Landlord and Tenant Act 1954 — Renewal opposed by landlord on ground (d) of section 30(1) — Whether landlord’s offer of suitable alternative accommodation must be made before service of notice under section 25 of the Act
The applicant
tenant held a tenancy dated July 17 1978 from the respondent landlord, the
contractual term of which expired on March 25 1982. The landlord served a notice dated July 17
1981 on the tenant under section 25 of the Landlord and Tenant Act 1954
terminating the tenancy on March 25 1982 and stating that they would oppose the
grant of a new tenancy on, inter alia, ground (d) of section
30(1) of the Act, namely that the landlord has offered alternative
accommodation. The landlord’s offer of
alternative accommodation, on another floor in the same building as the
holding, was made in a letter which accompanied the section 25 notice. At trial the tenant contended that, having
regard to the use of the past tense in para (d) of section 30(1), the
offer of alternative accommodation must be made before the service of the
section 25 notice, and further, the accommodation which has been offered did
not satisfy the requirements of para (d).
landlord has offered alternative accommodation is satisfied by an offer
of accommodation before the issue is joined in the pleadings, namely before the
landlord files his answer in the county court or his affidavit in reply in the
High Court. The offer of alternative
accommodation in the letter of July 17 1981 was therefore a valid offer. On the evidence the accommodation offered by
the landlord was suitable for the tenants.
The following
case is referred to in this report.
Betty’s
Cafe’s Ltd v Phillips Furnishing Stores Ltd
[1959] AC 20; [1958] 2 WLR 513; [1958] 1 All ER 607; [1958] EGD 92; (1958) 171
EG 319, HL, affirming [1957] Ch 67; [1956] 3 WLR 1134; [1957] 1 All ER 1, CA
This was an
application by the applicant tenant, M Chaplin Ltd, for a new tenancy under the
Landlord and Tenant Act 1954, the renewal of which was opposed by the
respondent tenant, Regent Capital Holdings Ltd.
John Dyson QC
(instructed by Fooks & Co) appeared for the applicant; Christopher Priday
(instructed by Brecher & Co) represented the respondents.
Giving
judgment, JUDGE ARON OWEN said: In this application, M Chaplin Ltd, the
applicant (to whom I shall hereinafter refer as ‘the tenants’) apply to the
court for an order for the grant to them of a new tenancy, pursuant to the
provisions of Part II of the Landlord and Tenant Act 1954 (‘the Act’), by
Regent Capital Holdings Ltd, the respondent (to whom I shall hereinafter refer
as ‘the landlords’). The tenants’
premises, in respect of which they seek a new tenancy, consist of rooms on the
ground floor at 21/22 St Cross Street, Hatton Garden, London EC1, which are in
the building called St George’s House on the corner of 44 Hatton Garden. The current lease is that dated July 17 1978
made between the landlords and the tenants for a term which expired on March 25
1982.
The
proceedings in this application were initiated by the landlord serving a notice
under section 25 of the Act, such notice being dated July 17 1981 and
terminating the tenancy on March 25 1982, which was also the contractual date
of expiry. The tenants have since stayed
on in the premises under the provisions of the Act.
In their
section 25 notice the landlords stated that they would oppose the grant of a
new tenancy on two grounds. The two
grounds set out in the notice are those provided by section 30(1)(d) and
(f) of the Act, namely the provision relating to alternative
accommodation (which is para (d)) and the provision relating to
demolition or reconstruction (para (f)).
The strict timetable laid down by the Act was then operated. The tenants’ counternotice was by their
solicitor’s letter dated September 4 1981, which stated formally that the
tenants were not willing to give up possession at the date of termination.
The tenants’
application to the court was made by originating summons dated October 29
1981. That summons set out the various
particulars as required by the County Court Rules (the relevant rule is now r6
Ord 43 in the County Court Rules 1981), including the tenants’ proposals as to
the period, rent and other terms of the new tenancy for which they were
applying.
The landlords’
answer is dated November 13 1981 and the two grounds of opposition to the grant
of a new tenancy, which had been set out in their section 25 notice, are
pleaded. They also pleaded that if a new
tenancy was granted they objected to the terms proposed by the tenants.
So battle was
joined between the parties. The line of
battle was, however, altered when by letter dated February 1 1982 the
solicitors for the landlords wrote to the solicitor for the tenants stating
that the landlords had decided to abandon their opposition under ground (f),
the demolition/reconstruction objection.
This left para (d), the alternative accommodation provision, as
the only ground upon which the landlords oppose the grant of a new tenancy to
the tenants.
