Scottish Court of Session Decisions

Richard Kerr, proprietor of a tenement of dwelling-houses at Clydebank, and James Stewart & Sons, his factors, brought an action in the Small-Debt Court at Dumbarton against Dougald Bryde, tenant of one of the bouses, for payment of £4, 11s. 9d. arrears of rent.

The parties averred, inter alia—“(Cond. 2) The house was let to defender on 28th August 1916 at a rent of £1, 2s. 6d. for a period of one month, including occupier's rates, the rent being 18s. 3d. and the occupier's rates 4s. 3d. per month. At the time when the let was entered upon, the said house was a house to which the Increase of Rent and Mortgage Interest War Restriction Act 1915 applied, and the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 now applies. The standard rent within the meaning of said Increase of Rent and Mortgage Interest (Restrictions) Act 1920 of said house is £1, 2s. 6d. per month, and the net rent 18s. 3d. per month. ( Ans. 2) Admitted. (Cond. 3) The defender entered into occupation and is still in occupation of said house. ( Ans. 3) Admitted. (Cond. 4) On 27th July 1920 the pursuers James Stewart & Sons, Clydebank, as factors fore-said, under said Increase of Rent and Mortgage Interest (Restrictions) Act 1920 gave

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notice in writing in the form prescribed by the First Schedule of said Act to the defender of their intention to increase the rent payable by him by 7s. 7d. per month, and that the increase would be payable from and after 28th August 1920. ( Ans. 4) Admitted that on 27th July 1920 the pursuers gave notice in writing in the form of the First Schedule of said Act intimating an intention to increase the rent as stated. (Cond. 5) On 26th April 1921 the pursuers James Stewart & Sons, as factors foresaid, under the same Act gave further notice in writing in the form prescribed by the First Schedule of said Act to the defender of their intention to increase the rent payable by the defender by an additional 10 per cent. of the net rent from and after 14th July 1921, raising the rent to the sum of £2, 0s. 1d. per month. ( Ans. 5) Admitted that on 26th April 1921 the pursuers gave notice in the form of the First Schedule of said Act of the intention to increase the rent as stated. (Cond. 6) The rent payable by the defender per month in consequence of the above statutory increase is now £2, 0s. 1d., of which £1, 9s. 10d. represents rent and 10s. 3d. occupier's rates. The defender's averments in answer are denied. Explained that the increases made over the standard rent were such as are allowed by the said Act and were made in the manner therein provided, and that defender acquiesced therein, and that no notice to quit or remove was given or was necessary.… ( Ans. 6) Denied. Averred that the rent payable per month during the year to May 1921 was £1, 6s. 8d. per month, the standard rent of £1, 2s. 6d. having been increased to that amount in respect of increased rates payable by pursuers. Also averred that the rent payable per month for the year to May 1922 was and is £1, 9s. 9d. per month, the standard rent of £1, 2s. 6d. having been increased to that amount in respect of rates payable by the landlord. Averred that the monthly periods from July 1920 to October 1921 inclusive were not periods during which but for said Act pursuers were entitled to possession. Averred that pursuers have not by notice to remove or otherwise terminated the contract made in July 1920, which contract has been continued to date by tacit relocation, except that the rent has been increased by the amount of rates payable by the landlord.”

The pursuers pleaded, inter alia—“1. The defences being irrelevant should be repelled and decree granted as craved. 3. The increases over the standard rent sued for being amounts not exceeding the amounts and for the periods permitted by the said Act of 1920, and notices of said increases having been given in the manner therein provided, decree should be granted as craved.”

The defender pleaded, inter alia—“1. The action is irrelevant and the defender should be assoilzied with expenses. 2. The periods in respect of which increases under said Act of 1920 are asked by pursuers, not being periods during which but for said Act pursuers were entitled to obtain possession, the said increases are not due by the defender.”

The Sheriff-Substitute ( Menzies) having transferred the case to his ordinary roll, sustained the defender's first and second pleas-in-law and dismissed the action.

The following passages are taken from his note:—“The question arises upon the interpretation of the words ‘Nothing in this Act shall be taken to authorise any increase of rent except in respect of a period during which but for this Act the landlord would be entitled to obtain possession,’ occurring in section 3, sub-section 1, of the Act. As the pursuer reads this clause the period opens at latest in all cases to which the Act applies upon the expiry of the expressed term of let current at the date when the Act came into operation. The defender contends that the period opens only at the date when the landlord is entitled ‘but for this Act’ to claim from the Court ex debito justitiœ an order for the recovery of the possession, which in this case would be the date at which his tenancy was legally determined by the service upon him of a valid notice to that effect by the landlord.…

