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Naidu v Yenula Properties Ltd.  EWCA Civ 719 (23rd May, 2002)
| || ||Neutral Citation Number:  EWCA Civ 719|
| || ||Case No: B2/2001/1739|
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (LLOYD J)
ON APPEAL FROM THE CENTRAL LONDON
COUNTY COURT (HH JUDGE BRADBURY)
| || ||Royal Courts of Justice|
London, WC2A 2LL
| || ||23 May 2002|
B e f o r e :
LORD JUSTICE ROBERT WALKER
LORD JUSTICE RIX
LADY JUSTICE ARDEN
| || NAIDU||Appellant|
| ||- and -|
| ||YENULA PROPERTIES LTD||Respondent|
(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)
Miss Judith Jackson QC and Mr Nigel Thomas (instructed by Rippon Patel and French) for the appellant
Mr Jonathan Brock QC and Miss Emily Windsor (instructed by S J Berwin) for the respondent
HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
Crown Copyright ©
Lord Justice Robert Walker:
- This is a second appeal in a dispute between landlord and tenant. The landlord is a company called Yenula Properties Ltd (“Yenula”), the claimant at first instance and the respondent in this court. The tenant (or former tenant) is Mr Venkat Mun Swami Naidu, the defendant at first instance and the appellant in this court.
- The dispute is concerned with a tenancy agreement dated 4th August 1995 (although the precise date on which it took effect is an issue in the case). By the agreement Yenula granted Mr Naidu a tenancy of premises known as Flat 4 (or the duplex apartment) on the sixth and seventh floors of York House, 17 Great Cumberland Place, London W1. York House is on the corner of Great Cumberland Place and Bryanston Street. The building consists mostly of office accommodation, but Flat 4 is a residential unit and had been occupied by the building manager, Mr David Bescoby.
- The sole issue throughout this hotly contested litigation has been whether Mr Naidu’s tenancy was (as Yenula has contended) an assured shorthold tenancy under Part I, Chapter II of the Housing Act 1988, or (as Mr Naidu has contended) an assured tenancy which did not qualify as a shorthold tenancy. Yenula’s final position is that the tenancy must come to an end in the near future in any event, since it proposes to demolish and reconstruct the whole of York House and would on that ground be able to terminate Mr Naidu’s tenancy even if it was not granted as a shorthold tenancy. But the issue is still a live issue, not least because of the substantial costs which have been incurred in the litigation.
- The proceedings were commenced in the Central London County Court by a Part 8 claim form, apparently in the belief that the case did not raise any contentious issues of fact. That belief has proved to be seriously mistaken. After a trial at which there was a good deal of oral evidence His Honour Judge Bradbury resolved the principal issues of fact and law against Yenula, and by an order dated 30 October 2000 he declared that Mr Naidu’s tenancy was an assured tenancy, essentially on the grounds that it had commenced on 1st August (not 4th August) 1995 and that no notice under s.20 of the Housing Act 1988 had been served on Mr Naidu before its commencement. Apart from Mr Naidu himself the principal witnesses were Mr Bernard Mendis, a licensed conveyancer who acted for Mr Naidu on the grant of the tenancy, and Ms Beena Amin, an assistant solicitor with S J Berwin, the solicitors acting for Yenula (which is a company in the British Land property group).
- For reasons explained by Lloyd J at the beginning of his judgment, any appeal from the County Court judge lay to the High Court. On 18 July 2001 Lloyd J allowed the appeal and made a declaration that Mr Naidu had been entitled to an assured shorthold tenancy. Mr Naidu has appealed from that order by permission which I granted on paper.
- The appeal judge was very well aware of the limited role of an appellate tribunal asked to reverse findings of fact made by the trial judge who has seen and heard the witnesses. He devoted several paragraphs of his long and careful judgment (paras 58-61) to the relevant principles. Nevertheless, he was satisfied that some crucial findings of fact made by the county court judge could not stand. He also differed from the trial judge on one discrete issue of law.
- The appeal judge had to take account of the unsatisfactory way in which the case had developed. Initially it was, as already noted, commenced by a Part 8 claim form. From the particulars of claim and the defence it appeared that the main issues were whether a section 20 notice had been served on 4 August 1996 (but before the commencement of the tenancy) on Mr Mendis, and whether Mr Naidu was bound by the notice (either because s.20 does not permit service of a notice on an agent, or because Mr Mendis did not have authority to receive notice on behalf of Mr Naidu). That raised an issue of fact, but it was a fairly limited one.
