Stubbs v Assopardi and another

Rent Acts–Effect of amendments made by Rent Act 1974 (now consolidated in Rent Act 1977)–Two successive fixed terms, one granted before and one after the commencement of 1974 Act–Whether second fixed term resulted in tenancy becoming protected–Held not, because exclusion of protected status was by virtue of transitional provisions in Schedule 3 to 1974 Act, not by virtue of section 5A of Rent Act 1968 (inserted by Rent Act 1974, section 2 (3) and Schedule 2)–Court of Appeal settles point in doubt since 1974. In this appeal Jeffrey Adams, one of two joint tenants of a flat, appealed against a decision of Judge Curtis-Raleigh at Bloomsbury and Marylebone County Court in favour of the landlord, Mrs Anna Maria Josepha Stubbs, who claimed possession of the flat. Mrs Stubbs was a resident landlord and the question was whether the grant of a second fixed-term tenancy after the commencement of the Rent Act 1974 (August 14 1974) following an earlier fixed term granted before such commencement resulted in the tenancy becoming a fully protected tenancy. The point turned upon the true construction of section 5A (5) (b) of the Rent Act 1968 (inserted by the Rent Act 1974) and the transitional provisions in Schedule 3, paragraph 1, to the Rent Act 1974. The point had been the subject of some uncertainty and discussion since 1974. Derek Wood (instructed by Douglas-Mann & Co) appeared on behalf of the appellant (second defendant); the respondent, Mrs A M J Stubbs (plaintiff), appeared in person. Giving the judgment of the court, MEGAW LJ said: The plaintiff, Mrs Anna Maria Josepha Stubbs, claimed against the defendants, Miss Lydia Assopardi and Mr Jeffrey Adams, possession of the ground-floor flat at 13 Norland Square, London W11. The particulars of claim as formulated by the plaintiff in the Bloomsbury and Marylebone County Court averred that by an agreement in writing dated July 1 1975 the flat had been let to the defendants, furnished, at a rent of £60.68 per month, for 11 months, which fixed-term tenancy expired on June 1 1976. In this court some point was sought to be made on behalf of the plaintiff to the effect that Mr Adams was not a party to the agreement because, though he had signed it as a party, the agreement on its first page recorded Miss Assopardi alone as ‘the tenant.’  We did not allow any such issue to be raised. It would have been inconsistent with the plaintiff’s own pleading, and it had not been taken in the county court, where it had been accepted or assumed that Mr Adams was a party and no question had been raised below as to any special considerations which might arise with regard to a joint tenancy, and no facts were put in evidence which would give rise to any question with regard thereto. We say no more on that point. At the hearing in the county court before Judge Curtis-Raleigh the relevant facts were not in dispute. They are clearly and succinctly set out by the learned judge in the first paragraph of his judgment as follows: In this case the landlord plaintiff claims possession of a ground-floor flat, 13 Norland Square, W11, which was let to the defendants under two successive agreements in writing, the first from July 1 1973 for a term of two years expiring on June 30 1975, followed immediately by a tenancy for a fixed term of 11 months from July 1 1975. Both the lettings were lettings of premises which were fully furnished. The landlord was a resident landlord. When the agreement of July 1 1973 (which we shall call ‘the first tenancy’) was made, the defendants were not protected tenants, because the tenancy was of furnished premises and section 2 (1) (b) of the Rent Act 1968, as it then stood, excepted such tenancy, so that it was not a protected tenancy. This was so, irrespective of the fact that the plaintiff was what the judge described as ‘a resident landlord.’  The Rent Act 1974 came into force on August 14 1974, and was thus in force when the first tenancy ended and when, immediately thereafter, the tenancy brought into being by the agreement of July 1 1975 (which we shall call ‘the second tenancy’) commenced. The issue, and the only issue, which arises on this appeal is whether, on the facts stated above and on the true construction of certain provisions of the 1974 Act, the defendants were, when the proceedings were brought and at the time of the hearing, protected tenants. Their defence to the claim for possession was expressed thus in paragraph 8 of their defence: The defendants aver that the said agreement of July 1 1975 was a second and immediately successive fixed-term agreement subsequent to the agreement of July 1 1973 and claim the protection of section 5A (5) (b) of the Rent Act 1968 as inserted by Schedule 2, Part I, paragraph 1 of the Rent Act 1974. In the county court the learned judge allowed the plaintiff’s husband to make submissions on her behalf, since it was said that the plaintiff herself had not a sufficient command of the English language. We allowed the same course to be followed on the hearing of the appeal. Judge Curtis-Raleigh held in favour of the plaintiff and granted an order for possession. The second defendant, Mr Adams, appealed to this court. He was represented in this court by Mr Wood, who did not appear in the county court. We would pay tribute to the admirable clarity and fairness of Mr Wood’s exposition of extremely complex and highly technical statutory provisions. Section 1 (1) (a) of the Rent Act 1974 extends Rent Act protection to furnished tenancies. That extension applied, not only to tenancies created after the coming into force of the Act, but also to already existing tenancies. However, section 2 (3) provides for the insertion in the Rent Act 1968 of a new section 5A, which introduces the concept of a ‘resident landlord’ as