Court awarded mesne profits to landlord for void lease, allowing recovery of advance rent payment.

[*24] 1980 Oct 31

(G. NICOLAOU, D.J.)

IN THE DISTRICT COURT OF NICOSIA

Sophoulla Zographou,

Plaintiff,

v.

Costas Panayiotou and Others,

Defendants.

(Action No. 4553/78).

Landlord and tenant - Mesne profits - Whether to be awarded upto the time of delivery of possession or up to the time of judgment.

Landlord and tenant - Contract of lease - Not bearing the names of two subscribing witnesses as provided by section 77(1) of the Contract Law, Cap.149 - Invalid and unenforceable - A tenancy from month to month created - Position of the guarantors - Whether amounts paid by tenants under such contract recoverable.

Practice - Pleadings - Contract illegal or void on the face of it - Court can take notice of such fact and refuse to enforce the contract even though the vitiating factor has not been pleaded and even though the defendants do not wish to raise the objection.

A. Paikkos, for the Plaintiff.

A. Skordis, for Defendants 3 and 4.

JUDGMENT

The following judgment was delivered by:-

G. NICOLAOU, D.J.:- The plaintiff was [*25] at all times to which the present action relates and still is the owner of certain premises situated at 6, Parthenon Street, Engomi, Nicosia. Defendants 1 and 3 obtained possession of the said premises apparently as tenants, thereof under a written agreement dated 23rd December, 1977 which defendants 2 and 4 signed as guarantors.

By the present action which was filed on 13th November, 1978 the plaintiff sought against all four defendants judgment for £300.- accrued rents for the period from 22nd October, I978 to 22nd November, 1978 and the amount of £300.- per month as mesne profits from 23rd November, 1978 until delivery of possession of the subject premises. The action took a rather unhappy course. On 24th November, 1978 appearance was entered for defendant I and on 15th December, 1978 appearance was entered by other advocates for defendants 3 and 4. No appearance was ever entered for defendant 2. On 19th December , 1978 the plaintiff filed an application for judgment against defendant 1 in default of defence. At some stage during the course of this application the advocates of defendant I withdrew from the case by leave of the Court and on 13th February, 1979 the plaintiff obtained judgment in default against defendant 1. This judgment was for £300.-plus mesne profits of £300.- per month as from 23rd November, 1978 until delivery of possession of the said premises; further, an order for delivery of possession of the said premises was made against defendant I and it was adjudged that he should pay £65.- costs. [*26]

On 10th April, 1979 something quite astonishing happened. The plaintiff filed an ex parte application for judgment again against defendant I for £300.- accrued rents; from 22nd October, 1978 to 20th November, 1978 and mesne profits totalling £900.- from 22nd November, 1978 until 19th February, 1979 at £300.- per month. On 18th April, 1979 the plaintiff again proceeded to prove her claim and got a second judgment in default against defendant I from a different judge on the same subject matter, this time for £1200.-with £65.- costs.

It would, I feel, be an omission on my part if I did not here stress the point that judges in such instances -and I have particularly in mind ex parte applications for judgment in default - are entitled to more assistance on the part of counsel on whom they often have to rely in respect of matters of which they may not be immediately aware.

On 20th September, 1979 the plaintiff filed an ex parte application for judgment against defendant 2 in default of appearance in the same terms as those prayed for against defendant 1. In giving evidence in proof of her claim against defendant 2 the plaintiff fixed the total amount of mesne profits at only. £600.- to get judgment on 14th November, 1979 against defendant 2 for £900.- this being the.sum total of £300.- accrued rent and £600.- mesne profits with £15.-

In the meantime, on 8th February, 1979, defendants 3 and 4 filed and delivered their defence. On 12th April, 1979 [*27] the plaintiff applied to the Registrar to fix a day for trial and in conformity with 0.31 r.3 this application stated the amount in dispute or subject matter to be between £200.- and £500.- This latter fact is important in view of an averment made in paragraph 12 of the statement of claim which together with the endorsement for costs claiming £84.-these being costs on the scale of claims exceeding £10,000.-apparently went unnoticed by the Court Registry. The said averment was that the value of the immovable property including the building to which the action relates amounts to £70,000.- and the yearly rent thereof to £3,600.-. On the face of the writ, however, the scale appearing is £200.-£500.- and stamp duty was paid on this latter scale. So far as this Court is concerned, even if it were to be considered that the proper scale was originally that for claims exceeding £3,000.- , yet the statement made in the plaintiff's application to the Registrar under 0.3I would effectively reduce the scale henceforth and fix it as that for claims between £200- and £500. Of course, the judgments given by brother judges against defendants 1 and 2 were judgments in default where no question of jurisdiction arose: See s.22 of the Courts of Justice Law of 1960.