- At a very late stage, however, the issues became more complex. The appeal judge described how this had occurred:
“As the case proceeded at trial, however, two other matters were in issue, namely whether the Defendant’s tenancy in fact started before 4 August 1995, he having had access to the Flat from 2 August, and if so whether an earlier section 20 notice had been served on Mr Mendis on 31 July or 1 August 1995, before the entry into any tenancy agreement which antedated 4 August. These two issues were never defined on the statements of case, and they developed during the two days of the trial, held on 12 and 13 October 2000.”
- In his judgment the appeal judge went on to summarise the flurry of late witness statements which were put in, without any corresponding amendments to the very simple pleadings. Then he described the further development of the dispute which occurred in the course of the trial:
“That was how the matter stood at the outset of the trial. When Ms Windsor opened the case to the judge for the Claimant, she gave him several additional documents to be included in the trial bundle: a draft, or blank, section 20 notice from S J Berwin’s file, said to have been sent with a letter of 18 July, a completed (but not signed) section 20 notice from the same file dated 31 July 1995, and a receipt form for access cards to the outside door in Bryanston Street to the property as a whole signed by the Defendant and dated 1 August 1995, obtained from the Claimant’s records. Ms Windsor then opened the issues to the judge. She explained that the Defendant now admitted that Mr Mendis had received a section 20 notice on 4 August, that even if strictly the defence ought to be amended she took no point on that, and then said that she understood that it was now said the tenancy agreement was entered into before 4 August. In retrospect, it is unfortunate that this allegation, at any rate, was not required to be the subject of some form of particularisation in writing as an amendment to the admission of the Claimant’s case in paragraph 2 of the Defence. It is understandable that no-one wanted to insist on something that would lead to unnecessary delay, especially as the judge only had 2 days available for the hearing, and even as things were, it took the whole of those 2 days. But as a result of the course in fact taken, the Defendant was free to advance a case that the tenancy was entered into before 4 August, which is entirely inconsistent with his Defence, without indicating clearly at any stage, and certainly not in advance, how he said it came into being.
Moreover, as it turned out, both the Defendant and Mr Mendis gave evidence, which had not in any way been foreshadowed before, or put to Ms Amin in her cross-examination, that Ms Amin and Mr Mendis had a telephone conversation on 1 August in the course of which they agreed that the tenancy should be effective immediately. By then Ms Amin had left the court, and she was not recalled to be asked about this new evidence. Mr Thomas, then appearing for the Defendant, cannot be criticised for not having put this case to Ms Amin, because it is quite clear that he had no idea, before it came out in cross-examination, that his client or Mr Mendis would say that any such telephone conversation took place. If, however, he had been made to put down on paper at the outset his case as to when, how and on what terms any tenancy agreement predating 4 August was entered into, he might have found out that this was his client’s evidence, in which event it would have been put to Ms Amin and the case would have been clearer and less difficult to deal with because of the way it emerged.
The benefit of hindsight is a wonderful thing, but not very useful in dealing with what actually happened. Nevertheless, it does seem to me that, in considering an appeal against the judge’s finding that the tenancy agreement was indeed entered into on 1 August, it is important to bear in mind the state of the matters in issue on the statements of case and as the matter was opened to the judge, and the unsatisfactory way in which the eventually successful allegation emerged in the course of the trial. I will also have to examine in much greater detail than would otherwise be necessary the evidence of the three principal witnesses, Ms Amin for the Claimants, and the Defendant and Mr Mendis. This has contributed to the length of this judgment and to the time required for its preparation both being greater than I would have wished.”
- Before going further into the issues of fact it is appropriate to say something about the legal framework. Under Part I, Chapter II of the Housing Act 1988 (that is, before far-reaching amendments made by the Housing Act 1996) an assured shorthold tenancy had to fulfil three basic conditions set out in section 20(1) –
i) that it was for a fixed term of not less than six months;
ii) that the landlord had no power to terminate it within its first six months; and
iii) that a notice in respect of the tenancy was served under section 20(2).
If these conditions were satisfied (and apart from immaterial exceptions) the tenancy was an assured shorthold tenancy and the Court was bound to make an order for possession at the end of the tenancy, if the landlord served the appropriate notice to recover possession.
- Section 20(2) provides as follows:
“(2) The notice referred to in subsection (1)(c) above is one which
(a) is in such form as may be prescribed;
(b) is served before the assured tenancy is entered into;
(c) is served by the person who is to be the landlord under the assured tenancy on the person who is to be the tenant under that tenancy; and
(d) states that the assured tenancy to which it relates is to be an assured shorthold tenancy.”
