FRANK HAZEL v HASSAN AKHTAR & ANOTHER [2001] EWCA Civ 1883

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MAYOR'S & CITY
OF LONDON COUNTY COURT
(His Honour Judge Simpson)
[2001] EWCA Civ 1883Case No Case No: B2/2001/0569Venue Royal Courts of Justice, Strand,, London, WC2A 2LL
Between
FRANK HAZELAppellantHASSAN AKHTAR & ANOTHERRespondent
Before
Lord Justice HenrySir Anthony EvansG Gelbart Esq(instructed by Messrs Hallmark, Atkinson & Wynter for the Appellant)D J Pearce-Higgins Esq, QC & J Crosfil Esq(instructed by Messrs Banharally & Co for the Respondents)Date 12 December 2001

SIR ANTHONY EVANS

[1]: This appeal is from a judgment given by His Honour Judge Simpson in the Mayor's and City of London Court on 19 February 2001. The Claimant Mr Frank Hazel applied for the grant of a new business tenancy of premises at 33 Electric Avenue, Brixton, London SW9 under the provisions of Part 2 of the Landlord and Tenant Act 1954. The application was opposed by the landlords, Hassan Akhtar and Nasira Ahktar, and it was refused.[2]The grounds relied upon by the landlords were those set out in section 30(1) paragraphs (a) and (b) of the Act. These read as follows: "(a) Where, under the current tenancy, the tenant has any obligations as respects the repair and maintenance of the holding, that the tenant ought not to be granted a new tenancy in view of the state of repair of the holding ,being a state resulting from the tenant's failure to comply with the said obligations; (b) That the tenant ought not to be granted a new tenancy in view of his persistent delay in paying rent which has become due;..".[3]The learned judge reminded himself that the power to order a new tenancy is discretionary, and he quoted in its entirety the relevant passage from Woodfall on Landlord and Tenant (Looseleaf Edition, Release 34) para.22.100.[4]The ground of appeal is that the judge's decision was wrong and that this Court is entitled to reverse it in the circumstances of this case. Mr Gelbart, counsel for the appellant, does not hesitate to say that the decision was 'perverse', but clearly he uses this term in the quasi-technical sense which means that the Court of Appeal is entitled to set side the trial judge's exercise of discretion when he has erred in law or in his appreciation of relevant facts, or he has exceeded the generous ambit of discretion within which different conclusions may be reached: see Civil Procedure (Autumn 2001) ref. 52/11/7, citing Tanfern Limited -v- Cameron McDonald (Practice Note) 1 WLR 647. The premises[5]Electric Avenue is a terraced three-storey building with shop premises on the ground floor. The Appellant carries on business there as a retailer of hair and beauty products under the name Afro Cosmetics. He held the premises under a lease dated 8 April 1984 which granted him a term of 16 years to run from 1 August of that year. The lease therefore expired on 31 July 2000.[6]The lease included covenants by the tenant to pay the yearly rent by equal quarterly payments in advance on the usual quarter days (clause 3(1)(a)) and to maintain the premises in good and substantial repair (clause 3(3)). By 1999, the annual rent was £15,800, requiring payment of £3,950 each quarter. The lease contains a provision for re-entry and forfeiture if any rent remains unpaid 21 days after becoming payable (clause 6(1)).[7]The lease was granted by Atlantic Estates (London) Ltd. but by 1997 the landlords were AK Properties. This, it appears, was a firm consisting of the First Defendant, Hassan Akhtar, and two partners. In 1999 the freehold reversion was transferred to the two defendants who are husband and wife. The landlord's agents were a firm of Chartered Surveyors called Andrews & Robertson until the defendants instructed M.H.Banharally, a firm of solicitors, in early July 1999. The proceedings[8]On 14 January 2000 M.H Banharally served notice on behalf of the landlords to terminate the tenancy on 31 July 2000, the date of expiry of the lease. The Appellant served a counter-notice on 20 January 2000 stating that he was unwilling to give up possession, and he applied for a new tenancy in March 2000. Pursuant to Directions given by the learned District Judge on 28 July 2000, the Appellant filed a Statement of Case dated 18 August 2000, the First Defendant responded on 8 September 2000 and the Appellant made a further Statement in Reply on 22 September 2000. Certain parts of these Statements are relevant to issues which arise in this appeal, and they will be quoted below. The hearing took place on 16/19 February 2001.