Court allows landlord recovery of possession and mesne profits under 1975 Rent Control Law despite premises being repaired before enactment.

[*56] 1975 August 29

(PIKIS, AG.P.D.C. & ARTEMIS,D.J.)

IN THE DISTRICT COURT OP LARNACA

Levon Boyadjian and Others,

Plaintiffs,

v.

D.J. Demades & Sons Ltd.,

Defendants.

(Action No. 240/75)

Rent Control (Business Premises) Law, 1961 (Law 17 of (1961) - "Completed and rented for the first time after the date on which the Law came into force” in the definition of "business premises" in section 2 of the Law - Includes premises that have been completed as a separate entity in a tenantable condition after the enactment of the Law - Whether repaired premises covered by the above definition.

Landlord and tenant - Recovery of possession - Mesne profits - Basis of determination.

Statutes - Retrospective operation - Principles applicable - Whether the Rent Control Law, 1975 (Law 36 of 1975) has retrospective effect.

Rent Control Law, 1975 (Law 36 of 1975) - Applicable to pending actions - Section 26 of the Law.

G. Nicolaides, for the Plaintiffs.

A. Poetis, for the Defendants.

JUDGMENT

The judgment of the Court was delivered by:-

PIKIS, AG.P.D.C.: On 23rd May 1969 [*57] a tenancy agreement was executed by the plaintiff 1 and the defendants whereby the former agreed to lease to the latter premises at Larnaca in accordance with the terms and conditions set out therein. One of the terms of the agreement was that before delivery of the premises repairs of a total value of £1 ,600.- would be carried out, apparently in order to render the premises suitable for the business of the defendants; a substantial part of the repairs would be paid by defendants. The repairs were carried out in accordance with the terms of the agreement and the defendants moved in on 15th September, 1969 and began to pay rent from the 1st October, 1969. The lease was for a 5 - year period, ending on 30th September, 1974. The stipulated repairs included -

(a) structural alterations of the premises;

(b) improvements in the building; and

(c) improvements of a decorative nature.

We have heard evidence from plaintiff

1 and Mr. Ioannis Demades, the managing director of the defendant/company, about the condition of the premises before and after repairs. We have gone into their evidence carefully and we consider it appropriate, before examining the case any further, to make first our findings on this aspect of the case.

Before the premises were let to the defendants, they formed part of a soap factory erected in the early forties and two water tanks were stored therein. It [*58] was, in essence, a store in a poor structural condition with no flooring and a ceiling in a dilapidated condition. In consequence of the repairs the prmises were considerably extended and the shop in its completed form was approximately 4/3 of the extent of the store. The extra space had been designed for use as a showroom and was fitted with glass on three sides, making it suitable for the desired use, The alterations carried out therein included inter alia. the demolition of an old wall, the construction of a proper floor and the improvement of the ceiling. In short, an old store in a fairly dilapidated condition was converted into a modern show-room.

In September, 1973, the owners of the premises served notice on the defendants of their unwillingness to renew the tenancy at Its expiration. In the meantime plaintiff 1 ceased to be the sole owner of the property as he transferred part of his property in the shop to his sons and wife, apparently in undivided shares. The defendants remained in occupation after the expiration of the contractual tenancy and made several attempts to pay rent to the plaintiffs, a thing they refused to do. Subsequently the defendants made, without the approval of the plaintiffs, payments in the bank account of plaintiff 1. In the meantime it was intimated to the defendants in no uncertain terms that plaintiffs were not prepared to renew the agreement. The fact that the money paid into the account of plaintiff 1 was not returned does not signify acceptance [*59] on the part of the plaintiffs, more so in the light of the behaviour of the plaintiffs and their explicit communication to the defendants about their unwillingness to enter into a new tenancy agreement. In the course of the trial a vague effort had been made to suggest to the plaintiffs that they had impliedly agreed to the extension of the agreement by accepting rent but this was abandoned as we understood in the final address of counsel for the defendants who unequivocally submitted that the fate of this action turned solely on whether the premises are covered by the provisions of Law 17/61.

Counsel agreed that the sole issue posing for consideration is whether the premises in question were covered by the provisions of section 2, Law 17/61 and in particular whether they had been "completed and rented for the first time after the date on which the Law came in force". Law 17/61 had been enacted on 28th April, 1961.

