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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 >> Wroe (t/a Telepower) v Exmos Cover Ltd  EWCA Civ 31 (8 February 2000)
Cite as:  EWCA Civ 31
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Case No : CCRTF 99/0100/B2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WEST LONDON COUNTY COURT
HER HONOUR JUDGE UZIELL-HAMILTON
Royal Courts of Justice
Strand, London WC2A 2LL
Tuesday 8 February 2000
The respondent, Exmos Cover Limited, is the owner of leasehold interest, for a term of twenty years from 24th September 1984, of the property known as Stern House, 85 Gloucester Road. The respondent's lease contains an unqualified covenant against underletting any part (as distinct from the whole) of the demised premises. The appellant occupies a room (known as the East Room) on the second floor of that property for the purpose of a business which he carries on under the name "Telepower". Until 30 September 1997 he occupied that room upon the terms of an agreement in writing dated 23 September 1994.
The agreement of 23 September 1994 is described on its face as a "Licence for the use of Business Premises". The agreement is expressed to be made between Exmos Cover Limited, described as "the Licensor" and Anthony Wroe and Susanna Wilson of Telepower described as "the Licensee". Clause 1 of the agreement is in these terms:
1. In consideration of the payment by the Licensee to the Licensor of the LICENCE FEE set out below and the strict acceptance of and compliance with the provisions of the attached schedule to the LICENCE by the Licensee the Licensor shall permit the Licensee during the LICENCE PERIOD to occupy and use respectively for the purposes of the Licensee's BUSINESS the ROOM(S) and available facilities at STERN HOUSE.
The agreed licence fee was £460 per calendar month. The licence period was twelve months from 1 October 1994 "unless renewed in writing by both parties on new terms as and if agreed". The schedule to the agreement required the licensor to provide heating, lighting and a telephone message taking service without charge and to be responsible for payment of rates. The agreement was expressed to be a licence personal to the licensee. Clauses G and L of the schedule to the agreement were in these terms:
G. "LICENCE" means only a temporary License (sic) and no provisions in this Licence shall have the effect of creating any form of tenancy or lease or otherwise.
L. The Licensee shall agree to perform and abide by the terms of the Licensor's
lease and Superior Leases . . .
Whatever may have been the effect in law of that agreement it is plain that the respondent, at least, did not intend that it should create any tenancy.
The agreement was renewed for twelve months from 1 October 1995 at an increased monthly payment; and, again, for a further six months from 1 October 1996 - the monthly fee being increased on that renewal to £521. On 3 March 1997 the respondent wrote to Mr Wroe:
Your licence expires 31 March 1997 and please can you let me know within the next 7 days please whether you wish to extend at the same fee for another six months.
Although there appears to have been no written response to that letter, it is common ground that the appellant and Miss Wilson remained in occupation paying the same monthly amount. The agreement, as extended, expired on 30 September 1997.
The parties reached no further agreement for an extension of the occupancy of the East Room at 85 Gloucester Road. On 29 September 1997 the respondent wrote to Mr Wroe and Miss Wilson, pointing out that the licence expired on the next day and that they should arrange to vacate the room. That letter provoked a response from solicitors, Messrs Ellis & Fairbairn. They wrote on 30 September 1997:
Re: Second Floor Office 85 Gloucester Road - Telepower Limited
We write to you on behalf of our above named clients with regard to their tenancy of the above property and understand that you are the landlord.
Our clients have contacted us today and informed us that you have harassed them during the course of today's business and instructed them that you wish them to vacate the premises today.
We would put you on notice that our clients' claim a tenancy protected by the Landlord and Tenant Act 1954 and as such your harassment and threats are in breach of the said Act.
If indeed you require possession of the premises then the necessary Notices required by the Act must be served by you in the normal way.
Any harassment of our clients or attempt to bar them from the premises is a fundamental breach of the Act which I am sure you will wish to avoid.
That was, I think, the first time that it had been suggested by anyone that the East Room was held under a tenancy. The respondent wrote back on the following day, 1st October 1997. That letter contained the following paragraph:
2. We do not accept that the provisions of the Landlord & Tenant Act apply to the arrangement we have with your clients and perhaps you can refer us to the appropriate section, subject to our further points.
The respondent went on to assert, in effect, that the occupation of the East Room by Mr Wroe and Ms Wilson had been on the terms of a licence and not a tenancy. The letter contained an offer of a further short-term arrangement under a weekly licence at the rate of £164 per week.
