England and Wales Court of Appeal (Civil Division) Decisions

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Cite as: [1966] 1 All ER 681, [1966] 2 QB 67, [1966] 2 WLR 560, [1966] EWCA Civ 2

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JISCBAILII_CASE_PROPERTY

		BAILII Citation Number: [1966] EWCA Civ 2
		Case No.

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
From his Honour Judge Drabble
Sudbury County Court

Royal Courts of Justice

14th January 1966

B e f o r e :

THE MASTER OF THE ROLLS
(Lord Denning)
LORD JUSTICE HARMAN
and
LORD JUSTICE DIPLOCK
____________________

Between:

	SIDNELL	Applicant Appellant
	WILSON and others	Respondents Respondents

____________________

(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters Ltd.,
Room 392, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London, W.C.2.)

____________________

MR J.H. SUNNUCKS (instructed by Messrs Wright Bull & Laytons, Agents for Messrs Wayman & Long, Clare, Suffolk)
appeared as Counsel for the Appellant.
MR C.W.S. LUBBOCK (instructed by Messrs Beaumont & Sansom, Colchester)
appeared as Counsel for the Respondents.
____________________

HTML VERSION OF JUDGMENT
____________________

THE MASTER OF THE ROLLS: This is an unusual case. In December 1950 Mr Sidnell v Wilson, who was a tobacconist, owned a couple of shops at Sudbury in Suffolk. One of them, No.11a North Street, he occupied himself for the purpose of his tobacconist's business. The shop next door, No 11, he let off to a Mr Carver, who was a Butcher, for twenty-one years at a rent of £156 a year. He took a covenant by the tenant to keep the premises in good and tenantable repair, damage by fire excepted. But the landlord himself covenanted to keep the roof and the exterior of the premises in good and tenantable repair and particularly" to do such structural repairs to the building as may be necessary for the convenient occupation thereof". There was a covenant by the tenant to reside personally on the premises.

It appears that in June 1962 there was a serious fire in some houses a little further along the street. then the fire brigade came and used their hoses , the water flowed down into the cellars beneath both Mr Sidnell v Wilson's tobacconist's shop at No.lla and also from there into Mr Carver's shop at No.ll. The fire assessors came round. They went into the cellars and found a lot of water there. They advised Mr Sidnell v Wilson himself to leave the door open and dry out the cellar with heaters. Mr Sidnell v Wilson did so and there has been no trouble in his cellar since. We do not know whether the fire assessors told the same thing to Mr Carver who was next door in his butcher's shop. But it is said that Mr Carver himself or his successors did not take proper steps to get rid of the damp after this water got in from the hoses. So much so that it is suggested that the dampness in due course caused dry rot to develop. Mr Carver himself was only there a further six months when he assigned the lease to Mr Wilson, Mr Arnaudy and Mr Rollingson together. They covenanted to reside personally on the premises and they took over the lease. Then it appears by the end of 1963 and the beginning of 1964 the landlord, Mr Sidnell v Wilson, discovered that dry rot was rampant in the cellar of No.ll. He got the surveyors to look at it. They found that this dry rot was going through the cellar and might indeed spread to Mr Sidnell v Wilson's premises next door. It has proved so bad that the floor of the butcher's shop has fallen through.

Under these circumstances, after considerable correspondence, the landlord's solicitors in October 1964 served notice on the tenants under Section 146 of the Law of Property Act 1925 alleging that there were breaches of covenant to keep in good and tenantable repair. She landlord required the tenants to dry out the cellar, replace the rotten timber, and so forth; and also to do other repairs such as repairing patches of plaster and ceilings in other parts of the house.

That notice given in October 1964 was not a good notice. It did not comply with the Leasehold Property (Repairs) Act as amended by Section 51 of the Landlord and Tenant Act 1954. That Act was passed shortly before the war because of a great mischief prevalent at that time. Unscrupulous people used to buy up the reversion of leases: then bring pressure to bear on the tenants by an exaggerated list of dilapidations. She Act applied to leases for seven years or more which had three years or more to run. In such cases Parliament enacted that a landlord, when he gives a notice under Section 146 of the Law of Property Act to make good dilapidations, must state on the notice that the tenant is entitled to give a counter-notice. She effect of a counter-notice is that the landlord cannot proceed to forfeit the premises or to claim damages unless he has the leave of the Court. In this case the landlords did not state on the notice of the 9th October 1964 that the tenant had the right to give a counter-notice. So that notice was invalid.

