Landlord and tenant — Section 30(1)(g) of the Landlord and Tenant Act 1954 — Grounds for opposing new tenancy — Whether landlord established reasonable prospect of establishing proprietary golf club after termination of tenancy
The appellant
golf club held a tenancy of land on which it operated a nine-hole golf course.
Prior to the expiration of the term of the tenancy, the club served a request
on the appellant landlord under section 26 of the Landlord and Tenant Act 1954
seeking a new tenancy from March 25 1996. The landlord served a counternotice
indicating his opposition to the grant of the new tenancy on five of the
statutory grounds provided by section 30 of the Act, including ground (g).
At the hearing in the county court the landlord relied only on ground (g);
he intended to occupy the premises for the purpose of carrying on a business of
a proprietary golf club. At the trial no schemes of what he had in mind were
produced and, in evidence in chief, he gave no indication of the likely cost of
his proposal. The judge concluded that the landlord did intend to occupy the
premises for the purposes of the business of a proprietary golf club on the
termination of the current tenancy. The club appealed contending that the
landlord had not, on the primary facts found by the judge, satisfied the test
that there was a reasonable prospect of the landlord achieving his intention
shortly or within a reasonable time after the termination of the tenancy.
to rely, under section 30(1)(g), on his intention to occupy demised land
on the termination of a tenancy for the purpose of establishing a business is
one of intention, and its reasonable practicability, to start such a business,
not of the probability of achieving its start and likely success once
established. The court is not there to police a landlord’s entitlement to
recover possession of his own property by examining the financial wisdom of his
genuinely held plans for it. The judicial gloss on the statutory test of
intention is to determine the reality of a landlord’s intention to start a
business, not the probability of his achieving its start or, even less, its
ultimate success. There was no basis for interfering with the judge’s
conclusion.
The following
cases are referred to in this report.
Betty’s
Cafés Ltd v Phillips Furnishing Stores Ltd
[1957] Ch 67; [1956] 3 WLR 1134; [1957] 1 All ER 1, CA
Cadogan v McCarthy & Stone Developments Ltd [1996] EGCS 94
Cox v Binfield [1989] 1 EGLR 97; [1989] 01 EG 69, CA
Cunliffe v Goodman [1950] 2 KB 237; [1950] 1 All ER 720, CA
Dominion
Trust Co v New York Life Insurance Co [1919]
AC 254, PC
Edwards v Thompson [1990] 2 EGLR 71; [1990] 29 EG 41; (1990) 60
P&CR 222; (1990) TLR 43, CA
Gregson v Cyril Lord Ltd [1963] 1 WLR 41; [1962] 3 All ER 907;
[1962] EGD 298; (1962) 184 EG 789, CA
Method
Developments Ltd v Jones [1971] 1 WLR 168;
[1971] 1 All ER 1027; (1970) 22 P&CR 141; [1971] EGD 75; 217 EG 403, CA
Palisade Investments
Ltd v Collin Estates Ltd [1992] 2 EGLR 94;
[1992] 27 EG 134, CA
Reohorn v Barry Corporation [1956] 1 WLR 845; [1956] 2 All ER 742;
[1956] EGD 243; (1956) 167 EG 604, CA
This was an
appeal by the tenant, Dolgellau Golf Club, from a decision of Judge Burr in
Swansea County Court dismissing the tenant’s application for a new tenancy to
be granted by the respondent landlord, Paul Hett.
David Parry
(instructed by J Charles Hughes & Co, of Dolgellau) appeared for the
appellant; Christopher Cant (instructed by Thorpe & Thorpe, of Ross-on-Wye)
represented the respondent.
Giving
judgment, AULD LJ said: This is an appeal by the trustees of Dolgellau
Golf Club from the judgment of Judge Burr on August 15 1997 in Swansea County
Court refusing the club the grant as against its landlord, Paul Hett, of a new
business tenancy under Part II of the Landlord and Tenant Act 1954.
The sole issue
is whether the judge, on the evidence before him, correctly found that the
club, on the termination of the current tenancy, was not entitled to a new
tenancy under the Act because Mr Hett had proved that he ‘intend[ed] to occupy
the premises for the purposes … of a business to be carried on by him therein’,
as provided by section 30(1)(g) of the Act, namely a proprietary golf
club.
