Eastern Power Networks plc (formerly EDF Energy Networks (EPN) plc) v BOH Ltd and others

Landlord and Tenant Act 1954 – Business lease – Statutory continuation of lease – Respondent asserting right of way across appellants’ land to lay and maintain electricity cables pursuant to 1953 lease – Whether lease continuing after expiry of contractual term – Whether tenancy determining under section 25 notice given by one of several reversioners under severed reversion – Whether respondent estopped from asserting invalidity of notice – Whether judge erring in law in finding that no merger of respondent’s rights as freeholder and tenant — Appeal dismissedThe respondent electricity supplier operated a substation on the Wembley Stadium trading estate, the access to which was across the appellants land. Underground electricity cables also crossed their sites.Following claims by the appellants that it had no right to cross their land or to maintain its underground cables, the respondent brought proceedings to exercise its rights over the disputed sites. It contended that it had the necessary rights pursuant to a lease of the substation site and other land that had been granted to its predecessor in 1953 by a common predecessor in title of the parties. The lease included a right of way over the lessor’s land for all purposes necessary for the enjoyment of the demised premises, together with a right to lay and maintain electricity cables under that land. The contractual term had expired in 1994. The respondent had since acquired the freehold of the substation site, but it contended that the lease had continued pursuant to Part II of the Landlord and Tenant Act 1954.The case turned on: (i) the validity of a notice, under section 25 of the 1954 Act, served in 1993 by the then freeholder of the substation site; and (ii) whether the lease, or part of it, had otherwise been determined by merger with the freehold acquired by the respondent or by forfeiture or surrender. The judge held that although there had been no merger, the respondent had rights of access over part of the appellants’ land and a right to maintain the underground cables. That conclusion was sufficient for the respondent’s purposes: [2009] EWHC 3193 (Ch); [2009] 49 EG 71 (CS). The appellants appealed, contending, inter alia, that the judge had erred in law in finding that no merger had taken place.Held: The appeal was dismissed. The ordinary rule at law was that the coalescence of a lease and its reversion in the same party (A) in the same right would result in a merger and extinguishment of the lease. In equity, however, it was open to A to form an intention, and to declare accordingly, that that should not happen. Equity had further developed the principle that where A did not expressly evince such an intention, or where there was no other evidence of such an intention on its part, there was a presumption against any intention for a merger if such would be against A’s interest. The equitable principles prevailed over those that applied at law: Ingle v Vaughan Jenkins [1900] 2 Ch 368 considered; Capital & Counties Bank Ltd v Rhodes [1903] 1 Ch 631 applied. The appellants’ submission amounted to a proposition that because a merger was said to have been in the interests of the co-reversioners, the respondent should be presumed to have intended a merger even though it would go against its interest. Putting the case in that way departed from established equitable principles and adopted contrary principles that would or might advantage third parties with whom the respondent had no commercial relationship and to whom it owed no duties. The judge had to consider whether there was evidence that the respondent had intended a merger. He did not so find. He then had to consider whether a merger was in the respondent’s interest. He found that it was not, which led him, correctly, to conclude that he should presume that no merger was intended. That was the approach that the court in Ingle (endorsed by Rhodes) required him to adopt and he was correct to do so. It was irrelevant that the lack of a merger might turn out to be contrary to the interests of the co-reversioners.Mark Warwick QC (instructed by Colman Coyle LLP) appeared for the appellants; Christopher Stoner (instructed by Forsters LLP) appeared for the respondent.Eileen O’Grady, barrister