Landlord and Tenant Act 1954, Part II — Application for new lease — Questions as to length of new term granted and as to whether a break clause in the landlords’ favour should be included — Whether county court judge had misdirected himself in exercising his judicial discretion — Whether, if so, Court of Appeal should substitute their own discretion and, if so, with what result — Landlords succeed in appeal but no change in term granted
dental surgeon carrying on practice in rooms let to him in Upper Wimpole
Street, where there were other professional tenants, including a consultant
surgeon and consultant physician — Tenant had a five-year term ending on
December 24 1984 — His intention was to retire from practice at Christmas 1993
— He had been given a notice under the 1954 Act terminating his tenancy on its
five-year expiry date — The county court judge granted the tenant a new lease
for a term to expire on December 24 1993 — No break clause was included in the
term — The landlords had pressed for an earlier expiry date, alternatively for
a break clause in their favour enabling them to determine the new tenancy for
redevelopment on six months’ notice — The landlords, and new landlords who took
over from them, had redevelopment in mind which would require vacant possession
of the accommodation held by the tenant and other professional tenants — It was
believed that the property had a large potential for profitable residential
conversion — The landlords appealed against the county court judge’s order
Appeal reviewed, as a background to the matters raised in the appeal, the cases
of J H Edwards & Sons Ltd v Central London Commercial Estates Ltd, Upsons Ltd v E Robins Ltd and
Adams v Green, where questions as to redevelopment by the landlords and the
inclusion of break clauses had been considered — The views were noted that it
was not part of the object of the 1954 Act to confer on the tenant a saleable
asset but primarily to protect him in the
the policy of the 1954 Act to prevent development — In the exercise of his
discretion a judge had to consider all the circumstances and strike a balance
between different factors — In the present case the judge had exercised his
discretion on the basis that in his view the premises were not ripe for
redevelopment — Unfortunately, the judge misdirected himself in doing so — It
was not for him or for the court to make a judgment as to what was ripe for
development — It is a question as to what a landlord bona fide wants to do with
his own premises (subject to the tenancy), not what is considered objectively
to be ripe for development
was therefore at large before the Court of Appeal to exercise their own
discretion as to the duration of the term to be granted to the tenant and as to
whether or not it should include a break clause — The court had to carry out a
balancing exercise, taking all the circumstances into account — So far as a
break clause was concerned the court considered that it would be unthinkable to
include a break clause under which the lease could be brought to an end earlier
than the rent review date three years from the date of the judge’s decision on
July 4 1989, ie July 4 1992 — The question was whether there should be a break
clause exercisable by, say, not less than nine months’ notice in writing to
terminate the new lease at a date not earlier than July 4 1992, or should the
tenancy be for a term ending December 24 1993, when the tenant contemplated
retiring — It would be difficult for the tenant to move his dental equipment
and practice elsewhere for the short period from July 1992 to December 1993 —
The court accordingly concluded that the reasonable course was to grant the
tenant a term lasting until December 24 1993 without any break clause
Court of Appeal, substituting their discretion for that of the judge, whose
decision was faulted for misdirection, arrived at precisely the same result as
he did — Appeal accordingly dismissed
The following
cases are referred to in this report.
Adams v Green [1978] EGD 107; (1978) 247 EG 49, [1978] 2 EGLR 46,
CA
Edwards
(J H) & Sons Ltd v Central London Commercial
Estates Ltd (1983) 271 EG 697, [1984] 2 EGLR 103, CA
London
and Provincial Millinery Stores Ltd v Barclays
Bank Ltd [1962] 1 WLR 510; [1962] 2 All ER 163, CA
O’May v City of London Real Property Co Ltd [1983] 2 AC 726;
[1982] 2 WLR 407; [1982] 1 All ER 660, HL
Upsons
Ltd v E Robins Ltd [1956] 1 QB 131; [1955] 3
WLR 584; [1955] 3 All ER 348, CA
This was an
appeal by the landlords, Hill Street Properties Ltd, from the decision of Judge
Martin QC, at Bloomsbury County Court, granting the applicant (respondent to
this appeal), Leonard Becker, a new lease of accommodation at 6 Upper Wimpole
Street, London W1, for a term expiring on December 24 1993 without a break
clause.
