Farrell v Alexander [1976] UKHL 5 (24 June 1976)

FARRELL AND ANOTHER (A.P.)
(APPELLANTS)

v.
ALEXANDER (RESPONDENT)

Lord Wilberforce
Viscount Dilhorne
Lord Simon of Glaisdale
Lord Edmund-Davies
Lord Russell of Killowen

Lord Wilberforce

MY LORDS,

The appellants, Mrs. Farrell and her daughter, have brought an action to
recover from the respondent, Mrs. Alexander, a sum of money which, was
paid to her in order to obtain the tenancy of a flat. They claim that this
money was a premium which it was illegal for the respondent to require or
to receive and that they have the right to recover it by virtue of section 90
of the Rent Act 1968 (” The Act”).

The respondent had a protected tenancy of this flat with some four years
unexpired from the Church Commissioners. There were negotiations with
the appellants with a view to an assignment of it and the appellants were
asked for a sum of £4,000 for the fixtures and fittings. Though the actual
value of these fixtures and fittings has not been determined, it was certainly
less than £4,000 so that the balance was a premium for the proposed assign-
ment. In asking for it, the respondent may have committed an offence
under section 89 of the Act. But the matter was not carried through by
assignment because the Church Commissioners, in accordance, it seems,
with their normal practice, and in accordance with a clause in the existing
lease, required the respondent to surrender the lease with a view to the
grant of a new tenancy to the appellants. The transaction proceeded in this
way. A formal agreement was drawn up under which the respondent
agreed to surrender the lease subject to acceptance of the surrender by the
landlords and to the simultaneous grant by them of a new lease to the
appellants. On completion the new lessees were to pay to the respondent
the sum of £4,000 for fixtures and fittings, and this money was in fact paid.

It seems to have been suggested at one time that the transaction might be
regarded as, in substance, an assignment, in which case the respondent would
have had no answer to the appellants’ claim, but in my opinion this is not a
maintainable contention. It cannot be said that the surrender and grant
was a sham, or a subterfuge: it was what the landlords required for reasons,
understandable enough, of their own. They had, of course, no interest in
the ” premium “. So the question to be decided is whether it is illegal for
a lessee to require or to receive a premium as a condition of surrendering
her lease, and in order that a new lease may be granted to the payer of the

premium.

The directly relevant sections are section 85 of the Rent Act 1968, which
contains the following:

” (1) Any person who. as a condition of the grant, renewal or con-
” tinuance of a protected tenancy, requires, in addition to the rent, the
” payment of any premium or the making of any loan (whether secured
” or unsecured) shall be guilty of an offence under this section.

” (2) Any person who, in connection with the grant, renewal or
” continuance of a protected tenancy, receives any premium in addition
” to the rent shall be guilty of an offence under this section “.

and section 90(1), which provides:

” Where under any agreement (whether made before or after the
” commencement of this Act) any premium is paid after the commence-
” ment of this Act and the whole or any part of that premium could
” not lawfully be required or received under the preceding provisions
” of this Part of this Act, the amount of the premium or, as the case

” may be, so much of it as could not lawfully be required or received,
” shall be recoverable by the person by whom it was paid.”

Section 92 says that in Part VII of the Act, in which the above sections
are, ” premium ” includes any fine or other like sum and any other pecuniary
consideration in addition to rent.

My Lords, I must say that, in relation to the facts which I have stated,
these sections are to me, if not transparently clear, at least unambiguous
in the legal sense. They refer to ” any person “, words wide enough to
include landlords, tenants, agents or middlemen. They apply to what was
done here because the respondent required the premium as a condition of
the grant of a protected tenancy (see the words ” subject to … the
“simultaneous grant” mentioned above). The words “any person” which
are common to subsections (1) and (2), and also to section 86(1) and (2) and
to section 87(2), are words of wide generality and fit, without any strain
whatever, the present facts. I am unable to follow the argument that the
words ” in addition to the rent ” or ” in addition to rent ” which appear in
section 85 and in the interpretation section 92 and which on any view are
used with, some surplusage, have the effect of limiting “any persons” to
” persons in receipt of rent”. The words are descriptive of the character of
the payment and not of the recipient.

Is there any reason why the general words should be restricted, and what
restricted meaning can be found which would exclude this transaction?
What is argued by the respondent quite simply is that ” any person ” in
section 85 means, or more exactly, should be confined to ” any landlord
” or lessor” or ” any potential landlord or lessor ” and this restricted
meaning is said to be imposed by the history of this legislation and by
authority.

Before I attempt to deal with this argument I must say something as to
the correct method, as I see it, of interpreting this Act, the key to which, in
my opinion, lies in the proposition stated above that what we are called upon
to construe is section 85 of the Rent Act 1968. This proposition, apparently
ingenuous in fact, contains within it the reasoning which follows.

The Rent Act 1968 is a consolidation Act of a comprehensive character
built up after a process of enactment, amendment, addition and repeal of a
number of statutes starling with an Act of 1915. The respondent’s argument
depends, for any plausibility, upon a process which involves starting from
that wartime Act—which had a very limited scope and whose language shows
that it was referring only to landlords—and tracing the development through
an Act of 1920 (re-enacting the 1915 provision in different language) and Acts
of 1949 and 1965 (both adding further provisions and re-arranging the sec-
tions) and asking at each stage the question, did Parliament extend the reach
of the prohibition beyond landlords? To reinforce a negative answer to this,
the respondent is able to rely on a decision of the Court of Appeal in 1921
(Remmington v. Larchin [1921] 3 K.B. 404) in which it was held that the
word ” person ” in the Act of 1920 (section 8(1)) meant ” landlord “. This
holding is sought to be extended to the present Act through a recent decision
of the Court of Appeal (Zimmerman v. Grossman [1972] 1 Q.B. 167). The
judge and the majority of the Court of Appeal in the present case followed,
as they were clearly bound to follow, Zimmerman v. Grossman, but your
Lordships are free to reconsider that case.

On this argument it is necessary to decide what consequences follow from
the fact that the Rent Act 1968 was a consolidation Act. This question has
already concerned this House, see Maunsell v. Olins [1975] 1 All.E.R. 16,
which, I must regret to say, contains more discussion than conclusion. I
will try to clarify the latter. The case was concerned with the meaning of the
word ” premises ” in another section of the Act, and led to sharp differences
of view. There were those who thought that the meaning of this word was
clear (Lord Diplock and Lord Simon of Glaisdale) and there were those who
thought it ambiguous (Lord Reid, Viscount Dilhorne and myself). It was
because I thought that the word has no primary or certain meaning, except

perhaps in a conveyance or lease, and that the section in question ” admits,
” almost invites, opposing constructions ” (p. 20) that I found it necessary to
look at the antecedents of the section, and Lord Reid and Viscount Dilhorne
took the same view. Lord Diplock and Lord Simon of Glaisdale, on the other
hand, thought the word was clear and for that reason considered that it was
not legitimate to go back into the legislative history. If I may say so, on
that hypothesis I would agree with them. I would agree and endorse the
principle that it is quite wrong that, in every case where a consolidation Act
is under consideration, one should automatically look back through the history
of its various provisions, and the cases decided upon them, and minutely
trace the language from Act to Act—a process, which, incidentally, has led
to an argument of four days’ length in this House. In recent times, because
modern statutes have become so complicated, the courts myself included (cf.
I.R.C. v. Joiner [1975] 3 AllER 1050) rather too easily accept this process,
whether under persuasion of counsel or from their own scholarly inclinations.
But, unless the process of consolidation, which involves much labour and
careful work, is to become nothing but a work of mechanical convenience, I
think that this tendency should be firmly resisted ; that self-contained statutes,
whether consolidating previous law, or so doing with amendments, should be
interpreted, if reasonably possible, without recourse to antecedents, and
that the recourse should only be had when there is a real and substantial
difficulty or ambiguity which classical methods of construction cannot resolve.
This is particularly true of Acts such as the Rent Act 1968 which have to
be applied by county courts, and which have to be understood or at least
explained to great numbers of citizens.

In this field of capital payments in relation to changes of occupation, we
find that in this Act there are provisions about the grant, renewal or con-
tinuance of protected tenancies—prohibiting the requiring of a sum as a
condition and the receiving of a sum in connection—(section 85)—similar
provisions about assignments of protected tenancies (section 86), similar
provision about grants, renewals, continuance or assignments of certain
furnished lettings (section 87) in which ” any person ” indisputably covers all
who may be concerned with any of these things, similar provisions about
offering furniture at an excessive price (section 89), provisions as to payments
asked or received as a condition of giving up statutory tenancies (section 13),
payments required as consideration for changes by agreement of statutory
tenancies (sections 14, 15). All of this, coupled with the width of expression
of section 85 itself points towards a general interpretation covering the
requiring or receipt of capital sums.

In my opinion this process of interpretation should lead to a conclusion that
section 85(1) covers the kind of tripartite arrangement we have here.

This brings me to the question of judicial authority. Remmington v.
Larchin (u.s.) was decided upon section 8(1) of the Act of 1920 which fol-
lowed and modified section 1(2) of the Act of 1915. Section 8(1) was as
follows:

” A person shall not, as a condition of the grant, renewal, or con-
” tinuance of a tenancy or sub-tenancy of any dwelling house to which
” this Act applies, require the payment of any fine, premium, or other
” like sum, or the giving of any pecuniary consideration, in addition to
” the rent, and where any such payment or consideration has been made
” or given in respect of any such dwelling house under an agreement
” made after the twenty-fifth day of March nineteen hundred and twenty,
” the amount or value thereof shall be recoverable by the person by
” whom it was made or given . . .”

It was decided by a Court of Appeal of great eminence, any of whose judg-
ments I would have the strongest disposition to accept as correct. I do not
think there is any need to differ from it. It is certain that all three Lords
Justices felt great difficulty about the case and that what ultimately weighed
with them were three things ; first, that the Act of 1915 looked to be confined
to landlords, second, that the Act of 1920 was penal in character, third, that
it contained no provision against the requiring of a premium on an assign-
ment of a tenancy. Atkin L.J. is explicit on this point (I.c. p. 411). This
was an argument of considerable strength against bringing tripartite

arrangements under the prohibition. I am quite content to leave this decision
there. It was followed by the appeal of Zimmerman v. Grossman upon the
Act of 1968, by which time the prohibition against requiring premiums on
assignments, as well as other prohibitions, had been added and the form and
structure of’ the enactment had been changed. The Court of Appeal, again
finding difficulty in their decision, followed Remmington v. Larchin and
reached the same result. It is not necessary to decide whether the court was,
in fact, bound by their earlier decision—they were clearly entitled to follow
it, but I think that we should take a different view.

There are three other points which I must mention. (1) It was said in
Zimmerman’s case, and the argument was repeated in this House, that there
was some Parliamentary endorsement of the decision in Remmington v. Lar-
chin by reason of the fact that, in 1949, and later in 1965, Parliament, having
the opportunity to reverse it, had in substance re-enacted the section on which
Remmington v. Larchin was based and so must be taken to have validated
Remmington v. Larchin. Widgery L.J. in his judgment cited the well-known
passage from the judgment of James L.J. in Greaves v. Tofield (1880)
14 Ch.D. 563, 571, and reliance was duly placed upon such cases as Barras v.
Aberdeen Steam Trawling and Fishing Co. Ltd. [1933] AC 402, and Webb v.
Out rim ([1907] AC 81) and, in the opposite sense, Reg. v. Bow Road Justices
ins. parte Adedigba [1968] 2 Q.B. 572.

My Lords, I have never been attracted by the doctrine of Parliamentary
endorsement of decided cases: it seems to me to be based upon a theory of
legislative formation which is possibly fictional. But if there are cases in
which this doctrine may be applied, and I must respect the opinions of those
judges who have so held, any case must be a clear one. James L.J. must have
thought so when he used the words ” well-known words upon which there
” have been well-known decisions ” (I.c.). This case is certainly not such a
case. It really cannot be said if our reasoning is to have any contact with
reality that the draftsman of the Act of 1949 (a) must have had in mind a
decision of 1921, whose reported headnote opens with the words “that
“section 8(1) was reasonably capable of two constructions” and all of the
judgments which underlined the ambiguity and obscurity of the enactment,
(b) decided to perpetuate this ambiguity while removing one of the grounds
of the decision, (c) should have committed Parliament to the continued
existence of a lacuna or loophole which had no merits to commend it.

