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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Single Horse Properties Ltd. v Surrey County Council [2002] EWCA Civ 367 (26th March, 2002)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/367.html
Cite as: [2002] WLR 2106, [2002] 1 WLR 2106, [2002] 19 EG 150, [2002] 4 All ER 143, [2002] EWCA Civ 367

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Single Horse Properties Ltd. v Surrey County Council [2002] EWCA Civ 367 (26th March, 2002)

Neutral Citation Number: [2002] EWCA Civ 367
Case No: B2/2001/1002

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EPSOM COUNTY
COURT, (HIS HONOUR JUDGE HULL QC)

Royal Courts of Justice
Strand, London, WC2A 2LL
26 March 2002

B e f o r e :

LORD JUSTICE POTTER
LADY JUSTICE ARDEN
and
SIR DENIS HENRY

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Between:
Single Horse Properties Ltd
Appellant
- and -

Surrey County Council
Respondent

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

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Mr Nicholas Dowding QC (instructed by Surrey County Council) for the Appellant
Mr Kim Lewison QC and Mr Wayne Clark (instructed by Berwin Leighton) for the Respondent

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HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

Crown Copyright ©

    Lady Justice Arden :

  1. This case raises the issue whether, where a landlord has served a notice under section 25 of the Landlord and Tenant Act 1954 (“the 1954 Act”) and the tenant has served a counter-notice on the landlord and made an application for a new tenancy, the tenant ceases to be liable for rent if it changes its mind about wanting a new tenancy and goes out of occupation prior to the contractual term date (referred to below as “the term date”). The point turns on the true construction of section 64(1)(c) of the 1954 Act, set out below.
  2. The statutory framework

  3. In broad terms, the statutory framework is as follows. Part II 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” (section 23(1)). Such a tenancy continues until determined in accordance with Part II of the Act (section 24(1)). The landlord may determine the tenancy by giving notice under section 25(1). If he does so, the tenant may claim a new tenancy if within two months he gives the landlord written notice (commonly called a “counter-notice”) that he is not willing to give up possession of the premises and not later than two nor more than four months after receiving the notice he applies to the court for a new tenancy (sections 24(1), 29(2), 29(3)). A tenant under a tenancy for a fixed period exceeding one year may also make a request for a new tenancy (section 26(1)). A tenant may determine a tenancy which is continued by section 24(1) by giving notice to quit or, if the tenancy is for a fixed term, by three months’ notice in writing to expire at the end of the term or on any quarter day thereafter (section 27). Section 64 provides for the continuation of tenancies where an application has been made to the court so that they do not expire before the expiration of three months following final disposal of the application for a new tenancy.
  4. The relevant provisions of the Landlord and Tenant Act 1954 are sections 23, 24, 25, 26, 27, 29 and 64 which (as now in force) provide in material part as follows:-
  5. 23 Tenancies to which Part II applies
    (1) Subject to the provisions of this Act, this Part of this 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.
    (2) In this Part of this Act the expression ‘business’ includes a trade, profession or employment and includes any activity carried on by a body of persons, whether corporate or unincorporate.
    (3) In the following provisions of this Part of this Act the expression ‘the holding’ in relation to a tenancy to which this Part of this Act applies, means the property comprised in the tenancy, there being excluded any part thereof which is occupied neither by the tenant nor by a person employed by the tenant and so employed for the purposes of a business by reason of which the tenancy is one to which this Part of this Act applies ...
    24 Continuation of tenancies to which Part II applies and grant of new tenancies
    (1) 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 twenty-nine 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 twenty-six of this Act.
    (2) The last foregoing subsection shall not prevent the coming to an end of a tenancy by notice to quit given by the tenant, by surrender or forfeiture, or by the forfeiture of a superior tenancy, unless –
    (a) in the case of a notice to quit, the notice was given before the tenant had been in occupation in right of the tenancy for one month; or
    (b) in the case of an instrument of surrender, the instrument was executed before, or was executed in pursuance of an agreement made before, the tenant had been in occupation in right of the tenancy for one month.
    (3) Notwithstanding anything in subsection (1) of this section, -
    (a) where a tenancy to which this Part of this Act applies ceases to be such a tenancy, it shall not come to an end by reason only of the cesser, but if it was granted for a term of years certain and has been continued by subsection (1) of this section then (without prejudice to the termination thereof in accordance with any terms of the tenancy) it may be terminated by not less than three nor more than six months’ notice in writing given by the landlord to the tenant;
    (b) where, at a time when a tenancy is not one to which this Part of this Act applies, the landlord gives notice to quit, the operation of the notice shall not be affected by reason that the tenancy becomes one to which this Part of this Act applies after the giving of the notice.
    25 Termination of tenancy by the landlord
    (1) The landlord may terminate a tenancy to which this Part of this Act applies by a notice given to the tenant in the prescribed form specifying the date at which the tenancy is to come to an end (hereinafter referred to as “the date of termination”):
    Provided that this subsection has effect subject to the provisions of Part IV of this Act as to the interim continuation of tenancies pending the disposal of applications to the court.
    (2) Subject to the provisions of the next following subsection, a notice under this section shall not have effect unless it is given not more than twelve nor less than six months before the date of termination specified therein.
    ...
    (4) In the case of any other tenancy, a notice under this section shall not specify a date of termination earlier than the date on which apart from this Part of this Act the tenancy would have come to an end by effluxion of time.
    (5) A notice under this section shall not have effect unless it requires the tenant, within two months after the giving of the notice, to notify the landlord in writing whether or not, at the date of termination, the tenant will be willing to give up possession of the property comprised in the tenancy.
    (6) A notice under this section shall not have effect unless it states whether the landlord would oppose an application to the court under this Part of this Act for the grant of a new tenancy and, if so, also states on which of the grounds mentioned in section thirty of this Act he would do so.

