only.
The lease was
renewed in 1977 for a further term of five years ending on July 29 1982.
Mr John
McGrath died in the month of July 1981, and the second defendants are the
executors of his will. Apart from some legacies, the whole estate was given by
the will to Mr McGrath’s widow, who is herself one of the executors.
On January 15
1982 the executors assented to the vesting of the lease in the first defendant,
Mrs McGrath, the daughter-in-law. They protected themselves by a deed of
indemnity from Mrs McGrath, as would be ordinarily prudent for executors who
were disposing of the lease in such circumstances. No consent to the
disposition effected by the assent was sought from the landlord. Notice of the
assent was given to the landlord’s solicitors on or about February 8 1982.
There then followed over a substantial period correspondence between the
parties, and it is necessary to refer to that in more detail.
I start with a
letter of March 24 1982 to Blandy & Blandy, who were Mrs McGrath’s
solicitors, and the letter is written by Collissons, who were the solicitors
for the landlord. It reads:
With
reference to your letter of February 8 and the enclosure sent therewith, in the
light of the terms of the Lease under which the late Mr J K U McGrath held the
premises and the provisions of his Will, we do not consider that the Executors
of the Will are entitled to transfer the Lease to Mrs Patricia McGrath. We
would mention that we have written to their Solicitors to that effect.
There is a
letter of March 24 also written to the executors’ solicitors by Collissons in
the following terms:
We have
received from Messrs Blandy & Blandy of Reading, the Solicitors acting for
Mrs Patricia McGrath, the daughter-in-law of the Deceased, a copy of what they
described as ‘an Assent given by the Personal Representatives of the tenant’
vesting the property in their client.
We enclose a
copy of our reply to Messrs Blandy & Blandy, which sets out our views on
the matter, but we shall be glad to have your comments on behalf of your
Clients.
In the
meantime we have advised Mrs Collins that she should continue to look to your
Clients for payment of the rent and that she should not accept payment from Mrs
Patricia McGrath.
I go then to a
letter of April 7 1982 from Collissons. That states:
With reference
to our letter of March 24 last, your Client, Mrs Patricia McGrath, has sent a
cheque for £205 with a covering note describing it as the next quarter’s rent.
In view of
what we said in our letter to you of March 24 and that our Client cannot accept
that your Client is the Lessee or Assignee of the lease of the flat occupied by
her, we are accordingly on her instructions returning the cheque herewith to
you as acting for Mrs Patricia McGrath.
I then go to a
letter of May 26 1982, again from Collissons. It is written to the executors’
solicitors, and I need read only the last paragraph which is in these terms:
In view of
the above, you will appreciate that we must advise Mrs Collins that the
purported assent in favour of Mrs P McGrath is of no effect and that your
Clients are liable under the terms of the Lease. It follows that rent cannot be
accepted from Mrs P McGrath and we are returning to her Solicitors the
cheque recently handed by her to Mrs Collins. We are at the same time sending
them a copy of this letter.
On May 26
Collissons wrote to Blandy & Blandy, Mrs McGrath’s solicitors, ending as
follows:
We would
refer you to our letters of March 24 and April 7 last and we are enclosing a
copy of the letter we have written to-day to Messrs Osborne Clark
— they are the
executors’ solicitors —
Your Client
sent a cheque for the rent to Mrs Collins, which she has forwarded to us and
which we are returning to you herewith for the reasons set out in our letter of
April 7.
Then on June 3
Blandy & Blandy write to Collissons as follows:
We thank you
for your letter of May 26 and note the position. Entirely without prejudice are
you able to let us know what your Client’s proposals are in relation to this
property, as naturally our Client is concerned as to her future position. For
example, would your Client be prepared to continue to accept rent from the
Executors after the expiry of the contractual term of the Lease?
I can then
jump to a letter of July 21 1982 from Collissons to the executors’ solicitors,
which contains the following paragraph:
Without
prejudice to the foregoing and in view of the fact that Mrs Collins and the
Writer were both on friendly terms with the late Mr McGrath and would much
regret being engaged in litigation with his Executors, we are wondering whether
a satisfactory solution to the present situation cannot be found. For example,
would the Executors be prepared to take an extension of the present Lease,
possibly determinable on the determination of Mrs P McGrath’s occupancy?
We should be
glad to hear from you as soon as possible since the rent tendered by Mrs P
McGrath has not in the present circumstances been accepted.