To impute such a process of thought to the architect of the new section,
and to those who voted it into existence really strains credibility.

1. 1. I have given careful thought to the question whether it is right for this
    House to over-rule, in effect, a decision which has stood for 55 years. Not
    forgetting that Remmington’s case was referred to without disapproval in this
    House in 1960 (Elmdene Estate Ltd. v. White [1960] A.C. 528), I have
    reached the conclusion that it is. To do so does not involve upsetting titles
    or, except as to the present respondent, any expectations. The respondent was
    willing to proceed by an assignment, which on any view was contrary to
    the Act, and there is no suggestion that she proceeded as she did on some
    view of the law which made it safer to do so.
  2. There is the point that the section is a penal section—not one of great
    criminality—but still, if infringed, liable to attract prosecution and some
    degree of discredit. But this consideration only has weight where ” after
    ” full inquiry and consideration one is left in real doubt” (Reg. v. Ottewell
    [1970] A.C. 642, 649 per Lord Reid). I do not agree with Widgery L.J. (as
    he then was) in Zimmerman v. Grossman when he said that a principle of
    restrictive application should be considered when a penal provision is framed
    ” in such wide and therefore necessarily ambiguous language” (I.c. p. 179),
    On the view which I take, the Act is wide, and deliberately so, and this is
    not ” ambiguity ” which attracts the principle.

I would allow the appeal with costs. The case must be remitted to the
county court at Wandsworth to determine the excess of the sum of £4 000
over the real value of the fixtures and fittings. The appellants are entitled
to have this sum repaid.

Viscount Dilhorne

my lords,

The particulars issued by the respondent’s agents stated that her flat was
for sale for £4,500, a price which was to include some fittings and other
articles. The appellants offered £4,000 and this offer was accepted. It was
then intended that for this sum the respondent should assign her tenancy
to the appellants. Later in correspondence, the respondent’s agents referred
to the £4,000 as the price for the fixtures and fittings.

It was not disputed that this price was substantially in excess of the value
of the fixtures and fittings.

Section 89(1) of the Rent Act, 1968, so far as material, reads as follows:

” Any person who, in connection with the proposed grant, renewal,
” continuance or assignment, on terms which require the purchase of
” furniture, of a protected tenancy—

“ (a) offers the furniture at a price which he knows or ought to know
” is unreasonably high . . .

” . . .

” shall be liable to a fine not exceeding £100.”
Section 92(1) defines furniture as including fittings and other articles.

The respondent appears to have committed an offence under section 89(1)
but the plan was changed. The respondent’s landlords, when approached
for their consent to the proposed assignment, said that they would prefer
the respondent to surrender her lease and then to grant the appellants a new
lease.

This was agreed to and the £4,000 of which £400 had been previously paid
to the respondent’s agents as a deposit was paid not in connection with any
assignment but in connection with the grant of a new lease to the appellants
and, in my view, as a condition of that grant.

In these circumstances the main question for determination is whether by
requiring payment of and by receiving this money the respondent contravened
section 85 of the Rent Act 1968. That section reads as follows:

“85.—(I) Any person who, as a condition of the grant, renewal or
“continuance of a protected tenancy, requires, in addition to the rent.
” the payment of any premium or the making of any loan (whether
” secured or unsecured) shall be guilty of an offence under this section.

” (2) Any person who, in connection with the grant, renewal • or
” continuance of a protected tenancy, receives any premium in addition
” to the rent shall be guilty of an offence under this section.

” (3) A person guilty of an offence under this section shall be liable
” to a fine not exceeding £100.

” (4) The court by which a person is convicted of an offence under
” this section relating to requiring or receiving any premium may order
” the amount of the premium to be repaid to the person by whom it was
” paid.”

Section 88 provides that:

” Where the purchase of any furniture has been required as a con-
” dition of the grant, renewal, continuance or assignment—

” (a) of a protected tenancy,

” (b) . . .

” . . .

” then, if the price exceeds the reasonable price of the furniture, the
” excess shall be treated, for the purposes of this Part of this Act, as if
” it were a premium required to be paid as a condition of the grant,
” renewal, continuance or assignment of the protected tenancy . . .”.

Section 90 provides that where under any agreement any premium is paid
and it could not lawfully be required or received under the preceding pro-
visions, the amount of the premium

” shall be recoverable by the person by whom it was paid “.
and section 92(1) states that, unles the context otherwise requires:

” ‘ premium ‘ includes any fine or other like sum and any other pecuniary

” consideration in addition to rent “.

That the £4,000 was paid as a condition of the grant of the lease to the
appellants though not paid to the lessors but to the respondent, cannot I
think be disputed. It was a price exceeding the reasonable price for the
fixtures and fittings. That is conceded. The excess must, by virtue of
section 88, be treated as a premium : and if the fixtures and fittings were
offered at a price which the respondent knew or ought to have known was
an unreasonably high price, as would appear to have been the case, it was a
premium which could not lawfully be required and so one recoverable under
section 90(1).

The respondent, however, contends that this case is governed by section
85. While not disputing that ” Any person ” means what it says, it is
contended that only a landlord or potential landlord can commit the offences
defined in the section. It was argued clearly and persuasively by Mr.
Barnes, for the respondent, that section 85(1) properly interpreted could
only apply to a person who, as a condition of the grant etc. of a protected
tenancy, required the payment of rent and also required the payment of a
premium ; and section 85(2) only to a person who receives the premium
and also receives the rent. The opposing argument is that the words ” in
” addition to the rent” are there merely to indicate that the premium must
be a sum over and above the rent. For the respondent, it was suggested
that in section 85(1) the fact that the words “in addition to the rent”
followed immediately after the word ” requires ” supported the contention
advanced on her behalf. I am unable to attach any significance to this or
to the punctuation. The words ” in addition to the rent ” must have the
same meaning in section 85(2) as in section 85(1), and in section 85(2) they
do not appear after ” receives ” but after ” any premium “.

Mr. Barnes conceded, and in my view rightly, that in section 92(1), the
interpretation clause, ” in addition to rent” meant over and above the rent
and that being so I cannot regard it as right to read section 85(1) as if it
read ” any person who requires the rent and also requires a premium ” or
section 85(2) as saying ” receives any premium and also receives the rent”.
The context does not require the words ” in addition to the rent” to be
interpreted differently in the same part of the Act.

That the Rent Act 1968, a pure consolidation Act, has incorporated in its
drafting inadequacies contained in earlier Acts, I acknowledge.

The inclusive definition of premiums in section 92(1) does not fit in with
either section 85(1) or 85(2) so far as it relates to the words “in addition
” to rent”. It really is not possible to read section 85(1) as if it said

” requires in addition to the rent the payment of any premium in
” addition to rent “

or section 85(2) as saying

” receives any premium in addition to the rent in addition to rent”
In my opinion in view of the definition in section 92(1) it was unnecessary to
insert the words ” in addition to the rent” in section 85(1) and (2) and mere
surplusage to do so. Those words in the definition are necessary in con-
nection with the use of the word premium in other sections of the Act, for
example, sections 86, 87, 88 and 90.

Looking at the Rent Act 1968 alone, I would have no hesitation in saying
that, in my view, the amount paid by the appellants in excess of a reasonable
price for the fixtures and fittings constituted a premium ; that it was an
offence under section 85(1) to require the payment of it as a condition of
the grant of the protected tenancy, an offence under section 85(2) to receive

it in connection with the grant of such a tenancy; and also that it was a
premium which could not under sections 89 and 88 be lawfully required
and so a premium recoverable under section 90(1).

I do not regard section 85(1) and (2) as ambiguous. Though they might
have been better phrased I think their meaning and effect is clear. The
object of these provisions was to protect protected tenants by making it
impossible to extract from them as the condition of the grant, renewal,
continuance or assignment of a tenancy or in connection with such a grant
etc., any sum over and above the rent. That seems to me to be clear
and that being so I can see no valid reason why, as a matter of policy,
Parliament should have intended the section only to apply to landlords
though it may have been thought that they were the most likely offenders.

Section 86 makes it an offence for any person to require the payment of
any premium as the condition of the assignment of a protected tenancy.
It is therefore contrary to the law for a tenant to require a premium for
assigning. If section 86 is not restricted to landlords or potential landlords,
and it clearly is not, I cannot see how section 85 can properly be construed
as so restricted.

It is, however, said that the legislative history and two decisions of the
Court of Appeal make it wrong to give this interpretation to these sections.

Section 1(2) of the Increase of Rent and Mortgage Interest (War
Restrictions) Act 1915 reads as follows:

” A person shall not in consideration of the grant, renewal or con-
” tinuance of a tenancy of any dwelling-house to which this Act applies
” require the payment of any fine, premium or other like sum in
” addition to the rent, and where any such payment has been made in
” respect of any such dwelling-house after the 25th November 1915,
” then the amount shall be recoverable by the tenant by whom it was
” made from the landlord . . .”

This subsection only applied to landlords. That is made clear by its
express reference to landlords in the latter part of the subsection. But that
does not mean that the words ” require any payment of any fine, premium
” or other like sum in addition to the rent” are to be interpreted as if they
were ” require any payment of any fine, premium or other like sum in
” addition to requiring the payment of the rent “.

That subsection was repealed and replaced by section 8(1) of the Increase
of Rent and Mortgage Interest (Restrictions) Act, 1920 which made a
number of changes in the language. The words ” in consideration of ” were
replaced by ” as a condition of “. The words ” or sub-tenancy ” were inserted
after ” tenancy ” though in view of the definition of tenancy in section
12(11)(g), this change would not appear to have been necessary. The words
” or the giving of any pecuniary consideration ” were inserted after ” other
” like sum ” so that that part of the subsection read as follows:

” require the payment of any fine, premium or other like sum, or the
” giving of any pecuniary consideration, in addition to the rent “.

Under the 1915 Act payment of such premiums, etc. made after the 25th
November 1915, were made recoverable. Under the 1920 Act only such
payments made after 25th March 1920 were recoverable. But to my mind
the most significant and important change was in the concluding words of
the subsection. Instead of reading ” recoverable by the tenant by whom
it was made from the landlord ” section 8(1) of the 1920 Act reads:

” recoverable by the person by whom it was made or given “.

Why the change in language? Parliament, it can be assumed, does not
change the language of a section unless it intends to change its meaning.
The change from ” tenant” to ” person ” clearly was intended to secure that
any person who paid such a premium, whether or not the tenant, should
be able to recover it. Why the omission of the reference to ” landlord ”
if in 1920 Parliament intended that such a premium should only be recover-
able from a landlord? I do not myself see that it can be said that this was

made necessary by the specific inclusion of sub-tenancies. , In my opinion
the language of section 8(1) contrasted with that, of the 1915 Act shows it to
have been the intention of Parliament that anyone who paid, such a premium
should be entitled to recover it from the person to whom it was paid, whether
or not he was the landlord.

Where there are only two parties to the transaction, a landlord would
be the most likely person to require the payment of a premium .as a condition
of a grant of a tenancy ; but where there is, as there was in the instant case,
a tripartite arrangement, with the tenant requiring a premium on the terms
that the existing tenancy would be surrendered and a new tenancy granted
by the landlord to the payer of the premium, 1 fail to see why the tenant
should not be regarded as requiring the payment of the premium as a condition
of the grant of the tenancy.

