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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Pennycook v Shuns (EAL) Ltd. [2002] EWHC 2769 (Ch) (28 November 2002) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2002/2769.html Cite as: [2003] 2 P & CR 8, [2003] L & TR 16, [2003] 3 EGLR 28, [2003] 2 WLR 1265, [2003] 3 All ER 1316, [2003] Ch 399, [2002] EWHC 2769 (Ch), [2003] 45 EG 176 |
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CHANCERY DIVISION
Strand London WC2A 2LL |
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B e f o r e :
____________________
WALBERT PENNYCOOK | Plaintiff | |
v | ||
SHUNS (EAL) LIMITED | Defendant |
____________________
MR N VICKERY for the Defendant
____________________
Crown Copyright ©
MR JUSTICE PUMFREY:
"Take notice that I/We will [not] be willing to give up possession of the property comprised in the tenancy on that date."
"a tenancy to which this part of this Act applies shall not come to an end unless terminated in accordance with the provisions of this part of this Act and subject to the provisions of section 29 of this Act the tenant under such a tenancy may apply to the court for a new tenancy
(a) if the landlord has given notice under section 25 of this Act to terminate the tenancy; or
(b) if the tenant has made a request for a new tenancy in accordance with section 26 of this Act."
"…subject to the provisions of this Act on an application under sub-section (l) of section 24 of this act for a new tenancy,
(1) the court shall make an order for the grant of a tenancy comprising such property at such rent and on such other terms as are hereinafter provided;
(2) where such an application is made in consequence of a notice given by the landlord under section 25 of this Act it shall not be entertained unless the tenant has duly notified the landlord that he will not be willing at the date of termination to give up possession of the property comprised in the tenancy;
(3) no application under sub-section (1) of section 24 of this Act shall be entertained unless it is made not less than two, nor more than four months after the giving of the landlord's notice under section 25 of this Act or, as the case may be, after the making of the tenant's request for a new tenancy."
"1. that in order to be entitled to compensation for disturbance the tenant must first have served a counter notice on the landlord under section 29(2) of the Act of l954, stating that he was unwilling to vacate the premises, and secondly, under section 37(1) of the Act, before amendment, he must have applied to the court for a new tenancy, but a counter notice which expressed willingness to quit was irrevocable and that accordingly after October 13, the tenants could not give notice of unwillingness to quit, and had lost their right to apply to the court, and the landlords in turn had acquired an indefeasible right to obtain possession on April 1, l970 without paying compensation."
"It appears to be the scheme of the Act that a landlord's notice under section 25 shall be followed by a notification by the tenant either that he iswilling or that he is not willing to give up possession on the date of termination specified in the landlord's notice. For convenience, I refer to such a notification by the tenant as a positive or a negative counter notice, according to whether the tenant is or is not agreeable to the landlord's demand. A negative counter notice is a condition precedent to an application by the tenant to the court: see section 29 (2). An application by the tenant to the court was, prior to the Act of 1969, a condition precedent to the tenant's becoming entitled to compensation for disturbance. It is therefore hard to see how it can ever have been to a tenant's financial advantage to serve a positive counter notice. Before the Act of 1969 the result can only have been to deprive the tenant of the chance of obtaining compensation. Indeed, no counsel was able to suggest what practical function is performed by a positive counter notice, except an act of courtesy to the landlord.
On October 22, 1969, the Law of Property Act 1969 received the Royal Assent. Part I of the Act is headed: "Amendment of Part II of the Landlord and Tenant Act 1954."
Section 11 of the Act amends section 37 (1) of the Act of 1954 by inserting new words. Section 37 (1) as amended is set out in Schedule 1 to the Act of 1969; the additional words follow the words "of that subsection" and read:
"or where no other ground is specified in the landlord's notice under section 25 of this Act or, as the case may be, under section 26 (6) thereof, than those specified in the said paragraphs (e), (f) and (g) and either no application under the said section 24 is made or such an application is withdrawn, ..."
The effect, therefore, of the amendment was to entitle the tenant to obtain compensation notwithstanding the absence of an application to the court.
Section 31 (2) of the Act of 1969 provided that the parts of the Act relevant to this application should come into force on January 1, 1970.
On February 11, 1970, the tenants' solicitors wrote to the landlords' solicitors:
"Further to the notice to determine our client's lease of the above premises, our client now proposes to leave approximately at the end of February. In the circumstances, will you kindly let us know what arrangements are being made regarding compensation payable under the Landlord and Tenant Act 1954 as amended by the Law of Property Act 1969."
