3PLR – KEEVES V. DEAN AND NUNN V. PELLEGRINI.

POLICY, PRACTICE AND PUBLISHING, 3PLR, LAW REPORTS

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KEEVES V. DEAN

AND

NUNN V. PELLEGRINI.

[Consolidated cases)

IN THE COURT OF APPEAL

1923 NOV. 30; DEC. 19.

3PLR/1924/3  (CA-E)

 

CITATIONS

[1924] 1 K.B. 685

 

BEFORE THEIR LORDSHIPS:

LUSH J.

BANKES, and  SCRUTTON L.JJ.

REPRESENTATION

CASE 1:

Merriman K.C. and A. H. King  – for the appellant.

Lord Halsbury K.C. and Oddy – for the respondent.

 

CASE 2:

  1. E. Jones and Vaisey – for the appellant.
  2. R. Elliston – for the respondent.

Solicitors for the appellant: Morris AND Bristow, for Bernard Pretty, Ipswich.

Solicitors for the respondent: Foyer, White, Borrett AND Black, for Westhorp, Cobbold AND Ward, Ipswich.

Solicitors for the appellant: Peard AND Son.

Solicitors for the respondent: Gibson AND Weldon, for F. Gowen, Croydon.

MAIN ISSUES

REAL ESTATE LAW:– Landlord and Tenant – Notice to quit – Tenant holding over – Statutory Tenant – Right of, to assign his Interest – Increase of Rent, &c., Act, 1920 (10 AND 11 Geo. 5, c. 17), s. 12, sub-s. 1 (g); s. 15, sub-ss. 1, 2.

SUMMARY AND HISTORY

The right of a statutory tenant under the Increase of Rent, &c., Act, 1920, is merely a personal right to retain possession of the premises, and cannot be assigned to another person.

 

Judgment of the Divisional Court reversed.

 

TWO APPEALS from the judgment of a Divisional Court. (1)

 

CASE 1 – KEEVES v. DEAN.

The plaintiff in 1920 let a dwelling house at Thornton Heath to one Percy Beach as a weekly tenant at a rent of 12s. 6d. a week. There was no written agreement of tenancy. On August 19, 1922, the plaintiff gave Beach notice to quit the premises before August 28. Beach did not quit, but remained in possession as statutory tenant under the protection of the Increase of Rent, &c., Acts. On January 5, 1923, Beach’s solicitor wrote to the plaintiff giving him notice that Beach had assigned his interest in the premises by indenture to the defendant Dean. Beach vacated the premises and Dean entered into possession. The plaintiff brought this action in the Croydon County Court to recover possession of the premises upon the ground that a statutory tenant cannot assign his interest and that the defendant was a trespasser. The county court judge, who was of opinion that the rights of a statutory tenant were purely personal and therefore not assignable, made an order for possession. The dead of assignment by Beach to the defendant, which purported to assign the hereditaments and all the assignor’s estate and interest in them in consideration of a price of 400l., was not put in, apparently because the view of the county court judge made it unnecessary to do so. On

 

  • [1923] 2 K. B. 804.

 

appeal the Divisional Court (Sankey and Salter JJ.) reversed the decision of the county court judge, holding that, in the absence of any prohibition against assignment in the original contract of tenancy, the statutory tenant was given a right to assign by s. 15, sub-s. 1, of the Increase of Rent, &c., Act, 1920. (1) They were of opinion that a right to assign was one of the terms or conditions of the original contract of tenancy.

 

The plaintiff appealed.

 

Merriman K.C. and A. H. King for the appellant. A statutory tenant cannot assign. Even if a right to assign is a term or condition of the original tenancy it is not one to which the statutory tenant is entitled, for by s. 15, sub-s. 1, of the Act of 1920 he is only entitled to the benefit of such terms and conditions “so far as the same are consistent with the provisions of this Act,” and a right of assignment is wholly inconsistent with those provisions. It is only so long as he “retains possession” that the statutory tenant has any interest in the premises. The moment he goes out his interest is gone. He has nothing more than a personal right to be undisturbed in his possession, and that cannot be assigned.

 

[LUSH J. His interest seems to be nothing more than a status of irremovability.]

 

That a statutory tenancy is wholly different in kind from an ordinary tenancy by agreement is clear from Brewer v.