The club is an
unincorporated association, which for some 50 years has been a tenant of club
premises and about 45 acres of land, on which it has operated a nine-hole golf
course, on the outskirts of Dolgellau in Gwynedd. The site, which is in or
close to Snowdonia National Park, is very beautiful. Over the years the club
has spent much money on improving the course and its facilities, including the
construction of temporary buildings to form a clubhouse and changing rooms
around an old cottage.
Clause 4(2) of
the tenancy provided that on its termination, or within one month after, the
club could remove any buildings and other structures erected by it on the
property unless the landlord notified it, before the determination of the
tenancy by effluxion of time or within two weeks after determination by some
other means, of his intention to purchase them. The clause also provided that,
in the event of the landlord giving such a notice, the purchase was to be at a
price agreed between the parties or, failing agreement, determined by an
arbitrator. Mr Hett, who seems to have been unaware of this contractual option
to purchase, did not serve such a notice on the club. Nor has he, or it, made
any proposal to the other about the club’s removable structures. In the event
of Mr Hett succeeding in recovering the property for his own use, he can still
exercise the option because where, as here, there is an application for a new
tenancy, section 64(1) of the 1954 Act provides that the tenancy does not
terminate until three months after the final disposal of the application.
In about 1980
Mr Hett acquired the freehold reversion to the club’s tenancy, then a 21-year
term expiring on March 26 1996, as well as freehold land known as Hengwrt
Estate and a large area of woodland adjoining the golf course. In 1986 he
decided to develop about 40 acres of the woodland into a nine-hole golf course
with the intention, if possible, of combining with the club to form an 18-hole
course. He obtained planning permission for the nine-hole development and
opened negotiations with the club to join with him in the 18-hole venture.
After lengthy consideration the club, in 1990, declined to do so because it did
not consider the project financially viable. In the meantime, according to Mr
Hett’s evidence to the judge, he had begun land works in anticipation of
persuading the club to join him in the project. Despite the club’s stance, Mr
Hett persisted with his hopes of establishing a full size course, spending a
total of about £80,000 on preparatory land works for it over the 10 years from
1986 to 1996. He only abandoned the project shortly before the hearing in 1997,
when his accountant advised him that an 18-hole course was not financially
viable.
By a notice
dated April 19 1995 the club served a request on Mr Hett under section 26 of
the Act, seeking a new tenancy from March 25 1996 at the current rent, subject
to the same rent review provision as in the current lease. By a counternotice
dated June 9 1995 Mr Hett indicated his opposition to the grant of a new
tenancy. He relied on five of the seven statutory grounds provided by section
30, namely: (a) the club’s failure to repair and maintain the premises;
(b) its persistent delay in paying rent; (c) other substantial
breaches of its obligations under the tenancy; (f) his intention to
demolish or reconstruct the premises; and (g) his intention to occupy
the premises for the purpose of carrying on a business there. As to (g),
Mr Hett’s stated intention at that stage was still to operate an 18-hole
course, combining the club’s nine holes with a further nine holes to be
constructed on his own woodland. On July 18 1995 the club asked the county
court to determine the matter by applying to it to grant a new tenancy.
Some months
before the hearing of the application the club served on Mr Hett a notice under
Ord 14, r 4(4) of the County Court Rules requiring him to produce documents in
support of his intention, ability and preparations to carry on the business of
an 18-hole golf course. The documents sought included: planning consents and
approved plans; all estimates of the cost of the proposed works; financial details
of the proposal, consisting of income projections, cash-flow charts and
financial plan; and copies of all correspondence with banks, lenders and
financial institutions. He did not respond to the notice and the club did not
seek an order for production of the documents sought or to administer
interrogatories to him on the matters. In the result, it was only at the
hearing of the club’s application in August 1997 that Mr Hett disclosed some
documents and gave an account in evidence of his means to carry out his stated
intention.
At the start
of the hearing Mr Hett indicated that he relied only on ground (g) in
section 30(1) of the Act, namely his intention to occupy the premises for the
purpose of carrying on a business of a proprietary golf club.