[9]The Single Lord Justice granting the tenant permission to appeal referred to "... what may have been a somewhat harsh decision ...", and to the possibility that the learned judge misdirected himself as the tenant alleged. The judgment[10]Dealing first with the allegation of persistent late payment of rent, the judge said "In fact, the claimant told me in evidence that he had never paid the rent on the due date. On each and every occasion it follows he was in arrear." He then referred to a schedule drawn up by counsel for the defendants covering the period from 25 March 1997 to Christmas 2000 - "This shows that the least amount of time that the tenant was in arrear was one day in the September quarter of 1998, but the greatest number of days shown is 21 in the June quarter of 1999. But that is not entirely accurate in some respects because the schedule demonstrates that on six occasions the tenant pays by cheque, and therefore one has to allow three working days for the cheque to clear, thus adding to the days of arrear."[11]The suggestion, therefore, that the delays should be increased by the number of days required for the cheque to be cleared appears to have come from the judge rather than from the defendants, whose schedule allowed for payment when the cheque was received. There was, in fact, evidence that the landlords` new agents indicated that they were prepared to allow five days` grace for this reason, which was equivalent to saying that the defendants were prepared to accept conditional payment by means of the tenant's cheque received on the due date.[12]The judge appears also to have been influenced by his view that the Appellant benefited financially from the delays in payment "because he has had the use of the money" for the period in question. "It is therefore wrong to suppose that he has made nothing out of it." When the Appellant claimed the opposite in his evidence, the judge contradicted him - "MR HAZEL: Like I say, sir, I did not think I was doing anything wrong. I really honestly didn`t think I was doing anything wrong. I had nothing to gain from having the money for an extra fourteen days. JUDGE SIMPSON: Yes, you did. You had the use of the money." The Appellant's witness statement dealt with this issue, and it was not challenged by the defendants in cross-examination. He said:
"I would add that I have gained no benefit from any slight delays in paying my rent. I have not had cash flow problems with my business which remains nicely profitable, nor have I consciously gained by earning interest on the rent over the few days it may have been paid late."
The Appellant's trading accounts were in evidence, including one bank statement which showed a substantial overdraft on 14 April 2000. The judge's view that the Appellant did benefit from each day of late payment was correct if either he avoided paying interest on an overdrawn account or he received additional interest on a deposit account, but these matters were not enquired into and the only evidence, which was the Appellant's, was to the contrary effect.[13]The judge then referred to another matter which clearly influenced him greatly. In his Statement of Case, the Appellant said:
"5. As far as my rent payments are concerned, I have always reasonably promptly paid my rent and cannot understand why the defendants have cited ground (b) as a reason for not wishing to renew my tenancy."
The Defendants` Statement included this response:
"12. With respect to the Claimant, he has always paid in his rent late to me and the previous Managing Agents and I shall be pleased to produce evidence to confirm this despite the postulations of the Claimant to the contrary."
Then in his Reply the Appellant was unwise enough to say this:
"7. It is denied that I have always paid rent late and the Defendant is put to strict proof of this allegation."
[14]The Judge's view was that this last statement was dishonest and misleading. The statement, he said, "... cannot have honestly been made ...", because the Appellant had admitted in his evidence that he had known the due dates and had accepted that every payment had been made late, by a number of days.

The judge continued:

"From first to last, there has been no expression of apology or regret: the most he could manage ... was that he was sorry it had come this far, and he reiterated that he did not think that he did anything wrong."