    26 Tenant’s request for a new tenancy

    (1) A tenant’s request for a new tenancy may be made where the tenancy under which he holds for the time being (hereinafter referred to as “the current tenancy”) is a tenancy granted for a term of years certain exceeding one year, whether or not continued by section twenty-four of this Act, or granted for a term of years certain and thereafter from year to year.

    (2) A tenant’s request for a new tenancy shall be for a tenancy beginning with such date, not more than twelve nor less than six months after the making of the request, as may be specified therein:

    Provided that the said date shall not be earlier than the date on which apart from this Act the current tenancy would come to an end by effluxion of time or could be brought to an end by notice to quit given by the tenant.
    ...

    (5) Where the tenant makes a request for a new tenancy in accordance with the foregoing provisions of this section, the current tenancy shall, subject to the provisions of subsection (2) of section thirty-six of this Act and the provisions of Part IV of this Act as to the interim continuation of tenancies, terminate immediately before the date specified in the request for the beginning of the new tenancy.

    ...

    27 Termination by tenant of tenancy for fixed term

    (1) Where the tenant under a tenancy to which this Part of this Act applies, being a tenancy granted for a term of years certain, gives to the immediate landlord, not later than three months before the date on which apart from this Act the tenancy would come to an end by effluxion of time, a notice in writing that the tenant does not desire the tenancy to be continued, section twenty-four of this Act shall not have effect in relation to the tenancy unless the notice is given before the tenant has been in occupation in right of the tenancy for one month.

    (2) A tenancy granted for a term of years certain which is continuing by virtue of section twenty-four of this Act may be brought to an end on any quarter day by not less than three months’ notice in writing given by the tenant to the immediate landlord, whether the notice is given .... after the date on which apart from this Act the tenancy would have come to an end or before that date, but not before the tenant has been in occupation in right of the tenancy for one month.

    29 Order by court for grant of a new tenancy

    (1) Subject to the provisions of this Act, on an application under subsection (1) of section twenty-four of this Act 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 other terms, as hereinafter provided.

    (2) Where such an application is made in consequence of a notice given by the landlord under section twenty-five 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 subsection (1) of section twenty-four 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 twenty-five of this Act or, as the case may be, after the making of the tenant’s request for a new tenancy.

    64 Interim continuation of tenancies pending determination by court

    (1) In any case where –

    (a) a notice to terminate a tenancy has been given under Part I or Part II of this Act or a request for a new tenancy has been made under Part II thereof, and
    (b) an application to the court has been made under the said Part I or the said Part II, as the case may be, and
    (c) apart from this section the effect of the notice or request would be to terminate the tenancy before the expiration of the period of three months beginning with the date on which the application is finally disposed of,
    the effect of the notice or request shall be to terminate the tenancy at the expiration of the said period of three months and not at any other time ......”