The trial
before me was concerned with the true construction of section 30(1)(d)
of the Act and evidence relating to the requirements thereof and with the
determination of the figure for rent in respect of any new tenancy granted by
the court. I was not concerned with the
duration or other terms of any new tenancy which might be granted, the parties
having agreed those other matters themselves.
I was informed by Mr John Dyson QC and Mr Christopher Priday, counsel
for the tenants and landlords respectively, and to both of whom I am greatly
indebted for their helpful submissions, that, so far as their researches
revealed, there is no direct authority on how para (d), section 30(1) of
the Act is to be construed. The Act has
now been in operation for nearly three decades, but it appears that the
implications of this paragraph have never had to be fully and directly
considered.
In the County
Court Practice 1982 ed at p1487 there is this note:
Alternative
accommodation — this expression has the same meaning as in the Rent Act and
therefore part of the existing accommodation may afford
v Carter (1956) LJo 259 (County Court).
That however
does not deal with the problem with which we are concerned in the present
application.
There are obiter
dicta in the well-known House of Lords’ decision Betty’s Cafe’s Ltd v
Phillips Furnishing Stores Ltd [1959] AC 20* which both counsel prayed
in aid and to which I shall presently refer in my judgment. That case concerned the construction of para
(f), but reference was made to the other paragraphs in section 30(1) in
the course of their lordships’ speeches.
*Editor’s
note: Also reported at (1958) 171 EG 319.
Counsel told
me that the facts in the present application raise for the first time, it would
appear, a direct consideration by the court of the true construction of para (d). Let me, therefore, first read in full section
30(1)(d) of the Act. It provides:
30. Opposition by landlord to application for new
tenancy
(1) The grounds on which a landlord may oppose an
application under subsection (1) of section 24 of this Act are such of the
following grounds as may be stated in the landlord’s notice under section 25 of
this Act or, as the case may be, under subsection (6) of section 26 thereof,
that is to say:
. . .
(d) that the landlord has offered and is willing
to provide or secure the provision of alternative accommodation for the tenant,
that the terms on which the alternative accommodation is available are
reasonable having regard to the terms of the current tenancy and to all other
relevant circumstances, and that the accommodation and the time at which it
will be available are suitable for the tenant’s requirements (including the
requirement to preserve goodwill) having regard to the nature and class of his
business and to the situation and extent of, and facilities afforded by, the holding;
. . .
The
construction of that paragraph submitted by Mr Dyson was as follows:
(1) The landlord must have made an offer of
alternative accommodation before the time of the section 25 notice.
(2) That offer must have been of alternative
accommodation which satisfies reasonableness and suitability as set out in para
(d).
(3) The offer must not be withdrawn and must
remain open for acceptance until the hearing at which time reasonableness and
suitability must still be satisfied.
(4) Terms which are reasonable include whether
the rent upon which the alternative accommodation is available is a reasonable
rent. But it must be a reasonable rent
on which to agree and not a reasonable rent to ask as an ‘opening shot’; it
must be not a reasonable asking rent, but a reasonable concluding rent.
In support of
his first submission, Mr Dyson quoted Lord Denning in the Betty’s Cafe’s case
op cit at p50:
If a landlord
opposes on the ground that: ‘I have offered you alternative accommodation and
am willing to provide it’ he clearly means that in the past, at some
time before the notice, he has offered alternative accommodation, and that in
the present, at the time of giving the notice, he is willing to provide it.
The importance
of that construction for Mr Dyson’s submission on the facts in our case is
this: the landlords’ offer of alternative accommodation is contained in the
letter dated July 17 1981, which was the letter sent with the section 25
notice. Mr Dyson said that offer, sent
at the same time as the notice, would not satisfy the words ‘has offered’,
which refer to an offer in the past, at some time before the notice (as per
Lord Denning obiter). And, said
Mr Dyson, if he was wrong on that construction as to time, and the offer of
alternative accommodation could accompany the section 25 notice, then he relies
on his second and fourth submissions: the offer when put forward must there and
then satisfy the requirements of para (d) in respect of reasonableness
and suitability and the landlord cannot subsequently amend the terms of that
offer in an attempt to make it conform.
The effect of
such a construction of para (d), when applied to the facts in our case
would, Mr Dyson submits, be fatal for the landlords. Because one of the terms included in the
landlords’ offer of July 17 1981 was an offer to pay for the tenants’ costs of
removal, but only up to a sum not exceeding £500. That sum has since been conceded by the
landlords to be unreasonable; heavy safes would have to be moved and resited
and the reasonable figure for moving costs is accepted as being in the region
of £5,000.
