Calladine -Smith v Saveorder Ltd

This is an appeal by the Claimant Mr Calladine-Smith from a decision of Judge Hallon sitting in the Bromley County Court. The appeal is brought with the permission of the learned Judge. The appeal concerns the interpretation of, and the application of, section 7 of the Interpretation Act 1978. That section provides:

Before turning to the facts of the case, it is convenient to refer to the provisions of the 1993 Act. The relevant provisions are contained in Chapter II of Part I of the 1993 Act although it is also relevant to refer to the general provision in Section 99 of that Act. By Section 39(1), Chapter 2 has effect for the purpose of conferring on the tenant of a flat, in the circumstances mentioned in Section 39(2), the right exercisable subject to and in accordance with Chapter 2 to acquire a new lease of the flat on payment of a premium determined in accordance with Chapter 2. There is no dispute about the fact that the Claimant has the right conferred by Section 39(1) to a new lease of a flat where he is currently the lessee. Section 42 is headed: ‘Notice by qualifying tenant of claim to exercise right.’ Section 42(1) provides for a qualifying tenant to exercise the right to acquire a new lease of the flat by the giving of a notice of the claim under Section 42. By Section 42(2), a notice under that Section must be given relevantly to the landlord. By Section 42(3)(f), the tenant’s notice must specify the date by which the landlord must respond to the notice by giving a counter-notice under Section 45. Section 45 is headed: ‘Landlord’s counter-notice.’ Section 45(1) is in these terms: ‘The landlord shall give a counter-notice under this section to the tenant by the date specified in the tenant’s Notice in pursuance of Section 42(3)(f).’

The 1993 Act then makes provision for what is to happen in relation to the different kinds of counter-notice that a landlord is permitted to serve. For present purposes one can go to Section 49, which is headed: ‘Applications where a landlord fails to give counter-notice or further counter-notice.’ The relevant part of Section 49 is Section 49(1)(a) which provides that where a tenant’s notice has been given in accordance with Section 42 but (a) the landlord has failed to give the tenant a counter-notice in accordance with Section 45(1), the court may on the application of the tenant make an order determining in accordance with the proposals contained in the tenant’s notice the terms of acquisition. Section 49(2) provides that the court shall not make an order under Section 49(1) unless it is satisfied of certain matters. Those matters are not, as I understand it, in dispute in the present case.

The operation of Section 49 can be seen by reference to the decision of the Court of Appeal in Willingale v Globalgrange Ltd [2000] 2 EGLR 55. That decision did not itself concern Chapter 2 of Part 1 of the 1993 Act. It concerned equivalent provisions dealing with collective enfranchisement in Chapter 1 of Part 1 of the 1993 Act. In the course of the judgment of Lord Justice May in that case there is a discussion of the operation of Section 49 and indeed an earlier authority in relation to Chapter 2 of Part 1 of the 1993 Act. For today’s purposes it is sufficient to say that the parties are agreed that the authority of Willingale v Globalgrange Ltd applies to an application under Section 49 so that if a counter-notice has not been served in the present case by the landlord then the tenant is entitled to the relief which is spelt out in Section 49. I need not further indicate the nature of that relief as the parties are agreed as to the form that that relief would take.

Finally, in relation to the 1993 Act, I need to go to Section 99 dealing with Notices. Section 99(1) reads: ‘Any Notice required or authorised to be given under this Part (a) shall be in writing, and (b) may be sent by post.’ That is the only provision in the 1993 Act which bears upon – for today’s purposes, at any rate – the question of service of a landlord’s counter-notice under Section 45 of the 1993 Act.

Before I go to the facts of this case, I ought to contrast the position under the 1993 Act with a different statutory position created by Section 23 Landlord and Tenant Act 1927. Section 23 provides for the mode of service of certain notices and other instruments. This section applies to the service of notices under Part 2 of the Landlord and Tenant Act 1954. Section 23 has been the subject of many decisions of the courts and it will be relevant later in this judgment to refer to one or two of those. Section 23(1) is in these terms: ‘Any notice, request, demand or other instrument under this Act shall be in writing and may be served on the person on whom it is to be served either personally, or by leaving it for him at his last known place of abode in England or Wales, or by sending it through the post in a registered letter addressed to him there ... and in the case of a notice to a landlord the person on whom it is to be served shall include any agent of the landlord duly authorised in that behalf.’ As I have explained, Section 23 does not apply to a landlord’s counter-notice under Section 45 of the 1993 Act, but it is agreed Section 7 Interpretation Act 1978 does apply to such a Notice.

