Landlord and Tenant Act 1954, Part II–Question as to entitlement to claim new tenancy of shop premises–Tenants were owners of other premises in same street on which they carried on a pharmacy business–These other premises were being reconstructed to make a larger pharmacy–Shop premises for which new tenancy claimed used only at material time as temporary dumping ground for builders’ spoil arising from reconstruction of other premises–For various reasons tenants had not been able to make any other use of the subject premises although they had stated a future intention to open them as a retail shop–Held that the premises in question were not occupied by the tenants for the purpose of a business carried on by them–Not possible to rely on the dumping being an ‘activity’ within the definition of ‘business’ in section 23(2) of the 1954 Act–Some guidance by court on meaning of ‘activity’
This was an
appeal by the defendant company, Naraine Pharmacy Ltd, tenants of premises at
33 Westow Hill, Upper Norwood, London SE19, from a decision of Judge McDonnell
at Lambeth County Court in favour of the landlords, Hillil Property &
Investment Co Ltd, plaintiffs in the action. The plaintiffs claimed that the
defendant company had no valid basis for an entitlement to a new tenancy of the
premises under Part II of the Landlord and Tenant Act 1954. The second
defendant, Mrs Mary Paricha Pawanrakha Naraine, who had been joined in the
action because she had given an indemnity in respect of any breach of covenant
by the company, took no part in the appeal.
Christopher
Allen (instructed by Fairs & Barnes) appeared on behalf of the appellants;
Jeremy Gordon (instructed by T V Edwards & Co) represented the respondents.
Giving
judgment, MEGAW LJ said: In this appeal, despite the, if I may say so, very
attractively presented argument put forward by Christopher Allen on behalf of
the appellant defendants, I am in no real doubt but that the learned judge in
the court below was right in the conclusion which he reached, and that this
case does not involve any real question of principle but is one which falls to
be decided on principles which are reasonably clear by reference to the
particular facts, or absence of facts, in the particular case.
The appeal is
one which is brought by Naraine Pharmacy Ltd, who were the first defendants in
an action brought by Hillil Property & Investment Co Ltd as plaintiffs. The
action was in the Lambeth County Court. It was heard by Judge McDonnell, who
gave his judgment in favour of the plaintiffs on March 6 1979. The claim was a
claim by the plaintiffs asserting, in substance, that the defendants had no
valid basis for an assertion that they were entitled to take advantage of the
provisions of Part II of the Landlord and Tenant Act 1954 to obtain a new
tenancy in respect of premises owned by the plaintiffs and let to Naraine
Pharmacy Ltd. The premises in question were 33 Westow Hill, Upper Norwood.
I should say
at the outset of this judgment that there were certain difficulties which were
properly faced by Mr Allen at the beginning of his address to us. It may be
partly because this appeal, being a possession appeal, has come on for hearing
not much more than three months after the date of the judgment; but, whatever
the reason, unfortunately there have not been made available to the court any
notes of evidence given in the county court. Indeed, as Mr Allen frankly and
properly admitted, those instructing him had failed to apply to the county
court for such notes of evidence, and therefore it is not surprising that they
were not provided. In those circumstances, Mr Allen was not disposed to ask for
an adjournment of the appeal but was prepared to accept that he could not make
any attack upon the learned judge’s decision on the basis of any suggestion
that the judge had erred in any way in his understanding of the evidence or in
his findings of fact.
There was also
a difficulty, which fortunately was able to be resolved, in relation to the
terms in which the learned judge in the county court had given his judgment. In
the bundle of documents before us, two separate notes of judgment were
produced, one being the notes which had been taken by Mr Allen himself, who
appeared as counsel for the defendants in the county court; the other a rather
longer and fuller note taken by Mr Gordon, who had appeared as counsel for the
plaintiffs in the county court. Both those notes, it would seem (the judge should
not have been troubled with two notes unless there was some special reason) had
been submitted to the learned judge for his approval, amendment or disapproval,
but only at a very recent date. Therefore (I need scarcely say that no blame is
to be attributed to the judge for this) his comments had not been received by
the time that this appeal came into the list for hearing. Counsel agree that we
should take Mr Gordon’s note of the judgment as being the rather fuller note;
though there is no material difference, as I see it, between the two. In the
circumstances we were prepared to accept this suggested course.
