Landlord and Tenant Act 1954, Part II, section 30(1)(g) — Appeal by tenants, retail confectioners, against decision of county court judge on preliminary issue in favour of landlords as to whether landlords had established the ground of opposition to a new tenancy set out in para (g) — Discussion of much criticised decision in Nursey v P Currie (Dartford) Ltd — Question as to whether landlords intended to ‘occupy the holding’ for the purpose of a business to be carried on by them — Demised premises consisted of a relatively small part of the ground floor of a building and the remainder of the ground floor was occupied by the landlords, who carried on business there as retailers of camping and other leisure goods — Landlords’ revised scheme involved removal of the partitions enclosing the part of the ground floor occupied by the tenants and the closing of one of the doors opening on to the street; the result would be that the whole of the ground floor, including the tenants’ present part, would be devoted to additional sales space for the landlords — County court judge decided in favour of landlords, rejecting a submission that the ground in para (g) was not made out because the physical premises demised to the tenants would no longer be an identifiable entity in the landlords’ scheme — Before the Court of Appeal the appellant tenants’ main argument was that the landlords had not shown an intention to occupy ‘the holding’ — This involved consideration of the Nursey case (a Court of Appeal decision) and subsequent decisions in which it had been doubted or distinguished — Cases considered included Method Development Ltd v Jones, Cam Gears Ltd v Cunningham and Leathwoods Ltd v Total Oil Great Britain Ltd — Held, affirming the county court judge’s decision, that the Nursey case could be distinguished as there was to be total demolition of the building in that case — If the Nursey decision could not be distinguished on that ground, at least the present case could be said to pass the test as formulated by Willmer LJ in Nursey (his ratio decidendi being preferable to that of Wynn-Parry J) — Appeal by tenants dismissed — Undertaking on behalf of landlords as to carrying out the works involved in the revised scheme accepted
The following cases are referred to in this report.
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
Cam Gears Ltd v Cunningham [1981] 1 WLR 1011; [1981] 2 All ER 560; (1981) 43 P&CR 114; [1981] EGD 144; 258 EG 749, [1981] 1 EGLR 63, CA
Gregson v Cyril Lord Ltd [1963] 1 WLR 41; [1962] 3 All ER 907; [1962] EGD 298; (1962) 184 EG 789, CA
Leathwoods Ltd v Total Oil Great Britain Ltd (1985) 51 P&CR 20; [1985] 2 EGLR 237, 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
Nursey v P Currie (Dartford) Ltd [1959] 1 WLR 273; [1959] 1 All ER 497; [1959] EGD 166; (1959) 173 EG 493, 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 tenant applicants, J W Thornton Ltd, in proceedings under the Landlord and Tenant Act 1954 in the Newcastle upon Tyne County Court, from the decision of Judge MacDonald on the trial of a preliminary issue. Judge MacDonald held that the landlords, Blacks Leisure Group plc (formerly Greenfield Blacks plc and Greenfields Leisure plc), had succeeded in
establishing their ground of opposition to the grant of a new tenancy to the applicants. The landlords relied on section 30(1)(g) of the Landlord and Tenant Act 1954.
Miss Heather Swindells (instructed by Kershaw Tudor & Co, of Sheffield) appeared on behalf of the appellants; Jonathan Brock (instructed by S J Berwin & Co) represented the respondent landlords.
Giving judgment, SLADE LJ said: This is an appeal by the applicants in certain landlord and tenant proceedings, J W Thornton Ltd, from an order of His Honour Judge MacDonald made in the Newcastle upon Tyne County Court on January 8 1986.
By a lease of April 3 1964 there were demised to the appellants certain premises which were described in the lease as:
ALL THAT ground floor shop and premises being part of the Lessors’ building known as Bradburn House Northumberland Street in the said City and County of Newcastle upon Tyne and known as Number 68 Northumberland Street aforesaid . . .
The premises were demised for a term beginning on May 4 1964 and ending on May 3 1985. The present landlords are the respondents to the appeal. Their name is now Blacks Leisure Group plc, though they formerly bore a different name.
