England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
Mr Recorder Hockman QC
Claim No: 9ED05665

		Royal Courts of Justice Strand, London, WC2A 2LL
		02/02/2012

Lord Justice Rimer :

1. This is a renewed application for permission to appeal. Patten LJ refused permission on the papers on 20 October 2011 on the basis, for the reasons he gave, that an appeal would have no real prospect of success. The applicant, who was the claimant in the court below, is Bektas Aktu. The respondent, which was the defendant below, is the London Borough of Enfield ('Enfield').
2. The applicant is the tenant of mixed business and residential premises in Edmonton, the business premises being a 'mini-mart' shop and the residential premises being a two storey maisonette above. The premises are held under a lease dated 1 May 1985 for a term of 25 years from 11 April 1983 and so was destined to expire in April 2008. As the tenancy is of business premises for the purposes of Part II of the Landlord and Tenant Act 1954, it continued until terminated in accordance with the Act and is (I presume) still continuing by reason of the provisions of section 64. At all material times the rent under the tenancy was £13,500 a year.
3. In May 2009 Enfield, the landlord, gave notice to the applicant under section 25 terminating the tenancy and saying it would oppose any application to the court for a new tenancy on (inter alia) the section 30(1)(b) ground, namely 'that the tenant ought not to be granted a new tenancy in view of his persistent delay in paying rent which has become due'. The applicant applied for a new tenancy and the issue that came before Mr Recorder Hockman QC in the Central London County Court, whose decision is under challenge, was whether that ground of opposition was made out. He held that it was and, by his order of 15 August 2011, he dismissed the applicant's claim.
4. It was common ground before the judge that the approach he had to apply in assessing Enfield's ground of opposition was as explained by the Court of Appeal in Hurstfell Ltd v. Leicester Square Property Company Ltd (1983) 37 EG 109, in which the court endorsed the following passage from the judgment of Birkett LJ in Betty's Cafés Ltd. v. Phillips Furnishing Stores Ltd. [1957] Ch 67, at 82. It is set out in paragraph [4] of the judge's judgment:

'[Section 30(1)(b)] again is a section which makes use of the words 'ought not'. This would seem to leave some discretion in the court which hears the application to decide whether the application ought or ought not to be granted. In practice, the court would look at the history of the payments and make its decision; but if the tenant had some very good reasons to explain delays, and very good grounds for assuring the court that the like situation would never arise again, it seems difficult to say that the court could not listen to the evidence to show how completely the situation had changed from the date of the notice to what it was at the date of the hearing, and that it was prevented from taking the evidence into account in considering whether a landlord had established to the satisfaction of the court that the court "ought not" to grant the application'.

5. The judge derived from that passage that he needed to decide two things: (a) whether the tenant has provided very good grounds to explain all the delays in paying the rent due; and (b) whether he has provided very good grounds for assuring the court that the like situation would never arise again.
6. There was no dispute that the applicant had been guilty of persistent delay. The judge's summary of the history in paragraph [8] of his judgment reflects a disgraceful catalogue of delay in relation to the payment of rent between 2002 and 2010. In paragraph [9] the judge recorded that, subject to one qualification, there had been no attempt to contend on the applicant's behalf that there were 'very good reasons' to explain the delays. The qualification was the applicant's assertion that Enfield had in 2009 indicated a willingness to grant a new lease of the shop (but not of the maisonette) and had thus impliedly indicated that the history of delay in paying the rent was not regarded by Enfield as a show stopper to the grant of the proposed lease. I shall have to return to that point later but it obviously falls short of providing 'very good reasons' to explain the past delays. Accordingly, the judge was entitled to find, as he did, that the first limb of the Hurstfell test was not met.
7. As for the future, if a new tenancy were to be granted, the judge explained in paragraph [11] that the applicant's evidence was still part heard when the case had to be adjourned at the end of the first day for, in the event, a period of nearly two months; and he had been questioned on day one as to his failure to produce any evidence as to the likelihood of his own future ability to meet his rent obligations. Although, therefore, this failure had been expressly flagged up, when the hearing (and the applicant's evidence) resumed on the adjourned hearing, he still produced nothing in the way of evidence (by way, for example, of a business plan, cash flow projections, profit projections or any other material as to the likely financial future of the business) to give the court any confidence that he would in the future be a wholly reliable tenant in terms of meeting his rent liabilities. The judge therefore also held that the second limb of the Hurstfell test had not been satisfied. The result was that he dismissed the applicant's application.
8. The first ground of the proposed appeal is that the judge failed to have sufficient regard to the fact that on the second day of the hearing the applicant offered security for the due performance of his future obligations. The security was (a) a rent deposit of £10,000 offered by Firat Mayil, a director of one of the applicant's suppliers; (b) a guarantee by Mehmet Duman, a director of the same (or a related) supplier, of the applicant's obligations under his covenants in any new lease. The judge did not overlook this evidence, but rightly noted that it went not to the likelihood of future default by the applicant but to what might happen if he did default. In paragraph [13], he said of these offers:

'… Mr Mayil apparently sells goods to [the applicant] and no doubt has an interest in the continuance of his business. In all the circumstances I can attach little weight to this proposal which seemed to me to give [Enfield] little re-assurance against future default, or in the event that default was to occur. [The applicant] also produced a letter from a Mr Duman offering to guarantee a new lease. Once again I find that this would offer [Enfield] little reassurance against future default or in the event that default were to occur.'

9. The point is made that the judge allegedly placed adverse consideration on the fact that Mr Mayil was one of the applicant's suppliers. Read in context, I do not myself so interpret what he said. All he was saying was that Mr Mayil's connection with the applicant was an explanation of his willingness to provide the deposit. As to whether the judge paid insufficient regard to the making of these offers, he plainly had them in mind. He rightly assessed them as going not to whether the applicant would be a reliable payer of his rent in the future, but to the landlord's remedies if was not. His assessment was that 'in all the circumstances' he could attach little weight to them.
10. It is said that this ground of appeal will entitle the Court of Appeal to conclude that the judge's decision was flawed and cannot stand, that his order should be reversed and that the applicant should be granted a new tenancy. With respect, I regard that as reflecting a triumph of hope over reality. This is a case in which the applicant's rent payment record in the past was appalling and one which his own counsel, Mrs Creer, had described as 'lamentable'. His evidence provided no basis for any conclusion that his record as a rent payer would be any better in the future. The offered rent deposit of £10,000 would at most cover part of the first year's rent due under any new tenancy. There was a high likelihood that the landlord would have to have recourse to the guarantor. The ability to have such recourse was, however, something that the judge plainly did not regard as overcoming the difficulties that the applicant himself would be likely to present with regard to the payment of rent. It amounted to no sufficient answer to the applicant's deficiencies. The section 30(1)(b) ground of opposition is to save a landlord from having inflicted upon him the misery of a tenant like the applicant who does not pay his rent promptly; and the offer of a guarantor does not materially change that. It simply means that on each occasion of likely default the landlord must suffer the inconvenience of turning to the guarantor for payment. And how is the landlord entitled to be confident that the guarantor will pay with any punctuality?
11. In the supplemental argument provided for the oral application, Mrs Creer advanced a new point, not referred to in the main skeleton argument, that the applicant had demonstrated to the court that, with the conclusion of his sons' education, his financial circumstances for the future could be regarded as having changed significantly. That evidence was before the judge, who referred to it expressly in paragraph [12] and nevertheless concluded that it made no difference to his assessment of the applicant's reliability in the future with regard to the discharge of his rent liabilities.
12. In my judgment, and in respectful agreement with Patten LJ, this ground of appeal offers no real prospect of success. The decision as to whether the applicant should be imposed upon Enfield for another term was a discretionary one for the judge in the light of the evidence that he heard. He had regard to that evidence and formed an assessment on the basis of it. It is not seriously arguable that he misdirected himself, failed to take material matters into account, or took account of immaterial matters. There is no real prospect of the court taking, and substituting, a different view. The decision was one for the judge to make and he made it.
13. The second ground of appeal is said to be based on a procedural irregularity, although I do not myself understand what it was. The point appears to be this. There was apparently a meeting on 28 April 2009 attended by the applicant and his son and by representatives of Enfield and of the managing agents. The meeting is said by the applicant in his evidence to have been an open meeting at which Enfield's representatives offered him a new lease of the shop if he surrendered the maisonette. His son corroborated the making of such a proposal in his own evidence. The proposal was, however, subsequently withdrawn. The applicant's point is that this showed that Enfield had no real concerns about his rent record. The applicant and his son were cross-examined about this meeting, whereas because none of Enfield's witnesses were at the meeting, none could be cross-examined about it.
14. The fact that none of Enfield's witnesses had any knowledge of the meeting and could not be cross-examined on it is of no materiality. The applicant cannot complain that Enfield did not call witnesses who could speak as to what was said at the meeting. That was an advantage to him because it meant that his own evidence as to the meeting was unanswered by contrary evidence. That did not, however, mean that Mr Beglan could not cross-examine the applicant and his son about the meeting and the judge was entitled to take into account their evidence in answer to it. There was no procedural irregularity. The only question is as to the relevance of the written and oral evidence about the meeting and as to what, if any, weight the judge should have attached to it.
15. As it seems to me, the applicant's real point here involves a criticism of parts of the following paragraphs of the judge's judgment, where he said:

[15]. Counsel for [the applicant] has relied strongly upon this sequence of events which she claims was "an unequivocal representation" to [the applicant] that [Enfield] did not consider that his history of rent arrears would preclude a new lease being granted. She also alleges that these proceedings are a mere device to avoid reliance on ground 30(1)(f) in the 1954 Act pursuant to which compensation is payable.

[16]. I have carefully considered these points but find them to be without substance. Whether or not [Enfield] could at any stage have proceeded under s. 30(1)(f), it was entitled to proceed under s.30(1)(b) if it had good grounds to do so. I can see nothing in the evidence to show that [Enfield] made to [the applicant] the unequivocal representation that is alleged, or that [the applicant] in any way changed his position or acted to his detriment in reliance upon such representation. The discussion about a new lease does not alter the facts and the evidence relevant to s.30(1)(b) under which, unfortunately for [the applicant], I have to make my decision'.

16. Insofar as the judge found in paragraph [16] that no such 'unequivocal representation' as was suggested had been made, I cannot see that he was at fault. Neither the written nor the oral evidence about the meeting given on behalf of the applicant suggested that any express representation had been made that Enfield was unconcerned about his past record with regard to the paying of rent. The evidence went at most to proving that there had been a proposal at the meeting that, in exchange for the yielding up of the maisonette, Enfield would grant the applicant a new lease of the shop. That proposal said nothing of what Enfield thought of the applicant as a tenant: it may be that the prospect of a consensual recovery of the maisonette was worth the price of being fixed with him as a continuing tenant of the shop. But even if the evidence showed that, in certain circumstances, Enfield might have been prepared to grant the applicant a new lease of the shop, it takes the applicant nowhere. In the event the proposal came to nothing. The applicant does not challenge the judge's finding that he did not change his position, or act to his detriment, in reliance upon any representation that may have been made at the meeting and so its making gave rise to no estoppel. The issue at the trial was as to Enfield's opposition under section 30(1)(b) and, as Patten LJ observed when refusing permission (and as Mrs Creer agreed), the establishment or not of that ground of opposition requires the meeting of an objective test. I cannot see what light the meeting of 28 April 2009 can have shed upon the application of such a test. Whatever view Enfield may have expressed on 28 April 2009 about a new lease of the shop alone, by the time May 2009 arrived it had adopted the stance that it would object on the section 30(1)(b) ground to any new tenancy of the premises. There can, in my view, be no criticism of the judge's conclusion that Enfield had made good that ground.
17. I would refuse permission to appeal. Like Patten LJ, I consider that an appeal would have no real prospect of success.