Court orders tenant to repair wall damage instead of eviction under Rent Control Law s.20.

[*219] 1982 March 18

(HADJIHAMBIS, Ag.D.J.)

IN THE DISTRICT COURT OF LIMASSOL

Michalakis Drakos & Co. Ltd.,

Applicants,

v.

"AVGERINOS" Company Ltd.,

Kyriacos Papares ,

Niki Michael idbu,

Respondents.

(Rent Application No. 122/81).

Landlord and tenant - Statutory tenancy - Recovery of possession Shop - Tenants opening a door in one of its stonewalls and connecting it with an adjoining shop of

defferent ownership - Whether an act of waste or wrongfull act causing of substantial damage in the sense of section16(1)(d)

of the Rent Control Law, 1975 (Law 36/75) -Principles applicable - Order that the tenants should block the door and restore the wall to its original condition within three months , in substitution for anorder for recovery of possession, which would have otherwise been made - Section 20 of the Law.

A. Lemis, for the Applicant.

A. Papakyriacou, for the Respondents.

JUDGMENT

The following judgment was deliver by:-

HADJIHAMBIS. Ag.D.J. : This Application prays [*220] for the recovery of possession of a shop situated at No.7, Ronald Burrows Street, owned by the Applicants and occupied for many years by the Respondents, to which I shall hence-forth refer to as "the premises". It is common ground between the parties, and I so find on the evidence, that the Respondents, who initially took possession of the premises; under contract, are statutory tenants within the definition of s.2 of the Rent Control Law 1975, to which I shall henceforth refer to as "the Law".

In November I980 the Respondents obtained a tenancy of another shop adjoining the premises for the purpose of expanding their business of booksellers and stationers, which they had until then carried on in the premises. To facilitate the operation of their extended business, the Respondents proposed to join the two shops by opening a door in the stone wall of the premises separa­ting them from the newly acquired tenancy, to which I shall henceforth refer to as "the door". For this, they asked for the Applicants permission, which was refused, where­upon they unilaterally proceeded to demolish a part of the said wall and construct the door as proposed.

The Applicants now allege that this action of the Respondents constitutes a ground for the recovery of possession under s.16(1)(d) of the Law, on which they base the Application, which provides:

"No judgment or order for the recovery of possession of any dwelling house or business premises to which [*221] this Law applies, or for the ejectment of a tenant therefrom, shall be given or made except in the following cases;

……………………………………………………………………………………………………..

(d) where the condition of the dwelling house or business premises has, in the. opinion of the Court, deteriorated owing to acts of waste by, or the neglect or default of the tenant or where the tenant has wrongfully caused or suffered to be caused substantial damage to the premises;"

Learned counsel for the Respondents submitted that, in so far as the Statement of Claim is only based on s.16(1)(d), an order for the recovery of possession can only be made under that and not under any other ground, and, in particular, it cannot be made for breach of the tenant's obligations generally under s. 16(1)(b) of the Law, which provides:

"'Where any obligation of the tenancy other than the payment of rent (whether under the contract of tenancy or under provisions of this Law), so far as the obligation is consistent with the provisions of this Law, has been broken or not performed by the tenant and the Court considers it reasonable that such judgment or order be given or made".

He further submitted that even if the Court could consider the matter under s.16(1)(b), it would not, in the circumstances, [*222] be reasonable to" make an order for the recovery of possession.

The opening of the door could, I thought, though, of course, without deciding the point, amount to breach of the tenancy obligations such as to bring the case under s.16(1)(b), and I invited learned counsel for the Applicants to state whether the Application was in any way intended to be based on s.16(1)(b). Learned counsel having stated in answer that s.16(1)(b) was in no way intended to be relied upon and that the Application was being based solely on s. 16(1)(d), as per the Statement of Claim, I do not propose to deal with s.16(1)(b) any further and I shall only consider the Application under s.16(1)(d).

Learned counsel for the Applicants submitted,.: and, I think, rightly, that s.16(1)(d) really involves two distinct alternative situations as grounds for the recovery of possession, that is:

"(a) Where the condition of the dwelling house or business premises has, in the opinion of the Court, deteriorated owing to acts of waste by, or the neglect or default of the tenant, or

(b) where the tenant has wrongfully caused or suffered to be caused substantial damage to the premises."

He further submitted that the opening of the door amounted both to an act of waste by the tenant causing the premises to deteriorate and to substantial damage to the premises [*223] wrongfully caused by the tenant, and relied on the strong objection taken to the Respondents' action by the Applicants, as Mrs. Dora Drakou, Managing Director of the Applicants, testified.