The Claimant is the lessee of the flat at 2 Robbins Court, 77 Bromley Road, Beckenham Kent BR3 5PB. On or about 16^th September 2009, the Claimant prepared for service a notice under Section 42 of the 1993 Act. The notice identified the intended recipient as the Defendant. The notice related to the flat at 2 Robbins Court. The Claimant identified himself and specified his address as 77 Cumberland Road, Bromley Kent BR2 0PL. The notice then continued with the information which is appropriate to be included in such a notice. Paragraph 9 of the notice stated that the address in England and Wales at which notices might be given to the Claimant under the statutory provisions was the address at 77 Cumberland Road. Paragraph 10 of the notice is in these terms: ‘The date by which you must respond to this notice by giving a counter-notice under Section 45 of the 1993 Act is 25^th November 2009.’ The Claimant’s Notice was served on or about the date it bore. It is not disputed that para. 10 of the Notice effectively imposed a time limit for a counter-notice of 25^th November 2009 pursuant to Section 42(3)(f) of the 1993 Act.

The Claimant’s notice was duly received by the Defendant. The Defendant instructed solicitors to act for it. Those solicitors prepared a form of counter-notice intended to be served under Section 45 of the 1993 Act. The counter-notice which was prepared was addressed to the Claimant at 77 Cumberland Road. It related to the flat at 2 Robbins Court. The counter-notice admitted that the Claimant had the right to acquire a new lease of the flat but identified certain proposals made by the Claimant which it did not accept; the landlord did not accept the premium which had been proposed by the Claimant; the counter-notice sets out the difference in the figures. The Claimant’s figure was £5900 as a suggested premium and the Defendant’s figure was £9000. The counter-notice then stated that the Defendant did not propose or accept any further variation to the terms of the existing lease. That counter-notice was dated 13^th November 2009. The Defendant’s solicitors also prepared a covering letter. The covering letter had a heading referring to the flat at 2 Robbins Court. It referred to an enclosed notice under Section 45 of the 1993 Act. The Claimant’s name was slightly misspelt but no point has been taken on that. The covering letter correctly identified the intended address to which the notice was to be sent as 77 Cumberland Road.

The Judge made findings as to what happened in relation to this counter-notice. The solicitor who had prepared the counter-notice and who had taken further steps in relation to it gave evidence before the Judge. The Judge expressed herself satisfied that the Defendant’s solicitor had placed the counter-notice and covering letter in an envelope; the envelope had been correctly addressed to the Claimant; the envelope had been franked so that postage was prepaid in that way; and the envelope containing the counter-notice and the covering letter was put into the post in an entirely regular way. The Judge also made a finding as to whether the Claimant ever received that counter-notice posted in that way. The Judge said that she was clear that the Claimant had not received the counter-notice. So the Judge’s findings, taking into account the wording of Section 7 at this point, were to the effect that the counter-notice had been properly addressed, prepaid and posted in a letter to the Claimant and the Claimant had not received the letter with the counter-notice.

The essential issue for the Judge in this case was whether the Defendant had established that it had served a counter-notice under Section 45. If the counter-notice had been served then the 1993 spells out the consequence of such service and the later procedures that apply. If a counter-notice has not been served, in particular not served by the date specified in the Section 42 notice, then the case fell within Section 49. Counsel who appeared for the Claimant in the County Court was the same counsel who appeared on this appeal. She took the Judge to Section 7 Interpretation Act 1978 and cited the authority of R v County of London Quarter Sessions Appeals Committee ex parte Rossi [1956] 1 QB 682. The Claimant’s submission was in effect that because the Judge had found that the Claimant did not receive the counter-notice the Claimant had thereby proved the contrary of the suggestion that the counter-notice had been delivered in the ordinary course of post. Therefore the Claimant submitted the counter-notice had not been received by the date specified in the tenant’s Section 42 Notice and there was no effective counter-notice.