The appellant remained in the property after 1 October 1997. He tendered a cheque in the amount of £521, described as "rent". The respondent returned that cheque for the reasons set out in a letter of 6 October 1997:
"Thank you for your cheque which whilst we appreciate the gesture we have already returned to you. We do not accept what your solicitor says concerning in effect a tenancy and know that it is a very grey area. We are seeking advice on this which may take time. However in the meantime we accept that you are holding over on the existing terms but as your solicitor said it should be at the current market value.
The appellant's solicitors replied on 7 October 1997, repeating their assertion that their client (meaning, I think, Mr Wroe to the exclusion of Ms Wilson) was entitled to hold over under the terms of a tenancy agreement and to claim the protection of the 1954 Act. On 9 October 1997 the solicitors wrote to say that they understood from their client that the terms of the new tenancy had been agreed. The respondent wrote back on 14 October 1997:
Thank you for your letter of 9 October 1997. We have not offered your client a tenancy under the Landlord and Act 1954. We have no power to offer such a tenancy and are specifically not allowed to do so.
That the third sentence of that paragraph was intended as a reference to the restriction in the respondent's own lease is made clear by a letter from the respondent to Mr Wroe dated 6 November 1997. That letter contained the sentence:
Unfortunately the lease we own does not allow us to grant tenancies within the Landlord and Tenant Act of individual rooms, and I draw your attention to clause `L'.
The letter continued:
I am assuming that you will now be applying for a tenancy (if only because it will give you several more months without our being able to accept any monies!) but have heard nothing. Please appreciate therefore that if you still do nothing there are, to my surprise and regret, absolutely no legal steps for us to take other than to evict you, therefore the notice will be enforced on 20th December without further notice.
The directors of the respondent company at the relevant time were Mrs Sonya Trudgian, her father and her husband, Mr Tom Trudgian. On 21 November 1997 Mrs Trudgian wrote again to Ellis & Fairbairn. She returned a cheque which had been submitted as rent and pointed out that the respondent company had made it perfectly clear that payment could not be accepted on that basis. But some three days later, on 24 November 1997, Mr Tom Trudgian wrote to Ellis & Fairbairn in these terms:
I want to be fair but it is now nearly eight months since I told Anthony I wanted my old office back in 6 months'. Anthony's motives are perfectly understandable of course, but without any response at all I am left with no alternative but to get on. To do this apparently we have to accept he is holding over under the Landlord and Tenant Act from 1st October 1997 as a tenant and now do so. We enclose a copy of the notice Sonya has served on him today under section 25 of the Landlord and Tenant Act 1954 and this gives him a further six months to make the permanent office arrangements I should have thought are in his interests.
I return your cheque for £1226.06 for you to clarify that it is on account of rent from 1st October 1997 at a market value to be assessed effective 1st October 1997 on the basis of the terms and services agreed in the agreement dated 23rd September 1994.
As that letter indicates the respondent had served on the appellant a notice under section 25 of the Landlord and Tenant Act 1954. The notice is dated 24 November 1997. It is in the prescribed form, addressed to the appellant trading as Telepower. It is expressed to be given under section 25 of the Act; and to relate to "the East Room on the second floor of 85 Gloucester Road, London SW7 4SS of which you are the tenant". The notice purports to terminate "your tenancy" on 31 May 1998. It indicates that, if application is made to the court under Part II of the Landlord and Tenant Act 1954 for the grant of a new tenancy, that application will be opposed on the grounds mentioned in paragraph (g) of section 30(1) of the Act.
Thereafter, until August 1998, the matter proceeded on the basis that the room occupied by the appellant was held on a tenancy to which Part II of the Landlord and Tenant Act 1954 applied.
Part II of the Act applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes - see section 23(1) of the Act. A tenancy to which Part II applies does not come to an end unless terminated in accordance with provisions of that Part - see section 24(1) of the Act. A landlord may terminate such a tenancy by notice in the prescribed form, specifying the date at which the tenancy is to come to an end; but such a notice shall not have effect unless it is given not less than six months before the date of termination specified therein - see section 25(1) and (2) of the Act. A notice of termination shall not have effect unless it requires the tenant, within two months, to notify the landlord whether or not the tenant would be willing to give up possession of the property; and unless it states whether the landlord would oppose an application to the court for the grant of a new tenancy, and (if so) upon what ground - see section 25(5) and (6) of the Act. The grounds upon which a landlord may oppose an application for a new tenancy are set out in section 30(1) of the Act. They include, as ground (g), that on the termination of the current tenancy the landlord intends to occupy the premises for the purposes or partly for the purposes of a business which is to be carried on him.