This conclusion is contrary to that of a strong court of appeal in
Remmington v. Larchin [1921] 3 K.B. 404 (Bankes, Scrutton and Atkin L.JJ.).
The tenant of premises to which the 1920 Act applied had agreed that upon
payment of a premium he would surrender his tenancy, his landlord having
agreed that if he did so he would grant a new tenancy to the payer of the
premium. It was held that section 8(1) was reasonably capable of two
constructions and that, as it was a penal section, the more lenient should
be adopted, namely, that it only applied to landlords. Bankes L.J. did not
think the matter plain and he did not attach any significance to the alteration
of language from that in the 1915 Act by the omission of any reference to
landlords and the omission of any definition of the persons from whom
repayment might be obtained. Scrutton L.J. thought the construction of
section 8(1) “a matter of very considerable doubt ” but, as it was a penal
section, he reached the same conclusion. Atkin L.J. said that he had had
great difficulty with regard to the construction of the section and that if it
had stood alone he would have been inclined to the view that it applied.
In the light of the language of section 1(2) of the 1915 Act which clearly
refers to landlords, he thought that the similar language of section 8(1) must
also be interpreted as applying only to them.

Scarman L.J. in the present case said he thought a wrong turning had been
taken in 1921. I agree, and while it is with considerable reluctance that I
venture to differ from the opinions of such eminent judges I am comforted
by the fact that each expressed doubt as to the construction to be placed on
the section.

Twenty-eight years later the Landlord and Tenant (Rent Control) Act.
1949, was enacted. Section 8(1) of the 1920 Act was repealed and replaced
by section 2 of that Act.

Section 2(1) and (2) read as follows:

” (1) A person shall not, as a condition of the grant, renewal or
” continuance of a tenancy to which this sections applies, require the
” payment of any premium in addition to the rent

” (2) Subject to the provisions of Part II of the First Schedule to this
” Act, a person shall not, as a condition of the assignment of a tenancy
” to which this section applies, require the payment of any premium.”

Section 2(4) made it permissible for the assignor to obtain certain payments
from the assignee. Section 2(5) provided that a premium paid which could
not lawfully be required should be ” recoverable by the person by whom it
” was paid ” and section 2(6) made the requiring of a premium in contra-
vention of the section an offence.

I recognise _:the force of the contention that if Parliament wished the
decision in Remmington v. Larchin not to apply, it should have made
that clear by express words and that it could have done so by the insertion
of the words after ” a person “, ” whether or not a landlord “, but the omission
to do so does not in my view justify the conclusion that a person to whom
section 2(1) applies must be a landlord when “a person” in section 2(2)
dearly applies to a person who is not a landlord.

In Woods v. Wise [1955] 2 Q,B. 29, Romer LJ. at page 57 pointed out
that a landlord did not infringe section 2(1) by receiving a premium which
had not been required by him as a condition of granting or renewing or
continuing a tenancy. This no doubt led to the substitution of a new sub-
section in place of section 2(1) ten years later.

The Rent Act 1965 by section 37 and Schedule 5 enacted that the following
subsection should be substituted for section 21(1):

” (1) A person shall not—

” (a) as a condition of the grant, renewal or continuance of a
” tenancy to which this section applies, require the payment of
” any premium ; or (b) in connection with such a grant, renewal
” or continuance, receive any premium ;

” in addition to the rent”.

The fact that in paragraph (b) the words are ” in connection with ” and
not as in paragraph (a) “as a condition of” may have been intended to
secure that paragraph (b) applies to cases where it could not be established
that the receipt of the premium was a condition of the grant.

In Zimmerman v. Grossman [1972] 1 Q.B. 167 the defendant had agreed
to pay £300 to the tenant of a fiat for fixtures and fittings if the landlord
agreed to accept her as a tenant. She paid £100 but refused to pay the
balance claiming that £300 was far in excess of the true value of the fixtures
and fittings. The county court judge assessed their true value at £100 and
held that the balance of £200 was not a premium and that the plaintiff was
entitled to it. The defendant’s appeal to the Court of Appeal (Davies,
Widgery and Karminski L.JJ.) was dismissed. The other members of the
court agreed with the judgment of Widgery L.J. and the case was decided
on the Rent Act 1968. He thought that the principle stated by James L.J.
in Greaves v. Tofield [1880] 14 Ch.D. 563 at page 571 that

” If an Act of Parliament uses the same language which was used
” in a former Act of Parliament referring to the same subject, and
” passed with the same purpose, and for the same object, the safe and
” well-known rule of construction is to assume that the legislature when
” using well-known words upon which there have been well-known
” decisions uses those words in the sense which the decisions have
” attached to them “

applied.

My Lords, although the first part of section 1(2) of the 1915 Act and
of section 8(1) of the 1920 Act are the same, I do not think, as I have said,
that section 8(1) was passed for the same purpose and for the same object
as section 1(2). The changes made by the Acts of 1949 and 1965 appear
to me to reinforce the view that the language of section 8(1), which was
repeated in section 2(1) of the 1949 Act and in the re-draft of that subsection
effected by the 1965 Act, was not regarded or intended by Parliament to be
limited in its application to landlords. It may be that in 1949 the decision
in Remmington v. Larchin escaped the notice of the draftsman when it
should not have done, and that when the subsection was re-drafted in 1965
the draftsman was content to model the re-draft on the 1949 Act. However
this may be, our task is to give effect to the intention of Parliament and
the language used by Parliament does not, in my opinion, support the
conclusion that the operation of the subsection was limited to landlords.

It follows that in my opinion Zimmerman v. Grossman was wrongly
decided. His Honour Judge Ifor Lloyd rightly thought that he was bound
by these two decisions of the Court of Appeal, as indeed was the Court
of Appeal in the present case. That court is bound, as Scarman L.J. stated
in his judgment in the present case, by precedent, for the reasons given
by him with which, if I may say so, I entirely agree and which I need not
repeat. But for that, it would seem that the decision of the Court of Appeal
in this case would have been to allow the appeal.

For the reasons I have stated, in my opinion this appeal should be allowed
with costs and the case sent back to the county court for the determination
of the amount by which the sum of £4,000 exceeded the value of the fixtures

and fittings.

Lord Simon of Glaisdale

MY LORDS,

My noble and learned friends who have preceded me have apprised your
Lordships of the facts which have led to this appeal and the relevant statutory
provisions. The following questions arise thereupon: (1) What is the proper
approach to the interpretation of a consolidation Act? (2) Adopting such
an approach, what is the proper construction of section 85 of the Rent
Act 1968 in relation to the facts judicially ascertained in the instant case?
(3) Was Remmington v. Larchin [1921] 3 K.B.404 correctly decided;
involving also the question how much weight should be put on the factor
that the statutory provision to be construed there (as here) had penal
consequences? (4) Was Zimmerman v. Grossman [1972] 1 Q.B. 167 correctly
decided ; involving also the question of the validity of an alleged canon
of statutory construction arising from a presumed parliamentary endorsement
by re-enactment of a word or phrase previously the subject of judicial inter-
pretation (” the rule in Barms v. Aberdeen Steam Trawling and Fishing Co.
“[1933] A.C.402 “)? (5) Was the Court of Appeal in the instant case bound
to follow Zimmerman v. Grossman?

There are certain fundamental considerations which impinge on more than
one of these questions. First, in the construction of all written instruments
including statutes, what the court is concerned to ascertain is, not what the
promulgators of the instruments meant to say, but the meaning of what
they have said. It is in this sense that ” intention ” is used as a term of
art in the construction of documents. In order to avoid wearying your
Lordships with repetition, for the authority and rationale of this rule may
I refer to what I said about it in Wickman Tools v. Schuler A.G. [1974|
A.C.235, 263 and Black-Clawson v. Papierwerke [1975] A.C.591, 645 et seq!
Suffice it to repeat that, provided draftsmen and courts operate correctly,
the court’s elucidation of the meaning of what is said should accord with what
the promulgator meant to say. But, secondly, such an accord can only be
achieved if courts frame their approach to statutory interpretation in the
light of the actual parliamentary processes which evolve the statutory
enactment in question.

Construction of consolidation Acts

All consolidation Acts are designed to bring together in a more convenient,
lucid and economical form a number of enactments related in subject-matter
(and often by cross-reference) previously scattered over the statute book.
All such previous enactments are repealed in the repeal schedule of the
consolidation Act. It follows that, once a consolidation Act has been passed
which is relevant to a factual situation before a court, the ” intention ” of
parliament as to the legal consequences of that factual situation is to be
collected from the consolidation Act, and not from the repealed enactments.
It is the relevant provision of the consolidation Act, and not the
corresponding provision of the repealed Act, which falls for interpretation.
It is not legitimate to construe the provision of the consolidation Act as if it
were still contained in the repealed Act—first, because Parliament has
provided for the latter’s abrogation; and, secondly, because so to do would
nullify much of the purpose of passing a consolidation Act.

There are three sorts of consolidation Act: (1) “pure” consolidation
(i.e., re-enactment); (2) consolidation under the Consolidation of Enactments
(Procedure) Act 1949, which allows consolidation with “corrections and
” minor improvements ” (for their definition see Lawton L.J. in the instant
case [1976] Q.B. at page 366D); (3) consolidation “with Law Commission

“amendments” under a procedure adopted by parliament in 1965. What
all three types of consolidation have in common is that there is a short*
circuiting of the normal parliamentary procedures. This can be seen by
comparison with the nearest parliamentary analog—an Act ” to consolidate
” and amend ” the previous law. This was formerly a very common legisla-
tive exercise, and very advantageous to all except government business
managers. Its objection for the latter is that all stages of the bill leading
to the Act are subject to normal and full parliamentary control; so that
amendments may be made, not only to the amending provisions of the bill,
but also to those provisions which merely re-enact the pre-existing statute
law. Such measures therefore make the full normal demand on the
parliamentary timetable. By contrast, the detailed scrutiny of every type of
consolidation bill is referred to a joint select committee of both Houses of
Parliament; and, in reliance on the report of this committee, the Houses
forego discussion (and, other than exceptionally, amendment) of the
consolidation bill in so far as it merely re-enacts pre-existing statute law
(including re-enactment with ” corrections and minor improvements ” in the
case of 1949-Act-procedure bills). The long title of the statute shows
whether it is a consolidation Act: if it is merely ” to consolidate . . . “, it is
a ” pure ” consolidation Act; while if it is under the 1949 or 1965 procedures
this will be specifically indicated in the long title (see, e.g., Juries Act 1974;
Friendly Societies Act 1974). Special parliamentary practice governs
consolidation under the 1949 and 1965 procedures respectively; and, should
a consolidation Act passed under either of these procedures fall for
interpretation, I would hope that the court of construction would not make
heavy weather of discovering how much of the Act in question represents
amendment and would in interpretation discriminate between 1949-and 1965-type
amendments. But no such questions arise on the instant
appeal; the Rent Act 1968 is ” pure ” consolidation.

In the case of such a statute it is the primary task of the joint committee
to ensure that the bill when it passes into law does not depart from the
pre-existing statutory enactments which are to be consolidated. That does
not involve a literal transcription. The language will be modernised.
Contemporary drafting techniques will be adopted, so long as they do not
change the sense. The lay-out will if possible be improved to promote
perspicuousness. Obvious slips in the pre-existing legislation will be corrected.
Sometimes, through inadvertence, there are overlapping provisions or varying
terminology dealing with the same subject-matter: the joint committee will
then choose the one which most felicitously accords with the obvious
parliamentary intention (though doubts or ambiguities must be dealt with
by the 1949 procedure). Thus, in a “pure” consolidation Act it must be
assumed that it was not necessary to have recourse to the 1949 procedure—
i.e., that the consolidation Act reproduces pre-existing statute law without
even “corrections” or “minor improvements” as defined in the 1949 Act.