a relevant factor in excluding the protected status of furnished tenancies. Its terms are set out in paragraph 1 of Schedule 2 to the 1974 Act. That new section of the 1968 Act, so far as it is relevant in the present appeal, reads: 5A–(1) Subject to subsection (5) below, a tenancy of a dwelling-house which is granted on or after the commencement date [August 14 1974)] shall not be a protected tenancy at any time if– . . . (b) the tenancy was granted by a person who, at the time that he granted it, occupied as his residence another dwelling-house which also forms part of that building. . . . If it rested there, the defendants in this case would not be protected tenants. The second tenancy, of July 1 1975, was granted after the commencement date of the 1974 Act; and, as appears from the undisputed facts set out above, the landlord was a ‘resident landlord’: that is, he fulfilled the requirements of paragraph (b) above. But the provisions of subsection (1) of section 5A are expressly made subject to subsection (5), which, so far as relevant, reads as follows: (5)  This section does not apply to a tenancy of a dwelling-house which forms part of a building if– . . . . (b) the tenancy is a tenancy for a term of years certain and is granted to a person who, immediately before it was granted, was the tenant under an earlier tenancy of that dwelling-house . . . and, by virtue of this section, that earlier tenancy was not a protected tenancy. . . . So the exclusion of the tenancy from being a protected tenancy, which section 5A (1) would otherwise achieve in respect of a post-August 14 1974 tenancy, is itself excluded if the requirements of section 5A (5) are fulfilled. There is no doubt but that in the present case all the requirements contained in subsection (5) (b) are met, save only for one possible exception. The second tenancy is a tenancy for a term of years certain. The provision for 11 months’ duration, it is not disputed, satisfies that requirement. That second tenancy was granted to a person who, immediately before it was granted, was the tenant under an earlier tenancy (the first tenancy) of that dwelling-house (the ground-floor flat). There is no doubt that that first tenancy was not a protected tenancy. The one and only ground on which it could be suggested, and the ground on which the learned judge held, that the requirements of subsection (5) (b) were not fulfilled is that it was not ‘by virtue of this section’ (that is, section 5A) that the first tenancy was not a protected tenancy; but that, instead, it was ‘by virtue of’ something else. The ‘something else’ which the judge held to be relevant and effective was the transitional provisions of the Rent Act 1974 as set out in paragraph 1 of Schedule 3. The purpose of the transitional provisions was to ensure that a resident landlord who before the commencement of the 1974 Act had granted a furnished tenancy, which was still in effect at the commencement of the Act, should be in no worse position than a resident landlord who granted such a tenancy on or after the date of the commencement of the Act. The tenancy granted on or after the commencement of the Act would not be protected because of the new section 5A inserted in the 1968 Act. But in the absence of transitional provisions a pre-commencement date tenancy would be protected because of section 1 (1) of the 1974 Act, coupled with the fact that the new section 5A (1) would not provide an exemption since it was expressed to be applicable to a tenancy granted on or after the commencement date. The relevant transitional provisions in Schedule 3, paragraph 1 (1) and (2), so far as they are material, were as follows: 1–(1) In any case where–(a) before the commencement date a dwelling was subject to a tenancy which is a furnished letting, and (b) the dwelling forms part only of a building . . . and (c) on that date the interest of the lessor . . . under the furnished letting–(i) belongs to a person who occupies as his residence another dwelling which also forms part of that building . . . and (d) apart from this paragraph the furnished letting would, on the commencement date, become a protected furnished tenancy, the Rent Act shall apply, subject to sub-paragraph (2) below, as if the tenancy had been granted on the commencement date and as if the condition in paragraph (b) of section 5A (1) of the Rent Act 1968 were fulfilled in relation to the grant of the tenancy. (Paragraph (b) of section 5A (1) has been set out earlier. It defines what we have called ‘the resident landlord’). (2)  In the application of the Rent Act 1968 to a tenancy by virtue of this paragraph–(a) sub-section (5) of section 5A shall be omitted; and (b) in section 102A any reference to section 5A of that Act shall be construed as including a reference to this paragraph. The transitional provisions are plainly relevant and material. If it were not for them, the first tenancy would have had the status of a protected tenancy. It would have been made such by section 1 (1) of the 1974 Act. It would not have been deprived of that status by section 5A, because section 5A is concerned with tenancies granted on or after the commencement date. The first tenancy was granted before that date. The way in which the relevant transitional provisions (Schedule 3, paragraph 1 (1) and (2)) achieve their object is by introducing a statutory fiction. The fiction is that the relevant tenancy was granted on the commencement date, though in fact it was granted earlier. It is thus brought within section 5A, and it thus loses its protected status. Schedule 3, paragraph 1 (1), expressly provides that section 5A shall apply. We say ‘expressly,’ because there can be no doubt but that the words used, ‘the Rent Act shall apply,’ in the context mean the Rent Act including the new section 5A. Not only section 5 (3) of the 1974 Act, but also the references, in the immediately following provisions of paragraph 1 (1) and (2) of Schedule 3, to section 5A put it beyond doubt that that is so. But that does not solve the essential question, which is: is the absence of protected status of the first tenancy ‘by virtue of this section,’ within the meaning of that phrase in section 5A (5) (b): or is it ‘by virtue of’ the transitional provisions?  