Farrell v Alexander [1976] UKHL 5

House of Lords

Between

FarrellAppellant

AlexanderRespondent

Before

Lord Wilberforce Viscount Dilhorne

Lord Simon of Glaisdale

Lord Edmund-Davies

Lord Russell of Killowen

LORD EDMUND-DAVIES

My Lords,

The appellants, Mrs. Farrell and her daughter, have brought an action to recover from the respondent, Mrs. Alexander, a sum of money which, was paid to her in order to obtain the tenancy of a flat. They claim that this money was a premium which it was illegal for the respondent to require or to receive and that they have the right to recover it by virtue of section 90 of the Rent Act 1968 (" The Act").

The respondent had a protected tenancy of this flat with some four years unexpired from the Church Commissioners. There were negotiations with the appellants with a view to an assignment of it and the appellants were asked for a sum of £4,000 for the fixtures and fittings. Though the actual value of these fixtures and fittings has not been determined, it was certainly less than £4,000 so that the balance was a premium for the proposed assign- ment. In asking for it, the respondent may have committed an offence under section 89 of the Act. But the matter was not carried through by assignment because the Church Commissioners, in accordance, it seems, with their normal practice, and in accordance with a clause in the existing lease, required the respondent to surrender the lease with a view to the grant of a new tenancy to the appellants. The transaction proceeded in this way. A formal agreement was drawn up under which the respondent agreed to surrender the lease subject to acceptance of the surrender by the landlords and to the simultaneous grant by them of a new lease to the appellants. On completion the new lessees were to pay to the respondent the sum of £4,000 for fixtures and fittings, and this money was in fact paid.

It seems to have been suggested at one time that the transaction might be regarded as, in substance, an assignment, in which case the respondent would have had no answer to the appellants' claim, but in my opinion this is not a maintainable contention. It cannot be said that the surrender and grant was a sham, or a subterfuge: it was what the landlords required for reasons, understandable enough, of their own. They had, of course, no interest in the " premium ". So the question to be decided is whether it is illegal for a lessee to require or to receive a premium as a condition of surrendering her lease, and in order that a new lease may be granted to the payer of the

premium.

The directly relevant sections are section 85 of the Rent Act 1968, which contains the following:

" (1) Any person who. as a condition of the grant, renewal or con- " tinuance of a protected tenancy, requires, in addition to the rent, the " payment of any premium or the making of any loan (whether secured " or unsecured) shall be guilty of an offence under this section.

" (2) Any person who, in connection with the grant, renewal or " continuance of a protected tenancy, receives any premium in addition " to the rent shall be guilty of an offence under this section ".

and section 90(1), which provides:

" Where under any agreement (whether made before or after the " commencement of this Act) any premium is paid after the commence- " ment of this Act and the whole or any part of that premium could " not lawfully be required or received under the preceding provisions " of this Part of this Act, the amount of the premium or, as the case

" may be, so much of it as could not lawfully be required or received, " shall be recoverable by the person by whom it was paid."

Section 92 says that in Part VII of the Act, in which the above sections are, " premium " includes any fine or other like sum and any other pecuniary consideration in addition to rent.

My Lords,

I must say that, in relation to the facts which I have stated, these sections are to me, if not transparently clear, at least unambiguous in the legal sense. They refer to " any person ", words wide enough to include landlords, tenants, agents or middlemen. They apply to what was done here because the respondent required the premium as a condition of the grant of a protected tenancy (see the words " subject to ... the "simultaneous grant" mentioned above). The words "any person" which are common to subsections (1) and (2), and also to section 86(1) and (2) and to section 87(2), are words of wide generality and fit, without any strain whatever, the present facts. I am unable to follow the argument that the words " in addition to the rent " or " in addition to rent " which appear in section 85 and in the interpretation section 92 and which on any view are used with, some surplusage, have the effect of limiting "any persons" to " persons in receipt of rent". The words are descriptive of the character of the payment and not of the recipient.

Is there any reason why the general words should be restricted, and what restricted meaning can be found which would exclude this transaction? What is argued by the respondent quite simply is that " any person " in section 85 means, or more exactly, should be confined to " any landlord " or lessor" or " any potential landlord or lessor " and this restricted meaning is said to be imposed by the history of this legislation and by authority.

Before I attempt to deal with this argument I must say something as to the correct method, as I see it, of interpreting this Act, the key to which, in my opinion, lies in the proposition stated above that what we are called upon to construe is section 85 of the Rent Act 1968. This proposition, apparently ingenuous in fact, contains within it the reasoning which follows.

The Rent Act 1968 is a consolidation Act of a comprehensive character built up after a process of enactment, amendment, addition and repeal of a number of statutes starling with an Act of 1915. The respondent's argument depends, for any plausibility, upon a process which involves starting from that wartime Act—which had a very limited scope and whose language shows that it was referring only to landlords—and tracing the development through an Act of 1920 (re-enacting the 1915 provision in different language) and Acts of 1949 and 1965 (both adding further provisions and re-arranging the sec- tions) and asking at each stage the question, did Parliament extend the reach of the prohibition beyond landlords? To reinforce a negative answer to this, the respondent is able to rely on a decision of the Court of Appeal in 1921 (Remmington v. Larchin [1921] 3 K.B. 404) in which it was held that the word " person " in the Act of 1920 (section 8(1)) meant " landlord ". This holding is sought to be extended to the present Act through a recent decision of the Court of Appeal (Zimmerman v. Grossman [1972] 1 Q.B. 167). The judge and the majority of the Court of Appeal in the present case followed, as they were clearly bound to follow, Zimmerman v. Grossman, but your Lordships are free to reconsider that case.

On this argument it is necessary to decide what consequences follow from the fact that the Rent Act 1968 was a consolidation Act. This question has already concerned this House, see Maunsell v. Olins [1975] 1 All.E.R. 16, which, I must regret to say, contains more discussion than conclusion. I will try to clarify the latter. The case was concerned with the meaning of the word " premises " in another section of the Act, and led to sharp differences of view. There were those who thought that the meaning of this word was clear (Lord Diplock and Lord Simon of Glaisdale) and there were those who thought it ambiguous (Lord Reid, Viscount Dilhorne and myself). It was because I thought that the word has no primary or certain meaning, except

perhaps in a conveyance or lease, and that the section in question " admits, " almost invites, opposing constructions " (p. 20) that I found it necessary to look at the antecedents of the section, and Lord Reid and Viscount Dilhorne took the same view. Lord Diplock and Lord Simon of Glaisdale, on the other hand, thought the word was clear and for that reason considered that it was not legitimate to go back into the legislative history. If I may say so, on that hypothesis I would agree with them. I would agree and endorse the principle that it is quite wrong that, in every case where a consolidation Act is under consideration, one should automatically look back through the history of its various provisions, and the cases decided upon them, and minutely trace the language from Act to Act—a process, which, incidentally, has led to an argument of four days' length in this House. In recent times, because modern statutes have become so complicated, the courts myself included (cf. I.R.C. v. Joiner [1975] 3 AllER 1050 ) rather too easily accept this process, whether under persuasion of counsel or from their own scholarly inclinations. But, unless the process of consolidation, which involves much labour and careful work, is to become nothing but a work of mechanical convenience, I think that this tendency should be firmly resisted ; that self-contained statutes, whether consolidating previous law, or so doing with amendments, should be interpreted, if reasonably possible, without recourse to antecedents, and that the recourse should only be had when there is a real and substantial difficulty or ambiguity which classical methods of construction cannot resolve. This is particularly true of Acts such as the Rent Act 1968 which have to be applied by county courts, and which have to be understood or at least explained to great numbers of citizens.

In this field of capital payments in relation to changes of occupation, we find that in this Act there are provisions about the grant, renewal or con- tinuance of protected tenancies—prohibiting the requiring of a sum as a condition and the receiving of a sum in connection—(section 85)—similar provisions about assignments of protected tenancies (section 86), similar provision about grants, renewals, continuance or assignments of certain furnished lettings (section 87) in which " any person " indisputably covers all who may be concerned with any of these things, similar provisions about offering furniture at an excessive price (section 89), provisions as to payments asked or received as a condition of giving up statutory tenancies (section 13), payments required as consideration for changes by agreement of statutory tenancies (sections 14, 15). All of this, coupled with the width of expression of section 85 itself points towards a general interpretation covering the requiring or receipt of capital sums.

In my opinion this process of interpretation should lead to a conclusion that section 85(1) covers the kind of tripartite arrangement we have here.

This brings me to the question of judicial authority. Remmington v. Larchin (u.s.) was decided upon section 8(1) of the Act of 1920 which fol- lowed and modified section 1(2) of the Act of 1915. Section 8(1) was as follows:

" A person shall not, as a condition of the grant, renewal, or con- " tinuance of a tenancy or sub-tenancy of any dwelling house to which " this Act applies, require the payment of any fine, premium, or other " like sum, or the giving of any pecuniary consideration, in addition to " the rent, and where any such payment or consideration has been made " or given in respect of any such dwelling house under an agreement " made after the twenty-fifth day of March nineteen hundred and twenty, " the amount or value thereof shall be recoverable by the person by " whom it was made or given . . ."

It was decided by a Court of Appeal of great eminence, any of whose judg- ments I would have the strongest disposition to accept as correct. I do not think there is any need to differ from it. It is certain that all three Lords Justices felt great difficulty about the case and that what ultimately weighed with them were three things ; first, that the Act of 1915 looked to be confined to landlords, second, that the Act of 1920 was penal in character, third, that it contained no provision against the requiring of a premium on an assign- ment of a tenancy. Atkin L.J. is explicit on this point (I.c. p. 411). This was an argument of considerable strength against bringing tripartite 4

arrangements under the prohibition. I am quite content to leave this decision there. It was followed by the appeal of Zimmerman v. Grossman upon the Act of 1968, by which time the prohibition against requiring premiums on assignments, as well as other prohibitions, had been added and the form and structure of' the enactment had been changed. The Court of Appeal, again finding difficulty in their decision, followed Remmington v. Larchin and reached the same result. It is not necessary to decide whether the court was, in fact, bound by their earlier decision—they were clearly entitled to follow it, but I think that we should take a different view.

There are three other points which I must mention. (1) It was said in Zimmerman's case, and the argument was repeated in this House, that there was some Parliamentary endorsement of the decision in Remmington v. Lar- chin by reason of the fact that, in 1949, and later in 1965, Parliament, having the opportunity to reverse it, had in substance re-enacted the section on which Remmington v. Larchin was based and so must be taken to have validated Remmington v. Larchin. Widgery L.J. in his judgment cited the well-known passage from the judgment of James L.J. in Greaves v. Tofield (1880) 14 ChD 563 , 571, and reliance was duly placed upon such cases as Barras v. Aberdeen Steam Trawling and Fishing Co. Ltd.

[1933] AC 402

, and Webb v. Out rim (

[1907] AC 81

) and, in the opposite sense, Reg. v. Bow Road Justices ins. parte Adedigba [1968] 2 Q.B. 572.

My Lords,

I have never been attracted by the doctrine of Parliamentary endorsement of decided cases: it seems to me to be based upon a theory of legislative formation which is possibly fictional. But if there are cases in which this doctrine may be applied, and I must respect the opinions of those judges who have so held, any case must be a clear one. James L.J. must have thought so when he used the words " well-known words upon which there " have been well-known decisions " (I.c.). This case is certainly not such a case. It really cannot be said if our reasoning is to have any contact with reality that the draftsman of the Act of 1949(a) must have had in mind a decision of 1921, whose reported headnote opens with the words "that "section 8(1) was reasonably capable of two constructions" and all of the judgments which underlined the ambiguity and obscurity of the enactment,

(b) decided to perpetuate this ambiguity while removing one of the grounds of the decision,

(c) should have committed Parliament to the continued existence of a lacuna or loophole which had no merits to commend it.

