Landlord and Tenant Act 1954, Part II — Leave sought by tenants to discontinue proceedings for new lease — Condition of granting leave — Landlords’ contention that as a condition tenants should undertake not to apply for compensation under section 37 of 1954 Act — Young, Austen & Young v British Medical Association, Covell Matthews & Partners v French Wools Ltd and Ove Arup Inc v Howland Property Investment Co Ltd considered — No reason in present case why tenants should be put on any such term as a condition of granting leave — Leave to discontinue granted without condition
This was a
summons by Fribourg & Treyer Ltd, the tobacconists, tenants of premises in
the Haymarket, London W1, for leave to discontinue proceedings which they had
brought for a new lease under Part II of the Landlord and Tenant Act 1954
against their landlords, Northdale Investments Ltd.
Stephen Nathan
(instructed by Trower, Still & Keeling, agents for J N B Sparks, of
Bristol) appeared on behalf of the plaintiffs; Edwin Prince (instructed by
Titmuss, Sainer & Webb) represented the defendants.
Giving
judgment, FOSTER J said: I have before me a summons for leave to discontinue
proceedings under the Landlord and Tenant Act 1954, which were proceedings for
a new lease. On November 30 1976 a lease of premises known as the shop and
basement, 33 to 34 Haymarket and 3 to 4 Shavers Place, London W1, were granted
by the defendant landlords to the plaintiffs, the well-known tobacco firm of
Fribourg and Treyer Ltd. The front part is the shop in Haymarket known as 33-34
Haymarket, and the rear of the building has an entrance in Shavers Place, nos 3
and 4. That lease contained a clause 3(10) which I will read:
If at any
time during the term the lessor desires to demolish, rebuild or reconstruct the
whole or any part of the demised premises or the said building either alone or
in conjunction with any scheme for the redevelopment of the said building or
the site thereof together with any adjoining or nearby building or buildings or
the site or sites thereof, then and in any such case the lessor may determine
the term by giving to the lessee not less than six months’ notice in writing in
that behalf and upon the expiration of such notice the said term shall
thereupon determine and the lessor shall be entitled to re-enter the demised
premises but without prejudice to any right of action or remedy of the lessor
in respect of any antecedent breach of covenant by the lessee hereinbefore
contained.
On November 3
1980 the landlords’ solicitors gave a notice not only under that clause but
also under the Landlord and Tenant Act 1954. The first reads:
As solicitors
and agents for Northdale Investments we hereby give you notice in pursuance of
the provisions of clause 3(10) of a lease dated November 30 1976
and then the
parties are set out
A. That
Northdale requires the possession of the premises briefly described above and
comprised in the lease for the purposes set out in that clause. And
accordingly, B., that the term granted by the lease shall determine on June 4
1981, and accordingly that Northdale requires you on that date to quit and
deliver up possession of the premises.
And on the
same date, November 3, the normal landlord’s notice to terminate a business
tenancy under the Landlord and Tenant Act 1954 was also given. Clause 3 reads
as follows:
We would
oppose an application to the court under Part II of the Act for grant of a new
tenancy on the ground that on the termination of the current tenancy the
landlord intends to demolish or reconstruct the premises or a substantial part
of the premises or to carry out substantial work of construction on the
premises or part thereof, and that the landlord could not reasonably do so
without obtaining possession of the premises.
On November 27
1980 the plaintiffs gave the usual counternotice under the Landlord and Tenant
Act 1954 requesting a new lease, and an originating summons was issued by them
on February 27 1981 in which they applied to the court for the grant of a new
tenancy under Part II of the Act of the premises of a building known as 33-34
Haymarket and 3-4 Shavers Place for a period upon the terms set out. And after
the usual preliminary provisions paragraph 7 reads:
The following
are the plaintiff’s proposals as to the period, rent and other terms of a new
tenancy for which they are applying. Period, seven years from the determination
of the current tenancy. Rent, £12,000. Other terms, as in the lease dated
November 30 1976.
It appears
that in June 1981 the landlords offered the tenant a new lease of part only of
the premises. Although it was not in evidence an agreed plan was before me in
which it is shown that the ground floor which was being offered by the
landlords to the tenant comprises part of the property which faces on to the
Haymarket but does not offer any part of the premises to the rear, that is to
say adjoining on to Shavers Court, where no doubt there was delivered the
necessary stock for the shop. It looks to me as if they were offering about
two-thirds of the original premises. But in the basement there was a
considerably smaller area than that on the ground floor, and there the amount
offered which was coloured red appears to be not more than about 50% of the
original tenancy.