The landlords' section 25 notice had been sent with a letter dated September 26, 1969, and it is common ground that this notice should be treated as "given" on September 27. The position therefore, on that day, was that November 26 or 27 (I assume November 27, without so deciding) was the last day available to the tenants for serving a negative counter notice as a prelude to an application by the tenants to the court for an order for the grant of a new tenancy. In fact, as I have mentioned, the tenants' solicitors on October 13 had written a letter which the landlords accepted as. and which I hold to have been, a notification by the tenants within the meaning of section 25 (5) of the Act of 1954 that, on April 1, 1970, they would be willing to give up possession of the property. There was some discussion, unsupported by authority as I was told none existed, as to whether the tenants could, on or before November 27, have revoked their positive counter notice and given the negative counter notice required by section 29 (2) to enable proceedings to be taken. In my view the purpose of section 25 (5) is to introduce an element of certainty into the relationship between the landlord and the tenant. A tenant is not bound to serve a negative counter notice before the end of the two month period allowed to him. He may pause for that period of time while he makes up his mind. If however he does serve a positive counter notice during the two month period, I think that he must abide by what he has done. If that were not the case, the positive counter notice would serve no purpose whatever compared with complete inaction, for in either case the landlord would not know where he stood until the end of the two month period. If a positive counter notice is revocable the tenant serving the same would be able to serve a negative counter notice right up to the end of the two month period. If on the other hand the tenant does nothing, he may likewise serve a negative counter notice right up to the end of the two month period. It follows that a positive counter notice would be wholly devoid of any function, even that of courtesy, if it were revocable at the will of the tenant. I, therefore, conclude that a positive counter notice is irrevocable; and that in this case the tenants ceased to be able to serve a negative counter notice after October 13, 1969, and that they then lost their right to apply to the court for an order for the grant of a new tenancy.
I have not overlooked the fact that the Act of 1954 is not expressed to impose on the tenant an obligation to serve a notice of either description within the two month period. All that the Act does is to impose on the landlord, as a condition of a valid section 25 notice, the obligation of informing the tenant that he is required to serve a notice one way or the other within the two month period, and to place the tenant under a disability if he fails to serve a negative counter notice. In my view, however, it is a necessary implication from section 25 (5) that a tenant is under a statutory obligation to serve notice one way or the other within the two month period, although I accept that there is no sanction imposed on him for ignoring that obligation, except his inability to apply to the court.
In these circumstances the position in my view was as follows:
On October 14, 1969, that is to say, about eight days before the Act of 1969 received the Royal Assent, the landlords had an indefeasible right to recover possession on April 1, 1970, without payment of compensation, if I am correct in my conclusion that the tenants were precluded from withdrawing their letter of October 13, and from serving a negative counter notice."
"On the face of it, that passage from the judgment of Brightman J, concludes the issue in this case. If that passage is binding upon me and is good law, then it is perfectly clear in the circumstances of the case that whatever the circumstances in which the positive notice was given it is binding upon the tenant and it has brought to an end the tenancy. Mr Geldart, who has said everything that could be said on behalf of the claimant in these proceedings, has sought to distinguish in re 14 Grafton Street on a number of bases."
and he sets out the arguments of counsel and so far as the transcript I have only in part, the learned county court judge concluded that the judgment of Brightman J was binding upon him and that he had no hesitation in following it. He accordingly struck out these proceedings.
"In my view the purpose of section 25(5) is to introduce an element of certainty into the relationship between the landlord and the tenant. A tenant is not bound to serve a negative counter notice before the end of the two month period allowed to him. He may pause for that period of time while he makes up his mind. If, however, he does serve a positive counter notice during the two month period, I think he must abide by what he has done. If that were not the case the positive counter notice would serve no purpose whatever compared with complete inaction, for in either case the landlord would not know where he stood until the end of the two month period. If a positive counter notice is revocable, the tenant serving the same would be able to serve a negative counter notice right up to the end of the two month period. If, on the other hand, the tenant does nothing, he may likewise serve a negative counter notice right up to the end of the two month period. It follows the positive counter notice would be wholly devoid of any function, even that of courtesy, if it were revocable at the will of the tenant. I therefore conclude that a positive counter notice is irrevocable."