This does not mean that the initial approach to the construction of a
” pure ” consolidation Act must be via the statutes it has replaced. On the
contrary, it is the consolidation Act itself which falls for interpretation.
The initial judicial approach is the same as with the interpretation of any
other statute. The judge places himself, as the saying goes, in the
draftsman’s chair. He will ascertain what facts were within the draftsman’s
knowledge, and what statutory objective he had both generally and as to
the particular provision to be construed. The facts available to the draftsman
of a consolidation Act will be all those which had been available to the
draftsmen of the enactments to be consolidated. These facts and (closely
related) the statutory objectives will generally be obvious from the statute
falling for construction itself; but the court may, in default or by way of
supplement or confirmation, have recourse to matters of which judicial
notice may be taken or to official reports in the light of which any part
of the legislation has been framed (see Eastman Photographic v. Comptroller-
General [1898] A.C. 571 ; Black-Clawson v. Papierwerke). The judge will
then ascertain and tune in to the linguistic register of the statute (see
Maunsell v. Olins [1975] A.C. 373. 391E-392C). Having done all this the
judge will be in a position to read the statutory language in the primary and

most natural sense which it bears in its context. Since the draftsman will
himself have endeavoured to express the parliamentary meaning by words
used in the primary and most natural sense which they bear in that same
context, the court’s interpretation of the meaning of the statutory words used
should thus coincide with what parliament meant to say.

There is one rare situation in which it is permissible for—indeed, incum-
bent on—the court to construe a consolidation Act at this primary stage of
construction by reference to a consolidated enactment. This is where the
purpose of a statutory word or phrase can only be grasped by examination
of the social context in which it was first used. George He fisher Ltd. v.
Restawile Upholstery (Lanes.) Ltd. [1976] A.C. 64 provides an example.
The phrase ” work of artistic craftsmanship ” in the Copyright Act 1956
could only be properly understood by investigating the social and aesthetic
circumstances in which it was first used in the Copyright Act 1911. (The
1956 Act, though not a consolidation Act, was relevantly in pari materia).
I can, however, find nothing in section 85 of the Rent Act 1968 which would
bring its interpretation within this exception.

It might be objected that the statutory objective of a consolidation Act is
merely to consolidate the previous law ; so that it is necessary to look back
to the superseded legislation to ascertain its various statutory objectives.
But in vindicating the paramount objective of consolidating the preceding
statute law the consolidation Act is also furthering the statutory objectives
of the legislation which is consolidated. Apart from the exceptional case I
mentioned in the preceding paragraph, the various statutory objectives will
be apparent from a scrutiny of the provisions of the consolidation Act itself
(possibly aided by judicial notice and perusal of official reports). The
primary approaches to statutory interpretation (which I have tried to sum-
marize earlier) are therefore as appropriate for construction of a consolidation
Act as for any other type of statute. It is only on failure of the primary aids
to construction that the fact that the statute to be construed is a consolidation
Act permits any special approach: what it does then is to provide an
additional secondary canon of construction which will sometimes be of
service—namely, a presumption that a consolidation Act (in so far as it
merely re-enacts) does not change the law.

If a court of construction places itself in the position of the draftsman,
acquires his knowledge, recognizes his statutory objectives, tunes in to his
linguistic register, and then ascertains the primary and natural meaning in
their context of the words he has used, that will generally be an end of the
task of construction. But occasionally something will go wrong. It may
become apparent that the primary and natural meaning cannot he what
Parliament intended: it produces injustice, absurdity, anomaly or contradic-
tion, or it stultifies or runs counter to the statutory objective. Or sometimes
the words have no primary meaning in their context; they are fairly capable
in all the circumstances of being taken in two senses: there is, in other words,
an ambiguity. There are a number of secondary canons of construction avail-
able to resolve ambiguity: which of them is most helpful will vary from
case to case. But in nothing of the foregoing does the construction of a
consolidation Act differ from that of any other statute. Its only peculiarity
is that if the primary approach to construction discloses an ambiguity in a
consolidation Act, that may sometimes (though rarely) be resolved by
examination of the superseded legislation. Since, as will appear, I cannot
for myself see any ambiguity in section 85, I venture merely to refer sum-
marily to what, in a speech prepared in collaboration with my noble and
learned friend, Lord Diplock, I said, in Maunsell v. Olins at pp. 392H
393B, about this exceptional use of the superseded enactments.

There is, however, one canon of construction relevant to the interpretation
of section 85, which is deducible from the submissions I have been making
to your Lordships. It is not peculiar to the construction of consolidation
Acts, though it -is equally applicable to them. The first or ” golden ” rule
is to ascertain the primary and natural sense of the statutory words in their
context, since it is to be presumed that it is in this sense that the draftsman

is using the words in order to convey what it is that Parliament meant to say.
They will only be read in some other sense if that is necessary to obviate
injustice, absurdity, anomaly or contradiction, or to prevent impediment of
the statutory objective. It follows that where the draftsman uses the same
word or phrase in similar contexts, he must be presumed to intend it in each
place to bear the same meaning, see Courtauld v. Legh (1869) L.R. 4
Ex. 126, 130 ; Black-Clawson v. Papier-werke at p. 651 A-B.

Construction of Section 85

At least before your Lordships, if not in the Court of Appeal, it was not
sought to argue that ” any person ” should, merely by reason of the historical
statutory background, be read as ” any landlord “. Nor, on the other hand,
was the difference between ” a person ” in the repealed legislation and “any
person” in section 85(1) relied on. It was accepted on behalf of the
respondent that, in their primary and natural meaning, the words ” any
” person ” are all-embracing. What was argued, with great force and skill,
was that it is the position and punctuation of “, in addition to the rent,”
which shows that ” any person ” must be limited to landlords or their
agents. The person who requires the premium must require it in addition
to requiring the rent; but only a landlord (or his agent) can require the
rent; so that it is only a landlord (or his agent) who meets the description
of ” any person . . . who requires … the rent” and therefore of ” any
person” at the beginning of section 85(1). In so placing and punctuating
the phrase the draftsman, it was claimed, was advisedly reflecting the inter-
pretation put on the pre-existing law in Remmington v. Larchin, where a
very powerful Court of Appeal was left in doubt as to the meaning of
similar words in the 1920 Act; and, since the provision involved penal
consequences, construed them narrowly, reading them as applicable only to
landlords, and not to third parties, taking a premium. It was further argued
that it has been open to Parliament, on the numerous occasions when it has
since then dealt with rent restriction, to make it plain, did it so desire, that
the sanction was meant to extend to third parties as well as landlords
requiring a premium as a condition of the grant of a protected tenancy—
not least in 1949, when it was made an offence to require a premium as a
condition, not merely of the grant, renewal or continuance of a protected
tenancy, but also of its assignment. Parliament, whether from oversight or
error or intention, has left the statutory provision as it was interpreted in
Remmington v. Larchin. Alternatively, there is still at the very least the
ambiguity perceived in Remmington v. Larchin; and, since the provision
is still penal, it should be resolved by a strict construction limiting ” any
” person ” to those requiring payment of rent, i.e. landlords (or their agents).

In so far as this argument was based, in the absence of ambiguity, on
recourse to legislation now repealed, it was, in my respectful opinion,
fallacious for the reasons I ventured to give in the preceding section of this
speech.

In so far as the argument was based on the placing and punctuation of
“, in addition to the rent,” in section 85(1), it fails as a matter of literal
construction. Whether or not Widgery L.J. (tentatively, in Zimmerman v.
Grossman at p. 180 and Scarman L.J. in the instant case at p. 368B were
right as to the relationship of section 85(1) and 85(2), the two subsections
are, at least from the point of view of drafting, mirror provisions. This is
borne out by the recovery provisions of section 90, which reads:

” (1) Where . . . any premium is paid . . . and the whole or any
” part of that premium could not lawfully be required or received . . .”

” Any person who . . . requires, in addition to the rent, the payment of
any premium . . .” in section 85(1) must be a counterpart of “Any person
who . . . receives any premium in addition to the rent … in sec-
tion 85(2). As a matter of literal construction I would therefore read ” in
“addition to the rent” in section 85(1) as qualifying the payment rather
than the requirement, and thus the character of the payment rather than
the character of the recipient.

I go so far with the respondent as to accept that the words ” in addition
” to the rent” are capable of being understood in two senses—either ” as
” well as the rent” or ” over and above the rent”—and that if it means
the former it would prevent the subsection extending to tripartite arrange-
ments like that in the instant case. But most words in English are capable
of more than one sense: for the words to be read in two possible senses
does not make them ambiguous unless they can be fairly read in either
sense in their context. The general purpose of this Act and the particular
purpose of this provision show conclusively, to my mind, that “in addition
“to the rent” means “over and above the rent”. So does the context,
So do the absurd anomalies which would arise if the alternative reading

were adopted.

(Incidentally, if there were an ambiguity, one of the means of resolving
it would be to have recourse to the provision in the 1965 Act which was
re-enacted in section 85(1). There is no sign there of the placing of the
phrase and its punctuation to which counsel for the respondent attached such
significance. The provision (Schedule 5, Part I, paragraph 1) amended
section 2 of the 1949 Act to read :

” (1) A person shall not—

” (a) as a condition of the grant, renewal or continuance of a
” tenancy to which this section applies, require the payment of
” any premium ; or

” (b) in connection with such a grant, renewal or continuance, receive
” any premium ;

” in addition to the rent.”)

Although the statutory objectives and the linguistic register are the most
potent elements in eliminating the penumbra of possible meanings from
the true meaning, it is convenient to deal first with context, since I have
already touched on this in comparing sections 85(1) and 85(2). I venture
to pray in aid the analysis of my noble and learned friend. Viscount Dilhorne.
In my view, the conclusive argument here is from the interpretation of
” premium ” in section 92 (” includes . . . any pecuniary consideration in
” addition to rent”). Although this statutory interpretation involves some
tautology when applied to section 85, it obviously and admittedly means
” over and above rent”, which is also the sense required by the sections
other than 85 to which it applies. The presumption against change of
meaning of similar words used in the same context is a strong pointer against
the words meaning ” as well as the rent” in section 85(1).

Counsel for the respondent made adroit use of the tautology apparent
when section 85(1) is read together with the interpretation of “premium”
in section 92(1). This showed, he claimed, that the words must be used
in different senses in the respective sections, so that the presumption in favour
of consistency of terminology is displaced. With every respect, I find this
altogether too far-fetched. A tautology, unlike a contradiction, does not
necessarily call for any modification of meaning. Legal language is frequently
tautological: a draftsman will prefer to repeat himself rather than leave
his meaning in doubt. Nor, indeed, does even the extreme recourse of reading
“in addition to {the] rent” as having different meanings in sections 85(1)
and 92(1) respectively—” as well as the rent” in the former and ” over
” and above rent” in the latter—eliminate all tautology.

The construction urged on behalf of the respondent involves reading
section 85(1) as if it went “in addition to requiring the rent”. “It is a
” strong thing to deal into an Act of Parliament words which are not there,
” and in the absence of clear necessity it is a wrong thing to do,” said Lord
Mersey in Thompson v. Goold & Co. [1910] A.C. 409, 420. There is certainly
no such clear necessity here: on the contrary.

I turn, then, from such linguistic minutiae to examination of the general
and particular parliamentary objectives, which, to my mind, put the meaning
beyond any possible doubt. The general purpose of the Act was to hold
rents artificially below their market price, thus penalising relatively the

financial return on one type of property. The result of such an interference
with a market is a matter of common knowledge: supply does not expand
to meet demand, and demand is on the other hand artificially inflated. There
is thus apt to be a substantial difference between the statutory price of the
goods or services in question and a black market price. If the statutory
control is to be effective, strict steps must be taken to obviate the black market
and to prevent evasions of the control. Loopholes in the control will be
sought by those offering or seeking the goods or services; and, as they
are recognised by those enforcing the control, those loopholes will be closed.
This is the picture clearly disclosed by the history of rent restriction in
this country culminating in the Rent Act 1968, the terms of which reveal
the whole story like a fossil bed recapitulating natural history.