At this point I consider it appropriate to say a. few words about the practice of giving mesne profits for an indefinite period subsequent to judgment down to the time of delivery of possession. Of course, as is well established, in order to succeed to a claim for mesne profits which are in the nature of damages for trespass to land against one [*28] formerly in possession as tenant, the plaintiff must prove his right to recover possession of the whole or part of the premises and the value of the mesne profits, normally down to the time of verdict or some previous date. However, as stated in Woodfall on “Landlord & Tenant” 28th Ed. Vol.1, 1-2158, mesne profits may further be claimed down to the time that possession is given, and in such case it is the practice to extend the judgment so as to include such claim. The authority given for this proposition is Southport Tramways Co. v. Gandy (1897) 2 Q.B. 66 which 1, with respect, do not find at all convincing Nonetheless, Cyprus Courts do quite often follow this practice, the plaintiff normally filing an affidavit when the amount of mesne profits is ascertained, usually though not invariably, upon delivery of possession for purposes of execution in respect of the amount due. This practice is, of course, very convenient but obviously, a Court in extending judgment to include mesne profits down to delivery of possession must be careful not to exceed its jurisdiction in those cases where there is a limit to it for at the time when judgment is given the final amount of such judgment cannot be known. In Boyadjian & Others v. Demades & Sons Ltd., (1978) 1 J.S.C. p.56. Pikis P.D.C. did not appear to accept the practice of awarding mesne profits down to the date of delivery of possession prefering to fix the relevant date as at the time of verdict. As to the mode of assessing mesne profits, as is well established this is done by reference to the fair rental value of the premises: see Clifton Securities v. [*29] Huntley (1948) W.N. 267; Cavendish-Bentinck v. Cavendish Bentinck (1948).2 All E.R. 285; Rawlance v. Croydon Corporation (1952) 2 All E.R. 535.

I now come to the said written agreement, exhibit 1, in the case, which purports to create a lease for a term of five years. It is quite apparent on the face of this document that it has not been properly executed in accordance with the provisions of s.77 (1) of the Contract Law, CAP. 149 as it does not bear the names of at least two subscribing witnesses but only one witness, and in fact it has not been sought to prove that this document was properly executed. It is quite true that counsel for the plaintiff at the end of the day suggested that one subscribing witness would be sufficient for the due execution of this document but he could give no reason for his suggestion and when his attention was drawn to the express provisions of the said s.77(1) all he could do was to stick to his suggestion offering an ingratiating smile in. lieu of even a semblance of some reason which might justify it. In the event it is without difficulty that I find that the said purported agreement embodied in exhibit 1 is invalid and uneforceable. It is true that defendants 3 and 4 do not in their defence plead this but in the circumstances this is of no consequence for it is well settled that where a contract is on the face of it illegal or void, the Court will take : notice of that fact and refuse to enforce the contract even though the vitiating factor has not been pleaded and even [*30] though the defendants do not wish to raise the objection: North Western Salt Co.Ltd. v. Electrolytic Alkali Co.Ltd.,

(1914) A.C. 461 (H.L.).

What must now be considered is the position of defendants 3 and 4 with reference to the subject premises and to their relationship, if any, with the plaintiff in view of the result I have already reached regarding the invalidity of the said five year lease. So far as defendant 3 is concerned it is not in dispute that he, together with defendant 1, in pursuance of the said invalid written agreement obtained possession of the premises though defendant 3 has disputed the period for which he was in occupation thereof. To this period I shall revert later on. What I am here examining is the capacity in which defendant 3 held the premises for the period that he did whatever this was. It would appear to be settled that where a person enters into occupation of premises as tenant, pursuant to the provisions of a void contract he holds possession as contractual tenant on terms appertaining to tenancies of that kind regard being had to the mode of the payment of rent and subject always to such other terms which may spring from the original void agreement not inconsistent with the said tenancy and adopted in performance by the parties as those on which their relationship is based. In other words, such terms have no existence by virtue of the invalid written agreement but may if adopted by the parties in the course of their dealing be regarded as terms included in a new and [*31]separate oral agreement between the parties. (See Halsbury's Laws of England 3rd Ed. Vol. 23 p.511 and. Woodfall on “Landlord & Tenant” Vol. I para 652. See also Petrolina Ltd. v. Vassiliadou , (1975) I C.L.R. 289, at 299). In the present case, having regard to the intention of the parties and their actual relationship on the ground, the conclusion is easily drawn that a tenancy from month to month was created between the plaintiff and defendant 3.

The position is, however, quite different for defendant 4 who was one of two guarantors of the obligations under the said void agreement of defendants 1 and 3 and who was never himself in occupation of the said premises. No new relationship can be said to have been created as between himself and the plaintiff for it would be stretching the point too far to say that a new contact of guarantee should be implied as forming the basis upon which the plaintiff allowed defendant 3 to be or to remain in possession of the said premises. Defendant 4 must now, therefore, drop out of the picture.