The submission made on behalf of the Defendant was made by counsel who again appeared on the appeal before me. In para. 9 of the judgment the Judge records the submission that was made to her. The submission was to the effect that it is not enough for the Claimant to show that he did not receive the document. In order to prove the contrary, as required by Section 7, it was necessary for the Claimant to prove that the communication was not properly addressed, prepaid and posted.

The learned Judge considered the case of ex parte Rossi in some detail. She read from the three judgments which were given by the members of the Court of Appeal in that case, setting out lengthy passages from their judgments. She expressed her own reasons for her conclusion at paras. 14, 15 and 16 of the transcript of her decision. I ought to read those three paragraphs as follows:

It seems to me that the essential ground for the Judge’s decision is that which is stated in para. 16. She identified the burden on the Claimant as being one where, in order for him to escape the operation of Section 7 and each and every part of it, he had to show that the relevant notice had not been put in a properly-addressed envelope or that the envelope was not prepaid or that it was not posted.

On this appeal the Claimant relies on the same argument as he put before the Judge. He says that this is a case within the second part of Section 7; the time of the alleged service of the counter-notice is relevant for the operation of Section 45 of the 1993 Act. It is open to him, he contends, to prove that the counter-notice was not served by the last permissible date. He relies on the Judge’s finding of fact that he did not receive the counter-notice.

The Defendant submits that the Judge was right for the reasons which she gave. It submits that it is not open to the Claimant to prove that he did not receive the counter-notice. The reference in Section 7 to proving the contrary is a reference to the addressee proving that the notice was not addressed to him or was not in a prepaid envelope or was not posted. Here the Claimant does not try to do that. The result is that the counter-notice is deemed to have been served, and what is more, it is deemed to have been served in the ordinary course of post. The Defendant also relies on the decision of the Court of Appeal in Lex Service plc v Johns [1990] 1 EGLR 92. This case was not relied on before the Judge. There is no Respondent’s Notice seeking to support the Judge’s decision on an additional ground. It seems to me clear that this point is a different point from that relied upon by the Judge and so a Respondent’s Notice ought to have been served. Nonetheless I have allowed the Defendant to raise the question of principle which is based upon Lex Service in the course of argument so that I am able to hear what each side says about it. The point that is made is potentially an important point and I am satisfied that both sides have been able to develop legal submissions in relation to it. I should say at this point that counsel for the Claimant has submitted that because this point was not raised at the trial there was no examination in the course of the evidence of matters which might have been material on this point. I will return to that subject in due course. In summary, the Defendant relies upon the Lex Service case for the proposition that it is not sufficient simply to call evidence which supports a finding on the balance of probabilities that the letter was not delivered. The Defendant says that more is required; there is a burden on the Claimant to lead positive evidence as to what happened to the counter-notice and/or a burden on the Claimant to show that the sender of the letter was aware that the letter had not been delivered. The Defendant then submits that the Claimant did not discharge that higher burden.

The Claimant’s authorities begin with the decision of the Court of Appeal in ex parte Rossi. That case concerned the operation of the Summary Jurisdiction (Appeals) Act 1933. That Act and the facts of that case are very far away from the 1993 Act and the facts of the present case. The Judge in the matter before me appears to have attached some significance to the differences between the 1933 Act in ex parte Rossi and the 1993 Act. I do not regard the differences between those statutes as a reason for distinguishing ex parte Rossi or not applying it. The point which arose in the 1993 statute as construed and applied by the Court of Appeal was that a certain notice had to be served on Mr Rossi. Section 45 of the 1993 Act provides that if the landlord is to take advantage of the counter-notice provisions in the 1993 Act the landlord must serve a counter-notice on the Claimant. So one arrives at the same point in the legal analysis in this case as was arrived at in ex parte Rossi, namely, that a notice has to be served. That then gives rise to the question in that case as in the present case as to the operation of what is today Section 7 Interpretation Act 1978; the predecessor of that section was Section 26 Interpretation Act 1889.