The nature of the business carried on by the appellant tenants in the demised premises has at all material times been the retail sale of confectionery. I understand that the building has three floors, a ground floor, basement and first floor, and the demised premises comprise a relatively small part of the ground floor. The rest of the ground floor has been occupied by the landlords, who carry on business there as retailers of camping and similar leisure goods.
On May 5 1984 the landlords served on the tenants a notice terminating their tenancy on May 3 1985. They stated in that notice that if the tenants applied to the court under Part II of the Landlord and Tenant Act 1954 for the grant of a new tenancy, they would oppose it on the grounds mentioned in para (g) of section 30(1) of the Act. Those grounds are:
. . . that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence.
On May 15 1984 the tenants’ solicitors served a notice on the landlords saying that they would not be willing to give up possession of the demised premises on May 3 1985.
On August 1 1984 the tenants’ solicitors issued a common form application for the grant of a new tenancy under the 1954 Act. On December 6 1984 an order was made by the registrar providing, in effect, for the trial of the preliminary issue, whether the landlords had established the ground of opposition upon which they relied, namely that set out in para (g) of section 30(1) of the 1954 Act.
The case came on for hearing for the first time before the learned judge on April 24 1985. On that occasion plans were produced which indicated the landlords’ project in regard to the demised premises. The learned judge sufficiently summarised these plans in his judgment as follows. He said:
There are separate entrances to the parts occupied by the Applicant and the Respondent. From the part occupied by the Respondent a staircase goes to the upper floors of the building.
The evidence shows that at one time the ground floor was undivided; and that the Applicant’s premises were created by two partitions being erected. One was placed at right angles to the left hand wall of the ground floor and the other runs down to the front of the building. A new entrance, a doorway, was created at the front of the building. It is against this side partition that the staircase is to the upper floors.
The original proposal by the Respondent was to remove these side and end partitions enclosing the Applicant’s premises, and to modify the doorway. Next to the left hand wall a staircase was to be built to the first floor to replace the existing one. Some 50% of the floor area of the Applicant’s premises would have to be taken up by the staircase.
It is well settled that if a landlord is to rely successfully on ground (g) in opposing the grant of a new tenancy, he must show a genuine bona fide intention that he intends to occupy the premises for the purpose of his business (or as his residence as the case may be). For this purpose, at the first hearing before the learned judge, the landlords’ counsel, Mr Brock, called their group property manager, Mr King, and their financial director and company secretary, Mr Higgins.
After this evidence had been called, the tenants’ counsel, Mr Beresford, elected to call no evidence and addressed the court. As one sees from the learned judge’s notes, Mr Beresford made it clear that the bona fides of the landlords’ intention and their financial capability to carrying that intention out were not in question; the only issue was whether that intention fell within para (g). It would appear that he argued, with some force, that the project then before the court would not fall within para (g), one of the points stressed by him being that the area which would be taken up by the proposed new staircase would occupy approximately 50% of the demised premises.
By the time that he had concluded his submissions, the hour, I understand, was quite late. Mr Brock, the landlords’ counsel, no doubt recognising that the submissions made on the other side posed certain difficulties for the landlords, made an application to re-call Mr King with, I understand, the purpose of indicating their willingness, or intention, to put forward a revised plan of some kind or another.
The application was objected to. The learned judge deferred a ruling on it and the case was adjourned to a date to be fixed.
The date for the resumed hearing was in due course fixed for January 8 1986. At the resumed hearing the landlords’ counsel (again Mr Brock) made an application to reopen the case and call fresh evidence by recalling Mr King. The application was again objected to, but in the end the learned judge concluded that the tenant would not be prejudiced by the grant of the application, or at any rate that there would be greater prejudice to the landlords if it were refused than there would be prejudice to the tenant if it were granted. Accordingly, he allowed it.
The hearing then proceeded. Certain new documentary evidence was placed before the learned judge. This comprised some revised plans. The learned judge sufficiently described the altered proposals in his judgment as follows:
The altered proposal is for the reconstruction of the staircase against the right hand wall of the ground floor, with the door being relocated in front of that repositioned staircase. As before, the two partitions round the premises presently occupied by the Applicant would be removed. The door to the street would, of course, be closed up.
