Lease – Termination – Section 30(1)(g) of the Landlord and Tenant Act 1954 – Claimant leasing land including oil jetty from defendant harbour authority – Defendant terminating lease and opposing grant of new tenancy – Whether defendant intending to occupy premises for purposes of its business — Preliminary issue determined in favour of defendant
By four leases, the claimant company leased land on which an oil terminal was situated from the defendant authority’s predecessor for a term of 40 years that expired in December 2009. In 1995, the parties commenced negotiations in which the claimant applied to extend the leases. However, they failed to reach an agreement.
In 2009, the defendant served on the claimant notices, under section 25 of the Landlord and Tenant Act 1954, to terminate the leases. It also notified the claimant pursuant to section 25(6), that it would oppose the grant of new tenancies.
The claimant commenced four sets of proceedings for the grant of new tenancies. The defendant resisted the claim arguing, pursuant to section 30(1)(g) of the 1954 Act, that it intended to occupy the premises and the associated land leased to the claimant to provide port facilities and services to import and export oil and other products in order to explore and implement the supply of oil and other products over or through the premises to third parties.
The court ordered to be tried as a preliminary issue the question of whether the defendant intended to occupy the holdings for the purposes, at least in part, of a business, within section 30(1)(g), and if so when, and in what circumstances it so intended.
Held: The preliminary issue was determined in favour of the defendant.
“Intention” was a common English word that should, when construing section 30(1)(g), be given its ordinary meaning. The intention had to be settled and unlikely to change. If the landlord, having obtained possession, changed its mind and did not do any work of reconstruction, the tenant had no remedy. Moreover, “intention” connoted an ability to carry work into effect. It would not be right that a tenant should be turned out by landlords on an uncertain and unsettled intention: Cunliffe v Goodman [1950] 2 KB 237 and Reohorn v Barry Corporation (1956) 167 EG 604 considered.
The test was one of intention and reasonable practicability, not of the probability of achieving its start or its likely success once established. The intention had to be capable of being carried out in the reasonable future in the circumstances that would prevail when possession was achieved by the landlord. However, it was not for the court to police a landlord’s entitlement to recover possession by examining the financial wisdom of its held plans. Nor would it always be appropriate to test the reasonable practicability of a landlord’s intention to establish a business by reference to the presence or absence of detailed building plans, planning and licensing consents: Cornwall Coast Country Club v Cardgrange Ltd [1987] 1 EGLR 146; (1987) 282 EG 1664; Cox v Binfield [1989] 1 EGLR 97; [1989] 01 EG 69; Edwards v Thompson [1990] 2 EGLR 71; [1990] 29 EG 41; and Dolgellau Golf Club v Hett [1998] 2 EGLR 75; [1998] 34 EG 87 considered.
The judge had only one question to decide, namely, whether the landlord, on the termination of the tenancy, intended to occupy the holding for the purposes of a business. The court had to be careful when speculating about what might happen in the future on hypothetical bases. However, section 30(1)(g) called for some speculation by requiring proof of what the landlord intended to do at the termination of the tenancy. That termination would, by definition, not have happened at the date of the hearing, because of the existence of the statutory continuation tenancy under section 24(1). Tenants were to be allowed security of tenure if they had established themselves in business in leasehold premises so that they could continue their business there. However, they were not allowed such protection at the termination of their lease if the landlord could establish its intention to reoccupy the holding for the purposes of its business. That exception was a function of another aspect of the policy of the legislation, to the effect that landlords should be entitled to reoccupy their land, notwithstanding the tenant’s security of tenure, if they wanted to use that land for business purposes (section 30(1)(g)) or for redevelopment (section 30(1)(f)): O’May v City of London Real Property Co Ltd [1982] 1 EGLR 76; (1982) 261 EG 1185; Westminster City Council v British Waterways Board [1984] 1 EGLR 109; (1984) 272 EG 1279, and Cornwall considered.
In the instant case, the defendant intended to reoccupy the premises at the termination of the leases, whenever that might occur. There was no doubt that the defendant would ensure that it was reoccupying the premises for the purpose of providing port services to third-party oil companies or traders at the termination of the leases. The same would apply if the claimant vacated and removed its equipment from the oil jetty.
Nicholas Dowding QC and Mark Sefton (instructed by DLA Piper UK LLP) appeared for the claimant; Christopher Nugee QC and David Holland QC (instructed by Eversheds LLP) appeared for the defendant.
Eileen O’Grady, barrister