Further, it
was submitted, the landlords having put forward in their offer a definite
figure for rent for the alternative accommodation are stuck with it and it does
not avail them to pass a resolution, as in fact they did at their company
meeting on January 18 1983, that their offer as to rent is the figure proposed
‘or such other rental as the court may determine’.
Mr Dyson
submitted that such departures from the original offer are not permitted by the
requirements of para (d). A
landlord offering alternative accommodation, he said, would have to devise some
formula in which to couch his offer to avoid such pitfalls and the landlords in
our case had failed to do so.
Mr Priday,
needless to say, does not accept that construction of para (d). Though in any event he says, on the facts of
our case, as to timing, since no time whatsoever is stipulated in the Act as to
when in the past the landlord must have made his offer, the fact that the offer
(in the instant case) was contained in the letter which would be read first by
the recipient, that is before reading the section 25 notice enclosed with the
letter, was good enough.
I might add
that on the facts of the present case there was an offer of alternative
accommodation in the same building which was the subject of correspondence
between the parties in 1979. And
thereafter there were some informal meetings between the parties (between Mr EN
Goodman for the landlords and Mr AD Chaplin for the tenants) when the landlords
offered orally various ‘packaged deals’ of alternative accommodation on various
floors, including the second floor, in the same building.
Mr Priday,
however, submitted that, on a true construction of para (d), the time
for the operation of the words ‘has offered’ is not restricted to an offer
which must precede the giving of the section 25 notice. And he also disagreed with Mr Dyson’s
submissions as to the immutability of the terms proposed in the landlords’
original offer.
On the
question of time. Mr Priday quoted the obiter
views of Viscount Simonds in the Betty’s Cafe’s case op cit at
p36. The passage he prays in aid reads
as follows:
Perhaps a
brighter light is thrown by (d) which opens with the words ‘that the
landlord has offered and is willing’, etc.
Here the perfect and the present tense are used. Leave out the perfect and look only at the
present tense. ‘The landlord is
willing’. It would be a hardship and
worse on the tenant, if the relevant date were any other than that of the
hearing: it is to his advantage that the opportunity of accepting an offer of
alternative accommodation should be open to the last moment, and it is
inconceivable that the landlord should at the hearing be permitted to say that,
though no longer willing, he had been willing at an earlier date, and therefore
could validly oppose the application.
Nor would it be reasonable to reduce the time within which the landlord
should have the opportunity of finding and offering alternative accommodation. If the tenant complains that he has had too
little time to consider its suitability, his grievance can be met by an
appropriate adjournment. In ground (d),
therefore, I find support, if it be needed, for the view that the word
‘intends’ in ground (f) means ‘intends at the date of the hearing’.
Mr Priday
(who, it so happens, was one of the team of counsel who appeared in the Betty’s
Cafe’s case) submitted, and in my view correctly, that the key to the
understanding of Viscount Simonds’ remarks in the passage I have quoted (and
which Mr Dyson confessed he found difficult) was to be found in the fact that
their lordships were considering a section 26 case.
In that case
it was the tenant who initiated proceedings by his request for a new tenancy
under section 26 of the Act. And section
26(6) reads:
Within two
months of the making of a tenant’s request for a new tenancy the landlord may
give notice to the tenant that he will oppose an application to the
court for the grant of a new tenancy, and any such notice shall state on which
of the grounds mentioned in section 30 of this Act the landlord will oppose the
application.
Thus a
landlord is here given a statutory time of up to two months in which to put forward
his ground or grounds of opposition and to serve the notice setting out such
ground or grounds and those grounds include para (d). But if the opening words of that paragraph,
‘the landlord has offered’, mean that the offer must have been made before the
service of the notice, then in order to be able to put forward this ground of
opposition, the landlord will have been required to have offered alternative
accommodation in a shorter time than the two months allowed by the Act as the
statutory time in which the Act, in terms, permits him to put forward this
ground of opposition.
Viscount
Simonds thought it would not ‘be reasonable to reduce the time within which the
landlord should have the opportunity of finding and offering alternative
accommodation’. With respect, I
agree. Such a construction infers that a
different time scale is to be ascribed to the words ‘has offered’, one that is not
restricted and confined to a time before service of the notice.
As to the
submissions that the terms of the offer of alternative accommodation must be a
kind of ‘once and for all’, ‘take it or leave it’ type of offer as suggested by
the tenants’ counsel, Mr Priday drew my attention to a number of matters, which
he submitted militated against any such construction.
