by Delyth Williams
During 1990, litigation continued to interpret and explain the operation of the Landlord and Tenant Act 1954 Part II. In addition, as witnessed in the correspondence columns of Estates Gazette, the abolition of the domestic rating system and the introduction of changes to the compensation provisions contained in section 37 have provoked much discussion and debate. Many of these cases on the 1954 Act have been reported in the columns of Estates Gazette and this article summarises recent case-law developments in this period.
Operation of the 1954 Act
In Shelley v United Artists Corporation Ltd [0] 1 EGLR 103; [1990] 16 EG 73, S was the tenant of an office suite under a lease granted by U Ltd. The landlord company occupied the remainder of the building but was itself the tenant of another company, B Ltd. S’s lease was for a term which expired on June 20 1988, while U Ltd’s lease was for a term which expired on June 24 1988. The mesne landlord served a notice under section 25 of the 1954 Act and then (a) made a section 26 request to B Ltd, and (b) exercised an option under the headlease to obtain a further term at a rent to be determined in accordance with a provision in the lease. S served a counternotice on U Ltd. Both the section 26 request and the exercise of the option were acknowledged by B Ltd. S then issued an originating summons, within the statutory timetable imposed by section 29(3) of the 1954 Act, in which U Ltd was named as the defendant. After the expiration of the time-limit, U Ltd advised S that the company was not the competent landlord for the purposes of S’s proceedings, but that the competent landlord was B Ltd. Two summonses were subsequently issued: (a) by S seeking an order that B Ltd be joined as a second defendant, or that B Ltd be substituted for U Ltd, and for such extensions of time as may be appropriate; and (b) by U Ltd seeking an order that S’s originating summons be dismissed or that U Ltd should cease to be a party to the proceedings.
At first instance, Mervyn Davies J held, inter alia:
(i) that, although U Ltd was the competent landlord at the time of issue by S of the section 25 notice, U Ltd ceased to be the competent landlord on issue of U Ltd’s section 26 request since the effect of that request was to terminate U Ltd’s tenancy on June 24 1988 in accordance with section 26(5) of the 1954 Act;
(ii) the exercise by U Ltd of the option contained in the headlease did not bind B Ltd and U Ltd to the grant of a new lease since the existing lease permitted U Ltd to withdraw within 14 days of being notifed of the new rent under the new lease. The exercise of the option was therefore only the first step towards the making of an agreement for a new lease; the agreement became enforceable by both parties only when the 14-day period had expired. The option therefore had no effect on U Ltd’s status as competent landlord;
(iii) U Ltd was not estopped from denying that it was no longer the competent landlord by virtue of failure to report the same to S; the correct procedure was for S to issue a notice to U Ltd under section 40(2) of the 1954 Act to seek information about the headlandlord; this was a step which S had neglected to take;
(iv) B Ltd could not be substituted as defendant since the timetable imposed by section 29(3) is (per Lord Diplock in Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd (1970) 216 EG 31) “a statute of limitation incorporated in the Act”;
(v) although the court was empowered by RSC Ord 97, r8(3) to add a defendant to an originating summons, the power could not be exercised to defeat a vested right. In this case B Ltd had acquired a vested right not to be sued;
(vi) an amendment could not be made under RSC Ord 20, r5(3) as this provision was applicable only in the narrow circumstances of a mistake as to the true identity of the defendant.
The Court of Appeal held, inter alia, that, although the doctrine in Walsh v Lonsdale (1882) 21 Ch D 9 could not be invoked in cases where an agreement for a lease was subject to a condition precedent which remained unperformed by the proposed tenant and had not been waived by the landlord, it could be invoked in this case. At the date the appellants applied to the court, the respondent could not have enforced the agreement it had for the grant of the new 14-year lease without abandoning its right to elect at a later date not to exercise its option. However, this right of abandonment was a provision for the exclusive benefit of the respondent and was no obstacle to the grant of the lease. Further, it could not be accepted that the respondent was the competent landlord by reason of its residual rights to remain in possession, as those rights applied only when what must be regarded as a notice to quit was given.