On August 13
there is a letter from Collissons to Mrs McGrath’s solicitors as follows:
With
reference to your letter July 1 last your Client sent Mrs Collins a cheque for
£205 but, as she is not the Lessee and we have no confirmation that she is
acting as Agent for the Executors, we are afraid that this cannot be accepted
and we are accordingly returning the cheque herewith.
On October 7
Osborne Clark, the executors’ solicitors, wrote to Collissons a letter which
contains the following paragraph:
We feel that
our Clients may well be interested in taking the grant of such a lease on the
basis that Mrs Patricia McGrath will occupy the flat and we should be grateful
for further details as soon as possible. We should make it clear that these
negotiations are without prejudice to our contention that Mrs Patricia McGrath
is in law the person entitled to occupy the flat, by virtue of the Assent
signed by the Executors in her favour. Her agreement to waive her rights in
this respect would therefore have to be part of any negotiated agreement
regarding a new lease in favour of our Client, but we think it likely that she would
agree to this rather than see the present uncertain situation continue.
On October 20
1982 Collissons write to Blandy & Blandy again:
Your Client,
Mrs P McGrath, has sent our Client, Mrs Collins a further cheque for £205 but
for the same reasons as we stated in our letter to you of August 13 last we are
afraid that this cannot be accepted and we are accordingly returning the cheque
herewith.
On November 5
Collissons write to Osborne Clark, the executors’ solicitors:
With
reference to our previous correspondence with regard to the above our Client
has now contracted to sell her Lease of No 5 Nevern Square. The Purchasers’
Solicitors are Messrs Fairchild, Greig & Wells . . .
On November 8
there is a letter to the executors’ solicitors from the present plaintiffs’
solicitors, saying:
We act for
Pazgate Ltd, which Company has recently exchanged contracts for the purchase of
Mrs I G Collins’s leasehold interest in 5 Nevern Square. In the course of our
pre-contract investigations, Mrs Collins’s Solicitors have disclosed to us
their correspondence with yourselves, together with the copy of your clients’
purported Assent dated January 25 1982. We have also inspected a copy of the
Will of the late J K U B McGrath, and we note that Mrs Patricia McGrath, the
present occupier of the flat, is not named as a beneficiary in the Will.
We have taken
Counsel’s Advice as to the validity of the purported Assent, and he was of the
clear opinion that it was in effect an unlawful Assignment, and that if the
Executors of the late J K U B McGrath should have wished to assign their
leasehold interest to Mrs Patricia McGrath, they should first of all have
applied for the Landlord’s approval in accordance with the procedure laid down
in the Lease. We should mention that Counsel also had the benefit of reading
your correspondence with Messrs Collissons.
In view of
the above, our clients will be seeking vacant possession of the premises
following completion of their purchase, but they would wish to give a
reasonable length of notice so that the present occupiers can make alternative
arrangements.
That concludes
such of the correspondence it is necessary for me to refer to in this judgment.
From that
correspondence a number of things emerge. First, Mrs Collins asserted
throughout that the assent was not effective to vest the lease in Mrs McGrath.
Secondly, Mrs Collins refused at all times to accept any rent from Mrs McGrath.
Thirdly, Mrs Collins’ assertion was that the executors remained the tenants.
Fourthly, Mrs Collins was prepared, because she had been friendly with Mr
McGrath and did not want litigation, to consider an arrangement under which the
executors would take an extension of the lease and Mrs McGrath would continue
to live in the flat. That in fact came to nothing.
Before I come
to the provisions of the Rent Act 1977, I should deal with the effect of the
assent. It is accepted by both parties, and contrary to what was asserted on
behalf of Mrs Collins in the correspondence which I have read, that the assent
did operate to assign the lease to Mrs McGrath and that she accordingly became
the contractual tenant. That is the effect of the decision of this court in Old
Grovebury Manor Farm Ltd v W Seymour Plant Sales & Hire Ltd (No 2)
[1979] 1 WLR 1397, which was followed in Governors of the Peabody Donation
Fund v Higgins [1983] 1 WLR 1091. And it is agreed that, upon the
determination of the contractual tenancy by effluxion of time, Mrs McGrath
became a statutory tenant of the flat.
I come now to
the provisions of the Rent Act 1977. Section 98(1) is in the following terms:
Subject to
this Part of this Act, a court shall not make an order for possession of a
dwelling-house which is for the time being let on a protected tenancy or
subject to a statutory tenancy unless the court considers it reasonable to make
such an order and either —
(a) the court is satisfied that suitable
alternative accommodation is available for the tenant or will be available for
him when the order in question takes effect, or
(b) the circumstances are as specified in any of
the Cases in Part I of Schedule 15 to this Act.
