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SOME ASPECTS OF RENT RESTRICTION in actual occupation. Thus, if a tenant of


By THEO. SOPHIAN, of the Inner Temple,



It now becomes necessary to consider the various cases in which a person may be entitled to the protection of the Acts.

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premises were lawfully to sublet the whole of the demised premises, whether to one person or to several persons, on the expiration of the contractual tenancy he would not be able to invoke for himself the protection of the Acts, although his undertenant no doubt would be protected and would become the statutory tenant of the head lessor.

It may be stated as a general proposition that, in order to claim protection under the Acts, it will be necessary to shew that there was at some time a contractual tenancy, under which the claimant derives his statutory title.

It is quite clear that the Acts do not protect a trespasser, though in this connection reference must be made to Remon's case ([1921] 1 K.B. 49), which at first sight might appear to have decided that even a trespasser may be entitled to rely on the Acts. In that case it will be remembered that the tenant's term had expired

In the first place, a distinction should be drawn between the " contractual" tenant on the one hand, and the " statutory " tenant on the other. By the contractual tenant" I mean a person whose possession of premises is governed and controlled by a lease or tenancy agreement, although such lease or tenancy agreement will be subject to the restrictive provisions of the Acts; while by the "statutory" tenant I mean the person whose sole right to possession or occupation rests on the Acts themselves. An example will make this distinction clearer. Qon the 24th June 1920, but the tenant had, is tenant under a three years' agreement of certain premises, coming within the operation of the Acts. During these three years his tenancy will be a contractual one; but on the expiry of the term, if he continues in possession without entering into any new contractual arrangement with his lessor, his occupation will be merely that of a statutory tenant.

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That this distinction is of importance and should carefully be borne in mind, becomes easily apparent from a consideration of the following matters: In the absence of any agreement to the contrary, a tenant has in general the right to assign or to sublet. If, therefore, an assignment or subletting is effected while the contractual tenancy is still running, the assignment or the subletting will be perfectly valid, and the title of the assignee or of the sublessee will be a good and lawful one. Now assume that the assignment or subletting took place while the tenancy was a purely "statutory one in the sense I have indicated above. One will be immediately faced with the decision in Keeves v. Dean and Nunn v. Pellegrini ([1924] 1 K.B. 685), and no conclusion can be arrived at other than that the title of the assignee or sublessee is a bad one, inasmuch as the statutory tenant according to that decision cannot assign or (semble) sublet. Therefore, the assignee or the sublessee, in the latter case, cannot rely on the protection that might otherwise have been afforded by the Acts, inasmuch as their tenancies have not been lawfully created (see sections 5 (5); 12 (1) g; and 15 (3) of the Act of 1920).

Again, it should be observed, that whereas the contractual tenant is entitled to possession of the premises, even though he does not himself actually occupy the premises, the statutory tenant will be protected only so long as he is

nevertheless, continued in occupation against the will of his landlords until the 2nd July 1920, that being the date on which the premises in question first came within the protection of any Rent Act (the Act being the Act of 1920, which came into operation on the 2nd July 1920). On the same day the landlords entered the premises in the defendant's absence and obtained possession. The Court of Appeal nevertheless held that the tenant was entitled to the protection of the Acts, and that the landlords were obliged to allow him to re-enter into possession. The meaning there given to the term tenant," as used in the Rent Restrictions Act, is instructive. "It is clear," Lord Justice Bankes said (at p. 54)," that in all the Rent Restrictions Acts the expression 'tenant' has been used in a special, a peculiar, sense, and as including a person who might be described as an ex-tenant, someone whose occupation had commenced as tenant and who had continued in occupation without any legal right to do so, except, possibly, such as the Acts themselves conferred upon him."

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It will be necessary, therefore, to see whether the relationship of landlord and tenant existed, and if such relationship existed, it will be immaterial whether the tenancy was for a term certain, or whether it was a periodic tenancy (e.g. from year to year).