Carlton
Christensen (instructed by Stone Rowe Brewer & Devane) appeared on behalf
of the appellants; Charles Utley (instructed by Wolfe Myers & Co)
represented the respondent.
Giving
judgment, DILLON LJ said: This is an appeal by landlords, Hill Street
Properties Ltd, against an order of His Honour Judge Martin QC made on July 4
1989 after a hearing on May 2, 3 and 24, which granted the applicant at first
instance, the respondent to this appeal, Mr Leonard Becker, a new lease of the
premises in question under Part II of the Landlord and Tenant Act 1954 for a
term to expire on December 24 1993 without a break clause. The rent was agreed.
The judge’s order provided for rent review three years from the date of his
order, that is to say July 4 1992. The landlords asked in the court below, and
ask this court on appeal, that the term to be granted should be a term expiring
on an earlier date than December 24 1993; alternatively that there should be in
the new tenancy a break clause enabling the landlords to determine the tenancy
for redevelopment on six months’ notice in writing. Such a break clause could
operate either at any stage during the term of the tenancy or only after a
certain period of the term had elapsed. It is not in doubt that any new tenancy
granted would itself continue to be within the protection of Part II of the
1954 Act. Accordingly, even if a break clause is put into the new lease the
landlords, if they exercised the break clause on the ground that they wanted to
redevelop the property, would have to be prepared to serve a notice of
termination of the new tenancy under section 25 of the Act and to satisfy one
of the specified grounds for opposing any further application by the tenant for
a new tenancy, in particular ground (f) in section 30 of the Act 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.
It is not in
doubt that, in fixing the duration of the term as he did without including any
break clause, the judge was exercising a judicial discretion. Accordingly, the
first hurdle for the appellant landlords is to satisfy this court that the
judge misdirected himself and that therefore it is permissible for this court
to review the judge’s exercise of his discretion or, as it has been put, to
exercise our own discretion afresh.
The second
hurdle for the landlords is to persuade us, if we are exercising our own
discretion, to do so in a way which would favour the landlords’ contentions
rather than in the way which appealed to the judge.
As to the
facts, the premises in question are at 6 Upper Wimpole Street, London W1. The
tenant is by profession a dental surgeon. He was granted a five-year term in
the premises from December 25 1979 by an underlease dated January 17 1980. The
landlord of the premises at that time was a Mr Julius Salter, who was himself a
retired dentist. The tenant took a lease of two rooms on the first floor of the
building. The second and third floors were a residential maisonette occupied by
Mr Salter. The tenant has installed dentists’ equipment in his premises, of
which there are photographs in the bundles. I understand the equipment is his
own, which he installed and would have to remove at the expiration of the
tenancy. There are two other medical tenants in parts of the building; a Mr
Parker, a surgeon and consultant cardiologist, has a room on the ground floor
and a room on the first floor. He also has applied for a new tenancy. In
addition there is a Dr Emmanuel, who is a physician and consultant
cardiologist, who has a tenancy of three rooms in the back extension of the
ground floor. Dr Emmanuel holds these on a tenancy until December 24 1993. The
three professional tenants share a waiting room for their patients on the
ground floor and share the services of a receptionist, who works in an area
partitioned off on the ground floor. In addition they have certain rights of
storage and rights to use an X-ray room in the basement of the building.
The former
landlord, Mr Salter, gave the usual notice under section 25 of the 1954 Act on
June 21 1984 terminating the tenant’s existing tenancy at its five-year expiry
date, but stating that he would not oppose the grant of a new tenancy. The
tenant, on June 26 1984, gave a counternotice that he would not be willing to
give up possession and on September 24 1984 he commenced these proceedings
applying for the grant of a new lease under the 1954 Act.