The word "and" is ordinarily interpreted in a conjunctive sense though exceptionally it may be read in a disjunctive sense if this is necessary to avoid an absurdity. (See Anisminic, Ltd. v. Foreign Compensation Commission (1969) 2 W.L.R. 163 - R. v. Newbould (1962) 2 Q.B. 102). In the context of section 2, Law 17/61, the word is clearly used in a conjunctive sense and we agree with the submission of Mr. Poetis that only premises that have been both completed and rented after the enactment of the Law and exempt [*60] from its provisions. We have not been referred to any authority and our own research has made us no wiser concerning the interpretation of this provision of the Law and in particular the meaning to he attributed to the word "completed". The Concise Oxford Dictionary gives the following definition to the verb "complete": "Finish, make whole or perfect; make up the amount of. "So completion n., completive". A similar meaning is attributed to the word in the "### (See volume 17, p. 412 the verb "###"). The word "complete" connotes, to our comprehension, a finished product or article in contrast to an unfinished object. In our judgment the phrase "completed and rented" includes premises that have been completed as a separate entity in a tenantable condition after the enactment of the Law. Any objective observer would, without difficulty, come to the conclusion that the premises rented to the defendants were, in every material respect, different from the store earlier annexed to the soap factory. Prior to the repairs we had a store in a fairly dilapidated condition whereas what was rented to the defendants was a self-contained shop with a show-room bigger in extent in comparison to the store and with a different appearance. Our finding is that the premises that were rented to the defendants had been completed and rented for the first time after the enactment of Law 17/61. Therefore at the expiration of the contractual agreement the defendants had no right to stay in the premises as statutory tenants. They remained in the premises as trespassers [*61] and what must he decided next are the mesne profits to which the plaintiffs are entitled.

In an action for ejectment it is perfectly possible to include a claim for mesne profits, as in this action, and such profits may be assessed down to the time of the verdict. (See Woodfall on Landlord and Tenant, 26th edition, volume 1, paragraph 2330).

Mesne profits are determined on the basis of the fair rental value of the premises. (See Cavendish-Bentinck v. Cavendish-Bentinck (1948) 2 AH E.R. 285). In arriving at the rental value of the premises regard may be had, inter alia, to the rent paid prior to the expiration of the contractual period though this is not conclusive. (See Rawlence v. Croydon-Corporation (1952) 2 All E.R. 535). Of course the relevance of such evidence weakens if the tenancy is an old one and the rental agreed does not reflect the state of the rent market at a point of time near the relevant date. In this case the rental had been agreed in 1969 and was for a sum of £1,600.- for a 5-year period. A sum of £1,300.- was paid in advance to facilitate the plaintiffs carry out the stipulated repairs. In the contention of the plaintiffs the rental agreed in 1969 in no way indicates the rental value of the premises in 1974 and subsequently and Mr. Boyadjian cited the rental paid

by the tenants of three adjoining shops belonging to the plaintiffs. One of the [*62] shops was let to Mr. Chopurian in at a monthly rental of £80.- It is

smaller in extent in comparison to the shop let to the defendants and has no show-room. Two smaller shops, again the property of the plaintiffs, the combined extent of which is approximately equal to that of the shop let to the defendants, were let in 1975 for £40. - per month each. Plaintiff 1 insisted in evidence that the shop let to the defendants is superior to that let to Mr. Chopurian in every respect and that it is alsO better than the two smaller shops put together. This allegation was disputed by Mr. Demades, who maintained that the premises let to Mr. Chopurian were, for the reasons he gave in evidence, superior to those let to the defendants. Mr. Demades stressed that the premises in question are apt to create difficulties for tenants as they abut a factory and have to cope with

dust coming therefrom. In the course of the cross-examination of plaintiff 1 the defendants made the point that rents

at Larnaca have gone up after the tragic events of last summer and in. particular after the expulsion of the Greek population of Famagusta.

We have gone carefully into the conflicting versions and having done so we accept the evidence of Mr. Boyadjian as to the comparative merits of the four shops. In the light of the totality of the evidence before us we find that a fair rental value for the premises after the expiration of the contractual tenancy and up to the date of judgment is £80.- per month. [*63]

This judgment had teen written on 11th July, 1975 and we were minded to give the judgment over the next two days. However in the evening of 11th July, 1975, we heard over the radio and read in the press the following day that a new Law had been enacted amending and. codifying the Rent Restriction Laws. We thought it appropriate, in the circumstances, to postpone giving our judgment until we had an opportunity to read the new Law. Eventually Law 36/75 was published wherein provision is made for extending, after an order of the Council of Ministers, specifying the areas, the application of the Rent Control Laws to all premises completed and rented for the first time prior to 31st December, 1974. In the meantime properties within the town of Larnaca have been declared to be controlled premises.

Following the enactment of the new Law we thought it pertinent to give the parties an opportunity to voice their views on the implications of its provisions on the outcome of this case, a course that was made necessary by the fact, inter alia, that neither the wording nor the sectioning of the new law is happily drafted. On the part of the tenant it has been argued that the provisions of the law are given retrospective effect, an intention manifested by the provisions of section 26 making applicable the provisions of the law to cases for the recovery of possession pending before the Courts on the

day the law came into force. Counsel was unable, this section apart, to make any definite submission whether the provisions of the law

are given a retroactive [*64] effect in the sense that they re-define ex posto facto the legal relationship of the parties on 1.10.74, interfering thereby with rights that accrued under the preexisting law. On the other hand it was submitted for the landlord that the law is not intended to have retrospective operation except for certain provisions of it, clearly earmarked in the law itself relating to the readjustment of rents made applicable to pending cases, as well, by virtue of the provisions of section 26.

