Landlord and Tenant Act 1954, Part II — Application for new tenancy — Opposition by landlord under section 30(1)(f) of Act — Appeal from decision of county court judge in favour of landlord — Whether landlord had shown ‘intention’ to carry out reconstruction within the meaning of the authorities on para (f) — Intention required was an intention ‘on the termination of the current tenancy’ — Evidence did not show such intention — Case presented in Court of Appeal with different emphasis from that put forward below
tenant occupied a smithy or forge where he made wrought iron gates and carried
out certain repairs — His immediate landlord, the present respondent, owned the
smithy and a barn together with a small area of surrounding land — This had been
transferred to the respondent out of an area belonging to her mother, the
remainder of which (the larger portion) continued to be the mother’s property —
The whole area before the transfer was the subject of a planning permission
granted to the mother for a development scheme consisting of the conversion of
the barn and smithy to a single dwelling, the construction of five other
detached houses, a new access road and garages — The planning permission was
subject to conditions which were relevant to the present litigation — These
were that no occupation should take place until the whole plan had been
completed, including the construction and approval of the proposed access road
— The scheme required vacant possession of the smithy occupied by the appellant
tenant — The respondent landlord succeeded in the county court in obtaining a
possession order for this purpose, relying on the ground provided by section
30(1)(f) — The tenant appealed
sole question was whether the respondent had shown that she ‘intends’ to carry
out the reconstruction within the meaning of section 30(1)(f) as laid down by
earlier cases, of which a number were cited — The general effect of the
authorities was that the intention must be firm and settled, not likely to be changed;
that it must, in the often-quoted words of Asquith LJ in Cunliffe v Goodman, have
‘moved out of the zone of contemplation — out of the sphere of the tentative,
the provisional and the exploratory — into the valley of decision’; and that
there must be a reasonable prospect that the reconstruction will be carried
out, with not too many hurdles to overcome — In the present case the settled
intention had to relate not merely to the barn and smithy but also to the
remaining, and major, part of the development, the construction of the five
other dwellings, the access road and the garages — This involved co-operation
between the respondent and her mother, but it was accepted that the latter
would give as much co-operation as possible — The question of the different
titles, which had been referred to by the judge, was not relied on in the Court
of Appeal — The appellant’s case was that the respondent landlord was unable to
establish, even with the co-operation of her mother, that there was present the
settled intention, or the means, to carry out the whole development on the
termination of the current tenancy
showed that, if the matter had concerned the barn and the smithy only, the
respondent had, or could obtain, the necessary finance, but that was not the
position — As regards the remainder of the development, no specific developer
had been selected, no estimates obtained in regard to costs and no advice
received about what a developer would be likely to pay — In addition, there was
evidence that if a good offer had been received for the whole of the land the
respondent and her mother might have accepted it — In the circumstances there
was a fatal obstacle in the respondent’s way — The ‘intention’ which the law
required was an intention to carry out the reconstruction ‘on the termination
of the current tenancy’ — The position in the present case was, however, that
without further exploration there could be no certainty, nor any high
probability, nor even (if that is the correct test) a reasonable prospect, that
a developer would, by the material time, agree to pay to the respondent’s
mother a price which she would accept — There was a very real possibility that
an acceptable price for the remainder of the land would not be agreed within a
period which would allow the conversion of the barn and the smithy to be
carried out ‘on the termination of the current tenancy’
appeal was thus successful and it was agreed by the parties that he should be
granted a new tenancy of the premises for one year on such terms and at such
rent as the county court should direct
The following
cases are referred to in this report.
Cunliffe v Goodman [1950] 2 KB 237; [1950] 1 All ER 720, CA
Fleet
Electrics Ltd v Jacey Investments Ltd [1956]
1 WLR 1027; [1956] 3 All ER 99, CA
Gregson v Cyril Lord Ltd [1963] 1 WLR 41; [1962] 3 All ER 907;
[1962] EGD 298; (1962) 184 EG 789, 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 Leslie Philip Edwards from the decision of His Honour
Judge Hammerton dismissing the appellants’ application for a new tenancy of
premises at The Forge, West Street, Alfriston, East Sussex. The respondent
landlord, Mrs Carolamber Linda Thompson, objected under section 30(1)(f)
of the Landlord and Tenant Act 1954 to the grant of a new tenancy.
