Court dismisses landlord's claim as surviving partner remains protected statutory tenant under Rent Control Law.

[*1197] 1972 October 18

(STYLIANIDES, P.D.C., HJITSANGARIS, D. J. )

IN THE DISTRICT COURT OP LIMASSOL

Ismini Th. Politou,

Plaintiff,

and

K.

S. Hassapis and Co., and Another,

Defendants.

(Action No, 2192/70).

Landlord and tenant - Joint tenancy - Contractual tenancy - Determination of - Lessees holding premises over as statutory tenants - Section 2 of the Rent Control (Business Premises) Law, 1961 (Law 17 of 1961) - Business premises leased to partnership - Dissolution of partnership by death of one of its partners - Formation of new partnership - Surviving partner the main partner - Premises not sub-let - And partnership business housed in the same premises - Surviving partner a statutory tenant - Members of the new partnership not trespassers - Payment of rent by occupier of premises - Into landlord's account - Whether it creates a new tenancy.

J. Potamitis, for the Plaintiff.

V. Tapakoudes, for the Defendants.

JUDGMENT

The judgment of the Court was delivered by:-

STYLIANIDES. P.D.C.: This Action was originally [*1198] raised against Defendant 1, a partnership. By order of the Court dated 15/10/71 a second Defendant, Costas S. Hassapis, was added and the Statement of Claim was amended accordingly.

The Plaintiff by this Action claims

(a) Order of the Court restraining the Defendants, their servants and agents from interfering with the premises situated at the corner of St. Andrew and Archbishop Kyprianos Streets in Limassol, and that the Defendants do deliver to the Plaintiff vacant possession of the said premises, and

(b) £2,400 damages for the period 28/3/68-28/8/70 and £80 per month from 29/8/70 until vacation of the premises.

The Plaintiff is the daughter of the late

N. Cl. Lanitis; he and his family were forced in 1931 to leave the country for Greece. The Plaintiff made Athens her permanent home. She paid only very short and occasional visits to this country after 1950.

The shop situated at the corner of St. Andrew and Archbishop Kyprianou Streets was the ownership of the plaintiff’s father. It was leased by a Contract dated 8/7/1946 (exhibit 13) to B. S. Petrides & Co., merchants of Nicosia, who were represented in Limassol by Defendant 2, Costas S. Hassapis and his late brother, Kyriacos S. Hassapis.

In 1953 Kyriacos Hassapis and Costas Hassapis formed a partnership under the name of K. S. Hassapis [*1199] which in due time was registered under the law. A photostat copy of their partnership agreement is exhibit 2 before us.

On 17/10/59 a written agreement (exhibit 1) was executed by the aforesaid partnership and the Plaintiff's advocate on her behalf, whereby the said shop was let to that partnership for three years (7/7/59–6/7/62); if any of the contracting parties did not notify in writing to the contrary two months prior to the expiration of the said period, the lease would be continued for another year.

The tenants were paying the rent bi annually by lodging same in the account of the owner with the National Bank of Greece, Limassol Branch·

Clause 10 of exhibit 2 provided that in the event of the death of Kyriacos Hassapi, the heirs of Kyriacos Hassapi would be entitled (tha metechoun) to 40% of the profit and loss of the partnership, each one according to his legal share. If any of the heirs elected not to take part in the partnership, his share would go to the benefit of Costas S. Hassapis.

Kyriacos Hassapis passed away on 7/10/67 (see exhibit 5, Certificate of Death). Letters of Administration of the estate of the deceased were granted on 2/11/67 to Costas S. Hassapis (see exhibit 12).