Under the altered proposal the whole of the floor area presently occupied by the Applicant would be given over to additional sales space for the Respondent.
The crucial difference between the two schemes was, of course, that under the second scheme the proposed new staircase would not be sited in any part of the demised premises, and therefore the whole of the demised premises would be available for occupation by the landlords for the purposes of their business if they were to succeed in regaining possession.
The documentary evidence at the resumed hearing also included a few further items, which are to be found at pp 77 to 82 of our bundle. I need only refer to them very briefly. At p 77 there is a letter dated September 27 1985 written by the landlords’ architect, Mr Birchall, to Mr King, relating to the revised project. At pp 78 and 79 there are letters from a firm of consulting engineers (dated October 18 1985 and November 6 1985) respectively to Mr Birchall and to Mr King also relating to the revised project. At p 80 there is a letter of December 11 written by Mr Birchall to Mr Percy, of the planning department of the City of Newcastle upon Tyne, as to the possibility of obtaining the necessary planning permission. At p 81 there is Mr Percy’s reply of December 16 1985, indicating that in his opinion
. . . the rearrangement would be acceptable subject to submission of satisfactory design details.
Finally, at p 82, there are the minutes of a meeting of the board of the landlords, held on December 13 1985, which contain the following extract:
John King has referred to the Board resolution of December 17 1984, and advised that the preliminary hearing had been adjourned to January 8 1986. He further advised that the budget estimate of costs should be revised to £70,000.
The reference to the figure of £70,000 represented an increase of £20,000 on the estimate for the earlier project of £50,000, and was plainly referable to the revised project.
At the resumed hearing, as one sees from the judge’s notes, Mr King gave oral evidence. He referred to the new proposal, and in cross-examination was asked a number of questions which were clearly designed to test the firmness of the landlords’ intention to carry out the revised project. As the learned judge’s notes record, he gave the following answers among others:
Estimate would start in six months. Planning application not yet made for change. Considered it could be done by variation of consent. I have preferred left hand side accept now have to have right hand side. Present intention is to build on right hand side. I think we have accepted we will have to construct on
right hand side. £10,000 not a material amount to have to put into alteration. Left hand side preferred on convenience and expense. £10,000 a very small sum of money. Would take left hand side if permissible. Would build on right hand side if forced, but would prefer on left hand side if not forced.
Earlier in his evidence he had explained that the difference between £50,000 and £70,000 represented £10,000 due to the extra costs occasioned by the revised plans and £10,000 as an estimate to cover inflation and other contingencies.
Mr Percy, of the planning department, also gave evidence. His evidence was to the effect that the chances of the landlords’ obtaining planning permission for the new project would be very high.
At the end of the learned judge’s notes of the evidence of those two witnesses is to be found this passage:
Court puts respondent to election to elect — right hand side proposal — or left hand side proposal. (Brock) — right hand side proposal is the case now being put forward. Higgins undertakes that as a director he will recommend this proposal to Black’s Board.
One sees from the judge’s notes that Mr Beresford and Mr Brock then in turn addressed the court before judgment was delivered.
Miss Swindells, who has appeared on behalf of the tenants in this court, did not have the advantage of appearing in the court below, but Mr Brock, who, as I have indicated, appears on behalf of the landlords, was present on that occasion. He has assisted us by explaining the part of the judge’s notes to which I have referred.
What I understand happened was this. The learned judge wished to be quite clear in his mind as to which project Mr Brock was submitting that the landlords had the firm intention to carry out. He accordingly invited Mr Brock, as it were, to nail his flag to the mast. In response to that invitation Mr Brock indicated that his case was based on the landlords’ having a firm intention to carry out the second of the two projects; and as an earnest of the good faith of his clients in that regard, and of their settled intention, he voluntarily offered an undertaking, which was not asked for by the judge, that Mr Higgins, as a director, would recommend the proposal to the landlords’ board. Indeed, Mr Brock told us that he went further and offered a firm undertaking to the learned judge that the landlords would actually carry out the work envisaged by the second project, but in all the circumstances of the case the learned judge did not think it necessary to ask for as firm an undertaking as that.
