Landlord and tenant — Landlord and Tenant Act 1954, Part II — Whether tenancy was business or residential — Dwelling-house and outbuildings converted to kennels — Groomage, breeding and kennelling of dogs carried on for a period of years — Appeal by landlords from decision of county court judge that the tenancy was a protected residential tenancy and that a notice under section 25 of the 1954 Act purporting to terminate the tenancy was void — Cheryl Investments Ltd v Saldanha considered — Appeal dismissed
this case, the respondent to the appeal, had actually lived in the property as
her home since 1939 but did not have a tenancy until 1974 — She started to take
an interest in dogs in the dogs in the 1960s, beginning by showing poodles and
providing kennels for friends and relations — From that she
when she ceased to take an active part; and her son, who lived in a caravan nearby,
continued to carry on for a time — The business came to an end about 1988 —
Takings per annum from 1969 to 1976 were in the region of £3,000 — In 1988 the
landlords gave the tenant notice to quit on the footing that she was a business
tenant — In her originating application to the county court she sought a
declaration that Part II of the 1954 Act did not apply to her tenancy; that her
tenancy was a protected residential tenancy; and that the notice to quit was
null and void — It was common ground in the county court that, if the letting
to the tenant in 1974 was for occupation for the purposes of a business carried
on by her, Part II of the 1954 Act applied, but, if it was not so let and
occupied, the tenant was protected by the Rent Act 1977 — The judge decided
that the tenancy was residential and the tenancy was so protected
this conclusion the judge applied the test stated by Lane LJ in Cheryl
Investments Ltd v Saldanha — The judge held that in the present case the tenant
occupied the property for the purposes of her residence only and that the
running of the business on the property was merely incidental, something akin
to a hobby — The question for the Court of Appeal was whether the judge was
entitled to make that finding on the evidence before him — The judge had
applied the correct test and the matter was peculiarly one within his ability
to decide on the basis of evidence which he, not the Court of Appeal, had
before him — There was no reason to interfere with his decision — Appeal
dismissed
The following
cases are referred to in this report.
Cheryl
Investments Ltd v Saldanha [1978] 1 WLR
1329; [1979] 1 All ER 5; (1978) 37 P&CR 349; 248 EG 591, [1978] 2 EGLR 54,
CA
Russell v Booker [1982] EGD 58; (1982) 263 EG 513, [1982] 2 EGLR 86
This was an
appeal by Richard Parrott and Geoffrey Darrow, the landlords, trustees of the
estate of the late E A Padfield, from a decision of Judge Paynter-Reece, at
Romford County Court, holding that the tenancy of the respondent, Mrs Doris
Lilian Gurton, of Wantzway Kennels, Upminster, Essex, was a protected
residential tenancy, not a business tenancy subject to Part II of the Landlord
and Tenant Act 1954.
Bernard Devlin
(instructed by Hunt & Hunt & Houghtons, of Romford) appeared on behalf
of the appellants; Steven Coles (instructed by Sackvilles, of Hornchurch)
represented the respondent; Guy Newey was present as amicus curiae.
Giving the
first judgment at the invitation of Fox LJ, BALCOMBE LJ said: This is an appeal
by landlords from an order of His Honour Judge Paynter-Reece made in the
Romford County Court on November 22 1989. By that order the judge directed that
there be a declaration on behalf of the applicant, who is the respondent to
this appeal (the ‘tenant’), that the tenancy relating to the property, at
Wantzway Kennels, Hall Lane, Upminster, Essex, in the London Borough of
Havering is not a tenancy to which Part II of the Landlord and Tenant Act 1954
applies; that the notice served by the respondents, the appellants in this
court (the ‘landlords’), on January 27 1988 pursuant to section 25 of the
Landlord and Tenant Act 1954 is null and void; and that the tenancy of the said
property is a protected residential tenancy.
