Landlord and Tenant Act 1954, Part II–Application by tenants for a new tenancy opposed under section 30(1)(g)–Landlord’s interest vested in two executors who were also entitled under the will to equal shares in the residue, which included the property in question–One of the two intended to occupy the holding for the purpose of a business to be carried on by him therein–Question whether he could be regarded as ‘the landlord’ for the purpose of section 30(1)(g)–Arrangement that he should purchase his co-beneficiary’s share in the property–Effect of section 41(2) of the 1954 Act as interpreted in Frish Ltd v Barclays Bank Ltd–The words ‘beneficiaries under the trust’ in section 41(2) must be limited to persons occupying by virtue of their interest as beneficiaries–In view of arrangement to purchase co-beneficiary’s interest this condition was not satisfied–Held that the ground for opposing the grant of a new tenancy under section 30(1)(g) had not been established–County court judge’s order allowing application for new tenancy accordingly upheld
This was an
appeal from a decision by Judge Lermon at Epsom County Court in which he made
an order for the grant of a new tenancy to the applicants, Carshalton Beeches
Bowling Club Ltd, of the first floor of premises at 61a Banstead Road South,
Carshalton, and a bowling green occupied therewith. The appellants were Lady
Irene Eunice Cameron and Peter Henry, executors of a Miss Henry, deceased, who
had been the freehold owner of the whole property. The respondents were
Carshalton Beeches Bowling Club Ltd, the successful applicants in the court
below.
B S Green
(instructed by Copley, Clark & Co) appeared on behalf of the appellants; R
H T Smith (instructed by John Chapman & Co) represented the respondents.
Giving the
first judgment at the invitation of Stephenson LJ, BRIDGE LJ said: This is an
appeal from a judgment of His Honour Judge Lermon, given in the Epsom County
Court on March 17 1978, allowing an application by the respondent tenants for
the grant to them of a new lease of certain premises pursuant to the provisions
of Part II of the Landlord and Tenant Act 1954. The premises in question are
the first floor of a property known as 61a Banstead Road South in Carshalton
and a bowling green occupied together therewith, which has been occupied for
some time before this matter came to court by the applicants as lessees, the
Carshalton Beeches Bowling Club Ltd.
No 61a
Banstead Road South, apart from its first floor and its bowling green, had been
occupied for many years (together with another house in the same road) as a
school which had been run by a lady named Miss Henry, who was the freehold
owner of the property and the landlord of the tenants and who lived to the ripe
old age of 94. When she died, she made a will whereby she left the property in
question as part of the residue of her estate and she gave that residue in
equal shares to her niece and nephew, a Mr Peter Henry, the nephew, and the
niece, Lady Irene Eunice Cameron. They were also named as the executors under
the will, and they as executors were respondents to this application. They
opposed the grant of a new lease to the tenants
well known, that a new lease is not to be granted if the landlord proves that
on the termination of the current tenancy he, the landlord, intends to occupy
the holding for the purposes or partly for the purposes of a business to be
carried on by him therein or as his residence.
Now the
evidence was, and this was accepted by the learned judge, that Mr Peter Henry
was going to carry on the school and he wished to take over the first floor
occupied by the tenant club for the purposes of running a proprietary club for
the benefit of parents of children of the school and to take in the bowling
green as part of the school amenities, so although there was an issue about
this, the learned judge undoubtedly accepted that Mr Peter Henry had the
necessary intention to defeat the tenants’ claim for a new tenancy, provided
that he could bring himself within the words ‘the landlord’ in section
30(1)(g). Now, of course, at the time of the hearing Mr Henry was not the
landlord, but in order to entitle himself to set up the section 30(1)(g)
grounds of opposition, he invoked the provisions of section 41(2) and that
provides that: ‘Where the landlord’s interest is held on trust the references
in paragraph (g) of subsection (1) of section 30 of this Act to the landord
shall be construed as including references to the beneficiaries under the
trust, or any of them.’ ‘So,’ said Mr
Henry, ‘as one of the beneficiaries entitled to an equal half-share in the
residue of the late Miss Henry’s estate, of which number 61a Banstead Road
South, forms part, I am a beneficiary under a trust and as such entitled to
call myself a landlord for the purposes of paragraph (g) of subsection (1) of
section 30 of the Act.’
The difficulty
in the way of that contention and that which was held by the learned judge to
be sufficient to defeat it arises from the decided case in this court of Frish
Ltd v Barclays Bank Ltd, which is reported in [1955] 2 QB 541. That
was a case where the property in question was held on discretionary trusts for
a number of beneficiaries. One of those beneficiaries had agreed with the
trustees for the grant to him of a tenancy in reversion to the tenancy occupied
by the business tenants, and in virtue of that reversionary tenancy, he claimed
to defeat the business tenants’ application for a new lease. The decision of
the court, Sir Raymond Evershed MR, Jenkins LJ and Parker LJ, was that that
opposition to the grant of a new tenancy failed because it was not in virtue of
his interest as beneficiary in that trust that the person claiming the rights
of a landlord under section 41(2) was proposing to occupy. It was not in virtue
of his interest as a beneficiary that he would occupy the premises, but in
virtue of his interest as a tenant under a tenancy to be granted to him on
commercial terms by the trustees.
The matter is
put in a number of ways in the judgment. Sir Raymond Evershed said, at p 547:
What is said
(and this prevailed in the court below) is that Mr Parnes happens to be a
beneficiary under the trusts on which the property is held by the landlords,
and that by reason of section 41(2) (to which I earlier alluded) it therefore
follows that occupation by someone who is in fact, or can be shown in fact to
be, a beneficiary under the trusts on which the property is held by the
landlords amounts to occupation by the landlords for the purposes of paragraph
(g), even though the intended occupation is in no substantial sense referable
to the fact of the beneficial interest of the proposed occupier.