 

(1) By s. 15, sub-s. 1, of the Increase of Rent, &c., Act, 1920: “A tenant who by virtue of the provisions of this Act retains possession of any dwelling house to which this Act applies shall, so long as he retains possession, observe and be entitled to the benefit of all the terms and conditions of the original contract of tenancy, so far as the same are consistent with the provisions of this Act.”

 

Sub-s. 2: “Any tenant retaining possession as aforesaid shall not as a condition of giving up possession ask or receive the payment of any sum, or the giving of any other consideration, by any person other than the landlord, and any person acting in contravention of this provision shall be liable on summary conviction to a fine not exceeding 100l., and the Court by which he was convicted may order any such payment or the value of any such consideration to be paid to the person by whom the same was made or given.” Jacobs (1), where it was held that a statutory tenant is not entitled to the protection of s. 14 of the Conveyancing Act, 1881, which requires, as a condition precedent to re-entry by the landlord for breach of the conditions of the tenancy, that a notice specifying the breach complained of should have been served on the tenant. Certain decisions were referred to in the Court below as showing that the statutory tenant has more than a mere personal right. In Parkinson v. Noel (2) it was held that the interest of the statutory tenant was “property” within the meaning of s. 167 of the Bankruptcy Act, 1914, which devolved upon his trustee. But the ground of that decision was that under s. 15, sub-s. 2, of the Act of 1920 the tenant had the right to bargain with his landlord as to the terms on which he would be willing to give up possession, a right which had a pecuniary value. Moreover, involuntary devolution by operation of law stands on a very different footing from a voluntary act such as assignment. It has been held over and over again that a covenant not to assign is not broken by the bankruptcy of the tenant, even when he is adjudicated on his own petition. It is true that Greer J. in Parkinson v. Noel (3)went on to suggest that the statutory tenant may “sublet part of the premises,” and in the present case Sankey J. said that he was “not at present convinced that the Act does not allow the creation of sub-tenancies by the statutory tenant,” without limiting his proposition to a part of the premises. But even if that proposition is sound it may possibly be explained by the fact that the tenant so subletting remains in possession of the term. Further, a right to assign is not a term or condition of the original contract of tenancy within the meaning of s. 15, sub-s. 1. It may be incidental to it, but it is not a term of it.

 

Lord Halsbury K.C. and Oddy for the respondent. The right to assign a tenancy is an implied term of the original contract. No substantial distinction can be drawn between a “term of the contract” and a “term incidental to it.” If that be so the assignment is not open to the objection that it is inconsistent with the provisions of the Act, for the word “tenant” in s. 15, sub-s. 1, must be read by the light of the definition of that expression in s. 12, sub-s. 1 (f), and s. 15 must be read as if the words were “any tenant or other person deriving title under the tenant who retains possession, &c.” There is no moment of time when either the original tenant or his assignee is not in possession.

(1) [1923] 1 K. B. 528.; (2) [1923] 1 K. B. 117.; (3) [1923] 1 K. B. 117, 119.

 

CASE 2 – NUNN v. PELLEGRINI.

The plaintiff, Walter Nunn, was the landlord of a dwelling house and shop at 1 Upper Barclay Street, Ipswich. In 1920 the premises were let to C. Stebbings on a weekly tenancy at a rent of 9s. per week. At various dates in 1920, 1921, and 1922 the rent was increased within the limits allowed by the Increase of Rent, &c., Act, 1920. In the letting to Stebbings there was no prohibition against assignment, but in the rent-books from 1921 onwards there was a prohibition against subletting. In December, 1922, the defendant bought from Stebbings the goodwill, fixtures, and stock of the business which had been carried on at the premises. A document not under seal was drawn up embodying the contract of sale, but though it was part of the bargain that Stebbings’ interest in the tenancy should be transferred to the defendant, the document was silent as to the assignment of that interest. Stebbings then erased his name from the outside of the rent-book and inserted the defendant’s name, handing the book to the defendant. The defendant received the key of the premises and entered into possession. She then tendered rent to the plaintiff, but it was refused. In March, 1923, the plaintiff brought this action in the Ipswich County Court, claiming possession of the premises and mesne profits. The defendant claimed to be in lawful occupation as tenant to the plaintiff, or in the alternative as sub-tenant of Stebbings, and also claimed the protection of the Increase of Rent, &c., Act, 1920. The county court judge held that the statutory tenancy of Stebbings had never come to an end; that a statutory tenancy was assignable: Parkinson v. Noel (1); that there was no term in Stebbings’ tenancy prohibiting assignment; that in this case, if a deed were necessary for a legal assignment, a Court of equity would grant specific performance of the agreement of December 20, 1922, and that since the Judicature Act, 1873, the equitable assignee was in as good a position as if a deed had been executed: Manchester Brewery Co. v. Coombs. (2)He therefore gave judgment for the defendant. On appeal the Divisional Court (Sankey and Salter JJ.) affirmed the judgment of the county court judge. (3)