Where the landlord has given notice under section 25 of the Act to terminate the tenancy the tenant may apply to the court for a new tenancy - see section 24(1)(a) of the Act. An application for a new tenancy, made in consequence of a notice given by the landlord under section 25, cannot be entertained unless the tenant has notified the landlord that he is not willing to give up possession and the application is made not less than two nor more than four months after the giving of the landlord's notice. The court must dismiss the application if the landlord establishes one or more of the grounds on which he is entitled to oppose it - see section 31(1) of the Act. But, subject thereto, on an application for a new tenancy the court shall make an order for the grant of a tenancy comprising such property at such rent and on such terms as are provided in sections 32 to 35 of the Act - see section 29(1) of the Act.
It was pursuant to that statutory framework that, on 8 January 1998 the appellant's solicitors gave notice on his behalf that he would not be willing to give up possession of the property comprised in the tenancy on 31 May 1998. On 20 March 1998, just within the four month period from the date of the landlord's notice under section 25 of the Act, the appellant made application to the West London County Court for a new tenancy under Part II of the Act. The particulars of the appellant's current tenancy were set out in the application in these terms:
(a) The Agreement is partly contained in, alternatively evidenced by, a
letter dated 3rd March 1997 from the Respondent to the Applicant and an
agreement in writing dated 23rd September 1994.
(b) The original parties to the Lease were the Respondent as Landlord and the Applicant as Tenant who have remained the parties to the Lease at all material times to date.
(c) The Lease was granted for a term of six months from 1st April 1997.
(d) The rent originally reserved by the Agreement was £521.73 plus VAT per month and at all material times to date has remained such an amount.
(e) Under the terms of the Lease the term expired on 30th September 1997.
(f) The whole of the premises demised by the Lease is used for the purpose of a business carried on by the Applicant.
The appellant proposed a new tenancy for a period of two years at a rent of £600 per month and otherwise upon the terms of the present lease. It was stated in paragraph 10 of the application that the appellant had no knowledge of any other persons having an interest in the premises and likely to be affected by the grant of a new tenancy other than the freeholder, who was identified as Grand Metropolitan Estates Limited.
That application for a new tenancy was, as it seems to me, open to the criticism that it was made by one only of the two persons who, if there were a current tenancy within Part II of the Act, held under that tenancy as joint tenants. The agreement of 23 September 1994 had been made between the respondent, Exmos Cover Limited, and "Anthony Wroe and Susanna Wilson of Telepower". There is nothing in the correspondence between 1994 and the end of September 1997 which suggests that Ms Wilson had ceased to be a licensee or tenant (whichever the case might be) of the East Room under that agreement. She was treated as a joint licensee in the notice to quit dated 29 September 1997; and when, on 30 September 1997, Ellis & Fairbairn wrote to the respondent asserting (for the first time) the existence of a tenancy they did so "on behalf of our above-named clients".
Be that as it may, the point was not taken by the respondent company. The answer to the application, served on or about 6 April 1998, contains the statement, at paragraph (4), that there is no person likely to be affected by the grant of a new tenancy to the applicant alone. Nor, curiously, did the answer take what might have been thought to be the obvious points (i) that the respondent denied the existence of a current tenancy or (ii) that the grant of a new tenancy would put the respondent in breach of the covenant against subletting in its own lease. The opposition to a new tenancy was confined to the ground stated in the notice given under section 25 of the Act - namely, that on the termination of the current tenancy the landlord intended to occupy the holding for the purposes, or partly for the purposes, of a business which it was to carry on therein.
The application was fixed for a hearing on 11 June 1998. On 14 May 1998, Mrs Trudgian invited Ellis & Fairbairn to agree that there be directions for "a preliminary hearing as to our opposition to the granting of a new tenancy on the ground that we require the room for our own occupation and the matter of the terms of any new lease and the interim rent be dealt with at a later date". There was no formal agreement to the directions sought - because the parties were not agreed as to the need for witness statements - but an order for a preliminary issue whether the respondent could make good its opposition to a new tenancy on ground (g) of section 30(1) of the Act was not opposed. An order in those terms was made by the District Judge on 11 June 1998. The hearing of that issue was fixed for 10 August 1998, with a estimate of one day.
