Landlord and tenant — Landlord and Tenant Act 1954 Part II — Section 43(3) — Occupation as tenant for two successive periods less than 12 months — Further occupation as tenant at will — Whether occupation for period exceeding 12 months for purposes of section 43(3)(b) — Whether tenancy protected by 1954 Act
By a written agreement, dated 26 November 1997,
the plaintiff occupied a floor in the defendant’s premises from 26 November
1997 to 30 April 1998, for a licence fee and subject to other terms. On
28
that the period was from 1 May to 30 September 1998. There were negotiations
between the parties for the grant of a lease, under which sections 24 to 28 of
the Landlord and Tenant Act 1954 were to be excluded, but no agreement was
reached. The plaintiff remained in occupation, and, on 2 December 1998,
tendered a cheque for rent said to be due for the quarter commencing 29
September 1998. On 9
whatever right the plaintiff had. On 10 December 1998 the plaintiff commenced
the present proceedings claiming a tenancy protected by Part II of the 1954
Act, and applied by motion for interlocutory relief, on the ground that it had
been in occupation of the premises for a period exceeding 12
the meaning of section 43(3)(b). For the purposes of the interlocutory
proceedings the defendant conceded that the two agreements could be construed
as tenancies.
dismissed. It was common ground that the plaintiff occupied as a tenant at will
after the expiry of the second agreement. Section 43(3) could not apply to that
tenancy at will. If the second agreement granted a tenancy, then, when that
tenancy expired, it was not at that time within the 1954 Act. If a tenancy was
not within the 1954 Act when it expired, because of section 43(3), then the
clearest possible words would be required before it could retrospectively be
revived and brought within the Act. On 30 September 1998 the tenancy under the
second agreement was not within the Act because, although there had been two
successive tenancies, they did not span a period of more than 12 months and,
accordingly, section 43(3) applied. After 30
not a tenant within the meaning of the Act because the word ‘tenant’ in the Act
did not extend to a tenant at will.
The following cases are
referred to in this report.
Cardiothoracic Institute v Shrewdcrest Ltd [1986] 1 WLR 368; [1986] 2 EGLR 57; (1986)
279 EG 69
Hagee (London) Ltd v AB Erikson & Larson [1976] QB 209; [1975] 3 WLR 272;
[1975] 3 All ER 234; [1975] 2 EGLR 61; [1975] EGD 139; (1975) 236 EG 479, CA
Javad v Aqil [1991]
1 WLR 1007; [1991] 1 All ER 243; (1990) 61 P&CR 164; [1990] 2 EGLR 82;
[1990] 41 EG 61
Street v Mountford
[1985] AC 809; [1985] 2 WLR 877; [1985] 2 All ER 289; [1985] 1 EGLR 128;
(1985) 274 EG 821, HL
Wheeler v Mercer
[1957] AC 416; [1956] 3 WLR 841; [1956] 3 All ER 631; [1956] EGD 248;
(1956) 168 EG 520, HL
This was an application
by motion by the plaintiff, Cricket Ltd, seeking interlocutory relief in
proceedings against the defendant, Shaftesbury plc.
Joanne Moss (instructed by Shammah Nicholls, of
Manchester) appeared for the plaintiff; Robert Levy (instructed by Eversheds)
represented the defendant.
Giving judgment, NEUBERGER J said: This is an application by Cricket Ltd,
the plaintiff, against Shaftesbury plc, the defendant, for an order restraining
the defendant until trial or further order from impeding the plaintiff’s
enjoyment, use and occupation of premises, being the fourth floor, Ganton
House, 14-22 Ganton Street, London W1.
It is the plaintiff’s case that it has, or may
have, the protection of Part
1954 Act) and that in those circumstances, even though its contractual term has
expired, it enjoys the right to remain in possession of the premises and the
defendant is not entitled to evict it. It is the defendant’s case that the
plaintiff does not have the protection of the 1954 Act and that, in those
circumstances, the plaintiff has no right to remain in the premises.
The facts are these. On 26 November 1997 the
plaintiff and the defendant entered into a written agreement whereby the
defendant consented to the plaintiff ‘occupying the above property’ [that is
the premises] from 26 November 1997 to 30 April 1998 for ‘a licence fee of
£35,000 plus any value added tax payable thereon’ on certain terms as set out
in the agreement.
Two days before that came to an end, the parties
entered into a further agreement dated 28 April 1998, which was to all intents
and purposes in identical terms, save that the period was from 1 May 1998 to 30
September 1998 and the ‘licence fee’ was slightly lower.
Subject to the incidence of the 1954 Act, that
agreement came to an end on 30 September 1998. It appears that there were
negotiations between the parties with a view to the plaintiff taking a lease of
the premises from the defendant for a term from 29 September 1998 until
February or May 1999. A draft lease was sent by the defendant’s solicitors to
the plaintiff’s solicitors under cover of a letter of 12
recorded a rent of £81,891 pa and it also indicated that the proposed lease was
to be subject to an order under section 38(4) of the 1954 Act, whereby the
provisions of sections 24 to 28 of the 1954 Act were to be excluded from the
new lease.