Patrick Ground
QC and Ian McCullouch (instructed by John Healy & Co) appeared on behalf of
the appellant; Christopher Smyth (instructed by Wynne Baxter Godfree)
represented the respondent.
Giving
judgment, NOURSE LJ said: The question in this case is whether, on a
tenant’s application for a new tenancy of business premises, the landlord has
made out a ground of opposition under section 30(1)(f) of the Landlord
and Tenant Act 1954, namely:
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.
On April 14
1989 His Honour Judge Hammerton, sitting in the Eastbourne County Court, gave
judgment in favour of the landlord, and the tenant has now appealed to this
court.
The premises
consist of a smithy and are known as ‘The Forge’, West Street, Alfriston, East
Sussex. They are part of a larger area of land which includes a barn and an
orchard. In 1929 the freehold of the whole of the land was acquired by Mr J E
Wilson, who died in 1967 leaving it to his widow. By a transfer dated April 3
1985 Mrs Wilson transferred a part of the property comprising the smithy and
the barn and a small area of surrounding land to her daughter, the respondent
Mrs Carolamber Linda Thompson, who is the wife of Mr G P Thompson. Since 1969,
the smithy has been occupied by the applicant, Mr Leslie Philip Edwards, for
the purpose of the business of a smithy carried on by him. He does not shoe
horses, but makes wrought iron gates and repairs some motor cars and carts.
Latterly he claims to have held a tenancy from year to year for his life at an
annual rent of £300. It is agreed that his tenancy is protected by the
provisions of Part II of the 1954 Act.
In 1984 Mrs
Wilson, while she was still the owner of the whole of the land, applied to the
Wealden District Council for planning permission to develop the property by the
conversion of the barn and the smithy to a single dwelling and by the
construction of five other detached dwellings, a new access roadway and
garages. On July 19 1984 permission was duly granted, subject to certain
conditions, of which the following are material to this appeal:
5. The
development to which this permission relates shall not be occupied until it has
been completed in accordance with the approved plan.
12. Before
any of the dwellings hereby permitted are used or occupied, the whole length of
the proposed access road and vehicular turning areas indicated on the approved
plan, Drawing No. S/83/896/2 (Rev.B), date stamped 16th February 1984, shall be
laid out, constructed and completed to the approval of the District Planning
Authority.
The conversion
of the barn and the smithy would not of course be feasible without obtaining
vacant possession of the smithy and on September 29 1984 Mrs Wilson served on
Mr Edwards a notice under section 25 of the 1954 Act determining his tenancy on
April 8 1985 and stating that she would oppose an application for a new tenancy
on the ground mentioned in section 30(1)(f). Mr Edwards then duly made
application to the court and it was at that stage, for reasons into which I
need not go, that Mrs Wilson decided to transfer the smithy and the barn to Mrs
Thompson, who thereupon became the landlord of the premises of which Mr Edwards
is the tenant. I should add that the major part of the land which was retained
by Mrs Wilson, ie the orchard, formed the site on which, in accordance with the
planning permission, the five other dwellings and the new access roadway and
the garages were to be constructed.
No further
formal step was taken until June 19 1987, when Mrs Thompson served another
section 25 notice in the same form on Mr Edwards, who then made a second
application to the court for the grant of a new tenancy. Both applications came
before Judge Hammerton on April 14 1989, when he held that Mrs Thompson had made
out a ground of opposition under section 30(1)(f). He made an order for
possession of the premises within two months but granted a stay conditional on
notice of appeal being given in 28 days, which it duly was.
With regard to
the requirements of section 30(1)(f), it is not in dispute either that
the proposed conversion of the barn and the smithy would entail the
reconstruction of a substantial part of the smithy or that Mrs Thompson could
not reasonably carry out the reconstruction without obtaining possession of the
smithy. The sole question is whether Mrs Thompson has shown that she ‘intends’
to carry out the reconstruction within the meaning of section 30(1)(f)
as laid down by earlier authorities, whose effect can best be understood from
two passages in judgments delivered in this court shortly after the enactment
of the 1954 Act.