Learned counsel for the Respondents submitted that the opening of the door could not be considered as either an act of waste by the tenant causing the premises to deteriorate or to substantial damage to the premises wrongfully caused by the tenant, relying on the evidence of Mr. Phivos Polydorides, an architect who testified for the Respondents as an expert witness, to the effect .that the opening of the door does not affect the structural safety of the premises and is not of a destructive nature. Mr. Avgerinos Papares, the Managing Director of Respondent I, who also testified for the Respondents, further stated in his evidence that the contractor engaged for the opening of the door took all necessary steps for the safety of the premises and that, as Mrs. Niki Michaelldou, Respondent 3, also testified, the Respondents, although not intending to block the door now, propose to return the premises to their original condition when they are vacated and are prepared to deposit in Court the money to be required for that purpose.

The first ground for the recovery of possession under s. 16(1)(d), that of deterioration, corresponds to the ground for possession provided by Case 3 in Schedule 15 Part 1 of the English Rent Act 1977, that is,

"Where the condition of the dwelling-house has in [*224] the opinion of the court, deteriorated owing to acts of waste by, or the neglect or default of, the tenant or any person residing or lodging with him or any subtenant of his and, in the case of any act of waste by, or the neglect or default of, a person lodging with the tenant or a sub-tenant of his, where the court is satisfied that the tenant has not before the making of the order in question, taken such steps as he ought reasonably to have taken for the removal of the lodger or sub-tenant as the case may be".

In considering the matter, therefore, I am, I believe, entitled to rely, by way of guidance, on the English autho­rities relating to it, in so far as it may not be fully covered by authority in Cyprus. There is no equivalent in the English statute of the second ground for the recovery of possession under s.16(1)(d), that of substantial damage, but it seems to me that the inclusion of this ground in the Law was primarily intended to cover instances of deteriora­tion caused by persons other than the tenant himself, which, although expressly provided for in Case 3 of the English Statute, are otherwise omitted in s.16(1)(d). I am led. to this view by the use in s.16(1)(d) of the term "suffered to be caused", which would seem intended to signify conduct other than that of the tenant, and I feel reinforced by the lack of other provision in s.16(1)(d) regarding persons other than the tenant equivalent to that in the English statute [*225]

Be that as it may, I turn to the consideration of the question whether the opening of the door does fall within s.16(1)(d) and, in the first place, whether it amounts to an act of waste by the tenant causing the condition of the premises to deteriorate. There is no definition of waste in the Law and neither my researches nor those of learned counsel have traced any in the Cyprus authorities. I, therefore, propose to rely on the English authorities in this respect as providing useful guidance for the determina­tion of the matter, and adopt the test of waste laid down by Buckley J., as he then was, in West Ham Central Charity Board et al v. East London Waterworks Co. et al (1900-1903) All E.R, Rep. 1011, at p. 1013, as:

"… whether the act which the lessor says is an act of waste by the lessee is an act which alters the nature of the land demised."

relying on Law Darcy v. Askwith (1618) Hob 234. At p. 1014, his Lordship, elaborating on the test, said:

"If the permanent character of the property demised is not substantially altered,… I conceive that the law is that it is not now waste for the tenant to do things which within the covenants and conditions of his lease he is not precluded from doing. Within those covenants and conditions he may use his holding as he pleases.

The same principle was applied in the leading decision of the House of Lords in Hyman et al v. Rose [*226] (1911-I913) All E.R. Rep. 236, which is analogous to the present Application in so far as it involved the question of relief against forfeiture of lease for alleged, acts of waste consisting, inter alia, in the opening of a new outdoorway. In dealing with the matter, Earl Loreburn, L.C., in whose opinion Lord Macnaughten, Lord Atkinson and Lord Shaw, concurred, considered waste to he a question of degree. As he put it at p. 240;

"I cannot assent to the argument that a lessee with a covenant such as this to maintain could under no circumstances, make a new door, or that doing so necessarily amounts to waste. It is a question of fact whether such an act changes the nature of the thing demised and regard must be had to the user of the demised premises which is permissible under the lease."

Considering the matter in the light of the circumstances, his Lordship came to the conclusion that the opening of the new doorway did not amount to waste, but imposed the condition that the tenant deposit a sufficient sum to secure the restoration of the building to its former condition at the end of the lease.

