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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Belgravia Property Investment & Development Company v Webb [2001] EWCA Civ 2075 (18 December 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/2075.html Cite as: [2002] L & TR 29, [2001] EWCA Civ 2075

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SOUTHEND COUNTY COURT
(His Honour Judge Peter Dedman)

		Royal Courts of Justice Strand London WC2 Tuesday, 18th December 2001

1. LORD JUSTICE ROBERT WALKER: On this appeal there has been no attendance on behalf of the appellants. But rather than simply dismissing the appeal I think it right to give judgment stating my reasons for dismissing it.
2. This is an appeal against an order of His Honour Judge Dedman made on 7th June 2001 in the Southend County Court. The appellants, the claimants below, are two closely associated companies called Belgravia Property Investment and Development Company Limited ("Belgravia") and Quantumrange Limited ("Quantumrange"). It is now clear that Belgravia had no current interest in the matter but it does play a part in the story. The real appellant is Quantumrange. The first defendant below was a Mr. Webb. He has played no part in the proceedings. Indeed, he has not been seen or heard of for more than ten years when he seems to have left the Southend district, possibly for Spain. The second defendant below, and the real respondent to the appeal, is Mr Terence West, who is in his late 60s and has been in poor health at least since 1992 when he had the first of several heart attacks from which he has suffered.
3. The proceedings are concerned with a two bedroomed flat, flat 12, in a purpose built block of flats known as Mayflower Court, May Avenue, Canvey Island, Essex. This flat has had a curious history. Although there is a high degree of agreement between the parties as to the sequence of events (counsel helpfully produced a detailed chronology as well as a statement of issues for use in the county court) there has been a high degree of controversy about their legal significance and consequences. The best course is for me to trace the sequence of events, adding some comments about the issues as I proceed.
4. I start on 8th February 1973 when a company called A W Hardy & Co Ltd granted a lease of flat 12 to a Mr. Forster at a premium of £9,075 for a term of 199 years from 1st January 1972 ("the 1973 lease"). There was an initial ground rent of £35 a year increasing by stages. There was no prohibition on a subletting of the whole flat until the last seven years of the term. There was a proviso for re-entry on breach. By the mid-1980s (the exact dates are either unknown or irrelevant) the freehold interest had been acquired by Belgravia and the long leasehold interest in flat 12 under the 1973 lease had been acquired by Mr. Webb. On 17th January 1988 Mr Webb sublet the flat to Mr. West on a protected shorthold tenancy expiring on 16th January 1990 at a monthly rent of £375. Mr West paid rent to Mr Webb through a rent collector.
5. On the expiration of the shorthold tenancy Mr. West remained in possession and, as the judge held and as was not to be challenged in this court, he became a statutory tenant of Mr. Webb. So far the sequence of events was in no way out of the ordinary, but then some curious events occurred. In 1990 or thereabouts Mr Webb disappeared. He stopped having rent collected from Mr. West and he stopped paying ground rent to Belgravia. At about the same time Mr West fell ill and had to give up work. For a time he was receiving housing benefit but this came to an end when Mr Webb stopped having the rent collected. Mr. West was therefore not paying rent and did not know where his landlord was.
6. Mr. Hudson, a director of Belgravia who gave evidence at the trial, admitted in cross-examination that from 1993 he was aware that Mr. West and not Mr. Webb was living in the flat. Mr. West had the further misfortune that his wife left him at about the time when he became incapacitated, although he visited her and stayed with her from time to time. He also sometimes stayed with friends or had to be admitted to hospital but his case, which the judge accepted, was that he never moved out of the flat and, although it was only sparsely furnished (since his wife had taken several items) it remained his residence.
7. It appears that on 18th April 1990, that is at about the time of his disappearance, Mr. Webb charged his leasehold interest under the 1973 lease to a company called Maes Finance Limited ("Maes"). He failed to keep up his mortgage payments and on 14th May 1991 Maes obtained an order for possession against Mr Webb. Mr West promptly applied for an order that he had a statutory tenancy binding Maes. On 3rd April 1992 the county court suspended the warrant for possession and directed that Mr West should be made a party to the mortgagee's proceedings. On 11th June 1993 the possession order in favour of Maes was suspended until the final hearing but no final hearing ever took place. For some reason Maes decided not to proceed with the matter. It should be noted that the suspended possession order against Mr. Webb had been made not on the basis that his leasehold interest under the 1973 lease had come to an end, but on the basis that it was a valuable interest against which Maes, as mortgagee, wished to enforce its security.