On the other hand, although it has been held that a tenant at sufferance is entitled to rely on the Acts (Dobson v. Richards, [1919] W.N. 166), it has been held that a tenant at will, with no rent reserved, is not entitled to such protection (Commrs. of H.M. Works v. Hutchinson, 1922, S.L.T. (Sh. Ct. Rep.) 127). Reference may also be made to Brake v. Ward (1922 (L.J.), 11 County Court Reporter, 74),

where a purchaser, who had been let into It is further submitted, if this view is correct, possession pending completion of purchase, that whether a statutory tenant dies testate was regarded as being in the position merely or intestate, section 12 (1) (g) must apply. of a tenant at will with no rent reserved, and The rights, if they may be so described, of a as such not entitled to claim the protection statutory tenant, are not rights of property, of the Acts. notwithstanding what Parkinson v. Noel ([1923] 1 K.B. 117) may appear to have decided. As Lord Justice Scrutton said in Keeves v. Dean, the rights of a statutory tenant are negative rights, rights which are personal to him and to him alone; and if a statutory tenant cannot assign or sublet, it is difficult to see how he can transmit by will any interest in these statutory rights. If, therefore, one were to confine the operation of section 12 (1) (g) to cases where the statutory tenant had died intestate, one would be faced with the absurd position that the widow or other relative of the statutory tenant would be deprived of the protection conferred by section 12 (1) (g) where the statutory tenant had executed a will which could not possibly affect his statutory rights in the premises in question.

Interesting questions often arise as to whether a servant who occupies premises provided by his master occupies as a servant merely, or as a tenant. The test that it is necessary to apply in order to determine the character of the occupation in each case is briefly this: If it is necessary for the due performance of his duties that the servant should occupy certain premises, or if the servant is required to occupy premises in order that he may perform his duties more satisfactorily, his occupation will be in the capacity of a servant; but if he is permitted merely to occupy the premises, his occupation will be that of a tenant (Mayhew v. Suttle, 4 El. & B. 347; White v. Bayley, 10 C.B. (N.S.), 227; R. v. Spurrel (L.R.), 1 Q.B. | 72).

Reference should also be made to the case of Marquis of Bute v. Plenderleith (1921, 58 S.L.R. 290; 1921 S.C. 281), where it was held that a gamekeeper occupying premises for the purpose of his employment did not occupy as a tenant; and also to the case of Pollock v. Assessor for Inverness (1923, S.L.T. 282), where a schoolmaster occupying a house belonging to the Education Authority, in virtue of his office, was similarly regarded as not being a tenant.

Where a tenant dies, it is clear that, in the case of a contractual tenancy, such tenancy will vest in the executor or administrator of the tenant, as the case may be (Collis v. Flower, [1921] 1 K.B. 409; Mellows v. Low, [1923] 1 K.B. 522). If, however, the tenancy is a statutory one, then apparently the better opinion would appear to be that the executor or the administrator of the subtenant, as such, will have no interest whatsoever in the statutory tenancy, but that the provisions of section 12 (1) (g) of the Act of 1920, which appear to have been specially intended to meet such a case, will strictly apply. According to that provision "the expression tenant includes the widow of a tenant dying intestate who was residing with him at the time of his death; or where a tenant dying intestate leaves no widow, or is a woman, such member of the tenant's family so residing as aforesaid as may be decided in default of agreement by the County Court." With regard to the meaning of the term "family," family," as used in the above provision, it should be noted that the Courts have recently held in Salter v. Lask (41 T.L.R. 201) that that term may include the husband of a tenant dying intestate.

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On the other hand, reference should be made to Mellows v. Low (supra), where Macardie J. held ([1923]1 K.B. at p. 526) that the above provision" paragraph (g) must be taken as applying only in cases where there was no executor or administrator, in other words, to cases falling within paragraph (ƒ)," and that the same rule would apply both to a contractual as well as to a statutory tenancy. But it is extremely difficult to reconcile this view of the law with the decision in Keeves v. Dean (supra).

I hope to deal with the position of subtenants in a subsequent article.


It has recently been found necessary to consider very closely some aspects of the rules regulating sales of heritable property by private bargain by trustees in sequestrations. The occasion is accordingly taken to deal with the matter exhaustively. The statutory rule is in section 111 of the Bankruptcy Act, 1913, along with which it is necessary to consider a question which may arise, and has been raised, under section 116. Section 111 reads:

It shall be competent for the trustee with con. currence of a majority of the creditors in number and value, and of the heritable creditors if any, and of the bargain on such terms and conditions regarding price Accountant to sell the heritable estate by private

and otherwise as the trustee with the concurrence of

those parties may fix, and the concurrence of the Accountant shall be conclusive evidence that the concurrence of the requisite majority of creditors has been obtained.