- The form of notice was prescribed by the Assured Tenancies and Agricultural Occupancies (Forms) Regulations 1988 (S1 1988 no.2203), Form 7 “or a form substantially to the same effect”. As the appeal judge observed, the form addresses the tenant as “you” and advises the tenant to get advice from a solicitor or a Citizens’ Advice Bureau, if necessary. It refers to the possibility of the form being signed by an agent for the landlord but does not make any reference to an agent for the tenant. Apart from section 20(2)(c) itself, Part I, Chapter II of the Housing Act 1988 does not contain or incorporate any special provision about service of notice (such as service by post or by leaving the notice at a particular place).
- In his judgment the trial judge was critical of the evidence of both Ms Amin and Mr Mendis. He said of Ms Amin:
“Both Miss Amin and Mr Mendis troubled me as their reliability and their honesty. There are no attendance notes of relevant telephone conversations on either file. Miss Amin seemed feisty and unduly aggressive during cross-examination. Her whole manner indicated to me a determination to present the best possible face against questions which in effect suggested negligence, and in presenting the best possible face I regret that I have to make a finding that she has sought to distort the truth.”
- He said of Mr Mendis:
“Mr Mendis seemed strangely blank when asked about conveyancing matters. I wondered to what extent, if at all, he had the ability to explain complex documents to his clients. ... In contrast to Miss Amin, he seemed totally a polite witness with a tendency to agree almost automatically, so it seemed to me, with any proposition put to him in examination, even though those propositions might be at cross-purposes to each other.”
- The trial judge did not make a general assessment of Mr Naidu’s evidence but he did say that he accepted his evidence on a number of specific points, including that he did not personally receive any section 20 notice, that he did not give Mr Mendis authority to receive a section 20 notice, and that he moved into Flat 4 on 2 August 1995.
- The disputed issues of fact arose in relation to a fairly ordinary sequence of events which took place over a fairly short space of time between the last week of June and the first week of August 1995. Mr Naidu (who is a businessman and had then recently separated from his wife) negotiated the terms of the tenancy with Conrad Ritblat, Yenula’s surveyors. The tenancy was to run until March 2001 with a 12-month rent-free period on account of the poor condition of the flat and the expense which Mr Naidu was to incur in making it good. In the second year the annual rent was to be £10,000 rising by 10 per cent a year until the end of the tenancy.
- During the last week of June S J Berwin were instructed to undertake the transaction and Ms Amin had day to day charge of the file. Her evidence was that she was not familiar with residential lettings and that she was working under pressure with inadequate secretarial support. She prepared a relatively long and complicated form of tenancy agreement (mainly, it seems, to fit in with the predominantly commercial lettings in the rest of York House). She sent the draft to Mr Mendis with a letter dated 18 July 1995, the first paragraph of which was as follows:
“I enclose a copy letter which I am sending to the proposed tenant’s solicitors today for your information, together with copies of the draft tenancy agreement and the notice, which must be served prior to the grant of the tenancy agreement.”
- This preliminary letter has given rise to fierce controversy on a point which on any view can go only to credit, since it is common ground that the form of section 20 notice was no more than a printed blank. The trial judge made a finding that Ms Amin did not enclose a section 20 notice form with her letter, and that a printed form was subsequently inserted into the file, after disclosure had taken place in these proceedings.
- The appeal judge described this last finding as ‘extraordinary’:
“It amounts to finding the firm of S J Berwin guilty of seeking to mislead the court and for that purpose of fabrication and dishonesty.”
It was especially unfair, the appeal judge thought, since Ms Amin herself had left S J Berwin some time before the trial. Counsel for Mr Naidu have not attempted, in either their written or their oral submissions, to justify this finding. However it does not necessarily undermine the whole of the trial judge’s assessment of Ms Amin’s evidence. He specifically rejected as untrue her oral evidence (given in October 2000) that she could actually remember signing and enclosing a section 20 notice in a subsequent letter dated 31 July 1995.
- By the end of July the position was that Mr Naidu was anxious to complete on 1 August, but matters were slightly delayed because Mr Naidu wished to use one room as a study and to install some office and telecommunication equipment. There was discussion about whether this would breach the user covenant in the head lease (from the trustees of the Portman Estate) and at one stage a side letter was proposed (although in the end no side letter was used).