The tenant,
Mrs Doris Lilian Gurton, in 1939, then aged 23, married Mr Arthur Gurton and
took up residence at property then known as Emmanuel Cottage, but now known as
Wantzway Kennels as described in the declaration made in the court below, and
at the same time her mother-in-law, father-in-law and brother-in-law were
already residing at the property. Her father-in-law died in 1945. A daughter
was born to her in 1948 and a son, Graham, was born to her in 1951. In the late
1950s her mother-in-law died and in 1960 her husband died. Her brother-in-law
died in the mid-1960s.
She has continued
to live in the property from 1939 until today; until 1974 she paid no rent and
had no tenancy.
In the
mid-1960s she, with her son Graham, carried on a business at the premises,
grooming, breeding and kennelling dogs and held a licence from the local
authority to enable her to kennel dogs at the property. That business
terminated early in 1988.
At some time
before 1974 a Mr E A Padfield acquired the freehold of the premises, and in
1974 he granted to the tenant a tenancy of that property at a rent of 50 pence
per week. There was no document evidencing or creating such tenancy.
In 1976 the
tenant no longer played an active part in the business, she being then aged 60
and not in good health. Her son Graham, who lived in a caravan nearby,
continued to carry on the business.
Mr Padfield
died on January 12 1977, and the landlords are the trustees of his estate. On
January 27 1988 they gave the tenant notice under the 1954 Act to terminate her
tenancy on the basis that it was a business tenancy under Part II of the Act.
In due course the tenant served a counternotice, and in April 1988 she issued
an originating application in the Romford County Court seeking a declaration
that her tenancy was not one to which Part II of the Landlord and Tenant Act
1954 applied; that the notice served on her by the landlords was null and void;
and that her tenancy was a protected residential tenancy.
That was the
application which came before Judge Paynter-Reece, with the result to which I
have already referred.
Section 23(1)
of the Landlord and Tenant Act 1954 is in the following terms:
Subject to
the provisions of this Act, this Part of this Act applies to any tenancy where
the property comprised in the tenancy is or includes premises which are
occupied by the tenant and are so occupied for the purposes of a business
carried on by him or for those and other purposes.
In my
judgment, the issue in this case is fairly and adequately summarised in the
skeleton argument of the amicus curiae, for which I would like to say we
are much indebted. Mr Newey, as amicus curiae, was appointed at a time
when it was not known whether the tenant would be represented in this court, so
we have had the benefit of his skeleton argument as well as argument on behalf
of the tenant herself. Mr Newey’s summary of the issue is whether, when let to
the tenant in 1974, Wantzway Kennels was occupied for the purposes of a
business carried on by her or ‘for those and other purposes’. It is clear that
whatever other reasons the tenant may have had for occupying the property,
Wantzway Kennels had, at all material times, been her home — in fact since
1939. Accordingly — and this was common ground between the parties in the court
below — if the property was not occupied for the purposes of the business
within section 23(1) of the 1954 Act, the tenant is protected by the Rent Acts,
and the judge so found.
If, on the
contrary, Wantzway Kennels was, in truth, occupied for the purposes of a
business when let to her, then the tenant will not have had the Rent Acts
protection and Part II of the 1954 Act will have applied. If her tenancy
initially fell within the 1954 Act, and not under the Rent Acts, then the
tenant would seem no longer to have any statutory protection as a matter of
strict law, since business user has now come to an end.
However, as I
say, the matter seems to have been dealt with in the court below and in
argument before us on the basis that if, at the time when the tenancy was
granted, it was occupied for the purposes of a business, then it was a Landlord
and Tenant Act business tenancy; but if it were not so occupied, then it was
and still is a Rent Act protected tenancy.