To impute such a process of thought to the architect of the new section, and to those who voted it into existence really strains credibility.

I have given careful thought to the question whether it is right for this House to over-rule, in effect, a decision which has stood for 55 years. Not forgetting that Remmington's case was referred to without disapproval in this House in 1960 (Elmdene Estate Ltd. v. White [1960] A.C. 528), I have reached the conclusion that it is. To do so does not involve upsetting titles or, except as to the present respondent, any expectations. The respondent was willing to proceed by an assignment, which on any view was contrary to the Act, and there is no suggestion that she proceeded as she did on some view of the law which made it safer to do so.

There is the point that the section is a penal section—not one of great criminality—but still, if infringed, liable to attract prosecution and some degree of discredit. But this consideration only has weight where " after " full inquiry and consideration one is left in real doubt" (Reg. v. Ottewell [1970] A.C. 642, 649 per Lord Reid). I do not agree with Widgery L.J. (as he then was) in Zimmerman v. Grossman when he said that a principle of restrictive application should be considered when a penal provision is framed " in such wide and therefore necessarily ambiguous language" (I.c. p. 179), On the view which I take, the Act is wide, and deliberately so, and this is not " ambiguity " which attracts the principle.

I would allow the appeal with costs. The case must be remitted to the county court at Wandsworth to determine the excess of the sum of £4 000 over the real value of the fixtures and fittings. The appellants are entitled to have this sum repaid.

Viscount Dilhorne

My Lords,

The particulars issued by the respondent's agents stated that her flat was for sale for £4,500, a price which was to include some fittings and other articles. The appellants offered £4,000 and this offer was accepted. It was then intended that for this sum the respondent should assign her tenancy to the appellants. Later in correspondence, the respondent's agents referred to the £4,000 as the price for the fixtures and fittings.

It was not disputed that this price was substantially in excess of the value of the fixtures and fittings.

Section 89(1) of the Rent Act, 1968, so far as material, reads as follows:

" Any person who, in connection with the proposed grant, renewal, " continuance or assignment, on terms which require the purchase of " furniture, of a protected tenancy—

" (a) offers the furniture at a price which he knows or ought to know " is unreasonably high . . .

" . . .

" shall be liable to a fine not exceeding £100." Section 92(1) defines furniture as including fittings and other articles.

The respondent appears to have committed an offence under section 89(1) but the plan was changed. The respondent's landlords, when approached for their consent to the proposed assignment, said that they would prefer the respondent to surrender her lease and then to grant the appellants a new lease.

This was agreed to and the £4,000 of which £400 had been previously paid to the respondent's agents as a deposit was paid not in connection with any assignment but in connection with the grant of a new lease to the appellants and, in my view, as a condition of that grant.

In these circumstances the main question for determination is whether by requiring payment of and by receiving this money the respondent contravened section 85 of the Rent Act 1968. That section reads as follows:

"85.—(I) Any person who, as a condition of the grant, renewal or "continuance of a protected tenancy, requires, in addition to the rent. " the payment of any premium or the making of any loan (whether " secured or unsecured) shall be guilty of an offence under this section.

" (2) Any person who, in connection with the grant, renewal• or " continuance of a protected tenancy, receives any premium in addition " to the rent shall be guilty of an offence under this section.

" (3) A person guilty of an offence under this section shall be liable " to a fine not exceeding £100.

" (4) The court by which a person is convicted of an offence under " this section relating to requiring or receiving any premium may order " the amount of the premium to be repaid to the person by whom it was " paid."

Section 88 provides that:

" Where the purchase of any furniture has been required as a con- " dition of the grant, renewal, continuance or assignment—

" (a) of a protected tenancy,

" (b) . . .

" . . .

" then, if the price exceeds the reasonable price of the furniture, the " excess shall be treated, for the purposes of this Part of this Act, as if " it were a premium required to be paid as a condition of the grant, " renewal, continuance or assignment of the protected tenancy . . .".

Section 90 provides that where under any agreement any premium is paid and it could not lawfully be required or received under the preceding pro- visions, the amount of the premium

" shall be recoverable by the person by whom it was paid ". and section 92(1) states that, unles the context otherwise requires:

" ' premium ' includes any fine or other like sum and any other pecuniary

" consideration in addition to rent ".

That the £4,000 was paid as a condition of the grant of the lease to the appellants though not paid to the lessors but to the respondent, cannot I think be disputed. It was a price exceeding the reasonable price for the fixtures and fittings. That is conceded. The excess must, by virtue of section 88, be treated as a premium : and if the fixtures and fittings were offered at a price which the respondent knew or ought to have known was an unreasonably high price, as would appear to have been the case, it was a premium which could not lawfully be required and so one recoverable under section 90(1).

The respondent, however, contends that this case is governed by section 85. While not disputing that " Any person " means what it says, it is contended that only a landlord or potential landlord can commit the offences defined in the section. It was argued clearly and persuasively by Mr. Barnes, for the respondent, that section 85(1) properly interpreted could only apply to a person who, as a condition of the grant etc. of a protected tenancy, required the payment of rent and also required the payment of a premium ; and section 85(2) only to a person who receives the premium and also receives the rent. The opposing argument is that the words " in " addition to the rent" are there merely to indicate that the premium must be a sum over and above the rent. For the respondent, it was suggested that in section 85(1) the fact that the words "in addition to the rent" followed immediately after the word " requires " supported the contention advanced on her behalf. I am unable to attach any significance to this or to the punctuation. The words " in addition to the rent " must have the same meaning in section 85(2) as in section 85(1), and in section 85(2) they do not appear after " receives " but after " any premium ".

Mr. Barnes conceded, and in my view rightly, that in section 92(1), the interpretation clause, " in addition to rent" meant over and above the rent and that being so I cannot regard it as right to read section 85(1) as if it read " any person who requires the rent and also requires a premium " or section 85(2) as saying " receives any premium and also receives the rent". The context does not require the words " in addition to the rent" to be interpreted differently in the same part of the Act.

That the Rent Act 1968, a pure consolidation Act, has incorporated in its drafting inadequacies contained in earlier Acts, I acknowledge.

The inclusive definition of premiums in section 92(1) does not fit in with either section 85(1) or 85(2) so far as it relates to the words "in addition " to rent". It really is not possible to read section 85(1) as if it said

" requires in addition to the rent the payment of any premium in " addition to rent "

or section 85(2) as saying

" receives any premium in addition to the rent in addition to rent" In my opinion in view of the definition in section 92(1) it was unnecessary to insert the words " in addition to the rent" in section 85(1) and (2) and mere surplusage to do so. Those words in the definition are necessary in con- nection with the use of the word premium in other sections of the Act, for example, sections 86, 87, 88 and 90.

Looking at the Rent Act 1968 alone, I would have no hesitation in saying that, in my view, the amount paid by the appellants in excess of a reasonable price for the fixtures and fittings constituted a premium ; that it was an offence under section 85(1) to require the payment of it as a condition of the grant of the protected tenancy, an offence under section 85(2) to receive

it in connection with the grant of such a tenancy; and also that it was a premium which could not under sections 89 and 88 be lawfully required and so a premium recoverable under section 90(1).

I do not regard section 85(1) and (2) as ambiguous. Though they might have been better phrased I think their meaning and effect is clear. The object of these provisions was to protect protected tenants by making it impossible to extract from them as the condition of the grant, renewal, continuance or assignment of a tenancy or in connection with such a grant etc., any sum over and above the rent. That seems to me to be clear and that being so I can see no valid reason why, as a matter of policy, Parliament should have intended the section only to apply to landlords though it may have been thought that they were the most likely offenders.

Section 86 makes it an offence for any person to require the payment of any premium as the condition of the assignment of a protected tenancy. It is therefore contrary to the law for a tenant to require a premium for assigning. If section 86 is not restricted to landlords or potential landlords, and it clearly is not, I cannot see how section 85 can properly be construed as so restricted.

It is, however, said that the legislative history and two decisions of the Court of Appeal make it wrong to give this interpretation to these sections.

Section 1(2) of the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915 reads as follows:

" A person shall not in consideration of the grant, renewal or con- " tinuance of a tenancy of any dwelling-house to which this Act applies " require the payment of any fine, premium or other like sum in " addition to the rent, and where any such payment has been made in " respect of any such dwelling-house after the 25th November 1915, " then the amount shall be recoverable by the tenant by whom it was " made from the landlord . . ."

This subsection only applied to landlords. That is made clear by its express reference to landlords in the latter part of the subsection. But that does not mean that the words " require any payment of any fine, premium " or other like sum in addition to the rent" are to be interpreted as if they were " require any payment of any fine, premium or other like sum in " addition to requiring the payment of the rent ".

That subsection was repealed and replaced by section 8(1) of the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 which made a number of changes in the language. The words " in consideration of " were replaced by " as a condition of ". The words " or sub-tenancy " were inserted after " tenancy " though in view of the definition of tenancy in section 12(11) (g) , this change would not appear to have been necessary. The words " or the giving of any pecuniary consideration " were inserted after " other " like sum " so that that part of the subsection read as follows:

" require the payment of any fine, premium or other like sum, or the " giving of any pecuniary consideration, in addition to the rent ".

Under the 1915 Act payment of such premiums, etc. made after the 25th November 1915, were made recoverable. Under the 1920 Act only such payments made after 25th March 1920 were recoverable. But to my mind the most significant and important change was in the concluding words of the subsection. Instead of reading " recoverable by the tenant by whom it was made from the landlord " section 8(1) of the 1920 Act reads:

" recoverable by the person by whom it was made or given ".

Why the change in language? Parliament, it can be assumed, does not change the language of a section unless it intends to change its meaning. The change from " tenant" to " person " clearly was intended to secure that any person who paid such a premium, whether or not the tenant, should be able to recover it. Why the omission of the reference to " landlord " if in 1920 Parliament intended that such a premium should only be recover- able from a landlord? I do not myself see that it can be said that this was

made necessary by the specific inclusion of sub-tenancies. , In my opinion the language of section 8(1) contrasted with that, of the 1915 Act shows it to have been the intention of Parliament that anyone who paid, such a premium should be entitled to recover it from the person to whom it was paid, whether or not he was the landlord.

Where there are only two parties to the transaction, a landlord would be the most likely person to require the payment of a premium .as a condition of a grant of a tenancy ; but where there is, as there was in the instant case, a tripartite arrangement, with the tenant requiring a premium on the terms that the existing tenancy would be surrendered and a new tenancy granted by the landlord to the payer of the premium, 1 fail to see why the tenant should not be regarded as requiring the payment of the premium as a condition of the grant of the tenancy.

This conclusion is contrary to that of a strong court of appeal in Remmington v. Larchin [1921] 3 K.B. 404 (Bankes, Scrutton and Atkin L.JJ.). The tenant of premises to which the 1920 Act applied had agreed that upon payment of a premium he would surrender his tenancy, his landlord having agreed that if he did so he would grant a new tenancy to the payer of the premium. It was held that section 8(1) was reasonably capable of two constructions and that, as it was a penal section, the more lenient should be adopted, namely, that it only applied to landlords. Bankes L.J. did not think the matter plain and he did not attach any significance to the alteration of language from that in the 1915 Act by the omission of any reference to landlords and the omission of any definition of the persons from whom repayment might be obtained. Scrutton L.J. thought the construction of section 8(1) "a matter of very considerable doubt " but, as it was a penal section, he reached the same conclusion. Atkin L.J. said that he had had great difficulty with regard to the construction of the section and that if it had stood alone he would have been inclined to the view that it applied. In the light of the language of section 1(2) of the 1915 Act which clearly refers to landlords, he thought that the similar language of section 8(1) must also be interpreted as applying only to them.