The statutory
timetable is such that a considerable period of time, usually many months,
inevitably elapses between the giving of a notice by the landlord under section
25 or section 26(6) of the Act and the hearing of the application in court. During that time, circumstances can change
enormously. Yet (on the tenants’
construction of the paragraph) the terms of the landlord’s offer would not be
permitted to be altered to fit in with changed circumstances. It would be an impossible, or almost
impossible feat for a landlord to make an offer which is ‘spot on’ from
inception and will remain so throughout the lengthy period that is going to
elapse.
A further
possible extension of that period is postulated by section 31 of the Act. That section, which is the only other section
in the Act where para (d) is specifically mentioned (paras (e)
and (f) are also referred to), contains a provision in subsection (2)
which, in the circumstances and time-limit set out, has the effect of
prolonging the date, at which the court is to be satisfied that the ground has
been established, to a future date when that ground will be satisfied.
Apart from
those considerations, some of the matters which have to be established under
para (d), particularly the requirement to preserve goodwill, are of a
subjective nature and all the evidence relating thereto could hardly be in the
landlord’s possession right from the start.
The only statutory provision as to what preliminary information the
landlord can obtain from the tenant is that set out in section 40 of the
Act. That information would not be of
much assistance to the landlord in formulating his alternative accommodation
offer.
Another
requirement of para (d) is that regard must be had, inter alia,
to the terms of the current tenancy when considering the terms on which the
alternative accommodation is available.
Both counsel accept that ‘terms of the current tenancy’ in this context
refer not to the old terms under which the tenant holds his existing tenancy,
but to such terms as the parties agree or the court would determine in a grant
of the tenant’s application for a new tenancy of his holding.
Thus the
requirement in para (d) to have ‘regard, etc’ incidentally encompasses
consideration of that trio of sections in the Act, namely section 33 (duration
of new tenancy), section 34 (rent under new tenancy) and section 35 (other
terms of new tenancy). Each of those
sections is worded so as to give the parties the opportunity to reach an
agreement themselves and only ‘in default of such agreement’ does the court
step in.
That, if I may
say so, has been one of the great strengths of Part II of the Act and why, on
the whole, it has worked so well. Within
the framework of a tight procedural schedule, the Act nevertheless provides a
flexibility, giving full rein to the parties themselves to negotiate right up
to the last moment, to the very door of the court. The court is a long stop if the parties
themselves cannot reach agreement.
So here you
have incorporated, as it were, into para (d) a requirement which relates
to ‘terms’ which, under other sections of the Act, are permitted to be
negotiated and agreed between the parties or, in default, are determined by the
court. Why then should a similar flexibility
not apply to the terms of an offer of alternative accommodation?
How then
should para (d) be construed?
Mindful of the fact that I am treading new ground and should, therefore,
tread warily, I put forward the following construction:
(1) The opening words of subsection (1) of
section 30 indicate, to my mind, that there should be no difference, when
considering any of the grounds in para (a) to (g), whether the
landlord’s opposition arises as a result of the service of a notice under
section 25 or from the service of a notice under section 26(6). And neither of those sections and the
appropriate notices thereunder require the landlord to state the grounds upon
which he opposes; the requirement is for him to state the grounds on
which he would (section 25(6)) or will (section 26(6)) oppose.
(2) Dealing specifically with para (d),
that paragraph has three separate limbs each of which is preceded by the word
‘that’, namely:
(a) ‘that the landlord has offered’ etc;
(b) ‘that the terms’ etc;
(c) ‘and that the accommodation’ etc.
(3) It will be seen that the past tense occurs
only once in the whole paragraph and that this is in the first part of the
first limb, ‘has offered’, and even there it is coupled with the present tense,
‘is willing’, which forms the second part of the first limb. The tense used in the second and third limbs
is the present and there is also a future tense, ‘the time at which it (the
alternative accommodation) will be available’.
(4) The first limb is expressed in language of a
general nature, a statement about the provision of alternative accommodation
which is not particularised in any way.
There is no definite article preceding ‘alternative accommodation’
mentioned in the first limb. The
definite article does appear in relation to the alternative accommodation referred
to in the second and third limbs.
(5) In my judgment, the first limb is in the
nature of an ‘opening shot’ by the landlord, telling the tenant the ground of
opposition to be relied upon. And the
requirement of the landlord having offered in the past (what I have described
in military terms as the ‘opening shot’), is satisfied if that has taken place
before ‘battle is joined’, namely if the offer has been made before the issues
are joined in the pleadings. This would
be before the landlord files his answer (if the tenant’s application is to the
county court); and before the landlord files his affidavit in reply to the
tenant’s affidavit (if the tenant’s application is to the High Court). The times are set out in the rules which are
to be found respectively under Ord 43 of the County Court Rules 1981 and under
Ord 97 in the Rules of the Supreme Court.