I turn now to
the judgment of the judge where he sets out in detail the evidence given by the
tenant, to whom he refers as the ‘applicant’. He said:
I summarise
the applicant’s evidence. She told me that prior to her interest in dogs, which
started in the mid-1960s, the outbuildings and the land on which they stood had
been used for keeping chickens and a few pigs from time to time, mainly to
provide food for the family, and this had been carried on by her
brother-in-law. Her interest in dogs started at the suggestion of a friend. She
bought a poodle and bred from it, selling the pups, and then started showing
poodles. Her brother-in-law converted one of the huts into kennels to house the
breeding dogs. She then started to kennel dogs for friends and relations, for
which purpose she needed more kennels and the council licence. She had
kennelling for 46 dogs but it was a seasonal activity, mainly summer holidays,
and never had that number at any one time. She charged for this service and for
grooming dogs £3 or £4 a week on average, and expanded the breeding side to
eight or nine dogs over the years. She did not advertise in the press but used
the name Wantzway Kennels in her handouts when showing dogs because she had to
have a ‘prefix’.
I should add
that the judge had previously stated that there were two sign-boards
advertising Wantzway Kennels and the services which she provided erected and
kept in position on the property.
The judge
continued:
She had
disclosed the accounts she had prepared for the Inland Revenue; these showed
takings in the region of £3,000 per annum from 1969 to January 31 1976. She did
not regard herself as being in business, rather it was a hobby which provided
her with some money to help with living expenses and upkeep of the property.
She stopped
playing an active part in 1976 due to her health, aged 60, but her son, who now
lived in a caravan nearby, had carried on in his spare time. He had already
been helping her for some years.
In 1974 Mr
Padfield, with whom her family had always been on very good terms, visited her
and suggested that for her security she should become a tenant and have a rent
book. A rent of 10 shillings a week was agreed; he told her to get a rent book,
which she did, and obtained two more when each became full. The rent books were
produced. At the time the use of the property for kennelling and the like was
known to Mr Padfield, who thoroughly approved. Nothing specific was said by
either as to whether the tenancy was to be business or residential but she was
under the impression that she would be able to live on there until she died and
that her security did not depend in any way on keeping on with the dog
activities. Since early 1988, when the last council licence expired, no
kennelling, breeding or grooming of any significance has been carried on by
herself or her son, if at all.
Then the judge
came to his first decision:
In my judgment
those activities did constitute a business within the meaning of section 23(2).
Wantzway Kennels was used as a business name, she worked on kennelling dogs and
grooming dogs for profit and achieved a not insignificant turnover, which was
shown in the business accounts. Although the applicant, in her evidence, tended
to belittle the amounts earned and the work involved, I am quite satisfied on
her own evidence, which generally I found truthful, that she was conducting a
business at the premises from the mid-1960s until 1988 . . .
There has been
no cross-appeal against that finding of the judge, so that the issue which has
been ventilated before this court was the other matter which the judge had to
determine, namely: did she occupy the premises for the purposes of the business
of kennelling, breeding and grooming dogs?
She clearly did occupy those premises for the purposes of a residence,
but did she also occupy them for business purposes?
The leading
authority on this question, to which the judge below and this court have been
referred, is Cheryl Investments Ltd v Saldanha [1979] 1 All ER 5*
and I refer to the first finding at p 6:
Held — (i)
Premises were occupied by a tenant ‘for the purposes of a business carried on
by him’ within section 23(1) of the 1954 Act, only where the business activity
on the premises was a significant purpose of the occupation of the premises or
part of the reason for the occupation. Where, therefore, the business activity
was merely incidental to residential occupation of the premises, and did not
amount to a significant use of them, the premises were not occupied ‘for the
purposes of a business’ . . .
*Editor’s
note: Also reported at (1978) 248 EG 591, [1978] 2 EGLR 54.