I am unable to give any value to the words ‘but for this Act’ if the period in question is taken as opening at the date contended for by the pursuers, viz., the expiry of the express term of let current at the date when the Act came into operation. In the present case the landlord can only be entitled to obtain possession at that date by an appeal to the effect of the Act of 1920, as altering the law obtaining before that Act as to the landlord's right to possession, and that in favour of the pursuer. But any appeal to the Act for the purpose of fixing the opening date of the period in question is expressly excluded by the Act itself. You must find the date as if the Act had never been passed. If that is so it is not doubtful that the date in question is the date contended for by the defender. That date has not yet arrived as no valid notice determining the tenancy has yet been given. The only notice given is that under the Act 1920 increasing the rent, but as that is under that Act it cannot affect the opening date of the period which has to be determined altogether apart from that Act. The introduction into the clause to be interpreted of the words ‘but for this Act’ seems to me conclusive of the question and that in favour of the contention of the defender.…

In debate the pursuer raised the point that the defender had ‘acquiesced’ in the notice given in terms of the Act of 1920 that the rent was to be increased and had thus brought himself into the position of being a statutory tenant under that Act and subject to its provisions as to increase of rent.

The attempt to raise this question is a violent breach of the understanding between parties upon which alone the case was transferred by me to the ordinary roll, and I should upon that ground alone have declined to treat the point as properly before me for decision upon its merits. But it is unnecessary to pursue this aspect of the debate. Upon record in condescendence 6 there is to be found the only basis of averment for

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this argument. The averment is—‘The increases made over the standard rent were such as are allowed by the said Act and were made in the manner therein provided, and defender acquiesced therein.’ I am not sure that I understand what ‘therein’ refers to. In any case it is an irrelevant averment of such acquiescence on the part of the defender as would bar him from pleading in these proceedings that the pursuer notified the increases in question during a period when he was not authorised by the Act to make such increases.…

I desire to make it clear that I am deciding nothing further here than that a valid notice determining the tenancy is in this case a condition-precedent to the opening of the period during which a statutory increase of rent can be legally made, and that condition-precedent not being fulfilled the increase made is not a valid increase under the Act.…”

The pursuer appealed to the Sheriff ( Macphail) who on 25th April 1922 adhered to the judgment of the Sheriff-Substitute.

The Sheriff's note was as follows:—“The question for decision is whether but for the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 the pursuer was entitled to obtain possession of the house occupied by the defender at No. 6 Union Street, Clydebank, for the period from 28th August 1920 onwards.

The case was so fully and carefully argued that instead of merely saying that I agree with the result at which the Sheriff-Substitute has arrived it is right that I should state the grounds on which I have come to the same conclusion.

The proprietor of a heritable subject is always entitled to possession thereof unless (1) he is debarred therefrom by statute, or (2) the possession has by himself or his author been validly ceded to some other person whose right still exists. In the present case the only statutory obstacle is that created by the Act of 1920, and it therefore remains to consider whether since 28th August 1920 the defender had a right flowing from the pursuer or his author.

The house was let to the defender by the pursuer on 28th August 1916 for a period of one month, and at the expiry of that month the tenancy was from time to time renewed by tacit relocation until at all events 28th August 1920. On 27th July 1920 the pursuer served on the defender a notice [of increase of rent], and this was followed later by several other notices. This notice was plainly not a notice of removal under section 38 and rule 113 of the Sheriff Court Act of 1907, and it could not have been made the foundation of an action of summary removing. But that is not decisive of the question whether it had the effect of preventing tacit relocation. A number of English cases were cited, and though these are not binding authorities the views of the learned Judges by whom they were decided are entitled to the greatest weight. It was argued that these cases decided that before a landlord can obtain possession he must have served a notice to quit, and that a notice to quit was the English equivalent of our notice of removal. It appears, however, that a notice to quit, which appears elsewhere in this statute, is a term of English law, and it is thus defined in Stroud's Judicial Dictionary—‘A “notice to quit” is a notice (which, generally speaking, may be written or verbal) which on its expiry does of itself and in accordance with the subsisting contract put an end to the relationship of landlord and tenant.’

From this definition it is obvious that though every Scots notice of removal includes or implies a notice to quit, there may be other notices to quit which while terminating the contract yet do not warrant proceedings for removal. It therefore does not appear that even if the English cases were to be regarded as binding they decide anything more than that where there is tacit relocation the landlord cannot obtain possession till the end of the period for which the tenancy endures, and that therefore an increase of rent in respect of such period is illegal.

In the latest and most authoritative of these cases— Newell v. Cranford Cottage Society, Limited decided by the Court of Appeal on 13th February 1922 (38 T.L.R. 355)—the rubric is as follows—‘Where a tenancy does not expire till a notice to quit has been given, the effect of section 3 (1) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 is that a notice to quit is necessary before a landlord can enforce a claim to the increase of rent permitted by the Act.’ Different views seem to have been entertained by the eminent Judges who composed the Court as to whether it was sufficient for the landlord to have the legal right to possession or whether he must actually have taken proper steps to obtain possession—which in Scotland would appear to mean not merely the service of a notice of removal, but also a decree of the Court following thereon. But the decision itself is as I have stated.

