Landlord and Tenant Act 1954, Part II, section 30(1)(f) and (g) — Appeal by tenants from order made by judge on the trial of a preliminary issue as to the entitlement of the tenants to a new tenancy — Case concerned a petrol filling and service station including a workshop, office area and showroom as well as a forecourt and lubrication bay — Landlords’ intention was to obtain possession of premises for their own business and in so doing to demolish all the buildings on the site, building thereon a new filling station with much greater pump capacity, but without a showroom, workshop or lubrication bay — The two questions which arose were (a) whether this was a substantial reconstruction or improvement which could reasonably be carried out without the landlords’ obtaining possession of the holding, and (b) whether the landlords could establish an intention to occupy the holding within the meaning of the provisions of para (g) of section 30(1) — The lease contained a covenant to permit the landlords to enter the premises for or in connection with the carrying out of any improvement or addition to or alteration of the premises — The judge below had decided the preliminary issue against the tenants — The Court of Appeal, dismissing the appeal, held on the first question, following the authority of Heath v Drown, that the works intended to be carried out by the landlords required more than the facilities for physical entry and occupation contemplated by the above-mentioned clause in the lease; they could not be effected without legal possession of the holding — On the second point, in regard to para (g) of section 30(1), the court considered the frequently criticised decision of the Court of Appeal in Nursey v P Currie (Dartford) Ltd, which appeared to decide that where a landlord intends not only to occupy the holding for his own purposes but also to demolish buildings on the holding and put something else up he does not intend to occupy ‘the holding’ because it is a different holding that he intends to occupy — After a detailed consideration of Nursey, and reference to other decisions critical of it or in conflict with it, the present court distinguished it by confining its ratio to the narrow compass of its own special facts — In general, in the ordinary case of land let with buildings on it, and where the buildings do not comprise the whole of the holding, the landlord’s intention to occupy the whole, whether in the original or the reconstructed form, does constitute an intention to occupy the whole of them — Accordingly the judge below came to the correct conclusion on both questions — Tenants’ appeal dismissed
This was an
appeal by Leathwoods Ltd, tenants of a petrol filling and service station at
Whitehorse Lane, Croydon, known as the Palace Garage, against a decision of Mr
Vivian Price QC, sitting as a deputy High Court judge in the Chancery Division,
in which he made declarations in favour of the landlords, Total Oil (Great
Britain) Ltd, and dismissed the tenants’ originating summons for the grant of a
new lease.
Michael
Connell QC and A Moylan (instructed by Tilbury Goddard & Co, of Thornton
Heath, Surrey) appeared on behalf of the appellants; Anthony Porten (instructed
by Denton Hall & Burgin) represented the respondents.
Giving
judgment, OLIVER LJ said: This is an appeal from an order made on the trial of
a preliminary issue in an application by a tenant for a new lease under the
Landlord and Tenant Act 1954 of certain business premises; it was an order made
by Mr Vivian Price QC, sitting as a deputy judge of the High Court in the
Chancery Division, by which he declared that:
the defendant
having established to the satisfaction of the court that on the termination of
the current tenancy
(a) it intends to demolish or reconstruct the
premises. . . and
(b) it intends to occupy the holding for the
purposes of a business to be carried on by it,
the plaintiff
was not entitled to a new tenancy of the premises.
Accordingly the
originating summons for the grant of a new lease was dismissed and a suspension
of the operation of the order was refused.
The case
concerns a petrol filling and service station which combines, as I understand
the schedule of dilapidations, a workshop and office area and a showroom, as
well as a forecourt and lubrication bay, situate at Whitehorse Lane in Croydon
and known as the Palace Garage.
On March 12
1982 the landlords, Total, who are the respondents to the present appeal, gave
notice terminating the tenancy of the tenants of those premises under section
25 of the Landlord and Tenant Act 1954, and indicating that they would oppose
any application for the grant of a new tenancy on the grounds which are
specified in section 30(1), paras (f) and (g), to which I shall refer in a
moment. There is no issue between the parties that that notice was one which
was quite properly given.