The Court of Appeal went on to add that, although section 28 may have applied, it did not enable the appellants to argue for an addition to the fag-end of the head-lease expiring in June 1988. When the respondent served the section 25 notice on the appellants, stating that it would not oppose a new lease, it was representing that it was the competent landlord. When it ceased to be the competent landlord, its former representation became a misrepresentation which should have been corrected. That failure caused the appellants to regard the respondent as the competent landlord for the purposes of the counternotice and the application to the court. Accordingly, had the respondent been granted a lease by B Ltd in its own name, the respondent would have been estopped from denying that it was the competent landlord and MGM, a related company, could be in no better position and was bound.
In Pearson v Alyo [0] 1 EGLR 114; [1990] 25 EG 69, A purchased an hotel which was conveyed into the joint names of himself and his wife. In 1984 they granted a three-year lease of the premises to P which, after expiration of the fixed term, continued under the provision of section 24 of the 1954 Act. A notice to terminate the tenancy, under section 25 of the 1954 Act, was issued by A but made no reference to his wife as co-owner of the fee simple.
P’s application to the county court for a new tenancy failed. On appeal to the Court of Appeal, he argued that the section 25 notice was invalid for failure to state the names of both co-owners. A argued that P had not been prejudiced by the omission. The Court of Appeal held that, as both A and his wife fell within the definition of “landlord” in section 44 of the 1954 Act, the section 25 notice was defective. Further, the validity of the notice had to be assessed at the date on which it was given. It did not matter whether the tenant was actually prejudiced by the defect in the notice — what was relevant was whether, viewed objectively, it was capable of prejudicing a reasonable tenant. The defect in the notice rendered it invalid.
In Javad v Aqil [0] 2 EGLR 82; [1990] 41 EG 61, the appellant, who was in the business of manufacturing leather goods and who had lost his place of business, was allowed into possession of the subject premises in June 1985 having paid the respondent £2,500 “as rent for three months in advance”. It was envisaged by the parties that negotiation would follow for a lease. By September 1985 the respondent’s solicitors sent an amended engrossment of the counterpart lease to the appellant’s solicitors with a completion statement made up to October 21 1985. The lease was for a term of 10 years at a rent of £10,000 pa. The appellant did not complete as he objected to paying a sum of £2,500 as deposit in respect of potential damage to the property and arrears of rent. However, on November 11 1985, the appellant made a second payment of rent in the sum of £1,878.42 and, on January 10 1986, he paid a further sum of £2,500 as rent for the next quarter in advance.
On the further failure of the appellant to complete the transaction, the respondent required the property to be vacated and his claim for possession was allowed. On appeal, the appellant claimed that he entered the property as a quarterly periodic tenant and, accordingly, his tenancy fell within the 1954 Act and had not been properly terminated in accordance with that Act. The respondent contended that the appellant was a tenant at will to which the Act did not apply.
The Court of Appeal held that a tenancy emanates from a consensual arrangement between the parties and the extent of the right thus granted and accepted depends primarily upon the intention of the parties. In the case where the parties are negotiating the terms of a proposed lease, and the prospective tenant is let into possession in advance of, and in anticipation of, terms being agreed, the fact that the parties have not agreed will be a factor to be taken into account in ascertaining their intention. The parties are not supposed to have agreed, by the mere payment of a rent on a quarterly basis, that the prospective tenant shall be a quarterly tenant. Regard must be had to the particular circumstances and that, if the payment of rent can be explained, the legal presumption that a tenancy from year to year arises from the receipt of rent is rebutted. Entry into possession while negotiations are proceeding is one of the classic circumstances in which a tenancy at will may exist.
The occupation of the premises for the purposes of a business was one of the matters considered by the Court of Appeal in Kent Coast Property Investments Ltd v Ward [0] 2 EGLR 86; [1990] 45 EG 107, where the appellant was the tenant of premises and appealed against the decision of the county court judge to grant possession of the premises to the landlord respondents. The premises in question had the physical appearance of a corner shop with accommodation over it, but there was some conflict of evidence as to use. There was some evidence that the subject premises were used by the appellant as a shop for the sale of bric-a-brac. The appellant’s evidence, however, indicated that he had not used the premises for the purposes of a business but that he had lived in them for a while and subsequently used them as a storeroom. If the tenant was in occupation for the purposes of a business, the respondent landlords were entitled to possession as the tenant had failed to make an application for a new tenancy under the 1954 Act. The county court judge concluded that the appellant had been a tenant under the 1954 Act. The Court of Appeal held that the three grounds of appeal put forward by the appellant would be rejected. The tenancy in the present case “included” premises occupied for the purposes of a business.