  6. In Esselte AB v Pearl Assurance Ltd [1997] 1 WLR 891 the question arose whether a tenancy for a fixed term was prolonged by service by the tenant of a notice under section 27 of the 1954 Act. The tenant was no longer in occupation of the demised premises when that notice was served. The Court of Appeal held that section 27(2) was looking to the point in time when the notice took effect. At that point in time the tenancy had to be one which was “continuing by virtue of section 24 of the Act” (898E, per Morritt LJ). Section 24(1) applies only to tenancies “to which Part II of the 1954 Act applies” (in the present tense). The only tenancies continued by that section were those whereunder the tenant was in occupaton for the statutory purposes immediately before the term date (898E – 898F per Morritt LJ). Thus, in the Esselte case, the tenancy was not at that date a tenancy to which the 1954 Act applied. Accordingly, the tenant’s notice under section 27(2) was not effective to extend it. In so holding the court decided to follow the earlier decision of the Court of Appeal in Morrisons Holdings Ltd v Manders Property (Wolverhampton) Ltd [1976] 1 WLR 533 in preference to the more recent decision of the Court of Appeal in Long Acre Securities Ltd v Electro Acoustic Industries Ltd [1990] 1 EGLR 91, in which the Morrisons case was not cited. In the latter case, the tenant under a tenancy for a fixed term ceased to occupy the demised premises prior to the term date. The landlord served notice under section 25(1) terminating the tenancy at a subsequent date. That notice was held to be effective to continue the tenancy under section 24(1). The tenancy was held to be one to which the 1954 Act applied as from the outset.
  7. The background

  8. In this case the appellant was the tenant of an office building known as 7, 9, 11 and 13 Monument Hill, Weybridge, Surrey under a lease granted on the 24 July 1975 for twenty-five years ending on the 24 June 2000. It occupied the building as offices in connection with its functions as a local education authority. The tenancy was one to which the 1954 Act applied while such occupation continued.
  9. On 3 December 1999, the landlord, who is the respondent to this appeal, served a notice dated 30 November 1999 under section 25 of the 1954 Act on the appellant. This notice terminated the tenancy on 24 June 2000. On 26 January 2000 the appellant served a counter-notice dated 24 January 2000 to the effect that it was not willing to give up possession on the termination date. On 21 March 2000 it applied to the County Court for a new tenancy under the Act. On 10 April 2000 the respondent served an answer. On 15 May 2000, District Judge Dimmick gave directions by consent with a view to trial of the application in September or October 2000.
  10. However, on 13 June 2000 the appellant vacated the building. On 16 June 2000 its agents notified the landlord that it had done so and returned the keys. Accordingly, (and this is common ground) the appellant did not occupy the premises on the term date.
  11. On 3 August 2000 the landlord applied for an order in the following terms:
  12. “The claimant’s application for a new tenancy be struck out. The said tenancy the subject of the application to continue with rent payable thereunder for a period of three months from the making of this order.”
  13. The ground on which the application was made was that the appellant had vacated the premises. On 22 August 2000, District Judge Coni made an order in the terms sought by the landlord. The order provided that the tenancy the subject of the claimant’s application was to continue with rent payable thereunder for a period of three months from the date of the order. On this basis the appellant was liable to pay rent from 24 June 2000 to 22 November 2000 even though it had not been in occupation of the premises for any part of that period. The amount in question exceeds £64,000.
  14. On 7 September 2000 the appellant applied for an order varying District Judge Coni’s order so as to delete that part of it which provided for payment of rent after 24 June 2000. The application was dismissed by District Judge Sturdy on 25 October 2000. The appellant appealed to His Honour Judge Hull QC. On 20 April 2001 he made an order dismissing the appeal. It is that order which is now under appeal.
  15. The judge considered a number of authorities which were cited to him. He concluded that if, having set in train an application for a new tenancy, the tenant could vacate the premises immediately before the term date, the result would be inconvenient to the landlord. Following the application to the court by the tenant, the landlord might, for instance, refrain from seeking a new tenant. The critical question was the meaning of section 64(1)(c) of the 1954 Act. In his judgment:
  16. “the true construction of section 64 is to require the parties to ask, subparagraphs (a) and (b) being satisfied , this:
    ‘apart from section 64 will the effect of the section 25 notice be to terminate the tenancy, (assuming that it will operate in due course to terminate the tenancy) before the expiration of three months beginning with the date on which the application is finally disposed of?’
    Of course it will not be possible to answer that question until three months before the date of termination specified in the notice. Up to that time the application may be disposed of by order of the court, or by the tenant ceasing to occupy the premises, or ceasing to occupy them for the tenant’s business purposes, but thereafter, if I am correct in inserting the words in parenthesis, which I have mentioned, it will be clear that the effect of the section 25 notice will be to terminate the tenancy within the three months, assuming that it will in fact take effect. The possibilities of premature abandonment, surrender etcetera will not affect the operation of the statutory extension of the tenancy. In my view that is the natural way to construe paragraph (c) of section 64(1), both in view of the oblique language of the paragraph and the obvious common sense of the situation in which the parties are placed by the statutory provisions.