In Reohorn
v Barry Corporation [1956] 1 WLR 845 at p 849 Denning LJ said:
In the
present case, the premises are ripe for development and the proposed work is
obviously desirable: but the difficulty is to be satisfied that the corporation
have the present means and ability to carry out the work. ‘Intention’ connotes
an ability to carry it into effect. A man cannot properly be said to ‘intend’
to do a work of reconstruction 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. In
this case the corporation contemplate turning this land into a splendid estate
by the sea. They are exploring the possibilities of it; they are discussing the
ways and means, in the shape of a building lease; but that is as far as they
have got. Their ability to do the work, or to cause it to be done, is, I think,
open to question.
In Fleet
Electrics Ltd v Jacey Investments Ltd [1956] 1 WLR 1027 at p 1032
Lord Evershed MR said:
It is not now
in doubt that the import of the word ‘intend’ in section 30(1)(f) of the
Act is that at the appropriate date or dates . . . there must be a firm and
settled intention not likely to be changed, or in other words that the proposal
for doing the work has moved ‘out of the zone of contemplation . . . into the
valley of decision’.
Those last
words were taken from the well-known judgment of Asquith LJ in Cunliffe
v Goodman [1950] 2 KB 237 at p 254.
The only other
authority cited to us was Gregson v Cyril Lord Ltd [1963] 1 WLR
41, a case under section 30(1)(g) of the 1954 Act, on which Mr Smyth for
Mrs Thompson relied in support of the proposition that what the landlord has to
establish is a reasonable prospect that the reconstruction will be carried out.
Before I
consider how the facts of the present case stand in the light of the
authorities, it is desirable that I should state my belief that Mr Edwards’
case, as presented to us in this court by Mr Ground, has been presented with a
different emphasis from the case which was put forward in the court below.
Having heard the evidence and Mr McCulloch’s closing submissions on behalf of
Mr Edwards, Judge Hammerton did not call on Mr Smyth to reply on behalf of Mrs
Thompson. Since I am of the opinion that the judge’s decision cannot be
sustained, it is only fair to him that this should be pointed out. Equally, no
criticism of Mr McCulloch is implied. Often it is only as a case develops stage
by stage that the real point becomes clear.
The essence of
the judge’s decision is expressed in the following passage towards the end of
his judgment:
Mr McCulloch
submits that as there is no legal right to require Mrs Thompson’s mother to
build the road and complete her part of the development and as she has done
nothing about obtaining estimates or taking any steps towards development it is
impossible for Mrs Thompson to carry out the development on her part of the
land. She has no title to enable her to carry out the whole of the development
only to develop her own land. However it is clear from the evidence of Mrs
Wilson and Mr and Mrs Thompson that all 3 members of the family are
co-operating and it is only they who are able to dictate terms to a purchaser
from Mrs Wilson and they are in a position to do that. It seems to me that the
question of feasibility and possibility is amply provided for.
In this court
Mr Ground has not placed any real reliance on possible difficulties over title.
He has accepted, in my view correctly, that Mrs Wilson would co-operate as much
as possible with Mrs Thompson in bringing about the development as a whole.
What Mr Ground has relied on is the failure, as he submits, of Mrs Thompson
and Mrs Wilson to show that they have the means and ability or a settled
intention not likely to be changed to carry out not simply the conversion of
the barn and the smithy but also the remainder and major part of the
development, namely the construction of the five other dwellings, the new
estate road and the garages.
The foundation
of Mr Ground’s submissions is condition 5 of the planning permission, supported
by condition 12. The combined effect of those conditions is that none of the
six dwellings (including the converted barn and smithy) may be occupied until
the whole development, including the new access road and the vehicular turning
areas, has been completed. Mr Ground submits that the practical result of this
must be that Mrs Thompson would not convert the barn and the smithy, except as
part of the development as a whole. Mr Smyth counters that submission by
pointing out that the prohibition is against occupation, not against
construction. He argues that the barn and the smithy could be converted and
then left unoccupied pending the completion of the remainder of the development.
I reject that argument, first, because there was no evidence to show that Mrs
Thompson intended to proceed in this way — indeed, it was all to the contrary —
and, second, because it is highly improbable that Mrs Thompson would be both
willing and able to carry the extra costs of financing the development.