Scarman L.J. in the present case said he thought a wrong turning had been taken in 1921. I agree, and while it is with considerable reluctance that I venture to differ from the opinions of such eminent judges I am comforted by the fact that each expressed doubt as to the construction to be placed on the section.

Twenty-eight years later the Landlord and Tenant (Rent Control) Act. 1949, was enacted. Section 8(1) of the 1920 Act was repealed and replaced by section 2 of that Act.

Section 2(1) and (2) read as follows:

" (1) A person shall not, as a condition of the grant, renewal or " continuance of a tenancy to which this sections applies, require the " payment of any premium in addition to the rent

" (2) Subject to the provisions of Part II of the First Schedule to this " Act, a person shall not, as a condition of the assignment of a tenancy " to which this section applies, require the payment of any premium."

Section 2(4) made it permissible for the assignor to obtain certain payments from the assignee. Section 2(5) provided that a premium paid which could not lawfully be required should be " recoverable by the person by whom it " was paid " and section 2(6) made the requiring of a premium in contra- vention of the section an offence.

I recognise : the force of the contention that if Parliament wished the decision in Remmington v. Larchin not to apply, it should have made that clear by express words and that it could have done so by the insertion of the words after " a person ", " whether or not a landlord ", but the omission to do so does not in my view justify the conclusion that a person to whom section 2(1) applies must be a landlord when "a person" in section 2(2) dearly applies to a person who is not a landlord.

In Woods v. Wise [1955] 2 Q,B. 29, Romer LJ. at page 57 pointed out that a landlord did not infringe section 2(1) by receiving a premium which had not been required by him as a condition of granting or renewing or continuing a tenancy. This no doubt led to the substitution of a new sub- section in place of section 2(1) ten years later.

The Rent Act 1965 by section 37 and Schedule 5 enacted that the following subsection should be substituted for section 21(1):

" (1) A person shall not—

"(a) as a condition of the grant, renewal or continuance of a " tenancy to which this section applies, require the payment of " any premium ; or

(b) in connection with such a grant, renewal " or continuance, receive any premium ;

" in addition to the rent".

The fact that in paragraph (b) the words are " in connection with " and not as in paragraph (a) "as a condition of" may have been intended to secure that paragraph (b) applies to cases where it could not be established that the receipt of the premium was a condition of the grant.

In Zimmerman v. Grossman [1972] 1 Q.B. 167 the defendant had agreed to pay £300 to the tenant of a fiat for fixtures and fittings if the landlord agreed to accept her as a tenant. She paid £100 but refused to pay the balance claiming that £300 was far in excess of the true value of the fixtures and fittings. The county court judge assessed their true value at £100 and held that the balance of £200 was not a premium and that the plaintiff was entitled to it. The defendant's appeal to the Court of Appeal (Davies, Widgery and Karminski L.JJ.) was dismissed. The other members of the court agreed with the judgment of Widgery L.J. and the case was decided on the Rent Act 1968. He thought that the principle stated by James L.J. in Greaves v. Tofield [1880] 14 Ch.D. 563 at page 571 that

" If an Act of Parliament uses the same language which was used " in a former Act of Parliament referring to the same subject, and " passed with the same purpose, and for the same object, the safe and " well-known rule of construction is to assume that the legislature when " using well-known words upon which there have been well-known " decisions uses those words in the sense which the decisions have " attached to them "

applied.

My Lords,

although the first part of section 1(2) of the 1915 Act and of section 8(1) of the 1920 Act are the same, I do not think, as I have said, that section 8(1) was passed for the same purpose and for the same object as section 1(2). The changes made by the Acts of 1949 and 1965 appear to me to reinforce the view that the language of section 8(1), which was repeated in section 2(1) of the 1949 Act and in the re-draft of that subsection effected by the 1965 Act, was not regarded or intended by Parliament to be limited in its application to landlords. It may be that in 1949 the decision in Remmington v. Larchin escaped the notice of the draftsman when it should not have done, and that when the subsection was re-drafted in 1965 the draftsman was content to model the re-draft on the 1949 Act. However this may be, our task is to give effect to the intention of Parliament and the language used by Parliament does not, in my opinion, support the conclusion that the operation of the subsection was limited to landlords.

It follows that in my opinion Zimmerman v. Grossman was wrongly decided. His Honour Judge Ifor Lloyd rightly thought that he was bound by these two decisions of the Court of Appeal, as indeed was the Court of Appeal in the present case. That court is bound, as Scarman L.J. stated in his judgment in the present case, by precedent, for the reasons given by him with which, if I may say so, I entirely agree and which I need not repeat. But for that, it would seem that the decision of the Court of Appeal in this case would have been to allow the appeal.

For the reasons I have stated, in my opinion this appeal should be allowed with costs and the case sent back to the county court for the determination of the amount by which the sum of £4,000 exceeded the value of the fixtures

and fittings.

Lord Simon of Glaisdale

My Lords,

My noble and learned friends who have preceded me have apprised your Lordships of the facts which have led to this appeal and the relevant statutory provisions. The following questions arise thereupon:(1) What is the proper approach to the interpretation of a consolidation Act?

(2) Adopting such an approach, what is the proper construction of section 85 of the Rent Act 1968 in relation to the facts judicially ascertained in the instant case?

(3) Was Remmington v. Larchin [1921] 3 K.B.404 correctly decided; involving also the question how much weight should be put on the factor that the statutory provision to be construed there (as here) had penal consequences?

(4) Was Zimmerman v. Grossman [1972] 1 Q.B. 167 correctly decided ; involving also the question of the validity of an alleged canon of statutory construction arising from a presumed parliamentary endorsement by re-enactment of a word or phrase previously the subject of judicial inter- pretation (" the rule in Barms v. Aberdeen Steam Trawling and Fishing Co. "[1933] A.C.402 ")?

(5) Was the Court of Appeal in the instant case bound to follow Zimmerman v. Grossman?

There are certain fundamental considerations which impinge on more than one of these questions. First, in the construction of all written instruments including statutes, what the court is concerned to ascertain is, not what the promulgators of the instruments meant to say, but the meaning of what they have said. It is in this sense that " intention " is used as a term of art in the construction of documents. In order to avoid wearying your Lordships with repetition, for the authority and rationale of this rule may I refer to what I said about it in Wickman Tools v. Schuler A.G. [1974| A.C.235, 263 and Black-Clawson v. Papierwerke [1975] A.C.591, 645 et seq! Suffice it to repeat that, provided draftsmen and courts operate correctly, the court's elucidation of the meaning of what is said should accord with what the promulgator meant to say. But, secondly, such an accord can only be achieved if courts frame their approach to statutory interpretation in the light of the actual parliamentary processes which evolve the statutory enactment in question.

Construction of consolidation Acts

All consolidation Acts are designed to bring together in a more convenient, lucid and economical form a number of enactments related in subject-matter (and often by cross-reference) previously scattered over the statute book. All such previous enactments are repealed in the repeal schedule of the consolidation Act. It follows that, once a consolidation Act has been passed which is relevant to a factual situation before a court, the " intention " of parliament as to the legal consequences of that factual situation is to be collected from the consolidation Act, and not from the repealed enactments. It is the relevant provision of the consolidation Act, and not the corresponding provision of the repealed Act, which falls for interpretation. It is not legitimate to construe the provision of the consolidation Act as if it were still contained in the repealed Act—first, because Parliament has provided for the latter's abrogation; and, secondly, because so to do would nullify much of the purpose of passing a consolidation Act.

There are three sorts of consolidation Act:(1) "pure" consolidation (i.e., re-enactment);

(2) consolidation under the Consolidation of Enactments (Procedure) Act 1949, which allows consolidation with "corrections and " minor improvements " (for their definition see Lawton L.J. in the instant case [1976] Q.B. at page 366D);

(3) consolidation "with Law Commission

"amendments" under a procedure adopted by parliament in 1965. What all three types of consolidation have in common is that there is a short* circuiting of the normal parliamentary procedures. This can be seen by comparison with the nearest parliamentary analog—an Act " to consolidate " and amend " the previous law. This was formerly a very common legisla- tive exercise, and very advantageous to all except government business managers. Its objection for the latter is that all stages of the bill leading to the Act are subject to normal and full parliamentary control; so that amendments may be made, not only to the amending provisions of the bill, but also to those provisions which merely re-enact the pre-existing statute law. Such measures therefore make the full normal demand on the parliamentary timetable. By contrast, the detailed scrutiny of every type of consolidation bill is referred to a joint select committee of both Houses of Parliament; and, in reliance on the report of this committee, the Houses forego discussion (and, other than exceptionally, amendment) of the consolidation bill in so far as it merely re-enacts pre-existing statute law (including re-enactment with " corrections and minor improvements " in the case of 1949-Act-procedure bills). The long title of the statute shows whether it is a consolidation Act: if it is merely " to consolidate . . . ", it is a " pure " consolidation Act; while if it is under the 1949 or 1965 procedures this will be specifically indicated in the long title (see, e.g., Juries Act 1974; Friendly Societies Act 1974). Special parliamentary practice governs consolidation under the 1949 and 1965 procedures respectively; and, should a consolidation Act passed under either of these procedures fall for interpretation, I would hope that the court of construction would not make heavy weather of discovering how much of the Act in question represents amendment and would in interpretation discriminate between 1949-and 1965-type amendments. But no such questions arise on the instant appeal; the Rent Act 1968 is " pure " consolidation.

In the case of such a statute it is the primary task of the joint committee to ensure that the bill when it passes into law does not depart from the pre-existing statutory enactments which are to be consolidated. That does not involve a literal transcription. The language will be modernised. Contemporary drafting techniques will be adopted, so long as they do not change the sense. The lay-out will if possible be improved to promote perspicuousness. Obvious slips in the pre-existing legislation will be corrected. Sometimes, through inadvertence, there are overlapping provisions or varying terminology dealing with the same subject-matter: the joint committee will then choose the one which most felicitously accords with the obvious parliamentary intention (though doubts or ambiguities must be dealt with by the 1949 procedure). Thus, in a "pure" consolidation Act it must be assumed that it was not necessary to have recourse to the 1949 procedure— i.e., that the consolidation Act reproduces pre-existing statute law without even "corrections" or "minor improvements" as defined in the 1949 Act.

This does not mean that the initial approach to the construction of a " pure " consolidation Act must be via the statutes it has replaced. On the contrary, it is the consolidation Act itself which falls for interpretation. The initial judicial approach is the same as with the interpretation of any other statute. The judge places himself, as the saying goes, in the draftsman's chair. He will ascertain what facts were within the draftsman's knowledge, and what statutory objective he had both generally and as to the particular provision to be construed. The facts available to the draftsman of a consolidation Act will be all those which had been available to the draftsmen of the enactments to be consolidated. These facts and (closely related) the statutory objectives will generally be obvious from the statute falling for construction itself; but the court may, in default or by way of supplement or confirmation, have recourse to matters of which judicial notice may be taken or to official reports in the light of which any part of the legislation has been framed (see Eastman Photographic v. Comptroller- General

[1898] AC 571

; Black-Clawson v. Papierwerke). The judge will then ascertain and tune in to the linguistic register of the statute (see Maunsell v. Olins [1975] A.C. 373. 391E-392C). Having done all this the judge will be in a position to read the statutory language in the primary and

most natural sense which it bears in its context. Since the draftsman will himself have endeavoured to express the parliamentary meaning by words used in the primary and most natural sense which they bear in that same context, the court's interpretation of the meaning of the statutory words used should thus coincide with what parliament meant to say.

