Landlord and Tenant Act 1954–Notice to terminate served on tenants under section 25–Whether notice valid–‘I intend to occupy the premises for the purpose of a business carried on by me in them’–Landlord a company–Notice given by individual with controlling interest in company–Section 30(3) considered–Notice ought to state whether landlord’s intention is to carry on business personally or
through medium of company–Notice in present case held to be valid, however, despite absence of reference to company
This was a
preliminary issue in proceedings by the plaintiffs, Harvey Textiles Ltd, to
obtain a new lease of the business premises occupied by them at 82 Middlesex
Street, Stepney, London E1, as wholesalers of textiles and fancy goods. The
plaintiffs claimed that the section 25 notice served on them as tenants was
invalid on the ground that their landlords were a company and not the
defendant, Abraham Hillel.
G I Bennett
(instructed by J Israel, Arnold & Strange) appeared on behalf of the
plaintiffs; C J Lockhart-Mummery (instructed by Thornton, Lynne & Lawson)
represented the defendant.
Giving
judgment WHITFORD J said: I have to decide a preliminary point in connection
with a summons under which the plaintiffs are seeking the grant of a fresh
lease of certain premises in Stepney which they have been occupying in
connection with a business as wholesalers of textile apparel and fancy goods.
The defendant,
who is the landlord, served a notice under section 25 of the Landlord and
Tenant Act 1954 to terminate the tenancy. I may add, although I do not think it
is of particular materiality, that, as is not uncustomary, a counter-notice was
served on the plaintiffs’ side, and, as I have already said, a summons has been
taken out under which the plaintiffs seek to secure the grant of a fresh lease.
The only point that I am concerned with is whether the original section 25
notice was a valid notice or whether, as the plaintiffs assert, it was not. It
is part of an exhibit to an affidavit which Mr Lever has sworn on behalf of the
plaintiffs, being his exhibit 1. The relevant premises are identified in the
notice, the defendant’s name is given; the plaintiffs are required to give
notice whether they will be willing to give up possession of the premises
specified. Then, in section 3 of the notice, which is the relevant part of it
for present purposes, the defendant says:
I would
oppose an application to the court under Part II of the Act to grant a new
tenancy on the ground that on the termination of the current tenancy I intend to
occupy the premises for the purposes of a business carried on by me in them.
That is, of
course, a notice expressing opposition to the grant of a new tenancy upon the
ground specified in (g) of subsection (1) of section 30 of the Act.
Following the
receipt of this notice, apart altogether from any question of a counternotice,
there has been a little correspondence which I do not think is of any
particular materiality. Certainly on February 2 1978 a letter was sent
indicating that the plaintiffs would not be willing to give up possession of
the premises and observing that the notice stated, as indeed it did, that it
was the intention of the defendant to occupy their premises for the purpose of
a business carried on by him, and requesting the fullest possible information
relevant to the genuineness of the stated intention.
The only other
document which I have, for quite plainly there were in this correspondence
certain letters which have not been laid before me, is a letter of March 30
1978, sent on the defendant’s side, and there is a reference to at least one
intervening letter after the one I have just read, stating that it is
imperative for the defendant to occupy the premises, referring to him as ‘our
client,’ since they are required as essential storage space, and it continues:
As our
clients have factory and offices on the second floor at 82 Middlesex Street
that is part
of the relevant premises
but that
floor does not contain the storage space which our client requires, and for
security reasons it is essential that our client should be able to store his
stock in the same building as that in which he has his factory.
Then it says he
wants part of the ground floor for loading space for lorries, and so forth. I
do not know what reply, if any, was made to that letter, other than one further
letter which was very kindly read out to me by counsel which does not deal with
the extent to which the plaintiffs may have been aware of what was going on so
far as the defendant was concerned at 82 Middlesex Street, but at least I have
the affidavit of Mr Lever on the plaintiffs’ side which seems to me in the
terms of paragraphs 6 and 7, the only paragraphs to which I was referred, to
show quite clearly that Mr Lever was well aware that the defendant was not
personally carrying on any business. He knew that part of the relevant premises
were occupied by a company with which the defendant was concerned, and, indeed,
it would appear from paragraph 7 of the defence that he was perhaps aware of
the fact that the defendant had a controlling interest in this company.