The plaintiffs
seek leave to discontinue and are ready to pay the costs of the hearing before
the master though not of the hearing before me today. The defendants’ position
is that they do not oppose leave to discontinue, but they ask the court to
place the plaintiffs under a condition of granting such a leave that they
should give an undertaking not to apply for compensation under section 37 of
the Landlord and Tenant Act 1954. That Act has been varied by the Law of
Property Act 1969, section 7, which introduced into it a new section 31A
whereby a landlord can offer part only of the original premises and the tenant
may, if he wishes, accept that part. There is no doubt in this case that the
tenants have never been and are not now prepared to take a part only.
For the
landlords reliance is placed on a case called Young, Austen & Young Ltd
v British Medical Association [1977] 1 WLR 881, where Whitford J granted
leave to discontinue but only on terms that the tenant should not seek
compensation under section 37 of the Act. At p 886 he says this:
I am bound to
say it does not appear to me that the court is in any way precluded from
considering the question as to whether a term should or should not be imposed.
The tenants come to this court, having started the proceedings, seeking an
indulgence, and RSC Ord 21, r 3 specifically provides that in considering
whether such an indulgence should be granted,
and of considering whether, in justice, it would be right that leave to discontinue
should be granted, and, if so, the terms upon which such leave should be
granted. Indeed, it is not really denied by the tenants, as I understand it,
that the imposition of some term may be appropriate in cases of this kind.
Graham J has recently so held in another proceeding relating to a notice under
section 25 of the Act of 1954, namely Covell Matthews & Partners v French
Wools Ltd [1977] 1 WLR 876. Graham J was referred to a number of cases, and
in his judgment he observes: ‘The principles to be culled from these cases are,
in my judgment, that the court will, normally, at any rate, allow a plaintiff
to discontinue if he wants to, provided no injustice will be caused to the
defendant. It is not desirable that a plaintiff should be compelled to litigate
against his will. The court should therefore grant leave, if it can without
injustice to the defendant, but in so doing should be careful to see that the
defendant is not deprived of some advantage which he already gained in the
litigation, and should be ready to grant him adequate protection to ensure that
any advantage he had gained is preserved.’
In that case
the tenants sought leave to discontinue their application merely because they
had changed their mind and no longer wanted a new lease, and accordingly he
made the grant to discontinue the action subject to an undertaking not to apply
for any compensation under the Act. And it is on this case which the landlord
defendants heavily rely.
In a case
called Ove Arup Inc v Howland Property Investment Co Ltd (1981)
42 P & CR 337; 261 EG 149, [1982] 1 EGLR 63 Mr Michael Wheeler QC
distinguished the case before Whitford J and came to the conclusion in all the
circumstances of that case that there should be no undertaking not to seek
compensation under the Act.
The defendant
landlords also rely heavily on a letter which the plaintiff tenants wrote to
all their customers in November 1981 in which they said: ‘After 261 years at 34
Haymarket it is with the greatest of regret that we are having to make a move.
We realise that progress must continue, but the inflation of rents and rates
has finally defeated us. However, we are going to continue in alternative
premises not far from here. As from January 4 1982 we will be trading in our
usual way from 214 Piccadilly, London W1’ and a telephone number is given. ‘It
is situated opposite Swan and Edgar and very handy for public transport.’ In this case it seems to me that the tenants
cannot succeed in their application unless they are willing to take a part only
of the premises included in this lease, and that they are not prepared to do.
It follows that their action cannot succeed. Whether the reason that they do
not want to take part is because the premises offered are so truncated as to
make the business impossible to carry on I know not. But the offer of part
means that they could not possibly succeed in this action to get a tenancy of
the whole.
In those
circumstances even if the plaintiffs, the tenants, had come to the conclusion
that the offer which was made, being an offer of the truncated premises at a
rent of some £45,000 per annum exclusive, was far too high and would be in any
case outside their financial ability, they cannot be forced to accept a part.
In those circumstances it is clear that this case can be well distinguished
both from Whitford J’s case and from Mr Wheeler’s case. In my judgment there is
no reason whatever why the tenants should be put on any term as a condition of
this court granting them leave to discontinue. I have come to the conclusion
that I shall grant them leave to discontinue the proceedings for a new lease
and am not prepared to give leave on condition that they do not apply for
compensation. As the plaintiffs are prepared to pay the costs of the hearing
before the master it seems to me that, subject to anything that counsel says,
the defendants should pay the plaintiffs the costs of the adjournment to me and
the hearing today before me.
It was ordered
that the plaintiffs should pay the costs down to and including the master’s adjournment
to the judge and that the defendants should pay the costs thereafter.
