Claim for new tenancy — Proof of landlord company’s intention to demolish and rebuild the property — Oral testimony of Secretary and Directors insufficient — Hearing adjourned to enable meetings to be convened for passing necessary resolutions — Intention established — Application dismissed
The applicants, by an originating application issued in the West London County Court, applied under Part II of the Landlord and Tenant Act, 1954, for the grant of a new tenancy, for a term of 14 years, of 133, Sloane Street, London, SW1.
The premises were held by the applicants under a lease granted by the first respondents, PB (Sloane) Ltd, for a term of seven years from September 29, 1953, subject to determination after the first three years by at least one year’s notice given by the landlord, which notice was only to be given if the landlord intended to demolish and rebuild the premises on expiry of the notice. A notice was served by the landlord, pursuant to his power, determining the tenancy on the September 29, 1956.
The first respondents opposed the grant of the new tenancy on the ground that they intended to demolish and rebuild the property. They served the second respondents, the Cadogan Settled Estates Co, with notice of the proceedings under Rule 15(2) of 0.40, and the latter, under Rule 18 of 0.40, applied to be joined as respondents and an order to that effect was made.
The second respondents filed an answer alleging that they were the freeholders, and that the first respondents were their lessees under a building agreement, under which the latter were yearly tenants with a right to the grant of a 99 year building lease upon their rebuilding the premises on or before June 24, 1966. The second respondents further contended that the applicants were not entitled to the grant of a tenancy because of the intention of the first respondents to demolish and rebuild the premises on the determination of the tenancy on September 29, 1956. Alternatively, if a new tenancy was to be granted, such new tenancy should not be for more than one year, or for such other term as would secure that the first respondents should not be precluded from proceeding with the proposed rebuilding, and/or that the second respondents should not be prejudiced in their scheme for the redevelopment of the property in the event of the interest of the first respondents being determined before the proposed rebuilding had been commenced or completed.
Mr Hunter (instructed by Messrs Child and Child) appeared for the applicants, Mr Macaskie (instructed by Messrs Cooper, Bake and Co) for the first respondents and Mr Sophian (instructed by Messrs Lee and Pembertons) for the second respondents.
At the first hearing Mr Herbert Edward Wright, the Secretary of PB (Sloane) Ltd, was called to give evidence as to the Company’s intention to demolish and rebuild, of the plans submitted to the LCC, and of the progress made. Mr Stanley Frederick Glynn, who had been a director of the first respondents, till the beginning of January, 1956, when there had been a change in the Board, and Mr Arthur Edgar Rowley, who became a director in January, 1956, were also called to give similar evidence.
His Honour Judge Daynes pointed out that proof of the evidence of the Company’s intention could not be given by the oral testimony of the Secretary and directors; he adjourned the hearing in order to enable the first respondents to put their house in order by convening the necessary meetings of the Board of Directors and passing the necessary resolutions.
At the further hearing Mr Wright was recalled to give evidence as to the meetings that had since been held by the directors and of the resolutions that had been passed on January 24, 1956. By the first resolution, it was resolved “to proceed forthwith with the preparation of the demolition of the existing building and the erection of the proposed new building to the intent that this work be commenced as soon as vacant possession of the site Nos 132-135 Sloane Street be obtained, which was expected on September 29, 1956.” By the second resolution, it was “agreed that Messrs L-S be appointed architects for the rebuilding work and Mr Catch (a director) was authorized to arrange with them for the preparation of the drawings and obtaining the necessary consents”.
By the third resolution, it was resolved that “the action of Messrs S-W&G in serving notices to quit on the lessees and tenants on September 26, 1955, be ratified and confirmed.”
By the fourth resolution, it was resolved that the Company’s Secretary, HT Wright, was authorized to give evidence of the Company’s intention to demolish and rebuild at the hearing of the application by A&W Birch, Ltd, for a new lease and the evidence which he had already given to that effect was ratified and confirmed.
Evidence was also given of a revised outline plan to be submitted for approval of the LCC.
His Honour, in giving judgment said:
I pointed out it was no good one director or one secretary going into the box and saying what the Company intended. The intention of the Company is shown by a resolution either of the directors, or, if it is beyond their powers, by the Company in general meeting. In this case a resolution by the Company in general meeting is not necessary. This is within the powers of the directors, who have power to manage the Company’s business. The Company was incorporated with a Memorandum giving |page:285| wide power and with Articles which included Table A.
After referring to the various resolutions, His Honour said that the intention to demolish and reconstruct as soon as possession was obtained had been proved.
It had been argued that the intention to demolish and reconstruct could not be bona fide because it was obvious it could not be done in the time, and that it was necessary that the landlord should prove affirmatively that it would be done as a practical proposition, on the termination of the tenancy on September 29, 1956. He held, however, that on the evidence the Company had a genuine and sincere intention. A building project such as this could not be carried out in a day. The mere fact that amendments might have to be made in the plans did not militate against such a genuine and sincere intention.
A point had been raised under S31, and it had been suggested that the tenant should be entitled to a further six months by the Court exercising its powers under S31 and postponing the date of the termination specified in the landlord’s notice by six months.
There was no room, however, for S31 in a case which fell within S30(1)(f). The material word in para (f) was “intends” and “intends” did not mean “guarantees.” There were many cases, however, in which S31 might be applied, as, for instance, where an injunction might have been granted between the date of the action and the date of the hearing, or where there was an appeal.
On the question of costs, His Honour held that the first respondents should not have any costs, since evidence of the Company’s intention was lacking at the date of the first hearing.
The second respondents, however, were fully justified in applying to be joined, since the applicants were claiming a term for 14 years, which would have necessitated an order for the grant by the second respondents of a reversionary tenancy, the first respondents having merely a yearly tenancy, which might have been determined in certain circumstances, before a 99 year building lease was granted to them.
The second respondents had also urged that if a tenancy were granted to the applicants, that tenancy should be only for a year, the attention of the Court being drawn to the decision of the Court of Appeal in “Upsons Ltd v E Robins Ltd,” 1955, 3 AER 348. According to that case, the Court was entitled to take all the circumstances into account in determining the length of the new tenancy, including circumstances which it was precluded from taking into account for the purpose of refusing a new tenancy altogether.
The second respondents had also urged that a term for one year would be sufficient, since it would still be open to the tenant to apply for a new tenancy on the determination of that tenancy, notwithstanding that it had been granted pursuant to an order of Court. His Honour accordingly held that the applicants should pay the costs of the second respondents. Compensation under S37 could not be awarded, since paragraph 5 of the Ninth Schedule applied.