Aireps Ltd v City of Bradford Metropolitan Council and another

Landlord and Tenant Act 1954, Part II — Appeal by landlords from county court judge’s decision as to whether there was a basis in law for tenants’ claim for a new lease — Tenancy which gave rise to the dispute was of accommodation consisting of an ‘airline desk’ in a small airport which was due to be reconstructed — Lease contained an express provision that if the landlords required possession of the accommodation for reconstruction they were bound to offer, and the tenants to take, temporary accommodation for that purpose — In due course the tenants were informed that possession was required and they moved out into temporary accommodation, both parties assuming at that time that the tenants would be provided with suitable permanent accommodation later — However, landlords subsequently gave tenants a notice purporting to terminate the tenancy of the desk accommodation under section 25 of the 1954 Act and stating that a new tenancy would be opposed under section 30(1)(f) — At the date of this notice the airline desk in question had in fact ceased to exist, the tenants having, entirely voluntarily, moved into the temporary accommodation which had been provided — Tenants replied to this notice by an originating application under the 1954 Act for a new tenancy — Tenants quoted the express provision in the lease mentioned above and relied also on an implied term that they would not lose their rights on reconstruction but would be reaccommodated in a suitable manner — The judge decided that the tenants had a justifiable claim and that their application should be allowed to proceed — Held by the Court of Appeal that the landlords’ appeal must be allowed as the entire proceedings under the 1954 Act were misconceived — Section 30(1)(f) of the Act had no relevance, as possession had been obtained, the reconstruction of the airport had taken place and the subject accommodation, for which a new tenancy was sought, had ceased to exist — Tenants might have a remedy under other proceedings for an appropriate declaration, but it was beyond the powers of the court in the present proceedings to give relief — Appeal allowed

This was an
appeal by the City of Bradford Metropolitan Council and Leeds City Council from
a decision of Judge Gosnay at Otley County Court in favour of Aireps Ltd on a
preliminary point under the Landlord and Tenant Act 1954 concerning the tenancy
of an airline desk, known as desk G48 (7), in the terminal building at the
Leeds and Bradford Airport, at Yeadon, of which the appellants were the
landlords and where Aireps Ltd, the present respondents, were the tenants of
the desk accommodation.

Ian Newbon
(instructed by the City Solicitor, Leeds) appeared on behalf of the appellants;
Richard L Newbury (instructed by Jobbings Creasey, of Leeds) represented the
respondents.

Giving
judgment, ACKNER LJ said: This is an appeal from a decision of His Honour Judge
Gosnay, given in the Otley County Court on February 27 1985. There was before
him a preliminary point as to whether there was a proper basis for a claim for
a new lease under the Landlord and Tenant Act 1954. He concluded that there was
a justifiable claim for such a lease and he therefore ordered that the
application for a new tenancy must continue to be heard.

The matter,
quite shortly, arises out of the following facts. There was granted in 1983 by
the Bradford Metropolitan Council and Leeds City Council a tenancy of premises
in a then small airport, identified in the schedule as ‘The airline desk known
as desk G48 (7) being part of the airline concourse of the terminal building at
the Leeds and Bradford Airport Yeadon near Leeds West Yorkshire and shown
coloured blue on the plan annexed [to the lease].’ The term which was granted was a term for six
months, which was determinable by either party on six months’ notice. It
contained the usual clauses which one would expect to be found, but one clause
was unusual. It was clause 5, which reads in these terms:

5. PROVIDED
ALWAYS and it is expressly agreed as follows:

(i) In the event of the Councils requiring the
Tenant to relinquish possession of the accommodation during the course of this
tenancy for the purposes of the reconstruction by the Councils of the premises
in which the accommodation is situated the Councils shall offer and the Tenant
shall take such temporary accommodation as the Councils make available subject
to the conditions and stipulations herein contained so far as the same may be
applicable thereto.

It was clearly
contemplated at the time when the lease was made that the airport was, or was
likely, to be subject to reconstruction, as and when finances made this
possible, in order considerably to extend its size.

In the summer
of 1983, which was not long after the granting of the lease, the respondents
(the tenants under the lease) were informed that possession was required of
their premises in order that reconstruction should take place and they moved
out quite voluntarily into temporary accommodation. It was anticipated, and
this was common ground, both by the tenant and the appellant144 landlords that in due course, when the airport was reconstructed, they would be
provided with comparable accommodation in the airport, though not necessarily
in the self-same spot.

The
reconstruction took place. G48 (7) no longer exists. Correspondence which took
place did not indicate that ultimately what was contemplated by the parties
would not take place. Out of the blue, on June 6 1984, the City of Bradford
Metropolitan Council sent a letter signed by the City Solicitor to the
respondent saying:

LANDLORD AND
TENANT ACT 1954

PREMISES AT
LEEDS AND BRADFORD AIRPORT

I enclose
Notice under Part II of the above-mentioned Act terminating your tenancy of the
Airline Operators desk known as G48 (7) on 31 December 1984. If you wish to
discuss the implications of this Notice will you please contact Mr N Ellaby,
Department of Estates and Development, Leeds City Council, Merrion House, Leeds
LS2 8JY.

The telephone
number is provided. Then there was sent a notice headed ‘LANDLORD’s NOTICE TO
TERMINATE BUSINESS TENANCY (LANDLORD AND TENANT ACT 1954, SECTION 25)’. It
again refers to the premises as being the airline operators desk known as G48
(7) and follows the description given in the schedule, to which I have already
referred. It says:

5. If you
apply to the Court under Part II of the Landlord and Tenant Act 1954 for the
grant of a new tenancy, I will oppose it on the grounds mentioned in paragraph
(f) of section 30(1) of the Act.

