Landlord and Tenant Act 1954, Part II — Appeal by tenants from county court judge’s refusal to grant a new tenancy of a car park used in connection with tenant’s business — New tenancy opposed by landlord who wished to occupy the land for the expansion of his business of testing vehicles for the MOT test — Submission by tenants that the landlord did not intend to occupy ‘the holding’ for the purpose of his business within the meaning of section 30(1)(g) of the 1954 Act — Tenants argued that the landlord’s proposal, which included the erection of a building on the site for a workshop, office, waiting rooms, vehicle inspection pits etc, was the creation of a new holding, not an occupation of ‘the holding’ — Submission rejected — Difficult case of Nursey v P Currie (Dartford) Ltd considered and distinguished — In present case ‘the holding’ consisted of the vacant site on which the landlord proposed to erect a building, so that he would in fact occupy ‘the holding’ plus something else — Appeal from decision of county court judge in favour of landlord dismissed
This was an
appeal by Cam Gears Ltd, tenants of premises consisting of a vacant site used
as a car park on the corner of Selbourne Road and Covent Garden Close in Luton,
from a decision of Judge Kingham at Luton County Court in favour of the
landlord, David Lawrence Cunningham. The judge refused to grant the tenants a
new tenancy of the site, the landlord having opposed the grant under section
30(1)(g) of the Landlord and Tenant Act 1954.
Nicholas
Patten (instructed by Slaughter & May) appeared on behalf of the
appellants; Allan Levy (instructed by John Photiades & Co, of Luton)
represented the respondent.
Giving the
first judgment at the invitation of Cumming-Bruce LJ, OLIVER LJ said: This is
an appeal by a tenant of business premises from a decision of His Honour Judge
Kingham, which was given on January 11 1980, refusing the grant of a new
tenancy under the provisions of the Landlord and Tenant Act 1954.
The premises
with which the application is concerned consist of a vacant site — that is to
say, a site unencumbered by buildings but with a concrete surface —
constituting a car park and situate on the corner of Selbourne Road and Covent
Garden Close in Luton. The appellants, the tenants, carry on business nearby,
and the premises have been at all material times used as a car park in
connection with that business. The premises were originally let by the
respondents to the appellants on a lease dated May 5 1972 for a term of seven
years from January 1 1972; that term expired in 1979.
The proper
notice under the Act was given by the respondent in July 1978, and there is no
dispute that the correct sequence of events envisaged by the Act has taken
place; I need not go through its various stages.
The present
dispute arises out of the respondent landlord’s opposition to the grant of a
new tenancy which, in the notice which was served on the tenant, he put on the
ground set out in section 30(1)(g) of the 1954 Act:
‘That on the
termination of the current tenancy the landlord intends to occupy the holding
for the purposes, or partly for the purposes, of a business to be carried on by
him, or as his residence’.
The
respondent, Mr Cunningham, has been in business for some time, originally, I
think, in partnership, but more recently through the medium of a limited
company, Technical Brakes Ltd, of which he is a director and in which he holds
74 out of the 99 issued shares. That company runs a garage business and, as I
understand it, the principal facet of that business is the provision of
Ministry of Transport testing facilities for vehicles which are more than three
years of age. In the course of its business, at present carried on in Wingate
Road, Luton, it tests about 10,000 vehicles a year.
What the
respondent wishes to do is to expand his business. The lease of the present
business premises expired in, I think, June of last year and he needs two new
test lanes.
As I have
mentioned, the premises the subject-matter of this appeal are used at present
as a car park. They consist simply of a vacant site with no buildings on it,
and the landlord’s project, if he can get possession, is to have erected on the
site what is known as a Banbury prefabricated commercial building, which will
cover about one-third of the total area of the site and will furnish a
workshop, an office, a waiting room, toilet facilities and inspection pits for
vehicles. The total cost of that building is likely to be in the order of
£16,000, the total cost of the operation, including erection, being estimated
by the respondent before the learned judge at £20,000. His evidence, which was
accepted by the learned judge, was that facilities would be made available to
him by his bankers. The learned judge accepted the respondent’s evidence in
toto and he found as a fact that he was bona fide in forming his intention and
that the intention was a practicable one, albeit that he would have to get a
detailed planning permission, satisfy the building regulations and obtain a Ministry
of Transport licence. The learned judge was satisfied that these were not
problems which would stand in the way of a successful outcome of the project.