Notices and counternotices
In some cases, in practice, problems can arise over the service of the requisite notices under the 1954 Act. In Lex Service plc v Johns [0] 1 EGLR 92; [1990] 10 EG 67, properties comprising car showrooms were demised to J. The landlord company served a notice under section 25 using the recorded delivery service, but the tenant denied receiving the notice and had instructed his staff not to sign for recorded delivery mail addressed to him. The postman’s recorded delivery receipt book contained, however, an illegible signature, but J did not discover that the section 25 notice had been issued until it was too late to serve a counternotice or make an application to the court for a new tenancy. The landlord company brought an action for possession which J defended on the grounds of failure of service. By section 66(4) of the 1954 Act, the methods of service prescribed by section 23 of the Landlord and Tenant Act 1927 apply to notices under the 1954 Act and these include registered post and (per Recorded Delivery Service Act 1962) delivery by the recorded delivery service. Unless it can be shown that service has definitely not been effected, eg because it is returned marked “undelivered”, then, by virtue of section 7 of the Interpretation Act 1978, the notice is deemed to have been delivered:
Where an Act authorises or requires any document to be served by post … then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, prepaying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.
The Court of Appeal held that the purpose of the statutory provisions is to entitle persons who have to serve documents to be satisfied that service has been effected if the specified steps have been taken. Further, in order to prove that service has not been effected, it would be necessary to show that either (a) positive evidence that the document has been returned to the sender or, (b) if sent by recorded delivery or registered post, there is no acknowledgement of it ever having been received by the recipient. If the recipient was not the person to whom the notice was addressed and it is proved that the recipient failed to bring it to the attention of the addressee, that would be sufficient to show the documents were not properly served. It is not sufficient for the addressee simply to assert that the document was not served on him, albeit that somebody has acknowledged receipt of it. In the event, the section 25 notice was held to have been properly served.
The validity of the section 25 notice was the main issue considered by the Court of Appeal in Smith v Draper [0] 2 EGLR 69; [1990] 27 EG 69, where the appeal premises comprised an hotel and garage which had been let by three co-owners to D. A section 25 notice was given to D by two of the co-owners without mentioning the name of the third. A counternotice was served by D, who duly made an application to the county court for a new tenancy. When the landlords’ solicitors realised that the section 25 notice was defective, they served a second notice containing the names of all three co-owners, but “without prejudice” to their contention that the first notice was nevertheless still valid. D served a counternotice but did not make another application to the county court for a new tenancy.
The landlords eventually abandoned any by reliance on the first notice and, having informed D of this, invited her to withdraw the court proceedings. D did not do so and, in the absence of a second application to the court for a new tenancy, the landlords sought possession of the premises. D contended that she had waived the defect in the first notice. The county court judge held that D was estopped from waiving the defect in the first notice and granted possession. D appealed to the Court of Appeal, which held that the first notice was invalid and the landlords were entitled to withdraw it and serve a second section 25 notice. The tenant had not waived the defect in the first notice and, having failed to make a second application to the county court, had failed to protect her rights under the 1954 Act.
In Long Acre Securities Ltd v Electro Acoustic Industries Ltd [0] 1 EGLR 91; [1990] 06 EG 103, the respondent originally occupied premises under a lease that fell within the 1954 Act. By a consent order of December 1987, the county court judge ordered that the respondent be granted a new lease commencing on July 25 1987 and expiring on March 25 1988 and the appellant landlord served on the respondent a notice under section 25 of the 1954 Act stating that the date of the termination of the lease was March 1 1989. On March 4 1988, the respondent served a notice under section 27(2) of the Act to terminate the tenancy on June 24 1988. However, the respondent had given up business occupation of the premises by March 25 1988.