Those
difficulties having been overcome in that way, I go on to the facts so far as
they are available. They are not really in dispute. What I may call the title
to the property, 33 Westow Hill, came about as follows. On December 10 1971, a
lady called Mrs Lambert, who was then the owner of 33 Westow Hill, demised it
to a Mr Johnson for a term of seven years, from December 29 1971 to December 28
1978. On January 19 1973, Mr Johnson in his turn assigned the remainder of that
term to Naraine Pharmacy Ltd, the first defendants in the county court action
and the appellants in this appeal. On December 22 1977, Mrs Lambert assigned
the reversion to the plaintiffs in the county court action, the respondents in
this appeal, Hillil Property & Investment Co Ltd.
In 1972
Naraine Pharmacy Ltd owned 25 and 27 Westow Hill–that is, in the same street
but not immediately contiguous to 33. The business of a pharmacy was carried on
by them at 25; and I think for a time tenants of theirs were carrying on a
different business in 27; those tenants left. So that the defendants were in
occupation of both 25 and 27. In 1972 the defendants decided to join 25 and 27
structurally together in order to provide bigger and better premises for the
carrying on of their pharmacy shop. The builders whom they consulted and whom
they were disposed to employ for the purposes of that structural operation
apparently told the tenants that if they wanted to continue business at 25
while the structural alterations were being made they would have to get some
other premises where (according to the note of the judgment) ‘materials could
be stored.’ Mrs Naraine, who was the
moving spirit of the defendant company, approached the owner of 33, Mrs
Lambert, and told her that they would wish to take over the tenancy of 33; that
they would be using it for a time for the purpose of storing materials while
reconstruction of 25 and 27 went on; and that when that was finished they
intended to open a retail shop at 33. That was the plan and the intention; and
it was on that basis that the defendants took assignment of the lease of 33 on
January 19 1973 and thus became tenants of Mrs Lambert in respect of that property.
It is unnecessary to refer to the terms of the lease, dated December 10 1971,
of the residue of which the assignment was thus taken by the defendants.
Mrs Naraine
came into the action as the second defendant because she had given an
undertaking to indemnify the lessor in respect of any breach of covenant by the
defendants, her company Naraine Pharmacy Ltd, under the assigned lease. She
disappears from the scene so far as this appeal is concerned.
Then
apparently there were substantial delays. The planning authorities were not
satisfied as to the plans for the reconstruction of 25 and 27; and that no
doubt took time. It is said also that the district surveyor was troubled about
various matters, and it took some time for them to be settled. In view of there
being such delay in the starting of the work of putting together 25 and 27, the
tenants granted a licence in respect of the occupation of 33 first to Oxfam for
a short time and thereafter to a Mr Dada, who operated minicabs. He, it would
seem, was not very willing to go out when asked to do so on the termination of
the licence. It was not until 1977 that Mr Dada was persuaded, or otherwise
caused, to remove from 33. Meanwhile, it would seem that the planning
difficulties and the district surveyor difficulties had been sorted out; and in
1977 the building operations for the running together of 25 and 27 began. We
have no information in this court, and there is no indication that there was
any such material before the learned judge in the county court, as to who the
contractors were, or what were the terms of the contract between the defendants
and the contractors as to the work which they were to do; as to whether it was
a contract in writing or an oral contract; if so, what the terms were; and in
particular what terms there were about the use of 33 for the purpose for which
it is said the contractors had at an earlier stage indicated that they would
wish to have the building, namely to store materials.
According to
the notes of the learned judge’s judgment, which provide the facts so far as we
are concerned, the builders, having started work in late 1977 or perhaps early
1978, used 33 to dump waste material taken from 25 and 27. When the term of the
lease of 33 expired in September 1978, the position was that the only use of
the shop at 33 was ‘as a dumping ground,’ as the judge puts it, ‘for 25 and
27.’ The judge goes on in his judgment
to say: ‘It is said’–that is, said on behalf of the tenants–‘that some of the
material’–that is, material dumped in 33–‘could and would be reused in 25 and
27’; ‘but,’ said the judge, ‘I find that the great bulk of material was
rubbish, although one or two of the items could have been reused. That is the
situation in September 1978 and the situation today’–‘today’ being the date
when the learned judge was giving his judgment in March 1979. Then the judge in
his judgment, having set out various clauses in the lease which I do not
propose to recite, records that the tenants had made known–presumably in
January 1973–to Mrs Lambert their intention to open a retail shop at 33, but
meantime to make temporary use of 33 for the storage of material in connection
with 25 and 27. The judge held that it was clearly contemplated by all
concerned that the use for storage of materials was to be a short and temporary
use, followed by reopening as a shop.