In the context of housing accommodation the most obvious and facile
way of operating a black market where rents are controlled is to demand a
premium—i.e., a capital payment in connection with the grant etc. of a
tenancy over and above the rent as held statutorily below its true market
rate. The history of rent control is a history of attempts to control the
black market in rented housing accommodation by penalising criminally
and nullifying civilly the taking of premiums. Whatever might be thought
of a tenant or assignee who gets occupation of premises by promising to
pay a premium and then resiles from his promise, it is obviously necessary
(given the paramount parliamentary objective) to permit him to do so.
Moreover, given the paramount statutory objective of holding rents below
their market price, parliament must be concerned, not merely to penalise
landlords evading the controls, but also to prevent tenants from doing so.

This leads me to the closely related consideration of anomaly. It would
indeed be the most extraordinary anomaly were a tenant penalised for
requiring or receiving the payment of a premium on assignment of his
tenancy (section 87) and made liable to reimburse it (section 90), but yet
permitted to require or receive a premium if the transfer were carried out
by way of surrender and new lease. Similarly, if he were to be penalised
for attempting to obtain an excessive price for furniture on assignment of
his tenancy (section 89) and made liable to reimburse the excess (sections 88
and 90). but yet could freely obtain such an excessive price provided the
transfer was carried out by surrender and new lease.

In Beswick v. Beswick [1968] AC 58, 105, Lord Upjohn, having described
the practice of the Joint Committee on Consolidation Bills (of which he was
then chairman), referred to the proceedings of that committee on the Law of
Property Bill 1925 ” not with a view to construing the Act, that is of course
” not permissible, but to see whether the weight of the presumption as to the
” effect of consolidation Acts (that they are not intended to alter the law] is
” weakened by anything that took place in those proceedings “. My Lords,
I have taken the same course in relation to the Rent Act 1968—though I
postponed doing so until I had otherwise completed writing this speech.
I found that clause 85(1) passed without comment (see 4th Report of the
Committee, 1967-68, p. 14). If the punctuation and positioning of “, in
” addition to the rent “, had had the significance which counsel for the
respondent attached to it, the draftsman would certainly have drawn the
committee’s attention to it. Therefore, were it necessary to look behind the
1968 Act itself, the presumption would apply with full force that section 85(1)
means the same as section 2(1) of the 1949 Act as amended in 1965 ; and
I have already ventured to point out how adverse that is to the respondent’s
argument.

In my respectful opinion, a reading of section 85 in its relationship with
the other sections of Part VII, recognition of the general and specific
statutory objectives, and consideration of the extraordinary anomalies con-
stituted by any other reading, make it clear that ” in addition to the rent”
in section 85 means ” over and above the rent ” ; and that the other possible
sense (” as well as the rent”) cannot reasonably be the meaning. There is
therefore nothing to indicate that ” any person ” is used in anything other
than its natural, primary and universal sense—specifically there is nothing
to suggest that it is only landlords or prospective landlords or their agents

who can fall within the ambit of these words. I would therefore allow the
appeal

This conclusion enables me to deal summarily with the other questions
raised in the appeal.

Remmington v. Larchin and the construction of penal provisions

I humbly recognize the eminence of the judges who decided Remmington
v. Larchin. But, for the reasons given by my noble and learned friend,
Viscount Dilhorne, I think it was wrongly decided.

The Court of Appeal in that case was left in doubt (wrongly, as I venture
to think) whether the statute was intended to reach further than landlords—
it must be remembered that it was not until 1949 that the loophole of the
taking of a premium on an assignment of a protected tenancy was closed.
The Court of Appeal was thus led, by consideration that a more liberal
reading would lead to extended penal consequences, to adopt a strict
reading, confining the operation of the provision to landlords. But, in my
view, the canon of strict construction of a penal statute is a secondary canon
of construction—generally one of the most potent to be applied where there
is a real ambiguity in the statutory language. I do not think that there was
any such real ambiguity in the language which fell for consideration in
Remmington v. Larchin ; and, for the reasons I ventured to put forward in
the preceding section of this speech, I certainly cannot find any such ambiguity
in section 85(1) of the 1968 Act. Restrictive interpretation of a statutory
provision because it has penal consequences is inappropriate where the
language has in its context, bearing in mind the statutory objectives, a plain
and primary meaning.

I would only add that, where strict construction of a penal statutory
provision does become called for, the strictness of the construction will vary
directly with the heinousness of the crime and the severity of the penalty.

Zimmerman v. Grossman and the Barras doctrine

What I have called ” the Barras doctrine ” appears from some (not all)
of the speeches in Barras v. Aberdeen Steam Trawling & Fishing Co. It
is to the effect that, where a statutory word or phrase of doubtful meaning
has received clear judical interpretation in a well-known decision, and the
word or phase is then repeated in a subsequent statute which is in pari
materia, parliament must be presumed in this latter statute to be using the
word or phrase in the sense in which it had been judicially interpreted (see
Maxwell on Interpretation of Statutes, 12th ed. (1969), p. 71, citing James L.J.
in Greaves v. Tofield (1880) 14 Ch.D.563, 571). In Zimmerman v. Grossman
at p. 177H Widgery L.J. took the doctrine to its logical conclusion and stated
it with exemplary clarity:

“. . . one ought to approach section 2(1) of the Act of 1949 as though it
” had added in parenthesis, ‘ it is the intention of Parliament that those
” ‘ words be given the meaning given to them in Remmington v.
” ‘ Larchin: “.

It is to be noted that, thus logically and clearly stated, the doctrine becomes
a primary canon of construction (displacing even ” the golden rule “) and
applies equally to interpretations at first instance or on appeal (provided the
decision can be said to be ” well-known “, whatever that means in the context)
and even though the interpretation was clearly erroneous. On this doctrine
parliamentary endorsement has transmuted the judicial error into juristic
authenticity.

I do not myself believe that any such doctrine was at all applicable to
interpret the 1949 Act in the light of Remmington v. Larchin. All the
members of the Court of Appeal in that case arrived at their decision with
doubt and difficulty. I do not think it can be said to be a ” clear ” judicial
interpretation. Moreover, Atkin L.J. placed reliance on the fact that the
1920 Act did not preclude the requiring or receipt of a premium on assign-
ment of a tenancy: whereas the 1949 Act itself, as I have pointed out, closed
that loophole in the controls and put the general parliamentary objective

beyond question. It would be an absurd fiction to hold that Parliament was
endorsing Remmington v, Larchin in derogation of that general objective
and was giving specific statutory sanction to another loophole in the controls.
This very example indicates that at best the profferred canon of construction
would need to be closely scrutinised in its application.

The Barras doctrine is, however, so frequently invoked that I venture to
detain your Lordships for a moment or two in examining its validity and
scope. For this it is necessary to return to the two general considerations
I mentioned at the outset of this speech.

It is a fact that a parliamentary draftsman (like any draftsman) does
acquaint himself thoroughly with the existing law (statutory and judge-made)
before starting to draft. Any draftsman of a rent restriction Act after 1921
must be presumed (nor is it an idle presumption) to have had Remmington v.
Larchin in mind. When, then, he used language which had been interpreted
in Remmington v. Larchin he presumptively used it in the sense in which it
had there been interpreted. If therefore the object of statutory interpreta-
tion were to ascertain what Parliament meant to say, the Barras doctrine
would indeed be potent and primary. But the object of statutory interpre-
tation is rather to ascertain the meaning of what parliament has said. On
this approach the previous judicial interpretation is merely one of the facts
within the knowledge of the draftsman in the light of which he will draft. It
carries to his knowledge as much authority as it bears under the general
doctrine of precedent, but no more. If the decision is of long standing it is
unlikely to be disturbed unless it is clearly erroneous (and sometimes not
even then). If it has been frequently followed it gains added authority.
Still more if it has been endorsed by the Court of Appeal. And again if it
has been the basis of commercial or proprietary transactions or of criminal
responsibility. And so on. A decision of your Lordships’ House on statutory
construction is most unlikely to be overruled under the 1966 declaration
(Ex parte Jones [1972]1 A.C. 944). In short, the previous decision carries its
own authority. So long as courts are conscientious in applying the doctrine
of precedent, the draftsman will rarely be led astray. If Parliament wishes
to endorse the previous interpretation it can do so in terms (cf., just by way
of one striking example, the Law of Property Act 1925, section 40(2)).
The sovereignty of parliament is fundamental constitutional law ; but courts
of law have their own constitutional duties, important amongst which is to
declare the meaning of a statutory enactment. To pre-empt a court of
construction from performing independently its own constitutional duty of
examining the validity of a previous interpretation, the intention of parlia-
ment to endorse the previous judicial decision would have to be expressed or
clearly implied. Mere repetition of language which has been the subject of
previous judicial interpretation is entirely neutral in this respect—or at most
implies merely the truism that the language has been the subject of judicial
interpretation for whatever (and it may be much or little) that is worth.

Was Zimmerman v. Crossman binding on the Court of Appeal?

Applying the Burros doctrine, the Court of Appeal in Zimmerman v.
Grossman held itself bound to follow Remmington v. Larchin. But neither
case is binding on your Lordships, and, with all the temerity incumbent in
venturing to differ from the great judges who constituted the courts in those
cases. I am judicially bound to say, for the reasons I have already indicated,
that I think both cases were wrongly decided.

However, in the instant case counsel for the appellants understandably
conceived that the Court of Appeal was bound by a previous Court of Appeal
decision on the same point, subject to the rare exceptions indicated in
Young v. Bristol Aeroplane Co. [1944] KB 718: [1946] AC 163. So
counsel for the appellants sought to bring the case within one of those rare
exceptions. Feeling unable to argue that Zimmerman v. Grossman was
wrongly decided or was distinguishable, he argued that it was decided per
incurlam.

The majority in the Court of Appeal (Lawton and Scarman L.JJ.) dealt
with the point scrupulously. They held that Zimmerman v. Grossman did
not come within the per incuriam doctrine. The point does not arise in your
Lordships’ House; so I content myself with merely expressing, with respect,
my entire agreement with Lawton and Scarman L.JJ.

The learned Master of the Rolls did not deal with the point at all. But
he must have concluded that Zimmerman v. Grossman was neither distin-
guishable nor decided per incuriam ; for he based his dissent on the ground
that Zimmerman v. Grossman ” was wrongly decided. So much so that I
” do not think it is binding on us “.

The relevant law on this point has been laid down beyond all question by
two of the most eminent judges who have ever held the great office of Master
of the Rolls—Lord Greene (in Young v. Bristol Aeroplane Co., Ltd.) and
Lord Denning (in Miliangos v. George Frank (Textiles) Ltd. [1975] 1 Q.B.
487). I content myself with citing the latter (pp. 499, 503):

” We have further considered this case and we consider that we are
” bound by the earlier decision [of the Court of Appeal in Schorsch
” Meier G.m.b.H. v. Hennin [19751 Q.B. 416] …

” The law on this subject has been authoritatively stated in Young v.
” Bristol Aeroplane Co. Ltd. [1944] KB 718 and Morelle Ltd. v. Wake-
” ling [1955] 2 QB 379. This court is bound to follow its own decisions
“—including majority decisions—except in closely denned circum-
” stances … I have myself often said that this court is not absolutely
” bound by its own decisions and may depart from them just as the
” House of Lords from theirs: but my colleagues have not gone so far,
” so that I am in duty bound to defer to their view.”

The learned Master of the Rolls explained the relevant defined circum-
stances in which the Court of Appeal could depart from a previous decision
of that court. They did not, of course, extend to a case where the court con-
ceived that the result of an appeal to your Lordships’ House was “a foregone
” conclusion “.

It is sufficient to say that the law, as stated by Lord Greene M.R. (giving
the judgment of the full Court of Appeal, subsequently endorsed by the House
of Lords) in Young v. Bristol Aeroplane Co. Ltd. and by Lord Denning M.R.
in Miliangos v. George Frank (Textiles) Ltd. is part of the law of the land.
But there are powerful practical reasons why the law should be as laid down
by Lord Greene in Young’s case and by Lord Denning in Miliangos. The
reasons have been cogently stated by Scarman L.J. in Tiverton Estates Ltd. v.
Wearwell [1975] Ch. 146, 172 and again in the instant case. The Court of
Appeal occupies a crucial position in one judicial system. Most appeals stop
there. It handles an immense volume of business. It sits in a number of
divisions. Unless it follows its own decisions, as the law directs, litigation will
be a gamble on which division of the court is to handle the appeal and what
law will be declared there. Most actions which are threatened or begun are
settled by agreement—to the great advantage of the public generally and the
litigants in particular. They are settled on the basis of a prognostication of
the applicable law. If the law becomes unpredictable, changing from court to
court and from case to case, it will be failing the public. I therefore respect-
fully agree with the majority of the Court of Appeal that, having held that
Zimmerman was indistinguishable and was not decided per incuriam. they
were bound to follow that decision.