The Court of Appeal in ex parte Rossi comprised Lord Justices Denning, Morris and Parker. All three members of the court gave judgments. Lord Justice Denning, at p. 692, referred to what had to be proven, and to the need to serve notice on Mr Rossi. The Lord Justice went on:

In the many authorities which have followed and applied ex parte Rossi, reference is made to those three passages in the judgments which I have read. It may be that there has been a preference in later cases for the way in which the matter is put by Lord Justice Parker and of the three judgments later courts have tended to regard the judgment of Lord Justice Denning as perhaps the least helpful – with respect to him – on the grounds that it may have been expressed too widely. For present purposes there is no need to analyse possible differences between the ways the matter is expressed. For my part, with respect, I find the greatest help in the way in which the matter is put by Lord Justice Parker, and that is the elaboration of the section which I shall endeavour to apply to the facts of this case.

As described in ex parte Rossi, the position is undoubtedly a slightly curious one. If one splits the section into two parts, one gets rather different messages from the two parts. If the court finds that the letter in question has been put in an envelope, properly addressed, prepaid and then posted, one deems the letter to have been served. When one comes to consider the date when the letter is served, if that is a relevant question for the particular statute in question, then one can argue and find that the letter was not delivered by the cut-off date either because there is proof it was delivered late or because one finds that there is proof that the letter was not delivered at all. So although one holds for the first part of Section 7 that the letter is deemed served one is entitled to make a finding of fact on the second part of Section 7 that the letter was not served at all. That is really very clear from the way the matter is expressed in ex parte Rossi. It occurred to me in the course of argument that if there had not been these authorities on Section 7 one might have contemplated a different reading of the second part of Section 7. One might have contemplated that the only contrary that could be proved would be by reference to a specific date for service later than the deemed date, but one would not be able to contend for a contention that the document had not been served at all. Whether that speculation is worthy or not, I am quite satisfied it is not open to me to develop that further. I am bound by the decision in ex parte Rossi.

Miss Waterworth submitted that I should not follow Rossi or I should not apply it to the circumstances in this present appeal. She submitted that I should construe Section 7 as if it were to be analysed as a single part rather than as the expression of two parts. She did not however give me any grounds on which I could decline to follow the decision in ex parte Rossi and in particular the decision in ex parte Rossi that Section 7 has two albeit interlinked parts to it.

Possibly because the Judge in the County Court distinguished the ex parte Rossi case by reference to the particular statute which was considered in ex parte Rossi I have been shown on this appeal a certain number of later decisions which have applied or considered the ex parte Rossi case. In date order those later decisions were Beer v Davis [1958] 2 QB 187; Hosier v Goodall [1962] 2 QB 401; Moody v Godstone Rural District Council [1966] 1 WLR 1085; Hewitt v Leicester City Council [1969] 1 WLR 855; Maltgrave v St Albans Rural District Council [1972] 1 WLR 1230; and Customs and Excise Commissioners v Medway Drafting and Technical Services Ltd [1989] STC 346. Those various cases, as one would expect, have concerned different statutes. The process has essentially involved two-stages. The first stage is to construe the individual statute and see whether there is a requirement that a notice be served on a certain person. If there is such a requirement then Section 7 Interpretation Act potentially applies when that notice is sent by post. As I have indicated, there is nothing in the individual statutes considered in those cases which causes those cases to be inapplicable as containing statements of principle as to the operation of Section 7 of the 1978 Act. I ought perhaps to single out the decision in Moody v Godstone Rural District Council. That differs from the other cases because there the Divisional Court held that one was not concerned with the second part of Section 7, one was only concerned with the first part of Section 7. That had the important consequence that it was not open to the addressee of the letter to attempt to prove that the letter had not been received. It sufficed if the sender of the letter proved that the letter had been properly addressed, prepaid and posted. The Moody case is not conclusive in the present appeal because Section 45 of the 1993 Act does have a time stipulation so that it is necessary to consider and apply the second part of Section 7. Finally on this point I should say that it is sometimes difficult in some of the other cases to say when the second part is engaged and when it is not, but that difficulty does not arise in the appeal before me.