Mr Hett’s evidence
was that he intended to operate a proprietary golf club, making use of the
existing nine-hole golf course. He said that if the club decided to remove its
temporary club buildings, for which clause 4(2) of the tenancy provided, he
would replace them with temporary constructions of his own; otherwise he hoped
to negotiate with the club for the purchase of its buildings. One way or
another his intention was to rely on temporary buildings at the outset with a
view, later, to building a new permanent clubhouse. He produced no schemes in
the form of sketch drawings or outline specifications of what he had in mind
and, in his evidence in chief, gave no indication of the likely cost of his
proposal. In cross-examination he spoke of the possibility of negotiating the
purchase of the club’s temporary buildings.
Mr Hett
suggested a figure of about £8,000 to provide and equip temporary buildings if
he had to replace those of the club. He said that he intended to boost the
club’s income from membership subscriptions and green fees by the sale of
alcohol and the provision of a gaming machine in the clubhouse. He also spoke
of supplementing the club’s income from winter grazing of sheep and haymaking.
However, he had not made any application for, or seemingly investigated the
possibility of obtaining, planning permission for any new buildings. Nor had he
investigated what was involved or the possible difficulties for a
proprietary club in obtaining a new liquor licence for temporary buildings of
the sort he had in mind or in obtaining a licence for a gaming machine. He
hoped to increase the income from green fees by attracting more visitors than
it currently attracted.
In summary, Mr
Hett produced little to demonstrate the detail and practicality of his
intentions. This is how the judge put it:
I do not
think that Mr Hett understood until the evidence began to unfold just what
expense and efforts would be required to make good his assurances that he
intended to carry on the business himself.
Nevertheless,
Mr Hett appears to have satisfied the judge of his commercial and financial
ability to undertake and run the business of a proprietary golf club on the
site. He spoke of his past business activities, which included the ownership
and running of a substantial private school. He acknowledged that he and his
wife had a limited income, but said that he could find the capital to finance
his proposal, however ill-defined, and to see him through slim profits or
possible losses in the early years. In response mainly to questions in
cross-examination, he gave evidence of a mortgage facility of £50,000, an
imminent land sale, which would produce £28,000, and further valuable saleable
assets. He said that his total capital assets were in the region of £1.25m to
£1.5m, of which, on his estimate, the Hengwrt Estate accounted for £750,000,
and that he could raise £100,000 for the project without difficulty. However,
there was no confirmation, documentary or otherwise, of much of this evidence
about his capital value.
The judge also
heard evidence from the parties’ respective accountants as to the financial
viability of Mr Hett’s proposal. His accountant, Mr Robert Grey, basing himself
on the club’s accounts up to 1995 and assuming certain levels of depreciation
of assets and either a retention or a drop of about 20% in the club’s existing
membership, estimated in his evidence in chief that the business would operate
at a small net profit. In cross-examination he qualified that estimate to
reflect a downturn in green fees and other receipts shown by the club’s 1996
accounts, shown to him for the first time in the witness box, and in
recognition of various less favourable financial operating circumstances for a
proprietary club than for the existing members’ club. Nevertheless, he still predicted
small net profits for the venture in the early years; £6,500 pa on best
assumptions, reducing to just under £1,000 pa on his worst.
The club’s
accountant, Mr Anthony Yeandle, on the basis of his figures and calculations,
expressed the view that the best Mr Hett could hope for was a 20% reduction in
the existing membership, which he estimated would result in a substantial
operating loss. He predicted a lower level of green fees and other sources of
income and higher levels of depreciation and cost of repairs of equipment than
had Mr Grey. His prediction was of a likely operating loss of £12,000 pa on
that best assumption and of £19,000 or more on his worst.
The club also
called evidence from its chairman, Mr David Vaughan, and an expert on golf
courses, Mr Roger Jones. Mr Vaughan spoke, inter alia, of the modest
levels of the club’s income and expenditure as a members’ club and of the
likely difficulties in increasing its turnover as a proprietary club. Mr Jones
produced a report, which he had prepared in early 1997, on the assumptions that
Mr Hett’s proposal was still for the incorporation of the existing nine-hole
course into an 18-hole course and involved some extension and improvement of
the existing clubhouse. In the report he expressed the view that the proposal
was not financially viable. He said that the area was already oversupplied with
golf courses, that it would cost Mr Hett more to run the venture as a
proprietary club than it was costing or would cost the club to run it as a
members’ club, that the capital cost of replacing old machinery and equipment
and extending and refitting the clubhouse would be an additional burden for him
if he had to do it on borrowed money, and that the necessary increase in
membership fees to achieve profitability might drive a number of members away.