The county court judge held that the appellant’s section 25 notice was of no effect as the contractual tenancy did not continue by virtue of section 24; the respondent was not in occupation for business purposes and the 1954 Act Part II ceased to apply. The Court of Appeal held that, under the 1954 Act, a tenant holding a term certain and who does not want to continue his tenancy is expected to give not less than three months’ notice to the landlord under section 27(1) or (2), as the case may be. Where a tenant does not wish to stay for the period of any section 25 notice that may have been served by the landlord, there is no bar on the tenant’s serving a three-month notice under section 28(2) expiring on any quarter day, as in the instant case. In the event, the lease terminated on June 24 1988 and the respondent was liable for rent to that date.
In Yamaha-Kemble Music (UK) Ltd v ARC Properties Ltd [0] 1 EGLR 261, Y Ltd was the tenant under a lease granted by ARC Ltd. The landlord company assigned the reversion expectant upon the lease to a wholly-owned subsidiary named ARC Property Developments Ltd, though no notice of the change of landlord was given to Y Ltd. Shortly afterwards, a notice was issued under section 25 of the 1954 Act which named ARC Ltd as the landlord and purported to terminate the tenancy. Y Ltd served a counternotice and applied to the court for a new tenancy. A declaration was sought by Y Ltd that the section 25 notice was invalid as it had named the wrong landlord. Aldous J held that the requirements of section 25 of the Act, that the notice must be given by the landlord, had not been complied with, and the tenant had been misled by the incorrect description. The notice was not saved by virtue of the point made by the Court of Appeal in Morrow v Nadeem [1986] 2 EGLR 73; (1986) 279 EG 1083, that a mere misdescription of the landlord would not be sufficient to invalidate it if the tenant had not been misled by the error. In the event, therefore, the notice was invalid.
New lease terms and court proceedings
Some complex issues of fact concerning the tenant’s application to the court for a new tenancy under section 29(3) of the 1954 Act were considered by the Court of Appeal in Stevens & Cutting Ltd v Anderson [0] 1 EGLR 95; [1990] 11 EG 70, where the respondent was the owner of “Mayford Stores” and an adjoining lock-up shop and, in November 1971, let the store to the appellant on a lease for 15 years from April 1971. By a supplemental lease of July 1982, the respondent granted a lease of the shop to the appellant for a term of five years from April 1981 with both terms expiring on April 2 1986. In notices dated June 12 1985, two of the directors of the appellant company purported to request a new tenancy of each holding under section 26. The respondent replied that the tenancies were held by the appellant company and not by the two directors and, without admitting the validity of the notices, indicated that he would oppose any application for new tenancies on grounds (a) and (c) of section 30(1). The appellant then requested new tenancies by a notice of June 25 1985 and, by a letter of June 28 1985, the respondent expressed the same grounds of opposition.
The appellant applied to the county court on August 13 1985 seeking the grant of the two tenancies and the respondent put in his answer in October 1987, after an extension. Proceedings were generally adjourned as negotiations continued but, eventually, on December 14 1987, the respondent realised that the appellant had made the application to the court less than two months after service of the section 26 notice contrary to section 29(3) of the Act. The county court judge dismissed the appellant’s application on the grounds that it had not been made in accordance with the timetable of the 1954 Act.
The Court of Appeal held that, although the respondent’s solicitor became aware of the defective application more than two years later, and then acted promptly, his knowledge was not the respondent’s knowledge so that there was no question of waiver by election. Estoppel required a representation of fact, reliance upon the representation and detriment resulting from the reliance. No such representation could be spelt out of the landlord’s counternotice of June 28 1985 or of the answer in proceedings before the county court of October 1987 setting out the grounds of opposition. There was no representation arising out of the conduct of the respondent that, if negotiations for new tenancies failed, there would be no opposition. As it was impossible to say at what stage a representation, if any, was made, the appellant had suffered no detriment.
