Business premises – Company A owning freehold of office building – Company B in same group granting lease of part of building – Tenant assigning lease to plaintiffs – Both parties to lease under impression that B owned building and that Landlord and Tenant Act 1954 applied – Whether tenant by estoppel of business premises entitled to protection of 1954 Act
On 15 July 1960 the defendant company (Life) bought the freehold of the office building at 31-33 Newport Road, Cardiff. In 1978 another company in the General Accident Group (Fire) let part of the building (the premises) to Eagle Star Insurance Co Ltd. In December 1988 Eagle Star assigned the lease to the partners in a firm of solicitors (the solicitors). At all material times both parties to the lease were under the impression that Fire, not Life, was and remained the owner of the premises, and that the provisions of the Landlord and Tenant Act 1954 applied. In February 1992 Fire served a section 25 notice terminating the tenancy . The solicitors served a counternotice under section 29 and applied for a new tenancy. In June 1992 Fire served an answer which contained an application under section 24A to the court to determine a reasonable rent. In November 1993 Life granted a reversionary lease of the premises to Fire, although it did not realise then that an error had been made in 1978.
In February 1994 Life sold the freehold in the building. The solicitors withdrew their application for a new tenancy and vacated the premises in May 1994. In October 1995 the solicitors applied successfully to strike out the section 24A application and the judge allowed Life’s appeal. The solicitors appealed to the Court of Appeal. It was accepted that a tenancy by estoppel came into being on May 15 1988 between Fire and Eagle Star, and that by virtue of the assignment by Eagle Star that tenancy passed to the solicitors. However, they contended that the tenancy was not one to which the provisions of the 1954 Act had ever applied because it was not a tenancy as defined in section 69, not being created immediately or derivatively out of the freehold, and that Fire was not a landlord within section 44 because it did not meet the requirements of section 44(1)(b).
Held The appeal was dismissed.
1. The common law doctrine of estoppel was founded on the rule that neither landlord nor tenant might deny the other’s title: see First National Bank plcv Thompson [1996] 2 WLR 293 per Millett LJ, at p297.
2. Tenancies by estoppel were to be regarded as falling within the 1954 Act, an Act “to enable tenants occupying property for business, professional or certain other purposes to obtain new tenancies in certain cases . . .”. It was not possible to discern in the policy or in the scheme or in the detailed provisions of the 1954 Act, as amended, any sound reason why a tenancy by estoppel, affecting premises occupied by tenants for business purposes, should be excluded from its protection. The judge was correct in concluding that the solicitors’ lease was a tenancy for the purposes of section 69(1) because it was created by Fire, which owned a fee simple by estoppel, that the lease was therefore one which had been created immediately out of the freehold, and that Fire was the landlord within section 44 .
Nicholas Cooke (instructed by Doel & Co, of Cardiff) appeared for the appellants; Martin Hutchings (instructed by Iliffes Booth & Bennett, of Uxbridge) appeared for the respondent.
