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 the Act — Landlord entitled to oppose application for new tenancy
The plaintiff, G, carried on business as an operator of markets. By a lease dated April 2 1974 a tenancy of Wallasey Market in Merseyside was granted to G for a term of 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. This was formerly known as Liscard Shopping Centre and is now known as Cherry Tree Centre. 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. Stalls were of wooden construction. Each stallholder secure his own stall with his own padlock and key. There was a market superintendent employed by G who had an office in the hall and controlled the heating for the hall from there. He unlocked and locked the hall and collected the rents from stallholders and generally supervised the running of the hall. On November 28 1970, P & O served G with a 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 on the grounds contained in section 30(1)(f) of the Landlord and Tenant Act 1954. On December 12 1990 G served on P & O a counternotice stating that it would not be willing to give up possession of the premises on the date of termination. It was common ground that the notice and counternotice complied with the requirements of the 1954 Act and that the relevant cut-off date was September 29 1991, so that if the 1954 Act did not apply at that date G’s tenancy could not continue.
There were three questions for the court: (a) whether G’s tenancy of the market was protected by Part II of the 1954 Act and continued: (b) if so, what was the holding in relation to G’s tenancy as defined by section 23(3) of the Act for the purposes thereof; and (c) whether G was entitled to a new tenancy of the premises or whether P & O might oppose G’s application for a new tenancy on the grounds specified in section 30(1)(f) of the Act.
Held G was not protected by the 1954 Act.
1. On the facts and in all the circumstances the stallholders in this case undoubtedly had exclusive possession of their stalls and for G to be protected under the 1954 Act the “occupation” test had to be satisfied. Under section 23(1) and (3) of the Act, the tenant might occupy a part only of the premises, but in order to claim protection in respect of the whole or any part of the premises the tenant had to “occupy” the same.
2. “Occupation” was an ordinary English word and the cases showed that in this context it should be given its ordinary meaning and construed in a common sense way: see Narcissi v Wolfe [1960] Ch 10; Lee-Verbulst (Investments) Ltd v Harwood Trust [1973] 1 QB 204; Hancock & Willis v GMS Syndicate Ltd (1983) 265 EG 473; and Wandsworth London Borough Council v Singh (1991) 62 P & CR 219.
3. Although occupation need not be continuous, there had to be an element of actual physical occupation before the requirements of the 1954 Act could be said to be satisfied: see Trans-Britannia Properties Ltd v Darby Properties Ltd [1986] 1 EGLR 151.
4. In the context of the 1954 Act there was no magic in the fact that the premises were used as a market and the occupation test still had to be satisfied. There had to be an element of actual physical occupation on the part of the person held to have been in occupation and the extent of G’s control and presence in the sense in which those words could be applied in this context was insufficient to satisfy the requirements of the 1954 Act.
5. In view of the findings of fact in this case and the terms of the contracts made between G and the stallholders, the only conclusion was that G did not occupy any of the market stalls. That was consistent with common sense because, as a matter of ordinary language, the stalls were occupied by the individual stallholders. Accordingly, they did not form part of the holding for the purposes of section 23(3) of the 1954 Act and G’s tenancy was not protected under Part II of the Act, but came to an end on September 29 1991.
6. Section 30(1)(f) contained the relevant grounds of opposition to the grant of a new tenancy which was invoked by P & O. It was common ground that P & O intended to carry out demolition and reconstruction works and that it had the ability to do so.
7. “Reconstruct” meant “rebuild” and involved substantial interference with the structure: see Percy E Cadle & Co Ltd v Jacmarch Properties Ltd [1957] 1 QB 323; Joel v Swaddle [1957] 1 WLR 1094.
8. Whether work amounted to reconstruction of a substantial part of the premises comprised in the holding involved looking at the position as a whole and comparing the effect on the premises of carrying out the proposed work with the condition and state of the premises before the work was done: see Joel v Swaddle.
9. The demolition and/or reconstruction need not be confined to load-bearing walls for the landlord’s plans to qualify under section 30(1)(f): see Bewlay (Tobacconists) Ltd v British Bata Shoe Co Ltd [1959] 1 WLR 45.
10. On the evidence in this case it was clear that the ground specified in section 30(1)(f) was made out. P & O’s plans could not be more extensive than they were. It was unrealistic to suggest that the proposed works could be done while the market continued to function and without P & O obtaining legal possession of the holding. It was plain that it would be impracticable for the proposed works to be carried out piecemeal.
11. The works proposed to be done by P & O would probably take eight weeks, during which time it would not be possible for G to make any use whatsoever of the holding. That would constitute an interference to a substantial extent and for a substantial time with the use of the holding for the purposes of the business carried on by G. Thus G was not entitled to the protection afforded by section 31A of the 1954 Act. Accordingly, P & O was entitled to oppose G’s application for a new tenancy on the ground specified in section 30(1)(f).
David Neuberger QC and Nicholas Harrison (instructed by Carter Lemon) appeared for P & O; Charles Sparrow QC and Patrick Powell (instructed by A Banks & Co) appeared for G.
