Farrell v Alexander [1976] UKHL 5

Mrs Farrell paid £4,000 for fixtures and fittings to obtain a flat tenancy, but the amount exceeded their true value. The existing tenant surrendered her lease so the landlord could grant a new tenancy to Mrs Farrell. The House of Lords held that section 85 of the Rent Act 1968 prohibited any person, not just landlords, from requiring or receiving premiums in connection with the grant of protected tenancies.

Facts

The respondent, Mrs Alexander, held a protected tenancy of a flat from the Church Commissioners. The appellants, Mrs Farrell and her daughter, wished to take over the tenancy. Initially, an assignment was contemplated, with the appellants paying £4,000 for fixtures and fittings, a sum admittedly exceeding their true value. However, the Church Commissioners required the respondent to surrender her lease rather than assign it, whereupon they would grant a new tenancy to the appellants. The transaction proceeded on this basis, with the £4,000 being paid to the respondent upon completion.

Issues

Principal Issue

Whether section 85 of the Rent Act 1968 applied to a person other than a landlord who required or received a premium in connection with the grant of a protected tenancy, particularly in a tripartite arrangement involving surrender and regrant.

Secondary Issues

The proper approach to interpreting a consolidation Act; whether the Court of Appeal was bound by its earlier decision in Zimmerman v Grossman; and the validity of the so-called Barras doctrine regarding parliamentary endorsement of judicial interpretations.

Judgment

The House of Lords (Lord Russell of Killowen dissenting) allowed the appeal, holding that section 85 of the Rent Act 1968 applied to any person who required or received a premium in connection with the grant of a protected tenancy, not merely landlords.

Lord Wilberforce

Lord Wilberforce held that section 85 was unambiguous in the legal sense. The words ‘any person’ were of wide generality and fitted the present facts without strain. He stated:

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.

His Lordship emphasised that consolidation Acts should be interpreted without automatic recourse to their antecedents unless there was real and substantial difficulty or ambiguity.

Lord Simon of Glaisdale

Lord Simon delivered a comprehensive analysis of the proper approach to interpreting consolidation Acts, stating:

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.

He found no ambiguity in section 85 when read in context with the statutory objectives of controlling premiums in connection with protected tenancies.

Lord Russell of Killowen (Dissenting)

Lord Russell considered that the legislative history showed that ‘person’ in these provisions meant landlord or potential landlord. He would have dismissed the appeal, finding Zimmerman v Grossman correctly decided.

Implications

This case clarified that the prohibition on premiums in the Rent Act 1968 extends to any person, not merely landlords, preventing evasion through tripartite arrangements involving surrender and regrant. The decision also affirmed important principles regarding the interpretation of consolidation statutes and the Court of Appeal’s obligation to follow its own previous decisions.

Verdict: Appeal allowed by majority (4-1). The appellants were entitled to recover the excess of the £4,000 paid over the true value of the fixtures and fittings, the case being remitted to the county court to determine the amount.

Source: Farrell v Alexander [1976] UKHL 5