Case No.:

AC-REV-185-1 959

Court:

Court of Appeal

Issue No.:

1961

Principles

·  Landlord ond Tenant—Rent Restriction Ordinance, 5. 20 ( of statutory condition against sub-letting without consent

A statutory landlord who knows of tenant’s statutory breach of sub-letting .without consent under Rent Restriction Ordinance, s. 2o (1), and continucs to receive rent from the tenant ,waives his right to eject the tenant under Rent Restriction Ordinance. s.11 (a), for brcach of this statutory obligation.

Judgment

(COURT OF APPEAL)*

ASLAN SEROUSSI AND ANOTHER v. DERBEDROSSIAN BROS.

AC-REV-185-1 959

Advocates: Abdel Rahman Yousif ... for the defendants-applicant Ahmed Gurnaa . for the plaintiffs-respondent

A M. Imam 1. February 29, 1960 is an application for revision by Asian Scroussi and Mohamed Ahmed Omer, applicants (and defeidants), against the summary dismissal order of the Judge of the High Court, Khartoum, dated July 21, I9 and the decree of the District Judge. Omdurman, dated May 29. 1959 granting Derbedrossian Bros., respoildents (and plaintiffs), an order of eviction in respect of Shop No. 17 (i), Block 7, Omdurman Suk.

The facts of the case were as follows: first defendant. Seroussi. is statutory lessee of the plaintiffs’ above-mentioned property for a monthly standard rent of £S.12. It is contended on the part of the plaintiffs that the said first defendant had committed a breach by sub-letting the shop without their written consent in writing, contrary to Rent Restriction Ordinance, S. 20 (1), to second defendant Mohamed Ahmed Omer. First defendant admitted that the said second defendant had been allowed by him to occupy the said shop since 19 but denied that the relationship between them was one of sub-tenancy and, alternatively, that even if it were, the plaintiffs must be held to have waived their right to forfeit the tenancy and that they are estopped from pleading the forfeiture due to the fact that all the time they were aware of the existence of the sub-lease and did not raise any objection to it, or, alternatively, that it would have been unreasonable for the plaintiffs to withhold their consent.

Court M A. Abu Rannat Cf. and A. M. Imam J.

The determination of the suit was mainly based on two issues:

(a) Did fir defendant sub-let the said shop to second defendant without the written consent of plaintiffs?

(b) If “yes,” did plaintiffs waive their right to forfeit the tenancy for effecting a sub-tenancy without obtaining their written consent ?

It is appropriate here to point out that the learned District Judge was right on ruling against framing an issue on the landlords unreasonably withholding their consent on the ground that the tenant did not seek to obtain such consent.

“It is now clear that it is essential that consent to the assignment, etc., must be asked for however unreasonable would be a refusal on the part of the landlord Woodfall, Landlord a Tenant 628 (25th ed., 1954).

It is also appropriate to do away with the somewhat confused argument submitted by advocate for applicants (and defendants) which, if we understand it, says that it should be comprehended by implication that for a sub-tenancy to be covered by Rent Restriction Ordinance, s. 21, i.e., that a sub-tenant would be deprived of the protection of the Ordinance if all or any of the three conditions enumerated in section 20 (2) would have been fulfilled. We think all that this subsection amounts to is that in case a tenant commits a breach of these conditions, an irrebuttable presumption of law arises in favour of the landlord that he would not be unreasonably withholding his consent. It is clear, therefore, that it would still be open to the landlord, other conditions broken or drcumstances existing, to with hold his consent on the ground that the giving of it would be unreasonable. But in such a case he is not entitled to the benefit of any presumption and each case would be decided on its own merits. The onus of proof of unreasonableness rests in this case upon the lessee. For instances other than the above-mentioned statutory conditions, in which the landlord was held to have unreasonably withheld his consent, see Woodfall, Landlord and Tenant 629 (25th ed., 1954).