Two of his heirs elected not to take part in the partnership. The surviving partner, his wife and the other heirs of Kyriacos S. Hassapis on 1/1/68 entered into a [*1200] partnership agreement, photo copy of which was produced as exhibit 3. This partnership was registered under the name K. S. Hassapis & Co. (vide letter of the Acting Registrar of Companies, exhibit 4). This partnership, as it is obvious from the preamble of exhibit 3, continued the business which was carried on by its "predecessor" partnership which was dissolved by the death of Kyriacos S. Hassapis. None of the other partners was entitled to sell his share in the partnership without the consent of Costas S. Hassapis who had the option to purchase same. On the dissolution of the partnership, the partnership, business and assets would be taken over by Costas S. Hassapis and his wife on payment to the other partners as per the provisions of exhibit 3 which we find unnecessary to include in this judgment. Costas S. Hassapis and his wife were rendering their personal services for the carrying out of the business of this partnership .

The business of the partnership continued to be housed in the afore-described premises of the Plaintiff. The rent was regularly lodged at the bank.

This partnership is Defendant 1 firm. It was dissolved on 30/12/70.

On 1/1/71 a new partnership was formed and registered under the name K. S. Hassapis & Son, its members being Defendant 2, Costas S. Hassapis, his wife and son; their respective shares in the partnership property are 65%, 30% and 5%. They are the occupants of the premises in question; their line of business is the same. [*1201]

The plaintiff since 1967, for personal reasons, did not receive a Statement of Account from her hank. The rent continued to be lodged at the hank and the payee appears on exhibit 11 (receipt dated 2/7/70) to be K. S. Hassapis & Co. The rent agreed in 1959 was £45 per month.

In April, 1970 the plaintiff gave instructions to her advocate to demand an increase of rent. Letter (exhibit 6) dated 21/4/70, was sent by the plainitff's advocate to "Eteria K. S. Hassapis" (K. S. Hassapis partnership). This is the name of the first partnership, the lessee in the Contract exhibit 1, As there was no response to that letter, Plaintiff's Counsel addressed to the same partnership on 12/5/70 another letter informing the addressees that if they did not offer rent to the satisfaction of the Plaintiff, measures would be taken for the adjustment of the rent by the Court. On 10/8/70 the Certificate of the Registrar of Companies (exhibit 4.) was received by Mr. Potamitis who then became aware of the existence of the second partnership and, thereupon, ho sent to the second partnership a letter dated 14/8/70 (exhibit 8), whereby he asked for the vacation of the premises and payment of £80 per month, damages from the date of death of the late Kyriacos Hassapis, as he considered the possessors thereof trespassers from that date. The Plaintiff was not aware either of the death of Kyriacos Hassapis or of the formation of the new partnership.

On 17/8/70 Mr. Tapakoudes, acting for K. S. Hassapis & Co., replied by exhibit

9 to the letter (exhibit 8) contending that his clients were lawfully in possession of the premises as:- [*1202]

(a) The members of the new partnership were the heirs of Kyriacos S. Hassapis and the surviving member of the first partnership, and

(b) The plaintiff was collecting the rents for about three years from this partnership.

On 19/8/70 these proceedings were instituted against K. S. Hassapis & Co.

On 12/7/71 Defendants' Counsel, by letter (exhibit 10), informed Plaintiff's Counsel that the second partnership was dissolved and that the shop is in the possession of Costas S. Hassapis. Hence the application for the addition of Defendant 2.

It is the allegation of the Plaintiff that on the determination of the contractual lease (exhibit l) the lessee held over the premises. On the dissolution of the partnership by the death of one of the partners the persons who possessed the shop became trespassers. The payment of rent in the way it was paid and the lack of knowledge by the Plaintiff of the death of Kyriacos S. Hassapis and the formation of the new partnership did not create a new tenancy as the parties were not ad idem.

It is the contention of the Defendants that Kyriacos S. Hassapis, deceased, and Costas S. Hassapis of Limassol, as the only partners in the first partnership, were statutory tenants; that Defendant 2 lawfully continued to be in occupation of the premises as a statutory tenant. It was in the [*1203] alternative alleged that he continued to be in possession as Administrator of the estate of the deceased partner, Kyriacos S. Hassapis, and that the Plaintiff is estopped from alleging that the defentants’ possession is unlawful because she was receiving rents and thus accepted the defendants as her tenants.