There is one rare situation in which it is permissible for—indeed, incum- bent on—the court to construe a consolidation Act at this primary stage of construction by reference to a consolidated enactment. This is where the purpose of a statutory word or phrase can only be grasped by examination of the social context in which it was first used. George He fisher Ltd. v. Restawile Upholstery (Lanes.) Ltd. [1976] A.C. 64 provides an example. The phrase " work of artistic craftsmanship " in the Copyright Act 1956 could only be properly understood by investigating the social and aesthetic circumstances in which it was first used in the Copyright Act 1911. (The 1956 Act, though not a consolidation Act, was relevantly in pari materia). I can, however, find nothing in section 85 of the Rent Act 1968 which would bring its interpretation within this exception.

It might be objected that the statutory objective of a consolidation Act is merely to consolidate the previous law ; so that it is necessary to look back to the superseded legislation to ascertain its various statutory objectives. But in vindicating the paramount objective of consolidating the preceding statute law the consolidation Act is also furthering the statutory objectives of the legislation which is consolidated. Apart from the exceptional case I mentioned in the preceding paragraph, the various statutory objectives will be apparent from a scrutiny of the provisions of the consolidation Act itself (possibly aided by judicial notice and perusal of official reports). The primary approaches to statutory interpretation (which I have tried to sum- marize earlier) are therefore as appropriate for construction of a consolidation Act as for any other type of statute. It is only on failure of the primary aids to construction that the fact that the statute to be construed is a consolidation Act permits any special approach: what it does then is to provide an additional secondary canon of construction which will sometimes be of service—namely, a presumption that a consolidation Act (in so far as it merely re-enacts) does not change the law.

If a court of construction places itself in the position of the draftsman, acquires his knowledge, recognizes his statutory objectives, tunes in to his linguistic register, and then ascertains the primary and natural meaning in their context of the words he has used, that will generally be an end of the task of construction. But occasionally something will go wrong. It may become apparent that the primary and natural meaning cannot he what Parliament intended: it produces injustice, absurdity, anomaly or contradic- tion, or it stultifies or runs counter to the statutory objective. Or sometimes the words have no primary meaning in their context; they are fairly capable in all the circumstances of being taken in two senses: there is, in other words, an ambiguity. There are a number of secondary canons of construction avail- able to resolve ambiguity: which of them is most helpful will vary from case to case. But in nothing of the foregoing does the construction of a consolidation Act differ from that of any other statute. Its only peculiarity is that if the primary approach to construction discloses an ambiguity in a consolidation Act, that may sometimes (though rarely) be resolved by examination of the superseded legislation. Since, as will appear, I cannot for myself see any ambiguity in section 85, I venture merely to refer sum- marily to what, in a speech prepared in collaboration with my noble and learned friend, Lord Diplock, I said, in Maunsell v. Olins at pp. 392H 393B, about this exceptional use of the superseded enactments.

There is, however, one canon of construction relevant to the interpretation of section 85, which is deducible from the submissions I have been making to your Lordships. It is not peculiar to the construction of consolidation Acts, though it -is equally applicable to them. The first or " golden " rule is to ascertain the primary and natural sense of the statutory words in their context, since it is to be presumed that it is in this sense that the draftsman

is using the words in order to convey what it is that Parliament meant to say. They will only be read in some other sense if that is necessary to obviate injustice, absurdity, anomaly or contradiction, or to prevent impediment of the statutory objective. It follows that where the draftsman uses the same word or phrase in similar contexts, he must be presumed to intend it in each place to bear the same meaning, see Courtauld v. Legh (1869) L.R. 4 Ex. 126, 130 ; Black-Clawson v. Papier-werke at p. 651 A-B.

Construction of Section 85

At least before your Lordships, if not in the Court of Appeal, it was not sought to argue that " any person " should, merely by reason of the historical statutory background, be read as " any landlord ". Nor, on the other hand, was the difference between " a person " in the repealed legislation and "any person" in section 85(1) relied on. It was accepted on behalf of the respondent that, in their primary and natural meaning, the words " any " person " are all-embracing. What was argued, with great force and skill, was that it is the position and punctuation of ", in addition to the rent," which shows that " any person " must be limited to landlords or their agents. The person who requires the premium must require it in addition to requiring the rent; but only a landlord (or his agent) can require the rent; so that it is only a landlord (or his agent) who meets the description of " any person . . . who requires ... the rent" and therefore of " any person" at the beginning of section 85(1). In so placing and punctuating the phrase the draftsman, it was claimed, was advisedly reflecting the inter- pretation put on the pre-existing law in Remmington v. Larchin, where a very powerful Court of Appeal was left in doubt as to the meaning of similar words in the 1920 Act; and, since the provision involved penal consequences, construed them narrowly, reading them as applicable only to landlords, and not to third parties, taking a premium. It was further argued that it has been open to Parliament, on the numerous occasions when it has since then dealt with rent restriction, to make it plain, did it so desire, that the sanction was meant to extend to third parties as well as landlords requiring a premium as a condition of the grant of a protected tenancy— not least in 1949, when it was made an offence to require a premium as a condition, not merely of the grant, renewal or continuance of a protected tenancy, but also of its assignment. Parliament, whether from oversight or error or intention, has left the statutory provision as it was interpreted in Remmington v. Larchin. Alternatively, there is still at the very least the ambiguity perceived in Remmington v. Larchin; and, since the provision is still penal, it should be resolved by a strict construction limiting " any " person " to those requiring payment of rent, i.e. landlords (or their agents).

In so far as this argument was based, in the absence of ambiguity, on recourse to legislation now repealed, it was, in my respectful opinion, fallacious for the reasons I ventured to give in the preceding section of this speech.

In so far as the argument was based on the placing and punctuation of ", in addition to the rent," in section 85(1), it fails as a matter of literal construction. Whether or not Widgery L.J. (tentatively, in Zimmerman v. Grossman at p. 180 and Scarman L.J. in the instant case at p. 368B were right as to the relationship of section 85(1) and 85(2), the two subsections are, at least from the point of view of drafting, mirror provisions. This is borne out by the recovery provisions of section 90, which reads:

" (1) Where . . . any premium is paid . . . and the whole or any " part of that premium could not lawfully be required or received . . ."

" Any person who . . . requires, in addition to the rent, the payment of any premium . . ." in section 85(1) must be a counterpart of "Any person who . . . receives any premium in addition to the rent ... in sec- tion 85(2). As a matter of literal construction I would therefore read " in "addition to the rent" in section 85(1) as qualifying the payment rather than the requirement, and thus the character of the payment rather than the character of the recipient.

I go so far with the respondent as to accept that the words " in addition " to the rent" are capable of being understood in two senses—either " as " well as the rent" or " over and above the rent"—and that if it means the former it would prevent the subsection extending to tripartite arrange- ments like that in the instant case. But most words in English are capable of more than one sense: for the words to be read in two possible senses does not make them ambiguous unless they can be fairly read in either sense in their context. The general purpose of this Act and the particular purpose of this provision show conclusively, to my mind, that "in addition "to the rent" means "over and above the rent". So does the context, So do the absurd anomalies which would arise if the alternative reading

were adopted.

r

(Incidentally, if there were an ambiguity, one of the means of resolving it would be to have recourse to the provision in the 1965 Act which was re-enacted in section 85(1). There is no sign there of the placing of the phrase and its punctuation to which counsel for the respondent attached such significance. The provision (Schedule 5, Part I, paragraph 1) amended section 2 of the 1949 Act to read :

" (1) A person shall not—

" (a) as a condition of the grant, renewal or continuance of a " tenancy to which this section applies, require the payment of " any premium ; or

" (b) in connection with such a grant, renewal or continuance, receive " any premium ;

" in addition to the rent.")

Although the statutory objectives and the linguistic register are the most potent elements in eliminating the penumbra of possible meanings from the true meaning, it is convenient to deal first with context, since I have already touched on this in comparing sections 85(1) and 85(2). I venture to pray in aid the analysis of my noble and learned friend. Viscount Dilhorne. In my view, the conclusive argument here is from the interpretation of " premium " in section 92 (" includes . . . any pecuniary consideration in " addition to rent"). Although this statutory interpretation involves some tautology when applied to section 85, it obviously and admittedly means " over and above rent", which is also the sense required by the sections other than 85 to which it applies. The presumption against change of meaning of similar words used in the same context is a strong pointer against the words meaning " as well as the rent" in section 85(1).

Counsel for the respondent made adroit use of the tautology apparent when section 85(1) is read together with the interpretation of "premium" in section 92(1). This showed, he claimed, that the words must be used in different senses in the respective sections, so that the presumption in favour of consistency of terminology is displaced. With every respect, I find this altogether too far-fetched. A tautology, unlike a contradiction, does not necessarily call for any modification of meaning. Legal language is frequently tautological: a draftsman will prefer to repeat himself rather than leave his meaning in doubt. Nor, indeed, does even the extreme recourse of reading "in addition to {the] rent" as having different meanings in sections 85(1) and 92(1) respectively—" as well as the rent" in the former and " over " and above rent" in the latter—eliminate all tautology.

The construction urged on behalf of the respondent involves reading section 85(1) as if it went "in addition to requiring the rent". "It is a " strong thing to deal into an Act of Parliament words which are not there, " and in the absence of clear necessity it is a wrong thing to do," said Lord Mersey in Thompson v. Goold & Co.

[1910] AC 409

, 420. There is certainly no such clear necessity here: on the contrary.

I turn, then, from such linguistic minutiae to examination of the general and particular parliamentary objectives, which, to my mind, put the meaning beyond any possible doubt. The general purpose of the Act was to hold rents artificially below their market price, thus penalising relatively the

financial return on one type of property. The result of such an interference with a market is a matter of common knowledge: supply does not expand to meet demand, and demand is on the other hand artificially inflated. There is thus apt to be a substantial difference between the statutory price of the goods or services in question and a black market price. If the statutory control is to be effective, strict steps must be taken to obviate the black market and to prevent evasions of the control. Loopholes in the control will be sought by those offering or seeking the goods or services; and, as they are recognised by those enforcing the control, those loopholes will be closed. This is the picture clearly disclosed by the history of rent restriction in this country culminating in the Rent Act 1968, the terms of which reveal the whole story like a fossil bed recapitulating natural history.

In the context of housing accommodation the most obvious and facile way of operating a black market where rents are controlled is to demand a premium—i.e., a capital payment in connection with the grant etc. of a tenancy over and above the rent as held statutorily below its true market rate. The history of rent control is a history of attempts to control the black market in rented housing accommodation by penalising criminally and nullifying civilly the taking of premiums. Whatever might be thought of a tenant or assignee who gets occupation of premises by promising to pay a premium and then resiles from his promise, it is obviously necessary (given the paramount parliamentary objective) to permit him to do so. Moreover, given the paramount statutory objective of holding rents below their market price, parliament must be concerned, not merely to penalise landlords evading the controls, but also to prevent tenants from doing so.

