Landlord and Tenant Act 1954 — New tenancy opposed under section 30(1)(f) — Whether landlords had established intention under ground (f) by agreement with adjoining owner to remove buildings and occupy site under four-year lease — Whether landlord’s real motive to sell irrelevant
The appellant
landlords are the owners of a holding occupied by the respondent trustees as
the City Farm, a strip of land upon which stand a number of buildings housing
sheep and a few chickens. The landlords opposed the respondents’ application
for a new tenancy on the ground set out in section 30(1)(f) of the
Landlord and Tenant Act 1954. In April 1993 the landlords entered into an
agreement with Newton Prep Ltd, a company running an adjoining private school,
by which that company would remove the old hardstanding of the site, demolish
the buildings, put down some tarmac for a car park on part of the site and
landscape the rest. On completion of these works the company would be given a four-year
lease. There was evidence that the landlords intended eventually to sell the
site when the market was more favourable. The landlords appealed the decision
of the trial judge that they had failed to establish ground (f).
wishing to sell was irrelevant if, as was accepted, it had a genuine intention
to carry out ground (f) works. The landlords intended that the
demolition work be carried out by the company, that counted as intention within
the meaning of section 30(1)(f). The real motive of the landlord, which
was to sell the freehold, was irrelevant and the landlord was entitled to
oppose a new tenancy.
The following
cases are referred to in this report.
Atkinson v Bettison [1955] 1 WLR 1127; [1955] 3 All ER 340, CA
Betty’s
Cafes Ltd v Phillips Furnishing Stores Ltd
[1959] AC 20; [1958] 2 WLR 513; [1958] 1 All ER 607; [1958] EGD 92; (1958) 171
EG 319, HL; affirming [1957] Ch 67; [1956] 3 WLR 1134; [1957] 1 All ER 1, CA
Fisher v Taylors Furnishing Stores Ltd [1956] 2 QB 78; [1956] 2 WLR
985; [1956] 2 All ER 78, CA
Gilmour
Caterers Ltd v St Bartholomew’s Hospital
Governors [1956] 1 QB 387; [1956] 2 WLR 419; [1956] 1 All ER 314, CA
Housleys
Ltd v Bloomer-Holt Ltd [1966] 1 WLR 1244; [1966]
2 All ER 966, CA
Spook
Erection Ltd v British Railways Board [1988]
1 EGLR 76; [1988] 21 EG 73, CA
This is an
appeal by the appellants, Wandsworth London Borough Council, from a decision of
Judge Hunter, sitting in Wandsworth County Court, who had decided a preliminary
issue in an application for a new tenancy under the Landlord and Tenant Act
1954 Part II in favour of the respondent tenants, Messrs Turner, Speigal, Plant
and Smith.
Guy
Fetherstonhaugh (instructed by the solicitor to Wandsworth London Borough
Council) appeared for the appellants; Nicholas Bowen (instructed by Howard
Kennedy) represented the respondents.
Giving
judgment, STAUGHTON LJ said: The plaintiffs in this action, Mr Turner,
Mr Speigal, Mr Plant and Mr Smith, are the trustees of a property in Wandsworth
which is the City Farm; or rather, they were the trustees when the action was
commenced, but now they have been replaced by others. It has been agreed that
the new trustees will be substituted as the plaintiffs upon proof that their
predecessors have retired and that they have been appointed. No objection has
been taken to the hearing of the appeal on that ground.
The City Farm
occupies a strip of land in the London Borough of Wandsworth, apparently near
to some railway lines. It is a long and narrow strip. It has some buildings;
there is some old hardstanding, which looks as though it has been there for
some time; the buildings are either prefabricated or of concrete blocks, no
more than one storey high. The rest of the strip is rough vegetation, which
might perhaps be used for grazing. We have some photographs.
The present
use of the land is, we were told, only for one sheep and a few chickens, but it
would seem that there have been more animals at other times. Mr Nicholas Bowen,
for the plaintiffs, tells us that several thousand children in the London
Borough of Wandsworth visit this farm and derive enjoyment, and indeed
education, from seeing what animals get up to.
The trustees
have occupied this strip for quite a long time (since the early 1980s) as
tenants of Wandsworth London Borough Council. They were first granted an actual
lease in December 1985. In 1987 there was an application to the court for a new
tenancy under the Landlord and Tenant Act 1954. That was opposed. But in May
1991 there was an order for a new tenancy of 20 months from July 24 1990.
Almost at once that tenancy had expired. In October 1991, the tenants sought
another new tenancy under the 1954 Act. The landlords opposed that on the
grounds set out in section 30(1)(f) of the 1954 Act. That provides that
it is a ground for refusing a new tenancy:
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.
Certain points
are common ground. First, the two alternatives ‘demolish’ or ‘reconstruct’ are
disjunctive; the landlord can succeed if he shows an intention to do either.
Second, that which is to be demolished or reconstructed has to be a substantial
part of the premises, but not necessarily a substantial part of the holding as
a whole.
In April 1993,
the landlords entered into an agreement with a company called Newton Prep Ltd,
which runs a neighbouring private school. The terms of the agreement were, in
brief, that Newton Prep would, once the tenancy of City Farm had been
terminated, dig up the old hardstanding on the site, demolish the buildings,
put down some tarmacadam or concrete for a car park on part of the site, and
arrange for the rest to be planted with grass and trees so that there would be
an attractive, levelled site. On doing that, Newton Prep would be entitled to a
lease for four years. There was also agreement about two other sites belonging
to the council nearby.