- On 31 July (which was a Monday) Ms Amin sent a letter by hand from S J Berwin’s office in Grays Inn Road to Mr Mendis’s office in Bell Street, Marylebone. The letter (marked ‘subject to contract’) was as follows:
“Further to our conversation this morning, we enclose a notice of an assured shorthold tenancy under Section 20 of the Housing Act 1988, together with an engrossment of the Agreement for execution by your client.
We also enclose a copy side letter which we are arranging for our client company to have drawn up on its headed notepaper to deal with the ancillary office use which is to be permitted to your client.
We confirm that we have sent one copy of the Agreement and the form of side letter for drawing up to our client and we will be in a position to complete upon the same being returned, duly signed by our client company.
In the meantime, we should be grateful if you would acknowledge receipt of the enclosed notice under Section 20 on behalf of your client by return.”
- This letter gave rise to further controversy at trial. Mr Mendis accepted that he had received the letter but denied receiving the section 20 notice. I should add that before the trial Mr Mendis had retired from being a licensed conveyancer and his files were lodged with the Council of Licensed Conveyancers. The Council released a file which was disclosed and referred to in court. But in the course of his cross-examination Mr Mendis stated that he had had another file, for draft documents, which had not been found. He accepted that it might have contained other documents from S J Berwin. Ms Amin gave evidence, which the trial judge disbelieved, of her actual recollection of having signed the section 20 notice (a copy inserted in the file contained particulars, specifying 1 August as the date of commencement of the tenancy, but was not signed; this gave rise to some lengthy and to my mind unproductive cross-examination of Ms Amin). The judge concluded that on 31 July the letter had been sent, but not the notice.
- The trial judge stated at the end of this part of his judgment:
“Miss Amin is plainly wrong when in her witness statement she said did not receive the defendant’s signed agreement until 4th August 1995. I am entirely satisfied that it was received by her on 1st August. The date stamp on Mr Mendis’ letter establishes that.”
- This was referring to Mr Mendis’s letter sent by hand on 1 August and stamped (by S J Berwin) “received 1 August 1995 1.20”. The letter was as follows:
“Please find the enclosed Shorthold Tenancy Agreement executed by our Client and kindly forward the Landlord’s part of the Agreement with the side letter and the keys directly to us today.”
- The trial judge was in error in supposing that Ms Amin was clearly wrong. She had not stated in her witness statement that she did not receive Mr Naidu’s signed agreement until 4 August. She stated (in paragraph 12 of her supplementary witness statement) that she received Yenula’s part of the agreement on 4 August, and (in paragraph 14) that completion took place by telephone later on 4 August, after she had faxed a letter to Mr Mendis and had received a faxed reply from him. In cross-examination she said that Yenula’s part was received by her firm on the 3rd, but she did not recall seeing it until the 4th.
- In the meantime the question of the study and the office equipment was in the course of being resolved, and on 1 August Portman Estates sent a letter to that effect to Conrad Ritblat. That letter was faxed to S J Berwin, but not until just after 4 pm on 2 August. In these circumstances it seems highly improbable that Ms Amin would have contemplated agreeing to a completion by telephone before 3 August at the earliest (or 4 August if the agreement executed by Yenula did not reach her desk until that day). A telephone completion on 1 August would have been inconsistent with all the documentary evidence previously mentioned (other than Mr Mendis’s letter of 1 August). It would also have been inconsistent with the faxed communications sent on 4 August, to which I now return.
- Ms Amin’s fax was as follows:
“We have now received our client’s part of the agreement executed in escrow.
Accordingly, we enclose a revised notice of an assured shorthold tenancy, having amended the term commencement date to today’s date. We confirm that the original will follow in tonight’s post.
We shall be in a position to complete the agreement upon receiving your written confirmation of receipt of the enclosed notice and upon hearing from you later today.”
- Mr Mendis’s faxed reply was as follows:
“We are in receipt of your letter of the 4th of August with the enclosed revised notice Assured Shorthold Tenancy Agreement.
We confirm receipt of the Notice and we confirm the commencement shall be as to today’s date.
We have spoken to our Client and the van you are referring to contains his personal belongings and a personal computer only; there is no other office equipment. He has confirmed to me that he would only use one room in the premises as an office and your Agents are welcome to inspect the premises after he had moved in.
Kindly request Agents to allow our Client to at least unload his belongings otherwise if the van is returned it would cost him a great deal of money to re-arrange for another van and it would also cost him further storage charges.
May we hear from you by return.”