(6) Take, for example, what happens after the
landlord has served a section 25 notice.
Until the tenant serves a counternotice, the landlord does not know if
there is going to be any issue. If no
counternotice is served, the landlord does not need to rely on any ground of
opposition (provided by section 30) to oppose the grant of a new tenancy. Again, after the tenant has made his
application to the court, until the landlord has filed his answer, the tenant
does not know if the landlord is going to pursue his opposition; there is
nothing to prevent the landlord withdrawing his opposition. But once the answer is filed, the issues
between the parties are set out and joined.
So if in that period between the service of the counternotice and the
service of the answer the landlord makes an offer of alternative accommodation
that, in my judgment, will satisfy the words ‘the landlord has offered’.
I interpose
here to say that I am glad to be able to put forward such a construction for
those words in the first limb of para (d). Because it seems to me, the words, ‘the
landlord has offered’ are of little worth to the tenant if, as is the fact, the
words do not specify at all the time in the past when such offer must have been
made, whether that offer had
offer (made prior to the notice) should have contained.
How will it
assist the tenant if, for example, the landlord makes an offer by writing it to
the tenant the day before he serves his section 25 notice specifying ground (d)
as the ground for opposition; or by sending the offer by first class post and
the said section 25 notice in a separate envelope sent later on the same day by
second class post; or by telephoning an offer to the tenant the day before the
tenant receives the said notice?
In this
context I adopt the words used by Romer LJ, in the course of his judgment in
the Betty’s Cafe’s case in the Court of Appeal, and say: ‘it is
permissible to inquire whether the requirement’ — I refer to a requirement of a
prenotice offer — ‘would, on the one hand, be of advantage to the tenant and,
on the other hand, would or might result in hardship or inconvenience to the
landlord; for if it would be a disadvantage to the landlord without securing
any corresponding benefit to the tenant, it is surely a legitimate inference
that the legislature did not intend to impose it’.
Another
comment I make is this. I appreciate
that the provisions of para (d) differ materially from the suitable
alternative accommodation provisions in section 98 of the Rent Act 1977 and
Schedule 15, Part IV thereto. Yet, it
seems to me, that whether the person affected is a residential tenant who has
to have a home in which to live, or is a business tenant who has to have
premises in which to conduct his business, the real concern of that person, in
an alternative accommodation case, is what is available to him now, when the
matter is before the court or when the order of the court takes effect, not was
or might have been available to him in the past.
The relevant
Rent Act provisions make no reference to any past offer. The wording in section 98(1)(a) of the
Rent Act 1977 reads:
the Court is
satisfied that suitable alternative accommodation is available for the tenant
or will be available for him when the order in question takes effect.
However, the
words, ‘the landlord has offered’ are in para (d) and effect must be
given to them and that is achieved by the construction I have put forward.
I am fortified
in that construction by the view expressed by Viscount Simonds in the Betty’s
Cafe’s case op cit at p36.
And it is also interesting to note the way in which Birkett LJ
considered para (d) in the course of his judgment in that case when it
was in the Court of Appeal. His views on
this paragraph are, of course, obiter but this is what he said [1957] Ch
67 at pp83-84. Having quoted para (d)
in full he went on:
At the
hearing of the application, the landlord must establish to the satisfaction of
the Court that he has filled the various conditions laid down in the
subsection. He must therefore show that
the alternative accommodation is available at the hearing, and must then be in
the position to express his willingness to provide it, or to secure its
provision for the tenant. The time at
which the alternative accommodation will be available must be suitable to the
tenant’s requirements, and the court must be satisfied on all these
points. At the date of the notice the
landlord might very well be unable to offer the requisite alternative
accommodation, though he was negotiating in order to be able to do so at
the hearing. If at the hearing the
landlord was able to fulfil all the conditions of the subsection, and
established this to the satisfaction of the court, there would be no discretion
left in the court to order a new tenancy; and, provided that the landlord had
stated the ground in his notice, the mere fact that it was not possible at the
date of the notice to fulfil all the requirements of the section would not
enable the court in my judgment to say that the landlord was debarred from
establishing the ground at the hearing.
(Emphasis
supplied)
I now return
to the construction of the remainder of para (d); see paras (1) to (6)
above.
(7) Having offered alternative accommodation, the
offer must be kept open from the time made and throughout and must not be
withdrawn. The present tense, ‘is
willing’, in the second part of the first limb connotes a continuing
willingness.
