Landlord and tenant — Tenants’ fixtures — Tenants’ right to remove fixtures — Effect on right of renewal of surrender of old tenancy and grant of new tenancy — ‘All the statements in the text-books are erroneous’ (Lord Denning) — Doctrine rejected that a tenant loses his right of removal if after expiry or surrender of tenancy he remains in possession by virtue of new tenancy — Point arose in context of a rent review clause in a lease of Her Majesty’s Theatre in the Haymarket — Fixtures in this case included the seats in the auditorium of the theatre — Old lease continued under Part II of the Landlord and Tenant Act 1954 until it was surrendered by operation of law when a new lease was granted — New lease provided for the rent for the second seven years of a 21-year term to be at the ‘open market rental of the demised premises’ — Were the fixtures to be regarded as part of the ‘demised premises’ on which the tenants were to pay rent on the basis that the right of renewal had been lost and the fixtures belonged to the landlords? — Law as to removal of tenants’ fixtures analysed — New rent should be assessed on the footing that the tenants had not lost the right to remove the fixtures and that the latter had not become part of the demised premises — Caution that in cases of express surrender the terms of the surrender must be considered — Judgments form an interesting excursus into the old common law — Appeal from decision of Woolf J dismissed
This was an
appeal from a decision of Woolf J, on a special case stated by Judge Hawser
sitting as an arbitrator appointed by consent under section 11 of the
Arbitration Act 1950 and RSC, Ord 36. Judge Hawser had held that the open
market rental of a new lease entered into by the tenants, H M & S Ltd, and
granted by New Zealand Government Property Corporation, the landlords, should
be determined on the basis that the tenants could only remove those fixtures
annexed after the date when the material terms of the new lease had been agreed.
The subject property was Her Majesty’s Theatre in the Haymarket. The old lease
expired by effluxion of time on October 1 1970. The new lease, executed on
February 8 1973, was for a term of 21 years commencing from October 1 1970.
Woolf J had held that the rent should be determined on the basis that the
tenants had removed all tenants’ fixtures, whether annexed during the term of
the old or the new lease: (1980) 257 EG 606, [1981] 1 EGLR 100.
Raymond Sears
QC and Anthony Porten (instructed by Allen & Overy) appeared on behalf of
the appellant landlords; Ronald Bernstein QC and Kirk Reynolds (instructed by
Nicholson, Graham & Jones) represented the respondent tenants.
Giving
judgment, LORD DENNING MR said: What rent is payable for Her Majesty’s Theatre
in the Haymarket? It gives rise to an
interesting question of law about tenants’ fixtures. But first for the story.
Her Majesty’s
Theatre is one of the most famous in London. It was built in 1898 by that great
actor Sir Herbert Beerbohm Tree. The landlords were the Carlton Hotel Ltd. They
leased it to him and his company, Playhouse Ltd, for 72 years from October 10
1898 to September 30 1970, at a rent of £3,700 a year. The lessees covenanted
to use it as and for a first-class theatre only, to keep the demised premises
(including landlord’s fixtures) in good repair and so to deliver it up at the
end of the term.
Many years ago
the lease became vested in a company called H M & S Ltd., of which the
leading figure is Mr Prince Littler. The ownership has become vested in the New
Zealand Government.
The theatre
was occupied ‘for the purpose of business’. So the tenancy came within the
Landlord and Tenant Act 1954. It meant that before the old lease came to an end
the lessees were entitled to, and did, apply for a new lease under that Act.
The landlords conceded that the tenants were entitled to a new lease. The only
question was as to the terms of it. There were negotiations between the parties
about the terms. They started early in 1970 (before the old lease expired) and
continued through the next two or three years. Meanwhile, pending all the
negotiations under the statute, the old lease continued in existence
automatically. It did not determine on September 30 1970. It continued until
February 8 1973 when the parties executed a new lease.
It is under
that new lease of February 8 1973 that the question arises. It was for 21 years
from October 1 1970 at a rent for the first seven years of £25,000 a year: and
for the next seven years at the ‘open market rental of the demised premises’.