The hearing of
the dispute came on before Judge Hunter in Wandsworth County Court on July 16
1993. It was in the form of a preliminary issue: whether the landlord council
could make out ground 30(1)(f) of the 1954 Act. If they could not do so,
of course there was the remaining issue of the terms of the new tenancy for the
tenant.
There was
evidence at the trial of the council’s intention to go ahead with the Newton
Prep agreement; but there was also the minute of a committee of the council
meeting on June 23 1992. The council’s property committee considered a report
on the Elm Farm site and neighbouring land and decided that, although it was
intended eventually to sell the freehold of the three sites, the current market
was not favourable for an early disposal. The committee resolved that the
borough valuer and estate surveyor should enter into negotiation for the grant
of a building agreement and a lease to Newton Prep School for the demolition
and development of the three sites on terms to be agreed by the committee.
The judge, in
the light of that minute, notwithstanding the evidence that he heard, was
sceptical about the intention and motive of the council. The note we have of
his reasoning is by no means complete. We fully understand that in the county
court counsel have to do the best they can to take a note of the judgment, and
so we have to do the best we can in reading it.
The judge said
that the council’s intention was colourable, not genuine, a ploy and not long
term. Judging from the evidence of the minute, what he meant was that the
council did indeed intend to have some demolition done, but that was because
they wanted eventually to sell the freehold, and not for demolition’s sake. In
the result, the judge decided the preliminary issue in favour of the tenants,
the trustees of City Farm. The council appeal against that decision.
We were told
that the evidence of intention of the council was not challenged at the hearing
and indeed that is accepted by Mr Bowen today. This experienced judge was fully
justified in regarding the evidence with caution. But what we have to consider
is the effect of his findings in relation to that evidence. Mr Bowen, it would
seem, accepts that the motive of the council is neither here nor there. If they
had an intention to demolish, it did not matter why they intended to demolish.
At all events, if Mr Bowen does not accept that, it is plain law all the same.
We have been
referred to a number of cases, first of all, Atkinson v Bettison
[1955] 1 WLR 1127, where the Court of Appeal dismissed an appeal of the
landlord on two grounds. The first was that demolition or reconstruction was an
ancillary purpose and not the main or primary purpose of the landlord. In other
words, motive was relevant. The second was that it was not a substantial part
of the premises which was going to be demolished or reconstructed. Denning,
Hodson and Morris LJJ on both those grounds rejected the landlord’s appeal.
That did not last long. Indeed, it has been referred to by Diplock LJ in a
later case as a ‘short-lived fallacy’. In Fisher v Taylors Furnishing
Stores Ltd [1956] 2 QB 78, the Court of Appeal resiled from that. Sitting
this time were Denning, Morris and Parker LJJ. It was there held that (p84):
. . . the
court must be satisfied that the intention to reconstruct is genuine and not
colourable; that it is a firm and settled intention, not likely to be changed;
that the reconstruction is of a substantial part of the premises, indeed so
substantial that it cannot be thought to be a device to get possession; that
the work is so extensive that it is necessary to get possession of the holding
in order to do it; and that it is intended to do the work at once and not after
a time.
That view, as
we have said, was accepted by Diplock LJ in the case of Housleys Ltd v Bloomer-Holt
Ltd [1966] 1 WLR 1244 at p1251, and also by the House of Lords in Betty’s
Cafes Ltd v Phillips
in general, motive is irrelevant, provided there is a genuine intention to
demolish or reconstruct.
He meets that
problem in this way. In terms of section 30(1)(f), it must be the
landlord who intends to demolish or reconstruct and not somebody else. There is
a definition of ‘landlord’ in section 44, but, with respect to Mr Bowen and
indeed the Parliamentary draftsman, that does nothing but confuse for the
purpose of solving the present problem.
It is accepted
that the landlord, as Sir Francis Purchas put it, is not obliged to do the work
with his own hands or to intend to do it with his own hands; he can do it by
his employees or by a contractor whom he engages on his own behalf. There is
authority that the law goes further than that. The case of Gilmour Caterers
Ltd v St Bartholomew’s Hospital Governors [1956] 1 QB 387, shows
that it is sufficient if the landlord arranges by means of a building lease for
a new tenant to do the work. In that case the lease was for 48 years.
Nevertheless, it was held to be, in effect, a landlord intending to do the work
by his agent, the new tenant.
There then
came the case of Spook Erection Ltd v British Railways Board
[1988] 1 EGLR 76. There it was a case of a building lease for 99 years. Still
it was held that this was the landlord intending to do the work by a
tenant/agent on his behalf under a building lease.
Faced with
those two authorities, Mr Bowen says: but the contemplated lease in this case
was for only four years and was not really a building lease at all. That, to my
mind, does not improve his position. If it be right, as was held in Spook’s
case, that the landlord who arranges a building lease for 99 years, under which
the new tenant would do the work, is still himself intending to do the work by
his agent, how much the more so when the agreement is for only four years? It is not a stronger case for saying that he
does not intend to do the work; it is a stronger case for saying that he does
intend to do it. I would not accept the distinction, the ground upon which Mr
Bowen says that the Gilmour case and the Spook case does not
apply here.
It seems to me
that, first of all, as is accepted, the landlords intended that demolition work
should be carried out by Newton Prep; second, that that counts as the intention
of the landlords within the meaning of the section; third, notwithstanding the
judge’s justified suspicion that the real motive was eventually to sell the
freehold, still motive is irrelevant and the landlords are entitled to refuse a
new tenancy.
I would allow
the appeal and decide the preliminary issue in favour of the landlords, which
results in the refusal of a new tenancy.
SIR FRANCIS
PURCHAS agreed and did not add anything.
Appeal
allowed.