The judge
later in his judgment said, discussing the question whether Part II of the
Landlord and Tenant Act 1954, applied at all, ‘If premises are acquired whether
by the grant of a new lease or by the assignment of an existing lease then I
would readily hold that they are occupied for the purposes of a business if the
occupier is in fact actively preparing the premises for those purposes.
Paragraph 4 of the defence suggests that they’–that is, the tenants–‘were
preparing for trade from the premises. The fact is quite different and the
premises were used by the builders to deposit rubbish.’ Later, the judge said: ‘It would be straining
the words of section 23(1) to hold that they applied to this case where
premises are occupied not for the business carried on by the first defendant at
25 and 27 but for the purpose of affording facilities to the builders to make
alterations to the structure of 25 and 27.’
The first
point which was taken on behalf of the plaintiffs in their assertion that Part
II of the Landlord and Tenant Act 1954 did not apply was that these premises,
33, were not used by the tenants for the purposes of a business carried out by
the tenants. On that basis the learned judge held that the plaintiffs were
right. From that decision the tenants appeal.
Before the
judge, the plaintiffs also asserted that the Act did
of the use of 33, and that, by virtue of another provision of the 1954 Act,
that also entitled them to say that the tenants had no status under the Act to
require the granting of a fresh lease in respect of business premises. I do not
find it necessary to deal with that point, on which the learned judge found
against the plaintiffs and which the plaintiffs, as respondents in this appeal,
wish to raise, if necessary, by way of cross-notice. We have not heard argument
upon it because, as it seems to me, the learned judge was entirely right on the
first ground on which he decided in favour of the plaintiffs. Therefore
argument as to the second ground becomes irrelevant.
The relevant
provisions of subsections (1) and (2) of section 23 of the Landlord and Tenant
Act 1954 are as follows:
(1) Subject to the provisions of this Act, this
Part of this Act applies to any tenancy where the property comprised in the
tenancy is or includes 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.
(2) In this Part of this Act the expression
‘business’ includes a trade, profession or employment and includes any activity
carried on by a body of persons, whether corporate or incorporate.
Mr Allen’s
primary submission in this case was that, by virtue of the provisions of
subsection (2), the defendants as tenants were to be treated as carrying on an
‘activity’ in 33, of which they were tenants, and that in consequence they were
brought within the scope of Part II of the 1954 Act. Mr Allen submitted that
there was no doubt that the tenants were ‘in occupation’ of 33. That was not
challenged by Mr Gordon on behalf of the plaintiffs, and I think was never in
issue.
Mr Allen also
submitted that the actual trading does not have to be carried on in the
particular premises and that, therefore, the defendants were not defeated by
the fact that the pharmacy business was here being carried on in 25 and 27, or
one or other of them, whereas the building with which we are concerned is 33.
That, again, I think is right, in this way. It is not a question of saying that
these are ancillary premises. The question under the Act is: are these premises
‘occupied for the purposes of a business’?
You may have more than one building. You may have two or more separate
buildings which at any given time are occupied for the purposes of a business.
The fact that your customers in the pharmacy shop come into 25 and do their
shopping there and do not do their shopping in 33 does not mean that 33
necessarily is not occupied for the purposes of the business. One can think of
many simple examples of that: where, for instance, you have a shop, and another
building used, not for customers to come and buy, but to keep stock which you
can take into the shop as required. Or you might have a separate building in
which you carried on the accountancy operations and keeping books of account
and so on. It is not a question whether the building you are looking at is the
main seat of the business, but whether it is occupied for the purposes of the
business. So the mere fact that the pharmacy shop, properly so called, was 25
or 27 would not stop 33 from being within the protection of the Act: but it has
to be shown that it is occupied by the tenant for the purposes of the business
carried on by him.