The contractual tenant under exhibit 1 was a partnership composed of two members. Partnerships in Cyprus are governed by the Partnership Law, Cap· 116 which is a reproduction of the English Partnership Act, 1890. This Act is merely a declaratory Act. It states the Law as it affects partners in relation to third persons under ordinary conditions and in the absence of special circumstances, (Per Farwell, J., in British Homes Assurance Corporation v. Patterson.

71 L.J. Ch. p. 872 at p. 875).

"Partnership" is defined in section 5(l) of Cap, 116 as the relation which subsists between persons carrying on a business in common with a view to profit.

A partnership is not a legal person.

In Re Sawers Ex Parte Blain (1874-1880) All E.R. (Rep.) James, L.J., said that a partnership firm is not a legal entity, like a limited company, nor is it, for any purposes, a persona so that a partnership firm could neither sue nor be sued except in the names of the individual partners who composed it. [*1204]

In Vagliano Anthracite Collieries, Lim., In re., (1910) 79 L. J. Ch. p. 769, Joyce, J., said:-

"In my opinion the application fails, and, whatever other reasons may be, I put it on the short ground that the applicants are not a 'person' - neither a natural person nor a legal entity at all. As it is put in Palmer on Companies a ’firm is not a person in law, distinct from the partners who compose the firm. The partners are themselves the firm. They are the joint owners of the partnership property'. And I may also refer to what was said by Lord Justice Farewell in Sadler v. Whiteman (1910): ’In English law a firm as such has 110 existence; partners carry on business both as principals and as agents for each other within the scope of the partnerhip business; the firm name is a mere expression, not a legal entity, although for convenience under Order XL VIII.A it may be used for the sake of suing and being sued’. In English law a firm is not a person."

By effluxion of time the lease created by the contract, exhibit 1, came to an end. The partners held over. Under the general law of the land, the tenants ceased to have any right to remain in possession of the subject shop and the owner was entitled to recover possession [*1205] thereof. In 1961, however, the legislator imposed certain restrictions on the rights of the landlords manifestly for the general or social interest.

Until 31/12/58 the Law obtaining in this country was protecting the tenants of business premises. This Law, so far as it related to business premises, was abolished on 31/12/58. In 1961 The Rent Control (Business Premises) Law 17/61 was enacted. It came into operation on 17/10/71 by Law 39/61. The object s of Law 17/61 were to protect the tenants of business premises from eviction and to empower the Court to adjust the rents having regard to all the circumstances of each particular case, (See objects and reasons published in Supplement No, 6 of the Official Gazette No.45 dated 3/3/61). This Law followed the model of the Law in operation prior to 31/12/58 and of the English Rent Restrictions Act, 1920.

The shop in question is within the ambit of the provisions of the Law as it is situated within the Municipal Limits of Limassol town and it was erected and first let prior to the enactment of Law 39/61.

"Tenant" and "statutory tenant" are defined thus in section 2 of Law 17/61:-

"’Tenant’ means the tenant of business premises in respect of which a tenancy exists and includes: -

(a) a statutory tenant; [*1206]

(b) any sub-tenant o any other person deriving a right from the original tenant or sub-tenant to possess the business premises;

(c) the widow of a tenant who was residing with him at the time of his death, or, where at tenant leaves no widow or is a woman, such member of the tenant’s family as was residing with the tenant for not less than six months immediately before the death of the tenant.

Statutory tenant’ means a tenant who, at the expiration or determination of his tenancy continues to be in possession of the premises".

When the relation of the parties is that of landlord and tenant the inference is easy to draw that on a holding over after the expiration of a lease by effluxion of time a statutory tenancy is created. (Per McNair, J., in Murray, Bull . & Co., v. Murray, (1952) 2 All E. R. 1079 at p. 1081; see also Katsikides v. Constantinides (1969) 1 J. S. C. p. 107).

In Strutt v. Panter (1953) 1 All E.R. 445, Evershed, M. R., said:-

"A statutory tenancy can only come into existence - where a contractual tenant retains possession of the subject matter of the tenancy - after the contract has been determined". [*1207]

On 7/7/63 a statutory tenancy was created. The partners thereafter possessed the shop as joint statutory tenants until the death of Kyriacos Hassapis.