The learned judge, in his brief, but very lucid, judgment, dealt substantially with two points. First, he came to the clear conclusion that there was a genuine bona fide intention on the part of the landlords to implement the second revised scheme. As to that, he said this:
Mr King’s evidence satisfies me that the respondent intends to carry out the altered scheme. That is the effect of his evidence. The respondent has got the financial capacity to carry out the scheme. Indeed a resolution of the Board has been passed giving an extra £10,000
I think that should have been £20,000
this is the estimated requirement for the additional structural work under the amended scheme.
Mr Brock for the respondent has formally elected to proceed on the amended scheme. Mr Higgins, a director of the respondent company, has given an undertaking that he will recommend to the company that there is no further amendment or reversion to the original scheme.
I am satisfied by Mr Percy that planning permission for the amended proposal will in all probability be forthcoming. The decision of the court is based on the amended scheme alone.
Then the learned judge went on to consider an argument which had been put forward by Mr Beresford as counsel for the tenants that the ground of objection in para (g) had not been made out, because, it was said, the physical premises then demised to and enjoyed by the tenants would, after the proposed alterations, no longer be identifiable.
This argument was primarily based on a decision of this court in Nursey v P Currie (Dartford) Ltd [1959] 1 WLR 273, to which I shall have to revert, but the learned judge rejected the argument in these terms:
In my judgment that submission is not good on the facts of this case, even if it is a good submission in law.
What is it that is going to be done by the respondent if it is allowed to have the applicant’s premises? What is going to be done is the removal of two dividing walls and the closing up of the door to the street. This will rejoin that part of the ground floor now occupied by the applicant to the remainder of the ground floor. Both parts were joined together before the partitions were put up. Thus the sales area of the applicant is to be joined on to the sales area of the respondent — all on the ground floor of the same building. It is obvious therefore that this case is not at all comparable with Nursey’s case. There the whole of the former building was to be demolished and was to be reconstructed. It seems to me, therefore, that the respondent’s objection falls properly and entirely within paragraph (g) in that it will ‘occupy the (Applicants) holding for the purposes of a business to be carried on by (it) therein’
The judge, considering as he did, that the ground of objection was made out, ruled that the preliminary point ordered by the registrar to be determined should be decided in favour of the landlords and that accordingly the tenants’ application failed.
The tenants now appeal to this court. In their notice of appeal, in ground 1, they raised the argument that the learned judge had wrongly exercised his discretion in allowing the landlords to reopen their case in the course of closing submissions so as to call and rely upon evidence that they could, or would, resite the access way and staircase outside the tenants’ holding. But Miss Swindells, if I may say so, realistically and wisely indicated that she did not intend to pursue that particular ground of appeal, since she recognised that the question whether or not the landlords should be allowed to reopen their case was a matter for the discretion of the learned judge and that there are really no sufficient grounds for attacking the exercise of that discretion.
Her argument which, if I may say so, has been presented with refreshing clarity and conciseness, has run on the following lines. She began by reminding us that to bring themselves within section 30(1)(g) of the 1954 Act, the landlords must show (1) a genuine and bona fide intention that they intend to occupy the premises for the purposes of their business; and (2) ‘a reasonable prospect of being able to bring about this occupation by their own act of volition’. The words just quoted come from Lord Diplock’s speech in Gregson v Cyril Lord Ltd [1962] 3 All ER 907, at p 911 B. These propositions are, I think, accepted by Mr Brock as being correct in law. For my part, I would certainly accept them.
Miss Swindells, in relation to the second of these two heads, does not seek to challenge the learned judge’s findings that the landlords had the financial capacity to carry out the amended scheme, and that planning permission would in all probability be forthcoming. On behalf of the tenants, however, she does challenge the learned judge’s findings on two important points. First, she disputes his finding that there was a genuine bona fide intention on the part of the landlords in respect of the amended scheme; second, she disputes his finding that the landlords intend to occupy ‘the holding’ within the meaning of section 30(1)(g). These are her two main points on this appeal.