He concluded:
"No proper reason has been given for his persistent disregard of the lease in the failure to pay rent on the due date. As this has been so throughout the whole of the 16-year lease (sic), one could not have a case of more persistence.", and later: "
On the question of late payment of rent, I think that this is a very bad case, because although by themselves one day or three days or seven days might not seem very much, he knew, or should have known, what his obligation was under the lease. He has disregarded it for no proper reason. He has failed to consider that the matter was serious when he ought to have known that it was. I see no reason why a landlord should put up with that behaviour."[15]The defendants also succeeded with regard to the repairing obligation. The position was explained to us as follows. In their Statement of Case, the Defendants said that when they took over the property in 1999 they instructed a Surveyor, Mr Ian Donoff, to prepare a Schedule of Dilapidations, which he had done. The poor condition of the property was one reason why they decided not to renew the lease. Then, after these proceedings began, the works required by the schedule were completed to the satisfaction of Mr Boyer, the surveyor acting for the Appellant, and, it was asserted, to the satisfaction of Mr Donoff also. However, before this was formally agreed between them, Mr Donoff was dismissed by the Defendants and another surveyor, Mr Cox, was appointed in his place. Another Schedule was prepared requiring, so we were told, further work to be done, and Mr Boyer agreed this with Mr Cox. They made different estimates of the likely cost: Mr Cox said £25,000 against Mr Boyer`s figure of £5-7000, or less if the Appellant or his friends were able to do the work themselves.[16]The judge thought that it was likely that the costs would be substantially more than Mr Boyer said. He cited the cost of scaffolding, which alone might be more than £2,100. He then proceeded to consider whether the Appellant would be able to afford to pay for the work to be done. The latest figures available were for the year which ended 31 May 1999. He considered that the Appellant could have obtained a letter from his accountants "... setting out his prospects so far as the current figures are concerned ....", or some form of comfort letter from his bank, but the Appellant had not done so. The Appellant had said that he hoped to expand his business, but "... these are just assertions; they are his hope that figures will get better .... So, on the state of the figures as they appear to me, I do not think that his business is capable of supporting the projected new rent [minimum £20,000 p.a.] and expenses on repairs."[17]Whilst the late payment of rent was the principal ground which led the judge to refuse to order a new tenancy, he found that the Appellant was in breach of the repairing obligations and it is clear that this matter influenced him also. The appeal - admission of further evidence[18]The Appellant served with his Application for permission to appeal from the judgment a further Witness Statement by himself, accompanied by letters from his accountant and from Barclays, his bankers. These letters had been obtained after the judge drew attention to the failure to produce such documents at the trial, in the passage to which I have referred. In addition to seeking leave to adduce this further evidence at the hearing of the appeal, Mr Gelbart applied to introduce a further Witness Statement by the Appellant's surveyor, Mr Boyer. Mr Gelbart was also able to produce approved accounts for the Appellant's business, dated 14 August 2001, for the year ended 31 May 2000, three months or so after the trial.[19]Mr Pearce-Higgins QC for the respondent landlords did not oppose the applications of which notice had been given, and after hearing Mr Gelbart's submissions the Court agreed that further evidence might be admitted, consisting of(1) the accountant's and bankers` letters, and the approved accounts for 1999-2000, and(2) those parts of the Appellant's and Mr Boyer`s Statements which evidence repairs that have been carried out to the property, specifically to the roof where the work was said to have been done at a cost of £600 and to have been inspected and approved by Mr Boyer. Beyond this, the applications were refused.[20]The letter from Kabir & Co., accountants, dated March 1 2001, expressed their view that the accounting profit for the year ended 31 May 2000 would be about £30,000, but the accounts as finalised show that the actual figure for the Afro Cosmetics business was only £5,222. This was considerably less than the previous year's figure of c.£24,000, and as Mr Pearce-Higgins submitted to us this evidence tends to confirm the judge's more pessimistic view as to the prospects for the business in February 2001. However, the letter from Barclays contains their opinion that Mr Hazel was able, on 1 March 2001, to meet a rent commitment of £20,000 payable over 12 months. The Appellant's Submissions[21]Mr Gelbart developed his submissions under numerous heads, and he placed particular emphasis on the judge's view that the Appellant was 'misleading and dishonest' when he denied in his Reply the Defendants` allegation that he invariably paid the quarterly instalments of rent late. He said that the Appellant had accepted at the trial that the payments were all, or mostly, a few days late, and that he had been foolish to deny this in the pre-trial statement in the terms in which he did. Moreover, the Appellant had been slow to realise the seriousness of the matter, particularly when the Defendants appointed new agents in July 1999 who were not prepared to accept delays as their predecessors had been. However, by the time of the trial the Appellant's attitude had changed, and although he did not express contrition, as the judge thought he might have done, nevertheless the judge ought not to have formed the unfavourable view of him and his attitude to his obligations under the lease that he did.