(8) The second limb of para (d) deals with
the requirements of reasonableness in respect of the matters therein set
out. In my judgment, the time when the
landlord has to establish that requirement to the satisfaction of the court is
at the hearing. There is a passage in Woodfall’s,
Law of Landlord and Tenant (28th ed vol 2 p2417 para 2-0715) which reads:
Thirdly, that
the alternative accommodation is available on terms which are reasonable having
regard to the terms of the current tenancy and to all other relevant
circumstances. The accommodation must
have been offered on these reasonable terms, and it must still be available on
those terms.
With respect
to the learned editors of Woodfall, I do not consider that passage to be
correct in stating ‘the accommodation must have been offered on these
reasonable terms . . .’, a past occasion, linked with a present occasion ‘and
it must still be available on those terms’.
The statutory
wording of this limb of para (d) is: ‘the terms on which the alternative
accommodation is available are reasonable’, not ‘was and is available and were
and are reasonable’. The construction
suggested by Woodfall would entail putting in those extra words of a
past tense which do not appear in the Act.
(9) The third limb of para (d) deals with
suitability. In respect of that
requirement also, the time when it has to be established is at the hearing.
Again, I draw
attention to the relevant wording of the Act which is here couched only in the
present, with a future included, ‘the accommodation and the time at which it
will be available are suitable’; not ‘the time at which it was and will be
available are and were suitable’.
So much for
the construction of para (d). I
turn now to the evidence and whether the landlords have, on the evidence,
established all the requirements of that paragraph. I find first of all, that the offer was made timeously
within the meaning of the words ‘has offered’.
Even if the construction I have put forward, as to the time to which
those words refer, is held to be wrong, in this case the letter (dated July 17
1981) was intended to be read before the notice and that would suffice and as I
have said, there was some evidence of an earlier oral offer or offers.
I have next to
consider whether the terms on which the alternative accommodation is available
are reasonable having regard to the statutory requirements. The terms offered (apart from rent which I
shall, hereinafter, consider separately) are precisely the same as the terms of
the current existing lease under which the tenants are in occupation. As to duration, I understand that a period of
five years is acceptable to both parties.
The draft of the proposed lease is exhibited in bundle B.
Since it is my
determination of the rent for the alternative accommodation which the landlords
will accept, I find, having considered the terms on which the alternative
accommodation is available and all other relevant circumstances, that the
landlords have proved the requirements of reasonableness.
Next the
requirement of suitability as set out in the third limb of para (d). This involved the consideration of quite a
number of matters. The nature and class
of the tenants’ business, as described to me by Mr Alfred D Chaplin, are these:
(i) The tenants (the company, M Chaplin Ltd) deal
in new jewellery, which they buy from manufacturers and sell to retail
jewellers and occasionally to other wholesalers.
(ii) There are two associated companies also
trading from the same premises: M Marston & Co (Gold Coins) — which appears
to be a firm name and not that of a separate limited company — which deals in
gold coins. This company or firm buys
from bullion houses, retail shops, dealers and members of the public. It sells to bullion houses, retail jewellers
and other dealers. The other company is
Turner & Leveridge Ltd, which trades in secondhand and antique jewellery
and silverware. It buys from auction
rooms, retail jewellers, brokers, other dealers and members of the public. It sells to customers within the trade and to
retail jewellers.
The tenants’
trading activities must, of course, come within the permitted user under the
lease. The relevant clause states:
(13) Not to use the demised premises or any part
thereof or permit the
tenant’s business of watch and clock importers and wholesale jewellers . . .
and not to use or permit or suffer the use thereof for the sale by retail of
any goods or merchandise. . .
There is a
further clause in the lease which provides as follows:
(ii) Subject to the provisos hereinafter contained
not to underlet or part with provided
(1) the tenant may share the possession and
occupation with any other company or firm for the time being beneficially owned
and/or controlled by Mr Alfred Douglas Chaplin and/or Mr Maurice Chaplin.
As to the
situation and extent of, and facilities afforded by, the tenants’ holding, they
are as follows. The situation is on the
ground floor at 21/22 St Cross Street, Hatton Garden, London EC1, which is part
of the building St George’s House, 44 Hatton Garden.
The extent and
layout are shown on the plan ASB appendix B and I inspected the tenants’
premises and saw all the facilities of their holding. The alternative accommodation is situated in
the very same building, but on the second floor, the entrance to the building
being the same entrance as now used by the tenants. A new lift has been installed and new toilet
facilities.