The question of whether the court should order the insertion of a break clause in the new lease was considered in National Car Parks Ltd v The Paternoster Consortium Ltd [0] 1 EGLR 99; [1990] 15 EG 53. The plaintiff was the underlessee of premises at Paternoster Square, London EC4, and, in September 1986, served a section 26 notice on the defendant requesting a new tenancy and specifying the commencement date as August 25 1987. In October 1986 the defendant served a counternotice stating that any application for a new lease would be opposed on the ground in section 30(1)(f). The Vice-Chancellor held that the defendant’s evidence showed that the various interests in Paternoster Square and the local planning authority were in favour of the area’s redevelopment. There was every possibility of the development proceeding. Accordingly, it was right to insert a break clause in the new lease. In addition, a 14-year term was appropriate for the new lease, commencing from the date of issue of the summons on December 9 1986. The break clause should give the right to the lessor to terminate the lease on giving not less than six months’ notice.
In Becker v Hill Street Properties Ltd [0] 2 EGLR 78; [1990] 38 EG 107, B carried on practice as a dentist from consulting rooms which he occupied under a sublease. The headlease became vested in H Ltd, which acquired the headlease after the issue of a section 25 notice. The notice had stated that an application to the court for a new tenancy would not be opposed. H Ltd argued before the county court judge that a break clause should be inserted because the premises were ripe for redevelopment. The county court judge decided to grant a new term expiring on December 24 1993, without a break clause, the decision being based on his opinion that the property was not ripe for redevelopment. H Ltd contended that he had applied the wrong test and that he should have considered the intention of the landlord with respect to possible future development. The Court of Appeal held that the issue was whether the landlord company wished, bona fied, to redevelop the premises, not whether, from an objective viewpoint, they had reached the stage at which redevelopment was required.
In exercise of its discretion to fix the term of the tenancy, the court should consider all the relevant factors, including the tenant’s intention to retire from practice as a dentist at the end of the term ordered by the county court judge. Other relevant factors were the likelihood that alternative premises would be difficult to find and that at least a year would elapse before H Ltd was actually ready to go on site. In the event, the new term would be one expiring on December 24 1993, without a break clause.
Grounds of opposition
The case law during the past 12 months has, as usual, been concentrated on the interpretation of section 30(1)(f) and 30(1)(g) of the 1954 Act. In Barth v Prichard [0] 1 EGLR 109; [1990] 20 EG 65, the respondent was the tenant of two floors of offices and also held a lease of the whole of the adjoining buildings. The respondent had made openings in the party wall between the two buildings to provide direct access to the two floors. As the respondent’s lease of the two floors was to terminate on June 24 1988, he served a section 26 notice to which the appellants responded, stating that they would oppose any application for a new tenancy under section 30(1)(f). The appellants’ proposed works included, inter alia, resiting of the staircase, rewiring, provision of new toilets, installation of central heating, restoration of main roof, decoration and carpeting and the closure of the openings made by the respondent in the party wall. The county court judge said that one should consider the “quality of the work as a whole … and the work in relation to the premises …” and decided that, although some of the items were works of construction, they did not all affect the structure and, taken in the context of all the work, it could not be said that the appellants were proposing “substantial work of construction” as envisaged by section 30(1)(f).
The Court of Appeal held that the county court judge had not applied the wrong approach, as the authorities established that the “position as a whole” is to be considered in so far as works not themselves works of construction are directly related to or are ancillary to works which do amount to works of construction. The authorities cannot be read as indicating that proposed works, considered as a whole, could amount to construction if none of the items considered separately could be so regarded. It is only in the context of works which are, or might be, properly regarded as construction works that other works which are not themselves construction fall to be considered when the works are regarded as a whole. The decision in Cerex Jewels Ltd v Peachey Property Construction plc [6] 2 EGLR 65; (1986) 279 EG 971 would be distinguished. The Court of Appeal went on to add that whether the proposed works individually, or in the light of other work, can be properly described as “construction” works depends on the facts in each case. It is implicit in ground (f) that the works will fall within that ground only if they involve directly the structure of the building in some way. Wooden partitions are unlikely to be construction, neither is the installation of wiring, plumbing, boilers or toilets.