This leads me to the closely related consideration of anomaly. It would indeed be the most extraordinary anomaly were a tenant penalised for requiring or receiving the payment of a premium on assignment of his tenancy (section 87) and made liable to reimburse it (section 90), but yet permitted to require or receive a premium if the transfer were carried out by way of surrender and new lease. Similarly, if he were to be penalised for attempting to obtain an excessive price for furniture on assignment of his tenancy (section 89) and made liable to reimburse the excess (sections 88 and 90). but yet could freely obtain such an excessive price provided the transfer was carried out by surrender and new lease.

In Beswick v. Beswick

[1968] AC 58

, 105, Lord Upjohn, having described the practice of the Joint Committee on Consolidation Bills (of which he was then chairman), referred to the proceedings of that committee on the Law of Property Bill 1925 " not with a view to construing the Act, that is of course " not permissible, but to see whether the weight of the presumption as to the " effect of consolidation Acts (that they are not intended to alter the law] is " weakened by anything that took place in those proceedings ". My Lords, I have taken the same course in relation to the Rent Act 1968—though I postponed doing so until I had otherwise completed writing this speech. I found that clause 85(1) passed without comment (see 4th Report of the Committee, 1967-68, p. 14). If the punctuation and positioning of ", in " addition to the rent ", had had the significance which counsel for the respondent attached to it, the draftsman would certainly have drawn the committee's attention to it. Therefore, were it necessary to look behind the 1968 Act itself, the presumption would apply with full force that section 85(1) means the same as section 2(1) of the 1949 Act as amended in 1965 ; and I have already ventured to point out how adverse that is to the respondent's argument.

In my respectful opinion, a reading of section 85 in its relationship with the other sections of Part VII, recognition of the general and specific statutory objectives, and consideration of the extraordinary anomalies con- stituted by any other reading, make it clear that " in addition to the rent" in section 85 means " over and above the rent " ; and that the other possible sense (" as well as the rent") cannot reasonably be the meaning. There is therefore nothing to indicate that " any person " is used in anything other than its natural, primary and universal sense—specifically there is nothing to suggest that it is only landlords or prospective landlords or their agents

who can fall within the ambit of these words. I would therefore allow the appeal

This conclusion enables me to deal summarily with the other questions raised in the appeal.

Remmington v. Larchin and the construction of penal provisions

I humbly recognize the eminence of the judges who decided Remmington v. Larchin. But, for the reasons given by my noble and learned friend, Viscount Dilhorne, I think it was wrongly decided.

The Court of Appeal in that case was left in doubt (wrongly, as I venture to think) whether the statute was intended to reach further than landlords— it must be remembered that it was not until 1949 that the loophole of the taking of a premium on an assignment of a protected tenancy was closed. The Court of Appeal was thus led, by consideration that a more liberal reading would lead to extended penal consequences, to adopt a strict reading, confining the operation of the provision to landlords. But, in my view, the canon of strict construction of a penal statute is a secondary canon of construction—generally one of the most potent to be applied where there is a real ambiguity in the statutory language. I do not think that there was any such real ambiguity in the language which fell for consideration in Remmington v. Larchin ; and, for the reasons I ventured to put forward in the preceding section of this speech, I certainly cannot find any such ambiguity in section 85(1) of the 1968 Act. Restrictive interpretation of a statutory provision because it has penal consequences is inappropriate where the language has in its context, bearing in mind the statutory objectives, a plain and primary meaning.

I would only add that, where strict construction of a penal statutory provision does become called for, the strictness of the construction will vary directly with the heinousness of the crime and the severity of the penalty.

Zimmerman v. Grossman and the Barras doctrine

What I have called " the Barras doctrine " appears from some (not all) of the speeches in Barras v. Aberdeen Steam Trawling & Fishing Co. It is to the effect that, where a statutory word or phrase of doubtful meaning has received clear judical interpretation in a well-known decision, and the word or phase is then repeated in a subsequent statute which is in pari materia, parliament must be presumed in this latter statute to be using the word or phrase in the sense in which it had been judicially interpreted (see Maxwell on Interpretation of Statutes, 12th ed. (1969), p. 71, citing James L.J. in Greaves v. Tofield (1880) 14 Ch.D.563, 571). In Zimmerman v. Grossman at p. 177H Widgery L.J. took the doctrine to its logical conclusion and stated it with exemplary clarity:

". . . one ought to approach section 2(1) of the Act of 1949 as though it " had added in parenthesis, ' it is the intention of Parliament that those " ' words be given the meaning given to them in Remmington v. " ' Larchin: ".

It is to be noted that, thus logically and clearly stated, the doctrine becomes a primary canon of construction (displacing even " the golden rule ") and applies equally to interpretations at first instance or on appeal (provided the decision can be said to be " well-known ", whatever that means in the context) and even though the interpretation was clearly erroneous. On this doctrine parliamentary endorsement has transmuted the judicial error into juristic authenticity.

I do not myself believe that any such doctrine was at all applicable to interpret the 1949 Act in the light of Remmington v. Larchin. All the members of the Court of Appeal in that case arrived at their decision with doubt and difficulty. I do not think it can be said to be a " clear " judicial interpretation. Moreover, Atkin L.J. placed reliance on the fact that the 1920 Act did not preclude the requiring or receipt of a premium on assign- ment of a tenancy: whereas the 1949 Act itself, as I have pointed out, closed that loophole in the controls and put the general parliamentary objective

beyond question. It would be an absurd fiction to hold that Parliament was endorsing Remmington v, Larchin in derogation of that general objective and was giving specific statutory sanction to another loophole in the controls. This very example indicates that at best the profferred canon of construction would need to be closely scrutinised in its application.

The Barras doctrine is, however, so frequently invoked that I venture to detain your Lordships for a moment or two in examining its validity and scope. For this it is necessary to return to the two general considerations I mentioned at the outset of this speech.

It is a fact that a parliamentary draftsman (like any draftsman) does acquaint himself thoroughly with the existing law (statutory and judge-made) before starting to draft. Any draftsman of a rent restriction Act after 1921 must be presumed (nor is it an idle presumption) to have had Remmington v. Larchin in mind. When, then, he used language which had been interpreted in Remmington v. Larchin he presumptively used it in the sense in which it had there been interpreted. If therefore the object of statutory interpreta- tion were to ascertain what Parliament meant to say, the Barras doctrine would indeed be potent and primary. But the object of statutory interpre- tation is rather to ascertain the meaning of what parliament has said. On this approach the previous judicial interpretation is merely one of the facts within the knowledge of the draftsman in the light of which he will draft. It carries to his knowledge as much authority as it bears under the general doctrine of precedent, but no more. If the decision is of long standing it is unlikely to be disturbed unless it is clearly erroneous (and sometimes not even then). If it has been frequently followed it gains added authority. Still more if it has been endorsed by the Court of Appeal. And again if it has been the basis of commercial or proprietary transactions or of criminal responsibility. And so on. A decision of your Lordships' House on statutory construction is most unlikely to be overruled under the 1966 declaration (Ex parte Jones [1972]1 A.C. 944). In short, the previous decision carries its own authority. So long as courts are conscientious in applying the doctrine of precedent, the draftsman will rarely be led astray. If Parliament wishes to endorse the previous interpretation it can do so in terms (cf., just by way of one striking example, the Law of Property Act 1925, section 40(2)). The sovereignty of parliament is fundamental constitutional law ; but courts of law have their own constitutional duties, important amongst which is to declare the meaning of a statutory enactment. To pre-empt a court of construction from performing independently its own constitutional duty of examining the validity of a previous interpretation, the intention of parlia- ment to endorse the previous judicial decision would have to be expressed or clearly implied. Mere repetition of language which has been the subject of previous judicial interpretation is entirely neutral in this respect—or at most implies merely the truism that the language has been the subject of judicial interpretation for whatever (and it may be much or little) that is worth.

Was Zimmerman v. Crossman binding on the Court of Appeal?

Applying the Burros doctrine, the Court of Appeal in Zimmerman v. Grossman held itself bound to follow Remmington v. Larchin. But neither case is binding on your Lordships, and, with all the temerity incumbent in venturing to differ from the great judges who constituted the courts in those cases. I am judicially bound to say, for the reasons I have already indicated, that I think both cases were wrongly decided.

However, in the instant case counsel for the appellants understandably conceived that the Court of Appeal was bound by a previous Court of Appeal decision on the same point, subject to the rare exceptions indicated in Young v. Bristol Aeroplane Co.

[1944] KB 718

[1946] AC 163

. So counsel for the appellants sought to bring the case within one of those rare exceptions. Feeling unable to argue that Zimmerman v. Grossman was wrongly decided or was distinguishable, he argued that it was decided per incurlam.

The majority in the Court of Appeal (Lawton and Scarman L.JJ.) dealt with the point scrupulously. They held that Zimmerman v. Grossman did not come within the per incuriam doctrine. The point does not arise in your Lordships' House; so I content myself with merely expressing, with respect, my entire agreement with Lawton and Scarman L.JJ.

The learned Master of the Rolls did not deal with the point at all. But he must have concluded that Zimmerman v. Grossman was neither distin- guishable nor decided per incuriam ; for he based his dissent on the ground that Zimmerman v. Grossman " was wrongly decided. So much so that I " do not think it is binding on us ".

The relevant law on this point has been laid down beyond all question by two of the most eminent judges who have ever held the great office of Master of the Rolls—Lord Greene (in Young v. Bristol Aeroplane Co., Ltd.) and Lord Denning (in Miliangos v. George Frank (Textiles) Ltd. [1975] 1 Q.B. 487). I content myself with citing the latter (pp. 499, 503):

" We have further considered this case and we consider that we are " bound by the earlier decision [of the Court of Appeal in Schorsch " Meier G.m.b.H. v. Hennin [19751 Q.B. 416] ...

" The law on this subject has been authoritatively stated in Young v. " Bristol Aeroplane Co. Ltd. [1944] KB 718 and Morelle Ltd. v. Wake- " ling [1955] 2 QB 379 . This court is bound to follow its own decisions "—including majority decisions—except in closely denned circum- " stances ... I have myself often said that this court is not absolutely " bound by its own decisions and may depart from them just as the " House of Lords from theirs: but my colleagues have not gone so far, " so that I am in duty bound to defer to their view."

The learned Master of the Rolls explained the relevant defined circum- stances in which the Court of Appeal could depart from a previous decision of that court. They did not, of course, extend to a case where the court con- ceived that the result of an appeal to your Lordships' House was "a foregone " conclusion ".

It is sufficient to say that the law, as stated by Lord Greene M.R. (giving the judgment of the full Court of Appeal, subsequently endorsed by the House of Lords) in Young v. Bristol Aeroplane Co. Ltd. and by Lord Denning M.R. in Miliangos v. George Frank (Textiles) Ltd. is part of the law of the land. But there are powerful practical reasons why the law should be as laid down by Lord Greene in Young's case and by Lord Denning in Miliangos. The reasons have been cogently stated by Scarman L.J. in Tiverton Estates Ltd. v. Wearwell

[1975] Ch. 146

, 172 and again in the instant case. The Court of Appeal occupies a crucial position in one judicial system. Most appeals stop there. It handles an immense volume of business. It sits in a number of divisions. Unless it follows its own decisions, as the law directs, litigation will be a gamble on which division of the court is to handle the appeal and what law will be declared there. Most actions which are threatened or begun are settled by agreement—to the great advantage of the public generally and the litigants in particular. They are settled on the basis of a prognostication of the applicable law. If the law becomes unpredictable, changing from court to court and from case to case, it will be failing the public. I therefore respect- fully agree with the majority of the Court of Appeal that, having held that Zimmerman was indistinguishable and was not decided per incuriam. they were bound to follow that decision.