What we are dealing
with is a statutory tenancy. Section 98(1)(a) does not apply to the present
case. We therefore go, under section 98(1)(b), to Schedule 15 to the Act, and
the plaintiff relies on Cases 1 and 6 in that Schedule as bringing him within
the circumstances in which an order for possession can properly be made.
On the view of
the matter which I take, it will be necessary to consider Case 6 only, and that
is in the following terms:
Where, without
the consent of the landlord, the tenant has, at any time after–
(a) 1st September 1939, in the case of a
controlled tenancy;
(b) 22nd March 1973, in the case of a tenancy
which became a regulated tenancy by virtue of section 14 of the
Counter-Inflation Act 1973;
(c) 14th August 1974, in the case of a regulated
furnished tenancy; or
(d) 8th December 1965, in the case of any other
tenancy, assigned or sublet the whole of the dwelling-house or sublet part of
the dwelling-house, the remainder being already sublet.
It is
paragraph (d) which applies to the present case, so that there was after
December 8 1965 an assignment by the tenant of the whole of the dwelling-house;
and it is common ground that, for the purposes of Case 6, the expression ‘the
tenant’ includes a previous tenant. So what is relied upon is the assignment of
the whole of the property by the executors of the late Mr McGrath by virtue of
the assent, and it is said that the Case applies because the assignment was
made without the consent of the landlord. And the dispute is this: did the
landlord consent?
It is said
that, looking at all the circumstances of the case, the proper inference is
that there was an implied consent by conduct within the principle of Hyde
v Pimley [1952] 2 QB 506.
I can see no
indication whatever of any consent by the landlord to the assignment in this
case. Certainly there was none previous to or at the time of the assent. Nor,
in my opinion, was there one afterwards. Looking at the correspondence, there
is, as it seems to me, nothing to indicate consent. Thus, in the first place,
the landlord was asserting that the assent was quite ineffective. On that basis
there was nothing to consent to. Secondly, the landlord refused all rent from
Mrs McGrath, and asserted that the only tenants were the executors of Mr
McGrath. That was the position while Mrs Collins was the landlord.
As soon as the
plaintiffs acquired the reversion, they indicated in clear terms their
intention to seek possession. It is quite true that the basis of the landlord’s
case, as disclosed in the correspondence, namely that there was no transfer by
the assent, was admittedly wrong in law, but that does not alter the fact that
the landlord was
executors were still the tenants. In my opinion, the landlord was plainly not
consenting to any assignment to Mrs McGrath.
I quite agree
that one must look at all the circumstances, and it is true that the landlord
made no attempt during Mrs Collins’ ownership to eject Mrs McGrath. But there
is really no reason why she should have done. Mrs Collins was not unfriendly to
Mrs McGrath, and the lease had only a few months to run. Mrs Collins was
content to leave Mrs McGrath as an occupant, which is what she had always been
and what it was always intended she should be, but with the executors, and the
executors only, as the tenants. Thus when a compromise was proposed, it was on
the basis that a new lease be granted to the executors.
Mr Primost
says one must not pay too much attention to the correspondence. He is quite
right in that we must, as I have said, look at all the facts. But, looking at
all the facts, I still see nothing to indicate any consent to this assignment.
As to the correspondence, it is a clear contemporary record of the attitude of
both parties, and the landlord’s attitude was from first to last quite
unyielding; the landlord was not going to have Mrs McGrath as tenant. The fact
that the landlord got the law wrong as to the effect of the assent is, as it
seems to me, quite beside the point. I think the correspondence is of much
significance and, indeed, apart from the correspondence, there is not much
evidence at all. Mrs McGrath gave evidence, but on this matter it does not
really take the problem much further.
The judge
reached the conclusion that the landlord did not consent. For myself I feel
quite sure that the judge was right in that conclusion. The result, I think, is
that the matter falls within Case 6 and there would be jurisdiction to order
possession.
The remaining
question is whether it was reasonable to make an order. The judge concluded
that it was, and it is common ground between counsel that the Court of Appeal
is very slow to disturb the conclusion of the county court judge on such a
matter. What is said is that he misdirected himself. The judge, in fact, gave
careful consideration to the whole matter, but it is said that he gave too much
weight to the fact that the assignment was in breach of covenant, but, in my
opinion, that was a significant factor in the case. One should not, I think
overemphasise the precise language of the judge in an extempore judgment. What
he was saying in substance, I think, was this. There was a covenant against
assignment without consent. That was broken, and it was because it was broken
that Mrs McGrath is able to assert a case based upon a statutory tenancy at
all.