- In the face of this exchange it is unsurprising that the state of the pleadings at the start of the trial was that Yenula alleged a tenancy agreement made on 4 August 1995 for a term commencing on that date, and that the defence admitted this without qualification. How then did the trial judge come to the conclusion that the tenancy had in fact commenced on 1 August, without any section 20 notice having been served? In the face of this unchallenged documentary evidence it was not enough for the judge to find that Ms Amin was an unreliable, or even an untruthful witness.
- Apart from the poor view which the trial judge took of Ms Amin, he seems to have relied principally on two matters. The first was the fact that Mr Naidu obtained the means of access (by a swipe card) to the common parts of York House on 1 August, and keys to Flat 4 itself on 2 August. On 4 August he arranged for a van to deliver furniture and equipment to the premises, and it was the quantity of office-type equipment on the van which led Mr Bescoby (the building manager) to query what was going on. That is reflected in the terms of Mr Mendis’s fax which I have already set out. Mr Bescoby has since died and so his version of what happened on the spot (and in particular, the circumstances in which Mr Naidu was given the flat keys on 2 August) is not known.
- The other matter on which the trial judge relied was oral evidence given by Mr Naidu that he completed by signing the agreement at Mr Mendis’s office on 1 August, and oral evidence given by Mr Mendis (confirmed to a limited extent by Mr Naidu) as to completion by telephone on 1 August. This suggestion (of which no hint had been given in the defence or in Mr Mendis’s witness statement) was touched on in the evidence of Mr Naidu, but in a way that showed that he did not understand what ‘completion’ means to a conveyancer. It only began to emerge with any clarity when cross-examination of Mr Mendis was resumed on the second day. He began by saying that he “thought” or “hoped” that completion “would have been on 1 August”. This hardened slightly into his having “thought that it was concluded on 1st August”. He then immediately agreed, three times in quick succession, that completion took place on the 4th, and that there could be no question about that. But in re-examination Mr Thomas obtained the following answers to his questions:
“Q Mr Mendis, on 1st August you told us in answer to a question of my learned friend that you had spoken to Ms Amin on the telephone. Can you tell us what you said to her over the telephone?
A. I said, we can now complete.
Q. And what did she say?
A. She said “yes”.
Q. What was your completion [?conclusion] after that statement?
A. I thought it was concluded.
Q. In your practice as a licensed conveyancer have you completed, or concluded matters over the telephone?
Q. Many times?
Q. Is it a practice which is adopted generally within the profession?
Q. Did Mrs Amin give any indication that there was any doubt about concluding the matter over the telephone?
- This was no doubt a skilful piece of re-examination, but I regard the evidence extracted in this way as worthless. None of these matters had been put to Ms Amin in cross-examination, although other peripheral matters (such as how solicitors should make a file copy of a particular form of notice) had been investigated at tedious length. The re-examination produced the impression that the suggested form of telephone completion was common procedure, whereas it would have been contrary to all the Law Society’s published guidance (as well as S J Berwin’s duty to their client).
- The appeal judge was critical, and in my view rightly critical, of the conclusion drawn by the trial judge, that Mr Naidu was unconditionally allowed to move into the flat as a tenant on 2 August before any section 20 notice had been served. The appeal judge put it like this:
“The judge’s finding was that Mr Mendis and Ms Amin had a telephone conversation on 1 August, in the course of which they agreed that the tenancy should start immediately and that the Defendant could have the keys at once. Of course there was some evidence from Mr Mendis which supported that conclusion, and also some from the Defendant, though his evidence was in fact inconsistent in detail with that of Mr Mendis. As against that, this was a case which had never been thought of or mentioned before the hearing, and which was therefore never put to Ms Amin. That would in itself give rise to a doubt as to its credibility, and as to the appropriateness of disbelieving Ms Amin on a point not put to her. Moreover, the circumstances that existed on 1 August, and were common ground, must cast doubt on that conclusion.”
- The appeal judge then proceeded to make good those points by an exceptionally clear and thorough examination of the witness statements, the oral evidence, and the undisputed documentary material. I have already noted most of the salient points but I cannot hope, in a short summary, to bring out the full force of the analysis. The appeal judge concluded that the judge was wrong to find that a tenancy agreement was entered into on 1 August. He also saw no answer to a point of law relied on by Yenula, that is the effect of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
- In her reply Miss Judith Jackson QC (appearing in this court with Mr Nigel Thomas; she did not appear below) submitted that the point on section 2 was not a knock-out point, because both parts of the agreement were in existence, duly signed, on 1 August. We know that Mr Naidu’s part had been signed, and the available evidence indicates that Yenula’s part had been signed, but as an escrow, by close of business on that day. In the absence of further evidence I would accept Miss Jackson’s submission that the section 2 point would not be unanswerable, if the trial judge’s finding of a telephone completion on 1 August were sustainable. But I am in complete agreement with the appeal judge’s reasoning and conclusion that it was unsustainable.