On March 30
the tenants, Leathwoods Ltd, gave a counternotice stating that they would not
be willing to give up possession, and on July 6 1982 they issued an originating
summons for a new lease under the Act. On December 17 1982 Master Dyson, on an
interlocutory application in the proceedings, ordered that the question of the
entitlement of the tenants to a new tenancy should be decided as a preliminary
issue. That was the way in which the matter came before the court and gave rise
to the decision now appealed against.
The relevant
section, as I have indicated, is section 30 of the Act, subsection (1) of which
provides:
The grounds
on which a landlord may oppose an application under subsection (1) of section
twenty-four of this Act are such of the following grounds as may be stated in
the landlord’s notice under section twenty-five of this Act or, as the case may
be, under subsection (6) of section 26 thereof, that is to say:
Then I can
skip to (f), which says:
that on the
termination of the current tenancy the landlord intends to demolish or
reconstruct the premises comprised in the holding or a substantial part of
those premises or to carry out substantial work of construction on the holding
or part thereof and that he could not reasonably do so without obtaining
possession of the holding;
(g) subject as hereinafter provided, that on the
termination of the current tenancy 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.
It is not
disputed that the landlords’ intention, if they can obtain possession of the
premises, is to occupy them for the purposes of a business which they wish to
carry on through one of their trading organisations.
The first
question which arises is this. It is accepted that Total do intend to demolish
all the buildings on the site and to reconstruct them. They have planning
permission, and we have seen the plans of what they propose to do. What they
actually propose to do is completely to clear the site and in effect to build a
new filling station there with five pumps in place of the existing lesser
number; to increase the capacity of the tanks on the site from 50,000 to, I
think, 130,000 litres, and their estimate is that the petrol sales will be
quadrupled. It is clear from the plans which have been produced that the site
will be very different in form when it has been reconstructed from what it is
at the moment; there will not be any showroom; there will not be any workshop;
there will not be any lubrication bays; there will simply be five pumps, a
canopy and an office block with, I think, a car-wash behind and certain
provision of car parking towards the rear of the site.
The first
question is: Is this a substantial reconstruction, or improvement, which can
reasonably be carried out without the landlords’ obtaining possession of the
holding? The second question — and as I
see it, these are the only two questions which arise on this appeal, both of
which were decided against the tenants — is: do Total intend to occupy the
holding within the provisions of para (g) to which I have referred?
Turning to the
first question, the first thing that we have to do, I think, is to look at the
terms of the lease, because it is on those terms that there depends the
question of whether the work which is proposed can be reasonably carried out by
the landlords without obtaining possession in the sense in which that word is
used as defined in the cases to which I shall refer in a moment.
I need not
refer to the whole of the lease. It demises ‘All those premises more
particularly described in the First Schedule’, which is in these terms:
ALL THAT
piece or parcel of land situate at Whitehorse Lane in the London Borough of
Croydon and registered at HM land registry under Title Nos . . .
and then it
gives them
TOGETHER WITH
the petrol filling and service station erected thereon or on part thereof and
known as Palace Garage Whitehorse Lane aforesaid.
Then,
secondly,
the equipment
furniture and other chattels belonging to Total in and about the premises and
listed in the Third Schedule below (hereinafter called ‘the effects’ which
expression shall include any additions made by Total and all replacements made
under Clause 2(3)(b) below).
Clause 2
contains the covenants by the tenant, who is described in the lease as ‘the
Dealer’; I think I need not read any of those provisions, except 10, possibly
15 and certainly 16.
Clause 2(10)
is in these terms:
That the
premises shall not without Total’s consent in writing be used for any purpose
other than that of a filling and service station together with the sale and
repair of motor vehicles
and, as I have
indicated, the premises did at all material times include a showroom and
workshop.
Clause 2(15)
is in these terms:
If so required
by Total to undertake and operate in a businesslike manner all such Agency
facilities for the sale of motor fuel and any oil or grease intended for
lubricating (in this Lease called ‘lubricants’) as Total may consider desirable
and to permit Total to install on the premises after obtaining any necessary
planning permission all signs and advertisements considered by Total to be
requisite in that connection.