[22]I do not think that it is necessary to place emphasis on this particular point, because it should properly be regarded as one aspect of a broader issue. That issue concerns the whole history of rent payments under the lease, to the previous landlords and agents as well as to the Defendants and theirs. Three of the grounds set out in Mr Gelbart's skeleton argument serve to summarise this: "(i) [the learned judge] failed to take into account and/or failed to give any or any sufficient weight to the fact that for the first 14 years of the tenancy, although the Appellant had paid his rent slightly late on each occasion (as the Appellant himself admitted in evidence, it not being a fact specifically alleged by the Respondents), there had been no complaint from the landlords nor request or demand that the rent be paid more timeously; (j) failed to consider that a situation akin to estoppel arose, so that the history of slightly late payments should not have been held against the Appellant as it was; (k) failed to consider that a habit of paying rent slightly late had innocently developed and that the Appellant was guilty of perhaps no more than a foolish disregard of the warning letters sent by the new landlords[`] managing agents/solicitors after they took over in or around 1999;".[23]The essence of the submission is this. The judge took the view that the longer the practice of 'slightly' late payment had continued, the more persistent the Appellant's disregard of his rent obligations was. This, coupled with his attitude to the new agents after they took over, showed that he was not a person in whose favour the Court's discretion should be exercised.[24]In my judgment, this approach leaves out of account one factor which is significant both legally and in practice, and which was established by the evidence here. That is, the fact that the Appellant's conduct as regards the payment of rent was acceptable to the previous landlords and agents, notwithstanding that it involved repeated minor breaches of the tenant's obligations under the lease. I would add that they also regularly accepted conditional payments by cheque, which meant as the judge pointed out that the landlords did not receive actual payment until cheques were cleared a few days later. In short, the previous landlords, according to this evidence, assented to the practice of 'slightly late' payments, by cheque, which the Appellant described.[25]This did not amount, of course, to a variation of the terms of the lease, but it did mean that the landlords were, in legal and equitable terms, estopped from insisting that the Appellant should revert to strict compliance with the lease unless they gave reasonable notice to him to that effect. In my judgment, the Defendants as assignees of the landlords` interest were subject to the same restraint.[26]The relevant enquiry, therefore, was whether the Defendants through the new agents did give such notice, and whether the Appellant's conduct could be described as 'persistent' disregard of the rent obligation after that notice was given. The judge dealt with this issue, though he did not address it in terms of reasonable notice or an estoppel, in the following passage - "Although, as it seems to me, a fair reading of this lease would tell anyone when the rent is due, Mr Hazel says that he misunderstood. Putting the matter at its highest, he must have been disabused of his notion when he received a letter of 21 st . July 1999, which appears to have crossed with his payment of the June quarter rent sent on 15 th. July, but by cheque, and so the 21 days shown late in the schedule must be added to the amount of time required to clear the cheque. The letter shows that the landlords solicitors have sent a rent demand on 14 th. July. They talked about bailiffs and litigation and they said that no further notices would be given for the recovery of arrears. They strongly recommended the tenant to seek legal advice. He did not do so and did not think anything of that letter for the future. But even a cursory reading would show him that the landlords were fed up. Mr Hazel appears to have put it to one side because he had already paid and he chose not to seek legal advice. Instead of that, the pattern of arrears resumed."[27]Unfortunately, the judge seems to have misunderstood completely the issue which arose in July 1999 when the letter dated 14 th. July was sent. The new agents had just taken over. The Appellant had made the March rent payment to them. He said in his evidence that on 25/26 June, not having received a rent demand, he phoned up the previous agent, Mr Dixon of Andrews and Robertson, and asked why he had not received one. Mr Dixon replied that he was not the managing agent any more and that he had washed his hands of it and that the appellant should telephone a Mrs Shah at the Habib Bank. He did so and said that he did not know who to pay the rent to- "She said that she would contact her clients, and then some time later I received a letter [the letter dated 14 th.July ] from [M.H.Banharally]. That is when I sent the cheque". The learned judge then intervened:
"JUDGE SIMPSON: But you knew who the landlords were and where they could be contacted? A: I didn`t know who the landlords were, sir, at that particular time because AK Properties, so I found out, was finished."