On learning of Mr Hett’s change of intention to operate a nine-hole course
only, he still considered that the project was not financially viable,
expressing the view in particular that Mr Hett and Mr Grey had under-estimated
the know-how required and the capital and running costs of it. However, he
conceded that Mr Hett’s plan could work.
The judge
preferred the evidence of Mr Yeandle and Mr Jones to that of Mr Grey. He found
that the cost of providing the club with new equipment to maintain the course
was likely to be much more expensive than Mr Hett and Mr Grey had estimated.
His view was that, in the first or early years, the venture was likely to lose
members and would operate, at best for Mr Hett, at an annual loss of about
£12,000. Nevertheless, he accepted that, however unprepared and risky Mr Hett’s
proposal may have been, he was genuine in his intention and had the ability and
financial means to bring it about. He was clearly impressed by Mr Hett’s
account of his capital assets available to finance the start of the venture and
its running in the early years.
The judge had
to consider whether Mr Hett had satisfied him as required by section 30(1)(g)
of the 1954 Act that, ‘on the termination of the current tenancy’, he
‘intend[ed] to occupy the premises for the purposes of’ the business of a
proprietary golf club. The meaning of ‘intention’ in that statutory context is
the product of a well established judicial gloss. It is both subjective and
objective. In Gregson v Cyril Lord Ltd [1963] 1 WLR 41 the Court
of Appeal, applying reasoning in earlier authorities concerned with this or
other similar provisions in the Landlord and Tenant Act 1927, stated that the
landlord must prove both a genuine and definite intention to occupy the demised
property for the purpose of a business within a short or reasonable time after
the termination of the tenancy, and a reasonable prospect of achieving that.
Upjohn LJ, with whom Lord Denning MR and Diplock LJ agreed, put it in this way,
at pp45–47:
The question
whether the landlords intend to occupy the premises is primarily one of fact,
but the authorities establish that to prove such intention, the landlords must
prove two things. First, a genuine bona fide intention on the part of the landlords
that they intend to occupy the premises for their own purposes … Secondly, the
landlords must prove that in point of possibility they have a reasonable
prospect of being able to bring about this occupation by their own act of
volition …
it is essentially
an objective test, that is to say, would a reasonable man, on the evidence
before him, believe that he had a reasonable prospect of being able to bring
about his occupation by his own act of volition?
(Emphases
supplied.) See also Cunliffe v Goodman [1950] 2 KB 237, CA, per
Cohen LJ, at p249, and per Asquith LJ, at pp253–254; Reohorn v Barry
Corporation [1956] 1 WLR 845, CA, per Denning LJ, at p849; Betty’s
Cafés Ltd v Phillips Furnishing Stores Ltd [1957] Ch 67, CA, per
Lord Evershed MR, at p99, approved in the House of Lords, per Viscount
Simonds [1959] AC 20, at p34; Method Developments Ltd v Jones
[1971] 1 WLR 168, CA; and Edwards v Thompson (1990) TLR 43*, CA.
*Editor’s
note: Also reported at [1990] 2 EGLR 71
As to the
‘definiteness’ of the intention, the following passage from the judgment of
Asquith LJ in Cunliffe v Goodman, at p254, is a useful guide:
Not merely is
the term ‘intention’ unsatisfied if the person professing it has too many
hurdles to overcome, or too little control of events: it is equally
inappropriate if at the material date that person is in effect not deciding to
proceed but feeling his way and reserving his decision until he shall be in possession
of financial data sufficient to enable him to determine whether the project
will be commercially worth while.
As to the
reasonable prospect of carrying out the intention, Lord Denning MR said in Reohorn
v Barry Corporation, at p849: ‘A man cannot properly be said to ‘intend’
to do a work … [in that case, of reconstruction under section 30(1)(f)]
when he has not got the means to carry it out. He may hope to do so: he
will not have the intention to do so.’