I deal first with the argument based on intention. Miss Swindells submits, correctly in my judgment, that in order for the intention to have the necessary quality required by the Act, it must be a firm and settled intention, not likely to be changed: see per Lord Denning in Reohorn v Barry Corporation [1956] 1 WLR 845, at p 849. She goes on to submit that the learned judge failed to give any, or any sufficient, weight to the following factors which, she says, negative the requisite fixity of intention, that is to say: (1) the landlords’ change of intention between the date of the initial hearing, April 24 1985, and the date of the resumed hearing, January 7 1986; (2) the delay in taking steps to amend the original scheme, which do not seem to have begun very effectively until about September of 1985; (3) the recent date of the landlords’ resolution (December 13 1985) in relation to the date of the resumed hearing; and (4) the landlords’ preference, as expressed by Mr King in cross-examination, for the original scheme.
In testing the validity and strength of these points, it has to be borne in mind that the critical time when the relevant intention of the landlords must be shown to exist is the time of the hearing; it need not be shown to have existed previously. This is made quite clear by the decision of the House of Lords in Betty’s Cafes Ltd v Phillips Furnishing Stores Ltd [1959] AC 20. Accordingly, it is open to a landlord to form the requisite intention at the very last moment. That may suffice to bring him within section 30(1)(g), provided only that the intention is in truth a genuine, bona fide intention, though, if it is said to have been formed at the last moment, this may no doubt provide some material for testing questions in cross-examination.
The time of the hearing being the relevant date, I do not regard any of the four factors relied upon by Miss Swindells in this context as carrying very substantial weight, because I do not think any of them is inconsistent with the landlords’ having formed a genuine, bona fide intention to carry out the revised project by the time of the resumed hearing.
Miss Swindells further submitted that the learned judge gave too much weight to the undertaking given by the landlords’ director, Mr|page:62| Higgins. With due respect to this point, I think there is nothing in it because, although the learned judge refers to the undertaking, we really do not know how much weight he attached to it. In any event it was in my view certainly one matter which he was entitled to take into account as an earnest of the landlords’ good faith.
On the evidence before him when he gave judgment, there was in my judgment sufficient to support the learned judge’s finding that the landlords, by the time of the resumed hearing, had the requisite bona fide intention and ability to carry out the revised project. There was not only the documentary evidence to which I have referred. There was no doubt about their financial capacity to do so. There was no doubt about the probability of the requisite planning permission being obtained. The learned judge had had the advantage of seeing Mr King giving oral evidence about the revised project, and had seen him being questioned about it. He had seen the recent board resolution. He had the undertaking by Mr Higgins to which I have referred. He had also, as we have been told, been offered the wider undertaking on behalf of the landlords. Furthermore, Mr Brock has told us that when Mr Beresford presented the tenants’ case to the learned judge in his final submissions, he did not really dispute such genuine, bona fide intention on the part of the landlords, but that his argument was based on the point relating to the definition of ‘the holding’, which is a quite different point.
Despite Miss Swindells’ able submissions, it seems to me that there are no sufficient grounds for differing from the learned judge’s conclusion on this point, namely that the requisite intention by the landlords had been established, albeit belatedly, at the resumed hearing before him in January 1986.
I now turn to the second main point which has been argued before this court on behalf of the landlords. If they are to bring themselves within ground (g), the landlords must of course show an intention to occupy ‘the holding’. The holding is defined by section 23(3) of the Act as ‘the property comprised in the tenancy’.
In the absence of authority I would, for my part, have felt no doubt, in the light of what I have said on the first ground of appeal, that the landlords have shown an intention to occupy the property comprised in the tenancy. Under the revised scheme they will be occupying, for the purposes of their business, the entirety of the premises now comprised in the tenants’ demise, the only difference being that the partition walls now separating the tenants’ property from the rest of the ground-floor property will have been demolished. These partition walls, as I understand the position, are non-loadbearing. I would have no doubt, in the absence of authority compelling a contrary conclusion, that the landlords have shown an intention to occupy ‘the holding’ within the requisite sense.