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Following upon this the Accountant's memorandum for the guidance of trustees is in the following terms:

The Accountant requires the trustee (1) to exhibit the missives of sale shewing the terms and conditions of the proposed sale; (2) to exhibit a valuation or other satisfactory evidence of the value of the subjects proposed to be sold; (3) to exhibit minutes of creditors and commissioners or other evidence that the creditors and commissioners approve of the proposed sale; (4) to lodge with the Accountant a list of creditors, with the amount of their claims, shewing those who have concurred, and a certificate by the trustee that the list is a complete and correct one, and that the whole creditors holding heritable securities affecting the subjects for sale, and that a majority, in number and value, of the ordinary creditors, have concurred in the proposed sale, and in the terms and conditions of it. If the trustee satisfy the Accountant on these heads, the Accountant will pronounce an order granting his concurrence, which may be used as part of the title. The Accountant does not consider it expedient that he should become a party to the disposition to the purchaser.

PROVISIONAL SALES.-It will usually happen that there has been a definite offer, for otherwise it is hardly to be expected that the trustee himself will take trouble, and put other people to trouble, or will incur the expense of the various steps which are necessary, unless there is something definite on which to proceed. In the event of competing offers the natural solution is to have no private sale at all, but to proceed to public roup. The trustee may even go further than mere negotiation, and may enter into a provisional contract, setting out price and other conditions, but it must be in the clearest terms provisional on the necessary consents being obtained, failing which the sale shall be at an end without any claim on either side.

VALUATION.--It is not provided in the Act that there must be a valuation, but the Act assumes that the trustee will conduct the administration on ordinary business lines and with prudence. The Accountant's requirement of a valuation or other evidence of value is therefore fully justified. It will not often happen that the implied conditions can be deemed to have been observed unless skilled advice has been obtained as to value, and it may be also as to other matters proper to be provided for on a sale of the particular property. There is no enactment or rule that the market shall first have been tested by public auction, or by the inviting of offers, or that there shall have been any prescribed amount of advertising. It is not the official practice to require that a

proposal for a sale by private bargain shall have been preceded by unsuccessful attempts to sell it will rarely happen that the trustee is prepared by public roup; but as regards advertisements to sell by private bargain until after he has done what he thinks proper in the way of giving publicity to the matter by a reasonable amount of advertising.

COMBINED SALES.-Cases occur in which the full value of two heritable assets can be obtained only by selling them in combination. In that case there may be difficulties regarding the apportionment of the price when different properties are charged with different bonds, and it will not be safe for the trustee to move until he is satisfied that these domestic questions have been suitably adjusted so that the way may be clear if the sale proceeds. In like manner

there are cases when the wisest course of realisation is to dispose of the buildings and goodwill, machinery, and stock, all in one lot for a cumulo price, and there again the same kind of question arises and must be handled in advance.

COMMISSIONERS.-Section 111 does not in

terms require the consent of the commissioners, which is in contradistinction to the requirement of their consent in another connection in section 109. It will be observed that the Accountant's memorandum expressly requires evidence of the commissioners' approval, but, as a majority is a quorum, it is not to be supposed that opposition by one commissioner would be fatal. Indeed, as the commissioners exist only to represent the creditors in the administration, and as the sale of heritable property by private bargain is a matter which is by the Act referred to the creditors themselves, it would appear to be the better opinion that, even if all the commissioners objected, that would not necessarily be fatal. Such objections might carry much weight with the general body of creditors, and might even influence the Accountant, but there are other considerations. If a case occurred in which all the statutory consents were obtained but the commissioners all objected, it is thought that it would still be the commissioners' duty formally to concur in the disposition, and that they must either do so or resign.