 

The plaintiff appealed.

 

  1. E. Jones and Vaisey for the appellant.

A so-called statutory tenancy is not assignable. It is not a tenancy at all. The so-called tenant has no term. He has no more than a permission to remain where he is on certain conditions, and this permission is, like any other licence, personal to him. If he leaves the premises the permission ceases with his departure. In this respect it resembles a lien. If it is assignable at all it can only be assigned gratuitously; an attempted assignment for good consideration would be contrary to s. 15, sub-s. 2, of the Act of 1920, and ineffective. If the interest is properly called a tenancy, then a tenancy can only be assigned by deed: Real Property Act, 1845 (8 AND 9 Vict. c. 106), s. 3. Therefore there was no assignment at law. Assuming that there was a contract to assign, it was not a contract of which a Court of equity would grant specific performance; for either there was no consideration at all, or else there was a consideration which was illegal as being contrary to s. 15, sub-s. 2, of the Act of 1920. In neither case would a Court of equity assist the assignee. It follows that there was no assignment either at law or in equity.

(1) [1923] 1 K. B. 117.; (2) [1901] 2 Ch. 608, 617.; (3) [1923] 2 K. B. 806.

 

  1. R. Elliston for the respondent.

Assignment of a statutory tenancy is nowhere forbidden by the Act. That being so the right to assign is incident to a lessee’s estate: Church v. Brown (1), per Lord Eldon. The statutory definition of “tenant” in s. 12, sub-s. 1 (f), of the Act of 1920 as including “any person from time to time deriving title under the original tenant” presupposes an assignment. There are several instances in which an assignment of a statutory tenancy by operation of law has been recognized; for instance to an administratrix: Mellows v. Low (2); to an executor: Collis v. Flower (3); to a trustee in bankruptcy: Parkinson v. Noel. (4) The proper conclusion from these cases is that the Legislature intended that a statutory tenancy should be assignable.

 

MAIN JUDGMENT

BANKES L.J.

These two appeals from the Divisional Court raise a very important question under the Increase of Rent, &c., Act, 1920 – namely, whether a person who has been a tenant of a dwelling house, whose tenancy has been determined by notice to quit, but who has remained in possession against the will of his landlord, can assign his statutory position to another person. The person who so seeks to assign has come to be known as a “statutory tenant,” and I think it is a pity that that expression was ever introduced. It is really a misnomer, for he is not a tenant at all; although he cannot be turned out of possession so long as he complies with the provisions of the statute, he has no estate or interest in the premises such as a tenant has. His right is a purely personal one, and as such, unless the statute expressly authorizes him to pass it on to another person, must cease the moment he parts with the possession or dies. I desire to reserve the question as to the right of a person who succeeds on the death of the statutory tenant. The two cases of Collis v. Flower (3) and Mellows v. Low (2) were both cases in which the original tenancy had not been determined at the date of the death, and in which therefore the position of a person claiming under a will, or as administrator, of a tenant dying after the statutory tenancy had begun did not directly come in question. It is true that in the last named case McCardie J. expressed the view that it made no difference whether the death was before or after the termination of the original tenancy, but that was only obiter. I confine my judgment to-day strictly to the question whether the so-called statutory tenant can assign his statutory position in his lifetime. That I think depends upon the construction to be placed upon s. 15, sub-s. 1, which provides as follows: [His Lordship read the sub-section.]

(1) (1808) 15 Ves. 258, 264.; (2) [1923] 1 K. B. 522.; (3) [1921] 1 K. B. 409.; (4) [1923] 1 K. B. 117.