The judge, in
his judgment, correctly identified the two-fold nature of the test. He found,
as was conceded by the club’s chairman, Mr Vaughan, that Mr Hett had a genuine
intention to operate a proprietary golf club on the property. He also found,
despite his view of Mr Hett’s
means to fund the project and the personal ability to undertake it. This is
what he said:
I conclude
that Mr Hett has proved the necessary intention to occupy the premises for the
purpose of his own business, even though I accept that many of the criticisms
and fears about the profitability of the new business (for all the reasons that
emerged during the course of evidence) are well founded, and even though I
think that Mr Hett would be far better off receiving rent from the Club than
spending his available capital on a business venture that he may live to
regret.
Nevertheless
the following facts are proved. First of all, Mr Hett has established his
long-standing interest in setting up a golf business. This is not a new idea
coinciding with the expiry of the lease. He has already spent large sums of
money on adjoining land.
Second,
whatever may be said about the clubhouse and its replacement in the immediate
future, it is the scenic 45 and a half acres with the nine-hole layout that
will continue to attract business.
Third, Mr
Hett has business experience and practical skills in other directions which
will serve him in good stead. He is capable of doing what is required to
promote the business.
Fourth, his
personal determination to start his business is unchallenged.
Fifth, Mr
Hett does have significant sums of capital available to him, despite his modest
income. The evidence about the undrawn mortgage money and the sale proceeds of
the plot is clear, whatever criticism can be validly made about his casual
approach to valuation of assets.
Sixth, the
uncertainties about the club premises cannot be resolved until the Club either
remove their present building or sell it on agreed terms to Mr Hett, and the
criticism about lack of detailed proposals has to be tempered by that fact.
I find in
conclusion that there is a reasonable prospect that Mr Hett will be able to
bring about that which he says he intends, and the law requires me to give him
his chance, …
Mr David
Parry’s main challenge to the judge’s decision was that Mr Hett had not, on the
primary facts found by the judge, satisfied the second half of Upjohn LJ’s test
in Gregson v Cyril Lord Ltd, namely a reasonable prospect of
achieving his intention of establishing a proprietary golf club on the property
shortly or within a reasonable time after the termination of the tenancy. He
invited the court to review the judge’s findings of primary fact and to draw
its own inferences on those findings, as it is entitled to do: see Dominion
Trust Co v New York Life Insurance Co [1919] AC 254, PC, per
Lord Dunedin, giving the judgment of the board, at pp257–258.
Mr Parry
listed a number of obstacles to the success of the venture, on the judge’s
express or implicit findings, which, he suggested, show that Mr Hett had not
investigated or thought through his proposal sufficiently carefully to
demonstrate his ability to achieve it. They included: obtaining the necessary
finance for the construction of a new clubhouse with all the facilities
required to accommodate the existing or a greater level of membership and the
proposed increase in visitors, and for the purchase of new equipment; obtaining
planning permission for a new clubhouse; the ability to comply with building
regulations in constructing it; obtaining licences to sell alcohol and to
operate a gaming machine for a proprietary club, as distinct from those
appropriate to a members’ club; and the provision of funds to finance the
running of a proprietary club likely to make a loss.
Mr Parry
maintained that the judge gave too much weight to the first half of Upjohn LJ’s
test, the genuineness of Mr Hett’s intention. As to the second half of the
test, a reasonable prospect of achieving it, he submitted that, in the passage
from the judgment that I have set out, the judge mistakenly relied on certain
findings of fact with the result that he wrongly found that Mr Hett had
satisfied that objective criterion. The first and the fourth findings, both as
to the genuineness of Mr Hett’s desire to operate a golf club, were, he
submitted, irrelevant to his ability to do so. The fifth finding, Mr Hett’s
available capital, he submitted, did not match the considerable capital
expenditure likely to be required to start the business or overcome the
insufficiency of his income to service further borrowing and/or to finance the
likely operating losses. The sixth finding, the need for Mr Hett to wait and
see whether the club would sell him its temporary buildings, Mr Parry submitted
was wrong in principle because the authorities require a definite achievable
intention. He referred, in particular, to the words of Asquith LJ in Cunliffe
v Goodman, which I have set out earlier in this judgment, and Edwards
v Thompson — where the landlord was relatively well prepared — per
Nourse LJ, at p44. Although clause 4(2) of the tenancy required the club to
remove its temporary structures, subject to Mr Hett’s entitlement on notice to
acquire them, Mr Hett had not attempted to negotiate with the club to buy them
and had produced no costed or practicable plan to meet the alternative
contingency of erecting new buildings of his own.