All this ties
up with the provisions in the schedule, which are what might be described as
typical provisions relating to the sale exclusively of Total’s products on the
premises. In fact, in clause 3(a) there is a provision that during the term,
and subject as provided in para 8 of the second schedule to the lease, Total
shall supply to the dealer and the dealer shall purchase from Total the whole
of the dealer’s requirements of motor fuel for sale on the premises, and the
dealer shall not sell or offer for sale, or advertise, any motor fuel not
supplied by Total.
I come now to
what is really the critical clause on this first question; it is 16(a), the
dealer’s covenant, and it is in these terms:
To permit
Total and its agents to enter the premises for or in connection with the
carrying out of any improvement or addition to or alteration of the premises which
Total may consider desirable.
Mr Connell,
for the appellants, states two propositions, which he supports with
authorities, to which I shall refer in a moment. First of all, he says that
when you look at section 30(1)(f) and you look at the reference there to
obtaining possession, it is clear that you could only bring yourself within
para (f) if it is in effect necessary for you to obtain possession from the
tenant for the purpose of carrying out work; and ‘possession’ in this context
signifies not merely physical occupation, because it is common ground that this
work cannot be done unless the contractor has sole physical occupation for a
period, estimated, I think, at some 16 weeks, the total cost being something of
the order of £200,000 to £250,000 — ‘possession’ signifies not only physical
occupation but putting an end to the tenant’s right of possession of the
holding under the current tenancy. If the landlord can do the work of
demolition or construction which is referred to in para (f) without terminating
the tenant’s rights to possession, even though he may require a period of
exclusive occupation, then, if he can do that within the terms of the lease he
does not need to obtain possession within the meaning of the para of the
subsection, and therefore he cannot rely on that as a ground for resisting a
new lease.
The authority
for that proposition is tolerably clear; it is in the decision of the House of
Lords in Heath v Drown, reported in [1973] AC 498. Before I refer
to the judgment, perhaps I should read the headnote, which states the holding
of the House of Lords. They allowed the tenant’s appeal, holding that:
the ‘holding’
referred to in section 30(1)(f) was ex hypothesi, in view of the language of
section 24(1), one of which there was a subsisting tenancy, and the expression
‘obtaining possession of the holding’ meant the landlord’s putting an end to
such rights of possession of the holding as were vested in the tenant under the
terms of the current tenancy; that in the present case it was not reasonably
necessary for the landlord so to act since it was conceded that he could carry
out the intended work of construction on the holding under the reservations in
the current tenancies, and that, accordingly, the landlord could not bring
himself within the terms of section 30(1)(f) and his grounds of opposition
failed.
That was a case
in which what the landlord was seeking to do was to carry out certain remedial
work to the premises, there being in the lease a clause reserving the right of
entry for the purpose of carrying out any necessary repairs.
Lord Reid, in
a dissenting judgment, says this at p 506:
Here security
is provided by continuing existing tenancies and granting new leases subject to
variation of rent and some other matters, if the tenant so wishes, until the
landlord is able to prove one of the grounds which entitles him to terminate
the tenant’s rights. Termination of his rights can properly be expressed by
saying that the right to legal possession has come to an end, so I would expect
the word ‘possession’ in this context to mean legal possession and not merely
physical occupation.
The meaning
of this ambiguous word must be determined in each case from its context. The
word ‘possession’ occurs many times in the Act. I do not think that it is
always used in the same sense but, in my view, it generally means legal
possession, and that is its meaning in section 30(1)(f).
Lord
Kilbrandon, with whose speech Lord Simon and Lord Diplock agreed, said this at
p 517:
The ‘holding’
referred to in section 30(1)(f) is ex hypothesi one in respect of which there
is a subsisting tenancy, since section 24(1) extends the current tenancy until
the tenant’s application for a new lease has been finally diposed of.