The parties, with solicitors and counsel instructed by the appellant, attended court on 10 August 1998 in the expectation that that preliminary issue would be heard on that day. The burden on the preliminary issue lay on the respondent. Its case was opened by Mrs Trudgian in person. We were told - and there is no reason to doubt - that, in the course of her opening (or, it may be, after she had begun to give her evidence), the judge took the point that, having regard to the terms of the agreement of 23 September 1994, she was concerned whether there was, indeed, any current tenancy. For my part, I think the judge was right to have concern on that point. The court's jurisdiction to grant a new tenancy on an application under section 24(1) of the Act of 1954 depends on the applicant being a tenant under a current tenancy to which Part II of the Act applies. Where, as in the present case, the agreement on which the applicant relies purports, on its face, to be a licence, it seems to me that the court must be entitled to satisfy itself that that condition is met. Be that as it may, the judge took the view that she ought to address the issue whether the room was held under a licence or a tenancy; and she adjourned the application for that purpose. She directed that the "landlords" - which, in context, must be a reference to the superior landlord - be served with notice of the application. Again, it seems to me that that was an appropriate direction. The respondent's lease contained a covenant against subletting; and the superior landlord might well wish to be heard on the question whether or not there was an existing sub-tenancy. Further, the superior landlord could be expected to have an interest in opposing the grant of a sub-tenancy to a business tenant who would or might obtain, against the superior landlord, the security afforded by Part II of the Act of 1954.
The application came back before the judge on 4 September 1998. It appears that, on that occasion, the appellant's counsel made it clear that, whatever the effect of the agreement when made, he would contend that the letter of 24 November 1997 created an estoppel which prevented the respondent company from denying the existence of a tenancy. There was, I think, insufficient time for the court to address that contention on 4 September 1997. The judge gave a short judgment in which she held that (leaving any question of estoppel on one side) the agreement of 23 September 1994 created a licence and not a tenancy. There is no challenge to her conclusion on that point. She adjourned the application to 10 September 1998 for further consideration of the appellant's contention that there was an estoppel.
At the hearing on 10 September 1998 the judge held that the letter of 24 November 1997 did not create an estoppel which prevented the respondent from denying the existence of a tenancy. She expressed her view in these terms:
It is apparent from what I have read [from that letter] that all the Respondent wants is for the Applicant to vacate the premises and he is under the mistaken impression that he must proceed under the Landlord and Tenant Act 1954.
In reaching that view, the judge placed emphasis on the phrase "apparently we have to accept" in the second paragraph of the letter; which, as she thought, indicated that the respondent was doing no more than selecting a procedural course which, as it thought, was the appropriate way to achieve the expressed objective of recovering possession.
The appellant, in his grounds of appeal, advanced the contention that the letter of 24 November 1997 created a tenancy by estoppel. In my view that contention has no foundation. As Lord Justice Millett pointed out in First National Bank Plc v Thompson  Ch 231, at page 237B, the concept of tenancy by estoppel is the product of what he described as "the fundamental principle of the common law which precludes a grantor from disputing the validity or effect of his own grant". The principle prevents both the lessor and the lessee from denying that the grant was ineffective to create the tenancy which it purported to create; notwithstanding that the lessor's title to the land was defective so that, as against third parties, he could create no interest in it. The point was put, succinctly, by Lord Hoffmann in Bruton v London & Quadrant Housing Trust  3 WLR 150, at page 157 G-H:
. . . it is not the estoppel which creates the tenancy, but the tenancy which creates the estoppel. The estoppel arises when one or other of the parties wants to deny the ordinary incidents or obligations of the tenancy on the ground that the landlord had no legal estate. The basis of the estoppel is that having entered into an agreement which constitutes a lease or tenancy, he cannot repudiate that incident or obligation.
That principle has no application in the present case. The question in the present case is not whether the landlord can deny that an agreement which, properly construed and understood, does create a tenancy is effective to do so. The question in the present case is whether one party can deny that an agreement which, properly construed and understood, does not create a tenancy must be treated, as between the parties to it, as if it does have that effect.