The point that
he takes, which was said by counsel on the plaintiffs’ behalf not in any sense
to be a technical point, is that the notice is bad because whereas–and I may
say that the defendant accepts this entirely in the only affidavit he has
sworn–his real intention was that the premises in question at present occupied
by the plaintiffs should be used for the company in which he has a controlling
interest, what he said in the notice was, ‘I intend to occupy the premises for
the purposes of a business to be carried on by me,’ which he must have known
was not the fact.
It is accepted
on the plaintiffs’ side that a notice under section 25 does not need always to
be drafted in particular terms, but it has been pointed out to me that the
regulations pursuant to the statute have provided that a notice under the
section in question shall follow what is described as a prescribed form. It is,
in fact, Form 7 under the Landlord and Tenant (Notices) Regulations 1957, and
the printed form which forms part of exhibit 1 to Mr Lever’s affidavit is based
upon the form which we find in the relevant regulations. There are some notes
in the Landlord and Tenant (Notices) Regulations which draw attention to the
fact that the court has no power to make an order for the grant of a new
tenancy if the landlord, having stated in his notice that he will oppose an
application to the court on one of the grounds specified in this Act,
establishes that ground to the satisfaction of the court. It then says ‘The
grounds specified are,’ and it sets out under Note 4(g) the same grounds as we
find in section 30. Subject, however, to this; that in relation to (g) what we
find is, as a ground of objection relevant for consideration, ‘that on the
termination of the current tenancy the landlord intends to occupy the premises
for the purposes, or partly for the purposes, of a business to be carried on by
him in them, or as his residence,’ with only this additional note that ‘the
landlord cannot rely on this ground if his interest was purchased or created
less than five years before the termination of the current tenancy, and at all
times since the purchase or creation of the landlord’s interest the premises
have been let to a tenant occupying them for the purposes of his business.’
Now, what was
said was that this notice might very well have been a perfectly good notice if
it in fact had been the intention of the defendant personally to carry on a
business, but that it is deceptive; and it is said that a notice of this kind
must not deceive; if it does deceive then it will be held bad and the landlord
will have to start all over again. Further, it is said that a notice of this
kind cannot be amended, it must stand or fall on the terms in which it has been
sent and that, in considering whether or not the notice effectively informs the
party upon whom it is served of the ground which is being advanced in objection
to the grant of a new lease, we must follow the ordinary rules of construction.
What was urged upon me was that, looking at this as a matter of language, there
is nothing to indicate what the true intention of the defendant was. The
plaintiffs would be deceived
himself in much doubt as to what the true intention was, but that is a matter
that I cannot determine on the evidence as it stands. So it is said that if the
plaintiffs in seeing the notice did not know what the true ground was, then it
must be bad.
It is
interesting, I think, just to consider the way in which the matter which is
next most relevant for consideration arose, because it arose out of a case that
was decided in 1962 and is, indeed, reported in [1962] 2 QB 593, being the case
of Tunstall v Steigmann, where the point was that a landlord’s
notice had been served specifying ground (g), and it was agreed that the
business which it was intended should be carried on would not in truth be
carried on by the landlord but by a limited company in which the landlord held
all the shares, and the Court of Appeal held that in those circumstances the
notice was bad, for the landlord and the tenant were different personae. It was
following that case, which I think the judgments in the Court of Appeal show in
their Lordships’ view perhaps brought a little bit of a hardship upon the
landlord, that there was an amendment to section 30 of the Act making an
express provision that opposition could be entered by not only a landlord
intending to carry on business personally, but also by a landlord intending to
carry on business through the medium of a limited company in which he might
hold a controlling interest. When Parliament chose to make this alteration to
the Act, they did it in this way; they added a new subsection, subsection (3)
to section 30, in these terms:
Where the
landlord has a controlling interest in a company any business to be carried on
by the company shall be treated for the purposes of subsection (1)(g) of this
section as a business to be carried on by him.
