(HIGH COURT)

SIR EL KHATIM and GAFAR ABDULLA... Applicants

and

NEGIB IBRAHIM EL YAS …………….. Respondent

(HC-REV-7-l 956)

Revision

Principles

·  Rent control - lease for ten years or more - section 15 of tile Rent Restriction Ordinance 1953 - meaning of premium

In an action by a landlord for recovery of a shop at Omdurman on ground of non-payment of rent, it was proved that the said shop was let out to Defendant for a term of ten years at LE.18 and that the tenancy agreement was registered under the Land Settlement & Registration Ordinance I 925. The tenant contended that the standard rent was LE.9 only and denied liability for payment of the balance. The landlord admitted the allegation as to standard rent but pleaded the proviso to section s. 15 of the Rent Restriction Ordinance 1953 in that the balance as recoverable as premium. The District Judge found for Plaintiff. On application  to the High Court for revision.
Held: that the whole of the LE.18 was rent and that a premium is a term which according to its ordinary business meaning is a sum paid for the grant of a lease It is not a reservation in any way It is a separate personal convenantto pay a premium because the lease has been granted. Per Scrutton L.J. in Hill v Booth (193o) I KB. 381.
The decision of the District Judge revised.

Judgment

The facts are fully set out in the Judgment of Hassib, J.

Advocates: Abdalla El Hassan ………..for Applicants

E.M. Kronfli ………………………..for Respondent

(*) Section 15. “No person shall as a condition of a grant renewal or continuance of any tenancy or sub-tenancy 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 tenancy or sub-tenancy the amount or value thereof shall be recoverable as a civil debt by the person by whom it was made or given : provided that this section shall not apply to the grant, renewal or continuance for a term of ten years

“or upwards of any tenancy”.

M.A. Hassib. J. Shop No. 15 Block 26 main Suk Omdurman is the property of Negib Ibrahim El

By a written contract of lease dated 17.10.1959 the Landlord leased his shop to Sir El Khatim Abdalla for a term of ten years at a rent of LE.18 monthly and the tenancy was registered under D/1510/54.

The tenant subsequently sublet the shop to his brother Gaafar Abdalla who is now occupying it.

The tenants failed to pay the rents of August, September and October 1955 a total sum of LE.54 and the Landlord brought CS/ 1619/55 against them for recovery of the said sum and costs.

The tenants admitted all the particulars above mentioned but resisted claim on the ground that the standard rent was not LE.18 and that they abstained from payment because the amount claimed was irrecoverable. At last the Landlord admitted that the standard rent was LE. 9. He then claimed that the agreement was covered by Section 15 of the Rent Restriction Ordinance 1953.

The District Judge instead of framing issues on all points at variance and trying the case thereupon, ruled hastily that there were no questions for hearing and said - If the action is ab-initio defenceless why should I unnecessarily and erroneously proceed with a hearing. The only right and proper thing for me to do now is to frame an issue on this last pleading and defence. This issue must be decided first and if found for Plaintiff this suit shall not step an inch further. If it is found for Defendant hearing shall proceed to ascertain whether the standard rent is LE. 8 or LE. 9 and the remainder of the claim be “determined accordingly.”

The District Judge then made the issue he referred to as follows - (i) Is the sum claimed by Plaintiff in excess of the Standard rent, exempt from recovery by Defendant, it being a payment or other pecuniary consideration for the grant of the ten years tenancy within Section 15 of the Rents Restriction Ordinance 1953 ? (2) If ‘Yes’, is this action defencelcss ?

On deciding this question the District Judge found that the amount in excess of the standard rent was covered by Section 15 of the Rent Restriction Ordinance and was not recoverable by the tenants. He decreed for Plaintiff in the claim and costs.

This is an application for revision of the decree of the District Judge dated 10.1.1956 whereby the Landlord recovered amounts in excess of the standard rent.

This case is not usual, perhaps it is the first of its nature in Sudan Courts.

Section 15 of the Rents Restriction Ordinance allows a premium or any other pecuniary consideration for grant of a lease for a term of ten years and upwards.

It is quite true in this present case a tenancy for ten years was created by the lease and duly made registered under D/1610/1954. There remains to consider whether the finding of the Court that the lease was covered by Section 15 of he Ordinance was right or wrong.

The District Judge thought that the amount agreed on in excess of the standard rent was not rent but a premium.

What is a premium ? In the words of Scrutton L.J. in Hill v. Booth [1930] I K.B. 381 “a premium is a term which according to its ordinary business meaning is a sum paid for the grant of a lease. It is not a “reservation in any way. It is separate personal covenant to pay a premium “because’ the lease has been granted.”

A premium is something entirely distinct from rent and not on the same footing at all. It is a sum which the lessee is prepared to give as a fore gift for the privilege of obtaining ten years lease upon certain terms as to rent i.e. the premium is a consideration for which the lease itself is granted. The distinction between rent and premium could clearly be made on the fact that the landlord can re-enter on failure of payment of rent but no re-entry could be effected In the event of non-payment of a premium.

In Rush v. Mathews [1926] 1K.B. 492 the landlord by verbal agreement let a flat the standard rent of which was thirteen shillings and six pence to the tenant at a rent of twenty five shillings per week. To evade the Rent Restriction Acts the parties executed a lease of the flat for 14 years (whereby the payments of a premium became lawful) at the standard rent of 13 shillings and six pence per week with a proviso that the tenant terminate the tenancy by giving one week’s notice to quit At the same time they made a separate agreement in writing that the tenant shall pay to the landlord a premium of eleven shillings and six pence weekly. The transaction was looked at as a whole and the two documents were read together and so dealt with, the eleven shillings and six pence was part of the rent and not premium and was as such irrecoverable.

In arriving at my judgment I am of the opinion that the whole sum of LE. 18 was rent and the lease was made for ten years to evade the statute. Therefore the amount in excess of the rent whether it was LE.8 or LE.9 monthly is irrecoverable. It is illegal for the landlord to impose more than the standard rent because he granted a long lease of ten

years or more. The two sections Sec.5 and Sec. 15 should be read together and so read together there would be no inconsistency. The intention of the legislator as I see it was certainly not to allow a rent in excess of the standard rent. But it allowed and permitted the foregift of the premium or any other pecuniary consideration for grant’ of a long lease. Rent is clearly and easily distinguishable from a premium. In this case the parties had expressly put it as a rent and the context of the contract treated the said sum of LE.18 as rent. The District Judge in his far-searching finding was surely deviating from the right principles of construction.

The case therefore to be returned for retrial on whether the standard rent was LE. 8 or LE. 9 ?

(Case sent for retrial)