That is the point at issue. What is the ‘open market rental’ for the second
seven years? The first seven years were
to end on September 30 1977. In anticipation of this, the parties negotiated for
the new rental for the second seven years of the term. The landlords’ surveyor
put it at £55,000 a year. The tenants’ surveyor did not agree. The matter went
to arbitration before an official referee (Judge Lewis Hawser QC), sitting as
an arbitrator. In the course of the arbitration a point of law arose about
tenants’ fixtures. There were many of them in the theatre. The tenants had put
them in over many years. Typical were the seats in the stalls and auditorium.
Were they to be included as part of the ‘demised premises’ on which the tenant was
to pay rent? Was the tenant to pay rent
for them on the basis that they belonged to the landlord? Or was he free from paying any rent on them
because they belonged to him, the tenant?
Now, before I
go any further, I must observe that it is clear law that a tenant has a right
to remove ‘tenant’s fixtures’ before the term comes to an end. So the tenant
here had a right to remove them, not only during the old lease itself, but also
at any time before the old lease as extended came to an end on February 8 1973.
The old lease, as extended, was surrendered ‘by operation of law’ on February 8
1973 when the new lease was granted (that has been clear for centuries: see Thompson
v Trafford (1593) 79 ER 1131).
What was the
effect of the surrender?
What, then,
was the effect of the surrender? The
landlords say that when the old lease was surrendered in 1973 the tenant lost
his right to remove the tenant’s fixtures. They became a gift to the landlord.
They became part of the ‘demised premises’. So that in 1977 the new rental was
to be paid on the basis that they belonged to the landlord and the tenant was
to pay rent for them just as if they were part of the structure itself.
But the
tenants say that the surrender in 1973 did not have that effect. They say that
so long as they continued in possession — whether under the old lease or an
extension of it, or on a new lease — they retained their right to remove them.
Tenant’s
fixtures and landlord’s fixtures
Before I go
any further, I would describe the distinction between ‘tenant’s fixtures’ and
‘landlord’s fixtures’. The term ‘tenant’s fixtures’, for present purposes,
means those fixtures which the tenant himself fixed into the premises for the
purpose of his trade, that is, for the business of the theatre, but which do not
become part of the structure itself. Instances are the seats for the stalls, or
auditorium, which are fixed by screws or bolts to the floor, wall-brackets for
lights which are screwed on to the wall, electric transformers fixed on to the
floor, and so forth. All these the tenant is entitled to remove when his term
comes to an end. Whereas ‘landlord’s fixtures’ for present purposes means those
fixtures which the tenant himself fixes into the premises so that they become
part of the structure itself: see Boswell v Crucible Steel Co of
America [1925] 1 KB 119. Instances are improvements made by the tenant by
putting in new doors or windows in place of those that were there before, or a
new frontage or a new safety curtain. These improvements become part of the
structure itself. The tenant cannot remove them when his term comes to an end.
All this goes back to the
368. A soap-boiler was the tenant for years of a house in Holborn. For the convenience
of his trade he put up vats and coppers and paved the back-yard. Sir John Holt
CJ said:
Firstly. That
during the term the soap-boiler might well remove the vats he set up in
relation to trade, and he might do it by the common law (and not by virtue of
any special custom) in favour of trade and to encourage industry: but after the
term they become a gift in law to him in reversion, and are not removable.
Secondly.
That there was a difference between what the soap-boiler did to carry on his
trade, and what he did to complete the house, as hearths and chimney-pieces,
which he held not removable.
