Landlord and Tenant Act 1954, Part II, section 30(1)(f) — Preliminary point as to whether landlords had demonstrated their intention to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part of it and that they could not reasonably do so without obtaining possession of the holding — Plaintiff tenants occupied a menswear shop of which defendants were landlords and the latter had served a notice under the Act determining the tenancy and stating that they would oppose the grant of a new tenancy on the ground mentioned in section 30(1)(f) — After citing Cunliffe v Goodman and Fisher v Taylors Furnishing Stores Ltd, the judge referred to evidence given on behalf of the landlords as to planning permission and their scheme to develop the site comprising the subject premises and three other shop units, erecting thereon three retail outlets — There had been certain changes of circumstances and revision of the original planning
The following
cases are referred to in this report.
Cunliffe v Goodman [1950] 2 KB 237; [1950] 1 All ER 720, CA
Fisher v Taylors Furnishing Stores Ltd [1956] 2 QB 78; [1956] 2 WLR
985; [1956] 2 All ER 78, CA
Little
Park Service Station Ltd v Regent Oil Co Ltd
[1967] 2 QB 655; [1967] 2 WLR 1036; [1967] 2 All ER 257, CA
This was a
preliminary point raised by the plaintiff tenants, A Levy & Son Ltd, in an
action between them and the defendant landlords, Martin Brent Developments Ltd
(a company in Dixon’s Group plc) concerning the grant of a new lease to the
plaintiffs of premises at 171A High Road, Ilford, Essex.
Stephen Shaw
(instructed by Slaters) appeared on behalf of the plaintiffs; R W Bailey-King
(instructed by Titmuss, Sainer & Webb) represented the defendants.
Giving
judgment, MR JULIAN JEFFS QC said: This is a preliminary point in an action
concerning a lease. The preliminary point that I am to try is this: whether the
defendant has the requisite intent to demolish or reconstruct the premises
comprised in the holding, or a substantial part of those premises, or carry out
substantial work of construction in the holding or part thereof within the
meaning of section 30(1)(f) of the Landlord and Tenant Act 1954.
The premises
are 171A High Road, Ilford, which are at the moment occupied by the plaintiffs,
who run a menswear shop there. The defendants are the landlords of the
premises. The lease expired on March 25 1987 and in April 1986 the landlord
served notice determining the lease.
I now turn to
section 30(1)(f) of the Landlord and Tenant Act 1954:
The grounds on
which a landlord may oppose an application under subsection (1) of section 24
of this Act are such of the following grounds as may be stated in the
landlord’s notice under section 25 of this Act or, as the case may be, under
subsection (6) of section 26 thereof, that is to say:–
(f) that on
the termination of the current tenancy the landlord intends to demolish or
reconstruct the premises comprised in the holding or a substantial part of
those premises or to carry out substantial work of construction on the holding
or part thereof and that he could not reasonably do so without obtaining
possession of the holding.
The law, as I
understand it, is set forth in vol 2 of Woodfall: Landlord and Tenant
28th ed, at p 2423:
It is not
sufficient for the landlord merely to assert that he ‘intends’ since he may
change his mind once he gets possession. An intention connotes that the
landlord does more than merely contemplate; it connotes a state of affairs
which he decides, so far as in him lies, to bring about, and which, in point of
possibility he has a reasonable prospect of being able to bring about, by his
own act of volition; the landlord does not ‘intend’ if he has too many hurdles
to overcome or too little control of events. The intention must be genuine and
not colourable; it must be firm and settled, not likely to be changed. It must
have moved out of the zone of contemplation — the sphere of the tentative, the
provisional and the exploratory — and have moved into the valley of decision.
I pause there
to observe that those words are taken from the judgment of Asquith LJ, as he
then was, in Cunliffe v Goodman [1950] 2 KB 237:
The court may
readily be satisfied of the landlord’s intention when the premises are old and
worn out or are ripe for development, the proposed work is obviously desirable,
plans and arrangements are well in hand, and the landlord has the present means
and ability to carry out the work; but the court will not be so readily
satisfied when the premises are comparatively new or the desirability of the
project is open to doubt, when there are many difficulties still to be
surmounted, such as the preparation and approval of plans or the obtaining of
finance, or when the landlord has in the past fluctuated in his mind as to what
to do with the premises.
Nevertheless,
the word ‘intends’ is not to be equated with the words ‘is ready and able’ so
as to impose on the landlord the onus of proving that he has not only finally
determined the course proposed but has also taken all necessary steps for the
satisfaction of any requisite conditions to which the course proposed is
subject. It is sufficient that there is a reasonable prospect that he will be
able to bring about that which he says he intends. There must not be so many
obstructions yet to be surmounted that he cannot truly be said to ‘intend’ it.