The pursuer maintained that the service of the notice [of increase] had the effect of terminating the tenancy at twelve noon on 28th August 1920, and that this being so he was but for the Act of 1920 entitled to obtain possession whether he saw fit to take the further necessary legal steps or not. With the second part of this argument I am disposed to agree, especially in view of a decision on the effect of the second part of section 1 (3) by the Sheriff of Lanarkshire in the case of Dewar v. Stewart, 1921, 37 S. L. Review, p. 201. But it becomes of importance only if the first part is accepted.

What then was this notice? The increase of rent is sanctioned by section 2 of the Act, and section 3 (2) provides that no such increase shall be lawful unless, inter alia, the landlord has served a notice in writing of his intention to increase the rent in or substantially in the form contained in the First Schedule to the Act. It is therefore a notice of a special kind, introduced for a special purpose, and must be in a special form. Prima facie it is not a notice terminating the tenancy. No doubt the rent is one of the essentials of the contract, and apart from this Act a notice by either

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party that the rent was to be altered might prevent tacit relocation at the termination of the existing contract—see Macfarlane v. Mitchell, 2 F. 901. But I am not prepared to hold that this statutory notice was intended to have or had that effect in the present case, especially in view of the light thrown on its character and effect by the last sentence of section 3 (2) and (3).

I express no opinion as to what might have been the rights of parties if the notice had contained such a sentence as that appearing in the notice of 23rd October 1920 [and repeated in the notice of 24th October 1921], viz., ‘The arrangement made between us by missive or otherwise for let of your tenancy continues on the basis thereof, except as hereby altered.’”

The pursuers appealed, and argued—The increases of rent were such as were authorised by the Act. The defender's case depended on tacit relocation; but the effect of the Increase of Rent Acts was from the first to exclude the conditions under which alone tacit relocation could operate. Accordingly on 28th September 1916 when the period of original consensual tenancy expired, the defender automatically became a statutory tenant. If statutory provisions so curtailed the landlord's liberty of action that he was free neither to select his tenant nor to fix the rent, and if the tenant was aware of this, it was impossible to suggest that the landlord, who was no longer a free agent and who had no alternative but to acquiesce in the curtailment of his right, must be presumed merely by reason of such acquiescence to have agreed to a renewal of the consensual contract. Section 3 (2) made detailed provision with regard to the formalities to be observed in connection with the increase of rent, and if it had been intended to prescribe further formalities, and in particular to require that notices of increase of rent should be preceded or accompanied by formal notices of removal, it was to be presumed that this matter would have been dealt with specifically. Tacit relocation was not excluded only by notice of removal. It could be competently excluded by evidence of contrary intention. Here the admitted facts afforded ample evidence of such contrary intention. Admittedly recent English decisions were unfavourable to pursuer's contention— Peizer v. Federman, [1921] W.N. 320, 38 T.L.R. 54; Hill v. Haster, [1921] 3 K.B. 643; Shuter v. Hersh, [1922] 1 K.B. 438; Newell v. Crayford Cottage Society, [1922] 1 K.B. 656 (Younger, L.J., reluctantly assenting to the judgment). But the principles of English real property law and the law of Scottish heritable rights were fundamentally different, and this difference was specially marked in relation to the position at the expiry of a term of a lease. In England the original contract persisted until the landlord (or the tenant) by a positive act took advantage of the right to terminate the tenancy. Not so in Scotland. Applying defender's construction to the second part of the sub-section it would follow that a bond must be called up before the rate of interest could be raised— Dewar v. Stewart, 1921, 37 S. L. Review, 201. The defender had by payments made acquiesced in the increased rent— M'Farlane v. Mitchell, 2 F. 901; Morrison v. Campbell, 1842, 4 D, 1426. Counsel also referred to sections 15 (1) and 18 (1) ( d) of the Act, and the House Letting and Rating (Scotland) Act 1911 (1 and 2 Geo. V, cap. 53), sec. 4.

Argued for the defender—There had been no “period during which but for this Act the landlord would be entitled to obtain possession.” Tacit relocation always applied unless there was either a warning to remove by the landlord or a renunciation by the tenant at the appropriate time. The notice of removal was not futile; it had this vital effect that it turned the tenant who refused to go and pled the Act into a statutory tenant upon whom alone increases of rent could be legally imposed. Here no such notice was given, and accordingly the defender's occupation was attributable to a renewal of the original contract by tacit relocation. The case of M'Farlane v. Mitchell ( cit.) was special and had no application to the facts of the case. Counsel founded on the English cases referred to by the pursuer, and also cited the following authorities:— Glossop v. Ashley, [1921] 2 K.B. 451, per M'Cardie, J., at p.455; Connolly v. Whelan, (1919) 54 Ir. L.T. 18, per Samuels, J., at p. 20; Cork Improved Dwellings v. Barry, [1919] 2 I.R. 244; Crook v. Whitbread, (1919) 35 T.L.R. 522; Vernon Investment Association v. Welch, (1919) 35 T.L.R. 511; Remon v. City of London Real Property Company, [1921] 1 K.B. 49; Wilkinson's Guide to the Increase of Rent and Mortgage Interest (Restrictions) Act, p. 35.

At advising—