Mr Christopher
Cant urged the court to respect the primary and secondary findings of fact by
the judge. He relied in particular on the judge’s firm findings that Mr Hett
genuinely intended to operate a proprietary golf club on the land and that he
was personally and financially capable of doing so, one way or another, within
a reasonable time after the termination of the lease. In the light of those
findings, he submitted, it was not necessary for Mr Hett to have formulated
detailed plans of how he would provide a clubhouse when he did not know whether
the club wished to remove or leave their temporary buildings. For the same
reason he argued that it was not necessary for him to have applied for planning
permission or for a liquor licence or to have investigated the possibility of
obtaining either. He referred to Mr Hett’s lack of appreciation before the
hearing of his option under clause 4(2) of the lease to purchase the club’s
temporary buildings.
Mr Cant relied
on Mr Hett’s evidence about the value of his assets capable of being liquidated
to provide capital for the venture, to service any necessary borrowing and to
fund any initial running losses — evidence that clearly impressed the judge. He
referred also to Mr Hett’s recent considerable expenditure on the preparation
of his own land for a nine-hole course. He submitted that the judge was
entitled to act on Mr Hett’s evidence about his means without independent
confirmation, and noted that the club did not attempt to contradict it by
evidence in rebuttal. He added that the club could have sought an order for
production of documents or interrogated Mr Hett on the matter before the
hearing of the application, but did not do so.
Mr Cant
challenged Mr Parry’s assertion that the judge relied unduly on his finding of
the genuineness of Mr Hett’s intention to operate a proprietary golf club. He
said that the judge’s overall conclusion was that Mr Hett did so intend and
that he had ‘a reasonable prospect’ of achieving his intention. That, submitted
Mr Cant, was enough; it was not necessary for the success of Mr Hett’s case
that he should satisfy the judge that he would succeed in establishing a
profitable business. He relied upon the approach of this court in Cox v Binfield
[1989] 1 EGLR 97, CA, in which an elderly landlady and her husband, who lived
over a ground-floor café let by her on a seven-year lease, sought to occupy it
under section 30(1)(g) partly as additional living accommodation and
partly to operate a smaller café in the remaining area. The couple were
pensioners, the husband was infirm and they had little experience of catering.
The evidence was that they might have difficulties in financing the equipment
for, and the running of, the cafe and that the financial advantages of the
venture were doubtful.
The assistant
recorder who heard the matter at first instance found that the couple were
genuine in their intention and that, though their plans were ‘ill thought out’
and more than not likely to fail, they were capable of succeeding, and
dismissed the tenant’s application for a new tenancy. O’Connor LJ, with whom
Sir Roger Ormrod agreed, held that the court could not set aside the decision.
The assistant recorder had considered all the circumstances, including the
doubtfulness of success in the venture, and was entitled on the evidence to
conclude that the couple’s intention was genuine and was capable of fulfilment.
O’Connor LJ observed, at pp97K–98D:
Objectively
the judge must be able to say that this intention is one which is capable of
being carried out in the reasonable future in the circumstances which will
prevail when possession is achieved by the landlord …
This is a
judgment which, it seems to me, considers the law completely correctly; it
carefully balances and weighs the facts which the learned judge
learned judge has taken all these matters into account, and, once he accepted
[the landlord’s] evidence that she was strongly motivated with a desire to stay
in the house, we cannot possibly say that he was wrong about that. The mere
fact that at that stage of the hearing there had been no approach to a bank or
a building society to raise money, that there had been no investigation as to
what the actual cost of setting up a small café would be … does not change the
position. These are matters which the judge considered, and of themselves they
do not, in my judgment, require a finding that objectively the intention does
not satisfy the Act. I think the judge was entitled to come to the conclusion
that he did.