The practical
situation created by the leases to Mr McGrath was this. First, Mrs McGrath was
to be able to live in the flat with her children; but, secondly, the tenant was
to be Mr McGrath and, of course, after his death, his estate. That was a very
convenient arrangement for Mrs McGrath because she was not liable on the
covenants under the lease and could not be sued for the rent or for breaches of
covenant. On the other hand, the landlord was not burdened with a statutory
tenancy because Mr McGrath, the tenant, was not in fact living in the house at
all and had no intention of living there; and, no doubt, also Mr McGrath was
financially a more substantial tenant from a landlord’s point of view.
The judge accepted
that Mrs McGrath and, I think, everybody else on her side did not intend
anything underhand in the execution of the assent. What they did they thought
was lawful in every respect. But the fact remains that the execution of the
assent totally destroyed, and destroyed in breach of covenant, the nicely
balanced situation created by the lease. It converted Mrs McGrath into a
statutory tenant. Really the position was this, that, in breach of covenant,
the executors were choosing the next tenant without the consent of the landlord
and greatly against the landlord’s interests. I think, therefore, that the
execution of the assent in breach of covenant is an important factor in the
case, and the judge was entitled to regard it as such.
It is said
that the judge misdirected himself when he said:
I think that
in the end it is a question of law as much as of discretion. The plaintiffs
assert a legal right; I have to uphold the law . . .
I do not think
that in saying that the judge was regarding his discretion as fettered. I think
that what he meant is shown by the next following remarks:
. . . if I
were to refuse them an order for possession I would be allowing the first
defendant — that is to say, Mrs McGrath — to make title by virtue of a breach
of covenant. If it were not for the assent she would have no right to remain in
the flat . . .
That, I think,
is only putting the point that I have already mentioned as to the alteration of
the rights of the parties in consequence of the assent. Again at p 35 of his
judgment, the judge says:
. . . the
first defendant would gain a statutory tenancy which in its origin derived from
a breach of covenant.
That is really
the same point. He goes on to observe that he knows of no case where title to a
statutory tenancy has been founded on a breach of covenant. It is said that Governors
of the Peabody Donation Fund v Higgins is such a case. But in fact
the present point was not dealt with in the Peabody case, and it did not
really arise at that point of the dispute. At p 1097 of the report May LJ said
this:
In the result
I do not accept that the deed of December 16, 1982, was invalid to pass the
legal interest in the tenancy of the flat on either of the two grounds. The
result must be that the second defendant has become the secure tenant of the
flat but, of course, she is at the risk of the landlords seeking possession on
the basis of her father’s breach of covenant if the plaintiffs take appropriate
steps under section 33 of the Housing Act 1980 and proceed in the county court.
That, however, is for the future. For the present I agree that this appeal
succeeds.
The judge was
very well aware that Mrs McGrath had lived in the flat for a long time and that
it had been bought as a home for her and her children, but it was of course,
for the reasons I have indicated, bought on the basis that she would not be a
statutory tenant because she was not a tenant at all. In my view, the judge
gave full consideration to the relevant matters and decided that it was
reasonable to make an order. In my judgment, he was entitled to do so, and I
can see no reason for interfering with his conclusion.
Accordingly,
despite the very helpful argument addressed to us by Mr Primost, I am of
opinion that this appeal must be dismissed.
Agreeing,
STEPHEN BROWN LJ said: The evidence was really quite incontrovertible that the
landlord did not consent to the assignment in this case. In my judgment, the
judge could have come to no other conclusion upon the evidence which was before
him. Thus the landlord’s case under Case 6 of Schedule 15 to the Act of 1977
was made out.
So far as
reasonableness is concerned, the judge gave careful attention to all the
relevant factors, and he came to the conclusion, for the reasons which my lord
has indicated, that in this case it would be reasonable to make an order for
possession.
For my part I
am satisfied that he was fully entitled to come to that conclusion; and indeed,
having regard to the facts of this case, that was a conclusion which was wholly
in accordance with the letter and the spirit of the Rent Act 1977.
For these
reasons I, too, would dismiss this appeal.
The appeal
was dismissed with costs, not to be enforced without the leave of the court;
legal aid taxation of appellant’s costs ordered.