On 7/10/67, by the death of one of the partners, the partnership was dissolved. (Section 35(l) of the Partnership Law, Cap. 116). The relations between partners are governed by the partnership agreement and the Law.

Section

23 of our Partnership Law reads:-

"23(1) All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Law partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement:

Provided that the legal estate or interest in any land which belongs to the partnership shall devolve according to the nature and tenure thereof and the general rules of the law thereto applicable, but in trust, so far as necessary, for the persons beneficially interested in the land under this section".

On the dissolution of a partnership by death, the [*1208] share of the deceased devolves to his legal personal representative. The surviving partners are under no obligation to retire from business themselves and cannot, it seems, be prevented from recommencing business together in the name of the old firm unless the goodwill has been or is to be sold. (Hill v. Fearis

(1905) 1 Ch. 466).

Equity recognises no right of survivorship as regards partnership property. This has been expressed by the maxim jus accrescendi inter mercatores locum non habet. (Halsbury's Laws of England, 3rd edition, volume 28, p.531).

In Re Fuller’s Contract. 102 L.J. Ch. p. 255, Luxmoore, J., after referring to the judgment of Romer, L.J., in Re Bourne, v. Bourne,

75 L.J. p. 783, said;-

"I think Romer, L. J , was only pointing out that the beneficial interest in the real estate belonged to the partnership, that is to those persons who constituted the partnership, and that those persons were together entitled to the partnership property. Of course, as between the partners, the partnership property must be dealt with in a particular way, but so far as all the rest of the world is concerned, there is no limitation to the interest of the partners. The partners have the beneficial interest in the partnership assets, which are held together as an undivided whole, but they respectively have undivided interests in them". [*1209]

Did the deceased, Kyriacos Hassapis, leave any right or interest in this shop which was. vested in his legal personal representative or devolved to his heirs at law? We shall dwell upon the nature of statutory tenancy.

Bankes, L.J,, had this to say in Remon v. City of London Real Property; Co., 89 L.J, K.B. 1105:-

"In no ordinary sense of the word was the respondent a tenant of the premises on July 2. His term had expired. His landlords had endeavoured to get him to go out. He was not even a tenant at sufferance. It is however clear that in all the Rent Restrictions Acts the expression ‘tenant' has been used in a special, a peculiar sense, and as including a person who might he described as an extenant, some one whose occupation had commenced as tenant and who had continued in occupation without any legal right to do so except possibly such as the Acts themselves conferred upon him".

The right conferred upon the statutory tenant - in the absence of an express provision altering it in any particular case - is a purely personal right with which he cannot deal. (Scrutton, L.J. , in John Lovibond & Sons v. Vincent,

98 L.J. K.B. at p. 405).

The status of a statutory tenant is something of a. Jurisprudential curiosity, and may well be described as [*1210] an anomalous legal entity. (Brown v. Minister of Housing and Local Government (1953) 1 W.L.R. 1370).

In Dudley and District Benefit Building Society v. Emerson,

(1949) Ch. 707 at 717 C.A , Evershed, M. E., said that a statutory tenancy is merely a compendious expression to describe the right of a tenant of protected premises to remain in possession of those premises, notwithstanding the determination of his contractual interest.

In Marcroft Wagons v. Smith (1951) 2 All E.R. p. 271 at p.

274 the same M.R., aptly described statutory tenancy as a statutory right of irremovability.

The Court has been gradually working towards a general principle that the Act extends, and relates, to a tenant in residence, a tenant whose home the house in question is, a tenant who desires to live there, or if he is away, desires to return there. (Scrutton, L.J., in Skinner v. Geary, 100 L.J. K.B. p. 275).

Bankes, L.J., in Keeves v. Dean, 93 L.J, K.B, at p. 204 said:-

"His right is a purely personal one and, as such, unless the statute expressly authorises him to passs it on to another person, must cease the moment he parts with the possession or dies. (The underlining is ours)."