Accepting Mr
Ground’s submissions so far, I turn to a closer consideration of the evidence
which was before the judge. That showed that Mrs Thompson had engaged a builder
who was ready to carry out the conversion of the barn and the smithy at a price
of £146,425 plus VAT, for which purpose a detailed specification had been
prepared. Further, arrangements had been made with the bank for a building loan
of £170,000 for up to 18 months and it was clear that the interest on that loan
could be defrayed by Mr and Mrs Thompson out of their current resources.
On that state
of facts there can be no doubt that if the proposal had been one simply for the
conversion of the barn and the smithy the means and ability of Mrs Thompson to
carry it out and a settled intention on her part to do so would have been fully
established. But since that was not the proposal it is necessary to consider
the evidence in regard to the remainder of the development as well.
The evidence
of Mrs Wilson and Mr and Mrs Thompson established that the intentions of Mrs
Thompson and her means and ability to carry them out can be summarised as
follows. While the barn and the smithy were to be converted by her in the
manner already mentioned, she intended that the remainder of the development
should be carried out at one and the same time by an independent developer. In
her mind that meant that Mrs Wilson’s land would be sold to the developer, but
in the light of a somewhat technical argument advanced by Mr Ground I will say
that ‘sale’ can for this purpose be taken to include an arrangement, for
example a building lease, whereby Mrs Wilson would retain full control of the
development. The factual position was that no specific developer had been selected
and no estimates had been made as to the costs of any part of the main
development, whether of the five other dwellings or of the new access road etc.
Nor had any advice been received as to what a developer might be prepared to
pay for the remainder of the land.
The evidence
also established that if a good offer had been received for the whole of the
land including the barn and the smithy, Mrs Thompson and Mrs Wilson would have
considered it and might have accepted it. Indeed such an offer, one of £505,000
subject to Mr Edwards’ tenancy, had been accepted subject to contract in
December 1988, although it came to nothing because the prospective purchaser
shortly afterwards reneged on his offer. It is suggested by Mr Ground that the
continuing readiness of Mrs Thompson and Mrs Wilson to consider and possibly to
accept such an offer in the future was evidence that their intentions in the
matter were not settled, but I reject that suggestion. I think that the
position at trial was that their previous experience had satisfied them that
they were unlikely to receive a satisfactory offer for the whole and that they
must proceed with their own development. At the same time, when they were asked
what they would do if they received an offer for the whole, candour, not
to say common sense, required them to answer the question as they did. I should
add that the acceptance of any such hypothetical offer would not have been
solely a question of money. It would have depended in large part on the
important but unresolved question whether Mr and Mrs Thompson wished to live in
the converted barn and smithy themselves.
I do not for
one moment doubt that both Mrs Thompson and Mrs Wilson had a bona fide
intention in the ordinary sense that the remainder of the development should be
carried out by an independent developer at one and the same time as the
conversion of the barn and the smithy. But on the authorities, all other
considerations apart, one fatal objection stood in their way. Without further
exploration there could be no certainty, nor any high probability, nor even, if
that is the correct test, a reasonable prospect, that a developer would, by the
material time for the purposes of section 30(1)(f), agree to pay to Mrs
Wilson a price which she was prepared to accept. The intention required is an
intention to carry out the reconstruction ‘on the termination of the current
tenancy’. For my part, on the evidence which was and was not before the judge,
I do not think that if this point had been specifically put to him he could reasonably
have been satisfied that the requirement was met. There was a very real
possibility that an acceptable price for the remainder of the land would not be
agreed within a period which would allow the conversion of the barn and the
smithy to be carried out on the termination of Mr Edwards’ current tenancy. It
might well have been necessary to wait a matter of months or even longer. In
the circumstances, Mrs Thompson did not show that she had the means and
ability, or, if you prefer, a firm and settled intention not likely to be
changed, to carry out the conversion of the barn and the smithy at the
necessary time. On this simple, but fundamental, ground, which I emphasise was
not specifically put to Judge Hammerton, Mr Edwards is entitled to succeed on
this appeal.
On that
footing the parties are agreed that Mr Edwards should be granted a new tenancy
of the premises for one year upon such terms and at such rent as the Eastbourne
County Court shall direct. I would therefore allow this appeal and make an order
to that effect.
BUTLER-SLOSS
LJ agreed and did not add anything.
The appeal
was allowed with costs; legal aid taxation of appellant’s costs ordered.