If it were not for the statutory fiction created by paragraph 1 (1) of Schedule 3, section 5A would not apply and the first tenancy would thus be protected. Hence it can be said that it is ‘by66 virtue of’ those transitional provisions that the first tenancy does not have a protected status. But the machinery by which the transitional provisions operate to deprive the first tenancy of its protected status is by applying section 5A (less subsection (5) thereof). Hence it could also be said that it is ‘by virtue of section 5A’ that the first tenancy does not have a protected status. Which of the two is the one to choose: for choose one must? In the absence of any further guidance from the context, we should have inclined to the view that the choice should be the transitional provisions. In some respects it is like a choice of the real or effective cause where there are competing causes. To our mind, it is the statutory fiction, created by the transitional provisions, which would be the real or predominant cause of the first tenancy not being protected. If one has to choose between them, as one must, it is by virtue of that statutory fiction, rather than by virtue of the resulting application of section 5A, that the first tenancy does not have protected status. We are confirmed in this view by two elements in the wording of the relevant transitional provisions. First, the opening words of paragraph 1 (2) of Schedule 3 are: ‘In the application of the Rent Act 1968 by virtue of this paragraph. . . .’  The statute thus stresses that the application of section 5A is ‘by virtue of’ these transitional provisions. To our mind, that tends to show that the legislature, in using the phrase ‘by virtue of this section’ in section 5A (5) (b), did not contemplate or intend that it should apply to a case where ‘this section’ itself had been made applicable, as the legislature itself has expressly said, ‘by virtue of’ the transitional provisions. The second element is one which is stressed by Judge Curtis-Raleigh in his judgment as being, we believe, the main reason for his conclusion as to the construction of the statute: that is, the wording of paragraph 1 (2) (b) of Schedule 3. It reads: ‘(b) in section 102A any reference to section 5A of that Act shall be construed as containing a reference to this paragraph.’  The judge says: ‘Section 5A should not be read in conjunction with Schedule 3, because when it has to be read in conjunction with the Schedule the Act says so–see paragraph 1 (2) (b) of Schedule 3’. In one sense, of course, section 5A has to be read ‘in conjunction with’ Schedule 3, because paragraph 1 (1) of Schedule 3 provides that that section shall apply. But we agree with what we understand to be the reasoning of the learned judge. The new section 102A (1), introduced by paragraph 4 of Schedule 2 to the 1974 Act, contains the words: ‘If and so long as a tenancy is, by virtue only of section 5A of this Act, precluded from being a protected tenancy. . . .’  The legislature, in enacting the transsitional provisions, which make section 5A applicable in certain cases where it would not otherwise apply, has thought it right, in relation to those words used in section 102A ‘by virtue only of section 5A of this Act,’ expressly to provide that those words are to be construed as containing a reference to the transitional provisions in Schedule 3, paragraph 1. There is no such provision–no corresponding words or formula–in relation to the corresponding words ‘by virtue of this section’ where those words occur in section 5A (5) (b). Therefore the legislature did not intend those words in section 5A (5) (b) to be read as ‘containing a reference to’ the transitional provisions. Mr Wood submits that this argument, which appealed to the judge, involves placing undue weight on the doctrine expressio unius, exclusio alterius. We do not think so. Like the learned judge, we regard it as a powerful indication of the intention of the legislature, which, as is normally the principle of our law, has to be derived from the words used. Mr Wood criticised the learned judge’s careful judgment in two other respects. The first was the passage in which the judge said: ‘This tenant was the tenant under an earlier tenancy and the only question is whether it became unprotected by virtue of section 5A. The answer is–no, because it was granted before 5A came into force.’  We do not think that this was an error. At that point the judge was looking at the question without reference to the transitional provisions. The other respect in which Mr Wood criticised the judgment was the learned judge’s ‘cross-check’ of his conclusion with his view of ‘what the legislature might reasonably be expected to want to achieve.’  We feel quite unable to express any confident view, one way or the other, as to the construction which would be more likely to fit in with the actual intention of the legislature. In any event, however, it is clear that the judge’s ‘cross-check’ was not in any way the basis of his judgment. But in our opinion his decision on the question of construction was right. We therefore dismiss the appeal. Appeal dismissed, with costs to respondent (plaintiff) in the sum of £75. Stay of execution of order for possession for 28 days from date of judgment. Legal Aid taxation of appellant’s (second defendant’s) costs.