In the above sense the argument of applicants’ (and defendants’) advocate has no bearing to the dispute. If it is another way of saying that as the tenant did not commit a breach of the statutory conditions and should therefore be entitled to the protection of the Ordinance, the answer to that would be that, as ‘he failed to ask for the requisite consent, he is debarred from invoking the protection of the Ordinance, and, in a hypothetical case, even if he did seek such a consent and it was refused, the landlord can still rely on circumstances and facts other than those contained in the statutory conditions to refute the tenant’s allegations that the refusal was unreasonable.

To consider now the two main issues mentioned above, it should be

observed that issue (a) was admitted. As to issue (b), it is in effect constituted of two issues, one of fact and one of law, to wit:

(i) Were respondents (and plaintiffs) aware of the sub-tenancy ?

and

 (ii) If “yes,” did they thereby waive their right to forfeiture?

It is obvious that the burden of proving both these issues rests on the applicants (and defendants). The court of first instance, it seems, found as a fact that they succeeded in respect of the first issue. In his judgment, at pp. 20 and 21, the learned District judge said:

"There remains one point, and that is what was mentioned by the advocate for the defendants, that plaintiffs had tacitly consented to this sub-letting and therefore they are entitled to nothing. The first defendant stated that the plaintiffs refused in I956 to receive the rent from second defendant which means that they (the plaintiffs) had knowledge of his (second defendant’s) occupation of the premises, considering that it is within close quarters. But I do not think that this amounts to waiver, for plaintiffs did not receive any rents . .

On the face of the above extract, it seems that the court, though it does not positively say so, was satisfied that the plaintiffs, because they were once tendered the rent by second defendant, and refused it, knew or were aware of the existence of the sub-tenancy. The court, however, went on to decide on the second issue that the principles of waiver apply only to personal rights and not to public rights; and because the Rent Restriction Ordinance was meant to protect the public, the provisions thereof cannot be waived.

Both the advocates for the contesting parties agree that it is now the law that even a statutory tenancy, certain conditions ,satisfied, can be subject to waiver, or estoppel by conduct. The learned advocate for the plaintiffs concentrated his fight on the ground that plaintiffs did not know of the existence of the sub-tenancy, and had no reason to believe that the relationship between the defendants was one of tenant and sub-tenant. In other words, he is attacking the finding of fact reached by the court of first instance.

This finding was determined solely on the sworn statements of plaintiff, first defendant father, and second defendant, and on circumstantial evidence. The record shows (p. 21) that the plaintiff admitted that he let to the first defendant in1951, but thy he only saw the second defendant for the first time four or five months before. He also admitted that his shop and the one in dispute were in the same vicinity. The first defendant’s father, who was also his agent, stated that he sub-let the shop in dispute in 1954 (p. 14). He also stated that the plaintiff refused to receive the rent from second defendant in 1956. The second defendant

supported these statements, and added that since the sub-tenancy he used to pay the rent to first defendant and that the receipt was always issued by the plaintiff in the name of first defendant. upon this evidence the Court found that plaintiff was aware of second defendant’s occupation of the shop in his capacity as a sub-tenant and not as partner. We see no person to disturb this finding.

We tackle now the question of waiver in connection with an ordinary contractual tenancy and the more difficult but same question in connection with statutory tenancies. It is firm law that the former can be subject to waiver.

“Where a forfeiture has been Incurred by breach of a covenant against alienation, the receipt of rent which becomes due at a later period will amount to a waiver of the forfeiture if the lessor then knows of the breach.” Woodfall, Landlord and Tenant 640 (2Sth ed.,1954)

Again the same principle is formulated by Cheshire, Real Property 4I5-416 ( 9th ed., 1962) as follows:

“The two essentials for waiver are that,

(1)the landlord must be aware of the commission of an act of forfeiture by the tenant, and

(2) he should do some positive act which is a recognition of the tenancy.

"Thus a merely passive attitude on his part has no e but on the other hand (and this applies to all conditions of forfeiture, whether in respect of the non-payment of rent or of the non-performance of other covenants).

(1) if he accepts or sues for rent falling due after the act of forfeiture has been committed, or

(2) if he distrains for rent whether due before or after the breach, or

(3)if he grants a new lease to the defaulting tenant. or

(4) if he or some person authorised by him unequivocally demands the rent that is due.

each of these acts is strong evidence that he has elected not to avoid the lease” (italics added ).