I can do no
better than quote the description given of the tenants’ present accommodation
and of the alternative accommodation as set out in the report of Mr Eric Frank
Shapiro [FRICS], the tenants’ surveyor.
After referring to the extent of usable floor area as being a total of
758 sq ft and to his plan, Mr Shapiro describes the tenants’ present
accommodation as follows:
the
accommodation is most irregular in shape and as such it constitutes uneconomical
space. It is totally unmodernised, but
it is fully burglar alarmed and has a security lobby. The standard of finish is substantially below
that provided on the second floor having no suspended ceilings, no modern
decorations or fitted carpets. The bulgar
alarm and security lobby are tenants’ improvements. The accommodation has no internal WC
facilities or water supply as these are located on the top, second and third
floor of the building so that a visit to the lavatory is most
inconvenient. Although there is central
heating in the building as a whole there is no heating in the private office or
entrance lobby.
Mr Shapiro’s
description of the alternative accommodation reads as follows:
The
alternative accommodation offered is part of the second floor of 44 Hatton
Garden which comprises approximately 1,400 sq ft. The actual size of the accommodation is to be
agreed, but it is not less than 800 sq ft and it has been modernised by the
provision of a suspended ceiling with fluorescent lights and is fully carpeted.
The tenants’
objections to the alternative accommodation were a general allegation that
goodwill would not be preserved and a number of specific matters were relied
on. These included:
(i) the alternative accommodation was on the
second floor and not on the ground floor;
(ii) the special facility which Mr Chaplin now
enjoyed of being able, when standing in his office on the ground floor, to see
out of the window and to be seen by passers-by in the street;
(iii) the notice boards on the front of the ground
floor premises advertising the tenants’ two associated companies;
(iv) a special burglar alarm system on the ground
floor.
Any objections
which may have existed in relation to layout and cost of removal I find are no
longer tenable in view of the landlords’ offer to provide whichever of the
various layouts the tenants wish to choose from among the alternatives offered,
and their offer to pay all reasonable removal costs, the figure of £5,000 being
put forward.
On the
question of goodwill, it has to be borne in mind that the tenants’ business, as
permitted by their lease, is a wholesale business carried on in premises which
can be used only as offices for such business.
The business cannot and must not be a retail business and the premises
are not to be used as a shop or showroom.
When I
inspected the Hatton Garden area, I could not help but notice that very many
wholesale jewellery businesses were carried on in upper floors and not on the
ground floor. In the newest building
erected in the area, ‘The Hatton Garden Centre’, a building specially designed,
I understand, for the diamond and precious stone trade and including the
wholesale jewellery trade and containing the London Diamond Bourse, all the
accommodation offered is on the first and second floors. It is true that Mr Chaplin can see out of the
window into the street and be seen from the street when he stands in the room
he uses as his office. His head in the
window is clearly shown in one of the photographs produced in evidence and I
saw the position for myself when I inspected the site. But again I stress the tenants’ business is
not retail and the tenants would be precluded from dealing with passers-by in
the street in any retail capacity. Mr
Chaplin told me that the only persons whose attention he tries to attract, or
who attract his attention through the window, are established customers in the
trade, not strangers. There is no
question whatsoever of touting for business from the public through this
window.
The facility
amounts to no more than this: someone in the trade who knows Mr Chaplin and who
wanted to contact him and who happened to be passing by would not need to
telephone to find out if Mr Chaplin was in; he would see his head in the
window. Similarly, someone in the trade
whom Mr Chaplin knows and wanted to contact and who happened to be passing by
could be contacted by Mr Chaplin attracting that person’s attention by tapping
on the window. In the alternative accommodation
there would be nothing to prevent Mr Chaplin having his desk by the corner
balcony window facing St Cross Street and being seen if he stands there. True he would not be able to attract the
attention of a person in the street below, but if that person wished to know if
Mr Chaplin was in, and he was passing by, he would look up to the window and
would be able to see Mr Chaplin, if Mr Chaplin was standing by the window. In any event, in my judgment, this matter
will not in any way detract from the preservation of goodwill. It is a matter which was not referred to at
all, and neither was any alleged loss of goodwill mentioned at all, during the
negotiations which took place in 1979 between the parties when alternative
accommodation was offered on the third floor in the same building.
In the present
proceedings it is a fact that, after July 17 1981, the landlords’ solicitors
wrote on several occasions asking for the tenants’ comments on the alternative
accommodation offered. It was not until
May 14 1982 that the tenants’ solicitor wrote, objecting for the first time in
the terms that ‘an upper part is not the same as a ground floor’ and that ‘in
addition’, any move by the tenants ‘must entail serious loss of goodwill’.