Lord Edmund-Davies

My Lords,

The question arising for decision in this appeal is whether it is illegal under the Rent Act 1968 for a lessee occupying premises under a protected tenancy

to require or receive a premium from a person desiring to replace him as occupier as a condition of surrendering his lease so that his landlord may grant a fresh lease to that other person.

As others of your Lordships have dealt in detail with the facts of the case and the relevant statutory provisions, I seek to state with much greater brevity than would otherwise have been possible my reasons for forming the conclu- sions at which I have arrived. The answer to the question posed by the ap- peal depends upon the construction of section 85 of the Rent Act 1968 (" Prohibition of premiums and loans on grant of protected tenancies "). This provides that—

" (1) Any person who, as a condition of the grant, renewal or continu- " ance of a protected tenancy, requires, in addition to the rent, the pay- " ment of any premium . . . shall be guilty of an offence under this " section.

" (2) Any person who, in connection with the grant, renewal or " continuance of a protected tenancy, receives any premium in addition " to the rent shall be guilty of an offence under this section.

" (3) A person guilty of an offence under this section shall be liable " to a fine not exceeding £100 ".

Section 88 provides (inter alia) that

" Where the purchase of any furniture has been required as a " condition of the grant, renewal, continuace or assignment—

" (a) of a protected tenancy, . . . then, if the price exceeds the " reasonable price of the furniture, the excess shall be treated . . . " as if it were a premium required to be paid as a condition

" of the grant, renewal, continuance or assignment of the pro-

" tected tenancy. . . ."

Section 90 provides for the recovery of any premium or as the case may be, so much of it as could not lawfully be required or received.

Before considering the construction of section 85, it is convenient to deal with the alternative way in which the appellants have based their claim to recover that part of the £4,000 paid by them to the respondent which was admittedly in excess of the value of the fixtures and fittings in the Little Venice flat. It was submitted that in the circumstances the respondent was a person who, as a condition of or in connection with, the assignment of her protected tenancy had required the payment of a premium and that this exaction was prohibited by section 86 of the Act. Counsel for the appellants urged that the substance of the tripartite transaction involving them and the respondents and the Church Commissioners as landlords was that it " remained an assignment from beginning to end, though the machinery by " which it was effected ultimately took the form of a surrender and fresh " grant." In my judgment this will not do and this for the reasons cogently advanced by Mr. Barnes on the respondent's behalf. As he submitted, the relevant document was not in form an assignment and, were this House to go behind it and uphold the appellants' submission that it was in substance an assignment, it could do so only by holding that the ostensible agreement was merely a label which the parties gave to the transaction when in truth they were doing something quite different; see I.R.C. v. Duke of Westminster [19361 A.C. 1. Even assuming an initial agreement to assign, it was overtaken by subsequent events which rendered it impossible to regard the transaction as an assignment simply because thereby the desire of the parties that the appellants should succeed the respondent as contractual tenants of the Little Venice flat was accomplished.

Section 13 of the 1968 Act, also relied upon by the appellants, can be disposed of with even greater brevity. It makes it an offence in certain circumstances for payment to be demanded as a condition of giving up possession of a dwelling-house, but as it relates only to the case of statutory tenants and as in the present case the parties throughout remained contractual tenants, section 13 can have no application to the circumstances in which

the payment of £4,000 was here made. Section 15 of the Act, to which reference was also made, is likewise restricted to changes of statutory tenancies and therefore again has no application.

This appeal therefore falls to be decided solely on the construction of section 85 of the Act. As the main controversy which arose during the hearing relates to the extent to which reference may be had to the construction placed upon earlier Rent Acts, it is desirable to see what happened to the previous legislation which, so it has been submitted (particularly for the respondent), has a bearing on the outcome of this appeal. The Increase of Rent and Mortgage Interest (War Restrictions) Act 1915 was repealed in toto by the Increase of Rent and Mortgage Interest (Restrictions) Act 1920, and re-enacted in a consolidated and amended form. Section 8(1) of the 1920 Act, which (so it was urged) is of particular interest, was repealed by the Landlord and Tenant (Rent Control) Act 1949, and replaced by section 2(1) thereof, and what still remained of the 1920 Act was wholly repealed by the Rent Act 1968. Section 2(1) of the 1949 Act was amended by section 37 of the Rent Act 1965, and what still remained of the 1949 Act was also repealed by the 1968 Act. Finally, section 37 of the 1965 Act was repealed by the same Act.

Although it effected amendments to sections 32 and 34 of the Rent Act 1965, the 1968 Act was, and was described as, a consolidating enactment. As such, there is a presumption that it was not intended to alter the law and accordingly, if the need arises, regard may be had to decisions on the construction of the earlier enactments which are consolidated, even if the words used are not identical, though this presumption must yield to plain words to the contrary; see Halsbury's Laws of England, 3rd ed. Vol. 36, p. 406 and the cases there cited. But where earlier legislation has been substantially altered by amending legislation before consolidation, decisions on the earlier provision cannot affect the construction of the later ; ibid, p. 407. It is legitimate to refer to an earlier statute in pari materia, even if it has expired or has been repealed, but " only where there is an ambiguity " (per Lord Russell of Killowen, C.J., Reg. v. Titterton { 1895] 2 QB 61 , at 66). As my noble and learned friend, Lord Simon of Glaisdale, said in Maunsell v. Olins [1974] 3 W.L.R. 835, at 847D)—

" It has been generally accepted in the past that there is a presump- " tion that Parliament does not intend by a consolidation Act to alter " the pre-existing law: see Maxwell pp. 20-25 and Beswick v. Beswick "

[1968] AC 58

, 73 ... But . . . such a presumption has no scope " for operation where the actual words of the consolidation Act are " not, as a matter of legal language, capable of bearing more than one " meaning. The docked tail must not be allowed to wag the dog ".

I therefore begin by asking: Is section 85 of the Rent Act 1968, ambiguous in the sense that it is a matter of uncertainty whether the tripartite arrange- ment with which your Lordships are presently concerned falls within its wording? Since it has been argued for the respondent that this House should tend towards a narrow construction of the section on the ground that it attaches a penalty to any contravention, it is well to have in mind the observations of Lord Reid in D.P.P. v. Ottewell [1970] A.C. 642, who said (at p. 649): —

" The Court of Appeal (Criminal Division) refer to the well-established " principle that in doubtful cases a penal provision ought to be given " that interpretation which is least unfavourable to the accused. I " would never seek to diminish in any way the importance of that " principle within its proper sphere. But it only applies where after " full inquiry and consideration one is left in real doubt. It is not " enough that the provision is ambiguous in the sense that it is capable " of having two meanings. The imprecision of the English language " (and, so far as I am aware, of any other language) is such that it is " extremely difficult to draft any provision which is not ambiguous In " that sense. This section [section 37(2) of the Criminal Justice Act " 1967] is clearly ambiguous in that sense: the Court of Appeal

" Criminal Division) attach one meaning to it, and your Lordships are " attaching a different meaning to it. But if, after full consideration, " your Lordships are satisfied, as I am, that the latter is the meaning " which Parliament must have intended the words to convey, then this " principle does not prevent us from giving effect to our conclusions "

That the language of section 85 is in that sense ambiguous is demonstrated by, for example, the totally different conclusions as to its applicability to the instant case arrived at by my noble and learned friends, Viscount Dilhorne and Lord Russell of Killowen, the former holding it " clear " that *he Little Venice flat arrangement is caught by the section, the latter evincing equal firmness in concluding that it is not. It is against—and despite—the background of that conflict that I must ask myself whether there is room for doubt whether the wording of section 85 covers the facts of that case.

The ultimate conclusion at which I have arrived is that no room for doubt exists that section 85 does apply. That conclusion is not incompatible with my having veered a good deal both during counsel's able submissions and in reflecting upon them since the hearing of the appeal was concluded. Having reflected, I have had to decide, however diffidently, whether to me there is room for doubt about the applicability of section 85.

It is helpful to consider its setting. It is one of the fasciculus of sections (85 to 92) constituting Part VII of the Act, headed simply " Premiums, etc. ", and all of them prohibiting in one way or another the payment of capital sums on a change in occupation under tenancies which, being either protected or statutory, come within the ambit of the Act. It is, as I think, difficult to accept that Parliament did not intend to outlaw payments of the kind made under this tripartite agreement. And if it be right that, as one commentator on the effect of the Court of Appeal decision in the instant case has put it in [1976] 126 N.L.J. 321, "as a matter of practice, premiums " are back in the housing market, arranged in this fashion and at their usual " exhorbitant level", the commentator's conclusion seems right that, " the " purpose of Parliament in prohibiting what used to be called key money " has been, at least partially, defeated ". Nevertheless, the question is, has Parliament used in section 85 the language proper to achieve its purpose?

Let me first consider subsection (1). The basic submission for the respondent is that this operates only if the " person " requiring the payment of a premium is in a position to make such payment a condition of the grant of a protected tenancy ; and it is said that the only person who can impose such a condition is the landlord, for he alone can grant the new tenancy. Again, despite the width of the opening words of the subsection (" Any " person "), such " person " must be he who is to become entitled to the rent under the contemplated tenancy, since, in order to be a " premium ", the payment required must be " in addition to the rent " ; therefore, since the only person entitled to the rent is the landlord, section 85(1) makes it a penal offence for him (and for no-one else) to make such a requirement. With respect, I do not think this reasoning is right. Take the present case: the respondent, though merely a tenant, was certainly in a position to make the grant of a protected tenancy of the Little Venice flat to the appellants conditional upon the payment of a capital sum to her, and the events amply demonstrate that she would never have vacated the premises and the Church Commissioners could not and would not have been in a position to grant the new tenancy to the appellants unless and until they paid her the £4,000 she required of them.

But to revert to the words, " in addition to the rent ". Do they not point to the landlord as the only person contemplated as being in a position to " require "? The answer to the question, I think, is to be found in the description of " premium " in section 92(1) of the Act as a word which " includes any fine or other like sum and any other pecuniary consideration " in addition to rent". It is beyond doubt that others besides landlords may in certain situations ' require " payment of a " premium ". Thus, section 86, already referred to. prohibits the imposition of the condition of

payment of a " premium " on the assignment of a protected tenancy, and it is common ground that it would operate here had the transaction been in fact in law an assignment, and would therefore render the respondent liable to repay to the appellant that part of the £4,000 paid which constituted a " premium ". The repeating of the words " in addition to the rent" in section 85(1) which is already involved in its use of the word "premium ", cannot, |in my judgment, mean that the landlord is the only "person;" intended to be caught by the subsection. I respectfully adopt the observation of my noble and learned friend, Lord Wilberforce, that the words are descriptive of the character of the payment, and not of the recipient. Mr. Blum rightly submitted, and Mr. Barnes conceded, that they mean no more than a sum which is " over and above the rent ".

If that conclusion is right, the excess part of the £4,000 paid by the appellants is recoverable by them and it is not strictly necessary to consider whether the respondent also comes within subsection (2) of section 85. It is a separate provision and its construction is not interlocked with that attributed to subsection (1); that is to say, although a landlord may well be caught by both subsections, a person may be within subsection (2) who is outside subsection (1). In my judgment, this subsection is, if anything, even clearer than subsection (1) and there is no room for doubt that the respondent did receive a " premium " of £4,000 " in connection with the grant ... of a pro- " tected tenancy " of the Little Venice flat to the appellants. The wording of the subsection could scarcely be more widely or clearly expressed, and it fits the facts of this case like a well-made glove. But my noble and learned friend, Lord Russell of Killowen, recognising that fact, takes the view that the wording cannot be considered in vacuo and must be construed by harking back to the earlier legislation and that, having done so, it should be held to relate simply to the receipt by the landlord of a proffered premium which he may not have " required ", but which has been presented to him invito by a possibly eager, would-be tenant.