Nevertheless, after a certain amount of correspondence between solicitors, the landlord's solicitors seem to have realised their mistake. On the 24th February 1965 they wrote a letter drawing the attention of the tenant to the covenant to keep in good and tenantable repair. They said it was broken. Then they referred back to the previous notice and told them to carry out the work specified in the previous notice. They added that the lessee was entitled under the Leasehold Property (Repairs) Act to serve a counter-notice which had to be served within twenty-eight days. The solicitors for the tenant took advantage of that notice and within twenty-eight days gave a notice claiming the benefit of the Act. I regard the letter of 24th February 1965 as a fresh notice under Section 146 which contained the requisite statement that the lessee was entitled to give a counter-notice. Alternatively, any defect was waived by the tenant giving the counter-notice.

Thereupon the landlord applied for leave to bring proceedings in the County Court to forfeit the lease. In order to get leave, the landlord had to bring himself within one of the clauses of Section 1(5) of the 1938 Act. The relevant clauses here are (a) and (e). These say that: "Leave for the purposes of this section shall not be given unless the lessor proves (a) that the immediate remedying of the breach in question is requisite for preventing substantial diminution in the value of his reversion, or that the value thereof has been substantially diminished by the breach"...or..."(e) special circumstances which in the opinion of the Court render it just and equitable that leave should be given".

Let me say at once that in the great majority of dilapidation cases when there/want of repair during the term, leave will not be given: for in most cases the reversion is not diminished much in value by the breach. But this ease is out of the ordinary. It is clear that, if the breach which the landlord alleges is established, the value of the reversion has been substantially diminished. Dry rot has invaded the premises. The floor of the butcher's shop has fallen in. The premises are unusable unless substantial repairs are done. The landlord says it has all come about because the tenants did not dry out the cellar and ventilate it as they ought to have done. The landlord does, therefore, "bring himself within Section 1(5)(a) provided always that he is right in saying that the tenant was in breach.

Now what has the landlord to prove in order to get leave? Has he actually to prove a breach by the tenant or has he only to show a prima facie case of breach? Mr Lubbock for the tenant admitted, as I think quite rightly, that the landlord need only show a prima facie case of a breach by the tenant. That is all he is required to do. After all, the application for leave is only an interlocutory application. It cannot be supposed that the landlord has to prove his whole case as if it were the trial. It must be sufficient if he shows a prima facie case, by which I mean a case which, if believed, would enable him to succeed.

In this case I fear that the Judge required the landlord to prove more. He required the landlord to prove that the tenant had been guilty of a breach of covenant. The Judge was induced to do so I think by the way that counsel on both sides conducted the case. They called surveyors and so forth as if it were the trial. Naturally enough the Judge treated it as such. He said: "It is for the applicant to show there has been a breach of covenant. As to the condition of the shop floor, which is the really serious defect in these premises, the applicant has not shown any breach of covenant to repair by the respondents". Mr Lubbock urged us to treat this statement benevolently. Even so, I cannot help thinking that the Judge treated this application almost as the trial of the action by requiring a breach to be proved. Whereas all the landlord had to show was a prima facie case.

The evidence here for the landlord was in these terms: The landlord's son said there was no trace of dry rot in the cellar in 1962 immediately after the fire. But by the end of 1965 it was rampaging away. A surveyor said that it might be due to neglect to dry out the cellar. On the whole I think this was sufficiently a prima facie case upon which the Judge might give leave.

Mr Lubbock urged that leave should not be given because the dry rot in any case would be damage by fire within the exception. I can understand that damage caused directly by water from the hoses would be damage by fire, but that is not this case. The immediate cause of the dry rot was, it is said, leaving the premises damp and not taking proper steps to dry them out, which is a different matter. In any case that is not a matter which can be decided on an interlocutory application.

I hold, therefore, that the landlord has satisfied Section 5(l)(a) of the Act. But the Court still has a discretion. Ought it to exercise it here? It seems to me that these parties are at such arms length that sooner or later the issues will have to be tried out. If we did not give leave here, the tenant might bring an action against the landlord for failing to repair the structure: or the landlord might bring an action against the tenants for failing to reside on the premises. In one way or another the issues will have to be decided by the Court. So we should I think give leave now so that all the issues can be fought out once and for all.

I would allow the appeal accordingly.