Against this background of the Law, we shall consider the case under determination. [*1211]

The contractual tenants were the two persons who composed the partnership as the partnership is not a legal person. They were joint tenants. They became statutory tenants after the expiration of the contractual tenancy. The statute provided them with security of possession. Upon the death of Kyriacos Hassapis and the consequential disssolution of the partnership the rights and interests of the deceased were vested in his personal representatives and ultimately devolved to his legal heirs. The right of Kyriacos Hassapis to retain possession of the shop came to an end upon his death. He had no interest; he was possessed only with a personal right. The protective umbrella of the Law covered him; but when he passed away no one was entitled to step in his place except as provided by law. The definition of "tenant" and "statutory tenant" leaves no room for doubt that only the wife of a statutory tenant residing with him at the time of his death, or a member of his family residing with him for not less than six months immediately before the death of the tenant, are covered. The statutory tenancy is transmitted only to such a widow or member of the deceased tenant's family; and there is no evidence that the deceased, Kyriacos Hassapis, left such persons on his decease.

The surviving partner, Defendant 2, by the dissolution of the partnership, was not deprived of his right under the Law. He was a joint tenant. He did not give up possession He remained in possession of the shop. On 1/1/68 a new partnership was formed - Defendant No. 1. Defendant 2 was the [*1212] main partner. This defendant did not sub-let the premises in question. The business of this second partnership was housed in the same shop. The second partnership was dissolved and a third partnership was formed composed of Defendant 2, his wife and son. They carry on the same business in the same shop. Defendant 2 holds 65% of the property of this partnership. He is rendering his personal services.

In our judgment Defendant 2 did neither abandon the shop nor did he sub-let the whole thereof. In fact, he possesses the premises. He does so as the sole statutory tenant. He is protected by the Law as he has never moved away from its umbrella and he has complied with the terms and conditions of the original contract. This is the only reasonable interpretation of the Law. To hold otherwise would defeat the object of the Law.

We are of the view and so hold, in the light of the foregoing, that Defendant 2 is a statutory tenant. He is not in unlawful possession of the premises. He is afforded by Law sufficient protection to successfully resist the claim of the Plaintiff for recovery of possession.

We turn now to Defendant 1, partnership. The main partner was Defendant 2. The partnership business was housed in the said premises. In view of the legal position of a partnership, the partnership property, the partnership agreement and the right of Defendant 2, we hold that the members of this "firm" were not trespassers. [*1213]

It was alleged in the Statement of Defence and submitted by Defendants' Counsel that the payment of rent created a new tenancy. As we have reached the

conclusion that Costas Hassapis was at all material times and continues to be a statutory tenant, it is not necessary for the determination of this Action to examine this proposition.

For obvious reasons, however, being a Court of first instance, we shall not avoid resolving this question.

Has the payment of the rent by the occupier of the shop into the plaintiff’s account with the National Bank of Greece in Limassol created a new tenancy? The matter is not devoid of authority.

Lord Mansfield, C.J. , in Doe d. Cheny v. Batten, (1775-1802) AllE.R. (Rep.) p. 594 at p. 595 said:-

"The single question is whether the landlord has, by any subsequent act or agreement, waived his right and consented that the tenant should continue the possession. If he has, there is no doubt that he will be bound by such agreement. As to that, the fact is that the landlord has received, eo nomine, a quarter's rent which became due after the time of the demise in the declaration laid. This circumstance, it is insisted, is in fact a declaration on his part that he departs from the notice he has given, and is an acknowledgment that, he still considers the defendant as his tenant. [*1214]

Let us, however, suppose the landlord had accepted this rent under terms, or made an express declaration that he did not mean to waive the notice and that, notwithstanding his acceptance or receipt of the rent, he should still insist on the possession. Or suppose any fraud or contrivance on the part of the tenant in paying it. Clearly in such circumstances, the plaintiff ought not to be barred of his right to recover. But all these are facts which ought to be left to the consideration of the jury.