From the above it is that forfeiture for breach of any Covenant, in general, and for alienation, in particular, can be waived, provided that these covenants were contained in a contractual tenancy. West V. Dobb(1869-70)  Q.B.D. 460.

(1869—70Q.B.D.460

It remains to be seen whether this rule can likewise be applied to a statutory tenancy.

It was contended on the part of applicants (and defendants) that even a statutory tenancy may be subject to both estoppel and waiver. In support of this contention was cited Ibrahim Osman El Arabi v. Hassan El Hakim, HC-REV-397-1958,AC-REV-195-1958 (M. A. Abu Rannat C.J.), in which the principle was laid down that acceptance of rent by a landlord from a statutory tenant with knowledge of the statutory tenant’s breach of the covenant amounts to waiver. In that case the knowledge of plaintiffs’ predecessor-in-title and acceptance of rent for more than six months amounted to waiver of breach.

And the Court of Appeal, per El Rayih El Amin J., ruled in Ibrahim Mohamed Wageealla v. Ahmed Shawgi Mustafa and El Sawi Abdel Kaul, DC-CS-3597-1954, application for revision dismissed (1957) S.L.J.R. 24, affirmed in part and reversed in part, AC-REV-82-1957:

“there is abundant evidence to show estoppel by conduct. Plaintiff knew of the sub-letting and received the rent without objection, and therefore plaintiff must be taken to have waived that consent should be in writing.”

Other Court of Appeal and High Court cases are in direct conflict with these decisions. See Abdulla Mohamed El Fadil ‘ f3aroul Beshir El Dabi, HC-REV-264-1958 Sittana Saleh v. Shama Mansour, AC-REV-x and El Sarra Bint F v. Fatma Habib, HC-REV-24-1 AC-REV-1 The decision in Sabila FadI v. Ahmed Abdalla Ahmed (1956) S.L.J.R. 62 (R. C. Soni J.) should be distinguished from these cases on the ground that no question of waiver was at issue; for the question was whether the prior consent of the Governor can be treated as a mere formality not affecting the validity of an assignment of lease and can therefore be obtained sub sequently.

The one case in which detailed and forceful reasons were given in support of the strict interpretation of the Ordinance is El Sarra Bint Fideil v. Fatma Habib, HC-REV-24-I959 AC-REV-137-1959 in which it was held that the failure of the tenant to obtain the consent in writing of the land. lords renders any assignment or sub-lease invalid, and that in spite of conduct on the part of the latter amounting to waiver or estoppel capable in an ordinary contractual tenancy of vitiating the effects of a breach and disentitling the landlord to claim forfeiture. The main grounds upon which this decision was reached seem to be:

(a) that the Rent Restriction Ordinance is a public statute enacted for the protection of public interest;

(b) that, in particular, section 20 “was specifically intended by the legislator to protect the landlord by controlling the commercial exploitation by the acts of the tenants

(c) that the wordings of the section are imperative.

Though we agree that the Rent Restriction Ordinance, 1953 is a public statute in the sense that it was passed for the protection of certain sections of the public, we feel bound to state that it contains provisions which are purely personal, e.g., the landlord’s right to claim possession for failure of payment of the standard rent. We think, however,, that the best way of interpreting a particular statute, is not by reference to its type, public or private, penal or non-penal, or by examining the particular right in question, but by adopting the interpretation which gives effect to the legislature’s intention:

“Why should a statute be subjected to a strict or liberal construction, as the case may be? The only answer that can possibly be correct is because the type of construction utilised gives effect to the legislative intent.” Crawfora, Construction of Statutes 454 (1940).