The principle of estoppel upon which the appellant must seek to rely, if he can - and which, in amended grounds of appeal, he invokes - is illustrated by the decision of this Court in Daejan Properties Ltd v Mahoney  2 EGLR 75. Miss Mahoney had lived for many years with her father and mother in a flat in Maida Vale. The flat had been let to her father on a contractual tenancy. When that contractual tenancy expired, in 1963, her father had held over as a statutory tenant until his death in 1976. Her mother then became a statutory tenant by succession. In 1991, following an earlier refusal by the landlords to transfer the tenancy into the joint names of mother and daughter, Miss Mahoney's mother obtained confirmation from the landlords' agent that "the tenancy of Flat 20 is in the joint names of you and your daughter and will continue to be so. All demands will be sent in your joint names". Subsequently, in February 1992, the landlords sought to resile from that position, and to treat the mother as the sole tenant. The mother died in August 1992. Miss Mahoney remained in occupation of the flat. The landlords accepted that she was entitled to do so as an assured tenant by succession under the provisions of the Housing Act 1988; but issued proceedings to determine whether, as Miss Mahoney contended, she was entitled to a statutory tenancy under the Rent Act 1977. This Court rejected the contention that Miss Mahoney had become entitled to a statutory tenancy by transmission under the provisions contained in paragraph 13 of Part II of schedule 1 to the Rent Act 1977; but accepted a submission based on estoppel, and allowed the appeal on that ground. The point is identified by Sir Thomas Bingham, Master of the Rolls, at page 77F-G:
But have the landlords, by their representation on which the appellant and her mother relied, estopped themselves from denying that the appellant and her mother would be treated by them as if they were joint tenants (and so statutory joint tenants, since a statutory tenancy was the only tenancy in existence at the relevant time)? That seems to me to be a natural and unstrained construction of what the landlords said, and this construction is not subject to the vice already described [that the appellant could not, in law, have become a statutory tenant because, on the facts, her mother's statutory tenancy had not been transmitted by the only means sanctioned by Parliament] because it is implicit in it that the appellant and her mother were not joint statutory tenants, but would be treated as if they were.
As Mr R E Megarry had put it, in an article in (1951) 67 LQR 505 to which the Master of the Rolls referred, the relevant distinction is between a representation that "the Act shall apply" (which is objectionable as an attempt to confer on the court a jurisdiction which goes beyond the intention of the legislature) and a representation that "I will treat you as having the same rights as if the Act applied". In relation to security of tenure and the restrictions on any increase in rent, at the least, there is no reason why the landlord should not agree to treat the tenant as having the same protection as he or she would have if the tenancy fell within the Act; and so no reason why the tenant should not be able to rely on an estoppel to the same effect - provided, of course, that the other requirements for an estoppel are met.
In the present case there is, as it seems to me, an unequivocal representation in the respondent's letter of 24 November 1997 that - at least in relation to the termination of the appellant's right to occupy the room at 85 Gloucester Place - he would be treated by the respondent as if he were holding over under a tenancy to which Part II of the Landlord and Tenant Act 1954 applied. The position as at 24 November 1997 may be summarised as follows: (i) the parties were in dispute - the appellant asserting the existence of a tenancy (which, if it existed, would be within Part II of the Act) and the respondent asserting that the agreement created only a licence; (ii) the respondent could not, in practice, recover possession of the room without an order of the court - an attempt to re-enter without an order would be met with an injunction (as did, in fact happen, between the judge's order and the hearing of this appeal); (iii) the appellant's claim to be entitled to a tenancy within Part II of the Act of 1954 would be raised in any proceedings which the respondent might take to recover possession - so that the issue "licence or tenancy" would have to be resolved in such proceedings; (iv) it was likely that proceedings in which that issue had to be resolved would not be determined within less than about six months - in the event it took five and half months to resolve that issue in the present proceedings; and (v), if that issue were resolved against the respondent, it would be necessary, then, for the respondent to give a notice under section 25 of the Act and there would be a further period of six months before the tenancy would determine pursuant to that notice. In those circumstances it was understandable that the respondent might take the view that there was, in practice, no real chance of obtaining possession of the room in less than about six months in any event and that the sensible course was to ensure that the period of six months which would be required under the Act (if it turned out that there was a tenancy) had begun to run against the appellant. There was, of course, always a chance that, faced with a notice which opposed a new tenancy on a ground which (as the respondent must have thought) the respondent would have no difficulty in establishing, the appellant would accept that he would have to vacate the room at the end of six months and would arrange his affairs accordingly. A more sensible course, perhaps, would have been to give the section 25 notice without prejudice to the contention that the agreement created a licence and not a tenancy, and to commence proceedings at once to have that issue resolved.