Negotiations followed, during which the plaintiff
remained in occupation of the premises. On 2 December 1998 the plaintiff sent
to the defendant a cheque for just over £24,000 ‘in respect of the rental due
for the quarter commencing 29th September 1998’. In reply, the defendant’s
solicitors wrote saying that the plaintiff should either sign the proposed
lease or vacate the premises. On the same day, 30
defendant wrote directly to the plaintiff purporting to terminate whatever
right of occupation the plaintiff had in the premises on 9 December 1998. The
plaintiff remained in occupation of the premises after that date, and still
remains in occupation of the premises.
The plaintiff issued the instant proceedings on 10
December 1998, seeking, effectively, the relief that it seeks in the notice of
motion, but on a more permanent basis. In particular, it seeks a declaration
that it occupies the premises ‘pursuant to a tenancy protected by the Landlord
and Tenant Act 1954’.
The 1954 Act, in general, applies to tenancies of
premises that the tenant occupies for the purpose of a business carried on by
him: see sections 23 and 24 thereof. However, there are tenancies that are
excluded from the ambit of the Act. One such type of tenancy arises where the
court has made an order under section 38(4) in respect of the tenancy, which
was what was proposed by the defendant in relation to the lease that was
negotiated with the plaintiff, but which was not, in fact, granted.
The relevant provision for the purpose of the
argument before me is, however, section 43(3) of the 1954 Act, which is in the
following terms:
This part of this Act does not apply to a tenancy
granted for a term certain not exceeding six months unless —
(a) the tenancy contains provision for
renewing the term or for extending it beyond six months from its beginning; or
(b) the tenant has been in occupation for
a period which, together with any period during which any predecessor in the
carrying on of the business carried on by the tenant was in occupation, exceeds
twelve months.
I cite that provision as amended by section 12 of
the Law of Property Act 1969, which substituted the periods of six months and
12 months for the previous periods of three months and six months, respectively.
In order to succeed in its argument, the plaintiff
has to get over two hurdles. The first hurdle is to establish that it ever had
a tenancy. So far as the two written agreements were concerned, they each, on
their face, purported to be licences. Licences are not included within the 1954
Act. It only applies to tenancies. However, in light of the decision of the
House of Lords in Street v Mountford [1985] AC 809*, Mr Robert
Levy, who appears on behalf of the defendant, concedes in view of the evidence
put forward by the plaintiff, that the plaintiff has, for the purpose of these
interlocutory proceedings, an arguable case for saying that the two written
agreements were, in fact, tenancies. In my judgment, for the purpose of these
interlocutory proceedings, that is a realistic and sensible concession.
*Editor’s note: Also reported at [1985] 1 EGLR
128
The plaintiff has also to get round section 43(3);
the aggregate period of the two agreements was less than 12 months, as it began
on 26 November 1997 and ended on 30 September 1998. However, crucially on the
plaintiff’s case, there is also the additional period of occupation since the
second agreement expired, namely from 1 October 1998. It is common ground
between the parties that, for that period, the plaintiff was a tenant at will
(at least assuming that the two agreements were tenancies). That seems to be
right in light of the decisions of the Court of Appeal in Javad v Aqil
[1991] 1 All ER 243* and of Knox J in Cardiothoracic Institute v Shrewdcrest
Ltd [1986] 1 WLR 368.
*Editor’s note: Also reported at [1990] 2 EGLR 82
Mr Levy contends that the plaintiff cannot claim
the benefit of the 1954 Act, because neither of the two agreements to which I
have referred was for a period of six months and their combined period was for
less than 12 months. So far as the period of occupation beyond
30
nature of the occupation being a tenancy at will fell within the 1954 Act
because it was a tenancy, she says that it clearly does not. This is in the light
of clear and consistent authority, namely Wheeler v Mercer [1957]
AC 416 in the House of Lords, Hagee (London) Ltd v AB Erikson &
Larson [1976] QB 209† in the Court of Appeal and Cardiothoracic
itself, at first instance. Accordingly, he says, two consecutive periods of
occupation under tenancies of five months each do not give the plaintiff
protection and the final period of occupation cannot be taken into account.
†Editor’s note: Also reported at [1975] 2 EGLR 61
Miss Joanne Moss, who appears on behalf of the
plaintiff, contends that this is not right, or at least for the purpose of an
interlocutory hearing such as this, it may not be right, because section 43(3)(b)
is not concerned merely with the occupation by a tenant under a tenancy that
falls within the Act or a tenancy of any sort. Read literally, she argues that
section 43(3)(b) assists the plaintiff. It requires that ‘the tenant has
been in occupation for a period which… exceeds 12 months’. Having taken up
occupation on 26 November 1997, the plaintiff was still in occupation on 27
November 1998, a year and a day after the original arrangement, and, indeed,
the plaintiff remained in occupation, perfectly lawfully, until about 10
December 1998. In those circumstances, she contends, therefore, that advantage
cannot be taken by the defendant of section 43(3)(b), which ceases to
apply once the tenant (in this case the plaintiff) has clocked up more than 12
months’ occupation.
