Redevelopment — Tenancy of market hall — Stallholders in exclusive possession — Notice to terminate tenancy — Counternotice of unwillingness to leave premises — Whether tenant “occupied” premises — Whether tenant protected by Landlord and Tenant Act 1954, Part II — Whether landlord entitled to resist application for new tenancy — High Court holding that tenant not protected by Act — Court of Appeal reversing that decision — Appeal to House of Lords allowed.
The appellants, G, were market promoters and managers. By a lease dated April 2 1974 a tenancy of Wallasey Market on Merseyside was granted to G for 21 years from September 29 1970. The freehold reversion was vested in P&O, which had completed the development of the whole of the shopping precinct of which the market formed part. The only part of the precinct not redeveloped was Wallasey Market. G had acquired the premises as a shell and had fitted them out as a market hall with wooden stalls. Each stallholder secured his own stall with his own padlock and key. There was a market superintendent employed by G who had an office in the hall from where he controlled the heating. He unlocked and locked the hall, collected stallholders rents, and generally supervised the running of the hall. On November 28 1990 P&O served G with notice to terminate the lease on September 29 1991. The notice stated that P&O would oppose an application to the court for the grant of a new tenancy. G served a counternotice stating that it was not willing to give up possession of the premises on the date of termination. A question arose whether G’s tenancy was one “… where the premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes” within section 23(1) of the Landlord and Tenant Act 1954. The High Court held that at the relevant date G did not occupy the market hall: see [1993] 1 EGLR 96. The Court of Appeal allowed an appeal against that decision: see [1994] EGCS 29. P&O appealed.
Held The appeal was allowed.
1. The court could not accept that a tenant of a business tenancy could sublet part of the property to a business subtenant on terms which would have the legal result that, thereafter, the sublet property would form the holding of the subtenant’s business tenancy and yet, at the same time, remain part of the holding of the tenant’s business tenancy.
2. In this case it was common ground that the traders’ tenancies were business tenancies. Each unit was occupied by the trader for the purposes of his business. It was inconsistent that units could also be occupied by Graysim for the purposes of its business.
3. Graysim was much more than a landlord passively receiving rents from its tenants. To achieve optimum rents it was concerned to supervise what went on in the market. Customers needed to be attracted if in turn traders were to be attracted.
4. Part II of the 1954 Act was concerned to protect tenants in their occupation of property for the purposes of their business. Its income from Wallasey market consisted solely of rentals from those lettings. The Act was not concerned to give protection to tenants in respect of such income. The Act looked through to the occupying tenants — here the traders — and afforded them statutory protection, not their landlord. Intermediate landlords, not themselves in occupation, were not within the class of persons the Act was seeking to protect.
David Neuberger QC and Nicholas Harrison (instructed by Carter Lemon) appeared for P&O; Charles Sparrow QC and J Patrick Powell (instructed by Banks & Co) appeared for Graysim.