- As I have noted, the appeal judge carefully reminded himself of the proper limits of an appellate tribunal’s powers (which might be particularly restrictive, he thought, in the case of a single judge hearing an appeal). He referred to ten well-known cases, most of them in the House of Lords, which cover this topic. To these were added, in this court, the well-known observations of Robert Goff LJ in The Ocean Frost  1 LLR 1 at p.57 (to which may be added the not quite so well known, but equally pertinent observations of Dunn LJ at p.42). I consider that the appeal judge followed the principles stated in these well-known cases and that he reached the right conclusion on this part of the case.
- That leaves two further issues (one of law, and the other of mixed law and fact) on which the trial judge and the appeal judge also differed: whether a section 20 notice can validly be served on a tenant’s authorised agent, and whether Mr Mendis was Mr Naidu’s authorised agent for this purpose.
- On the first issue counsel took the court carefully through a variety of statutory provisions relating to notices between landlord and tenant. The provision most frequently encountered is section 23(1) of the Landlord and Tenant Act 1927, which is also incorporated into the Landlord and Tenant Act 1954 and the Leasehold Reform Act 1967:
“Any notice, request, demand or other instrument under this Act shall be in writing and may be served on the person on whom it is to be served either personally, or by leaving it for him at his last known place of abode in England or Wales, or by sending it through the post in a registered letter addressed to him there, or, in the case of a local or public authority or a statutory or a public utility company, to the secretary or other proper officer at the principal office of such authority or company, and in the case of a notice to a landlord, the person on whom it is to be served shall include any agent of the landlord duly authorised in that behalf.”
- In Galinski v McHugh  1 EGLR 109 a landlord’s notice under section 4 of the Landlord and Tenant Act 1954 had been served on the tenant’s solicitors, who had confirmed that they had authority to accept service. Later the tenant challenged the validity of the service. This court upheld the county court judge’s rejection of the challenge. Slade LJ (giving the judgment of the court) distinguished the mandatory language of s.30 of the Compulsory Purchase Act 1965 and said (at p.111)
“In the circumstances we can see no good reason why s.23(1) or anything else should prevent the ordinary rules as to service of notice as between landlord and tenant, and the ordinary rules of agency, from operating in the present case. As we have already said, it is common ground that, under the general law of landlord and tenant, it is possible for good service of a landlord’s notice to be effected by serving it on the duly authorised agent of the tenant (and vice versa).”
- Galinski v McHugh was among the cases cited to the trial judge but he decided (while describing it as “not an altogether easy point”) that
“ ... this particular form of service is entirely personal to a proposed tenant.”
He reached that conclusion, it seems, because of the importance of the notice (the need for which could not be waived) and the necessity of bringing it home to the tenant in person. Lloyd J took a different view. He found nothing in s.20 to suggest that service on an agent was not permissible in those rare cases in which a person about to enter into an assured shorthold tenancy had an agent (for example a solicitor or a surveyor) acting for him.
- In this court Ms Jackson has cited Manel v Menon  2 EGLR 40. In that case this court held that a section 20 notice which omitted from the prescribed form the four “bullet points” (three of which contain important advice to the tenant) was not “substantially to the same effect” within the meaning of the regulations. Nourse LJ (with whom Mantell LJ and Holman J agreed) referred (at p.42) to an assured shorthold tenancy as having been, in 1988, “both novel in concept and notably less advantageous to tenants”. Nourse LJ also quoted an editorial comment in the White Book in relation to CCR 0.49 r.6A:
“When the Housing Act 1988 came into force on January 15, 1989, the concept of no security of tenure was controversial and contrary to the philosophy of the Rent Acts. Accordingly, to ensure that tenants understood the new law, s.20 required a notice to be given before the tenancy was granted.”