Lord Edmund-Davies

MY LORDS,

The question arising for decision in this appeal is whether it is illegal under
the Rent Act 1968 for a lessee occupying premises under a protected tenancy

to require or receive a premium from a person desiring to replace him as
occupier as a condition of surrendering his lease so that his landlord may
grant a fresh lease to that other person.

As others of your Lordships have dealt in detail with the facts of the case
and the relevant statutory provisions, I seek to state with much greater brevity
than would otherwise have been possible my reasons for forming the conclu-
sions at which I have arrived. The answer to the question posed by the ap-
peal depends upon the construction of section 85 of the Rent Act 1968
(” Prohibition of premiums and loans on grant of protected tenancies “). This
provides that—

” (1) Any person who, as a condition of the grant, renewal or continu-
” ance of a protected tenancy, requires, in addition to the rent, the pay-
” ment of any premium . . . shall be guilty of an offence under this
” section.

” (3) A person guilty of an offence under this section shall be liable
” to a fine not exceeding £100 “.

Section 88 provides (inter alia) that

” Where the purchase of any furniture has been required as a
” condition of the grant, renewal, continuace or assignment—

” (a) of a protected tenancy, . . . then, if the price exceeds the
” reasonable price of the furniture, the excess shall be treated . . .
” as if it were a premium required to be paid as a condition

” of the grant, renewal, continuance or assignment of the pro-

” tected tenancy. . . .”

Section 90 provides for the recovery of any premium or as the case may be,
so much of it as could not lawfully be required or received.

Before considering the construction of section 85, it is convenient to deal
with the alternative way in which the appellants have based their claim to
recover that part of the £4,000 paid by them to the respondent which was
admittedly in excess of the value of the fixtures and fittings in the Little
Venice flat. It was submitted that in the circumstances the respondent was
a person who, as a condition of or in connection with, the assignment of her
protected tenancy had required the payment of a premium and that this
exaction was prohibited by section 86 of the Act. Counsel for the appellants
urged that the substance of the tripartite transaction involving them and the
respondents and the Church Commissioners as landlords was that it
” remained an assignment from beginning to end, though the machinery by
” which it was effected ultimately took the form of a surrender and fresh
” grant.” In my judgment this will not do and this for the reasons cogently
advanced by Mr. Barnes on the respondent’s behalf. As he submitted, the
relevant document was not in form an assignment and, were this House to
go behind it and uphold the appellants’ submission that it was in substance
an assignment, it could do so only by holding that the ostensible agreement
was merely a label which the parties gave to the transaction when in truth
they were doing something quite different; see I.R.C. v. Duke of Westminster
[19361 A.C. 1. Even assuming an initial agreement to assign, it was overtaken
by subsequent events which rendered it impossible to regard the transaction
as an assignment simply because thereby the desire of the parties that the
appellants should succeed the respondent as contractual tenants of the Little
Venice flat was accomplished.

Section 13 of the 1968 Act, also relied upon by the appellants, can be
disposed of with even greater brevity. It makes it an offence in certain
circumstances for payment to be demanded as a condition of giving up
possession of a dwelling-house, but as it relates only to the case of statutory
tenants and as in the present case the parties throughout remained contractual
tenants, section 13 can have no application to the circumstances in which

the payment of £4,000 was here made. Section 15 of the Act, to which
reference was also made, is likewise restricted to changes of statutory
tenancies and therefore again has no application.

This appeal therefore falls to be decided solely on the construction of
section 85 of the Act. As the main controversy which arose during the
hearing relates to the extent to which reference may be had to the construction
placed upon earlier Rent Acts, it is desirable to see what happened to the
previous legislation which, so it has been submitted (particularly for the
respondent), has a bearing on the outcome of this appeal. The Increase of
Rent and Mortgage Interest (War Restrictions) Act 1915 was repealed
in toto by the Increase of Rent and Mortgage Interest (Restrictions) Act
1920, and re-enacted in a consolidated and amended form. Section 8(1) of
the 1920 Act, which (so it was urged) is of particular interest, was repealed
by the Landlord and Tenant (Rent Control) Act 1949, and replaced by
section 2(1) thereof, and what still remained of the 1920 Act was wholly
repealed by the Rent Act 1968. Section 2(1) of the 1949 Act was amended
by section 37 of the Rent Act 1965, and what still remained of the 1949 Act
was also repealed by the 1968 Act. Finally, section 37 of the 1965 Act was
repealed by the same Act.

Although it effected amendments to sections 32 and 34 of the Rent Act
1965, the 1968 Act was, and was described as, a consolidating enactment.
As such, there is a presumption that it was not intended to alter the law and
accordingly, if the need arises, regard may be had to decisions on the
construction of the earlier enactments which are consolidated, even if the
words used are not identical, though this presumption must yield to plain
words to the contrary; see Halsbury’s Laws of England, 3rd ed. Vol. 36,
p. 406 and the cases there cited. But where earlier legislation has been
substantially altered by amending legislation before consolidation, decisions
on the earlier provision cannot affect the construction of the later ; ibid,
p. 407. It is legitimate to refer to an earlier statute in pari materia, even if
it has expired or has been repealed, but ” only where there is an ambiguity ”
(per Lord Russell of Killowen, C.J., Reg. v. Titterton {1895] 2 Q.B. 61, at 66).
As my noble and learned friend, Lord Simon of Glaisdale, said in Maunsell v.
Olins [1974] 3 W.L.R. 835, at 847D)—

” It has been generally accepted in the past that there is a presump-
” tion that Parliament does not intend by a consolidation Act to alter
” the pre-existing law: see Maxwell pp. 20-25 and Beswick v. Beswick
” [1968] AC 58, 73 … But . . . such a presumption has no scope
” for operation where the actual words of the consolidation Act are
” not, as a matter of legal language, capable of bearing more than one
” meaning. The docked tail must not be allowed to wag the dog “.

I therefore begin by asking: Is section 85 of the Rent Act 1968, ambiguous
in the sense that it is a matter of uncertainty whether the tripartite arrange-
ment with which your Lordships are presently concerned falls within its
wording? Since it has been argued for the respondent that this House
should tend towards a narrow construction of the section on the ground
that it attaches a penalty to any contravention, it is well to have in mind
the observations of Lord Reid in D.P.P. v. Ottewell [1970] A.C. 642, who
said (at p. 649): —

” The Court of Appeal (Criminal Division) refer to the well-established
” principle that in doubtful cases a penal provision ought to be given
” that interpretation which is least unfavourable to the accused. I
” would never seek to diminish in any way the importance of that
” principle within its proper sphere. But it only applies where after
” full inquiry and consideration one is left in real doubt. It is not
” enough that the provision is ambiguous in the sense that it is capable
” of having two meanings. The imprecision of the English language
” (and, so far as I am aware, of any other language) is such that it is
“ extremely difficult to draft any provision which is not ambiguous In
” that sense. This section [section 37(2) of the Criminal Justice Act
” 1967] is clearly ambiguous in that sense: the Court of Appeal

” Criminal Division) attach one meaning to it, and your Lordships are
” attaching a different meaning to it. But if, after full consideration,
” your Lordships are satisfied, as I am, that the latter is the meaning
” which Parliament must have intended the words to convey, then this
” principle does not prevent us from giving effect to our conclusions “

That the language of section 85 is in that sense ambiguous is demonstrated
by, for example, the totally different conclusions as to its applicability to
the instant case arrived at by my noble and learned friends, Viscount
Dilhorne and Lord Russell of Killowen, the former holding it ” clear ” that
*he Little Venice flat arrangement is caught by the section, the latter
evincing equal firmness in concluding that it is not. It is against—and
despite—the background of that conflict that I must ask myself whether
there is room for doubt whether the wording of section 85 covers the facts
of that case.

The ultimate conclusion at which I have arrived is that no room for doubt
exists that section 85 does apply. That conclusion is not incompatible with
my having veered a good deal both during counsel’s able submissions and in
reflecting upon them since the hearing of the appeal was concluded. Having
reflected, I have had to decide, however diffidently, whether to me there
is room for doubt about the applicability of section 85.

It is helpful to consider its setting. It is one of the fasciculus of sections
(85 to 92) constituting Part VII of the Act, headed simply ” Premiums, etc. “,
and all of them prohibiting in one way or another the payment of capital
sums on a change in occupation under tenancies which, being either
protected or statutory, come within the ambit of the Act. It is, as I think,
difficult to accept that Parliament did not intend to outlaw payments of the
kind made under this tripartite agreement. And if it be right that, as one
commentator on the effect of the Court of Appeal decision in the instant
case has put it in [1976] 126 N.L.J. 321, “as a matter of practice, premiums
” are back in the housing market, arranged in this fashion and at their usual
” exhorbitant level”, the commentator’s conclusion seems right that, ” the
” purpose of Parliament in prohibiting what used to be called key money
” has been, at least partially, defeated “. Nevertheless, the question is, has
Parliament used in section 85 the language proper to achieve its purpose?

Let me first consider subsection (1). The basic submission for the
respondent is that this operates only if the ” person ” requiring the payment
of a premium is in a position to make such payment a condition of the grant
of a protected tenancy ; and it is said that the only person who can impose
such a condition is the landlord, for he alone can grant the new tenancy.
Again, despite the width of the opening words of the subsection (” Any
” person “), such ” person ” must be he who is to become entitled to the rent
under the contemplated tenancy, since, in order to be a ” premium “, the
payment required must be ” in addition to the rent ” ; therefore, since the
only person entitled to the rent is the landlord, section 85(1) makes it a
penal offence for him (and for no-one else) to make such a requirement.
With respect, I do not think this reasoning is right. Take the present case:
the respondent, though merely a tenant, was certainly in a position to make
the grant of a protected tenancy of the Little Venice flat to the appellants
conditional upon the payment of a capital sum to her, and the events amply
demonstrate that she would never have vacated the premises and the Church
Commissioners could not and would not have been in a position to grant
the new tenancy to the appellants unless and until they paid her the £4,000
she required of them.

But to revert to the words, ” in addition to the rent “. Do they not point
to the landlord as the only person contemplated as being in a position to
” require “? The answer to the question, I think, is to be found in the
description of ” premium ” in section 92(1) of the Act as a word which
” includes any fine or other like sum and any other pecuniary consideration
” in addition to rent”. It is beyond doubt that others besides landlords
may in certain situations ‘ require ” payment of a ” premium “. Thus,
section 86, already referred to. prohibits the imposition of the condition of

payment of a ” premium ” on the assignment of a protected tenancy, and
it is common ground that it would operate here had the transaction been
in fact in law an assignment, and would therefore render the respondent liable
to repay to the appellant that part of the £4,000 paid which constituted a
” premium “. The repeating of the words ” in addition to the rent” in
section 85(1) which is already involved in its use of the word “premium “,
cannot, |in my judgment, mean that the landlord is the only “person;”
intended to be caught by the subsection. I respectfully adopt the observation
of my noble and learned friend, Lord Wilberforce, that the words are
descriptive of the character of the payment, and not of the recipient. Mr.
Blum rightly submitted, and Mr. Barnes conceded, that they mean no more
than a sum which is ” over and above the rent “.