Read in the context of the position as it was at the time, the letter of 24 November 1997 contains a representation that the respondent will accept that the appellant should have the period of six months notice to which he would be entitled if Part II of the Act of 1954 applied; but that during that period he would be required to pay an interim rent based on open market value - again, as he could be required to do if Part II of the Act applied and the respondent made an application to the court under section 24A. The letter does not contain any representation that an application for a new tenancy will not be opposed. Indeed, when read in conjunction with the section 25 notice to which the letter refers, it is plain that any such application will be opposed. The most that could be said, as it seems to me, is that the letter and the notice, read together, suggest that opposition to a new tenancy will be founded only on ground (g) of section 30(1) of the Act; and will not be founded on an argument that Part II of the Act has no application at all.
The question, then, is whether the appellant relied upon the representation, or representations, contained in the letter of 24 November 1997 in a manner which caused him detriment. To put the point another way: did the appellant take some step in reliance upon a representation in that letter which would make it unfair, or inequitable, for the judge to allow the respondent to contend, in August or September 1998, that there had never been a tenancy. It is important to keep in mind that Miss Mahoney succeeded in the Daejan Properties case only on the basis that she had relied on the confirmation contained in the letters from the landlords' agents. She did so when she rejected an offer of alternative accommodation made by Westminster City Council shortly after receipt of those letters. As this Court held, she rejected that offer because she thought that her position as a statutory tenant had been accepted - see the observations of Sir Thomas Bingham, Master of the Rolls, at  2 EGLR 75, at 76D, and of Lord Justice Hoffmann at 78K and 79K-L. The representation alone - absent reliance to the detriment of the representee - would not found an estoppel.
There can be no doubt that the appellant remained in occupation of the room after 24 November 1997. But it is, to my mind, impossible for him to say that he did so in reliance on the letter of that date. His solicitors had made it clear, in their letter of 30 September 1997 and in subsequent correspondence, that he was asserting the right to remain in occupation until the expiry of the period specified in a valid notice given in accordance with Part II of the Act of 1954. He did not remain in occupation in reliance on the letter of 24 November 1997, nor in reliance on the section 25 notice that was served at the time of that notice. He remained in occupation because, independently of the letter or the notice, he was advised by his solicitors that he was entitled to do so. In any event, the respondent has not sought to foreshorten the period of six months which, in the letter of 24 November 1997, it represented to the appellant that he should have in which to make arrangements for other accommodation. Nor has the respondent yet sought to obtain possession of the room, save on the basis that it requires that room for use in connection with its own business.
It may be said that the appellant relied on the section 25 notice, served by the respondent on 24 November 1997, as the basis for the service of his own counter notice dated 8 January 1998 and as the basis for his application to the court, on 20 March 1998, for a new tenancy. In the circumstances of this case the appellant could not have applied for a new tenancy save in response to a landlord's notice under section 25 of the Act; because his current tenancy (if any) had been granted for a term certain which did not exceed one year - see section 26(1) of the Act. But I find it impossible to hold that, in serving a counter-notice under section 25(5) and in applying for a new tenancy under section 24(1)(a), the tenant was acting to his detriment - or, at the least, was acting to his detriment in reliance on any representation made to him. The appellant applied for a new tenancy because he wanted a new tenancy. The landlord's section 25 notice provided the opportunity to make the application; but it did not, in any sense, encourage the appellant to take that course. It was made clear to him in the notice itself that an application for a new tenancy would be opposed. There was no evidence to suggest that the appellant would not have made the application if he had not been led by the respondent to think that it would opposed only on the section 30(1)(g) ground; and not on the ground that there was no current tenancy within the Act.
The point can, I think, be tested in this way. If, after receipt of the counter-notice on or about 8 January 1998, the respondent had written to the appellant's solicitors to the effect that any application for a new tenancy would be opposed not only on the section 30(1)(g) ground but also on the ground - which had been asserted consistently prior to 24 November 1997 - that the agreement of 24 September 1994 had created a licence and not a tenancy, would the appellant have decided not to apply for a new tenancy? If, in its answer to the appellant's application made on 20 March 1998, the respondent had asserted that the agreement of 24 September 1994 had created a licence and not a tenancy, would the application have been withdrawn? On the material before the judge those questions could only be answered in the negative. I can find nothing in the submissions advanced in this Court to suggest that there was any material which could have been relied upon to suggest a different answer; and, given the very positive assertions made by the appellant's solicitors in correspondence - to the effect that there was a tenancy within the Act and that any attempt to interfere with their clients' enjoyment of the premises would amount to "harassment" and a "fundamental breach of the Act" - it seems to me most unlikely that any such material could exist. And, if those questions could only be answered in the negative, the further question "could the court have refused, at any time before 11 June 1998, to allow an amendment to the respondent's answer in order to raise the issue `licence or tenancy'" must also receive a negative response.