If the " harking back" approach were permissible as a guide to construction, it may well be that one should arrive at the same conclusion as my noble and learned friend Lord Russell of Killowen in regard to section 85(1), though I am far from being sure that this would also apply to section 85(2). But, however correct it is to describe as " patchwork " the legislative history before 1968, it has culminated in a consolidating statute which must initially be regarded as standing on its own feet. On the decided cases, only if its wording is ambiguous and its ambit obscure is one permitted to consider its legislative ancestry. One must therefore begin by considering subsection (2) of section 85 in vacuo. Doing just that, my noble and learned friend Lord Russell of Killowen and I arrive at the same firm conclusion, namely, that the respondent did receive the excessive price for the furniture " in connection with " the grant by the landlords to the appellants of a protected tenancy of the Little Venice flat. That conclusion being inescapable on the wording of section 85(2) itself, the task of construing the whole section is at an end as far as this appeal is concerned, and I do not regard it as open to go on to consider what earlier statutory provisions it replaced (such as section 37 of the Rent Act 1965) and what preceded that earlier provision, and how the wording of sections apparently aiming at achieving similar purposes differ from each other, and the significance of any difference that may emerge in the conducting of such an exercise.

Such being the conclusion to which I have come in relation to the meaning of section 85, and particularly subsection (2) thereof, it appears to me superogatory to consider whether or not earlier cases were correctly decided upon the different wording of repealed Rent Acts. I therefore restrict myself to saying that in my judgment Remmington v. Larchin [1921] 3 K.B. 404 correctly decided that in section 8(1) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 " A person " meant only a landlord. Zimmerman v. Grossman [1972] 1 Q.B. 167, on the other hand, turned on the substantially different wording introduced by section 37 of the Rent Act 1965 and Schedule 5 thereof, following upon the 1949 Act, which had signi- ficantly altered the 1920 Act. That different wording should, in my judgment have led to the conclusion that Remmington v. Larchin was not binding on

the Court of Appeal, and that they were free to hold, as I think they should have done, that the provision of 1965 was not directed solely against landlords. In any event, holding as I do that section 85(2) beyond doubt applies to the facts of the present case, the position is that, as Lord Denning M.R. said in the present case (at p. 651H) " When there is a conflict " between a plain statute and a previous decision, the statute must prevail. " That appears from the decision of the House of Lords in Campbell College, " Belfast (Governors) v. Northern Ireland Valuation Commissioner [19641] " 1 W.L.R. 912".

I would therefore allow the appeal, and I concur in the order proposed by my noble and learned friend on the Woolsack.

Lord Russell of Killowen

My Lords,

The respondent occupied as contractual tenant a flat of which the characteristics made the tenancy a protected tenancy. She wanted to leave, but wanted to sell her furniture and fittings at a price which only a succeed- ing tenant occupier would be prepared to pay. The original idea was that she should assign her contractual tenancy to the appellants and sell the furniture to them. This did not come about, because the landlord insisted (as the tenancy in that event provided) on a surrender of the tenancy, being prepared to grant a new tenancy to a person considered to be suitable as a tenant, on a tenancy which would of course also be a protected tenancy. In the result there was a simultaneous surrender of the existing tenancy by the respondent, grant of a new tenancy by the landlord to the appellants, and sale by the respondent to the appellants of the furniture at a price assumed for the purposes of this appeal to be very greatly in excess of its true worth. It is plain that the appellants would not have been prepared to pay that or indeed any price for the furniture except upon the footing that they obtained a new tenancy from the landlord, for which surrender of the old was a pre-requisite.

The main question in this appeal is whether in exacting from the appellants the excess over the true value of the furniture the respondent was guilty of an offence under section 85(1) or 85(2) of the 1968 consolidation Act, with the consequence that the appellants are by section 90 entitled to recover that excess in this action.

Section 85 of the 1968 Act is in the following terms: -

" (1) Any person who, as a condition of the grant, renewal or con- " tinuance of a protected tenancy, requires, in addition to the rent, the " payment of any premium or the making of any loan (whether secured " or unsecured) shall be guilty of an offence under this section.

" (2) Any person who, in connection with the grant, renewal or " continuance of a protected tenancy, receives any premium in addition " to the rent shall be guilty of an offence under this section.

" (3) A person guilty of an offence under this section shall be liable " to a fine not exceeding £100.

" (4) The court by which a person is convicted of an offence under " this section relating to requiring or receiving any premium may order " the amount of the premium to be repaid to the person by whom it " was paid."

Section 86(1) of 1968 provides that—

". . . any person who, as a condition of the assignment of a protected " tenancy, requires the payment of any premium or the making of any " loan . . . shall be guilty of an offence . . .".

Section 86(2) of 1968 provides that—

"... any person who, in connection with the assignment of a protected " tenancy, receives any premium shall be guilty of an offence . . .".

Other provisions of section 86 I shall note in the earlier enactments from which they derive.

Section 90(1) of the 1968 Act is in the following terms: —

" Where under any agreement (whether made before or after the " commencement of this Act) any premium is paid after the commence- " ment of this Act and the whole or any part of that premium could " not lawfully be required or received under the preceding provisions " of this Part of this Act, the amount of the premium or, as the case may " be, so much of it as could not lawfully be required or received, shall " be recoverable by the person by whom it was paid."

Under section 92(1) of 1968 it is provided that "unless the context other- " wise requires ' premium ' includes any fine or other like sum and any " other pecuniary consideration in addition to rent ".

Section 88 of 1968 is in the followng terms : —

" Where the purchase of any furniture has been required as a condi- " tion of the grant, renewal, continuance or assignment— (a) of a pro- " tected tenancy . . . then, if the price exceeds the reasonable price of " the furniture, the excess shall be treated ... as if it were a premium " required to be paid as a condition of the grant, renewal, continuance " or assignment of the protected tenancy . . .".

As indicated the 1968 Act was a pure consolidation Act, and there is no justification for supposing that it altered the pre-existing law: this was accepted, and in particular that the introduction of the words " any person " in place of " a person " in the relevant earlier enactments could not be regraded as of significance. Not only for this reason is it desirable to examine the antecedent legislation. Where as here you have a system of legislative control of ordinary economic activities, built up over the years in a patchwork fashion designed from time to time to cover certain aspects of those activities not previously covered, it is in my opinion a useful exercise to examine the course of additions to the patchwork in order to detect whether the language used by Parliament at the end of the day covers what may be otherwise thought a thinness in the instant case: and this is particularly so (pace Lord Denning M.R.) when each patch introduces a criminal offence.

The only other general observation I would make is this. It is correct to say that over the years Parliament has shown by its enactments dis- approval of profit made in various ways from the social factor of shortage of housing accommodation: but that does not entitle a court to add to the list of those various ways on the supposition of a general intention against all such ways, ignoring the possibility that Parliament may have overlooked a particular way, or thought it of insufficient importance for legislation: it is for Parliament to add the particular piece of patchwork, not for the court.

The story (so to speak) starts with the Act of 1915 (Increase of Rent and Mortgage Interest (War Restrictions) Act 1915). Section 1(2) deals with two matters. " A person shall not in consideration of the grant, renewal, or " continuance of a tenancy of a [relevant] dwellinghouse require the pay- " ment of any fine, premium, or other like sum in addition to the rent . . .": thus far this statutory forbidding conveys to my mind that the person referred to is a landlord or potential landlord, for it is only such a person who is capable of granting, renewing or continuing a tenancy and of requiring something in consideration of any of those things being done. The subsection then proceeds to give some sanction (though not a criminal one) to support the ban in the first part:

"and where any such payment " has been made ... the amount shall be recoverable by the tenant by " whom it was made from the landlord, and may without prejudice to any " rent payable by him to the landlord . . ."

. This, of course, wholly confirms the fact that Parliament by the language of the first part referred and intended to refer only to a landlord or potential landlord as the " person " requiring ".

There next followed the 1920 Act (Increase of Rent and Mortgage (Restrictions) Act 1920). Section 8(1) provided:

" A person shall not, as a condition of the grant, renewal, or con- " tinuance of a tenancy ... of any [relevant] dwellinghouse . . . " require the payment of any fine, premium, or other like sum, or the " giving of any pecuniary consideration, in addition to the rent . . .".

Pausing there I find, apart from the changes underlined by me, exactly the language plainly used in the 1915 section and referring only to a landlord or potential landlord. The only underlined change that can be of relevant significance is the change to " as a condition of ", which if anything points more strongly in the direction of the only person who can impose a condition on a grant. The other change is an example of patchwork, extending the type of exaction that may not be required.

Section 8(1) then provides for recoverability—

" and, where any such payment or consideration has been made or " given in respect of any " [relevant] dwellinghouse ... the amount " or value thereof shall be recoverable by the person by whom it was " made or given . . .".

This appears to me to be another piece of patchwork: it extends the ability to recover to a case where not the tenant but perhaps his relation or friend has made the payment or given the consideration. It also extends the ability of the payer or giver to recover from a person not the landlord or potential landlord but someone to whom the landlord has required the payment or consideration to be made or given. I do not find in this extension of recoverability any ground for attributing to Parliament an intention to extend the ban on " requiring " beyond the scope of the same language in the 1915 Act. More particularly do I incline against an extension of the ban inasmuch as section 8(2) adds a penal sanction:-

" A person requiring any payment or the giving of any consideration in " contravention of this section shall be liable on summary conviction to " a fine not exceeding £100 . .

Before leaving the 1920 Act I notice section 15(2): that enactment is con- fined to a statutory (not contractual) tenancy: it forbids under penal sanction a statutory tenant in possession to ask or receive payment of any sum or the giving of any other consideration by any person other than the landlord as a condition of giving up possession: this is another piece of patchwork limited to its particular circumstances.

It is at this stage that the decision of the Court of Appeal in Remington v. Larchin [1921] 3 K.B. 404 fits with the history. That was a case with a three cornered aspect: a contractual tenant agreed with the plaintiff that if the latter paid him a sum (premium) he would surrender his tenancy and that the land- lord would grant the latter a tenancy. The landlord knew nothing of the requirement of payment. The new tenant later sought to recover the sum paid from the old tenant under section 8(1) of the 1920 Act. It was held, and in my opinion rightly held, that the section in referring to " a person " in the first part referred to a landlord or potential landlord. Bankes L.J. thought that on this point the relevant language was unclear: he relied on the fact that this was a provision leading to a penal sanction: he considered the more natural construction was to read it as applying to a person who required as a condi- tion of his granting etc. etc. a tenancy: he also found assistance from the words " in addition to the rent " as more appropriate when referring to a per- son in a position to control the rent. Scrutton L.J. found the matter one of considerable doubt and was influenced by the penal sanction: he also con- sidered that the language pointed markedly to the condition being imposed by the person granting, etc.. etc., the tenancy—the landlord: he also derived assistance from " in addition to the rent ". Atkin L.J. also found the point difficult: he relied primarily on the language of section 8(1) being relevantly the same as that used in the 1915 Act where plainly reference to a person was

to a landlord (or I would add a potential landlord): and his conclusive con- sideration was that there was a penal sanction.