From the title of the Rent Restriction Ordinance, 1953, it is obviousus that it is a statute for restriction of rent. The circumstances giving rise to its enactment are the insufficiency of premises and the overwhelming demand for accommodation. The legislative intent, therefore, can accordingly be ascertained from these circumstances in that it is directed in the main to limit the rents and to control the right to recover possession with a view to keeping rents within the limit prescribed by law, thus reducing a landlord’s chances to profiteer to the minimum, and raising the opportunities for tenants with limited resources to securely accommodate them. selves. Keeping this in mind, it can be said that it would be unlawful to contract out of the Act, and consequently ousting al together jurisdiction of the court by private treaty. This simply means that you cannot, by agreement, decontrol controlled premises or vice versa, control decontrolled premises:

“Just as there can be no contracting out of the Acts, so there can be no contracting in; a status of control can be acquired neither by estoppel nor by res judicata. The principle is that neither estoppel nor res judicata can give the court a jurisdiction under the Acts which those Acts say it is not to have.” Blundell and Wellings, Rent Acts 58 (1958) The same authority, however, goes on to say in the same page:

“There is, however, no general rule that matters of estoppel affecting the relationship of landlord and tenant are irrelevant in Rent Act cases.”

It should be made clear that the meaning of contracting out is that the parties cannot contract out of the Act whether in respect of the premises themselves or in respect of the rent or any other matter where the Act lays down a definite rule as to what is lawful and what is not, e.g.. an agreement to quit by a tenant of controlled premises would be unenforcible, so also an agreement to pay an increased rent.

But surely this does not apply to merely personal right which should in our opinion be governed by the estoppel. This includes covenants restricting use of premises. In this connection Hill and Redman, Landlord and Tenant 246 (12th ed., 1955), states:

“A re of the covenant r not be express. If the lessor is aware of a continuing breach and acquiesces in it for a long period— where, for instance, with full knowledge, he receives rent—it will be presumed that he ha either released the covenant or granted a licence for the user.”

This principle of waiver was adopted in Oak Property Co., Ltd. v. Chapman (1947) K.B. 886, quoted above, the facts of which were similar to facts of the case now before us except that instead of an assignment. there was a sub-tenancy. In Stratford v. Syrett (1957) 3 W.L.R.733, it was held that the doctrine of estoppel which applies between lessor and lessee may apply in Rent Act cases

Applying the above principles to Rent Restriction Ordinance, s. 20, we think that a landlord’s right to give his consent to an assignment or a sub-tenancy is a purely personal matter. Section 20 reads:

“(i) that the tenant shall not assign or sub-let or otherwise part with the possession of the premises or any part thereof without the consent of the landlord in writing; and

)2)that the landlord shall not unreasonably withhold his consent:

provided that it shall not be unreasonable to withhold his consent if:

(a) the number of the persons actually or potentially entitled to the protection of this Ordinance is increased by such assignment or sub-tenancy; or

(b) the tenant himself remains in occupation; or

(c) the rent. or rents payable to the tenant under the proposed sub-tenancy or sub-tenancies exceed in the aggregate the rent payable by the tenant to the lan4lord.”

From the above it can clearly be seen that the landlord c and is entitled to give his consent even in case the circumstances mentioned under (a), (b) and (c) above exist, and it can therefore be inferred that the legislature’s intent is to make this a purely personal right of the landlord. We observe specifically that the landlord can give his consent even., under (c) where the aggregate of the rent exceeds the standard rent, in which case the sub-tenants would be entitled to the protection of the Ordinance against the tenant who is a landlord within the meaning of section 4 of the same Ordinance. There is nothing unlawful in the landlord giving ,his consent even under the instances mentioned above. That the legislature intended to make this a personal matter for the landlord is made doubly clear from

the fact that a tenant may lose the protection of the Ordinance, however unreasonable the withholding by the landlord of his consent, if the former failed to comply with the mere procedural pre-requisite of asking the latter to give such consent.

In this case respondents (and plaintiffs) knew of the breach for at least several months according to their own admission and notwithstanding continued to receive the rent from the tenant; they should therefore be held to have waived their right to insist on obtaining a written consent.

For the above reasons explained, we think that this appeal should be allowed and that the decree of .the District Judge, Omdurman, dated May 29, 1959, be set aside in so far as the order of recovery of possession is concerned, and the applicants (and defendants) be awarçled costs taxed at £S.26.5oo.

M. A. Abu R.annat C.J. February 29, 1960: —i concur.