We were referred to the decision of this Court in Keepers and Governors of the Possessions Revenues and Goods of the Free Grammar School of John Lyon v Mayhew  1 EGLR 88 as authority for the proposition that the service of the section 25 notice - and the respondent's subsequent failure to take the point that the application for a new tenancy was misconceived - precluded the respondent from asserting that there was no current tenancy within Part II of the Act. In my view that decision provides no support for that proposition in the present case. In the John Lyon School case the landlords had served a section 25 notice which was not in the prescribed form. The tenant knew that the notice was in the wrong form; but served a counter-notice and commenced proceedings for a new tenancy. Subsequently, in proceedings by the landlords for a declaration that the tenant was not entitled to rely on a notice served under the Leasehold Reform Act 1967 some two years after the service of the section 25 notice under the 1954 Act, the tenant sought to assert that that section 25 notice was invalid. It was held that he was estopped from doing so. By his conduct in treating the section 25 notice as valid, he had led the landlords to think that it would not be challenged. Had he not led the landlords to think that there would be no challenge to the formal validity of their section 25 notice, they could have served another notice in the correct form. As Lord Justice Leggatt put it, at page 90A:
Since the landlords refrained from doing so on the faith of Mr Mayhew's representation that he was treating the section 25 notice as valid, it would plainly be unconscionable for Mr Mayhew to take the point thereafter that the section 25 notice was defective. Since Mr Mayhew knew that the wrong form had been served, while it is evident that the landlords did not, there is no unfairness in Mr Mayhew being bound by the consequence of treating it as valid.
Lord Justice Henry said this, at page 91E:
So the tenant clearly intended the landlords to act upon his representation,
and the landlords did so act, first in not examining the notice critically and
so not amending it, and second, by incurring expense on activities only
relevant to the 1954 [Act] proceedings for a new lease (ie predicated on
acceptance of the notice as valid). And as Mr Mayhew was aware of the defect,
and was hoping to take advantage of the landlords' mistake, he lulled them into
a false sense of security by not taking this point. So there is nothing
inequitable in holding him to the stance he presented to the world: namely that
the notice was effective.
I find no parallel between the facts in the John Lyon School case and those in the present case. The respondent's representation in the present case was that the appellant should have the period of notice which he would have had if he were a tenant. There was, as I have already indicated, no representation that the respondent would not oppose the grant of a new tenancy. It cannot be said that the appellant was lulled into a false sense of security. There was nothing that he could or would have done if he had not been led to think (if he were) that the grant of a new tenancy would be opposed only on the ground under section 30(1)(g) of the Act. There would, in any event, have been proceedings in which the "licence or tenancy" issue would have arisen for determination. Given the advice which, as appears from their letters to the respondent, Ellis & Fairbairn had given to the appellant, the litigation costs down to 11 June 1998 - or comparable costs of other proceedings - would have been incurred whether or not the appellant was led, by the letter of 24 November 1997, to think that the respondent had abandoned its contention that the agreement of 23 September 1994 created a licence and not a tenancy.
The significance of 11 June 1998, of course, is that it was on that date that the court directed that the question whether or not the respondent intended to occupy the premises within the meaning of section 30(1)(g) of the Act be tried as a preliminary issue. The court made that direction at the invitation of the respondent. The direction led to the costs of and incidental to the hearing on 10 August 1998 being thrown away. It is plain that, if the respondent intended to take the point that the court had no jurisdiction under the Act to entertain an application for the grant of a new tenancy - on the ground that there was no current tenancy - that point should have been taken, at the latest, on 11 June 1998. To invite the court to direct a preliminary issue which could arise only if there were jurisdiction to entertain the application for a new tenancy is inconsistent with a contention that there is no such jurisdiction. The judge recognised the inconsistency; and reflected her concern in the order for costs which she made on 10 September 1998. She ordered that the respondent pay the appellant's costs of and occasioned by the wasted hearing of 10 August 1998.