The correct
rule
In the present
case the question arises: If the term expires by effluxion of time or by
surrender — and the tenant remains in possession by virtue of a new tenancy
express or implied — can he still remove the ‘tenant’s fixtures’ during his
extended time of possession? Or did he
lose them irretrievably when his original term came to an end? There are many statements in the text-books
to the effect that the tenant loses them when his original term comes to an
end. Woolf J quotes the text-books at length. I think those text-books are
wrong. In my opinion the tenant remains entitled to remove the ‘tenant’s
fixtures’ so long as he remains in possession. That was decided in Penton
v Robart (1801) 2 East 88. Robart was undertenant of a yard and
buildings at Battlebridge. During his subtenancy he erected a wooden shed for
the purpose of making varnish. It had a brick foundation. The original term
expired at Michaelmas 1800. He remained in possession for some time
afterwards, and during that time he pulled down the wooden superstructure
of the shed and carried away the utensils. The head landlord claimed that they
belonged to him. The Court of King’s Bench held that the tenant was entitled to
remove them. Lord Kenyon CJ said (at p 90):
The old cases
upon this subject leant to consider as realty whatever was annexed to the
freehold by the occupier; but in modern times the leaning has always been the
other way in favour of the tenant, in support of the interests of trade which
is become the pillar of the State. What tenant will lay out his money in costly
improvements of the land, if he must leave everything behind him which can be
said to be annexed to it . . . Here the defendant did no more than he had a
right to do; he was in fact still in possession of the premises at the time
the things were taken away, and therefore there is no pretence to say that he
had abandoned his right to them.
That case was
distinguished in Weeton v Woodcock (1840) 7 M & W 14, but not
doubted. The landlords let a cotton factory to Taylor for seven years. Taylor
installed a steam engine boiler, firmly fixed to the floor and walls of the engine-house.
Taylor became bankrupt. His property vested in his assignees Woodcock and
others. They entered into possession of the factory. The landlords then
forfeited the lease for breach of covenant by Taylor. So it came to an end. The
assignees then sold the boiler and removed it. The landlords claimed that the
assignees had no right to sell the boiler: because the term had already come to
an end and the tenant no longer remained in possession. The Court of Exchequer
held that the assignees were not entitled to remove the boiler. After the lease
was forfeited, they held on — not as tenants nor by agreement with the
landlords — but as trespassers. So they had no right to remove the boiler.
Alderson B in giving the reserved judgment of a strong court said (at p 19):
The rule to
be collected from the several cases decided on this subject seems to be this,
that the tenant’s right to remove fixtures continues during his original term, and
during such further period of possession by him, as he holds the premises under
a right still to consider himself as tenant.
The contrary
view
I think that
is the correct rule. But I have to recognise that there are later observations
which throw doubt on it. It is said that when the tenant surrenders his
existing term and takes a new tenancy, without reserving his right to remove
tenant’s fixtures, he loses that right altogether, even though he still
remained in possession as a tenant. In the case of an express surrender, there
is this dictum by Parker J in Leschallas v Woolf [1908] 1 Ch 641
at p 652:
In my
opinion, however, if the tenant upon the surrender of his lease in order that a
new lease may be granted makes no stipulation to the contrary, he does lose his
right to remove tenant’s fixtures.
And in the
case of a surrender by operation of law, there seems to be a decision by
Scrutton J in Slough Picture Hall Co Ltd v Wade (1916) 32 TLR
542. To which I would add the dictum of Warrington LJ in Pole-Carew v Western
Counties and General Manure Co Ltd [1920] 2 Ch 97 at p 122:
I think it is
clear that after a surrender of the term in the land to which tenant’s fixtures
are attached and a subsequent lease to the same tenant, the latter can no
longer remove the tenant’s fixtures unless his existing right to remove them is
reserved expressly or by necessary implication.
Opinion
reserved
But as against
all these statements, it is to be observed that on two separate occasions the
Court of Appeal have expressly left it open. In 1881 in Re Thomas, ex parte
Willoughby d’Eresby (Baroness) (1881) 44 LT 781 at p 784 the Court of
Appeal, consisting of James, Cotton and Lush LJJ, said:
If, and when
the simple case shall arise of a tenant, having removable fixtures, continuing
his possession under a new or extended term, we desire to hold ourselves
perfectly free as to the question whether he retains his right of removal
during such continuous possession, unfettered by anything said in this case.
Likewise in Pole-Carew
v Western Counties and General Manure Co Ltd [1920] 2 Ch 97 at p 119 by
Lord Sterndale MR; and at p 123 by Younger LJ.