- That may need some qualification since assured shorthold tenancies could be seen as the natural successor to protected shorthold tenancies under Part II of the Housing Act 1980, which combined the same features of a measure of rent control without security of tenure beyond the contractual term. In any event Miss Jackson was in my view putting it too high to describe the regime introduced by Part II of the Housing Act 1988 as ‘draconian’ to tenants. It might be seen as having reintroduced a limited measure of freedom of contract into residential lettings, and if anyone were to regard it as draconian it would be the landlord, who might by an inadvertent technical error in giving notice find that some other type of tenancy had been created.
- In my view the language of section 20(2)(c) must be given its natural meaning, without any predisposition to lean against either the landlord or the tenant. A section 20 notice was important, but so are most notices given between landlord and tenant. I consider that the appeal judge was right to follow the same general principle which this court followed in Galinski v McHugh. That was a case in which there was a statutory (but permissive) code as to how written notice might be given; here there is a bare statutory requirement for service of the written notice on the prospective tenant. I see no significant difference between these two situations. They are both clearly distinguishable from the case where there is a mandatory and exhaustive statutory code (compare Fagan v Knowsley MBC (1985) 50 P&CR 363, a decision of this court on section 30(1) of the Compulsory Purchase Act 1965).
- The remaining issue, and in some ways the most difficult issue, is whether Mr Mendis did have authority to receive notice on behalf of Mr Naidu. The issue is particularly difficult because in his oral evidence Mr Mendis did, as the trial judge said, have a tendency
“ ... to agree almost automatically ... with any proposition put to him in examination, even though those propositions might be at cross-purposes with each other.”
That tendency was nowhere more marked than on the issue of his authority; and the trial judge was therefore in an uniquely good position to assess what his contradictory evidence (especially on the significance of his 4 August fax) really amounted to. There was also evidence from Mr Naidu, which the trial judge accepted as correct, that he gave no authority to Mr Mendis.
- Having made that finding the trial judge continued,
“In a matter of this sort I conclude that the mere instruction of solicitors to handle the paperwork aspects of the tenancy is insufficient to allow an inference to be drawn that the solicitors had implied authority to accept the notice which was dated the 4th August.”
He then referred to the decision of this court in Westway Homes Ltd v Moores  2 EGLR 193, which had been cited by Miss Windsor, and said that it was entirely different from this case
“ ... where [Mr Naidu] did not explicitly agree to, nor have explained to him, the nature and limitations of an assured shorthold tenancy.”
- The appeal judge focused not on any general authority conferred on Mr Mendis, but on the events of August 4, when Mr Naidu had arrived at York House with a van-load of furniture and equipment and was having difficulties with the building manager. It seems to be common ground that the sequence of events on that day was as follows: (1) Ms Amin faxed a letter to Mr Mendis about completion (para 27 above); (2) Mr Naidu arrived at York House with his van, encountered difficulties, and telephoned Mr Mendis; (3) Mr Mendis spoke to Ms Amin on the telephone; (4) Mr Mendis sent a fax to Ms Amin (para 28 above); and (5) completion then took place in the course of a telephone conversation between Ms Amin and Mr Mendis.
- The trial judge did not make any detailed analysis of this sequence of events. The appeal judge did so (although he did not in terms find that there were two separate telephone conversations between Mr Naidu and Mr Mendis, and indeed the evidence on that point was unclear). The appeal judge’s reasoning and conclusions were as follows:
“The Defendant gave evidence that he had spoken to Mr Mendis during the day, so as to sort out the problem of access for unloading the van. He spoke of Mr Mendis’ fax of that day as having been sent “purely to get the van unloaded”. Mr Mendis gave evidence, unprompted, that he had mentioned the section 20 notice to the Defendant on 4 August, when the Defendant rang him because he had the problem about the van. His evidence was that the Defendant did not tell him that he should, or that he should not, accept the notice. The Defendant was clearly anxious to get his possessions into the Flat. It seems highly likely, both from Mr Mendis’ evidence and from general probability, that Mr Mendis told him the position as it then stood, including the receipt of the notice and of Ms Amin’s fax, and that it would be possible to complete the transaction subject only to replying acknowledging receipt of the fax. It is fair to say that Mr Mendis did not put forward his own recollection of what the Defendant told him in that or those telephone conversations in cross-examination or in re-examination. But what Ms Windsor put to him, and he accepted as possible, seems highly likely, namely that the Defendant’s instructions to Mr Mendis were to do whatever was necessary to get him into the property as quickly as possible. If that is correct, then it seems to me that those instructions did indeed give Mr Mendis actual authority to accept the notice on the Defendant’s behalf, and generally to proceed to completion. It is consistent with the Defendant’s evidence that the fax was sent purely to get the van unloaded. The word “purely” in that answer cannot be taken as an indication that the Defendant was seeking to evade the natural consequences of the fax having been sent with his authority. Mr Mendis knew, and on his evidence explained to the Defendant, what the position was and what was needed to get Ms Amin to agree to let the Defendant have full access, namely completion of the agreement, following confirmation of receipt of the notice. Nor is that inconsistent with the Defendant’s own evidence of what happened on 4 August. Mr Mendis did say in evidence that the Defendant never instructed him to accept service of a section 20 notice. In terms, no doubt that was correct. However, on his evidence as to what was said between them on 4 August, the question is what does that amount to, even if the notice was not mentioned expressly. It seems to me that it does constitute the giving of authority to do what was necessary to get to completion, including accepting service of the notice, because only in that way would the Defendant be allowed to unload. In those circumstances I do not need to consider the Claimant’s alternative case based on implied authority.