The
appellants’ contention before the learned judge and in this court was that
since the only ground of opposition to the grant of a new tenancy under the Act
specified in the respondent landlord’s notice was that which appears in section
30(1)(g), the landlord had to show that his intention was not just to occupy
the site, but that he was to occupy ‘the holding’; that the holding consisted
of the present vacant site used as a car park and that the proposed erection on
that site of a new building to be used for the purpose of a testing workshop
constituted the erection of a new and different holding and that therefore the
landlord was not proposing to occupy ‘the holding’ for the purposes of the
business.
The erection
of the proposed building was, no doubt, a major work of construction, which
could be carried out only if the landlord obtained possession, and it might
indeed have justified opposition to the grant of a new tenancy under section
30(1)(f); but that was not the ground that was specified, and since the only
ground relied upon was the ground in subparagraph (g), that is the ground upon
which the landlord must rely.
The learned
judge rejected that contention, which was based upon the decision of this court
in the case of Nursey v P Currie (Dartford) Ltd
[1959] 1 WLR 273. That was a case which bears a superficial resemblance to the
present case, in that the landlord’s notice in that case was confined to the
ground specified in section 30(1)(g), and what the landlord company proposed to
do was to demolish the existing buildings, which were standing in a yard which
was occupied by the landlord, and redevelop the site as part of a petrol
station which it proposed to carry on there. The Court of Appeal held that the
ground of opposition was not made out; and it did so because of the limiting
definition of the word ‘holding’ in section 23(3) of the Act.
That
subsection defines the word ‘holding’ as meaning ‘the property comprised in the
tenancy’ — I close the quotation there; there is some more but it is not
material for present purposes. The court held in that case that that definition
included the existing buildings. The landlord, since it intended to remove the
existing buildings and replace them with others, did not therefore intend to
occupy ‘the holding’ but intended to occupy the new buildings to be erected on
the land forming part only of ‘the holding’ viewed as a totality — at any rate,
that is what I apprehend is the ratio of the decision in the Nursey
case, and that is the view of it which was adopted by this court in the case of
Metal Developments Ltd v Jones [1971] 1 WLR 168; I refer particularly
to the judgment of Salmon LJ, as he then was, in that case.
I confess that
the Nursey decision is one which I find far from easy to understand. The
only argument, so far as can be deduced from the report at p 275, had been that
since the landlords intended to demolish the buildings, they could not be
intending to occupy ‘the holding’ which included the buildings. But Wynn-Parry
J, who delivered the first judgment, seems to have taken the view, at any rate
on one reading of his judgment, that it was fatal to the land-
and not as a separate holding on its own. He said, at p 277:
It seems to
me that that language circumscribes the use of the phrase ‘the holding’ in that
paragraph — that being subparagraph (g) — and makes it necessary to concentrate
the whole of one’s attention on the particular piece of land, whether it has
buildings on it or not, which is the subject-matter of the tenancy in question.
So viewed, it appears to me that the contention for the landlords in the
present case is too wide, and that when one is looking at the material time at
‘the holding’ under paragraph (g), it is not permissible to take into account
the wider scheme which the landlords had in mind, and merely to treat the land
comprised in the holding as land which, in one way or another, will be used for
the purpose of the wider undertaking.
I cannot think
that the learned judge can have intended to do more than to anwer the question,
which is: Is the holding which the landlord intends to occupy the same holding
as that comprised in the tenancy?
Construed in the wider sense that I have indicated, it would follow that
a landlord who carried on a business next door to the demised premises and who
wanted to occupy those premises as one with his existing shop for an expanding
business, would be unable to rely upon section 30(1)(g) and would be able to
resist a new lease only if he intended to reconstruct. For my part, I cannot
ascribe so eccentric an intention to the legislature. Certainly, Willmer LJ
confined his judgment to the narrow ground that the definition of ‘the holding’
simply involved reading into the subsection, in place of the words ‘the holding’,
the parcels of the lease — a ratio which hardly helps the present appellants,
since the lease in the present case merely refers to ‘all that piece or parcel
of land delineated for the purposes of identification only on the plan annexed
hereto and thereon edged red’, and that is precisely what the landlord intends
to occupy.
But even if I
am wrong in the limits within which, as I think, the judgment of Wynn-Parry J
must be read, and even assuming that the concurrence in that decision of Hodson
LJ renders the wider construction binding upon us, it still does not seem to me
to help the appellants in the instant case. There is no wider scheme here in
which the holding is proposed to be incorporated. The landlord simply intends
to place a building on the site and to use the whole site, together with the
new building, for the purposes of his business.