[28]The matter does not stop there, because the letter demanded payment, not just of £3,950 due on the June quarter day, but of the previous two quarters also, a total of £11,850. The demand was based, according to the letter, on documentation supplied to the new agents by the old. The letter concluded "We await hearing from you within the next 7 days". The Appellant sent a cheque for current quarter on 15 July, the day he received that letter.[29]The agents who are solicitors wrote again on 21 st . July 1999 demanding payment of £7900 as the balance of the sum of £11,850 which wrongly they thought was overdue from the previous December and March. Those were the supposed arrears in respect of which the threats to resort to bailiffs or litigation were made. The judge took up the point in the following passage from the transcript, from which it is apparent that he and the Appellant were at cross purposes, and the judge thought that the demand was for 'arrears' meaning the June quarter, although it had been paid:
"JUDGE SIMPSON: As a matter of interest, on the previous page ... there is a letter, is there not? ... There they are threatening to send in the bailiffs ... When you received this letter, you would have realised how serious all this is, wouldn`t you? A: Yes, sir. Q: They are talking about bailiffs and litigation, telling you to get legal advice. No further notices will be sent. Do you want to make any comment on that? A: When I received this letter I immediately phoned my bank to see if that money had gone through. They told me that it had. I spoke to [M.H.Banharally]. They said that they had received the money. Q: Yes, but does the letter not tell you of the importance of paying on time on the due date? A: Sorry, sir, are we talking about - Q: 21 July 1999. A: Are we talking about the outstanding sum of £7,900? Q: What I am pointing out to you is a letter referring to bailiffs and litigation and no further notices. What I am putting to you is: did you not, on reading that, realise the seriousness of all this? One comes to the next point: in spite of this letter, you still carry on being in arrears, you see. I just wondered if you wanted to make any comment about that? A: I had already paid this amount, sir. Q: I know that. But for the future? A: I didn`t think anything of it, sir. I had paid what was due and I carried on running my business. Q: You did not think anything of this letter for the future? A: Not really, sir, no."
[30]It is easy to understand why the judge, mistakenly believing the letter to be concerned with the delay in payment of the June quarter, and overlooking the wrongful demand for two previous quarters which in fact it contained, regarded these answers as indicative of a casual and unrepentant attitude on the Appellant's part. In fact, the appellant was entirely justified in disregarding these threats, and neither of the letters dated 14 th. and 21 st July purports to give any form of notice that, whatever the position in the past, the new landlords required punctilious observance of the rent covenant.[31]It seems most likely, from the evidence we have seen, that the demand for £7,900 simply lapsed, and that the Appellant heard no more about it. Mr Gelbart told us that neither the Defendants or M.H.Banhallary ever expressed their regrets that the wrongful demand was made, and he commented on the fact that it was the Appellant who was criticised by the judge for his lack of contrition.[32]There is no reference in the judgment to any subsequent letter which the Defendants could rely upon as notice that strict compliance was required for the future, nor does any such letter appear in the documents prepared for this appeal. The judge considered, however, that the notice given terminating the lease, and the fact that the Defendants opposed the grant of a new lease, should have led him to realise that the payments should be made on the due date, and if by cheque, sufficiently in advance of the date to enable the cheque to be cleared. The fact that the Appellant continued as before was regarded as further evidence, therefore, of persistent late payment which counted against the Court's discretion being exercised in his favour.[33]I should refer briefly to the evidence we were shown regarding the payment which became due on the March quarter day, 2000. The rent was paid by a cheque dated 14 th. April and the delay is shown in the Defendants` schedule, which the judge accepted, as 20 days. In fact, the Appellant's Statement gave the following account:
"One of the late payment blips occurred when I went away in March/April 2000 on a combined work conference and holiday trip. I posted the rent cheque which the Defendants` solicitors stated was not received by them and as a consequence Bailiffs were called in ... Severe disruption was caused to my business but within a few days, by the 4 th. April 2000, a further rent cheque was sent to the Defendants` Solicitors and rent was paid in full as well as the total sum claimed by way of bailiffs` fees. There was no danger that the landlords would not get their rent."