There then
followed a period of negotiations between the tenant and Mr Salter. They led to
nothing. The judge recorded in his judgment a submission that one important
reason why the application did not come to court during Mr Salter’s lifetime
was that negotiations to agree a new lease went on and Mr Salter kept changing
his mind. That is a subsidiary aspect of the matter.
Mr Salter, the
original landlord, died in 1987. It appears that his wife, who had lived in the
maisonette in the house, also died. His daughters proved his will and they
wrote to the tenant’s solicitors on July 22 1987 stating that it was intended
to carry out works to the property for which vacant possession of the whole was
required and, with that in mind, they wanted to agree both the rent payable and
the length of lease and the possibility of asking the court for permission to
exclude the security provisions of the 1954 Act, although it was said that that
was not essential but merely more convenient. There was reference to various
forms of work that might be carried out.
The present
landlords bought the whole building at auction from the executrices on July 11
1988. They bought it with full notice of the existing tenancies and subject, so
far as Mr Becker is concerned, to the right of Mr Becker to a new lease of the
premises held by him under the underlease, which I have mentioned, and to
similar rights of Mr Parker and also subject to the existing underlease to Dr
Emmanuel. The auctioneer’s particulars of the property state that in
the auctioneer’s opinion the property has tremendous potential for residential
conversion and with the possibility of adding a fourth floor, subject to the
necessary consents.
The interest
which the present appellants, Hill Street Properties, acquired from the
executrices of Mr Salter was under a 999-year lease from a date in 1927. The
freehold reversion is held by the Howard de Walden Estate.
The new
landlords were bound by the notice which had been served by Mr Salter not
opposing the grant of a new tenancy. Mr Salter had not himself filed any answer
in the proceedings, but the new landlords by their own answer when they had
been added to the proceedings clearly stated that they did not oppose the grant
of a new tenancy. The substantive question for the judge was what the duration
of the new tenancy should be. The other terms, except possibly as to the rent
review date, were agreed between the parties.
The general
background in law is covered by a relatively small number of the cases to which
we have been referred. The first case I would wish to mention is Edwards (J
H) & Sons Ltd v Central London Commercial Estates Ltd decided in
this court on December 21 1983 and reported in (1983) 271 EG 697, [1984] 2 EGLR
103. The leading judgment was given by Fox LJ, with whom Cumming-Bruce LJ
concurred. There were applications before the court for new tenancies of two
shop premises, 131 and 131A Tottenham Court Road, London W1, and these were part
of a parade of small shops extending on both sides of the main entrance to a
building, which was by then an hotel called the Grafton Hotel. The landlords
were minded to refurbish the Grafton Hotel and for that purpose to incorporate
into the hotel premises the areas of the shops. One of the shops had been in
the occupation of one of the tenants, Edwards, since a date in 1958. The other
shop was in the occupation of a different tenant, Eastern, from a considerably
more recent date. The landlords, however, were not in a position to make out a
case for opposing a new tenancy under ground (f), which I have read. The
judge in the county court in those circumstances had granted to the applicants
for new tenancies, Edwards and Eastern, long terms, of 12 years in Edwards’
case and 10 years in Eastern’s case, for new leases, without any redevelopment
break clause in either lease. This court disagreed with that view.
In the
judgment of Fox LJ, at p 698 in the right-hand column, there are references to
a number of specific matters which were relied on by the judge. One of these,
under reference (iii), reads as follows:
(iii) In the judge’s view the continued existence
of nos 131 and 131A would not be a real impediment to enhancing the character
of the hotel. The judge formed that view after inspecting the hotel, but I
think it is a matter for the hotel company to decide what, in the interests of
its business, is the best way of enhancing the character of the hotel.
