Business tenancy — Lease of premises over several floors — Permitted uses comprising shop use on lower floor and residential above — Shop not opened at date of grant of lease — Whether respondent tenant occupying for business purposes — Appeal allowed
The appellant acquired the freehold of premises in Hackney, comprising a basement, a ground floor and first floor, which were occupied by the respondent. The respondent had been there since 1993, originally pursuant to a licence granted by the local council, the appellant’s predecessors in title. The respondent had renovated the premises in order to make it habitable and had moved in to reside in the upper part. In 1995, the council had granted him a 10-year lease, in which the property was described as “shop premises” and the permitted uses were specified as the sale and catering of fish in the lower part of the premises and residential only in the upper part. The lease contained covenants by the respondent to: (i) carry out specified works; (ii) keep the premises open as a shop for carrying on the permitted use throughout the year during the usual business hours of the locality; and (iii) maintain an appropriate display in the shop windows. The initial rent of £1,000 pa was reviewable after five years. By 2000, the respondent had made the lower part fit for shop use and was selling fish and groceries there.
In 2003, the respondent’s rent was reviewed by a surveyor and was increased to £8,100 pa. The appellant demanded payment of the increased rent dating back to March 2002, the date upon which it had acquired the freehold. By early 2005, rent arrears of almost £25,000 were owed, and the appellant brought proceedings for possession. The district judge granted a possession order on the basis that the respondent held a business tenancy under Part II of the Landlord and Tenant Act 1954. The respondent appealed, contending that he was entitled to the extra protection afforded to secure or assured tenants under the Housing Act 1985 or 1988, and that the judge had failed properly to consider that question. That appeal was allowed and the possession order was set aside. The appellant appealed. The question on the appeal was whether the respondent’s tenancy was a business tenancy within section 23 of the 1954 Act such that it was excluded from the ambit of the Housing Acts pursuant to Schedule 1 to those Acts.
Held: The appeal was allowed.
The question posed by section 23 of the 1954 Act was a factual one as to whether the tenant occupied all or part of the premises comprised in the tenancy, and, if so, whether he did so for the purposes of a business carried on by him, or for those and other purposes. The respondent did occupy the premises in question, and, in respect of the ground floor and basement, he did so for the purposes of his shop business, which was carried on in that part of the premises. It was irrelevant that he had not started his business until January 2000; from that date on he had occupied the shop for business purposes and he was doing so at the date the proceedings were commenced and at the date of the hearing.
In considering whether the premises were occupied for the purposes of his business, it was not relevant to enquire into his subjective motivation at the time of taking the tenancy. The tenancy was one under which the respondent was not only permitted but required to use the ground floor and basement for business purposes, and he had done so from the time the premises were fit for such use. Although part of his purpose in taking the lease was to provide himself with a home, the terms of the lease were not compatible with a proposition that, once the shop was open for business, the use of that part of the premises was merely incidental to his use of the upper part as his home, or that running the shop was not part of the reason for him occupying the premises: Cheryl Investments v Saldanha [1978] 2 EGLR 54; [1978] 248 EG 591 considered. The district judge had accordingly taken the correct approach to the case and there had been no grounds to justify setting aside his order.
Timothy Frith (instructed by McEwen Parkinson) appeared for the appellant; David Watkinson (instructed by Dowse & Co) appeared for the respondent.
Sally Dobson, barrister