The question, therefore, is. quo animo the rent was received, and what the real intention of both parties was? If the truth of the case be that both parties intended the tenancy should continue, there is an end of the plaintiff's title; if not, the landlord, is not barred of his remedy by ejectment …."

In Clarke v. Grant and Another (1949) 1 All E.R. p. 768, Lord Goddard, C.J., referred to the above quotation of Lord Mansfield and held that the acceptance by the landlord of rent in respect of a period after the termination of the tenancy by the notice to quit did not operate as a waiver of the notice and the landlord was entitled to possession. At page 769 of the report he said:-

"It is impossible to say that the parties in this case intended that there should be a new [*1215] tenancy. The landlord always desired to get possession of the premises. That is why he gave his notice to quit. The mere mistake of his agent in accepting the money as rent which had accrued is no evidence that the landlord was agreeing to a new tenancy".

In Marcroft Wagons v. Smith (supra), Lord Denning at page 277 said that the test laid down in Doe d. Cheny v. Batten by Lord Mansfield applied in rent cases, and he further said:-

"If the acceptance of rent can he explained on some other footing than a contractual tenancy, as, for instance, by reason of an existing or possible statutory right to remain, then a new tenancy should not be inferred".

The same test was applied the following year in Murray, Bull & Co., Ltd., v. Murray (supra).

In Schiza & Another v. Gavrias & Others, 21 C.L.R. p. 177, in which rent was accepted by the plaintiff's clerk and agent after the death of the protected tenant, the trial Court said:-

"The Plaintiffs gave an explanation as to why the rent for the month of March was kept so long. Their explanation is quite possible and I think the circumstances

under which it was paid and received by the cashier did not create [*1216] any contractual tenancy in favour of the defendants"

The Court of Appeal had this to say on this issue:-

"Having considered the relevant parts of the evidence on this issue we are not prepared to upset the finding of the trial judge on a question of fact as to the intention of the parties and we consider that he was justified in holding that the receipt of rent for March by a clerk of the plaintiffs was not sufficient to constitute a new contractual tenancy".

In the case under consideration the plaintiff was abroad. She was not aware of the death of Kyriacos Hassapis and the dissolution of the partnership. She did not know by whom the rent was paid in her account and, therefore, the occupier and/or the person who paid the amount was not ad idem with the plaintiff, and if the defendants were not protected by the Rent Law they were only trespassers as under the circumstances no new agreement was entered into or could be inferred from the payment of the rent in the way. it v/as done in this particular case.

As Defendant 2 is a statutory tenant this Action will ultimately he dismissed.

Consonant to modern practice we shall proceed to assess the mesne profits the plaintiff would have been entitled to, had she been successful in her claim for recovery [*1217] of possession. had the defendant been a trespasser he would not have been able to resist the prayer for ejectment and he would have been liable to pay damages from the day he ceased to be a statutory tenant and became a trespasser.

Mesne profits are damages for wrongful possession and they are equal to the rental value of the premises.

The plaintiff claims £80 per month as from the date of the decease of the late Kyriacos Hassapis.

Pantelakis Kyprianides, an. ex District Lands Officer, with long experience in evaluation,

gave evidence on this issue and referred to other shops situated in St. Andrew’s Street in Limassol, and estimated the

reasonable rent for this shop between £120-£130 per month.

Andreas Philippou Loukaides (p.W.3) the Accountant of the Cyprus Estates Company Ltd., which own a number of shops in St. Andrew's Street, gave evidence as to the rents of those shops and produced contracts of lease relating to them. Teleradio shop, which is opposite the subject-matter shop, was leased in February, 1963 at £93 per month. The rent early in 1964, due to the events which prevailed in the country at the time, was reduced to £85 but later it was increased to £100 per month. (Vide exhibits 14 & 15).

Bearing in mind the evidence of these two witnesses and the fact that improvements were made to the subject shop by the tenant, we find that £80 would be a moderate rent for the shop in question as from the end of 1967. [*1218]

In the result, this Action is dismissed, but in all the circumstances of the case we make no order as to costs.

Action dismissed.

No order as to costs.