Fox LJ went
on:
Again, I do
not think that the fact that, as the judge thought, ‘the hotel is at present
operating quite well’ is of assistance. It is a matter for the company to
decide whether it could be operated better by incorporating the shops. Much the
same applies to the opinion that ‘the hotel can live fairly happily with the
scheme which will now give them the space occupied by the shops to the left’.
Now, as I
have indicated, it seems to me that the evidence establishes that the superior
landlord for the time being may wish to develop nos 131 and 131A as part of the
hotel. In that connection it is important to bear in mind that, in view of the
agreement of June 1982, the company is likely soon to be the superior landlord
of the tenants of the shops for the purposes of the 1954 Act. It is not satisfactory
to look at the matter simply from the point of view of the appellant landlord.
If it is
likely that the superior landlord for the time being may wish to develop the
property, then (since it is not the policy of the 1954 Act to inhibit
development) he should not be saddled with a lease which may prevent such
development. In that connection a present intention to redevelop immediately is
not necessary . . . Accordingly, it seems to me that it must be wrong in
principle, in the present case to order the grant of new leases for such
substantial periods as 12 and 10 years respectively without development ‘break’
clauses. That has the effect of preventing development without the consent of
the tenants during the period of the leases. I conclude, therefore, that the
judge’s decision was wrong and that the matter is at large before us.
In
considering what would be proper leases in the circumstances of this case I
think that the predominant considerations are two. First, that so far as
reasonable the lease should not prevent the superior landlord from using the
premises for the purposes of development. Secondly, that a reasonable degree of
security of tenure should be provided for the tenants. Those considerations are
to some degree in conflict. The function of the court is to strike a reasonable
balance between them in all the circumstances of the case.
I interject
that that, as I see it, is the balancing exercise that this court would have to
carry out if the judge has misdirected himself in the purported exercise of his
discretion. Fox LJ continues:
I bear in mind
that Edwards has a long-established business at no 131 and disturbance might be
a considerable hardship to the firm. Eastern, on the other hand, has come to
its premises a great deal more recently.
I also bear
in mind that it is not the purpose of the Act to give a tenant saleable assets
but rather to protect him in the conduct of his business (see Gold v Brighton
Corporation [1956] 1 WLR 1291 at p 1294 per Denning LJ).
In the upshot
this court granted each tenant a new lease for seven years, with a
redevelopment break clause such that the notice in writing referred to in it
should not expire earlier than the expiration of five years from the
commencement of the term.
Fox LJ’s
reference to Edwards’ long-established business and that disturbance might
therefore be a considerable hardship to the firm picks up certain passages in
another authority to which we were referred, Upsons Ltd v E Robins
Ltd [1956] 1 QB 131. That was a case where the facts were somewhat
different. The tenant was a company which carried on a chain of stores. The
landlords were a much smaller company which had only one shop in other premises
but, there being a real risk that they might have to vacate those other
premises, they had purchased the reversion in the premises with which the
proceedings were concerned with the intention of occupying them on the
termination of the current tenancy. They would be able to rely on ground (g)
in section 30 of the Act, when they had been landlords for at least five years.
At the time of the relevant proceedings they were just short of that position
and the court granted the tenant a new lease, as it had to, but for a term of
one year only. The court considered that it was appropriate to take into consideration
that the landlords would soon be able to satisfy condition (g) — they
would soon have completed their five years — but they also considered questions
of hardship. In relation to hardship, Denning LJ said at the foot of p 138:
In my judgment
the words ‘in all the circumstances’ [which are the words in section 33 of the
1954 Act] enable the court to consider hardship as well as other circumstances.
Then, said
[counsel], the judge founded himself on the ground that the landlords would
have quit their present premises on February 1, 1957, whereas there was no
admissible evidence to that effect. The judge did not say that they would have
to leave their present premises; he said that there was a danger of a real risk
that they would have to leave them. There was ample material on which the judge
could so hold, and there was no reason why he should not take that into
account.