    Appellant’s submissions

  17. Mr Nicholas Dowding QC, for the appellant, submitted that the ratio in Esselte v Pearl Assurance applies where notice has been given by the landlord under section 25 of the 1954 Act. He relies on the fact that in the Esselte case the court did not there distinguish the earlier Long Acre case on the basis that a section 25 notice was served. Indeed, it rejected that distinction (see per Morritt LJ at 900). He submits that the same principle should apply where there is not only a notice by the landlord under section 25 but an application for a new tenancy. This view is supported by Woodfall on Landlord and Tenant (2001) paragraphs 22 – 046 and 22 – 046.1, note 3.
  18. Mr Dowding relies on the fact that in section 24(2) there is no reference to expiry by effluxion of time. Where a tenant goes out of occupation, the tenancy does not continue by virtue of the Act and accordingly, there is no need for section 24(2) to mention expiry by effluxion of time. If the tenancy is forfeited after the section 25 notice was served, the tenancy would end on the date of forfeiture. Mr Dowding submits that if his proposition is not correct, the landlord can extend the tenant’s liability for rent even though the tenant obtains no benefit since the tenant has gone out of occupation.
  19. Mr Dowding submits that section 64 only extends the date of the expiry of the section 25 notice. Accordingly, that section can only operate if the section 25 notice is effective to determine the tenancy.
  20. Mr Dowding places emphasis on the words “the effect of the notice” in section 64(1)(c). These words do not apply if the tenant leaves the premises before the contractual term date because the notice has no effect. The argument to the contrary substitutes for these words a reference to the term date. The judge considered the question whether the date in the section 25 notice was earlier than the section 64 date.
  21. Mr Dowding submits that in the Esselte case the balance was struck firmly in favour of the tenant and that the result for which he contends reaches the same policy decision. He relies on the unreported decision of Mr Recorder Blunt QC sitting as a deputy judge of the Technology and Construction Court in Arundel Corporation v Financial Training Company Limited, 27 March 2000. He held that section 64 operated by deferring the effect of the landlord’s section 25 notice and that, where a section 25 notice had no operation because the tenant had ceased to occupy the premises by the term date, section 64 could not continue the tenancy (judgment paragraph 55). Mr Dowding submits that Part II of the 1954 Act is designed to protect only tenants who are in occupation.
  22. The judge failed to appreciate that the objection which he saw to the appellant’s construction was also endemic in a situation where the landlord serves no section 25 notice and does not know whether the tenant will go on the contractual term date.
  23. Mr Dowding contends that it was not open to the judge to make the assumption that the notice once given would operate in the future to terminate the tenancy.
  24. Mr Dowding submits that Benedictus v Jalaram Limited [1989] 1 EGLR 251 is distinguishable. In that case the tenant remained in possession beyond the term date. The decision, however, shows that in extreme circumstances, the tenant may become liable for rent because the circumstances gave rise to estoppel by convention.
  25. Mr Dowding submits that it matters not that the tenant invokes the jurisdiction of the court by making an application to it unless statute provides that it has the effect of continuing the tenancy. It was unnecessary to mention cesser by effluxion of time in section 24(2) because the tenancy which expires by effluxion of time is not one where the tenant is in occupation on the contractual term date and accordingly it is not one to which Part II of the Act applies. The fact that section 24(2) preserves forfeiture shows that section 64 must be subservient to section 24.
  26. Section 64(1)(c) is speaking as to the present, not the future. The word “would” is used because the reader is to assume that section 64 is not there. Mr Dowding gives us an example of the use of the expression: “but for your height you would be a good basketball player”. This is a statement as to the present abilities of the addressee not as to whether he would be a good basketball player in the future. Likewise, in section 64(1)(c) the question “what is the effect of the notice?” is to be asked as at the contractual term date. The notice has no effect before that date. If Parliament had meant that a comparison should be made between the date specified in the section 25 notice with the position at the end of three months following final disposal of the application, it would have said so. The effect of the section is to extend the date on which the notice or request takes effect. For instance, under section 26(5) where a request is served the tenancy terminates immediately before the date specified in the request for the beginning of the new tenancy. Accordingly, section 64 applies only if the notice is potentially a good notice and that depends on the tenant being in possession on the contractual term date. On the respondent’s submission, the date of termination is set in stone when a notice or request is served.
  27. Respondent’s submissions