Then there are
certain provisions as to what constitutes a controlling interest, and there is
no dispute but that the defendant has got a controlling interest in the company
which, it now stands accepted, it was always his intention should carry on the
business. It is to be observed that in making this amendment there was not any
amendment to subsection (1) of section 30, there was not any amendment touching
the prescribed form or the notes which we find in the Landlord and Tenant
(Notices) Regulations, and it seems to me to be perfectly plain that the
intention of Parliament was that, subsequent to the enactment of what is now
subsection (3), a notice should state whether the intention was an intention by
the landlord to carry on business personally or through the medium of a
company.
Now, as I
understood it, counsel for the plaintiffs, who has urged everything that I
think could conceivably be urged on the plaintiffs’ side, was prepared to
accept that if all that had been said in the notice that was served was that
the landlord would object to the grant of a new tenancy on ground (g) of
subsection (1) of section 30, then it might well be that he would be entitled
to rely upon the proposed use of the premises by the company in which he has
got a controlling interest, but by using the words he in fact used he has put
himself out of court. I do not think that this can be right.
I was referred
to the case of Sevenarts Ltd v Busvine [1968] 1 WLR 1929. It was
a case in which again questions arose as to whether in fact a section 25 notice
which had been given was or was not valid in circumstances where the landlord
who gave the notice was effectively giving it as trustee for a limited company
which would be carrying on the relevant business. The report is, I think, a
report of some assistance because there are references to a number of judgments
given in earlier cases touching notices under section 25 and the effect of
entering grounds of objection pursuant to section 30 (1). In particular, there
are quotations from the observations of Denning LJ in Byles v Caesar
[1957] 1 WLR 156 where he is observing that it is sufficient for a landlord in
his notice to specify the particular paragraph upon which he relies, and I
think it was in the context of observations such as these that counsel for the
plaintiffs was perhaps driven to observe that if only ground (g) had been
specified he could not take objection to the notice. It was, in fact, in Byles
v Caesar that Morris LJ observed in connection with (f), which was the
ground that was being considered by the Court of Appeal in that case, ‘I think
that paragraph (f) of section 30 constitutes one ground of opposition, which
ground may be satisfied in a variety of ways.’
I think the same thing can be said of ground (g); it is one ground of
opposition which may be satisfied if the landlord intends to occupy for the
purpose of carrying on a business of his own, or if he intends that the
premises shall be occupied for the carrying on of the business of a company in
which he has a controlling interest.
The notice
that was here served was, in fact, framed in the terms of the statute, that is
in the terms of (g). Those who receive notices of this kind must, unhappily for
them, be deemed to understand what the statute is about generally, and in any
event most people getting a notice of this kind would seek legal advice. To my
mind, anybody seeing the notice must appreciate that although the notice has
been framed in the terms of (g), the terms of (g) could be satisfied by the proving
of an interest such as is dealt with in subsection (3) of section 30, and the
relevant ground having been stated it must, of course, be for the landlord to
make good his case under that ground when the matter eventually comes to be
determined. I am not impressed with the suggestion that, in fact, there is
going to be any hardship upon the plaintiffs, or could be, setting aside all
questions of what they may or may not in truth have known as to the true
circumstances. Let me presume that they knew nothing and at this date have
ascertained as much as they have. When the relevant evidence is put in in this
case, the full facts will be before them, they will not be taken by surprise. I
think in this case the landlord in issuing the notice that he issued has given
just such a notice as is required by the terms of the statute and that the
notice is a perfectly valid notice.