Mr Patten, who
has argued this appeal, if I may say so, with conspicuous frankness and acumen,
seeks to steer a course midway between the construction of Wynn-Parry J’s
judgment to which I have referred and the very limited ratio adopted by Willmer
LJ. He suggests that the ratio of the Nursey case is that you have to
look at the holding as it is at the termination of the tenancy and to ask
yourself the question: Does the landlord intend to occupy the holding for the
purposes of his business in substantially the identical condition as it
was at the date of termination? If he
intends to occupy the whole of it, but to make any material alteration to its
condition, then he is intending to occupy a different holding.
For my part, I
find myself unable to follow Mr Patten through the gap which he thus seeks to
make between the prongs of Morton’s fork. Whatever may be the true ratio of the
Nursey case, I am unable to extract that from it and indeed to do so
would, I think, be to attribute a wholly irrational and capricious intention to
the legislature. Accepting as I must that Nursey is binding upon this
court, I certainly do not feel disposed to strain it beyond the narrowest
limits within which it is capable of being confined.
I think that
the determining feature of the Nursey decision was not the purpose
for which the holdings were occupied by the tenant, or the particular condition
at the time of the determination of the tenancy, but the fact that the holding
consisted of the buildings which, under the landlord’s proposals, were to be
demolished. That may or may not have been a logical or reasonable construction
of the section, and I bear in mind Salmon LJ’s reservation in the Metal
Construction case, as to whether it was correctly decided, although the
combined industry of counsel has not succeeded in unearthing the inconsistent
unreported case in the Court of Appeal to which Salmon LJ referred. But it
cannot in any event, in my judgment, have any possible application to a case
such as the present, where ‘the holding’ consists solely of a vacant site upon
which the landlord proposes to erect a building, so that what he will occupy is
‘the holding’ plus something else. He proposes to occupy everything that is
there at the moment, with the sole exception of two lengths of topsoil and
subsoil which will be removed to sink the inspection pits. Nursey v Currie
is, in my judgment, of no assistance to the tenant in such circumstances.
The learned
judge rejected the tenant’s submission. So do I, and I would dismiss the
appeal.
Agreeing,
TEMPLEMAN LJ said: By a lease dated May 5 1972 the landlord demised to the
tenant ‘All that piece or parcel of land edged in red on the plan annexed
hereto’. The tenant covenanted to use the demised premises only for the
purposes of a car park and not to erect on the demised land or any part thereof
any buildings or structures other than those necessary for the parking of
vehicles and, should the tenant so require, for providing shelter for vehicles.
The landlord proposed to occupy the demised premises for the business of an MOT
car testing centre and for that purpose needed and planned to erect a building
on part of the land.
By section
30(1)(g) of the 1954 Act, the landlord having duly determined the lease by
notice is entitled to resist the tenant’s present application for a new lease
if the landlord, on the determination of the current tenancy, intends to occupy
the holding for the purpose of a business to be carried on by the landlord
thereon. By section 23(3) ‘the holding’ means the property comprised in the
tenancy. The lease will determine at the expiration of three months after the
final refusal of the tenant’s application for a new lease. If there is no
appeal from this court the lease will determine three months from today.
Unassisted by
authority, it seems to me that the learned county court judge having found that
the landlord in fact intends to occupy the whole of the demised land for the
purposes I have mentioned, and has the financial resources and the ability and
the will to do so, it follows that the landlord made good his opposition under
the Landlord and Tenant Act 1954.
We were
pressed by the decision of this court in Nursey v Currie, of
which I make the melancholy observation that two bad reasons do not make one
good reason although both may be binding on this court. It is plain, however,
that the facts of the present case are distinguishable. Taking the test
adumbrated by Wynn-Parry J: Is this a case where the holding which is to be
developed is the same as the holding demised?
the answer is Yes; it does not form part of any larger undertaking.
Taking the test adumbrated by Willmer LJ, what was comprised in the demise in
the present case is a piece of land, and the landlord’s business will be
carried on upon that piece of land. The fact that for the purposes of enhancing
that business, or enabling it to be carried on, the landlord intends to put a
workshop on part of the land is neither here nor there. The object of paragraph
(g) is not to hand the land back to the landlord in a sterilised form, so that
he has to put his hand on his heart, saying in effect: ‘I do not intend to make
any alteration’. The purpose of the subsection is to hand the land back to the
landlord if he wants to carry on his own business there, and that indeed is
what this landlord intends to do and that is what he is entitled to do.
Accordingly, I
would dismiss the appeal.
Agreeing,
CUMMING-BRUCE LJ said: I agree with both judgments, hoping that such agreement
does not give rise to the difficulties which have arisen as a result of Hodson
LJ’s similar agreement in the case of Nursey v Currie.
The appeal
was dismissed with costs. Leave to appeal was refused.