‘Obtaining possession of the holding’ (sc by the landlord) must, in my view,
mean putting an end to such rights as possession of the holding as are vested
in the tenant under the terms of his current tenancy. This is the ordinary
meaning of ‘obtaining possession’ in the context of the relationship of landlord
and tenant. Moreover, an examination of the Act shows that when the word
‘possession’ is used it means the legal right to possession of land. In the
present case it was not reasonably necessary for the landlord to put an end to
such rights of possession of the holding as were vested in the tenant under her
current tenancies, since it is conceded that he could carry out his intended
work of construction on the holding under the reservations in her current
tenancies. So he could not bring himself within the terms of section 30(1)(f).
That, says Mr
Connell, is the position here, because the work which was proposed to be done
by the landlords and on which he relies as bringing him within section 30(1)(f)
is work which constitutes an improvement or an alteration, and he therefore
points back to clause 2(16)(a) of the lease, which obliges the tenants to
permit Total and their agents to enter the premises for or in connection with
the carrying out of any improvement, or addition to, or alteration of the premises
which Total may consider desirable.
Mr Connell’s
second proposition is that the mere fact that the work involves, as it does
here, not what one might call just an alteration to premises but their total
demolition and rebuilding does not prevent the work from being an improvement;
indeed, it may still reasonably be considered to be an alteration. For that he
relies on the case of Price v Esso Petroleum Co Ltd, which is
reported in (1980) 255 Estates Gazette Law Reports 243. That was a decision of
this
where he says this:
Esso now
propose to carry out works designed to improve the service station as a service
station and comprising additions and alterations. Counsel for Esso was unable
to point to anything which could not be described as an improvement, addition
or alteration. He relied on the fact that the works involved demolition, but
then many improvements involve demolition, as my Lord has said and as Morton J
decided. Counsel also relied on the magnitude of the works and the time
required to carry them out and the fact that the tenant could not carry on the
tenant’s business during the execution of the works. But in my judgment, Esso’s
present anxiety to safeguard the tenant by reducing the ambit of the
reservation made by Esso in favour of Esso is misplaced. Esso must consider the
works to be reasonable and the dealer must be consulted.
That was a
reference to the particular facts of that case, which were very similar in many
respects to the facts of the instant case. It was a case in which there was a
service station; the landlords had proposed to demolish and reconstruct the
service station; under the lease there was a power, in very similar terms to
the power in the instant case, to enter and carry out improvements.
The particular
clause which was quoted by Megaw LJ in that case was this:
Esso reserves
the right to enter the service station at any time with workmen and others for
the purpose of carrying out such improvements, additions and alterations to the
service station as Esso may consider reasonable, after consultation with the
dealer.
Perhaps I
should read a short passage from the judgment of Megaw LJ; having quoted that
reservation, he goes on to say (at p 247):
The vital
words in the latter part of the clause, which have been referred to in argument
in this appeal as ‘the reservation clause’, are ‘improvements, additions and
alterations’. Of course, those words have to be read in the context of the
surrounding words and of any other of the contractual provisions which may shed
light on them. Are the planned works ‘improvements’, ‘additions’ or
‘alterations’ or all three of them? If
so, the landlords cannot rely on paragraph (f), because, if so, the landlords
can reasonably do the works without obtaining possession of the holding, on the
interpretation of ‘possession’ in Heath v Drown. I can see no
valid reason, with great respect to the sustained submissions for the
landlords, why it should be said that the intended works are not at least
improvements, and it may well be also, in whole or in part, alterations and
additions. The landlords would not lose their right of entry if each of the
items of the planned works fell within one or other of those heads, merely
because they did not all fall within one and the same head. But, as I see it,
the tenant does not need to rely on that proposition here, for the totality of
the planned works are property within the word ‘improvements’.
Mr Connell
submits that the only relevant difference between that case and the present
case is that the lease there did not contain any similar provision to that
which is contained in the instant case, enabling the tenant to carry on a
business, facilities for which were not comprehended in, or catered for, in the
plans for improvement. It is that salient point which Mr Porten, on behalf of
the tenants, relies upon as distinguishing this case from the case of Price
v Esso Petroleum. As he points out (and in my judgment this is right)
the test which Heath v Drown clearly establishes is whether Total
could carry out the improvements within the terms of the lease. Mr Connell has
accepted that to do that within the terms of this lease would involve a breach,
either of the covenant for quiet enjoyment or a derogation from grant on the
part of the landlords, because of the provision which enables the tenants to
carry on the business of selling and repairing cars as a permitted business —
and factually of course that was the case; they were in fact carrying on business
as dealers in cars and repairers of cars, and those are permitted businesses
for which the premises were let. If these improvements are carried out, those
services will not be provided for, and in those circumstances Mr Porten says
that if entry was sought to be made for the purposes of carrying out the
improvements the tenants would be entitled to object and if necessary to apply
for an injunction to restrain a derogation from grant or breach of the covenant
for quiet enjoyment.