If that conclusion is right, the excess part of the £4,000 paid by the
appellants is recoverable by them and it is not strictly necessary to consider
whether the respondent also comes within subsection (2) of section 85. It is
a separate provision and its construction is not interlocked with that attributed
to subsection (1); that is to say, although a landlord may well be caught
by both subsections, a person may be within subsection (2) who is outside
subsection (1). In my judgment, this subsection is, if anything, even clearer
than subsection (1) and there is no room for doubt that the respondent did
receive a ” premium ” of £4,000 ” in connection with the grant … of a pro-
” tected tenancy ” of the Little Venice flat to the appellants. The wording of
the subsection could scarcely be more widely or clearly expressed, and it fits
the facts of this case like a well-made glove. But my noble and learned friend,
Lord Russell of Killowen, recognising that fact, takes the view that the
wording cannot be considered in vacuo and must be construed by harking
back to the earlier legislation and that, having done so, it should be held to
relate simply to the receipt by the landlord of a proffered premium which
he may not have ” required “, but which has been presented to him invito
by a possibly eager, would-be tenant.

If the ” harking back” approach were permissible as a guide to
construction, it may well be that one should arrive at the same conclusion
as my noble and learned friend Lord Russell of Killowen in regard to section
85(1), though I am far from being sure that this would also apply to section
85(2). But, however correct it is to describe as ” patchwork ” the legislative
history before 1968, it has culminated in a consolidating statute which must
initially be regarded as standing on its own feet. On the decided cases,
only if its wording is ambiguous and its ambit obscure is one permitted to
consider its legislative ancestry. One must therefore begin by considering
subsection (2) of section 85 in vacuo. Doing just that, my noble and learned
friend Lord Russell of Killowen and I arrive at the same firm conclusion,
namely, that the respondent did receive the excessive price for the furniture
” in connection with ” the grant by the landlords to the appellants of a
protected tenancy of the Little Venice flat. That conclusion being inescapable
on the wording of section 85(2) itself, the task of construing the whole
section is at an end as far as this appeal is concerned, and I do not regard
it as open to go on to consider what earlier statutory provisions it replaced
(such as section 37 of the Rent Act 1965) and what preceded that earlier
provision, and how the wording of sections apparently aiming at achieving
similar purposes differ from each other, and the significance of any difference
that may emerge in the conducting of such an exercise.

Such being the conclusion to which I have come in relation to the meaning
of section 85, and particularly subsection (2) thereof, it appears to me
superogatory to consider whether or not earlier cases were correctly decided
upon the different wording of repealed Rent Acts. I therefore restrict
myself to saying that in my judgment Remmington v. Larchin [1921] 3 K.B.
404 correctly decided that in section 8(1) of the Increase of Rent and
Mortgage Interest (Restrictions) Act 1920 ” A person ” meant only a landlord.
Zimmerman v. Grossman [1972] 1 Q.B. 167, on the other hand, turned on
the substantially different wording introduced by section 37 of the Rent Act
1965 and Schedule 5 thereof, following upon the 1949 Act, which had signi-
ficantly altered the 1920 Act. That different wording should, in my judgment
have led to the conclusion that Remmington v. Larchin was not binding on

the Court of Appeal, and that they were free to hold, as I think they should
have done, that the provision of 1965 was not directed solely against
landlords. In any event, holding as I do that section 85(2) beyond doubt
applies to the facts of the present case, the position is that, as Lord
Denning M.R. said in the present case (at p. 651H) ” When there is a conflict
” between a plain statute and a previous decision, the statute must prevail.
” That appears from the decision of the House of Lords in Campbell College,
” Belfast (Governors) v. Northern Ireland Valuation Commissioner [19641]
” 1 W.L.R. 912″.

I would therefore allow the appeal, and I concur in the order proposed
by my noble and learned friend on the Woolsack.

Lord Russell of Killowen

MY LORDS,

The respondent occupied as contractual tenant a flat of which the
characteristics made the tenancy a protected tenancy. She wanted to leave,
but wanted to sell her furniture and fittings at a price which only a succeed-
ing tenant occupier would be prepared to pay. The original idea was that
she should assign her contractual tenancy to the appellants and sell the
furniture to them. This did not come about, because the landlord insisted
(as the tenancy in that event provided) on a surrender of the tenancy, being
prepared to grant a new tenancy to a person considered to be suitable as
a tenant, on a tenancy which would of course also be a protected tenancy.
In the result there was a simultaneous surrender of the existing tenancy by
the respondent, grant of a new tenancy by the landlord to the appellants,
and sale by the respondent to the appellants of the furniture at a price
assumed for the purposes of this appeal to be very greatly in excess of its
true worth. It is plain that the appellants would not have been prepared to
pay that or indeed any price for the furniture except upon the footing that
they obtained a new tenancy from the landlord, for which surrender of the
old was a pre-requisite.

The main question in this appeal is whether in exacting from the appellants
the excess over the true value of the furniture the respondent was guilty of
an offence under section 85(1) or 85(2) of the 1968 consolidation Act, with
the consequence that the appellants are by section 90 entitled to recover
that excess in this action.

Section 85 of the 1968 Act is in the following terms: –

” (1) Any person who, as a condition of the grant, renewal or con-
” tinuance of a protected tenancy, requires, in addition to the rent, the
” payment of any premium or the making of any loan (whether secured
” or unsecured) shall be guilty of an offence under this section.

” (3) A person guilty of an offence under this section shall be liable
” to a fine not exceeding £100.

Section 86(1) of 1968 provides that—

“. . . any person who, as a condition of the assignment of a protected
” tenancy, requires the payment of any premium or the making of any
” loan . . . shall be guilty of an offence . . .”.

Section 86(2) of 1968 provides that—

“… any person who, in connection with the assignment of a protected
” tenancy, receives any premium shall be guilty of an offence . . .”.

Other provisions of section 86 I shall note in the earlier enactments from
which they derive.

Section 90(1) of the 1968 Act is in the following terms: —

Under section 92(1) of 1968 it is provided that “unless the context other-
” wise requires ‘ premium ‘ includes any fine or other like sum and any
” other pecuniary consideration in addition to rent “.

Section 88 of 1968 is in the followng terms : —

” Where the purchase of any furniture has been required as a condi-
” tion of the grant, renewal, continuance or assignment—(a) of a pro-
” tected tenancy . . . then, if the price exceeds the reasonable price of
” the furniture, the excess shall be treated … as if it were a premium
” required to be paid as a condition of the grant, renewal, continuance
” or assignment of the protected tenancy . . .”.

As indicated the 1968 Act was a pure consolidation Act, and there is no
justification for supposing that it altered the pre-existing law: this was
accepted, and in particular that the introduction of the words ” any person ”
in place of ” a person ” in the relevant earlier enactments could not be
regraded as of significance. Not only for this reason is it desirable to
examine the antecedent legislation. Where as here you have a system of
legislative control of ordinary economic activities, built up over the years
in a patchwork fashion designed from time to time to cover certain aspects
of those activities not previously covered, it is in my opinion a useful
exercise to examine the course of additions to the patchwork in order to
detect whether the language used by Parliament at the end of the day covers
what may be otherwise thought a thinness in the instant case: and this is
particularly so (pace Lord Denning M.R.) when each patch introduces a
criminal offence.

The only other general observation I would make is this. It is correct
to say that over the years Parliament has shown by its enactments dis-
approval of profit made in various ways from the social factor of shortage
of housing accommodation: but that does not entitle a court to add to
the list of those various ways on the supposition of a general intention
against all such ways, ignoring the possibility that Parliament may have
overlooked a particular way, or thought it of insufficient importance for
legislation: it is for Parliament to add the particular piece of patchwork,
not for the court.

The story (so to speak) starts with the Act of 1915 (Increase of Rent and
Mortgage Interest (War Restrictions) Act 1915). Section 1(2) deals with
two matters. ” A person shall not in consideration of the grant, renewal, or
” continuance of a tenancy of a [relevant] dwellinghouse require the pay-
” ment of any fine, premium, or other like sum in addition to the rent . . .”:
thus far this statutory forbidding conveys to my mind that the person
referred to is a landlord or potential landlord, for it is only such a person
who is capable of granting, renewing or continuing a tenancy and of
requiring something in consideration of any of those things being done.
The subsection then proceeds to give some sanction (though not a criminal
one) to support the ban in the first part: “and where any such payment
” has been made … the amount shall be recoverable by the tenant by
” whom it was made from the landlord, and may without prejudice to any
” rent payable by him to the landlord . . .”. This, of course, wholly
confirms the fact that Parliament by the language of the first part referred
and intended to refer only to a landlord or potential landlord as the ” person
” requiring “.

There next followed the 1920 Act (Increase of Rent and Mortgage
(Restrictions) Act 1920). Section 8(1) provided:

” A person shall not, as a condition of the grant, renewal, or con-
” tinuance of a tenancy … of any [relevant] dwellinghouse . . .
” require the payment of any fine, premium, or other like sum, or the
” giving of any pecuniary consideration, in addition to the rent . . .”.

Pausing there I find, apart from the changes underlined by me, exactly the
language plainly used in the 1915 section and referring only to a landlord
or potential landlord. The only underlined change that can be of relevant
significance is the change to ” as a condition of “, which if anything points
more strongly in the direction of the only person who can impose a condition
on a grant. The other change is an example of patchwork, extending the
type of exaction that may not be required.

Section 8(1) then provides for recoverability—

” and, where any such payment or consideration has been made or
” given in respect of any ” [relevant] dwellinghouse … the amount
” or value thereof shall be recoverable by the person by whom it was
” made or given . . .”.

This appears to me to be another piece of patchwork: it extends the ability
to recover to a case where not the tenant but perhaps his relation or friend
has made the payment or given the consideration. It also extends the ability
of the payer or giver to recover from a person not the landlord or potential
landlord but someone to whom the landlord has required the payment or
consideration to be made or given. I do not find in this extension of
recoverability any ground for attributing to Parliament an intention to
extend the ban on ” requiring ” beyond the scope of the same language in
the 1915 Act. More particularly do I incline against an extension of the
ban inasmuch as section 8(2) adds a penal sanction:-

” A person requiring any payment or the giving of any consideration in
” contravention of this section shall be liable on summary conviction to
” a fine not exceeding £100 . .

Before leaving the 1920 Act I notice section 15(2): that enactment is con-
fined to a statutory (not contractual) tenancy: it forbids under penal sanction
a statutory tenant in possession to ask or receive payment of any sum or the
giving of any other consideration by any person other than the landlord as a
condition of giving up possession: this is another piece of patchwork limited
to its particular circumstances.

It is at this stage that the decision of the Court of Appeal in Remington v.
Larchin [1921] 3 K.B. 404 fits with the history. That was a case with a three
cornered aspect: a contractual tenant agreed with the plaintiff that if the latter
paid him a sum (premium) he would surrender his tenancy and that the land-
lord would grant the latter a tenancy. The landlord knew nothing of the
requirement of payment. The new tenant later sought to recover the sum
paid from the old tenant under section 8(1) of the 1920 Act. It was held, and
in my opinion rightly held, that the section in referring to ” a person ” in the
first part referred to a landlord or potential landlord. Bankes L.J. thought that
on this point the relevant language was unclear: he relied on the fact that this
was a provision leading to a penal sanction: he considered the more natural
construction was to read it as applying to a person who required as a condi-
tion of his granting etc. etc. a tenancy: he also found assistance from the
words ” in addition to the rent ” as more appropriate when referring to a per-
son in a position to control the rent. Scrutton L.J. found the matter one of
considerable doubt and was influenced by the penal sanction: he also con-
sidered that the language pointed markedly to the condition being imposed by
the person granting, etc.. etc., the tenancy—the landlord: he also derived
assistance from ” in addition to the rent “. Atkin L.J. also found the point
difficult: he relied primarily on the language of section 8(1) being relevantly
the same as that used in the 1915 Act where plainly reference to a person was

to a landlord (or I would add a potential landlord): and his conclusive con-
sideration was that there was a penal sanction.