That is the true relevance of ability in relation to intention. A fortiori,
if it is proved that it is impossible to carry out the intention (eg
because he cannot obtain the necessary finance) then it would seem that he must
fail. The prudent landlord who wishes to prove his intention beyond doubt will
take steps at the earliest possible moment to ensure that he has the ability to
carry out his intention and, in particular, will see to it that planning
permission and all necessary licences and consent are obtained, plans,
specifications and working drawings prepared, contracts (albeit conditional
upon possession being obtained) for the work entered into, materials ordered
and finance arranged. But if any necessary permission or consent has not been
obtained the landlord may still ‘intend’ within the meaning of the section if
he can establish a reasonable prospect of being able to do what he says he
intends, and the test is an objective one: would a reasonable man believe, on
the evidence, that there is a reasonable prospect of getting that permission or
consent?
I have those
principles firmly in mind in deciding this case and in applying the facts to
the law. I would also refer to a short passage from Woodfall on p 2420:
The words
‘intended work’ in section 31A(1)(b) mean the work which the landlord actually
intends to do and the court has no jurisdiction to decide whether the
landlord’s purpose could, or should, be achieved by doing some different work
which would not involve the landlord requiring possession of the whole holding.
I was referred
to a number of authorities. I have already briefly mentioned Cunliffe v Goodman,
which is referred to in the section of Woodfall that I have just read.
Mr Shaw, for the plaintiffs, referred me to Fisher v Taylors
Furnishing Stores Ltd [1956] 2 QB 78 and in particular to a passage in the
judgment of Denning LJ, as he then was, on p 84. This reads as follows:
The sort of
case which I had in mind was where a landlord wants to get possession of a shop
for his own business and for that reason buys it over the tenant’s head a year
or so before the lease comes to an end. He knows that he cannot oppose a new
lease under section 30(1)(g) because he bought the property less than five
years before the end of the tenancy. So he puts forward a case for
reconstruction under 30(1)(f), hoping to get possession on that ground. In such
circumstances the court must be careful to see that section 30(1)(f) is fully
satisfied before it allows him to get possession. For this purpose the court
must be satisfied that the intention to reconstruct is genuine and not
colourable; that it is a firm and settled intention, not likely to be changed;
that the reconstruction is of a substantial part of the premises, indeed so
substantial that it cannot be thought to be a device to get possession; that the
work is so extensive that it is necessary to get possession of the holding in
order to do it; and that it is intended to do the work at once and not after a
time. Unless the court were to insist strictly on these requirements, tenants
might be deprived of the protection which Parliament intended them to have. It
must be remembered that if the landlord, having got the possession, honestly
changes his mind and does not do any work of reconstruction, the tenant has no
remedy. Hence the necessity for a firm and settled intention. It must also be
remembered that the Act is intended for the protection of shopkeepers, and that
this protection would be nullified if a big concern could buy the property and
get possession by putting in, say, a new shop-front. Hence the necessity for
the work being substantial.
I also bear
firmly in mind that passage.
With that in
mind, I come now to the facts of the case and would refer, first, to the
affidavit of Mr Michael Wallace Heaton, sworn on September 17 1986. He is a
director of the defendant company. At the date of that affidavit he deposed
that the defendant opposed the grant of the new tenancy and had the intention
to redevelop the site comprising 171, 171A, 173 and 175 High Road, Ilford, by
demolishing the four existing units and erecting three two-storey retail units,
and he then went on to exhibit certain documentary evidence.
He set forth
additional facts. The defendant had originally applied to the Redbridge Borough
Council for planning consent on December 13 1985. This planning application
reflected the company’s intention to develop the whole site, and that would
have meant obtaining a surrender of the lease relating to 173A which does not
expire until September 28 1991. Planning consent was granted on April 14 1986
but since that date the tenants of 173A proved unwilling to agree to a
surrender of their lease and the defendant decided to modify the proposed
development involving the demolition and rebuilding of the remaining shops.
They submitted
a revised planning application on August 1 1986 which was, at the time of
swearing of the affidavit, to be considered
In para 6 he
deposes to the fact that the defendant is a subsidiary of Dixon’s Commercial
Properties Ltd, which itself is a wholly-owned subsidiary of Dixon’s Group plc.
Dixon’s Commercial Properties Ltd is a property development company within
Dixon’s Group. Its development activities are summarised in a corporate profile
which he exhibits. Dixon’s Commercial Properties Ltd carries out its developments
through a number of subsidiary companies, including the defendant company,
which itself has been responsible for 30 developments during the last six
years.
Circumstances
changed, and when Mr Heaton came to swear his affidavit of February 17 1987 he
deposed as follows. He refers to his first affidavit and the revised planning
application which was submitted on August 1 1986, but that planning application
had not been considered. On November 13 1986 his architect submitted a further
planning application relating to the properties at High Road, and this was
considered on December 11 and approved subject inter alia to completion of
satisfactory legal agreement securing the right of access to an adjoining
property.
I would only
say that that matter has now, it stands accepted, been satisfactorily resolved.