In Romulus Trading Co Ltd v Henry Smith’s Charity Trustees [0] 2 EGLR 75; [1990] 32 EG 41, the respondent company was the tenant of the demised premises of which the appellant trustees were the landlords. The landlords intended to carry out works to convert the demised premises into two maisonettes and a self-contained flat and such works included, inter alia, (i) demolition and construction of partitions; (ii) installation of new windows; (iii) demolition of a wall and construction of a rear extension; and (iv) associated plastering, plumbing and electrical work. The county court judge held that, although the works were extensive, they did not fall within section 30(1)(f).
The Court of Appeal held that in its role it has to be careful not to review the findings of a trial judge as to what constitutes work of construction or reconstruction unless the evidence showed that the trial judge was plainly wrong. The Court of Appeal was of the opinion that for works to qualify as reconstruction within para(f) it must be shown primarily that they are works of rebuilding involving a substantial interference with the structure of the building, but structure is not necessarily confined to outside or other load-bearing walls; works or preparation ancillary to such works are properly included as works of reconstruction or construction as the case may be. Other closely associated work, such as the plastering of a new load-bearing wall, would also be included if that were an inseparable consequence of installation. Although there was material before the trial judge, he did not make any finding as to whether the works amounted to works of reconstruction of a substantial part of the premises or were substantial works of construction on part of the holding. In considering the works in the context of section 31(A)(1), the Court of Appeal was of the opinion that the works intended are the works of demolition, reconstruction or construction referred to in section 30(1)(f), and there must be consideration of these works in deciding whether the business of the tenant would be interfered with “to a substantial extent and for a substantial time”.
In Edwards v Thompson [0] 2 EGLR 71; [1990] 29 EG 41, a tenancy from year to year of a smithy was granted to E in which he carried on business as a maker of wrought iron gates and car repairing. Planning permission was obtained by the landlady’s predecessor in title to convert the smithy and a nearby barn into a single dwelling and also to develop another part of the site by the construction of five other dwellings. The planning permission was subject to conditions which prevented occupation of any part of the development until it had been completed and an access way had been constructed. The site of the proposed five dwellings was retained by E’s former landlady and the remainder sold to Mrs T.
A section 25 notice was served by Mrs T in which it was stated that she would oppose the grant of a new tenancy on the ground stated in section 30(1)(f), namely that she intended to demolish or reconstruct the premises or carry out substantial work of construcion on the holding. At the trial of E’s application for a new tenancy, Mrs T showed that she had engaged a builder to carry out the necessary works, that a detailed specification had been prepared and that finance was available for the project. The application for the new tenancy failed because the development of the proposed five dwellings which was the subject of the same grant of planning permission had not proceeded to the stage of finding a developer to purchase the site or an estimation of the cost of the redevelopment. The Court of Appeal held that a firm and settled intention to develop the holding occupied by E could not be shown by Mrs T. It was unlikely that there would be a developer ready to proceed with the five dwellings on the other part of the site subject to the same grant of planning permission at the stage of the termination of E’s tenancy.
The question of intention and time was considered by the Court of Appeal in relation to section 30(1)(g) in London Hilton Jewellers Ltd v Hilton International Hotels Ltd [0] 1 EGLR 112; [1990] 20 EG 69, where the landlords opposed the tenants’ application for a new tenancy on the basis of its stated intention to carry out extensive works to the ground floor of the Hilton Hotel for which it required possession of the premises occupied by the tenants. The assistant recorded held that the landlords had established the necessary intention for section 30(1)(g). Two grounds of appeal survived to be considered on appeal; the first being that the conclusion as to the landlords’ intention was against the weight of evidence. This ground seemed improbable as all the evidence at the trial was given on behalf of the landlords and the tenants gave no evidence at all. At the conclusion of the trial, landlords’ counsel gave an undertaking (in the same terms as the resolution by the landlords’ directors the same day) to the effect that the landlords would proceed with the alterations affecting the tenants’ premises without delay. The second remaining ground of appeal concerned similar proceedings, under section 30(1)(g), affecting a menswear shop (called Deerslade) which adjoined the tenants’ jewellers shop. The landlords’ scheme involved obtaining possession of both the tenants’ shop and the Deerslade shop but they could proceed with part of the scheme when they recovered possession of the jewellers’ shop and complete the scheme when they obtained the Deerslade shop. The judge in Deerslade decided in favour of the landlords but the appeal was not finally disposed of before the instant case came to trial.