  28. Mr Kim Lewison QC, submits that a number of dates are relevant for different purposes in Part II. He also points out that under section 26 there is no requirement for the tenancy to be a tenancy to which Part II of the Act applies and accordingly section 26 is not dependent on occupation by the tenant. He further submits that certain sections show that Part II of the 1954 Act has a concern for the landlord’s income stream by requiring the tenant to give three months’ notice of termination. He refers to sections 24(3), 27 and 36(2).
  29. With respect to section 64, Mr Lewison submits that the material words are “would be” not “would have been”. Accordingly the words are words of futurity. The crucial question is: as at what date does the question posed by section 64(1)(c) need to be answered?
  30. Mr Lewison relies on dicta by Cross J in I&H Caplan Limited v Caplan (No.2), [1963] 1 WLR 1247, above and Pike v Nairn, [1960] 2 AER 184, [1960] Ch. 553. In the Caplan case, Cross J (at 1253) held that the effect of section 64(1) was to extend the tenancy as from the date of the issue of proceedings and in addition (at 1254) that if the tenant went out of occupation before making an application for a new tenancy the landlord would be able to apply for an order dismissing the summons. However, in the Caplan case, the tenant did not cease to occupy the premises before the contractual term date. Cross J made useful observations about the circumstances in which a company which ceases physically to occupy premises can be said to have ceased to occupy them. In Pike v Nairn, Cross J held that the effect of section 64(1) was to extend the existing tenancy. However, in that case, it was not contended that the tenancy had terminated by effluxion of time.
  31. In short, Mr Lewison submits that, by issuing the summons in March 2000, the appellant had brought the statutory scheme into effect. If the tenant ceased to occupy the premises after that date, it could go to the court for an order bringing the proceedings to an end. If it had not been in occupation before the issue of the summons, the landlord could apply to dismiss the proceedings on the grounds that the tenant had no standing to make the application.
  32. Mr Lewison also relies on Zenith Investments (Torquay) Ltd v Kammins Ballroom Company Limited (No.2) [1971] 1 WLR 1751, C.A. In that case, the tenants filed an application for the grant of a new tenancy which was ultimately held to have been too early and therefore did not comply with Part II of the 1954 Act. In subsequent proceedings, the question arose as to the liability of the tenant for rent following the invalid application. The Court of Appeal held that the application was nonetheless an application for the purposes of section 64. Russell LJ pointed out (at 1755) that if the tenant made a hopeless application then the landlord would be able to apply to the court to strike it out. Sachs LJ (at 1757 – 1758) observed that:
  33. “the manifest object of section 64 as a whole was to ensure that during the periods, sometimes prolonged, while litigation between landlord and tenant was pending and neither party knew whether a new tenancy would be granted, there should yet be certainty as between them relating to their interim obligations”.
  34. Mr Lewison also relies on the recommendations made by the Leasehold Committee (the Jenkins Committee) in its final report (Cmd. 7982, 1950), which led to the 1954 Act, and in particular recommendation 18 at page 78 that a tenant who has duly given notice to the landlord of his claim to renewal should, notwithstanding the expiration or determination of his contractual tenancy, be entitled to remain in possession until disposal of his claim.