He goes on to
say that New Park Developments Ltd, an associated company of Martin Brent
Developments Ltd within the Dixon’s Group, has also contracted to purchase the
leasehold property at 173A which he referred to in his previous affidavit,
completion being fixed for March 24 1987, and he exhibits a copy of the
contract. He continues that in short the defendant is now able to implement the
planning consent granted on April 14 1986. It has also received approval for
further planning applications to which I have referred. Certain documents were
then exhibited.
I do not
propose to go through all the documentation in this case and certainly not all
the plans. It is enough that I have examined those plans and I am entirely
satisfied that in order to carry them out it will be necessary to demolish all
the shops. The plans are of sufficient detail. They show the ground plan and
the elevations of the properties and that the property as proposed to be
developed consists of a single substantial, though subdivided, building.
Planning permission has been obtained. The question of rights of access has
been dealt with. There remain, however, other questions, such as whether
finance has been satisfactorily demonstrated to be available. That is a point
specifically raised by Mr Shaw.
Now I would
mention in this connection p 4 of Mr Heaton’s exhibit MWH1 in which he gives
the Dixon’s Commercial Properties corporate profile. He refers to a property
portfolio of a current value in excess of £150m; activities for some 10 years
as property developers; an annual development programme in excess of £40m; in
1986-87 property transactions in the region of £75m, with control of 250
freehold and long leasehold properties with a portfolio value in excess of
£125m; activity in the United Kingdom property market dealing with substantial
properties in Avon, Slough, Cardiff, Dunstable and Stevenage, and a relatively
smaller property at Stratford Place, London W1. He goes into details of recent
developments in various other parts of the world.
Now, I am
satisfied of two things. One is that detailed plans have been prepared, the
carrying out of which will call for the total demolition of the properties and,
second, that adequate finance is available. It would appear to me to be
pedantic in the circumstances of this case to expect the court to go into
questions of the precise origin of any funds that are to be used, which bank
account is to provide them or anything of that nature. The defendants are
clearly a very large operation dealing with properties on a great scale and
over the years have been able to provide funds for developments much greater
than that which is before the court at the moment. That stands unchallenged and
I do not think that it is anything more than a pedantic point to suggest that I
should go into any financing relating to this property specifically.
I have no
reason to doubt the bona fides of the defendants, and the material in front of
me shows that all preliminary steps have been taken with regard to bringing
this development into effect. It is fair to say that the final steps have not
been taken. There is no contract for demolition, no contract for building; no
materials have been bought.
But one has,
in my judgment, to look at the circumstances as a whole in deciding whether the
defendants have satisfied the requirements of para (f) as expounded in the
authorities to which I have referred. I think they have. One needs to apply a
degree of commonsense, and commonsense would suggest that it would be premature
to go into such questions as building contracts in the circumstances of this
case. Having prepared their adequately detailed plans, the defendants should be
in a position to know whether they are going to go forward with them. Without
that knowledge such matters as the negotiations of building contracts would be
so much wasted effort.
So I turn now
to specific points which were raised by Mr Shaw. Under the first heading, if I
may put it that way, was the question whether the defendants had adduced
sufficient evidence to show that such intention as they have is capable of
implementation and will be implemented. I am satisfied on both those matters
for the reasons that I have already indicated. Second, it was put to me that if
I hold that there is sufficient evidence then they have not discharged the
burden of showing that the type of work envisaged could not be carried out
without obtaining the possession of the holding.
In referring a
short time ago to the first affidavit of Mr Heaton I indicated that originally
it was planned to develop only half of the site because at that time it was not
possible to develop the whole of it. But now it is possible to develop the
whole of it, and this application could well have come before me had just the
one shop in question been available for redevelopment if that was going to be
demolished. But the question under the Act is whether the landlord intends to
demolish or reconstruct the premises, not whether he could carry out a totally different
plan on some smaller part of the premises.
Quite clearly
this plan — which is at present envisaged and in respect of which I have no
doubt there is a firm intention of carrying it out — could not be carried out
without obtaining possession of the holding.
As to where
the funds are to come from — which was a further matter raised before me — I
think that that is an unreal consideration in the context of this case. Quite
clearly funds are available.
I was also
referred by Mr Shaw to the case of Little Park Service Station Ltd v Regent
Oil Co Ltd [1967] 2 QB 655. That case concerned a petrol filling station
which the landlords wished to redevelop, but the facts of that case are very
different from those of the instant case, and in my opinion it is distinguishable.
In the Little Park Service Station case the business was going to be
carried out while the demolition took place, save perhaps for a week. That
certainly does not apply to the present case. There was also a special
provision in the lease enabling the landlords to enter the premises and do
substantial work thereon, which is a wider clause than the covenant 2(9) in the
lease relating to the premises which I am at present considering, and on the
facts of that case it would appear that they could have done their required
development of the premises without closing the building and relied on the
powers they had under the lease. This certainly does not apply to the instant
case.
I am therefore
satisfied that the defendants have established their case and that the
preliminary point will be found in their favour.