Mr Connell’s
answer to that is that it does not matter, because the tenants, by applying for
a new lease, have put it out of his power to object to a proposal that involves
in effect the closing down of two aspects of the business which, under the
original terms of the original lease, he is entitled to carry on. The new
lease, says Mr Connell, under section 35, still has to be negotiated and fixed
by the court, and since the tenants have applied for a new lease with knowledge
of the proposal of the landlords to carry out these improvements, he cannot
raise any objection to a provision which restricts the user of the premises to
that of a filling station. But the answer to that, given by Mr Porten, which
seems to me to be a valid one, is that, as Heath v Drown
establishes, what one has to look at is not what the position might be under a
new lease, but what the position is under the current lease, which is
statutorily extended until the final disposition of the tenants’ application. I
have already referred to the passage from the speech of Lord Kilbrandon which
shows that that is indeed the test. The test is: could the landlords, under the
terms of the current tenancy, properly enter to do these works without getting
possession from the tenants or terminating the lease? Without the tenants’ consent and without
infringing what I think is an essential purpose of the lease as demonstrated by
the provisions of subclause (10) of clause 2, he could not do so.
The learned
judge took that view too. At p 11 of his judgment he sets out the contention of
the appellants in these terms:
It is true to
say, of course, that Mr Hancock
he was Total’s
witness
in
cross-examination, when essentially this point was put to him, said that he
would call it a complete redevelopment rather than an improvement, but I think
that when one considers the purpose of the proposed alterations and the hopes
that the proposed alterations would achieve, then really, following Morton J’s
reasoning, it could hardly be denied that in those terms the proposed works to
be carried out by Total are indeed an improvement to the site at Whitehorse
Lane.
So Mr Connell
is entitled to say that he starts one up to this extent, that the learned judge
has found these works to be an improvement.
Then the
learned judge gives the answer:
To all of
this, Mr Porten, on behalf of Total, makes essentially a short and simple
answer. He submits that what is intended by Total goes beyond their entitlement
under clause 2.16(a) because in place of the old service station will be a
petrol filling station with no facilities for the sale and repair of motor
vehicles. Total will, so Mr Porten submits, need more than the physical
occupation of the premises contemplated by clause 2.16(a). It will need legal
possession.
He then quotes
the user covenant, and goes on:
Mr Porten
points out that this covenant is not only restrictive but also permissive and
it seems to me that he must be correct in that submission. If, after the works
are carried out, Leathwoods would not be able to carry on its business in the
sale and repair of motor vehicles because the facilities for so doing would no
longer be available, then, if the lease is still in force, this circumstance
would constitute a derogation from Total’s grant and a breach for which
Leathwoods would be entitled to claim a remedy.
Mr Porten
enters a caveat there; he thinks he may have misled the judge into speaking of
a derogation from grant which was strictly, possibly, a breach of the covenant
for quiet enjoyment. But the point remains the same and, in my judgment, it is
a correct point.
The learned
judge concluded:
In my
judgment, the circumstances in Price v Esso were essentially
different, while the teaching of Heath v Drown
and another
case to which we have not been referred
provides no
answer to the consequences that flow from the inclusion in the present lease of
clause 2.10.
The learned
judge therefore held that the landlords were entitled to object to the grant of
a new lease under section 30(1)(f), and I for my part think he was right in
arriving at that conclusion. The point that Mr Connell takes that the tenants,
by applying for a new lease, puts it out of his power to object, is one the
force of which I see, but, as it seems to me, it does not get out of the
difficulty created by Heath v Drown, to which I have referred;
and indeed, if it were right one feels some difficulty in seeing why the
legislature thought it necessary to introduce, as it did, section 30(1)(a) into
the Act. That section provides in certain circumstances for the tenants to
avoid the consequences of a compliance by the landlords with para (f) of
section 30(1) by agreeing to the inclusion of appropriate terms in a new lease.