Accordingly, in my judgment the judge was wrong to hold that the Defendant did not give authority to Mr Mendis to accept the notice. He did so, at any rate at the moment when it mattered, and when the notice had to be accepted if completion was to take place.
In reaching that conclusion I do so despite findings of fact by the judge. One is that Mr Mendis did not tell the Defendant about the notice sent on 4 August. In making that finding the judge ignored the fact that Mr Mendis gave evidence that he did tell the Defendant about the notice. That evidence was not prompted by questions from Counsel, but was something which occurred to him of his own accord. Indeed Counsel’s question assumed a negative answer: “You cannot remember discussing that notice with Mr Naidu?” There is therefore no reason to discount that evidence as being due to Mr Mendis’ willingness to agree with any proposition put to him. That evidence is also consistent with that of the Defendant at least to the extent that they did speak on the telephone at that time, and is not inconsistent with any evidence of the Defendant. The judge’s failure to refer to this evidence seems to me to undermine his finding on this point.”
- The appeal judge went on to point out that the trial judge had also relied on Mr Naidu’s evidence that he had never explicitly agreed to take an assured shorthold tenancy. The appeal judge rightly described that as an unconvincing proposition. Mr Naidu is an experienced businessman and he had himself conducted negotiations with Conrad Ritblat, orally and by correspondence, as to the terms of the tenancy.
- The appeal judge was conscious that he was taking on a heavy burden in differing from the trial judge’s findings of fact. But in my judgment he was right to do so. The trial judge had a difficult case to try, with pleadings which did not define the real issues, unreliable witnesses, and inadequate time to explore the real issues in the case, while time was wasted on peripheral matters. In my view he unfortunately fell into error in overlooking or misevaluating some important pieces of evidence, failing to give sufficient weight to the fact that Mr Naidu’s new case was never put to Ms Amin, and failing to test Mr Naidu’s and Mr Mendis’s evasive and contradictory evidence against the undisputed documents and the inherent probabilities of the matter. It is right to emphasise that this combination of circumstances was truly exceptional, and it justified the appeal judge in taking the exceptional course which he took.
- Like the appeal judge, therefore, I do not find it necessary to consider the issue of implied authority. But I respectfully consider that the trial judge was wrong to dismiss Westway Homes v Moores  2 EGLR 193 as a case on quite different facts which offered him no assistance. Dillon LJ (with whom Nourse LJ and Russell LJ agreed) did to my mind give valuable guidance when he cited the observations of Walton J in Re Munro  1 WLR 1358, 1361,
“It is, of course, a common fallacy to think that solicitors have an implied authority on behalf of their clients to receive notices. They may have express authority so to receive them, but in general a solicitor does not have any authority to accept a notice on behalf of his client.”
- Dillon LJ continued,
“One has to look from the general to the particular and, as was urged by James LJ in the Saffron Walden Building Society case (1880) 14 Ch D 406, 409, to consider what [the solicitors] were employed for and what matter it was in which they were employed.”
Similarly Nourse LJ (at pp.196-7) spoke of the need to look at the facts of the particular case. He referred to Bowstead on Agency (see now Bowstead and Reynolds, 16th ed, pp.126-9 and 135-6) and noted that a solicitor may be made an authorised channel of communication for anything forming part of, or incidental to, an authorised transaction. The same must apply to a licensed conveyancer.
- For these reasons I would dismiss this appeal.
Lord Justice Rix:
- I agree.
Lady Justice Arden:
- I also agree.
- Appeal dismissed as per agreed order.
- Leave to appeal to the House of Lords refused.
(Order does not form part of the approved judgment)
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