[Counsel]
then argued that the judge was wrong because he took into account the fact that
Upsons Ltd have a chain of some 250 shops, and that the loss of one would be a
comparatively small matter for them, whereas the landlords have just this one
shop and they would suffer much more. I see no reason why the judge should not
take that into account.
The reasoning
of the judge was upheld.
Hodson LJ, at
p 140, said:
The second
ground in the notice of appeal is: ‘that the judge treated the question of the
length of term to be granted as if it were an issue of greater hardship between
the applicants and the respondents and thereby erred in point of law.’ I do not quite follow that, because the
judge, in my opinion, was clearly right in considering the question of
hardship. Hardship was one of the ‘circumstances’ to be considered. This case
emphasised the hardship on the landlords if they did not get their premises —
they already have empty flats in the upper floors — being at risk of losing
their existing premises, and having no other shop.
Morris LJ, at
the foot of p 141 and the top of p 142, said:
But the mere
fact that a landlord is not able to oppose an application for a new tenancy
does not seem to me to limit the ambit of the words ‘in all the circumstances’
in section 33 of the Act. A consideration of ‘all the circumstances’ of the
case, if it is careful and complete (as it appears to me was the consideration
by the judge in the present case) may inevitably involve considering how the
‘circumstances’ tell on the fortunes of those concerned.
We were also
referred to Adams v Green, which was decided on March 20 1978 and
is reported in (1978) 247 EG 49, [1978] 2 EGLR 46. The leading judgment was
given by Stamp LJ. That again was a question of the inclusion of a break clause
to allow reconstruction in view of the prospects of redevelopment of the current
landlords or their successors. The county court judge had ordered a new lease
for seven years with no break clause in respect of a shop which was one of a
line of 12 of which seven had similar break clauses. The Court of Appeal
allowed an appeal by the landlord. Stamp LJ said at p 51:
It is,
however, to be observed that the landlord would be entitled to object
altogether to the grant of a new lease if he had the immediate intention of
redeveloping the property — see section 30(1)(f) of the Act — and I would
have thought it not inappropriate to include in the proposed new tenancy
agreement a provision reflecting the probability or likelihood or possibility
of development in the near future.
There are, in
my judgment, several considerations to which the learned judge in the court
below did not refer which persuaded me that he was wrong to conclude that
because the property was not, in his view, ripe for redevelopment there should
be no rebuilding clause.
In the first
place, there can be no certainty regarding the future. There can be dramatic
changes in market conditions, and no certainties today as to what may be a
profitable redevelopment in four or five years’ time. It is to be observed, so
far as it is relevant, that the judge did not think redevelopment on the cards
after the end of seven years.
The second
thing which I think falls to be taken into consideration is that it was no part
of the policy — and I underline the word ‘policy’ — of the 1954 Act to give
security of tenure to a business tenant at the expense of preventing
redevelopment. . . . If the landlords here intended to redevelop immediately,
irrespective of whether the property was, in the words of the judge, ‘ripe for
development’, the landlords could, as I have said, object to the new tenancy,
and where redevelopment is in prospect I would have thought it right that the
prospect should be reflected in the terms of the tenancy agreement.
. . .
It is no
doubt correct that if the break clause is inserted the property comprised in
the tenancy will be of less value on the market than it would otherwise be; but
as Denning LJ, as he then was, said in Gold v Brighton Corporation
[1956] 1 WLR 1291 at p 1294, it was no part of the 1954 Act to confer on a
tenant a saleable asset: it was primarily to protect him in the enjoyment of
his business.
In the present
case, as I read the judgment of His Honour Judge Martin, he has exercised his
discretion on the basis that in his view the premises were not ripe for
redevelopment. I refer to passages in paras 19, 21 and 25 of his judgment
which, as I have indicated, was a reserved judgment. At para 19 he says:
Mr Horne, a
chartered surveyor and senior partner in the firm of Horne & Sons, was
called to give evidence. The Landlords deputed him to control the development
of this building. He said the building was old and tired and needed complete
redevelopment. I do not accept that. I have seen no surveyor’s report to that
effect. I do not even know if there has been one. He thought it would take
about 1 year to get all the planning permission and consents and so on; to
start work, about 1 year would cover it. I dare say that is correct.