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HERITABLE CREDITORS. The Act requires the concurrence of the heritable creditors if any." The reasonable construction is that this means those heritable creditors whose securities affect the particular property proposed to be sold, and that is the view taken by the Accountant in the official memordanum. So taking it, the necessity for their consent is obvious, for without them the trustee cannot make a title by private bargain. Therefore, it matters not on this head whether they have, or have not, claimed in the sequestration. An inhibitor is

in a special position. The inhibition is a security (Mitchell v. Motherwell, 1888, 16 R. 122) and it is heritable, but the trustee can convey or sell despite the inhibition (section 97), and therefore it is thought that the inhibitor is not a heritable creditor whose consent is essential. The inhibitor makes his preference available in the sequestration by virtue of an affidavit in which he claims for his debt and also for such preferential ranking as flows from the inhibition, and in that way he comes into computation the classes of creditors referred to below. It is unnecessary to consider the case of a bond which is so postponed as to have no security at all, for in a case like that it is not to be expected that the trustee and the general body of creditors should trouble themselves about the realisation. If, however, the bondholder has valued the security at nil, that practically wipes it out.


"A MAJORITY OF THE CREDITORS IN NUMBER AND VALUE.”—Those are the words in the Act, but they are not exactly adopted by the Accountant, who varies them as follows: "A majority in number and value of the ordinary creditors." Differing from the case of heritable creditors, regard is here to be had only to those creditors who have lodged claims.

(1) Preferential Creditors, i.e. creditors in debts of such a quality as to confer right to a preference within the sequestration. They must clearly be included in the computation of total creditors, and, if consenters, in the three-fourths. Section 118 of the Act sets out five classes of preferential claims, and there are others. That section allows formal claims to be dispensed with, but those creditors must have intimated claims in some form, and they come into the computations.

(2) Deferred Creditors. It is thought that these also must come into the computations, though certainly they are not not "ordinary"


(3) Heritable Creditors, i.e. on the property proposed to be sold. The Accountant's memorandum excludes them from the computation of the three-fourths. Certainly they cannot be included unless they have claimed in the sequestration. If they have claimed they must be included for any unsecured balances claimed; but it is thought that it goes further, and that they must be included for the full amount of their debt. That is in virtue of section 55, which, after directing valuation and deduction of securities over the estate of the bankrupt, proceeds "in questions as to the disposal or management of the estate subject to his security he (the creditor) shall be entitled to vote for the full amount of his debt." If, for instance, the holder of a second bond for £1000 has valued the security at £900 and claimed to vote and rank for the balance of £100, the position would thus

seem to be that the full £1000 must go into the list of general creditors and also into the list of consenters within that class, in order to ascertain whether the three-fourths majority is secured. The business in hand involves the disposal of the estate subject to his security, which is the very case pointed at in section 55. No doubt that same creditor comes into the class of heritable creditors also, and in that capacity his consent is essential to the transaction going through, both because section 111 says that it is so, and also because, without his consent and signature, the purchaser could not get a title. But that seems no reason why he should not reappear on this different platform also, and why his debt should not be reckoned towards the three-fourths majority required. If this be correct it leads one to point out that, if the voting became narrow, it would then be open to the first bondholder for, say, £6000, assumed to be absolutely safe, to lodge a claim for voting only, valuing the security at £5000 and claiming to vote upon £1000. That is perfectly safe, for on such a claim the security cannot be taken over except with an addition of 20 per cent., which would make up the full £6000. The £1000 vote thus created might make all the difference. But, indeed, that stops far short of what the result would apparently be; for, in the first place, if the view suggested above is correct, the first bondholder would on this issue vote upon the full £6000, and further that would appear to result no matter how small might be the alleged unsecured sum for which he claimed a general right to vote. Claims of that kind are frequently lodged in competitions for trusteeship.

(4) Other Secured Creditors, if claiming in the sequestration, are included in the computation for their unsecured balances. This has reference to creditors holding securities over heritable property other than the particular property proposed to be sold, or over any other part of the bankrupt's estate.

(5) Small Creditors.--" No creditor whose debt is under £20 shall be reckoned in number, but his debt shall be computed in value (section 96).