It was submitted that the judge failed to appreciate that what had occurred was an abuse of the process of the court. I find that a difficult submission to accept in the circumstances that it seems to be common ground that it was the judge herself who took the point, in the course of the hearing on 10 August 1998, that she needed to be satisfied as to the existence of the jurisdiction which she was asked to exercise. I have already indicated my view that she was entitled to consider the basis upon which the jurisdiction under Part II of the Act had been invoked. It seems bizarre to characterise as an abuse of process the respondent's conduct in taking the point which the judge had invited it to argue - albeit that, if the respondent had been better advised, it would have taken the point earlier and on its own initiative.
In support of the submission that it was an abuse of process for the respondent to advance, or for the judge to entertain, an argument that the agreement of 23 September 1994 fell outside Part II of the Act reliance was placed on the decision of this Court in Benedictus v Jalaram Ltd  1 EGLR 251. The tenant company had made a request, under section 26 of the Act, for the grant of a new tenancy. The landlords indicated that they would oppose that request, on grounds available to them under section 30(1). On 25 April 1983, before any application had been made to the court by the tenant under section 24(1), the landlords themselves commenced proceedings under section 24A for the determination of an interim rent. The tenant made its application for a new tenancy on 15 June 1983. In September 1983 the applications were consolidated. Some three and a half years later, in April 1987, the tenant company informed the landlords that it was not in occupation of the property; and, in those circumstances, the tenant's application for a new tenancy was dismissed. The tenant then sought to put in an answer to the landlords' application for an interim rent, alleging that it had not had, at any material time, a tenancy of the property to which Part II of the Act could apply. The county court judge ordered that answer to be struck out. This Court dismissed the tenant's appeal. Lord Justice Stocker held, at page 255C-D, that:
In my view, it would be an abuse of the process of the court for the tenants to abandon their previous assertion and course of conduct and to elect to aver that they have never had a tenancy to which Part II of the Act applied and by those means to defeat the landlords' claim for interim rent, the existence of which they had been aware throughout the whole course of the proceedings. . . . They were, as the judge said, approbating and reprobating and the assistance of the court should not be available in support of such a course of action.
Lord Justice Bingham expressed the principle in these terms, at page 256 D-E:
If in the course of litigation a party (A) accepts the truth of an assertion of fact expressly or impliedly made by his opposing party (B) and founds on that fact formally to claim relief to which he would not be entitled if that fact were not true (A knowing if the fact is true or not, whether or not B knows), and if the litigation is thereafter conducted on the basis of the truth of that fact, A may not thereafter assert the falsity of that fact and retract his acceptance of its truth where the effect would be both to deny B a remedy which would have been available to B had A asserted the falsity of that fact from the beginning and to deny B a remedy to which A's acceptance of that fact would have entitled him.
In my view the appellant gains no assistance from the decision in Benedictus v Jalaram Ltd. Adopting the formulation of principle in the judgment of Lord Justice Bingham - and assuming (but without deciding) that the question whether or not the agreement of 23 September 1994 created a licence or a tenancy is a question of fact, rather than a question of law - the assertion of fact made by the appellant (B) in the present case, which the respondent company (A) could be said to have accepted, was that there was a tenancy to which Part II of the Act applied. But although the respondent (A) founded a formal claim to relief on that fact - because it made application for the determination by the court of an interim rent in paragraph (5) of its answer dated 6 April 1998 - that claim was not pursued and the effect of allowing the respondent (A) to retract his acceptance that there was a tenancy is not to deny to the appellant (B) a remedy which would have been available to him if the respondent (A) had asserted from the beginning that there was no tenancy.
On a true appreciation of the position, this is not a case in which it can be said that the respondent company has elected between two inconsistent remedies; nor that it has sought to approbate and reprobate. The most that can be said is that the respondent made a procedural mistake. It should have raised the issue "licence or tenancy" in its answer to the appellant's application for a new tenancy; and it should not have invited the court to determine the section 30(1)(g) point as a preliminary issue in advance of the question whether or not there was a current tenancy to which Part II of the Act could apply. The judge, in my view, would have been correct to hold that the respondent was not precluded by that mistake from raising the issue "licence or tenancy". A fortiori,, the judge was entitled to invite consideration of that question in the circumstances that it went to the root of her jurisdiction.
For those reasons I would dismiss this appeal.
LORD JUSTICE CLARKE:
Order: Appeal dismissed. The respondent company to have its costs of the appeal assessed on the standard basis. Appellant to give up possession of the room on the second floor of 85 Gloucester Road, possession to be given on or before 28th February 2000, the respondent having received a cheque for February. Permission to appeal to the House of Lords refused.