  35. Mr Lewison also relies on the Benedictus case, above. He argues that both Stocker and Bingham LJJ took the view that the making of an application was the invocation of the court’s jurisdiction. Having done that, the tenant was liable to pay rent for the period of its occupation. Accordingly, the tenant could not approbate and reprobate and claim that they never had a tenancy to which Part II applied because they were not in occupation. Mr Dowding submits in reply that the dicta in the Benedictus case and the Zenith case are of little assistance. The same applies to Caplan v Caplan and Pike v Nairn. When these cases were decided, it was not clear that the material date for the purposes of tenancies to which Part II of the 1954 Act applied was the term date.
  36. Mr Lewison further relies on Bowes-Lyon v Green [1963] AC 420 above as showing how the court looks to events which occur in the future when applying a statutory provision. Under section 44 of the 1954 Act the relevant words were “tenancy which will not come to an end within fourteen months or less by effluxion of time or by virtue of a notice to quit already given by the landlord”. Lord Reid held the court should look at the state of affairs as it existed on the day on which it was necessary to determine the question whether the tenancy qualified under these words. The fact that the position might change should be ignored (see page 435 – 6). Lord Morris of Borth-y-gest and Lord Hodson gave judgment to the same effect (see page 443 and 447). In reply Mr Dowding submits that Bowes-Lyon v Green is distinguishable. The decision concerned section 44 of the 1954 Act (as originally enacted). The House of Lords placed emphasis on the words “for the time being” which appear in that section. The function of this section is to determine who the landlord is for the purposes of Part II. The effect of the decision is that the landlord has to be ascertained as at the time when the question arises and so the decision is of no real assistance.
  37. In summary, Mr Lewison submits that there is a single, logical scheme. The tenant can make a request for a continuation of his tenancy, in which case section 26(5) applies to continue his tenancy. That is the relevant provision for the purpose of section 24 and section 64 applies to postpone the date of termination. If the landlord serves a notice under section 25, that brings in section 64. By virtue of section 64, the tenancy is extended beyond the term date. This applies even if the application is invalid or is vulnerable to a particular defence (see the Zenith case). Section 64 is designed to achieve certainty. The landlord may not know whether a tenant who has ceased physically to occupy premises remains in occupation (see the Caplan case). Even when the facts are undisputed, the landlord may not know whether the tenant is in occupation for the purposes of his business. By making an application, the tenant has to assert that he is in possession. Part of the policy of the Act is to protect the landlord. A tenant must, if he wishes to get rid of the proceedings, pay three months rent.
  38. By stating that the assumption should be made that the section 25 notice would in due course operate to determine the tenancy, the judge was inclined to the same conclusion as the House of Lords in the Bowes-Lyon case. In this case the court had given directions for the matter to be listed in September or October 2000. The tenancy should be taken to continue for at least three months from that date or three months from the hearing date; otherwise the tenant by moving out deprives the landlord of a right which has already accrued. By making an application to the court, the tenant commits himself to the court procedure.
  39. Conclusions