The application of the same principle can also be seen in the decision of the Court of Appeal in Marsden v. Edward Heyes Ltd. (1926) All E.R. Rep. 329, where the premises, originally consisting of a ground floor shop and kitchen and two first floor bedrooms, were converted by the tenant [*227] into a shop with a loft by removing the partition wall separating the shop from the kitchen and the two bedrooms from each other and replacing the staircase with a ladder. The Court of Appeal thought that the tenant's actions amounted to waste in the circumstances. Atkin L. J., as he then was, in dealing with the matter, said at p.332:

"In the present case the contract of tenancy was oral and contained no express obligation on the part of the tenants with reference to their user of the premises, so that the question is whether there is an implied term in an oral agreement for a yearly tenancy that the tenant will abstain from such acts as the defendants have committed in this case. The precise obligation of such a tenant in relation to the demised premises has been the subject of discussion for over a century, and I am not sure that the obligation can be satisfactorily defined, for it must depend on the relation between the parties, the character and condition of the demised premises and other varying circumstances. But the cases ... show that there is an obligation on the tenant to use the premises in a tenant like, or, which is the same thing, a husbandlike manner. . . . . It is clear that the tenants, by entirely altering the character of the premises, did acts amounting to voluntary waste and to a breach of this obligation."

The application of the principle of waste thus appears to me to involve a consideration of the nature of [*228] the premises and. the conditions of the tenancy as well as the acts complained of, and the question I have to decide in the instant case is whether the opening of the door, in the light of the conditions of the tenancy, changes the nature of the premises as to amount to waste« It is importantto bear in mind that the premises originally consisted of, and were let for use as, a self-contained shop and that they were held initially under a contract of tenancy and, at any rate after its expiry, under a statutory tenancy. I bear also in mind the provisions of s.21(1) of the Law which provides:

"A tenant who, under the provisions of this Law, retains possession of any dwelling house or business premises shall, so long as he retains possession, observe and be entitled to the benefit of all the terms and conditions of the original contract of tenancy, so far as the same are consistent with the provisions of this Law,……..”

In these circumstances I have no doubt that both the original contract of tenancy and the statutory tenancy are subject to an implied term that the tenant shall use the premises in a tenantlike manner, which limits the tenant’s right to effect alterations. It is true that only a limited part of the wall was demolished for the construction of the door and that the shop still remains a shop, but the extent of the alteration is not necessarily crucial to the question of waste, and I do not read Marsden v. Edward Heyes Ltd. as resting so much on the extent of the alterations, extensive [*229] though they were as on their nature and. effect on the character of the premises. I must, therefore, consider all the circumstances. It seems to me that, by connecting the premises with the adjoining shop through the door, the Respondents have effectively converted the premises from a self-contained shop in one ownership into part of a shop in two ownerships and, by so doing, entirely changed the character of the premises, thereby committing an act of waste leading to the deterioration of the condition of the premises within s.16(1)(d). Had it been only a question of the opening of a new outdoorway, as in Hyman et al v. Rose, or even a doorway connecting two shops belonging to the same owner, I would, as at present advised, have probably been of a different opinion. But this is not such a case but a case of a new doorway which joins two properties belonging to different owners, albeit held by the same person as tenant, which to my mind, involves a complete alteration of the character of the premises in the light of the purpose and conditions of the tenancy. It is this that distinguishes the case from Hyman et al v. Rose, for there the door was only an outside, door; further, the lease there was a long (99 year) lease, to which different consideration apply, and also a lease of a building, namely a chappel, which was envisaged was to be otherwise converted and was, in fact, converted for use as a cinema. In those circumstances, the opening of the new outdoor could not be said to be said to be either an act of waste or, indeed, in breach of the conditions of the lease. In short, in determining [*230] whether the act is an act of waste, the act cannot be seen in isolation but only in the light of the circumstances and conditions . of the tenancy,, which alone give it its significance.

Having found that the opening of the door was an act of waste by the tenant leading to the deterioration of the condition of the premises, it would not, strictly speaking be necessary for me to consider the further question whether it also amounts to substantial damage to the premises wrongfully caused by the tenant. However, in case I am wrong so far, I propose to consider this ground also. The demolition of part of the stone wall for the construction of the door amounted, to my mind, to damage wrongfully caused and I cannot assent to the proposition put forward, though wisely not pressed, in argument by learned counsel for the Respondents, that the damage was not wrongfully caused because the Respondents’ motive was not the destruction of the wall but the construction of the door so as to make their acts justificable. Wrongfully in this context must and does mean without legal justification and has no reference to motive whatsoever. In so far as the Respondents intentionally demolished part of the wall, they wrongfully caused damage to the premises and their motive in so doing is irrelevant.