However, the decision of this court in Nursey’s case, to which I have already referred, presents certain problems. The facts of that case, as set out in the headnote in [1959] 1 WLR 273, were these:
Premises, consisting of some small buildings standing in a yard, were let on a quarterly tenancy and were used by the tenants to store and vulcanise tyres. The landlords, pursuant to section 25 of the Landlord and Tenant Act, 1954, served notice on the tenants to terminate the tenancy, stating in the notice that they would oppose the grant of a new tenancy on the ground that they intended to occupy the ‘premises’ for the purposes, or partly for the purposes, of a business to be carried on by them therein. At the date of the notice the landlords had been refused planning permission to develop the yard by the erection of a petrol filling station. After service of the notice, but before the hearing of the tenants’ application for a new tenancy, such planning permission was granted, and at the hearing it was proved that the landlords intended to demolish the buildings and develop the property as a petrol filling station.
At the hearing it was contended that the landlords were not within the terms of their notice because they did not intend to occupy the holding; but the county court judge held that the proposed demolition of the buildings was immaterial, since the holding comprised the land on which the buildings stood and the landlords intended to occupy the land.
The judge dismissed the tenants’ application for a new tenancy; the tenants then appealed and their appeal was allowed.
Wynn-Parry J gave the leading judgment. Though the ratio of his judgment is not entirely clear to me, it would appear to have been embodied in the following passage (at p 277):
It seems to me that that language
that is, the language of paragraph (g)
circumscribes the use of the phrase ‘the holding’ in that paragraph, and makes it necessary to concentrate the whole of one’s attention on the particular piece of land, whether it has buildings on it or not, which is the subject-matter of the tenancy in question. So viewed, it appears to me that the contention for the landlords in the present case is too wide, and that when one is looking at the material time at ‘the holding’ under paragraph (g), it is not permissible to take into account the wider scheme which the landlords had in mind, and merely to treat the land comprised in the holding as land which, in one way or another, will be used for the purpose of the wider undertaking.
In my view, for those reasons this case could only come within paragraph (f), but, unfortunately, there is no right of amendment and the matter had to go forward on the basis of the notice, and in the events which have happened, the landlords do not bring themselves within paragraph (g).
Willmer LJ decided the case in favour of the tenants on very different grounds. He said, at p 278:
The only ground put forward in the notice which they served was the ground that: ‘on the termination of the current tenancy we intend to occupy the premises for the purposes, or partly for the purposes, of a business to be carried on by us therein’.
Willmer LJ continued:
The words there used follow approximately, although not exactly, the wording used in paragraph (g) of the same subsection of the Act. It was contended on behalf of the landlords, and was held by the judge, that in addition to proving a case, as they admittedly had, under paragraph (f), they had, in the circumstances, also proved a case under paragraph (g), in the sense that they proved an intention, prevailing at the time of the hearing, to occupy the holding for the purposes of a business to be carried on by them therein. It seems to me, however, that so to hold does violence to the wording of the paragraph. I have said that the words used in the landlords’ notice do not exactly correspond to the words used in paragraph (g)
and then he quoted the words in the paragraph and continued:
The important word for the purposes of the present case is the word ‘holding’, and that is defined by section 23(3) of the Act of 1954 as meaning ‘the property comprised in the tenancy’.
It appears to me, therefore, that in applying paragraph (g) of section 30(1), one must look at the particular holding comprised in the particular tenancy which is before the court in the particular case. Here the building is described in the tenancy agreement as
and then Willmer LJ quoted the description in the parcels and continued:
In relation to this case, therefore, paragraph (g) must be construed as though, instead of the word ‘holding’, those words, which I have read from the tenancy agreement, were set out in the paragraph.
The question to be determined, then, is whether the landlords proved that on the termination of the current tenancy they intended to occupy ‘the buildings forming part of the premises known as No 248, Broadway, Bexley Heath in the County of Kent and, comprising the drivers’ room, can store, pump and the spirit store’ for the purposes, or partly for the purposes, of a business to be carried on by them therein. To that there can be only one answer. The only intention proved was an intention to demolish and reconstruct.