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(6) The Purchaser.-If he is a creditor, is he to be included in the list of creditors and/or in the list of consenters? It is understood that the question has never been raised. It is stated on the assumption of an affirmative answer to the following question:

MAY A CREDITOR PURCHASE heritable estate when sold by private bargain? This is where it may be thought necessary to refer to the enactment in section 116 that it shall be lawful for a creditor to purchase any estate when sold publicly. In a book of practice the observation is made upon this enactment that it may be

imprimatur of the Accountant's department, where the whole matter is reviewed with the benefit of long experience and expert knowledge of business. This is very different from what may happen in the case of a sale by auction, where the transaction may be carried through before anyone in the sequestration, except the trustee and the commissioners, has knowledge of it. So much on the negative side against the suggestion of an implied prohibition against creditors purchasing privately, but there is also an affirmative side in favour, or in explanation, of the positive enactment that creditors may purchase at auction. This enactment can be traced far back in Scottish bankruptcy legislation, and it is understood historically to have its origin in objections stated by outside parties to the competency of a creditor competing at an auction of any part of the bankrupt's estate. The enactment excludes any such objection, and it is levelled at the outside parties who might have stated that objection. It is plain, however, that that objection can have no place in private sales, and it is submitted that that is why the enactment is limited to public sales. This view was taken by Sheriff Cheyne in Lindsay & Crookston v. Rae (1897, 13 Scot. Law Rev. 296), which related to personal estate. It is understood that this view has throughout been acted on in the Accountant's department with reference to heritage, and was adhered to after special reconsideration on a recent challenge.

permissible to infer from it that, in the event of a private sale, a creditor is not entitled to purchase, and reference is made to the case of Hay v. Rafferty (1899, 2 F. 302), which seems to have little application. It is here submitted that the suggested inference is not admissible. The strangest possible way of legislating to the effect that a private purchase shall be incompetent is to enact that a public purchase shall be competent. The same section goes on to provide that on public sale the trustee or commissioners, or law agent employed by the trustee, or any partner of such law agent, shall not be entitled to purchase. If, as regards the first part of the section, it is permissible and obligatory to reason that an express affirmative carries an implied negative, then by parity of reasoning the express negative in the second part of the section must carry an implied affirmative. If the permission to a creditor to purchase publicly prohibits him from purchasing privately, then it must follow that the prohibition against the trustee and others purchasing publicly entitles them to purchase privately, which is absurd and is certainly not law. This is as futile as to argue that because trustees are expressly prohibited from purchasing shares in companies with unlimited liability, therefore they are authorised to do so in companies with limited liability, which is not law (Hardie v. Fulton's Trs., 1895, 2 S.L.T. 534). Such a method of construing statutes cannot be accepted. It is sufficient to take what is enacted and to apply it, without seeking to import extensions, qualifications, and directly contrary enactments. This is said whether there may or may not seem to be grounds in reason which would have made such further legislation suitable and appropriate. It is There is a curious word in some of our ancient thought that those views are sound, and if Scottish statutes and in the Acts of Sederunt sound they are certainly sufficient to exclude of the Court of Session-Acts which were made the suggestion that section 116 contains, or by the Lords of Council and Session in virtue leads to, anything to prevent a creditor purchas- of the power vested in them by the statute ing heritable property by private bargain in a instituting the College of Justice in 1532, and sequestration. It may seem, therefore, un- by the subsequent statute of 1540, entitled necessary to go further, but in point of fact"Ratification of the Institution of the College there are strong reasons against any such of Justice." The word referred to is "dyour inferred or hypothetical legislation. It is very or "dyvour," and it is used as synonymous much more reasonable that, under the scheme with the word "bankrupt." laid down in the Act, a creditor should purchase privately than that he should purchase publicly. If he purchases privately the proposal that the property should be sold to him must be expressly and exhaustively considered within the domestic tribunals of the sequestration. All possible interests are consulted-the heritable creditors, who can stop it at once; all other creditors, who must vote upon it specially, and must sanction it by the very substantial majority of three to one in respect of both number and value; and over and above all that, there must be the



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Some dubiety exists regarding the origin of the word, and many conjectures as to its origin have been made.

Skene, in his exposition as to the meaning of ancient Scottish legal terms in 1597, writes that a dyour or dyvour, otherwise a bairman, is one who, being involved and drowned in debts and not able to pay or satisfy the same, for eschewing of prison and other pains, makes cession and assignation of all his goods and gear devour in favour of his creditors, and does his and duty to them, proclaiming himself bairman

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