Mr Allen’s
point was that here, the tenants being a body of persons corporate, one looks
for an activity which is carried on by that corporate body, the tenants, and he
said that there was an activity carried on by them in 33. True, the actual
physical carrying on of the so-called ‘activity,’ the dumping of the spoil from
25 and 27, may have been done by the building contractors and not by servants
of the tenants; but, says Mr Allen, the building contractors ought to be
treated as the agents of the tenants for that purpose and therefore the
activity carried on by them should be treated as being the activity carried on
by the defendants, the tenants, in respect of 33. Here he was, I think, in
difficulty, having regard to the point which I have already mentioned, the
total absence of any evidence as to the relationship between the contractors
and the tenants, as to the terms of such contract, and as to the basis on which
33 was being used by the contractors. But let it be assumed that that ought to
be decided in favour of Mr Allen and that the activity of the contractors here
ought to be treated, so far as it was an ‘activity’ for the purposes of
subsection (2) of section 23, as being the activity of the defendants as being
the tenants. In my judgment the use of 33 for the dumping of spoil in the
building operations involved in the reconstruction of 25 and 27 is not an
‘activity’ within the meaning of that phrase in subsection (2) of section 23.
The word ‘activity’ connotes some general use by the persons occupying, and not
some particular, as it were casual, operation such as was being carried out by
the contractors here in using 33 as a temporary dumping ground for spoil from
the other buildings.
The cases in
which the word ‘activity’ in section 23(2) have been considered appear to have
been cases where that which has been recognised as being an ‘activity’ is such
a thing as a lawn tennis club, occupying for the purpose of its activities as a
members’ club; and other similar instances. Though the activity is something
which is not strictly a trade, a profession, or an employment, nevertheless,
being an ‘activity’ for this purpose it must be something which is correlative
to the conceptions involved in those words. In my judgment the learned judge in
the county court was quite right in not paying regard to the provision as to
‘includes any activity’ for the purposes of his judgment. He does not appear to
have referred to it, and I think rightly so. But that is not the end of the
matter, because the definition in subsection (2) is, ”business’ includes
a trade, profession or employment and includes any activity. . . .’ So the mere fact that what was being done is
not properly to be called an ‘activity’ is not the end of the matter. We still
have to look to see, and the learned judge had to look, as he did look, to see,
whether what was being done in 33 could properly be described as leading to the
conclusion that 33 was occupied by the tenants for the purposes of a business
carried on by the tenants. That is a question of fact and degree, depending
upon the evidence in the particular case. I see no basis here for faulting the
learned judge’s conclusion on that question of fact and degree on the evidence
before him so far as it is reflected in the passages in his judgment where he
records his findings of fact. It seems to me, with all respect to Mr Allen’s
submissions to the contrary, that the dumping of spoil from 25 and 27 in the
process of the work of reconstructing the premises to make them a larger and
better pharmacy is not, as a question of fact or degree, to be described as
being an occupation of 33 for the purposes of the business carried on by the
tenants. That is so even making the assumption, as being the assumption most
favourable to the defendants, of contractual terms between the contractors and
the tenants, and of the contractors being the agents of the tenants for these
purposes.
I may perhaps
give one hypothetical example to illustrate why in my judgment the judge was
right in his conclusion. As I said in referring to the learned judge’s
judgment, what he has recorded is that the purpose for which the builder said
it would be necessary to have another building was for the purpose of storing
materials. Suppose that the materials which the builder was minded to store
(though it does not seem to have been what in fact happened in this case) had
been his ladders and other equipment which he was going to need for his work in
25 and 27. Suppose that the builder thought that such materials should not be
taken back to his own yard every night and should not be left under cover in
some building in which it could be stored. Suppose he had to store that
material in some building which he had taken. Nobody could suggest that that
building was being used ‘for the purposes of the pharmacy business.’ Of course, on that hypothesis the tenant
would not have been ‘occupying’ that building. But could it make any difference
if, in the contract between the building contractor and the tenant, provision
had been made by contract that the tenant would provide a building in which the
builder should be entitled to store his
that that building was being used by the tenant for the purposes of the tenant’s
pharmacy business? In my judgment, not
so. So also in relation to the present case, where the building had been used,
for some reason which we do not know, rather than having, as is so common
nowadays, a skip outside 25 and 27 into which the debris could be dumped and
taken away. Instead of having the debris taken away to its ultimate disposal
place in one operation, for some unknown reason it is taken from 25 and 27 and
dumped in 33, and then there is a further operation thereafter at some time, presumably,
to take it away to its ultimate destination.
In all the
obscurity that exists here as to the facts of the matter, I find it impossible
to say that it has been shown that this use involved an occupation for the
purposes of the business of a pharmacy. I agree entirely with the learned
judge’s view on that matter. I would therefore dismiss the appeal.
SHAW and
CUMMING-BRUCE LJJ agreed.
The appeal was dismissed with costs.