LORD JUSTICE HARMAN: The Leasehold Property (Repairs) Act of 1938 was passed to meet certain abuses to which my Lord has referred. Like most remedial Acts of that sort, it catches the virtuous in the net which is laid for the sinner. This is not a case where there has been an abuse of the sort at which the Act was aimed. The landlord here has been for 25 years the landlord of this property. The grievance which he has got is a real one and not a trumped-up one. Whether he can succeed or not is a matter, I take it, of very great doubt. But at any rate here is a genuine subject matter for an action and one could have wished that such an action would be one which the landlord could bring as of right; hut having regard to the Act of 1938 he has got to get the leave of the Court where a counter-notice is served on him, as it was here, by his tenant.

Now having got so far, the learned County Court Judge approached the matter on the footing that it was necessary that it should he proved before him that a breach had occurred. If that be right, one of the effects of the Act is to make two actions flourish where one flourished before. Having proved that a breach has occurred for the purpose of getting leave, you have to prove it all over again for the purpose of the action. I do not think that can have been meant. What must have been meant was that the applicant must show a prima facie case and it is enough if that is what he does. The learned Judge said: "I have no confidence whatsoever in the suggestion that the shop floor rot started after the fire or because of the water going into the cellar" - that is to say he was not satisfied that it was so. He was hot bound to be so satisfied in the sense that he would have to be satisfied in order that the plaintiff should succeed in the action. Shis was a case which was to be judged as interlocutory applications on motion are judged. If the applicant shows a case for it, he is prima facie entitled to have his relief. That decides finally nothing between the parties. But in this Act under sub-section (5) there are also the following words: "Special circumstances which in the opinion of the Court render it just and equitable that leave should be given". It seems to me if ever there was a case where special circumstances exist, it is this one. It is a complicated case. There are points which bristle in every direction. It is most desirable that these points should now be tried. The issue should be joined which in the end comes to this: who should rebuild the lower part of this structure, and that is no doubt a substantial and expensive matter. Both parties need to have it tried sooner or later. I do think there are special circumstances as mentioned in sub-section (5), and on that ground alone it is a case in which leave ought to be given. I should be prepared to grant leave on that ground alone but I do not dissent from what my Lord has said under (a). I would allow the appeal.

LORD JUSTICE DIPLOCK: I agree, though with some hesitation, that the appeal should be allowed. I think the letter of the 24th February 1965 may properly be read in conjunction with the earlier notice of the 9th October 1964 and those two documents together constitute a notice specifying the requirements of sub-section (4) of Section 1 of the Act. The point which has caused me some hesitation is whether or not it has been established by the tenant that the learned Judge applied the wrong criteria in determining whether or not to give leave under sub-section (5) of Section 1 of the Act to the landlord to bring his proceedings for forfeiture. Parliament cannot have intended by its provisions for application for leave in sub-section (5) that there should be two trials of the matter. It must I think follow, therefore, that when in sub-section (5) it is said that "leave for the purposes of this section shall not be given unless the lessor proves", and then (a) to (e), that that cannot require a standard of proof of the same character as that which is required in the trial of an action. I agree with my brethren that he must be satisfied that there is material on which, if it were accepted as accurate, an arguable case can be put forward that the conditions set out in the sub-section are fulfilled. I use the expression "arguable case" rather than the expression "prima facie case" because the difficulty of the latter expression seems to me to be that it invites an enquiry at the hearing of the application itself into evidence contradicting what in the first instance is a prima facie case and therefore would lead to a complete trial of the action or is capable of leading to a complete trial of the action on the application for leave. I think it is sufficient that the lessor should show that there is a bona fide arguable case that the conditions or one or other of them set out in the paragraphs of the sub-section are fulfilled, and that if he does that, it is no function of the County Court Judge on the application for leave to go into the merits of the matter and hear rebutting evidence as if the trial were taking place then. The hearing of the application is not the occasion for resolving conflicts of evidence, for non constat that the resolution would be the same in the light of further evidence which each party would be entitled to call at the trial itself. If, as happened in this case, the parties do choose to treat the application for leave as if it were the trial, which is what they appear to have done, and the evidence called then does convince the County Court Judge that there was no breach committed by the tenant and that no other evidence which could be proffered at the trial could alter this conclusion, then I certainly should not interfere with the decision of the County Court Judge. But I think on reading his written judgment that that was not his approach - that he was looking at the matter, as indeed he was induced to look at the matter by the conduct of the parties themselves, as if he had to be satisfied that the landlord had proved a breach on the balance of the evidence called before him by both sides on the occasion of the application.

That was not his function on the application. I think he, very excusably, misdirected himself in law and I would allow the appeal on that ground.

Order: Appeal allowed. Costs below to be costs in the forthcoming action. Costs of appeal to be respondents' costs in cause.