 

It is said that the right to assign the tenancy is a term or condition of the original contract of tenancy in every case in which that contract does not forbid such an assignment, and that consequently any tenant whose contract does not include a condition against assignment is entitled to assign. It is well established by two decisions of this Court: Remon v. City of London Real Property Co. (1) and Cruise v. Terrell (2), that a person who is in possession by virtue of the provisions of the statute only is a “tenant” within the meaning of s. 15, sub-s. 1. I do not think that the right to assign a tenancy can be properly described as a term or condition of the original contract of tenancy, if those words are to be understood in their ordinary sense; it is certainly not an express term; nor, in my opinion, can such a term be implied. The right to assign is a right incident to the estate, just as a right to sell your watch, or horse, or any other chattel that may belong to you is a right incident to your ownership of the chattel, and the right to assign the one is no more a term or condition of the contract of tenancy than the right to sell the other is a term or condition of the contract under which the chattel was purchased. There are two authorities to which I should like to refer in connection with that point. One is a passage in the judgment of Lord Kenyon in Doe v. Carter (3), where he says: “Generally speaking, the grant of an estate carries with it all legal incidents, and therefore the grantee has a right to sell and convey it, unless he be controlled by the terms of his grant.”

(1) [1921] 1 K. B. 49.; (2) [1922] 1 K. B. 664.; (3) (1798) 8 T. R. 57. 60.

 

To the same effect is the language of Lord Eldon in Church v. Brown (1), where the question was whether under an agreement for a lease, which did not expressly stipulate for the insertion in the lease of a covenant not to aliene without licence, such a covenant was to be regarded as a proper and usual covenant, the Lord Chancellor said: “With regard to leasehold estates I should lay no stress upon the word ‘assigns’; if the lease was to be made to the lessee, his executors or administrators: his assigns being included in himself; and the right to assign, unless restrained, being incident to his estate.” If, therefore, one construed the words “terms and conditions of the original contract of tenancy” according to their natural meaning they cannot, in my opinion, include such a right as the right to assign. But one has to look at this Act as a whole to see whether it is necessary, in order to carry out the object of the Act, to put upon the language used some meaning other than the ordinary meaning. As I have already pointed out, this Court has held that it was obliged to give to the expression “tenant” in this section a meaning other than that ordinarily attached to that expression; but it seems to me that it is manifest, from a consideration of the provisions of sub-s. 2, that the Legislature when using the words “terms and conditions of the original contract of tenancy” used them in their strict legal sense. I arrive at that conclusion for this reason: sub-s. 2 says that “any tenant retaining possession as aforesaid,” that is in the manner provided by sub-s. 1, shall not part with that possession for valuable consideration to any one except his landlord, and that if he does so he shall be liable to a penalty, and the person who pays the consideration may recover it back as having been paid under a void agreement. But the Legislature when so enacting knew perfectly well that no assignment of a statutory tenancy would ever be likely to be made except for valuable consideration, in other words that ninety-nine out of every hundred of such assignments would be for valuable consideration.

  • 15 Ves. 258. 264

 

If so an enactment that the tenant should not assign for valuable consideration except to his landlord was practically the same thing as saying that he should not assign to any one except his landlord. The conclusion at which I have arrived upon the construction of sub-s. 1, when read by the light of sub-s. 2, is that the statute was not intended to confer upon the so-called statutory tenant a right to transfer his legal position under the statute to another person by assignment. I say nothing about subletting, because it may be that a statutory tenant who has sublet part only of the premises which he claims the right to retain and which he occupies is still entitled to the protection of the statute. What the position would be if he were to sublet the whole of the premises, and whether under those circumstances any distinction could be drawn between subletting and assignment, it is not necessary here to determine, and I do not decide it.