  40. In my judgment, the answer to this case lies in the wording of section 64(1)(c). That subsection requires the court to determine whether, apart from section 64, “the effect of the notice or request” would be to terminate the tenancy before the date there specified. In making that determination, section 64(1)(c) authorises the making of one assumption, and one assumption only, namely that section 64 has not been enacted. Moreover, since a notice which is ineffective under the 1954 Act is of no effect, section 64(1) cannot apply unless the notice or request took effect under the relevant provision of the 1954 Act.
  41. So the crucial question under section 64(1)(c) is whether and, if so, when the notice or request is effective to determine the tenancy under the relevant provisions of Part I or Part II of the 1954 Act.
  42. In this case, the relevant notice is that served by the landlord on 30 November 1999 under section 25(1) of the 1954 Act. That notice specified 24 June 2000 as the date on which the tenancy was to end.
  43. A notice given under section 25(1) must relate to “a tenancy to which this Part of the Act applies”, but section 25(1) does not relate that requirement to the date of service of the notice but rather to the act of termination for which the notice provides. A tenancy for a fixed term comes to an end at common law on the expiry of that term. Accordingly, the landlord’s notice under section 25(1) cannot terminate the tenancy unless it has been continued under section 24(1). Accordingly, those words in section 25(1) must in my judgment be read as a reference back to sections 23 and 24 of the 1954 Act. In any event those sections are expressed to apply for the purposes of the whole of Part II.
  44. The case of Esselte AB v Pearl Assurance is summarised in paragraph 4 of this judgment. In the Esselte case the issue was the effectiveness of a notice served under section 27(2) of the 1954 Act. That subsection contains an express reference back to section 24 since it applies only if the tenancy is a “tenancy granted for a term of years certain which is continuing by virtue of section 24 of this Act”. That wording is different from that in section 25(1), but the important point is that the application of section 24 was directly in issue in the Esselte case. The appellant’s case there was that there was nothing in section 24 to continue the tenancy beyond its fixed term. Section 23(1) provides that Part II of the 1954 Act applies where the tenant occupies the demised premises for business purposes but does not state when this condition must be satisfied. In the Esselte case, the appellant’s argument depended on whether the expression “to which this Part of this Act applies” (qualifying the word “tenancy” and appearing in section 24(1) and elsewhere) referred to the tenancy when the notice took effect or whether it included the tenancy at some date in the past so that it meant “a tenancy to which this Part of this Act applies or has applied”. Having considered sections 24 and 27 and the prior authorities in detail, Morritt LJ preferred the former view and concluded (as explained above) that section 24(1) did not apply where the tenancy expired by effluxion of time on the term date. The other members of the Court agreed with his judgment.
  45. In my judgment, since as I have explained, section 25 refers back to section 24, the conclusion in the Esselte case must apply for the purposes also of section 25(1). A notice under section 25(1) is thus of no effect if the tenancy is not continued by section 24(1). The tenancy is not so continued if it expires on the term date by effluxion of time (the Esselte case). Whenever the notice is served, there would be nothing for the landlord’s termination to “bite on”. Mr Lewison’s argument amounts to reading into Part II of the 1954 Act a concept whereby a tenancy is continued beyond its term date if by then the tenant has invoked the jurisdiction of the court by making an application to it. In my judgment, there is no room in section 25 for such a concept.
  46. It follows from this conclusion that in the present case the section 25(1) notice was of no effect for the purpose of terminating the tenancy and that accordingly it did not have the effect of terminating the tenancy within three months of the final disposal of the tenant’s applicaton to the court as required by section 64(1)(c). Accordingly, section 64(1)(c) was not satisfied, and there was not, and could not be, any interim continuation of the tenancy under the operative part of section 64(1). It follows that the tenant was not liable for rent referable to any period after the term date (24 June 2000) and that the appeal must be allowed.
  47. In the circumstances, I agree with the conclusion of Mr Recorder Blunt QC in paragraph 55 of his judgment in the Financial Training Company Limited case, above. Moreover, in my judgment, Mr Dowding is correct in his submission that the authorities on which Mr Lewison relied, such as Caplan v Caplan, are of little assistance because the exact point which arises in this case did not arise in those cases and because at the time of the decision of Cross J (in Caplan v Caplan) it had not been clearly decided that occupation at the term date was required for the purposes of Part II to apply. This was not clear until the Esselte case established that point.
  48. A tenant who has served a counter-notice under section 25 and made an application to the court should inform the landlord if he ceases to occupy the demised premises before the term date so that the application to the court can be dismissed. If a tenant fails to do this, and the landlord is led by the tenant’s conduct to believe that the tenant continues in occupation there is a risk that, in the events which happened, as in Benedictus v Jalaram, the tenant will be held to have estopped himself from denying that he was in occupation at the term date and be liable for continuing rent accordingly.
  49. The conclusions which I have reached as to the effect on section 64 of the service of a section 25 on a tenant who is no longer in occupation at the term date are supported by the passages in Woodfall on which Mr Dowding relies. Mr Lewison and Mr Dowding are both editors of Woodfall and Mr Lewison freely admitted that he was the contributor of these particular passages which were contrary to his argument. Mr Dowding did not, however, make the observations that had been made in the past by Counsel who have found themselves in similarly fortunate circumstances: see, for example, Wheeler v Mercer [1957] AC 416 at 422. It is totally immaterial to the outcome of this case which of the two Counsel was responsible for these passages. It is, however, a matter of commendation that busy practitioners find time to edit books of the stature of Woodfall. It is of great benefit to the practice and development of the law that practitioners, as well as legal scholars, continue to do so in all fields of law.
  50. Sir Denis Henry:

  51. I agree.
  52. Lord Justice Potter:

  53. I also agree.
  54. Order:

  55. Appeal allowed with costs agreed in the sum of £19,500.
  56. Leave to appeal to the House of Lords refused.
  57. Order as per counsel's minute of order.
  58. (Order not part of approved judgment)


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