It will thus be seen that Willmer LJ was deciding the case on a much narrower ground than that on which Wynn-Parry J appears to have decided it.
The third member of the court, Hodson LJ, simply said that he agreed. He therefore appears to have agreed with both judgments, even though they had different rationes decidendi.
Not surprisingly — and this has been the foundation of her argument in this context — Miss Swindells has relied strongly on Wynn-Parry J’s judgment in Nursey’s case. On reliance on it she has submitted that since, on the present facts, the landlords, if and when they obtain possession of the premises, will be knocking down the partition between the demised premises and the adjoining premises and will be coalescing them into their own premises, the former holding will entirely have lost its identity and the landlords cannot bring themselves within para (g).
The decision in Nursey has had what can fairly be described as a chequered subsequent history. In the case of Method Developments Ltd v Jones [1971] 1 WLR 168, Salmon LJ, at p 172, said this about it:
The basis of the decision seems to me to be that, if you are going to demolish buildings which stand on the demised premises, the buildings being part of the holding, you are not, therefore, intending to occupy the holding. I have some doubt about the correctness of the decision, particularly having regard to an unreported case in this court which preceded it.
The Nursey decision was also strongly criticised by this court in Cam Gears Ltd v Cunningham [1981] 1 WLR 1011*. Oliver LJ, in giving the leading judgment, quoted at p 1014 the passage from Wynn-Parry J’s judgment which I have already quoted, and said this:
I cannot think that the judge can have intended to do more than to answer the question, which is: is the holding which the landlord intends to occupy the same holding as that comprised in the tenancy? Construed in the wide sense|page:63| that I have indicated, it would follow that a landlord who carried on a business next door to the demised premises and who wanted to occupy those premises as one with his existing shop for an expanding business, would be unable to rely upon section 30(1)(g), . . . For my part, I cannot ascribe so eccentric an intention to the legislature.
*Editor’s note: Also reported at [1981] EGD 144 and (1981) 258 EG 749, [1981] 1 EGLR 63.
I pause to say that of course those observations if correct are entirely apt to cover the present case and that they support the landlords’ contentions.
Templeman LJ, in referring to the Nursey decision, said this:
We were pressed by the decision of this court in Nursey v P Currie (Dartford) Ltd . . . of which I make the melancholy observation that two bad reasons do not make one good reason, although both may be binding on this court.
He then proceeded to distinguish the case on its facts from that which was before him.
More recently still, the Nursey decision was referred to by this court in Leathwoods Ltd v Total Oil Great Britain Ltd (1985) 51 P&CR 20*. In that case, once again the Court of Appeal doubted the correctness of the decision in Nursey, and distinguished it. Oliver LJ, at p 33, described it as a decision which was confined very much to the peculiar facts of that case, and he continued:
. . . it was a case in which the only thing that was left of the premises was the buildings without any of the surrounding land, simply with a right of access to those buildings between particular hours, and it seems to me that the highest that it can be put is that at least that case may be applicable in any other case where one is concerned simply with premises which consists of nothing but a building.
*Editor’s note: Also reported at [1985] 2 EGLR 237.
On that state of the authorities my approach to this problem is a fairly simple one. First, I respectfully agree with the observation of Salmon LJ in the Method case that the basis of the Nursey decision is that if you are going to demolish buildings which stand on the demised premises, the building being part of the holding, you are not therefore intending to occupy the holding. Though of course the Nursey decision is binding on us, it seems to me that we should not regard the ratio of that case as going further than that. This, I think, was the view of the learned judge himself, who distinguished the Nursey case, rightly in my view, on the grounds that in that case ‘. . . the whole of the former building was to be demolished and was to be reconstructed’. In a case where there is to be total demolition of the building in question, one can see that it is at least very much easier for the tenant to argue that the landlord does not intend to occupy ‘the holding’ within the meaning of the Act.
If, however, contrary to my view, it were not permissible to distinguish the Nursey decision on that narrow ground, I think that we in this court must at least be at liberty to choose between the two divergent ratios of Willmer LJ and Wynn-Parry J which, as Oliver LJ pointed out in the Leathwoods case (at p 31), are entirely different from one another. I confess that neither of the two tests adumbrated by those learned judges, with the greatest respect to them, seems to me entirely satisfactory. But if we are bound to choose, I for my part would have no hesitation in preferring the course set for us by Willmer LJ.