Consider on
principle
This means
that in this court we can consider the point upon principle. I would test it by
taking these illustrations:
First, a
tenant takes a lease of business premises for five years, and puts in a
valuable machine fixed to the floor for use in his trade. After the five years
are at an end, he holds over with the consent of his landlord as tenant from
year to year. Nothing is said about the machine. Then after three more years he
moves out and goes elsewhere. Surely he can remove his machine and take it with
him. It would be most unjust if he could not do so.
Second, the
tenant does not hold over with nothing said. At the end of the five years, he
takes a new lease from his landlord for another three years to run from the
expiry of the first term. But nothing is said about the machine. Then, at the
end of the next three years, he moves out and goes elsewhere. Surely he can
take the machine with him. There is no difference between a new lease and holding
over.
Third, the
tenant takes a new lease for three years from his landlord, but it is
back-dated so that it starts after the first four years, and not after five.
Nothing is said about the machine. The first lease is then surrendered by
operation of law at the end of the fourth year. But surely at the end of the
new lease, he can take the machine with him.
Fourth, the
same as the last, but the tenant at the end of the fourth year expressly
surrenders the first lease and takes a grant of a new lease. Nothing is said
about the machine. Surely at the end of the new lease he can take away the
machine. Is it really necessary to say to him: ‘Did you tell the landlord that
you reserved your right to take away the machine?’ He would answer: ‘No, I did not do so,
because it did not occur to me. It was my machine and I assumed I could take it
away when I left’.
These
illustrations convince me that all the statements in the text-books are
erroneous. I hold that when an existing lease expires or is surrendered and is
followed immediately by another, to the same tenant remaining in possession,
the tenant does not lose his right to remove tenant’s fixtures. He is entitled
to remove them at the end of his new tenancy.
Improvements
But then it is
said that section 34 of the Landlord and Tenant Act 1954, as amended by the Law
of Property Act 1969, shows that Parliament proceeded on a different course.
That section says that in fixing the rent payable under a new tenancy, there is
to be taken into account any ‘improvements’ carried out within the last 21
years, but not those carried out more than 21 years past. But the answer is
that that applies to improvements made by the tenant which are ‘landlord’s
fixtures’ — which the tenant is never able to remove. It does not apply to
‘tenant’s fixtures’.
Time of fixing
rent
Finally,
coming back to our present case, the rent to be assessed for the second seven
years was, and would have to be, fixed by agreement or by the judge during the
period when the original lease was automatically extended by the Landlord and
Tenant Act 1954. During that automatic extension the tenant would certainly
have a right to remove the tenant’s fixtures. So the new rent should be
assessed on that basis.
‘Demised
premises’
The meaning of
‘demised premises’ is also elucidated by reference to the repairing clause
which is to keep ‘the demised premises and the appendages thereof’, including
the ‘landlord’s fixtures’ in good repair. That indicated that the ‘tenant’s
fixtures’ are not part of the ‘demised premises’.
Conclusion
After this
long discussion, I think that in this court we should free ourselves from the
shackles of the past. It is time that the law about removal of tenant’s
fixtures was brought up to date. This case gives this court the opportunity to
do so. I think the rent of the Haymarket theatre should be assessed on the
basis that the tenant’s fixtures could have been removed by the tenant if he
wished — and that they should not be regarded as part of the ‘demised premises’
for the purpose of fixing the rent.
I would
therefore dismiss the appeal.
Agreeing, DUNN
LJ said: At common law the ancient rule was that once a chattel was fixed to
the soil or the structure of the building it became part of the freehold. It
was a logical step from the rule to say that if a tenant surrendered his lease,
then he also surrendered the ‘fixture’, unless in the deed of surrender he
expressly reserved his right, which was also recognised at common law, to
remove the tenant’s fixtures. If he did not, then, since they were already part
of the freehold, they were surrendered together with the rest of the demised
premises.