The Court of Appeal was of the opinion that the undertaking given to the court and the resolution of the board of directors “compelled fixity of intention”. These factors were not present in the case of the Deerslade shop. Further, the landlords had given an undertaking to the assistant recorder that they would carry out the works at once even if they did not obtain possession of the Deerslade shop until later. The Court of Appeal expressed the opinion that the provisions of section 30(1)(g) “…on the termination of the tenancy…” must mean “within a reasonable time from the date of its termination”.
In Teesside Indoor Bowls Ltd v Stockton-on-Tees Borough Council [0] 2 EGLR 87; [1990] 46 EG 116, the landlords opposed the tenants’ application for a new tenancy, under section 30(1)(g), of business premises in which the tenants had been running a successful bowling club. The borough council landlords had, at first, decided to take possession of the premises and run the bowling club themselves, but decided that they did not have the necessary experience or flair to do so successfully and they therefore advertised for and selected an experienced management company. It was their precise relationship with this company which was called into question as, on the face of it, the company was to act as the council’s agent.
There was a long and elaborate management agreement, the salient features of which were that all advertising material was to show that the bowling club was a leisure facility provided by the council and the council’s logo was to be prominently displayed and the decision of the council was to be final in regard to membership fees, green fees and locker fees. Under the heading “Agency”, it was stated that “in providing the service the company, its servants and employees shall be the agents of the council but not otherwise”. The council retained policy decisions while looking to the company’s expertise in the day-to-day management and the main question was whether these arrangements were such as to justify that the business was being carried on “by them” within section 30(1)(g). The Court of Appeal held that the premises were intended to be occupied by the council for the purposes of the council’s business or for the purposes of a business to be carried on by the council through the company as the council’s agent. The tenant’s appeal would be dismissed.
In Meyer v Riddick [0] 1 EGLR 107; [1990] 18 EG 97, the appellant was the tenant of premises held on a 12-year lease expiring in June 1987 and the respondent landlords, who were trustees under a trust for sale, had acquired the reversionary interest in 1980. Two of the three respondents were partners in a firm of solicitors and the respondents opposed the tenant’s application for a new tenancy on ground (g) in section 30(1) as it was the respondents’ intention to use the premises for the purpose of their firm under a commercial lease.
The county court judge held that, as two of the trustees were also beneficiaries, they had shown an intention to occupy. The Court of Appeal held that, where a landlord intended to oppose the grant of a new tenancy under ground (g) of section 30(1), and relied on his beneficial interest under a trust, he had to show that his proposed occupation was for the purposes of and in the manner intended by virtue of his beneficial interest under that trust. In this case, two of the respondent landlords, R and N, were partners in the firm but the third, Mrs N, was not. In order to exclude Mrs N from the benefits of her beneficial interest under the trust for sale, it was necessary for the three trustees to let the premises under a lease to the partnership as a whole. In this way, R and N were entitled to occupy the premises not for the purposes of their business as beneficiaries of the trust but under the lease. That was not occupation as “beneficiaries” under the 1954 Act and did not satisfy ground (g).
In Mirza v Nicola [0] 2 EGLR 73; [1990] 30 EG 92, the tenants carried on the business of a fish-and-chip shop on the demised premises and the landlord opposed the application for a new tenancy on the ground in section 30(1)(g). The landlord (aged 64) had retired from business but wished to become active again and evidence showed that he had had previous experience of the fish-and-chip trade and of other retail ventures. At the trial, the landlord produced documents relating to various inquiries that he had made with a view to purchasing equipment for such a fish-and-chip shop but these had not been produced pursuant to an order for discovery. The Court of Appeal agreed with the county court judge’s assessment that the landlord’s failure to disclose at the proper time was a point in his favour as, if he had intended to deceive, he would have hastened to produce such documents. The Court of Appeal was of the opinion that the judge was entitled to come to the conclusion that the burden of proof with regard to section 30(1)(g) had been discharged.