It is true that damage, to qualify under this ground, must be substantial and not just any damage, but there is no definition of "substantial damage" in the Law nor have I been able to trace any in the authorities, An [*231] analogy in this respect may be suggested between the term "substantial" in relation to damage in s.16(1)(d) and "substantial" in relation to alteration of the premises in s.16(1)(h) to allow reliance to be placed on the authorities dealing with the interpretation of "substantial" in s.16(1)(h). I refer in particular to the decision of the Supreme Court in Michaelides v. Iacovides (1979) I C.L.R 123 and the authorities there cited to the effect that the question is one of degree and fact under s.16(1)(h). As Lord Evershed, M.R,, as cited by Hadjianastassiou J. giving the judgment of the Court at p. 129, put it in Bewlay (Tobacconists) Ltd. v. British Bata Shoe Co. Ltd. (1959) I W.L.R.4.5 at p.49:

"I think that the Judge was entitled to look at the totality of what is proposed to be done and, as a matter of fact and common sense, to ask himself the question whether these proposals involve the demolition or reconstruction of a substantial part of the premises or the carrying out of substantial work of construction on them".

I do not think that, on the basis of this definition, there is an identity or even a sufficient analogy between, substantial damage and substantial alteration, beyond the obvious one that substantial in both cases denotes more than trivial and is a question [*232] of degree and fact. In the first place, the notions of "alteration" and "damage" mean different things and qualify the meaning of "substantial" accordingly. Many alterations do not involve damage and it could, therefore, be misleading to rely too much on the notion of "substantial alteration" for the determination of the notion of "substantial damage". In the second place, the terms serve different purposes in the Law. In the case of s.16(1)(h) the term is used to denote proposed alterations which are so extensive in nature and effect as to justify the landlord's recovery of possession while ensuring that the purpose of the Law to. afford security of tenure to the tenant will not be defeated'by the landlord’s capricious demands or, more likely, his using this ground as an easy way to evicting the tenant and recovering possession with ulterior motives. Hence the requirement that the proposed alterations must, be so extensive in nature and effect as to be substantial, for a landlord would then only resort to this ground when his plans are genuine and sufficiently far-reaching to tip the balance in his favour and against the tenant’s right to protection. The position is different in the case of s.I6(l)(d)„ Here the tenant is not "innocent" as in s.l6(l) (h) but is guilty of conduct ex hypothesi inconsistent with his tenancy and it is the landlord that needs protection. Of course, by requiring that the damage must be substantial, the Law aims at avoiding results that would offend against common sense and justice as much as

against the purpose of the Law if the tenant were to be liable to eviction for [*233] the minutest of damage in breach of his duties as

tenant. On the other hand, I do not believe that the requirement that the damage must be substantial means that it must be as extensive in nature and effect as in s.l6(I)(h).

Substantial damage, it seems to me, means damage which, as a question of fact and degree, is significant or considerable and, on this basis, I conceive the demolition of part of the stone wall in the instant case to involve substantial damage to the premises. In this respect, I do not believe I can place much reliance on the evidence of Mr. Papares to the effect that the contractor engaged took all necessary steps for the structural safety of the premises, or on that of Mr. Polydorides to the effect that the opening of the door does not affect the structural safety of the premises, not so much because Mr. Papares is not an expert in the matter and Mr. Polydorides’ opinion was based only on visual observation after the work was completed, but because, even accepting the evidence on this point, it does not follow that the damage in question is not substantial merely because the structural safety of the premises is not affected. Though structural safety is a factor relevant to the determination of the question, it is not the only such factor and, in the instant case, I believe the damage to be substantial even though the structural safety of the premises might not have been affected.

Learned counsel for the Respondents invited me to hold that even if I find that the conditions of s.l6(l)(d) [*234] are satisfied I should not make an order for the recovery of possession because it would not be just and reasonable to do so. I do not consider the question of justice or reasonableness as in any way relevant in the application of s.l6(l)(d). No such considerations are contained in the section and no such considerations can be implied therein. Rather, it seems to me, if the Court finds that the conditions of s.l6(l)(d) were expressly and exhaustively provided for are satisfied, the ground of eviction is established and no discretion is allowed by the section. In so holding, I follow the interpretation placed on s.16(l)(d) by the Supreme Court in Papakokkinou et al v. Xenophontos (1979) I C.L.R. 770, where a test of reasonableness conditioned by the factor of hardship was introduced by the trial Court in the application of the section. In ordering a new trial, Triantafyllides, P., giving the judgment of the Court, said at p. 777:

"The trial Judge seems to have wrongly introduced, in an unwarranted by the relevant statutory provision manner, a test of reasonableness; and he went further and. brought in, also, the factor of hardship to the tenant, which is, again, not. evisaged by the said provision.".