It is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implications. (See Maxwell on the Interpretation of Statutes, 12th edition, 21 5o The following statement of R. S. Wright J., in Re Athlumney (1898) 2 Q.B. 551, cited with approval in Maxwell on Interpretation of Statutes, has gained universal approval:-

"Perhaps no rule of construction is more firmly established than this - that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only". [*65]

It is also instructive to have regard to what Lord Reid had said on the subject in Commissioners of Customs v. Gallaher (1969) 2 All E.R. 328.

The Courts lean strongly against giving a statute retroactive effect in the sense of upsetting vested rights and only where the legislature manifests on unequivocal intention to bring about such a state of affairs will Courts be driven to give retrospective effect to a statute. Courts credit the legislature with a disinclination to interfere with vested rights, a course inherently unfair and damaging for the confidence reposed by the public in the law so essential to uphold faith in the law. Some examples will demonstrate how law Courts in practice have given effect to the presumption against retroactivity. In R. v. Inhabitants of St.Mary, Whitechapel

(1848) 12 Q.B. 120 and in R. v. Inhabitants of Christchurch (1848)

12 Q.B. 149 the Court refused to construe retroactively statutes merely because some prerequisites for their operation were drawn from a period ot time antecedent to their operations. In London Fan and Motor Co. Ltd. v Silverman

(1942) 1 All E.R. 307 the Court refused to give retroactive effect to a statute disigned to give relief from the payment of rent to tenants of war damaged property by allowing a tenant to recover rent paid before the enactment of the Landlord and Tenant (War Damage) (Amendment) Act, 1941 which provided inter alia " ... and any rent paid by the tenant in respect of that period in excess of the amount apportionable ... [*66] shall be recoverable by him”. A similar construction was favoured in Longford Property Co. Ltd. v. Emerich Pajzs (1943) 2 All E.R. 687. These authorities evidence the strength of the presumption against interpreting a statute retrospectively and also indicate that legislation aimed at relieving war consequences is no exception to the general rule that in the absence of a compelling wording to the contrary every statute shall be given effect prospectively.

An example of the kind of wording that will suffice to rebut the resumption against giving a statute retrospective effect may be found in the case of Attorney- General v. Vernwzza (1960) A.C. 965 where it was held that the following provision of the 1959 Supreme Court of Judicature (Amendment) Act had retroactive effect "any legal proceedings instituted by (the vexatious litigant) in any Court before the making of the order shall not be continued by him without leave”.

The Rent Control Law of 1975 (36/75) seeks primarily to extend the ambit of controlled properties making the. 31.12.1974 a crucial date for discerning the presence of certain facts essential for the classification of premises and secondly purports to relieve tenants of certain contractual monetary obligations depending on the location of the rented property. It also deals with a number of other related and ancillary matters. In the former case regarding the extension of the Rent Control Laws to properties hitherto uncontroled, there is nothing in the law to give its provisions [*67] retrospective operation in the sense of giving the status of a statutory tenant to a trespasser. On the other hand the provisions of the law regarding relief from the payment of rent or a re-ajustment of rent have clearly retrospective effect in the sense that they re-define the contractual relationship of the parties, as for example in the case of section 10(1) of the law. The object of section

26 is to extend the operation of these retroactive provisions to pending actions thereby rebutting the presumption that the rights of the parties in such action are decided according to the law as it existed when the action was begun (National Real Estate & Finance Company Limited v. Hassan (1939) 2 K.B. 61 and Maxwell on the Interpretation of Statutes - 12th edition - p. 220). Therefore by virtue of section 26 the provisions of Law 36/75 including those with retroactive effect are made applicable to pending actions for the recovery of possession. If this was not the object of section 26 it would lead to the absurd result of giving retroactive effect to otherwise prospective provisions of the statute whereas future actions would be decided independently of the provisions of section 26.

The provisions of Law 36/75, though they alter the substantive Law and in consequence affect the rights of landlords and tenants, this alteration has a prospective application in the area indicated and is in no way intended to affect the vested rights of the parties. In other words, persons who are in [*68] the position of tenants after the enactment of the Law may derive benefit from its provisions. There is nothing in the Law conferring a right on persons who were trespassers in premises before its enactment to remain in occupation of the premises. In consequences the recent amendment of the Law can have no bearing on the outcome of this action.

In the result, the defendants are ordered to vacate the premises.

Judgment is given for the plaintiffs for £880.000 mils, representing mesne profits from 1st October, 1974 to 31st August, 1975. The plaintiffs are entitled to costs on the scale of claims between £2,000.- to £5,000.-

Defendants ordered to vacate premises.

Judgment for £880.- as mesne profits.