 

I have dealt so far with the construction to be put upon the Act generally without reference to the facts of these two particular cases, but, having regard to the construction which I put upon the Act, it is not necessary to draw any distinction between the two cases. In both of them the tenancy of the original tenant had been determined by notice to quit, and the person who claimed the right to assign his statutory position was in possession of the premises solely under the provisions of the statute. To that extent the facts of the two cases are the same. In the first case the assignment was not put in, and therefore the Court had not to consider whether it was for valuable consideration or not; but from my point of view that is immaterial, having regard to the construction which I put on s. 15, sub-s. 1. In the second case the document which was said to be the assignment was put in, and it was certainly not more, putting it at the highest, than an agreement to assign. If then it was an agreement to assign for valuable consideration it came directly within s. 15, sub-s. 2, and was void for illegality. If, on the other hand, it was without consideration, with all respect to the Divisional Court, I fail to see how any appeal to a Court of equity would assist the party claiming under it. For these reasons I think that the decision of the Divisional Court cannot be supported in either case, and that the appeals must be allowed, the judgment of the county court judge being restored in the first case and set aside in the other.

 

SCRUTTON L.J. This case is another stage in the unwelcome task which Parliament has imposed upon the Courts of defining the position of the “statutory tenant.” My Lord has objected to his being called by that name, on the ground that he is not a tenant at all. But it is a convenient expression, and, although it is true that before the passing of these Acts no one would have spoken of a person who after the expiry of his tenancy remained in possession against the will of his landlord as a tenant, Parliament has certainly called him a tenant, and he appears to me to have something more than a personal right against his landlord.

 

I take it that he has a right as against all the world to remain in possession until he is turned out by an order of the Court, and that he could maintain trespass against any person who entered the premises without his permission. However, it does not much matter what he is called so long as it is clear that one is speaking of a person who holds over after the expiry of his tenancy against his landlord’s will. The question in this case is whether such a person can assign his right, whatever it is, to another; and one can well see that that in turn may give rise to certain other questions which it is not necessary now to decide, whether he can leave his interest in the premises by will, or whether he can sublet either a part or the whole of the premises for less than the actual term for which he himself holds them. The answer to the question whether he can assign is to be found in the consideration of the meaning of s. 15, sub-s. 1, of the Act of 1920. [His Lordship read the sub-section.] That appears to me to raise two questions: First, was it a term or condition of the original contract of tenancy which was determined by the notice to quit that the tenant should be entitled to assign? Secondly, if it was a term or condition of that contract, was its application to the statutory tenancy consistent with the provisions of the Act? Now I am not able to agree with my Lord on the question whether it was a “term or condition” of the original contract in the sense in which those terms are used in this Act. I think it is clear that it was an incident of the original contract. As Lord Kenyon said in the case (1) to which my Lord has referred: “Generally speaking, the grant of an estate carries with it all legal incidents, and therefore the grantee has a right to sell and convey it, unless he be controlled by the terms of his grant,” and I take it that unless there is an express term forbidding alienation a tenant has a right to assign his tenancy. I cannot agree with the view that the expression “terms or conditions” of the contract of tenancy as used in this section is to be construed so strictly as to exclude incidents of the tenancy. For instance, it is not, strictly speaking, a term or condition of a tenancy that the landlord should have a right of distress. But is the landlord to have no right of distress in the case of a statutory tenant because that right is only an incident of the tenancy? It appears to me that that would be giving too narrow a meaning to the words “terms and conditions” as they are here used. But then comes the second question: Is that term or condition as I interpret it consistent with the provisions of the Act?

  • Doe v. Carter 8 T. R. 57, 60.

 

When I look at the next sub-section I find that the “tenant retaining possession as aforesaid” – that is as a statutory tenant – “shall not as a condition of giving up possession ask or receive the payment of any sum, or the giving of any other consideration, by any person other than the landlord”; that is, although he may bargain with his landlord as to the terms on which he shall give up possession, it is illegal for him to accept any valuable consideration for so doing from anybody else. That appears to me to be absolutely inconsistent with a right to assign. The assignee then seems to me to be in this difficulty; either the tenant has assigned to him for valuable consideration, which is illegal, and he consequently gets no title, or else he has agreed to assign without consideration, and in that case, if the agreement is not embodied in a deed, the Court will not assist him to enforce it. A Court of law will not help him, because the agreement is not in a deed; and a Court of equity will not help him in the absence of consideration. Whether if an assignee produced a deed which showed no consideration on the face of it, and as to which it was proved that no consideration was in fact given, the Court would recognize the validity of the assignment is a question on which I am not now prepared to express an opinion. That is a question which I reserve. I also reserve the question whether the statutory tenant can sublet the whole or a part of the premises. That is obviously a question of the greatest practical importance, for there must be very many statutory tenants in different parts of the country who have in fact sublet portions of their premises. I also reserve the question of the statutory tenant’s power of disposition by will. Sect. 12, sub-s. 1 (g) (1), shows that Parliament intended that if a statutory tenant died intestate his widow should have a right to continue his statutory tenancy, and it would be a strange thing if she were to be in a worse position where her husband expressly left her the premises by will than where he died intestate. But that is a matter to be dealt with when it arises. The two cases in which the position of the executor and the administrator of a deceased tenant have been considered were, as my Lord has pointed out, both cases in which the original tenancy had not been determined at the time of the death.