8. In January 1993 solicitors acting for Mr West wrote to solicitors acting for Belgravia informing them of Mr West's rights. That was no doubt what led to the admission which Mr. Hudson made in cross-examination. In 1994 Mr Hudson formed the view that flat 12 would make a suitable home for his daughter. He caused Belgravia to serve at the flat a demand for £2,329-odd in respect of ground rent and maintenance charges which were in arrears. These were claimed as due under the 1973 lease and on the footing that it was subsisting (as it was, subject to the charge in favour of Maes).
9. I should add that many of these events are recorded only in the agreed chronology furnished by counsel. There are no contemporary documents evidencing them before this court, apart from two leases, although more documents may have been in evidence below.
10. In July 1994 Belgravia decided to repossess the property on the footing that Mr Webb's 1973 lease had been forfeited. On 7th July it arranged for workmen to enter the property and change the locks (although Mr Hudson in his second witness statement said that the managing agents had entered and changed the locks in order to carry out repairs). On the same date, 7th July 1994, Belgravia granted to Quantumrange a lease of flat 12 for a term of 199 years from 1st January 1972, that is exactly the same term as had been granted by the 1973 lease. This lease, which I will call the 1994 lease, was expressed to be granted at a premium of £30,000, receipt of which was acknowledged. However, Belgravia and Quantumrange had their registered offices at the same address, 365 Rayleigh Road, Eastwood, and Mr. Hudson was a director of both companies. The premium thus passed from one of his companies to the other.
11. The 1994 lease was no doubt granted on the footing or on the assumption that Mr Webb's 1973 lease had been determined by re-entry and forfeiture. But under section 2 of the Prevention from Eviction Act 1977 it was and is unlawful to determine a lease by re-entry on premises without a court order if the premises are being lawfully occupied as a residence. Mr. West was not at home at the time of the re-entry but the judge held, and it was not to have been challenged on this appeal, that he was the residential occupier and his occupation was entirely lawful. The subletting was not prohibited by the 1973 lease and it ante-dated the charge in favour of Maes.
12. On 23rd July 1994 Mr. West returned home and found the locks changed, although his modest furniture and belongings were still inside. He took legal advice. On 30th July he attended at the property in the company of police officers, obtained entry and changed the locks. On 3rd August he obtained an injunction from the Southend County Court prohibiting Belgravia from re-entering the premises otherwise than by action.
13. The effect of Mr West's prompt defence of his rights operated not only for the benefit of himself but also for the benefit of Mr. Webb, although whether Mr. Webb either knew or cared anything about it is another matter. Section 2 of the Protection from Eviction Act 1977, once triggered, appears to be quite general in its effect. I draw attention particularly to the fact that section 2 refers to "any person . . . lawfully residing in the premises". The purported re-entry was illegal and it could not operate to terminate either Mr West's tenancy or Mr Webb's 1973 lease.
14. So the effect of the 1994 lease to Quantumrange was not, as had no doubt been intended, to substitute Quantumrange for Mr Webb, but was to insert a new and unusual link into the chain of interests existing in the flat. The judge referred to the possibility of a surrender of the 1973 lease by Mr Webb but I can see no evidence to support that theory and two major obstacles to it. One is the charge in favour of Maes and the other is the demand for ground rent and maintenance charges which Belgravia was putting forward at the time of the purported re-entry.
15. In August 1994 Belgravia sold its freehold interest to another unconnected company. On 10th March 1995 Mr Barrie J Hilbery wrote a letter to Mr West on behalf of Quantumrange. He asserted that Mr West had illegally entered the flat and he threatened proceedings. Mr Hilbery is described in the appellant's skeleton argument as a solicitor but in fact he is or was a licensed conveyancer. He had no business to be writing letters of that sort. If he knew of the injunction granted by the Southend County Court the letter may have been a contempt of court. If he did not know of it Mr Hudson was seriously at fault in not giving him proper instructions. Mr West's solicitors replied and the matter seems to have been dropped for another 18 months. On 9th December 1996 there was another letter addressed to the occupier threatening physical re-entry if the flat was vacant, but adding:

"If the premises are occupied we shall obviously have to advise our client further before taking any precipitous action."

16. There had up to this point been no assertion of a relationship of landlord and tenant between Quantumrange and Mr West and no demand for rent from him. All communications down to that point had treated Mr West as no more than a trespasser.
17. The first such demand for rent came on 9th October 1997 in a letter sent to Mr West by Quantumrange itself. The letter said, among other things:

"This company purchased the property on 7th July 1994 and on the basis that the monthly rent remains at £375 we would advise you that at the present time there is an amount due to this company totalling £14,906.25.

Accordingly therefore we make formal demand of the above amount together with £375 per month, payable in advance from 1st November 1977."

18. The letter threatened proceedings if the arrears claimed were not paid. Mr West's solicitors replied on 21st October 1997, stating among other things:

"So far as we are aware, you have never hitherto indicated to our client that you are his landlord. Indeed, by their letter to us dated 26th April 1995 Messrs Barrie J Hilbery & Co indicated that you had acquired the leasehold reversion.

Our client's understanding of the situation is that there is a mortgage in favour of Eagle Star and that his landlord is Mr T Webb who, of course, disappeared.

Our client has never received any evidence to suggest that Mr Webb's lease/underlease has ever been sold by him or forfeited."

19. Proceedings followed at the end of 1999, issued inappropriately by Belgravia. Later Quantumrange was added as a claimant. There was, on the amended pleadings, a clear issue as to whether Mr Webb's lease had come to an end either by forfeiture or by surrender: see paragraphs 9 and 10 of the amended particulars of claim and paragraphs 5 and 6 of Mr West's amended defence and counterclaim and also paragraphs 2 to 6 inclusive of the agreed statement of factual and legal issues.
20. The judge decided that the 1973 lease had not determined by forfeiture before his order of 13th June 2001 (which did grant possession as against Mr. Webb). The judge did not clearly decide the issue of surrender. In paragraph 33 of his judgment he said:

"There is no evidence therefore, since I have held that the purported forfeiture was not effective against Mr West, that he had surrendered the premises either."

21. He, in the second subordinate clause, must mean Mr West, although no one, so far as I know, was arguing that there had been a surrender by Mr West. However, the judge seems to have assumed that the 1973 lease had somehow ceased to exist when he came to refer to Quantumrange's claim for a money judgment against Mr. West in respect of arrears of rent. That claim must have depended on there being a direct relationship of landlord and tenant between Quantumrange and Mr West. Otherwise Mr West's rent was owed to the absent Mr Webb. The judge thought that Mr West owed Quantumrange a large sum of arrears for rent, subject only to possible defences of limitation which had not been pleaded, or waiver or estoppel which had not been pleaded either, but which the judge allowed to be raised as a defence and on which the judge ultimately decided that part of the case. That was the ground on which the judge dismissed the claim for arrears of rent. He said in the last paragraph of his judgment, paragraph 43:

"In my judgment Mr. West's contention that he had a legitimate expectation that his landlord would identify itself, not least on the footing that the claimants themselves have clearly been in doubt as to who had the right to claim possession by commencing proceedings in the names of both claimants. It would surely have been wise if not required by law if they had accepted him as a tenant to provide him with a rent book. The result of this is that Mr West has never been able to claim the housing benefit to which he would have been entitled by reason of his inability to give a proper dispensation for the receipt of such monies and I find it equally inequitable that he should now face the burden of huge arrears due to the lethargy of [Quantumrange].

Under section 47 of the Landlord and Tenant Act 1987 any written demand for rent must contain the landlord's name and address. That provision by itself could not have provided Mr. West with a full defence to the claim for arrears of rent.

Counsel who was to have appeared for the appellant on this appeal, but who has not in the event appeared, has in his skeleton argument criticised the judge's judgment on the rent arrears, pointing out that Quantumrange did identify itself and claim rent in its letter dated 9th October 1997, even though it had never done so before. However, the issue of waiver or estoppel becomes academic if the 1973 lease did not come to an end until the judge's order on 13th June 2001. That point was not originally raised in Mr West's respondent's notice, but it has been raised in paragraph 3 of the skeleton argument which Mr Douglas Keel has put in on behalf of Mr West, and we have granted permission for an amendment of the respondent's notice. In all the circumstances of this unusual case, it is right that the true issues should be identified and decided. We gave permission for amendment of the respondent's notice on that basis.

The position, as I see it, is that Quantumrange has been Mr. West's immediate landlord only since and because of the judge's order giving Quantumrange possession as against Mr. Webb. Then only did section 137(2) and (5) of the Rent Act 1977 come into operation so as to create that new relationship of landlord and tenant. Mr West may still be liable to pay arrears of rent to Mr Webb or his assigns, but that was not a claim with which the judge was concerned. As from 13th June 2001 Mr West is liable to pay rent to Quantumrange, and no doubt he will be able to obtain housing benefit for that purpose. But since Mr. West owed no arrears of rent to Quantumrange, the judge was right to give no money judgment against him. The judge was also right to refuse to make an order for possession either under case 1 or under case 6 in Schedule 15 to the Rent Act 1977. The judge was right to follow Leith Properties v Byrne [1983] QB 433, in which Slade LJ said at page 441:

"The rights of the subtenant do not necessarily stand or fall with those of the tenant; he is entitled to have his rights independently considered and ascertained."

22. For these reasons, which are different from those given by the judge, I would dismiss this appeal.
23. LORD JUSTICE DYSON: I agree.
24. SIR MURRAY STUART-SMITH: I also agree.
Order: Appeal dismissed with costs; public funding assessment.