As I have indicated I consider that case to have been rightly decided on the grounds(a) of substantial repetition of the relevant language of the 1915 Act under which the limitations on " a person " were undoubted

(b) on the fact that the more natural construction is to take the person to be one whose posi- tion as landlord or potential landlord enables him to impose conditions of the grant, etc., etc., of a tenancy and

(c) that a provision with a penal sanction, if there be uncertainty of intent in the language used, should be construed narrowly in scope rather than widely. I do not myself attach weight to the words " in addition to the rent", which was to some extent done by Bankes and Crutton L.JJ.

It follows that, in my opinion, had the instant case fallen to be decided under the 1920 Act, I would have decided against the appellants.

I move to the Act of 1923 (Rent and Mortgage Interest Restrictions Act 1923). Section 9(1) deals with a premium required under the guise of a de- mand of an excessive price for furniture.

" Where the purchase of any furniture or other articles is required as a " condition of the grant, renewal, or continuance of a [relevant] tenancy "... if the price exceeds the reasonable price of the articles, the excess " shall be treated as if it were a fine or premium required to be paid as a " condition of the grant, renewal or continuance, and the provisions of " section 8 of the [1920] Act, including penal provisions, shall apply " accordingly."

Here again we have reiteration of " required as a condition of the grant etc." (though not directly of " in addition to the rent") and if as I think, and as the Court of Appeal had held in the case cited, the person requiring in section 8 of 1920 is limited to a landlord or potential landlord, so also would be the application of this provision as to furniture.

Section 9(2) of 1923 applies this concept of excess price for furniture to the case of a statutory tenant in possession for the purposes of section 15(2) of the 1920 Act (supra).

Here again is patchwork: section 9 bringing within the ambit of the two already forbidden " premiums" a method of exacting a concealed premium. Parliament does not direct its fire against the " three cornered " situation revealed by Remmington v. Larchin (supra), nor against a premium demanded by a contractural tenant from an assignee of the tenancy which had been held by Shearman J. in Mason, Herring & Brooks v. Harris [1921] 1 K.B. 653 not to be within section 8 of the 1920 Act.

The Furnished Houses (Rent Control) Act 1946, the subject of which the title implies, namely contracts for furnished lettings, makes it unlawful by section 4, when the rent payable for any such premises has been entered in the register under the Act, " to require or receive

" (a) on account of rent for those premises . . . payment of any sum " in excess of the rent so entered ; or

" (b) as a condition of the grant, renewal or continuance of [such a] " contract . . . payment of any fine, premium or other like sum, or " any consideration, in addition to the rent."

The section makes any payment or consideration made or received in contravention recoverable by the person who made or gave it. I observe that in this new field Parliament has added "or receive ": and also that in this new field Parliament adheres to the traditional phrase " as a condition " of the grant, renewal or continuance ". Here again I see no justification for extending the language beyond the equivalent of the landlord or potential landlord. I should add that section 9 makes requiring or receiving in contra- vention of section 4 an offence involving a maximum of a fine of £100 and six months imprisonment if proceedings are instituted by the local authority.

I turn next to the 1949 Act (Landlord and Tenant (Rent Control) Act 1949). By section 2(1) the "forbidding" part of section 8(1) of the 1920 Act was replaced as follows, standing by itself—

" A person shall not, as a condition of the grant, renewal or continu- " ance of a [relevant] tenancy, require the payment of any premium in " addition to the rent".

Here we have the familiar phrase from the earlier enactments which as indicated I take as a reference to landlord or potential landlord. The only material change in drafting is(a) that " premium " is interpreted not in the body of the subsection but by section 18(2) which provides that " the expres- " sion ' premium' includes any fine or other like sum and any other " pecuniary consideration in addition to rent" and

(b) that the " recovery " provision is found in a separate subsection (5). I have already said that I do not find (or need) the reference to " in addition to the rent" as a pointer to a person being the landlord or potential landlord, for I think it only an indication of the quantity of the sum required as being additional to the rent. A particular argument was mounted for the respondent that those words in subscection (1) required some special virtue to be attached to them, since otherwise having regard to the interpretation section they are super- fluous: and observe that when subsection (2) deals with assignment by a contractural tenant of his contractual tenancy those words are not found in that subsection. While I appreciate the point taken, I would not, if I found it necessary to rely upon it for a restricted reading of subsection (1), find it a sufficiently reliable indication.

Section 2(2) of the 1949 Act then introduces a new patch into the legislative fabric, to cover the case (see Mason, Herring & Brooks v. Harris (supra)) of a contractural tenant of a relevant dwellinghouse being able to charge a premium on assignment of the tenancy: it will be recalled that there were already restrictions on a statutory tenant exacting payments under section 15(2) of the 1920 Act (supra) to which section 9(2) of the 1923 Act (supra) had applied the concept of an excess price for furniture. Section 2(2) of the 1949 Act provided—

"... a person shall not, as a condition of the assignment of a [relevant] " tenancy . . . require the payment of any premium ".

(a subletting by the tenant was already covered by section 2(1) of the 1949 Act). Just as in my opinion the reference to requiring as a condition the grunt, etc., etc., of a tenancy points to the person referred to as being the landlord or potential landlord, so it appears to me the language of subsection (2) points to the person there referred to as being the assignor tenant. It was suggested that the words would be wide enough to embrace a landlord under a lease requiring a sum as condition of consenting to an assignment: but this situation is in general adequately covered by the general law of landlord and tenant, and in any event a condition of an assignment is not the same thing as a condition of consenting to an assignment, the operation of such a consent being simply to prevent the assignment being a ground for forfeiture.

The 1949 Act reintroduced by section 3 the notional premium of an excessive price for furniture but adding the occasion of the assignment of a relevant tenancy. Section 12 of 1949 so far as now relevant applied the previous provisions against premiums in association with furnished lettings (section 4 of the 1946 Act supra) with the addition of a reference to the occasion of assignment of the relevant contract of furnished letting. Section 2(5) of the 1949 Act provided for recovery of premiums which could not lawfully be required under the section: and section 2(6) provided a penal sanction for a person requiring an unlawful premium.

There is one other matter on section 2 of the 1949 Act relevant to the question whether it would have embraced the instant case. Subsection (4) excluded certain matters from the ban on requiring premiums on an assignment by the assignor from the assignee: paragraph (b) of that subsection (see now section 86(3) of the 1968 Act) excluded the amount of expenditure reasonably incurred by the assignor on structural alterations or fixtures not

removable as against the landlord. The point made here for the respondent is that if the 1949 Act was aimed at the " three cornered " situation as in the instant case, Parliament could have been expected to afford a similar exception in that situation. This I think lends some support to my view.

Thus far we find Parliament recognising another thinness in the fabric by patching over the case of the assignment of a relevant contractual tenancy: but I can find in the language no indication that Parliament intended or considered it necessary to put a patch over that which has been labelled the " three cornered" situation exemplified in Remmington v. Larchin (supra), and which in my opinion was not previously covered: I say " considered it necessary" because, as counsel for the appellant said in opening, it is an exceptional case for a landlord of relevant premises to accept a surrender of a protected tenancy with a view to immediately re-letting on another protected tenancy: and the insertion of a condition that if the lessee wishes to assign he must first offer to surrender his lease is quite a modern feature in landlord and tenant law.

The Act of 1957 (The Rent Act 1957) may be noticed in passing as by section 14 bringing the requiring of loans to be made within the mischief aimed at by section 2 of the 1949 Act: another piece of patchwork.

The Act of 1959 (Landlord and Tenant (Furniture and Fittings) Act 1959) by section I made it an offence for a person in connection with the proposed grant, renewal, continuance or assignment of a relevant tenancy on terms which require the purchase of furniture to offer the furniture at an unreasonably high price. Maybe when the respondent originally offered the furniture in connection with a proposed assignment of the contractual tenancy she committed an offence under the 1968 Act equivalent (section 89) of this section: but that does not assist in the solution of the instant case.

No more light is shed on the present problem unless it be by the 1965 Act (Rent Act 1965) which is the last to which in this necessarily long, and I fear almost unbearably tedious, speech I need refer, the 1968 Act being as stated mere consolidation. The 1965 Act introduced a reference to receipt of a premium as well as to the requiring of a premium. (I have already noted that the 1946 Act in connection with furnished lettings had used the phrase "require or receive"). The 1965 Act substituted the following for section 2(1) of the 1949 Act: —

" A person shall not—

" (a) as a condition of the grants renewal or continuance of a [relevant] tenancy . . . require the payment of any premium ; or

" (b) in connection with such a grant, renewal or continuance, " receive any premium ; in addition to the rent."

To section 2(2) of the 1949 Act (assignments) was added the words " or in " connection with such an assignment receive any premium ". In section 2(4) of the 1949 Act (permitted exceptions on assignments) was added per- mission not only to require but also to receive. Section 2(5) of the 1949 Act (recoverability) and section 2(6) (penal sanctions) had the consequential addition of " or receiving " and " or received ".

The remaining question here is therefore in my opinion whether in the instant case the respondent can be said to have received the excessive price for the furniture in connection with the grant of the tenancy by the landlord to the appellants. This seems to me to be the crucial point in this case. If the question were asked in vacuo whether the respondent received the excessive price for the furniture in connection with the grant of that tenancy I would say that the answer was that she did. A connection is clear on the facts. But the question cannot be posed in vacuo; for the replacement of section 2(1) is a replacement of a section which (in my view) was limited to considera- tion of a person who is landlord or potential landlord, just as section 2(2) refers to a person who is assignor. Prima facie the receipt refers to receipt in the one case by the one person and in the other case by the other person, and there is ample scope for the addition of the reference to receipt as another patch to cover questions whether the recipient had " required "

(which had arisen—see Megarry on the Rent Acts 10th Edition Volume I pp. 424. 425). the simplest of which would be whether the grantee of the tenancy had perhaps prudently proffered the premium. See the case of Woods v. Wise [1955] 2 Q.B. 29 per Romer L.J. at p. 57. So far as the phrase " in connection with" is concerned this is amply explicable: for example the proffered but not required premium could not be brought within the ban by the phrase " received as a condition of the grant", for ex hypothesi no condition would have been imposed.

Accordingly I find here another patchwork, which should not be taken as extending a penal sanction more widely than is fairly required by the language used, in the general context of this legislative field.

It follows from what I have said that in my opinion the decision in Zimmerman v. Grossman [1972] 1 Q.B. 167 was correct.

There was an alternative argument to the effect that what happened in this case was tantamount to an assignment, and that accordingly the premium, if not within section 85 of the 1968 Act, was within section 86. Your Lordships did not require argument for the respondent on this con- tention, and I say no more of it.

A further argument was based upon section 13 of the 1968 Act (deriving from section 15(2) of 1920 and section 9(2) of 1923 v. supra) that there was a punctum temporis in the transaction in which the respondent in possession as statutory tenant asked or received from the appellants the sum in question as a condition of giving up possession. Similarly your Lordships did not call upon the respondent on this contention and I say no more of it.

I cannot, my Lords, leave this case without some comment upon the concluding paragraph of the judgment of Lord Denning M.R. of which I unreservedly disapprove. It is not the correct attitude to be adopted by the Court of Appeal; it is one which was rightly renounced by the other two members of the court in the instant case ; and it is one which has in previous cases (to some of which I was a party) been also renounced. Lord Denning added as a special reason for departing, in the instant case, from the fully established and sound doctrines of precedent in the Court of Appeal, that the result of an appeal to this House " a foregone conclusion ". This apparent assumption of the mantle of infallibility was not, I need hardly say, put in the forefront of argument for the appellants.

For these reasons, my Lords, I would dismiss the appeal.

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