The facts of
this case are very different from those in Cox v Binfield.
However, it is a useful reminder that the issue as to a landlord’s entitlement
to rely, under section 30(1)(g), on his intention to occupy demised land
on the termination of a tenancy for the purpose of establishing a business is
one of intention, and its reasonable practicability, to start such a business,
not of the probability of achieving its start or its likely success once
established. It is not an incident of the statutory formula nor of the present
judicial gloss on it that a landlord, in seeking to satisfy the court of the
reality of his intention, should be subjected to minute examination of his
finances with a view to determining the financial viability and durability of
the business he intends to establish. The court is not there to police a
landlord’s entitlement to recover possession of his own property by examining
the financial wisdom of his genuinely held plans for it.
Nor will it
always be appropriate to test the reasonable practicability of a landlord’s
intention to establish a business by reference to the presence or absence of
detailed building plans, planning and licensing consents or indications and the
like. As Balcombe LJ observed in Palisade Investments Ltd v Collin
Estates Ltd [1992] 2 EGLR 94, CA, at p97D:
this Act was
intended to be construed sensibly, so as to hold a fair balance between
landlord and tenant. It is not, … to be construed so as to create a series of
artificial hoops through which the landlord must jump before he must satisfy
the necessary intention.
Here, there
was an established planning use of the land and premises as a golf course and
clubhouse. Such detailed planning uncertainty as there was arose largely
because of Mr Hett’s uncertainty as to what buildings the club might leave
behind for him to purchase on the termination of the tenancy. It may be that he
should have been aware of his option under clause 4(2) of the tenancy. But, in
my view, that is not a reason for relying on his lack of detailed planning
proposals to attack the reality of his intention. The judge, who heard much
detailed evidence and probing on this aspect of the matter, was clearly of that
view in expressing his sixth main finding of fact which, for convenience, I
repeat:
the
uncertainties about the club premises cannot be resolved until the club either
remove their present building or sell it on agreed terms to Mr Hett, and the
criticisms about lack of detailed proposals has to be tempered by that fact.
As I have
said, the function of the judicial gloss on the statutory test of intention is
to determine the reality of a landlord’s intention to start a business, not the
probability of his achieving its start or, even less, its ultimate success: see
Cadogan v McCarthy & Stone Developments Ltd May 16 1996
(unreported save in [1996] EGCS 94), per Saville LJ, at p4 of the
transcript. The test is whether the landlord has a reasonable prospect of
achieving his genuine intention of occupying the demised property for the
purpose of conducting a business there within a short or reasonable time after
termination of the tenancy.
Here the judge
was satisfied, not only as to the genuineness of Mr Hett’s intention to do that
but also as to his personal and financial ability to achieve it. On the judge’s
findings of fact, Mr Hett was not feeling his way, reserving until after he
obtained possession whether he would proceed, as instanced by Asquith LJ in Cunliffe
v Goodman. Nor had he failed to establish ‘a firm and settled
intention’, as was the case in Edwards v Thompson.
Mr Parry has
rightly criticised the judge for including some irrelevant matters in his six
findings of fact on the objective part of the test of intention. However, the
critical primary facts found by the judge were that Mr Hett had the personal
qualities and the financial muscle to do what he genuinely intended, and that
his method of going about it would reasonably depend on what, if any, agreement
he and the club might make about their temporary structures and equipment on
the termination of the lease. It was implicit in his findings that he did not
regard as insurmountable any changes in detailed planning permission or in the
different licensing regime that might be necessary for Mr Hett’s continuation,
as a proprietary golf club, of the established use of golf course and
clubhouse. In my judgment, on those findings of fact he was entitled to find
that Mr Hett had established the requisite intention for the purpose of section
30(1)(g). The wisdom or long term viability of the project are not, in
my judgment, candidates for further judicial gloss on that provision. It
follows that I can see no proper basis on which this court can interfere with
the judge’s conclusion, and I would dismiss the appeal.
Agreeing, HIRST
LJ said: Although I have felt considerable misgivings as to the judge’s
decision for the reasons advanced by Mr Parry in his admirable argument, I have
in the end concluded that this decision should be upheld for the reasons given
by Auld LJ.
Appeal
dismissed with costs.