I therefore proceed to apply his test to the facts of the present case. In applying section 30(1)(g), I look at the particular holding comprised in the particular tenancy which is now before the court. The subject-matter of the holding is described in the lease as being:
ALL THAT ground floor shop and premises being part of the Lessors’ building known as Bradburn House Northumberland Street in the said City and County of Newcastle upon Tyne and known as Number 68 Northumberland Street aforesaid . . .
In relation to this case, therefore, para (g), according to Willmer LJ’s test, must be construed as though, instead of the word ‘holding’, these words from the lease were set out in para (g). The question to be determined, then, according to this test, is whether the landlords have proved that on the termination of the current tenancy they intended to occupy the ground-floor shop and premises, being part of this building, for the purposes, or partly for the purposes, of a business to be carried on by them therein. It seems to me that, just as there was only one answer to this question in the Nursey case, so there is only one answer on the facts of the present case. The landlords have proved that they intend to occupy these premises for the purpose of their business. It would seem to me quite unrealistic to suggest that they did not intend to do so simply because the partition walls of the demised premises will no longer be present when they resume possession of the property and have carried out the work which they intend to carry out.
Accordingly, in my judgment the learned judge reached the right conclusion on the second point, as he did on the first and main point, which falls to be determined on this appeal.
I would only add this. Mr Brock has repeated in this court the undertaking which he tells us he offered to the learned judge in the court below, namely an undertaking by the landlords actually to carry out the work embodied in the revised project if and when they get possession. I have already indicated that, like the learned judge, I am now satisfied as to the landlords’ good faith and their firm and settled intention in the matter. But I can well understand that, at least in the past, the tenants may have had some doubts upon this matter, bearing in mind the history which I have related. In these circumstances, it seems to me that, as a way of providing some reassurance to the tenants as to the landlords’ good faith, it would be right for this court to accept the undertaking which has been offered to it. Mr Brock has told us that undertakings of this nature have been offered to this court in previous cases and accepted. It would seem to me appropriate that this course should be followed once again.
For the reasons which I have given, I would dismiss this appeal.
Agreeing, CROOM-JOHNSON LJ said: I would only add one other matter, on Nursey’s case.
If we are bound on the present facts by either of the rationes decidendi of Nursey’s case, then I entirely agree with what my lord has said, that it is Willmer LJ’s approach that should be adopted and that, adopting that approach, the method by which he has applied it to the facts of this case, and the terms of the demise, is right.
On the other hand, in my own view Nursey’s case can be distinguished from the present one. In the present circumstances the evidence was that the applicant and the respondents carry on business side by side on the ground floor of Bradburn House, and what is desired is that the two premises, which are really half of the same ground floor, should be thrown into one. On those facts it seems to me that the case is amply covered by Method Developments v Jones [1971] 1 WLR 168. There the landlords had the tenancy of the second floor of a building which they had sublet to the tenants; what they wanted was possession of the rest of the second floor from the tenants, in order that the two premises might be thrown together; the part of which possession was wanted was intended for use for the landlords’ business after some minor amount of reconstruction. In those circumstances this court held that subsection (1)(g) enabled the landlords to recover possession and did not require them to grant a fresh lease.
It is of interest to note that in Nursey’s case, when Wynn-Parry J was giving the leading judgment, after stating the facts at p 275 of the report of that case, he began by saying:
The short question which arises is whether the landlords can bring themselves within paragraph (g) of subsection (1) of section 30 of the Act of 1954, which they must do, in view of the terms of their notice, or whether the fact that an essential part of what they intend to do involves demolishing the very buildings which were the subject of the tenancy prevents them from relying on that paragraph.
That was the problem which the court set out to solve in Nursey’s case; it is a totally different problem from that which has to be solved in the present case.
I agree, for the reasons which my lord has given, that this appeal should be dismissed.
The appeal was dismissed with costs; draft of undertaking to be agreed.