For my part, I cannot see why, if Mr Connell’s contention is right, it was ever
necessary to introduce that section, and in my judgment the learned judge
reached the right conclusion, and this appeal should be dismissed on that
ground alone. It really renders it academic to consider the next point, which
is the contention of the landlords that in any event a new lease should not be
granted because the landlords require the premises for the purposes of a
business to be carried on by the landlords under para (g) of subsection (1).
As to this, it
seems to me perfectly clear that, subject to one thing and one thing alone, the
landlords, having established the intention of demolishing and reconstructing
the premises and of occupying the premises for the purposes of their own
business, have complied with
v P Currie (Dartford) Ltd, which is reported in [1959] 1 WLR 273. That
is a decision of this court which has received a good deal of criticism one way
or another. But there it is, and the submission is that it is binding upon us.
The short point here is the reference in para (g) to the words ‘the holding’.
What is said is that where a landlord intends not only to occupy the holding
for his own purposes but to demolish buildings on the holding and put something
else up, he does not intend to occupy ‘the holding’ because it is a different
holding that he intends to occupy.
The facts of Nursey’s
case were unusual. The premises which were comprised in the tenancy there
consisted of some small buildings which stood in a yard, the yard being one of
which the landlords in the case were the tenants. They had sublet them to the
applicants for a new lease on a quarterly tenancy, and the applicants were
using those buildings for storing and vulcanising tyres. The landlords served
notice; they said that they would oppose the grant of a new tenancy because
they intended to occupy ‘the premises’ for the purpose, or partly for the
purpose, of a business to be carried on by them. In fact, what they intended to
do was to demolish the buildings and to develop the property as a petrol
filling station.
The terms of
the tenancy were unusual. What was let was a part of some premises known as 248
Broadway, Bexleyheath, comprising drivers’ room, can store, pump and a spirit
store, together with the right of ingress and egress thereto between the hours
of 8 am and 6 pm. Before the judge in the county court the landlords succeeded,
but they appealed to the Court of Appeal, where the leading judgment was
delivered by Wynne-Parry J, and although it is not altogether clear what the
ratio of his decision was, it appears to have been that the intention of the
landlords being to incorporate the site of the buildings into some wider
scheme, it could not be said that the holding, which they intended to occupy
for the purposes of their business, was the same holding as that which was
comprised in the tenancy. This passage reflects what I think is his ratio; he
says at p 277:
It seems to
me that that language circumscribes the use of the phrase ‘the holding’ in that
paragraph, and makes it necessary to concentrate the whole of one’s attention
on the particular piece of land, whether it has buildings on it or not, which
is the subject-matter of the tenancy in question. So viewed, it appears to me
that the contention for the landlords in the present case is too wide, and that
when one is looking at the material time at ‘the holding’ under para (g), it is
not permissible to take into account the wider scheme which the landlords had
in mind, and merely to treat the land comprised in the holding as land which,
in one way or another, will be used for the purpose of the wider undertaking.
Willmer LJ did
not associate himself with that ratio; he took an entirely different ground. He
said at p 278:
The only
ground put forward in the notice which they served was the ground that: ‘on the
termination of the current tenancy we intend to occupy the premises for the
purposes, or partly for the purposes, of a business to be carried on by us
therein’.
He points out
that in fact that did not exactly follow the words of para (g), but he said
that:
it was
contended on behalf of the landlords, and was held by the judge, that in
addition to proving a case, as they admittedly had, under para (f), they had,
in the circumstances, also proved a case under para (g), in the sense that they
proved an intention, prevailing as to the time of the hearing, to occupy the
holding for the purposes of a business to be carried on by them therein. It
seems to me, however, that so to hold does violence to the wording of the
paragraph. I have said that the words used in the landlords’ notice do not
exactly correspond to the words used in para (g)
— and he read
the paragraph.