It was this
step which Parker J took in Leschallas v Woolf [1908] 1 Ch 641 at
p 152. But although logical the step does not seem to me to be the necessary
consequence of the earlier decided cases, the fons et origo of which
seems to be Fitzherbert v Shaw (1789) 1 Hy B1 258. In that case
the landlord had brought proceedings for eviction against the tenant, which
were settled on terms that the tenant should surrender his lease at some date
in the near future, remaining in possession meanwhile. It was held that on the
true construction of the deed of surrender the tenant had lost his right to
remove the tenant’s fixtures. The case was expressly distinguished in Penton
v Robart (1801) 2 East 88 on the ground that it turned on the
construction of the deed of surrender. It is consistent with the view that the
tenant did not lose his right to remove the fixtures until he gave up
possession of the premises, and indeed would not have lost his right had it not
been for the terms of the deed.
It seems to me
that Parker J, for all his knowledge of this branch of the law, fell into error
in stating the rule in the terms in which he did, which are not supported by a
proper understanding of the earlier cases. This error was perpetuated in Slough
Picture Hall Co Ltd v Wade (1916) 32 TLR 542, although the Court of
Appeal expressly refused to be led into it in Re Thomas, ex parte Willoughby
d’Eresby (Baroness) (1881) 44 LT 781 and Pole-Carew v Western
Counties and General Manure Co Ltd [1920] 2 Ch 97.
I believe the
true rule at common law to be that a tenant has the right to remove tenant’s
fixtures so long as he is in possession as a tenant, whether by holding over,
or as a statutory tenant under the Rent Acts, or upon an extension of a lease
of business premises under Part II of the Landlord and Tenant Act 1954. There
is one exception to the rule; agricultural tenants never had the right at
common law to remove tenant’s fixtures (see Elwes v Maw (1802) 3
East 38), and this exception has by necessary implication been recognised in
the provisions of the Agricultural Holdings Act 1948, which contains a
compendious code for the ascertainment of ‘tenant’s rights’.
The rule is
not inconsistent with the provisions of Part II of the Landlord and Tenant Act
1954 if, as I agree with the Master of the Rolls, the word ‘improvements’ in
section 34 is defined as meaning improvements to the structure and the
landlord’s fixtures.
If the tenant
surrenders his lease and vacates the premises without removing the tenant’s
fixtures, then he is held to have abandoned them. But if he surrenders his
lease, either expressly or by operation of law, and remains in possession under
a new lease, it is a question of construction of the instrument of surrender
whether or not he has also given up his right to remove his fixtures. If
nothing is said, then the common law rule applies, and he retains his right to
remove the fixtures so long as he is in possession as a tenant.
I would
accordingly dismiss the appeal.
Also agreeing,
FOX LJ said: There is no doubt that the common law confers upon a tenant the
right to remove tenant’s fixtures. The question is the extent of that right.
Does it endure only so long as the tenancy exists, or will it continue so long
as the tenant remains in possession of the premises as tenant though under a
new tenancy?
The specialist
text-books, on the whole, support the narrower view. Foa, 8th ed, para
1075, states:
The mere fact
that the tenant retains possession of the demised premises after the expiration
of his interest does not extend the period during which he may sever fixtures
even though the reason for his holding over is that his successor in the
tenancy has failed to pay him an agreed price for them. And where the
continuance in possession is under a new lease or agreement his right to carry
away the fixtures is determined . . .
Foa admits the possibility of inferring where a lease is surrendered
and the premises redemised to the tenant that the new demise is of the premises
minus the tenant’s fixtures but states that if nothing is said about the
fixtures there would be no ground for such an inference.
Woodfall, 28th ed, at para 1–1573 warns tenants, on negotiating a renewal,
to be careful to reserve the right to tenant’s fixtures ‘as he may lose his
right of removal’.
Hill &
Redman, 16th ed, para 425, states that a tenant
must remove his fixtures during the term and that if he omits to do so they
become the absolute property of the landlord ‘save that if the tenant remains
in possession after the term in such circumstances that he is entitled still to
consider himself as tenant, his right to remove fixtures continues as long as
this state of things lasts . . .’
Thus while Foa
and Woodfall evidently favour the narrower view, Foa contemplates
the possible application of some less rigid rule; and Woodfall uses the
word ‘may’. Hill & Redman goes a good deal further still and
specifically asserts the tenant’s right to tenant’s fixtures so long as he is
entitled to consider himself as remaining in possession as tenant.
In my opinion
the authorities binding on this court do not establish the narrower rule.