I would refer
in particular to the judgment of Geoffrey Lane LJ at p 13 of the report. He had
pointed out that section 17(1) of the Landlord and Tenant Act 1927 had referred
to ‘holdings to which this Part of this Act applies are any premises held under
a lease . . . and used wholly or partly for carrying on thereat any trade or
business . . . ‘. He said that the alteration in the wording as affected by
section 23 of the 1954 Act must have had a reason, and he continued:
It is
obviously a very fine distinction, but the words in section 23 seem to have
been used in an attempt to make it absolutely clear that activities on the
premises which are merely incidental to residential occupation do not bring the
premises within the section although they may properly be described as using
them for carrying on a trade or business. The businessman, for example, who
takes work home in the evening which he does in a study set aside for the
purpose may very well be using the premises partly for carrying on thereat a
business, but he could scarcely be said to be occupying the premises for the
purposes of a business, any more than the person who watches the television
regularly every evening can be said to be occupying his house for the purpose
of watching television.
Then come
these very important words:
It is only if
the activity is part of the reason for, part of his aim and object in occupying
the house that the section will apply.
Judge
Paynter-Reece was referred to that case and he refers to it when dealing with
this particular issue. He said:
I apply the
test put forward by Lord Lane in the Cheryl Investments case to which I
have referred; that is to say, was the business part of the aim and object of
the applicant in occupying this property?
I have come to the conclusion that it was not and never has been and
that the applicant’s occupation has not been for its purposes. I accept the
submissions made by Mr Coles on this point. Although no one point is in any way
conclusive, in my judgment, the totality of the points leads me to the view
that she occupied this property for the purposes of her residence only and that
the running of the business on the property was merely incidental, something
akin to a hobby, taking advantage of the facilities offered by the existing outhouses
and other small amount of land, which might otherwise be used as a yard or
garden, which was an adjunct of the house.
In particular,
I am impressed by the fact that the applicant occupied this property purely as
a residence, albeit merely under a licence from the landlord, for many years
before starting the dog business, to provide herself with some extra money and
a part-time activity. That business never became her aim and object in
occupying the property; her aim and object was to continue to live in it as her
home.
The judge then
dealt with the view which Mr Padfield must have had in granting her the
particular tenancy which he did. In my judgment; that part of his judgment can
have no bearing on the question as to whether the tenant was occupying the
premises for the purposes of a business carried on by her; it was material to
the question which was not substantially in issue before him, whether she had a
Rent Act protected tenancy, and is covered by the case of Russell v Booker
(1982) 263 EG 513, [1982] 2 EGLR 86. However, it is not necessary to refer to
that because it was common ground between the parties that if the tenant had
not, at the relevant date, been occupying the premises for the purposes of a
business carried on by her, then she had a Rent Act protected tenancy, and the
remainder of the judgment was, in my view, referable to that issue.
I turn, then,
to deal with the question on this appeal: was the judge entitled to make the
finding which he did on the evidence before him?
Mr Devlin, for
the landlords, in this court has submitted a full and careful skeleton argument
and has summarised in some detail the evidence which was before the judge as to
the extent of this business. However, I need not refer to it in detail because
at the end of the day it seems to me that this was a matter peculiarly within
the ambit of the judge’s ability to decide on the basis of the evidence before
him. It has often been said that this court suffers from the disadvantage of
not being able to have what is sometimes called the ‘flavour’ of the case
because it does not hear the witnesses and it receives a somewhat attenuated
picture on paper.
The question
whether this tenant occupied this property for the purposes of a business
carried on by her is to be decided by applying the test set out by Geoffrey
Lane LJ in the Cheryl Investments case, which I repeat: ‘it is only if
the activity is part of the reason for, part of his aim and object in occupying
the house that the section will apply’.
Therefore,
what Judge Paynter-Reece had to decide on the evidence before him was: what was
the reason for this tenant’s occupation of the premises? As he said, and I bear in mind, she had
occupied the premises long before she commenced the business. What was the aim
and object of her occupation?
It seems to me
that this is a case where this court cannot and should not interfere with the
judge’s finding on the evidence, which he was entitled to make. I would not
wish to disturb it, and therefore I would dismiss this appeal.
FOX and STOCKER LJJ agreed and did not add anything.
The appeal
was dismissed with costs. Leave to appeal to the House of Lords was refused.