He went on:
The important
word for the purpose of the present case is the word ‘holding’, and that is
defined by section 23(3) of the Act of 1954 as meaning ‘the property comprised
in the tenancy’.
It appears to
me, therefore, that in applying para (g) of section 30(1), one must look at the
particular holding comprised in the particular tenancy which is before the
court in the particular case. Here the building is described in the tenancy
agreement as
— and he reads
the description from the parcels.
He then goes
on:
In relation to
this case, therefore, para (g) must be construed as though, instead of the word
‘holding’, those words, which I have read from the tenancy agreement, were set
out in the paragraph.
The question
to be determined, then, is whether the landlords proved that on the termination
of the current tenancy they intended to occupy ‘the buildings forming part of
premises known as no 248, Broadway, Bexleyheath in the County of Kent, and
comprising the drivers’ room, can store, pump and the spirit store’ for the
purposes, or partly for the purposes, of a business to be carried on by them
therein. To that there can be only one answer. The only intention proved was an
intention to demolish and reconstruct.
That was the
narrower ground on which the case was decided. Hodgson LJ appears to have
agreed with both judgments, although they seem to have had different rationes
decidendi, and the case has been the subject of considerable criticism. In Method
Development v Jones [1971] 1 WLR 168, Salmon LJ pointed out that it
seemed to conflict with an earlier decision of the Court of Appeal which had
not been reported, but nobody seems to have succeeded in tracing what that
decision was. It was also doubted in the case of Cam Gears Ltd v Cunningham
in this court, reported in [1981] 1 WLR 1011. In that case I myself gave the
leading judgment, but I propose to quote only from the judgment of Templeman
LJ, who said this about the case of Nursey (p 1016):
We were
pressed by the decision of this court in Nursey v P Currie (Dartford)
Ltd . . . of which I make the melancholy observation that two bad reasons
do not make one good reason although both may be binding on this court. It is
plain, however, that the facts of the present case are distinguishable.
Mr Porten has
referred us to the case of McKenna v Porter Motors Ltd [1956] AC
688, a decision of the Privy Council on very similar words in a New Zealand
statute, which I think directly conflicts with both the rationes decidendi
of Nursey v Currie. It was a case to which the court in Nursey
v Currie was not referred and it was, if one may say so respectfully, a
decision of an extremely strong Board. Speaking for myself, I see no ground to
retract any of the doubts which I expressed in the Cam Gears case about
the correctness of Nursey v Currie, but it is a decision of this
court. What I do think can permissibly be said about it is that it is a
decision which is confined very much to the peculiar facts of that case; it was
a case in which the only thing that was left of the premises was the buildings
without any of the surrounding land, simply with a right of access to those
buildings between particular hours, and it seems to me that the highest that it
can be put is that at least that case may be applicable in any other case where
one is concerned simply with premises which consist of nothing but a building.
But I think it cannot reasonably be applied to a case in which the holding
consists of buildings with surrounding land the whole of which is used for the
purposes of the tenant’s business.
It will be
observed, if I may say so with respect, that Willmer LJ in his judgment in that
case referred to the provisions of section 23 of the Act. He referred, however,
only to subsection (3), which simply provides:
In the
following provisions of this Part of this Act the expression ‘the holding’, in
relation to a tenancy to which this Part of this Act applies, means ‘the
property comprised in the tenancy’.
When one looks
at subsection (1) of section 23, one sees this:
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.
There seems,
therefore, to be contemplated a possible distinction between the property
comprised in the tenancy and the premises occupied. One notices then that when
one comes to section 30 there is a distinction between the provisions of
section 30(1)(f), which refers to demolishing or reconstructing ‘the premises
comprised in the holding’, and the provisions of para (g), which apply to the
landlord’s intention as regards ‘the holding’ simpliciter.
Speaking for
myself, I do not have any doubt that in the ordinary case of land which is let
with buildings on it and where the buildings alone do not comprise what is the
holding, the landlord’s intention to occupy the whole, whether in the original
or the reconstructed form, does constitute an intention to occupy the whole of
them.