The matter was explored in evidence, and it seems that the Appellant was wrong in saying that the second cheque, which paid the rent, was dated the 4 th. April. It was in fact the 14 th. April which was after the bailiffs entered and the Appellant returned. He said in evidence that the first cheque was drawn and posted on the 4 th. April and he produced the cheque stub showing that date. The Defendants suggested that it was ante-dated but that was groundless. His evidence that he posted that cheque on 4 April was not directly challenged. What remained, as Mr Pierce-Higgins acknowledged, was the fact that he did not attempt to pay the March quarter's rent until the 4 th. April, which was 10 not 20 days late.[34]What emerged from the whole of this evidence, therefore, was that the Defendants and the new agents never sought to give notice that, notwithstanding any previous practice, the Defendants required payment on or before the quarter days, nor was it ever suggested that cheques would no longer be acceptable unless time was allowed for clearance. The Appellant, perhaps foolishly, continued to act as he had done before, failing to realise that this was no longer acceptable to the landlords. Although he was in beach of the rent covenant, he was entitled to say, as he did, that payments of this kind had been acceptable to the previous landlords and that he was not given express notice that this attitude had changed. The longer the practice had continued, the more was the Appellant entitled to claim that it was accepted or tolerated. The fact that, apparently, it commenced in the early years of the lease was evidence supporting the Appellant's case, not further evidence of 'persistent' disregard of his obligations under the lease. The Respondent's Submissions[35]Their primary submission is that the judge directed himself correctly, as regards the law, as his extensive citation from Woodfall demonstrates, and that the Appellant fails to show grounds for appealing against his exercise of the Court's discretion under the Act. Under CPR Rule 52.11 the Court of Appeal has limited powers of review (ref. Civil Practice para. 52.11.7), and it should be reluctant to interfere in any event: Horstfall is clear authority to this effect. Moreover, the Appellant himself admitted his 'persistent' failure to pay rent on the due date, and his attitude remained the same up to and at the trial, when he made belated offers to provide security for future payments which, it is submitted, were rightly rejected by the judge. The Respondents` Notice conceded that the decision was "harsh but not unduly so". With regard to the grounds of appeal quoted above, the Respondent's skeleton argument said this: "Paragraphs (f)-(l) complain as to how the judge characterised the persistent delay. There is no question here of estoppel. Even when it was clear to the tenant that he should pay on time, he still failed ...".[36]In his oral submissions, Mr Pierce-Higgins QC made the important point that the history is relevant up to the date of the hearing, so that the late payments during 2000 had also to be taken into account. He also submitted that the presence of a re-entry and forfeiture provision for late payment, both in this case (21 days) and generally, means that the Court is entitled to take account of shorter periods of delay when applying paragraph (b) of section 30(1) of the Act. Conclusion[37]In my judgment, once it is recognised that the form of payment adopted by the Appellant, both as regards method (cheque) and date ("slightly late"), was apparently acceptable to the landlords until the Defendants appointed new agents in July 1999, two legal consequences follow. First, there was "a question of estoppel" until such time as the tenant received clear notice that strict compliance with the lease covenant was required. Secondly, the Defendants could only rely on 'persistent' late payment from the time such notice was given. The judge regarded the solicitor agents` letter dated 21 July 1999 as such notice, but in fact it was concerned with a different matter altogether, namely, the wrongful demand for two earlier quarters of rent. The Appellant was entitled to disregard it, as he said that he did. In September and December 1999 he adopted the same procedure as before, and he continued to do so after these proceedings began in January 2000. There was confusion with regard to the March 2000 quarter payment as related above. The subsequent payments during 2000 were, on the Defendants` figures, respectively 3,3 and 9 days after the due date. This was 'persistent' but only in the sense that the Appellant continued to believe that he was not breaking the terms of the lease.