However, it does seem to me that a discretion exists in another respect under s.20 of the Law, which provides: [*235]

"In any application made under this Part the Court may in its discretion order that, in addition to 'or in substitution for any other order which the Court may make, either party shall comply with any conditions, including the payment by one party to the other of any amount agreed upon by them, which the Court may think fit to impose for giving effect to the purposes of this Law."

This section, which also appears as s.14 in the Rent Control (Business Premises) Law 196l, and as s. 22 (renumbered as s.20 by the Rent (Control) (Amendment) Law 1968) in the Rent (Control) Law, Cap. 86, in effect applies where the. Court finds that a ground for an order for the recovery of possession under s.16 has been established, to allow a discretion to the Court to either (a) impose any conditions accompanying the order for the recovery of possession or (b) impose any conditions instead of making an order for the recovery of possession. S.20 thus corresponds to s.100 of the English Rent Act 1977 and, more widely, to the statutory and inherent jurisdiction of the English Courts to grant to a tenant relief against forfeiture of lease for breach of its terms.

My researches have traced no authorities whatsoever on s.20 or, indeed, on any of its predecessors and I am, consequently, dealing with it as a matter of firstimpression. It seems to me that the section is specifically designed to confer a wide discretion on the Court to impose [*236] conditions, not limited to the payment of an agreed amount, in addition to or in substitution for any other order which it may make, such discretion to be, of course, exercised judicially in the light of all the circumstances in order to give effect to the purposes of the Law. This is in no way inconsistent with Papakokkinou et al v. Xenophontos because that case only deals with the question whether any discretion exists under s.l6(l)(d) itself in the establishment of the ground for the recovery of possession and not with the wider discretion under s.20 relating to the imposition of terms (in addition to or in substitution for an order for the recovery of possession) once a ground for the recovery of possession has been established. The same is true of s.l6(1) (c), as to which the same observations were made by the Supreme Court in Papakokkinou et al v. Xenophontos and of s.l6(l)(h) in accordance with the

decision of the Supreme Court in Kontou v. Solomou (1978) I C.L.R. 425, followed in Michael idee v. Iacovides (1979) I C.L.R. 123.

The question I have to consider in applying s.20 in the instant case is, in effect, whether to impose the condition that the Respondents block the door and restore the wall to its original condition either in addition to or in substitution for an order for the recovery of possession under s.16(1)(d) which I would otherwise have made. I bear in mind that the ground and the sole ground of complaint is the opening of the door and that the waste and damage involved is not irremediable but can be repaired by [*237] the blocking of the door and the restoration of the wall to its original condition, the money for which is, according to the Respondents’ own evidence, instantly available. Seeing that if that is done the applicants will no longer have any cause to complain and will no longer be suffering any damage, and that, further, the Applicants wish the door, to which such strong objection is taken, to be blocked, whereas if an order of eviction is made the Respondents will suffer drastically through the loss of their tenancy and the disruption of their business, I consider this to be a proper case in which to order, in the exercise of my discretion under s.20, that the Respondents comply with the condition of blocking the door and restoring the wall to its original condition within three months from today in substitution for an order for the recovery of possession which I would otherwise have made. It is true that the Respondents' behaviour in opening the door against the refusal of the Applicants’ permission and refusing to block it is far from commendable, but I believe the purpose of s.l6(l)(d) is not penalisation but the safeguard of the landlord's basic rights. Considering that this safeguard can be effected through the Imposition of the above condition, without at the same time disturbing the other general purpose of the Law to afford security of tenure to the tenant, I believe the combined overall purpose of the Law in affording security of tenure to the tenant without violation of the landlord’s basic rights is best served by an order as above. [*238]

However, in case I am wrong as to the applicability of s.20, so that an order for the recovery of possession should be made, I would, in the exercise of my discretion under s.l6(2) of the Law, taking into consideration all the circumstances of the case to which I have already referred, have stayed the execution of the order up to the 15th January 1983 subject to the Respondents blocking the door and restoring the wall to its original condition within three months from today.

In the result, there will be judgment ordering, in substitution for an order for the recovery of possession by the Applicants which I would otherwise have made, that the Respondents shall comply with the condition of blocking the door and restoring the wall to its original condition at their own cost within three months from today. The Respondents are ordered to pay the Applicants' costs in these proceedings, to be assessed by the Registrar.

Judgment and order as to costs as above.