Ingenious though that argument is, I am bound to
reject it. Section 43(3) starts by saying:
This part of this Act does not apply to a tenancy
granted for a term certain…
To my mind, that cannot (and it is conceded that
it cannot) apply to the tenancy at will, such as that which arose on 1 October
1998. That is clear in light of the consistent, clear and binding authorities
to which I have referred. Therefore, when the second tenancy, as I assume it to
be, came to an end on 30 September 1998, it was not at that time within the
1954 Act. It expired by effluxion of time, because the 1954 Act did not apply
to it, in light of section 43(3). If Miss Moss is right, then, although no
further tenancy for the purposes of the Act (because a tenancy at will is not a
tenancy for the purposes of the Act) was granted to the plaintiff after 30
September 1998, the plaintiff’s occupation after that date up to 27 November
1998, none the less retrospectively brought the tenancy, which had expired on
30 September 1998, within the 1954 Act. In other words, having determined on 30
September, the tenancy was retrospectively revived. That seems to me an
extraordinary result.
In my judgment, if a tenancy is not within the
1954 Act when it expires because of section 43(3), then the clearest possible
words would be required before it could, as it were, retrospectively be revived
and brought within the 1954 Act. It seems to me that, if one asks oneself on 30
September 1998 whether the tenancy (then in its last day) was within the 1954
Act or not, the answer would have been no, because, although there have been
two successive tenancies, they did not span a period of more than 12 months
and, therefore, section 43(3) applied. Thereafter the plaintiff remained in
occupation of the premises but not as a tenant. It was a tenant at will. It
seems to me that whether it was a tenant at will,
any of those capacities could retrospectively resurrect a tenancy that had
expired by effluxion of time and bring it within the 1954 Act.
I consider that that conclusion is strongly
supported by looking at the opening words of section 43(3)(b). In order
to get out of the exemption in section 43(3), it has to be shown that the
tenant had been in occupation for the requisite period. ‘The tenant’ to my
mind must mean the person who is a tenant for the purposes of the 1954 Act,
namely a tenant under a fixed-term tenancy or a periodic tenancy, but not a
licensee, a trespasser or a tenant at will. To my mind, if one asks oneself on
any day after 30 September 1998 whether the tenant had been in
occupation for a period that exceeds 12 months, the answer must be no.
It is quite true, as Miss Moss points out, that,
under section 43(3)(b), where a person who is or has been a tenant
within the Act can show that he has taken over the business of another person
who may not have been a tenant (in that he may have been a freeholder or
licensee) there is an argument for saying (and I do not decide the point) that
one can take into account the previous period of occupation by the predecessor
in the business, irrespective of the nature of his occupation. Mr Levy contends
that that is wrong, but assuming in Miss Moss’ favour that that is right, it
still does not help the plaintiff in the present case. First, it is concerned
with a different point. Second, it involves looking at a period before the
contractual term, not after it as Miss Moss’ argument infers: no retrospective
reviewing of a tenancy would arise. Third, the argument highlights a difference
that assists the defendant. The plaintiff has to show that ‘the tenant
has been in occupation for a period, which together with any period during
which any predecessor in the carrying on of the business carried on by the
tenant was in occupation, exceeds 12 months’. The expression ‘predecessor’
refers to the predecessor in the business (who could be a tenant at will)
whereas ‘tenant’ infers someone who is a tenant within the 1954 Act (which cannot
include a tenant at will). From 30 September 1998 the plaintiff was not the
tenant: he was not a tenant, because the word ‘tenant’ in the 1954
Act does not extend to a tenant at will.
In those circumstances, I have reached the clear
view, despite Miss Moss’ arguments, that the defendant is correct. Because this
is a new point and because, in fairness to Miss Moss’ arguments, it is wrong to
pretend that there are no arguments the other way, she contends that I should
not decide this point and hold that it is arguable and leave it to be
determined at trial. The court has to be careful before deciding issues of
principle at an interlocutory stage, but it seems to me that the point raised
in these proceedings is a short issue of statutory construction upon which the
court not merely can, but ought, to rule at this stage if it has reached a
clear view. I have reached a clear view.
In those circumstances, I do not need to consider
the balance of convenience. If I had needed to consider the balance of
convenience, then, provided that I was satisfied that the plaintiff was in a
financial position to pay the defendant the sort of money that the defendant
could reasonably establish that it would lose with effect from February 1999, I
would have been prepared to grant the plaintiff the injunction. However, I
would have wanted to have been satisfied: (a) in favour of Miss Moss, on better
evidence than there is at the moment, that the defendant was really
anticipating carrying out substantial work to the building from about February
1999; and (b) if so, in fairness to Mr
those circumstances good for its cross-undertaking in damages. Apart from that,
I would otherwise have been minded to grant the injunction on terms that a
reasonable payment based on £81,000 pa was paid monthly. However, that would
have been insufficient compensation to the defendant if it really intended to
carry out substantial works to the premises before the trial. It does seem to
me, on the evidence, that it is quite possible that the defendant really
intends to do this work, given that the rest of the building is empty. However,
had I considered that the balance of convenience was something that ought to be
considered, I would want rather better evidence on each issue.
In the event, however, for reasons that I have
given, I consider that I should dismiss this motion.