As I have indicated I consider that case to have been rightly decided on the
grounds (a) of substantial repetition of the relevant language of the 1915 Act
under which the limitations on ” a person ” were undoubted (b) on the fact
that the more natural construction is to take the person to be one whose posi-
tion as landlord or potential landlord enables him to impose conditions of the
grant, etc., etc., of a tenancy and (c) that a provision with a penal sanction, if
there be uncertainty of intent in the language used, should be construed
narrowly in scope rather than widely. I do not myself attach weight to the
words ” in addition to the rent”, which was to some extent done by Bankes
and Crutton L.JJ.

It follows that, in my opinion, had the instant case fallen to be decided
under the 1920 Act, I would have decided against the appellants.

I move to the Act of 1923 (Rent and Mortgage Interest Restrictions Act
1923). Section 9(1) deals with a premium required under the guise of a de-
mand of an excessive price for furniture.

” Where the purchase of any furniture or other articles is required as a
” condition of the grant, renewal, or continuance of a [relevant] tenancy
“… if the price exceeds the reasonable price of the articles, the excess
” shall be treated as if it were a fine or premium required to be paid as a
” condition of the grant, renewal or continuance, and the provisions of
” section 8 of the [1920] Act, including penal provisions, shall apply
” accordingly.”

Here again we have reiteration of ” required as a condition of the grant etc.”
(though not directly of ” in addition to the rent”) and if as I think, and as
the Court of Appeal had held in the case cited, the person requiring in section
8 of 1920 is limited to a landlord or potential landlord, so also would be the
application of this provision as to furniture.

Section 9(2) of 1923 applies this concept of excess price for furniture to the
case of a statutory tenant in possession for the purposes of section 15(2)
of the 1920 Act (supra).

Here again is patchwork: section 9 bringing within the ambit of the
two already forbidden ” premiums” a method of exacting a concealed
premium. Parliament does not direct its fire against the ” three cornered ”
situation revealed by Remmington v. Larchin (supra), nor against a premium
demanded by a contractural tenant from an assignee of the tenancy which
had been held by Shearman J. in Mason, Herring & Brooks v. Harris [1921]
1 K.B. 653 not to be within section 8 of the 1920 Act.

The Furnished Houses (Rent Control) Act 1946, the subject of which the
title implies, namely contracts for furnished lettings, makes it unlawful by
section 4, when the rent payable for any such premises has been entered
in the register under the Act, ” to require or receive

” (a) on account of rent for those premises . . . payment of any sum
” in excess of the rent so entered ; or

” (b) as a condition of the grant, renewal or continuance of [such a]
” contract . . . payment of any fine, premium or other like sum, or
” any consideration, in addition to the rent.”

The section makes any payment or consideration made or received in
contravention recoverable by the person who made or gave it. I observe
that in this new field Parliament has added “or receive “: and also that in
this new field Parliament adheres to the traditional phrase ” as a condition
” of the grant, renewal or continuance “. Here again I see no justification
for extending the language beyond the equivalent of the landlord or potential
landlord. I should add that section 9 makes requiring or receiving in contra-
vention of section 4 an offence involving a maximum of a fine of £100 and
six months imprisonment if proceedings are instituted by the local authority.

I turn next to the 1949 Act (Landlord and Tenant (Rent Control) Act
1949). By section 2(1) the “forbidding” part of section 8(1) of the 1920
Act was replaced as follows, standing by itself—

” A person shall not, as a condition of the grant, renewal or continu-
” ance of a [relevant] tenancy, require the payment of any premium in
” addition to the rent”.

Here we have the familiar phrase from the earlier enactments which as
indicated I take as a reference to landlord or potential landlord. The only
material change in drafting is (a) that ” premium ” is interpreted not in the
body of the subsection but by section 18(2) which provides that ” the expres-
” sion ‘ premium’ includes any fine or other like sum and any other
” pecuniary consideration in addition to rent” and (b) that the ” recovery ”
provision is found in a separate subsection (5). I have already said that I
do not find (or need) the reference to ” in addition to the rent” as a pointer
to a person being the landlord or potential landlord, for I think it only an
indication of the quantity of the sum required as being additional to the
rent. A particular argument was mounted for the respondent that those
words in subscection (1) required some special virtue to be attached to them,
since otherwise having regard to the interpretation section they are super-
fluous: and observe that when subsection (2) deals with assignment by a
contractural tenant of his contractual tenancy those words are not found in
that subsection. While I appreciate the point taken, I would not, if I found
it necessary to rely upon it for a restricted reading of subsection (1), find it a
sufficiently reliable indication.

Section 2(2) of the 1949 Act then introduces a new patch into the legislative
fabric, to cover the case (see Mason, Herring & Brooks v. Harris (supra)) of
a contractural tenant of a relevant dwellinghouse being able to charge a
premium on assignment of the tenancy: it will be recalled that there were
already restrictions on a statutory tenant exacting payments under section
15(2) of the 1920 Act (supra) to which section 9(2) of the 1923 Act (supra)
had applied the concept of an excess price for furniture. Section 2(2) of the
1949 Act provided—

“… a person shall not, as a condition of the assignment of a [relevant]
” tenancy . . . require the payment of any premium “.

(a subletting by the tenant was already covered by section 2(1) of the 1949
Act). Just as in my opinion the reference to requiring as a condition the
grunt, etc., etc., of a tenancy points to the person referred to as being the
landlord or potential landlord, so it appears to me the language of subsection
(2) points to the person there referred to as being the assignor tenant. It
was suggested that the words would be wide enough to embrace a landlord
under a lease requiring a sum as condition of consenting to an assignment:
but this situation is in general adequately covered by the general law of
landlord and tenant, and in any event a condition of an assignment is not
the same thing as a condition of consenting to an assignment, the operation
of such a consent being simply to prevent the assignment being a ground for
forfeiture.

The 1949 Act reintroduced by section 3 the notional premium of an
excessive price for furniture but adding the occasion of the assignment of a
relevant tenancy. Section 12 of 1949 so far as now relevant applied the
previous provisions against premiums in association with furnished lettings
(section 4 of the 1946 Act supra) with the addition of a reference to the
occasion of assignment of the relevant contract of furnished letting. Section
2(5) of the 1949 Act provided for recovery of premiums which could not
lawfully be required under the section: and section 2(6) provided a penal
sanction for a person requiring an unlawful premium.

There is one other matter on section 2 of the 1949 Act relevant to the
question whether it would have embraced the instant case. Subsection (4)
excluded certain matters from the ban on requiring premiums on an
assignment by the assignor from the assignee: paragraph (b) of that subsection
(see now section 86(3) of the 1968 Act) excluded the amount of expenditure
reasonably incurred by the assignor on structural alterations or fixtures not

removable as against the landlord. The point made here for the respondent
is that if the 1949 Act was aimed at the ” three cornered ” situation as in the
instant case, Parliament could have been expected to afford a similar
exception in that situation. This I think lends some support to my view.

Thus far we find Parliament recognising another thinness in the fabric
by patching over the case of the assignment of a relevant contractual
tenancy: but I can find in the language no indication that Parliament
intended or considered it necessary to put a patch over that which has been
labelled the ” three cornered” situation exemplified in Remmington v.
Larchin (supra), and which in my opinion was not previously covered: I say
” considered it necessary” because, as counsel for the appellant said in
opening, it is an exceptional case for a landlord of relevant premises to
accept a surrender of a protected tenancy with a view to immediately re-letting
on another protected tenancy: and the insertion of a condition that if the
lessee wishes to assign he must first offer to surrender his lease is quite a
modern feature in landlord and tenant law.

The Act of 1957 (The Rent Act 1957) may be noticed in passing as by
section 14 bringing the requiring of loans to be made within the mischief
aimed at by section 2 of the 1949 Act: another piece of patchwork.

The Act of 1959 (Landlord and Tenant (Furniture and Fittings) Act 1959)
by section I made it an offence for a person in connection with the proposed
grant, renewal, continuance or assignment of a relevant tenancy on terms
which require the purchase of furniture to offer the furniture at an
unreasonably high price. Maybe when the respondent originally offered the
furniture in connection with a proposed assignment of the contractual
tenancy she committed an offence under the 1968 Act equivalent (section 89)
of this section: but that does not assist in the solution of the instant case.

No more light is shed on the present problem unless it be by the 1965 Act
(Rent Act 1965) which is the last to which in this necessarily long, and I
fear almost unbearably tedious, speech I need refer, the 1968 Act being as
stated mere consolidation. The 1965 Act introduced a reference to receipt
of a premium as well as to the requiring of a premium. (I have already
noted that the 1946 Act in connection with furnished lettings had used the
phrase “require or receive”). The 1965 Act substituted the following for
section 2(1) of the 1949 Act: —

” A person shall not—

” (a) as a condition of the grants renewal or continuance of a
[relevant] tenancy . . . require the payment of any premium ; or

” (b) in connection with such a grant, renewal or continuance,
” receive any premium ; in addition to the rent.”

To section 2(2) of the 1949 Act (assignments) was added the words ” or in
” connection with such an assignment receive any premium “. In section
2(4) of the 1949 Act (permitted exceptions on assignments) was added per-
mission not only to require but also to receive. Section 2(5) of the 1949
Act (recoverability) and section 2(6) (penal sanctions) had the consequential
addition of ” or receiving ” and ” or received “.

The remaining question here is therefore in my opinion whether in the
instant case the respondent can be said to have received the excessive price for
the furniture in connection with the grant of the tenancy by the landlord to
the appellants. This seems to me to be the crucial point in this case. If the
question were asked in vacuo whether the respondent received the excessive
price for the furniture in connection with the grant of that tenancy I would
say that the answer was that she did. A connection is clear on the facts.
But the question cannot be posed in vacuo; for the replacement of section
2(1) is a replacement of a section which (in my view) was limited to considera-
tion of a person who is landlord or potential landlord, just as section 2(2)
refers to a person who is assignor. Prima facie the receipt refers to receipt
in the one case by the one person and in the other case by the other person,
and there is ample scope for the addition of the reference to receipt as
another patch to cover questions whether the recipient had ” required ”

(which had arisen—see Megarry on the Rent Acts 10th Edition Volume I
pp. 424. 425). the simplest of which would be whether the grantee of the
tenancy had perhaps prudently proffered the premium. See the case of
Woods v. Wise [1955] 2 Q.B. 29 per Romer L.J. at p. 57. So far as the
phrase ” in connection with” is concerned this is amply explicable: for
example the proffered but not required premium could not be brought
within the ban by the phrase ” received as a condition of the grant”, for
ex hypothesi no condition would have been imposed.

Accordingly I find here another patchwork, which should not be taken
as extending a penal sanction more widely than is fairly required by the
language used, in the general context of this legislative field.

It follows from what I have said that in my opinion the decision in
Zimmerman v. Grossman [1972] 1 Q.B. 167 was correct.

There was an alternative argument to the effect that what happened in
this case was tantamount to an assignment, and that accordingly the
premium, if not within section 85 of the 1968 Act, was within section 86.
Your Lordships did not require argument for the respondent on this con-
tention, and I say no more of it.

A further argument was based upon section 13 of the 1968 Act (deriving
from section 15(2) of 1920 and section 9(2) of 1923 v. supra) that there
was a punctum temporis in the transaction in which the respondent in
possession as statutory tenant asked or received from the appellants the sum
in question as a condition of giving up possession. Similarly your Lordships
did not call upon the respondent on this contention and I say no more of it.

I cannot, my Lords, leave this case without some comment upon the
concluding paragraph of the judgment of Lord Denning M.R. of which I
unreservedly disapprove. It is not the correct attitude to be adopted by
the Court of Appeal; it is one which was rightly renounced by the other
two members of the court in the instant case ; and it is one which has in
previous cases (to some of which I was a party) been also renounced.
Lord Denning added as a special reason for departing, in the instant case,
from the fully established and sound doctrines of precedent in the Court of
Appeal, that the result of an appeal to this House ” a foregone conclusion “.
This apparent assumption of the mantle of infallibility was not, I need
hardly say, put in the forefront of argument for the appellants.

For these reasons, my Lords, I would dismiss the appeal.

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