In his
judgment, at p13 of the transcript, the learned judge said this:
The question,
then, that I have to decide is whether the landlord, Total, has established
that it intends to occupy the premises as defined in the first schedule for the
purposes of a business to be carried on by it therein. Clearly, Total are going
to occupy the parcel of land situate at Whitehorse Lane for the purposes of a
business to be carried on there by Total (and I interpolate that the fact that
the business is going to be carried on by Petropolis, the trading division of
Total, makes no difference) but, equally clearly, Total is not going to occupy
the petrol filling and service station for those purposes. It is going to
demolish the petrol filling and service station. How much difference does that
make? I am bound to say that it would
seem to me extraordinary if it made any difference at all to the proper
application of para (g). The premises at which Total desires to carry on its
business is the piece or parcel of land situate at Whitehorse Lane. If that
piece or parcel of land had no buildings on it, then the Court of Appeal case
of Cam Gears Ltd v Cunningham in 1981 is clear authority for
holding that the landlord’s objection to a new lease is well-founded even if
the landlord intends to construct a building upon the vacant piece or parcel of
land. What difference, then, does it make if, in order to enhance his business
on the piece or parcel of land, the landlord, before erecting a new building,
clears the piece or parcel of land of some old erections? I do not understand the judgments in the
Court of Appeal in Nursey and Another v P Currie (Dartford) Ltd
in 1959 to relate to anything other than the case where the ‘holding’ in the
lease comprised buildings only —
and he refers
to the judgment of Willmer LJ.
In my judgment
that approach of the learned judge was a correct approach. Speaking for myself,
I would confine the ambit of the decision in Nursey v Currie,
assuming it to be applicable at all to a case in which the circumstances were
the same as existed in that case, where the only holding consisted of the
buildings. For my part I do not believe it has any application to a case such
as the present.
That being so,
in my judgment, the learned judge came to the right conclusion also on ground
(g) and I would dismiss this appeal on that ground also.
Agreeing,
LLOYD LJ said: I agree with my lord on both the grounds that have been argued
by Mr Connell. The only contribution that I would make is to suggest, with
diffidence, that perhaps the missing decision of the Court of Appeal mentioned
by Salmon LJ in Method Development v Jones may in fact have been
the decision of the Privy Council in McKenna v Porter Motors Ltd.
Apart from
that, for the reasons given by my lord, I would dismiss the appeal.
Also agreeing,
SIR GEORGE WALLER said: The landlords’ case is that the appellants are not
entitled to a new lease, both on grounds 30(1)(f) and 30(1)(g); I will state
very briefly my reasons for saying that I agree with the judgments that have
been delivered.
Ground (f)
depends on whether the work which the landlords wish to do is covered by the
provisions in the lease relating to improvement. In my opinion, this question
must be looked at on the basis of the existing tenancy agreement and I do not
see how the landlords can exercise the power to enter to make improvements when
to do so would infringe the tenants’ right to quiet enjoyment to use the
premises for the servicing and selling of motor vehicles, when the construction
which they wish to do would remove the whole of the buildings used for that
purpose. So, in my opinion, the landlords are entitled to succeed on that
ground.
With reference
to ground (g), were it not for the decision in Nursey v Currie,
to which my lords have referred, I would have had no doubt whatever that the
landlords were entitled to succeed also on ground (g). Oliver LJ has set out
the details of the tenancy which were the subject of the tenancy agreement in
that case. Those buildings were going to be destroyed completely, and it is
therefore understandable that it is just possible to say that when they have
been destroyed completely there would be no holding. In the present case the
holding is ‘All that piece or parcel of land situate at Whitehorse Lane’ —
giving its location — ‘together with the petrol filling station and service
station erected thereon’ as being the holding the subject of this agreement.
In my opinion,
even if the service station is pulled down, the holding of the piece or parcel
of land remains. I agree that the landlords are entitled to succeed on this
ground also. Accordingly, in my opinion, the tenants are not entitled to a new
tenancy.
For these
reasons, and for those given by my lords, I would dismiss this appeal.
The appeal
was dismissed with costs.