The Master of
the Rolls held that the intended occupation by a landlord claiming under
section 41(2) must be referable to the fact of the beneficial interest. At p
548 he says:
And I think
they [the words] must be given, as a matter of fair interpretation of the
language, a limitation in this respect that only those beneficiaries are
referred to whose interest under the trust (putting it quite broadly and
generally) is such as to give them the right, as against the trustees, to occupy
the property, or is such that the trustees may properly within the terms of
their trust let them as beneficiaries into possession.
Then he added
at p 552:
. . . if the
intended occupation is to be that of a beneficiary, it must be shown that it is
the intention that he should so occupy by virtue of his quality or right as a
beneficiary.
Jenkins LJ
gave a judgment substantially to the same effect and said that the
beneficiary’s interest in virtue of which he claims to occupy in order to
qualify under section 41(2) must be such an interest as to justify the trustees
in letting the beneficiary into occupation.
In this case,
if one asks the question whether the executors of the will were entitled to let
Mr Henry qua beneficiary into occupation of the property, the answer is
no, as I think was conceded in the court below and as certainly clearly appears
from some voluntary further and better particulars of the landlord’s opposition
which were given prior to the hearing. By those particulars it was stated: ‘By consent
of both beneficiaries, both 61a and 67 Banstead Road South, which together form
the residue, will be conveyed into the sole name of Mr Henry on the winding-up
of the estate for a consideration to be agreed between them.’ In other words, Lady Cameron was for a
consideration going to transfer her beneficial interest in this property, as
forming part of the residue, to Mr Henry.
I can quite
see that if the residue of an estate comprises sufficient properties for a
single property held under a business tenancy to be appropriated by the
personal representatives to one of the beneficiaries, who wish to divide the
residue between them, and he can make such appropriation without the consent of
the other beneficiaries, the residue being large enough to satisfy the other
beneficiaries’ shares from other property, that beneficiary would be entitled
to claim as landlord under section 41(2), but that is clearly not the case
here. From the voluntary particulars given and from the evidence which followed
those particulars, it is clear that it is necessary for Lady Cameron to agree
to transfer her share, or a substantial part of her share, for a consideration,
which has not been stated in the evidence or in the particulars, to Mr Henry in
order to put him into a position to claim as the sole occupier of number 61a,
who is going to carry on the school in succession to Miss Henry and who was
going to take over (if his wish prevailed) the first floor from the Carshalton
Beeches Club and the bowling green.
Mr Barry
Green, who has argued this case as fully and as attractively as well it could
be, has urged us to take the view that the extent to which the interest of an
intending landlord/occupier who claims under section 41(2) must be that of
beneficiary and the extent to which the interest in virtue of which he is to
occupy would be his interest qua beneficiary is a matter of degree. I
accept that proposition to this extent, that if it could be shown that any
interest other than that of beneficiary which the intending occupier/landlord
had acquired was de minimis, that could properly be disregarded, but
here on the evidence the only inference we can draw is that the interest of Mr
Henry in the property as a beneficiary under the will extends only to half his
total interest and the other half of his interest is to be acquired by purchase
from Lady Cameron. Looking at the expression used in the Frish case, it
does not seem to me it could possibly be sufficient to satisfy the principle
which the court regarded as the governing principle by which section 40(2) of
the Act has to be construed.
Furthermore, I
think Mr Smith has given us another complete answer to the claim against his
clients which is advanced on the appellants’ behalf. He points out that before
very long the conveyance to Mr Henry which is mentioned in the voluntary
particulars will be effected and then it will no longer be a question of Mr
Henry holding this property as beneficiary under a trust but he will in fact
hold it as to
and of course in that capacity he would be defeated in his claim to oppose the
tenants’ application for a new tenancy by section 30(2), which expressly provides
that the landlord shall not be entitled to oppose an application on the grounds
specified in paragraph (g) of subsection (1) if the interest of the landlord
was purchased after the beginning of the period of 5 years which ends with the
termination of the current tenancy.
For those
reasons, I think the learned judge came to the right conclusion, and I would
dismiss this appeal.
SHAW LJ
agreed.
Also agreeing
STEPHENSON LJ said: I thought at one stage when listening to Mr Green’s able
argument that it might be possible to regard Mr Henry’s occupation which was
proposed at the time of the hearing at the county court, and which has now
become actual since last May, as in a substantial sense referable to his
beneficial interest. In the words of Sir Raymond Evershed MR at p 547 of the
report to which my Lord, Bridge LJ has referred, I thought it could be said
that his occupation was by virtue of his interest as beneficiary, and not by
virtue of a commercial bargain or under the terms of an intended commercial bargain.
Jenkins LJ
does not refer, in his judgment, to a commercial bargain but he agreed with the
Master of the Rolls that the interest of the beneficiary, qualifying him as a
landlord under section 41(2) must be an interest under the trust on the
strength of which he intends to occupy and must be in right of his beneficial
interest and referable to it. It seems to me, however, that Mr Smith gave the
answer to that; that once Mr Henry does occupy the property which might up to
that point be called trust property, the trust in so far as it affects him and
that property is at an end. It therefore becomes unnecessary to consider the
point whether one can look at the degree of his previous beneficial interest in
the property and the amount of the consideration with a view to seeing how far
it turns into a commercial bargain the transaction by which he obtains his
occupation of the property.
I too would
dismiss this appeal.
The appeal
was dismissed with costs.