 

That then being the general position as regards the law, we have to consider its application to the facts of the two cases which are the subjects of these appeals. In the first case, Keeves v. Dean, the county court judge held that there was no power to assign, and therefore it became unnecessary for him to inquire whether there was an effective assignment or not. The terms of the assignment were not before him, nor were they before the Divisional Court. If there had been no statement before us as to the terms which the deed in fact contained it might have been proper to order a new trial to ascertain whether the assignment was without consideration or not; but as we have been given to understand that it was for valuable consideration, it is unnecessary to do so.

(1) By s. 12, sub-s. 1 (g): “The expression ‘tenant’ includes the widow of a tenant dying intestate who was residing with him at the time of his death, or, where a tenant dying intestate leaves no widow or is a woman, such member of the tenant’s family so residing as aforesaid as may be decided in default of agreement by the county court.”

 

In the other case, Nunn v. Pellegrini, a document was produced which transferred the goodwill, fixtures, and stock in trade for a sum of money. But no document was produced which transferred the tenant’s interest in the premises, and therefore the assignee was in the dilemma to which I have already referred; either he had got possession because he had promised to pay a sum of money for the goodwill and stock in trade, in which case the assignment would be for valuable consideration, or if he was let into possession without consideration he would have nothing to which the Courts would give effect. I cannot help feeling that it is an unfortunate result for two persons who appear to have paid considerable sums of money to get into these premises that they should have to be turned out, but we must interpret the Act without regard to the result, and leave them to such remedies as they have under the ordinary law of contract. For these reasons I agree that the appeals should be allowed.

 

 

LUSH J.

I also am of opinion that the judgment of the Divisional Court cannot be supported. When it is said that a person who, perhaps inaccurately, is called a statutory tenant can assign one necessarily asks oneself what it is that he has got to assign. He has no estate in the premises, that has come to an end, and all that the statute has given him is a purely personal right to be free from disturbance by his landlord. It is a very valuable right, but it is personal to him. The fact that the right is only personal is, I think, apart from s. 15, shown by the whole scheme of the Act and by s. 12, sub-s. 1(g). That sub-section provides for the case of a statutory tenant who dies intestate, and allows his widow, if she was residing with him at the time of his death, to continue in possession of the house, and if there was no widow then a member of his family to be selected by the county court judge in default of agreement. That sub-section gives the position of statutory tenant to a particular defined person, the widow or selected member of the family, and it would seem strange that after the Legislature has defined the person who is to enjoy the protection of the statute that position of statutory tenant can be assigned to another. The difficulty in the way of the statutory tenant assigning which seems to me insuperable is that it is essential to the validity of an assignment that the assignee should have a right of entry. But the moment the assignor gives up possession his right of entry ceases, and the assignee cannot possibly claim a right which the assignor did not himself possess. The Divisional Court found the right of assignment in the provision of s. 15, sub-s. 1, that the tenant should be entitled to the benefit of all the terms and conditions of the original contract of tenancy, being of opinion that such a right was one of those terms and conditions. I cannot accept that view. I am unable to regard a right to assign a tenancy as one of the terms or conditions of the tenancy. I do not think that it can be said to be a term or condition of the contract of tenancy any more than a right to sell a chattel which a person has bought can be said to be a term or condition of the contract of purchase. The purchaser of a chattel gets his right to resell it, not from his vendor, but from the law of the land according to which, speaking generally, all property is alienable. I agree that the appeals should be allowed.

 

KEEVES v. DEAN.

 

Appeal allowed.

 

 

NUNN v. PELLEGRINI.

 

Appeal allowed.

 

 

  1. F. C.
  2. H. G.

 

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