That section
provides that a landlord may resist the grant of a new lease if he intends,
among other things, to reconstruct the premises and requires possession of the
premises for that purpose.

Why the notice
was sent seems to me to be a total mystery. G48 (7) had ceased to exist. There
was no question of seeking to get possession of those premises from the tenant
because the tenant voluntarily had vacated the premises. The notice, in my
judgment, was totally misconceived, but it provided the inevitable stimulus to
the tenants’ advisers to contemplate the grant of a new lease of premises under
and pursuant to the provisions of the Landlord and Tenant Act 1954 and they
accordingly put in an originating application asking for a new lease of the
premises which had ceased to exist and putting in a specific plea saying:

(7) By virtue of clause 5 of the Tenancy
Agreement herein, in particular subclause (i) thereof, the parties herein made
express provision for the circumstances relied upon in paragraph (f) of section
30(1) of the Act, whereby in the event of the Respondents’ requiring possession
of the Applicant’s accommodation for the purposes of reconstruction the Council
shall offer and the Applicant shall accept such temporary accommodation as the
Council makes available as a consequence whereof the Respondents are obliged to
offer the Applicant temporary accommodation and are estopped from relying upon
paragraph (f) of section 30(1) of the Act.

That seemed to
overlook that the landlords had in fact offered temporary accommodation and at
the material time the new tenant was enjoying that temporary accommodation,
and, of course, it overlooks the fact that section 30(1)(f) had no relevance to
these premises because, although possession was required to reconstruct them,
possession had been obtained, the reconstruction had taken place and, as a
result, they had ceased to exist. But there was an additional paragraph, which
says:

3. Further,
as a consequence of the foregoing, there is an implied term of the said
agreement that the Applicant’s lease would not be terminated by virtue of the
Respondents’ needs for reconstruction but that after the said reconstruction
the Applicant would be reaccommodated in the same or similar suitable
accommodation to the accommodation provided in the agreement herein.

There may be
some substance in that, or an analogous plea based upon an implied obligation
arising out of clause 5, but that cannot be the subject-matter of proceedings
under the Landlord and Tenant Act 1954. Those proceedings are designed for the
court to decide whether or not there should be a grant of a new lease of
premises, the subject-matter of a lease to which the Act applies and in regard
to which premises the tenant would be in occupation. That was not the case
here.

When the
matter came before the judge, having heard the evidence, he learned that the
change of heart was apparently said to be due to the landlords having lost two
bays of the new building, which I understand to mean that their intention to
extend the building had been frustrated to the extent of two bays and they were
apparently putting forward the suggestion that it was lack of available
accommodation that had caused their change of heart, ie no longer being
prepared to rehouse the respondents in the airport when it was completed. The
learned judge rejected that explanation. He concluded that the appellants were
not acting in good faith; what they were doing was to let the space in the
premises in which they could have housed the respondents to other tenants who
were in a position to, and in fact had agreed to, pay a significantly higher
rent. Understandably, the learned judge did not look favourably upon such
behaviour.

However, in my
judgment, the whole of the Landlord and Tenant Act proceedings, stimulated by a
purported notice to quit under the provisions of the Act, were misconceived.
The appellants should never have sent such a notice. If they had not sent such
a notice and it had become apparent that they were not going to rehouse the
tenants ultimately in the reconstructed airport, then doubtless the tenants
would have brought proceedings requiring the appropriate declaration as to
their entitlement based upon clause 5 of the lease. In those circumstances the
court would have had to have decided what implication was appropriate to be
made in that clause, bearing in mind in particular certain important
correspondence which was before the learned judge, and has been before us,
which preceded the grant of the lease.

In my
judgment, this appeal must be allowed because the proceedings were
misconceived. It results in there being no question of the grant of a new lease
of the premises, the subject-matter of the lease of 1983, because they have ceased
to exist, but the respondents are still in temporary accommodation and, if they
are faced with a continued refusal to rehouse them in the airport, then they
will be at liberty to bring the necessary proceedings asking for the
declaration to which they consider they are entitled. I would accordingly allow
this appeal but would add that if further proceedings are to be brought, then
it would save both time and expense for the matter to go back to the same judge
who has had the benefit of already hearing and considering much of the relevant
material.

MUSTILL LJ
agreed and did not add anything.

Also agreeing,
NOURSE LJ said: I add a few words of my own only because we are allowing the
appeal.

Before the
learned judge both parties proceeded on an assumption that the court had power
to grant a new tenancy in the circumstances of this case. It does not therefore
surprise me that the learned judge approached the matter as he did. However,
once the point is taken, it appears to me, as it has to my lord, to be clear.
In my judgment, the court cannot under the 1954 Act grant a new tenancy of
premises which have ceased to exist, cannot be reinstated and ex hypothesi
can never again be occupied by the tenant for the purposes of a business
carried on by him. Mr Newbury who appears for the respondents did not really
suggest that it could. What he said was that the court could grant a new
tenancy of premises which the landlord had agreed to let, even though they
could not be identified at the date of the application; for example, the
alternative premises which ought to be provided by the appellants pursuant to
the implied term pleaded in para 3 of the respondents’ originating application.
However, it is equally clear that that is also beyond the powers of the court,
if only because they are not premises which were occupied by the tenant at the
date of the application or at any other date which could be material.