Business premises — Tenant of garage premises covenanting with landlord to comply with requirements of any competent authority relating to premises — Tenant indemnifying landlord against consequences of default — License granted by fire authority allowing petroleum spirit to be kept on premises — License stating that no transfer allowed without authority’s consent — License granted under statutory provisions whereby license holder committing an offence if in contravention of any condition of license — Tenant taken over by another group — Landlord granting further leases after expiry of license — Tenant contravening statutory provisions with regard to keeping of petroleum spirit on premises — Tenant vacating premises — Authority refusing license until specified works carried out — Landlord claiming damages from tenant — Whether non-renewal of licence constituted breach by tenant — Whether damages recoverable — Judgment for the tenant
The plaintiff landlord owned the freehold of premises known as Flight Park Garage, 820/834 Bath Road, Cranford, Middlesex. It let the premises to Axis International Ltd (Axis) for a term from November 1 1985 to October 31 1987. By clause 3.17, the tenant undertook “to comply …with the provisions of all statutes and instruments… and requirements of any competent authority relating to the demised premises…and to indemnify the lessor against all proceedings claims or demands which may be brought” by reason of any default in compliance. In November 1986, the London Fire and Civil Defence Authority granted Axis a licence to keep petroleum spirit on the premises for a period of three years from that date until the end of October 1989. The licence was marked that it was not to be transferred without the consent of the authority and was subject to a condition that the licensee had to give notice in writing to the authority of persons to whom transfer was proposed.
In 1987, Axis changed its name to “T & C” and the landlord granted it a lease from November 1987 for one year to October 1988. In February 1988, T & C was taken over by the defendant tenant, to which the landlord granted short-term leases until April 1990. During those terms, the authority’s licence expired – on October 31 1989. The statutory position was that it was illegal for the occupier to keep petroleum spirit on premises without a licence to do so or, if he held a conditional licence, to keep petroleum spirit on the premises in breach of any condition of the licence. The tenant left the premises at the end of April 1990. The authority sent the landlord a letter listing 12 items of work which were to be carried out before further consideration could be given to the issuing of a new licence to keep petroleum spirit on the premises.
The landlord claimed damages for: (a) breach of covenant to repair; (b) the cost of carrying out the works; (c) delay in reletting the premises. The issues were stated to be: 1 whether the non-renewal of the petroleum spirit licence constituted a breach of the tenancy agreement; 2 whether, if so, damages were recoverable in law in so far as they resulted from the breach; 3 if so, the measure of damages to be assessed.
Held The tenant was not in breach of covenant.
1. It was absolutely clear that from November 1 1989 onwards to its vacating the premises, the tenant was in breach of its obligation “to comply in all respects” with the provisions of the “relevant statute” by having kept petroleum spirit on the premises without a licence. Further, throughout its occupancy the tenant was similarly in breach as the licence granted to Axis was expressed to be non-transferable. The defendant tenant was a new and distinct legal entity which was not entitled to rely on the licence granted to Axis without a proper transfer. No such transfer apparently took place, with the consequence that the tenant’s keeping of petroleum spirit on the premises was throughout unauthorised.
2. The obligation which the landlord pleaded was one needing “to comply with the requirements” of the authority (the “competent authority”). The breach pleaded was the tenant’s breach by failing to obtain a renewed petroleum spirit licence for the premises. However, there was no requirement of the authority directed to the tenant for a new licence to be applied for and obtained. Thus in seeking to clad the words “to comply in all respects … with … requirements of any competent authority” with specific content, the difficulty became insuperable. If there were no relevant requirement, there could be no relevant application of the general obligation to comply with the requirement of competent authorities. If there were no such application, then there could be no breach of obligation by the tenant and the landlord’s contentions failed.
3. Even by way of implication, it was not possible to arrive at the conclusion that the tenant could be said to have undertaken with the landlord to maintain a valid petroleum spirit licence in effect at all times during the currency of the landlord’s letting to the tenant. The tenant had never positively undertaken to use the premises for the keeping and sale of petrol. If he had been charged with breach by the authority, he could have discontinued the keeping of petrol on the premises at his option.
4. The issue of damages in the light of those conclusions did not arise. Had that stage been reached, however, the assessment would not have been made on the basis of the indemnity, as there had been no action, proceedings, or demand made — nor even default in compliance with a requirement of a competent authority. Moreover, for any licence granted by the authority to have succeeded, the licence of November 1986 would have been limited to the occupier for the time being and would have expired when the tenant vacated the site.
Henrietta Manners (instructed by Caporn Campbell, of Surbiton) appeared for the landlord; Michael Daiches (instructed by Bells, of Kingston upon Thames) appeared for the tenant.