I shall now proceed to examine the length of the period during which defendant 3 was in possession of the said premises. I should first say, however, that I am quite satisfied on the evidence that the monthly tenancy to which my earlier finding relates was one indivisible tenancy in which defenant 3 was co-extensively liable with defendant I and I so find. Defendant 3 contended that he ceased to

be a tenant of the said premises as from 1st June, 1978 having [*32] earlier sold out to defendant I after obtaining the

assurance of the plaintiff's husband, who as defendant 3 understood represented in this matter the plaintiff, that he, defendant 3 would no longer be held liable as a tenant of the Said premises. It is without the slightest hesitation that I reject this contention of defendant 3. Though the hopes of defendant 3 may have been raised by the husband of the plaintiff as to the prospect of making some other arrangement for the purpose of releasing defendant 3, and I must say, that it is hard to believe that the plaintiff was herself unaware of this, yet my finding is that defendant 3 was never released and never ceased to be a tenant of the plaintiff and no cause was given to defendant 3 by the plaintiff to warrant any conclusion to the contrary. The plain truth must be that defendant 3 wanted out and preferred to get his money quickly and go, shutting his eyes to the dangers that must have been quite obvious to him regarding the continuation of his liability to the plaintiff and which in fact gave him some cause for concern at the time. I do not accept the allegation of defendant 3 that the husband of the plaintiff ever assured him that he, and defendant 4 would be released without more. I believe that it was made clear to defendant 3 that he would only be released if some satisfactory guarantee was forthcoming though he may have been led astray by the optimism in this regard of the plaintiff's husband. But then again, there is nothing to indicate that the plaintiff ever authorized her husband to deal with the matter or that she did or omitted to do anything in consequence of[ *33] which the impression might have been fostered in the mind of defendant 3 that the plaintiff's husband was vested with such authority. It is, of course, well established that where a person by words or conduct represents; or permits it to be represented that another person has authority to act on his behalf he is bound by the acts; of such other person in respect of anyone dealing with him as an agent on the faith of any such representation. (See Hely-Hutchinson v. Brayhead Ltd., (1968) 1 Q.B. 549; Freeman & Lockyer v. Buckhurst Park Properties Ltd., (1964.) 2 Q.B. 480). However, in the present case the plaintiff did nothing of the kind.

According to the evidence the plaintiff recovered possession on 20th February, 1979. The plaintiff claims to be entitled to £300.- per month as from 22nd October, 1978 to 20th February, 1979 describing the sum for the first month as accrued rent and the rest as mesne profits. It would follow from my finding regarding the existence of a monthly tenancy that all the sums claimed may properly be described as rents. I should add that if, contrary to my above findings, I were in respect of any part dealing with a valid claim for mesne profits I would on such evidence as there is, have assessed them for the period claimed by the plaintiff at again £300.-per month.

Under the terms of the said void written agreement (exhibit I), the sum of £900.- which was paid in advance by defendants I and 3 and described as the amount of three months' rents to be used for effecting the alteration or improvement [*34] of the premises was to be returned to the defendants on the expiration of the agreement. This provision is contained in the clause which was inserted in substitution of clause 7 of the said exhibit 1. Though paid under a void agreement this sum cannot be lost for defendants 1st and 3rd because though the said agreement is invalid and unenforceable yet it is not tainted with such illegality as would preclude the Court from assisting a party in recovering money paid under it. That was not the purpose for the enactment of s.77 of the Contract Law, Cap. 149 which was merely to clothe with added solemnity transactions which were apparently considered at the time to be of particular importance. Defendant 3 does not counterclaim for this amount but in the circumstances I do not consider that defendant 3 need have counterclaimed for this amount. The payment of this amount is quite consistent with the monthly tenancy I have found to have been created, having been paid to be used by the plaintiff for effecting the alteration and improvement of the said premises.

Defendant 3 can, therefore;, be held liable only for one month's rent, the said £900.- which is three months rent paid in advance being applied, as it may be presumed to have been applied, towards the satisfaction of the other three months' rent.

In the result, judgment is hereby given for the plaintiff and against defendant 3 for £300.-.

As to the question of costs though these in the absence of some special reason follow the event, having [*35] regard to all the circumstances of the present case, including the course that it has taken and the manner in which the plaintiff's case has been conducted, as well as the existing orders for costs made against defendants 1 and 2 I make no order as to costs.

The action against defendant 4 is dismissed and in view of the fact that defendant 4 was jointly-defended with defendant 3 by the same advocates I make no order as to costs.

Judgment against defendant 3 for

£300.-. Order for costs as above.