Lazarus Estates Ltd v Beasley

A statutory deeming provision which treats a landlord’s declaration as satisfactory evidence after a tenant has not used a prescribed challenge procedure does not, without clear words, permit the landlord to retain a repairs increase obtained by fraud. A declaration knowingly containing a fraudulent material falsehood is a nullity. The tenant may raise fraud as a defence when sued for the increase, even though the statutory period for challenging the value or performance of the repairs has expired.

An obvious misdescription of the tenant does not invalidate a notice where it was received and understood by the intended tenant, who was not misled.

The landlords served a statutory tenant with notices and declarations seeking a repairs increase under the Housing Repairs and Rents Act 1954. The notice misstated the tenant’s name, but she received and understood it. She did not apply to the county court within the 28-day period in Schedule 2.

When the landlords sued for the increased rent, the tenant alleged that one item of repairs in the declaration had never been carried out and had been fraudulently inserted. The county court held that the expiry of the statutory period prevented that challenge. The tenant appealed.

The central issue was whether Schedule 2, paragraph 5 prevented a tenant from asserting that an unchallenged declaration was false and fraudulent.

1. Appeal allowed by a majority. Denning and Parker LJJ held that the tenant could raise fraud as a defence. The county court judgment was set aside and a new trial ordered. Morris LJ dissented.

2. Denning LJ held that the 28-day procedure in Schedule 2 enabled a tenant to require proof of repairs and to challenge their value. If that procedure was not used, paragraph 5 treated service of the declaration as satisfactory evidence and prevented a later challenge that the declared value was insufficient. It did not make the landlord’s declaration conclusive for every purpose.

3. Parker LJ agreed in substance. The statutory time limit barred an ordinary allegation that repairs had not been done to the declared value. Fraud was different. If proved, a knowingly false declaration was a nullity and could not constitute satisfactory evidence for the purposes of section 23(1). Clear language would have been needed to require a court to enforce an increase obtained by fraud.

4. Both majority judges treated fraud as vitiating even transactions of considerable legal solemnity. The allegation nevertheless had to be distinctly pleaded and proved. The court did not decide whether the declaration was in fact fraudulent.

5. The misnomer in the notice did not invalidate it. The intended tenant knew that it concerned her tenancy and was not misled. The evidence also supported the finding that the notice had been served sufficiently early.

6. Morris LJ would have dismissed the appeal. In his view, the statutory language made the declaration conclusive once the tenant had not invoked the prescribed procedure within 28 days, without an exception for fraud.

• Court of Appeal: Allowed the tenant’s appeal, set aside the county court judgment and ordered a new trial.
• County Court: Held that the tenant could not challenge the declaration after the 28-day period in Schedule 2 had expired.