[38]For these reasons, it seems to me that the judge misdirected himself in holding that the whole history of rent payments was evidence of 'persistent' failure relevant to the consideration of section 30(1)(b) of the Act. Moreover, he made a serious error of fact in relation to the July 1999 correspondence, which clearly influenced his decision. In my judgment, this Court is entitled to and should consider the exercise of discretion afresh. Want of repair[39]Mr Pierce-Higgins QC for the Respondents submitted that the judge was entitled to be sceptical, as he was, about the Appellant's ability to pay for the cost of necessary repairs, and that his view was confirmed rather than otherwise by the additional evidence produced for the appeal. The Appellant was responsible for the want of repair which his surveyor had agreed was necessary, and he could not rely upon the fact that he was not required to carry out the repairs before these proceedings began. The judge was entitled to find that "... it is likely that the costs would be substantially more than the tenant's surveyor says".[40]Having made that finding, the judge commented on the Appellant's failure to produce evidence from his accountants and bankers, as related above, and he concluded on this issue:
"So, on the state of the figures as they appear to me, I do not think that his business is capable of supporting the projected new rent and expenses on repairs."
His finding that there was a breach of the repairing obligations is not disputed.[41]This Court has received the additional evidence referred to above, and as regards the Appellant's overall financial situation it does little to improve the picture which appeared to the judge. However, it does suggest that the Appellant is able to carry out repairs at or near the lower figure for costs which was put forward by his surveyor, and in one, possibly significant, respect it introduces a new factor. One item of damage which was complained of was the presence of dry rot in part of the premises. It is now suggested that this is caused by water leakage from the neighbouring property, which is also owned by the Defendants themselves. This was not investigated at the trial because the source of water ingress was not then ascertained.[42]We were referred to part of the evidence of Mr Cox, the Defendants` surveyor, at the conclusion of his evidence in chief:
"Q: Would you describe the property overall as well looked after or otherwise? A: I would say that a considerable amount of work has been done over possibly the last twelve months or so, and certainly since I first saw it items have been attended to. Hence they no longer appear on my now amended and joint statement. My schedule now forms the backbone of the joint statement and a good many items have been tackled and removed from it. Overall it is in average condition."
This evidence was not referred to in the judgment. This does not mean that the judge did not have it in mind, although in my judgment it deserved express mention when the issue was whether the Appellant could be relied upon to maintain the property in good and substantial repair in the future. The Court's discretion[43]In exercising the discretion afresh, it seems to me that the judge's decision was wrong and the application for a new tenancy should be granted. It required the court proceedings to make the Appellant realise that the previous lax practice was no longer acceptable, as regards either the payment of rent or keeping the property in good repair. But, faced with the loss of his business and possibly his livelihood also, he was apparently sincere in his declarations of intent for the future. That would not have availed him, if the past record of breaches was as long and serious as the judge supposed, but he failed to take account of the attitude of the previous landlords and of the fact that the Defendants never gave clear express notice that the previous practice was not acceptable to them. Once those matters are taken into account, together with the amount of work that the Appellant had done to remedy earlier breaches (under the same previous landlords) of the repairing covenants, in my judgment the decision not to grant a new tenancy was indeed "harsh" and, I would hold, "unduly harsh" in the circumstances of this case.[44]For these reasons, I would allow the appeal and allow the application. I should add that the various offers made by the Appellant to secure prompt payment or to provide security for future payments have not influenced me, and I do not regard them as conditions for the grant of a new lease.

LORD JUSTICE HENRY:

[45]I agree.

Order

appeal allowed with costs summarily assessed at £7,296.75 (remaining £520 plus VAT of expert's fees to be reserved to the county court judge). (Order does not form part of the approved judgment)

Cited in 2 later judgments