At para 21:
I have not
heard from a director of the company [that is, the present appellants]. I do
not know if there is urgency to refurbish in reality. Were I to grant to the
Tenant a lease of a few years, the Landlords could still carry out a
modernisation of the 2nd and 3rd floors if they could get licence from the
freeholders and planning permission to add on a 4th floor. There is no reason
why they should not do so in that way and in that time. They can still develop
the basement or part of it whilst Mr Becker is there. He does not need it.
There is plenty of space there.
Then at para
25, after referring to two cases, which I need not mention, he said:
So those two
cases are clear authority for the proposition that where property and land are
ripe for redevelopment and that redevelopment is desirable, the terms of a new
lease should be such that they do not impede such redevelopment. In my
judgment, this building is not ripe for redevelopment. I think it has got many
years of use ahead of it and can be used for its present purposes. I am not
sure what is meant by desirable. It is not evident that conversion into luxury
flats is desirable. I bear in mind section 33 of the Landlord and Tenant Act
1954.
Whether or not
a particular development or redevelopment proposed by the landlord is
objectively desirable in the eyes of the judge seems to me to be irrelevant.
Obviously the development must be such that it obtains, or is likely to obtain,
planning approval and any necessary byelaw consent, but if the planning
authorities are prepared that there should be residential flats in a particular
area, if indeed permission is needed for a change of user, then the
desirability of having flats is not a question which enters consideration under
the 1954 Act. Again, whether the property and land are ripe for redevelopment
may be a factor in showing that the landlords’ proposals for redevelopment are bona
fide proposals which have good prospects of being carried into effect, but
ground (f) can be made out — that the landlord wants to demolish and
reconstruct the premises — even though the existing premises might, had the
landlord not formed that intention, have many years of useful life before them.
It is a question of what the landlord bona fide wants to do with his own
premises (subject to the tenancy), not what is considered objectively to be
ripe for redevelopment; for example that the premises are so worn down and so
old and tired that they are in need of complete redevelopment.
The learned
judge’s directions to himself, in my judgment, fall foul of the law as
expounded by Stamp LJ and Fox LJ in the passages which I have read. It
therefore follows that the matter is at large before us to exercise our own
discretion as to the duration of the term of the new lease which Mr Becker is
to be granted and as to whether or not it should include a break clause.
Here I have
very much in mind the fact that the term which the judge has granted is not a
very long term. It is merely until December 24 1993, that is to say, at the
time of the judge’s decision, just under four and a half years. One of the
factors to be borne in mind in the balancing exercise to which Fox LJ referred
is that there should be a reasonable degree of security of tenure provided for
the tenants. Mr Becker has been the tenant of these premises since Christmas
1979. He had been before that a tenant of other premises in Wimpole Street. His
business is a specialised dentistry practice, such as is obviously most
conveniently located in the Harley Street/Wimpole Street neighbourhood. He has
been in that neighbourhood since about 1962 and before that he had practised
elsewhere in London. At the time of the hearing before the learned judge he
was, as he said in evidence, 66 years old. He is self-employed and he
contemplated retirement at Christmas 1993. That is obviously a factor which the
judge took into account in fixing that date as the date to which the new
tenancy should run.
There were
plainly a number of other factors to be sorted out by the present landlords
before they proceeded to carry out redevelopment of the property. I have read
the passage in the judgment where the evidence was given that it would take
them 12 months to get on site. That, again, is something to be taken into
account. One suspects that they would not be over-surprised if it took a little
longer. But they obviously purchased this property with a view to redeveloping
it as residential flats. They have prepared various schemes, though they have
not yet alighted on the one preferred version and they have not made any
necessary applications for planning permission — should that be required — or
for byelaw consent, or anything of that nature, or superior landlords’ consent.