I accept that
an upper floor is not the same as a ground floor — and that would be a factor
of special significance when dealing with a retail shop or showroom business —
but I do not find that a move by the tenants (in the present case) from the
ground floor to the second floor will entail any loss of goodwill.
As to the
notices on the premises advertising the two other companies, the landlords have
said that the name of these companies will be shown on the board at the main
entrance doors of the building where the names of all the occupiers of the
building are listed. This is the very
same entrance which leads to the tenants’ present premises.
Mr Priday
submitted, rightly in my view, that alternative accommodation does not have to
mirror exactly the existing accommodation.
And what would appear to be the main source of advertising for these two
companies will continue precisely as before.
The tenants are connected with a company called AB Davis Ltd, who trade
as jewellers, silversmiths and pawnbrokers and have a retail shop at 89-91 Queensway,
London W2, and another retail shop at 18 Brook Street, London W1.
In those
shops, I understand, a printed card advertising the tenants’ business and those
of Turner & Leveridge Ltd and M Marston & Co, with the address St
George’s House, 44 Hatton Garden, London, and telephone numbers, is available
for distribution. The card, which is
printed in blue and red colours was produced in evidence. In addition,
tenants. Those matters will remain
exactly as before. And, most
importantly, the address of the tenants and its two associated companies will
not be changed.
On the
question of protection against burglary, I have no hesitation in finding that
the alternative accommodation on the second floor would be at least as safe, if
not safer, than the tenants’ present accommodation on the ground floor.
The special
precautions now taken must be viewed in the light of the circumstances
pertaining, namely that the accommodation is on the ground floor with a door
opening directly on to the pavement in St Cross Street. That door as I saw for myself, could easily
be broken open and the premises entered directly from the street. Accordingly, special precautions have been
taken to deter any would-be criminal from making such breaking and entry. Those special precautions, other than the
usual, sensible precautions for jewellers’ premises in Hatton Garden, will not
be required on the second floor.
There is no
issue between the parties as to the time at which the alternative accommodation
will be available. I find that the
landlords have proved all the requirements in para (d) relating to
suitability.
I now return
to the question of rent, which is a matter very much in issue. I had the advantage of visiting, on Friday
January 28 1983, the Hatton Garden area, traditionally the home of wholesale
jewellers, of inspecting the tenants’ present accommodation, the alternative
accommodation and most of the comparables.
I also had the reports of, and heard evidence given by, the experts: Mr
HAE Cox for the landlords (supported by Mr AS Browne who produced the plans to
which I have referred, and who gave evidence in place of Mr Hartford, the
architect, who has retired), and Mr EF Shapiro for the tenants.
The figures
for rent, put forward by the respective parties, for a new tenancy of the
tenants’ existing premises on the ground floor and for the alternative
accommodation on the second floor, were as follows:
Landlords’
figures:
Ground floor:
£15 per sq ft
Second floor:
£12.50 per sq ft
Tenants’
figures:
Ground floor:
£10.50 per sq ft
Second floor:
£9.50 per sq ft
Many
considerations were canvassed before me on behalf of the parties. They included inflation, recession, the state
of the market generally, availability of accommodation, user clauses,
differences between ground floors and upper floors, detailed analysis and
breakdown of the ‘comparables’, renovations carried out to the St George’s
House building and so on. A great deal
of ‘fine tuning’ has to be done to arrive at the proper figure for rent under a
new tenancy bearing in mind what are the statutory requirements prescribed by
section 34 of the Act.
I must say
that, as between the two expert surveyors, Mr Cox and Mr Shapiro, I greatly
preferred the evidence given by Mr Shapiro who is a highly qualified surveyor
and with great experience in valuing and whose expert evidence I found
impressive. In my judgment, his
valuations and ‘fine tunings’ are much nearer the proper mark than those given
by Mr Cox.
Having
considered all the evidence and the circumstances, I determine the new rents as
follows:
For a new
tenancy of the ground floor: £11.75 per sq ft
For a new
tenancy of the second floor: £10.50 per sq ft
To sum up, I
find that the landlords’ opposition to the tenants’ request for a new tenancy
succeeds on the ground set out in section 30(1)(d) of the Act which they
have established to my satisfaction. I
am thus precluded by section 31(1) of the Act from making an order for the
grant of a new tenancy to the tenants.
But, of course, the alternative accommodation is available to the
tenants on the basis of all the various matters (including the rent I have now
determined) as set out in my judgment.