As long ago as
1852 in Heap v Barton (1852) 12 CB 274 we find Jervis CJ saying
at p 280:
The Courts
seem to have taken three separate views of the rule. First, that the fixtures
go at the expiration of the term to the landlord unless the tenant has during
the term exercised his right to remove them. Secondly, as in Penton v Robart
(1801) 2 East 88, that the tenant may remove the fixtures notwithstanding the
term has expired if he remains in possession of the premises after his term has
expired — thirdly, that his right to remove fixtures after his term has expired
is subject to this further qualification viz that the tenant continues to hold
the premises under a right still to consider himself as tenant.
It was not, in
the event, necessary for the court to reach any conclusion on the matter.
In Penton
v Robart (supra) the tenancy had come to an end but the tenant remained
in possession. He was permitted to remove his fixtures. Lord Kenyon at p 91
said:
Here the
defendant did no more than he had a right to do; he was, in fact, still in
possession of the premises at the time the things were taken away and,
therefore, there is no pretence to say that he had abandoned his right to them.
In Weeton
v Woodcock (1840) 7 M & W 14 the lease was forfeited and the
assignees in bankruptcy, after the forfeiture, sought to remove tenant’s
fixtures. They failed. Alderson B at p 19 said:
The rule to
be collected from the several cases on this subject seems to be this, that the
tenant’s right to remove fixtures continues during his original term and during
such further period of possession by him, as he holds the premises under a
right still to consider himself as tenant.
The assignees
having removed the boiler after the forfeiture, they did so at a time when they
could no longer regard themselves as tenants.
The Court of
Appeal in Re Roberts, ex parte Brook (1878) 10 Ch D 100 seem to have
felt difficulty in determining the exact limits of the principle stated in Weeton
v Woodcock and the examples which they give (at p 109) of its operation
are of limited extent but they do not disapprove it. The present is a case
where, although the tenants continued at all times to occupy the premises as
tenants, there was, immediately prior to the grant of the present lease in 1973,
a surrender by operation of law of the 1898 lease (or rather of the statutory
extension of that lease created by the Landlord and Tenant Act 1954).
There are two
cases in the present century in relation to the effect of surrender upon a
tenant’s right to remove fixtures. The first is Leschallas v Woolf
[1908] 1 Ch 641, a decision of Parker J. There was an express agreement to
surrender. The judge stated, in the passage at p 652 to which the Master of the
Rolls has referred, that if the tenant surrenders his lease, albeit with the
view to the grant of a new lease, and does not reserve the right to remove
tenant’s fixtures, he loses that right altogether, even though he remains in
possession as a tenant. He does, however, state at p 654:
It may under
certain circumstances be inferred that what is surrendered and redemised is not
the premises in their actual condition, but the premises minus the tenant’s
fixtures. Possibly also, parcel or no parcel being a question of fact, evidence
might be admitted under this head.
In Slough
Picture Hall Co Ltd v Wade (1916) 32 TLR 542 Scrutton J followed Leschallas
v Woolf (supra). As regards the passage from the judgment of Parker J at
p 654, which I have set out, Scrutton J said:
But in this
case nothing was said about the fixtures at all and I can find no ground for
implying an exception out of the ordinary circumstances of a surrender . . .
Despite these
last two authorities, it seems to me that, leaving aside the question of
express surrenders, there is no authority binding upon this court which decides
that, where a lease comes to an end but the tenant remains in possession under
a new lease, the tenant loses his right to remove the tenant’s fixtures.
In Re
Thomas, ex parte Willoughby d’Eresby (Baroness) (1881) 44 LT 781, the Court
of Appeal on March 3 1881 gave judgment in terms which might be regarded as
favouring the narrower view of the tenant’s rights. Four days later, however,
on March 7, the court restored the case to the list on its own motion and
stated, inter alia:
If and when
the simple case shall arise of a tenant having removable fixtures, continuing
his possession under a new or extended term, we desire to hold ourselves
perfectly free as to the question whether he retains his right of removal
during such continued possession . . .