I would, for
my part, have thought it unthinkable to include in the lease a break clause
under which the lease could be brought to an end at a date earlier than the
rent review date three years from the date of the judge’s decision, July 4
1989.
It was urged
upon us by Mr Christensen, for the landlords, that the fact that the tenant has
had the benefit of holding over under the 1954 Act was a factor to be taken
into account by the court in fixing the terms of a new tenancy. Reference was
made in his skeleton argument to the case of London & Provincial
Millinery Stores Ltd v Barclays Bank Ltd [1962] 1 WLR 510 where
there are indeed statements to that effect. In the present case Mr Becker, from
early 1985, paid rent to Mr Salter at a rate considerably higher than the rate
of the rent under his previous lease. In view of this, and in view of the fact
that until the present landlords came on the scene there was no one who had any
ability to redevelop the premises, I do not see why the fact that he had the
benefit of holding over from Christmas 1984 until August 1988 comes into the
picture at all. All that time it was common ground that he was entitled to a
new tenancy and the rent had been increased. It was merely a question of how
long and how much rent. But he would be there anyhow and there was no live
question of redevelopment. Even the letter from the executrices’ solicitors
indicating a desire to redevelop does not indicate that there was any practical
ability on their part to carry out the redevelopment or any plans which would
have made redevelopment a live issue at that time.
But then the
question is: should there be a break clause exercisable by, for instance, not
less than nine months’ previous notice in writing to determine the new lease at
a date not earlier than July 4 1992 or should the tenancy be until December 24
1993 when Mr Becker contemplates retiring and which was the date picked on by
the learned judge?
Our
discretion, in my view, is unfettered by the judge’s decision, but we have the
fact, as I see it, that it would be very difficult indeed for Mr Becker to
locate his dental equipment and his practice elsewhere for the short period
from July 1992 to December 1993. Taking that into account with the other
factors I have mentioned, I conclude that the reasonable course in this case is
that Mr Becker should be granted a new tenancy until December 24 1993, without
any break clause. Accordingly, I would, for my part, dismiss this appeal.
BALCOMBE LJ said: I agree with Dillon LJ that, as the learned judge misdirected
himself as to the principles to be applied, we are free to substitute our
discretion for his. In that connection I refer to a passage in the speech of
Lord Wilberforce in O’May v City of
referring to section 35 of the 1954 Act, which relates to the terms of the
tenancy to be granted by the court under the Act.
He says:
This section
contains a mandatory guideline or direction to ‘have regard to’ the terms of
the current tenancy and to all relevant circumstances. The words ‘have regard
to’ are elastic: they compel something between an obligation to reproduce
existing terms and an unfettered right to substitute others. They impose an
onus upon a party seeking to introduce new, or substituted, or modified terms,
to justify the change, with reasons appearing sufficient to the court . . .
If such
reasons are shown, then the court, applying the words ‘all relevant
circumstances’ may consider giving effect to them: there is certainly no
intention shown to freeze, or in the metaphor used by learned counsel, to
‘petrify’ the terms of the lease. In some cases, especially where the lease is
an old one, many of its terms may be out of date, or unsuitable in relation to
the new term to be granted. If so or for other good reasons shown, the court
has power to order a modification by changing an existing term or introducing a
new one (eg a break clause, cf Adams v Green . . .) Before doing
so it will consider any objections by the tenant, and where there is an
insoluble conflict, will decide according to fairness and justice.
In my
judgment, for the reasons Dillon LJ has stated, there is such an insoluble
conflict here and it seems to me, again for the reasons he has stated, that
fairness and justice require us to provide that the term should run until the
date when Mr Becker reasonably expects to be able to continue in practice. I,
too, would therefore dismiss this appeal.
BELDAM LJ also agreed and did not add anything.
The appeal
was dismissed with costs.