In Pole-Carew
v Western Counties and General Manure Company Ltd [1920] 2 Ch 97
Warrington J at p 122 said:
I think it is
clear that after a surrender of the term in the land to which tenant’s fixtures
are attached and subsequent lease to the same tenant the latter can no longer
remove the tenant’s fixtures unless his existing right to remove them is
reserved either expressly or by necessary implication — Leschallas v Woolf
(supra).
But Lord
Sterndale MR and Younger LJ reserved their opinions upon the surrender point,
which Younger LJ at p 123 described as one of great difficulty.
In these
circumstances, it seems to me that this court is free to consider the matter on
principle. In approaching that consideration there are two preliminary matters
which I should mention.
First, I can
quite see that, if a tenant upon the determination of his lease quits the
holding without removing his fixtures, he may have to be taken to have
abandoned them.
Secondly, if a
tenant executes an express surrender of his lease or enters into an express
agreement to surrender his lease, the surrender or agreement must be construed
according to its terms. It may be that the document can only be construed as a
disposition of the entirety of the tenant’s rights in respect of the land and
will, therefore, extinguish his right thereafter to remove tenant’s fixtures.
Parker J in Leschallas v Woolf (supra) so interpreted the
agreement in that case.
But when one
comes to cases where the tenant, after the determination of his lease remains
in possession of the property under a new lease and the determination of the
old lease was either by effluxion of time or a surrender by operation of law,
it seems to me that quite different considerations apply. I can see no sensible
reason why, in these circumstances, the tenant should lose his right to remove
his fixtures. The fixtures were brought in by him for the purposes of his
occupation as tenant, and one would suppose that (subject to any express
disposition by him) his rights in respect of them would not alter so long as he
continued to occupy as tenant, whether under his original lease or a new lease
taking effect upon the determination of the original lease. I do not believe
that a person holding over as tenant from year to year or taking a renewal of
his lease under a provision in the original agreement would imagine that any
rights that he had to remove fixtures would be affected by the determination of
the original lease. The Landlord and Tenant Act 1954 is designed to ensure
security of tenure for business tenants. The Act in effect enables such tenants
to obtain extensions of their leases from time to time to enable them to carry
on their businesses. One would be reluctant to reach the conclusion that while
tenants are secure in their tenancies they may lose their rights in respect of
valuable business fixtures.
The fact that
the previous lease has determined by surrender by operation of law (which is
normally the case where application is made under the Landlord and Tenant Act
1954 in consequence of the statutory extension of the existing lease until the
proceedings are determined) seems to me to be a mere technicality which should
not affect the court’s approach to the question of principle.
It is, of course,
true that a tenant can, prior to the grant of a new lease, remove any tenant’s
fixtures which he attached to the property during the existing term and bring
them back after the new term has been granted. But that is expensive and
wasteful formalism. It should be possible for the law to preserve the tenant’s
right to remove fixtures in some more sensible way. In my view it would be a
sensible and workable rule that a tenant should have the right to remove his
fixtures so long as he remains in possession of the premises as tenant. I think
it is open to the court to adopt that rule and I would do so.
It is right to
consider whether such a rule would disturb property transactions entered into
upon the basis reasonably supposed to exist of some other state of the law
indicated in the authorities. I do not think it would. The construction of
express surrenders or agreements for surrender would not be affected. So far as
other transactions are concerned, the text-books have not been unanimous as to
the limits of the law and it is clear, I think, that the two decisions of the
Court of Appeal to which I have referred (ie Willoughby d’Eresby and Pole-Carew)
have left the matter quite open over a long period. The law has not been
settled. And, of course, if it can be shown that the parties have both acted
upon the basis that particular fixtures are part of the land and not removable,
effect could be given to that.
I should add
that I agree with the observations of the Master of the Rolls regarding section
34 of the Landlord and Tenant Act 1954 as amended by the Law of Property Act
1969.
The result, in
my view, is that the fixtures in issue in the present case should be regarded
as fixtures which the tenant is entitled to remove and the rent should be fixed
accordingly.
I would
dismiss the appeal.
The appeal
was dismissed with costs. Leave to appeal to the House of Lords was refused.
