Material change of use — Greater London Council (General Powers) Act 1973 — Definition of temporary sleeping accommodation in section 25(2) — Flats provided to employees for holiday purposes — Whether flats provided for a ‘consideration’
In April 1987 the
appellant council granted conditional planning permission for the conversion of
property into flats, subject, inter alia, to a condition that the flats
were not used for any purpose specified in section 25 of the Greater London
Council (General Powers) Act 1973. Section 25 provides that any use as
temporary sleeping accommodation, as defined in that section, of any
residential premises in Greater London involves a material change of use. In
July 1996 the council served two breach of condition notices on the company in
respect of two flats that were being used to provide short-term free
accommodation to overseas employees. The company’s application for judicial
review of the two notices was allowed and the notices quashed by the High
Court. That decision was upheld by the Court of Appeal. The council appealed to
the House of Lords contending that in the context of section 25(2) the word
‘consideration’ should not be given the strict meaning that it bears in the
context of English contract law, but a wider meaning that would encompass the
purpose of the provision and meet the mischief that that section sought to
counter.
The broader
construction of the section was preferred. It gives a coherent meaning to it and serves the intention of the
legislation. It does not extend the section to many of the cases where
accommodation is made available for friends or relations, whether on a formal
or informal basis, whether for any return or not. What the section strikes at
are cases where the person providing the accommodation does so with his mind on
the advancing of a commercial enterprise with a view to profit from the receipt
of money or money’s worth or where the accommodation is made available for some
purpose or other for an employee by reason of his employment. Whether a given
case falls into one or other of the two subparagraphs should be readily
established without the need for too detailed an inquiry. In particular, it
should not be necessary to examine the precise terms of an employee’s contract
in order to discover whether or not he has an entitlement to the accommodation.
It would be a curious reading
the decision as to whether a case qualified or not under subpara (ii) was found
to rest upon the particular terms or conditions of each particular contract:
see pp142-144.
referred to in the opinions
Appeal from the Court
of Appeal
This was an appeal by
Kensington and Chelsea Royal London Borough Council against the decision of the
Court of Appeal on 14 January 1998 upholding a decision of Mr Robin Purchas QC,
sitting as a deputy judge of the Queen’s Bench Division, quashing two breach of
condition notices issued by them against Lawrie Plantation Services Ltd.
Thomas Cosgrove (instructed by the solicitor to Kensington and Chelsea Royal
London Borough Council) appeared for the appellants, Kensington and Chelsea
Royal London Borough Council.
Fitzgerald QC and Alun Alesbury (instructed by Travers Smith Braithwaite)
represented the respondent, Lawrie Plantation Services Ltd.
opinions were delivered.
LORD SLYNN OF
HADLEY: My lords, I have had the advantage of
reading in draft the speech prepared by my noble and learned friend Lord Clyde.
As he shows, the language used in the section is clearly capable of different
interpretations. The purpose of the legislation, however, is plainly to enable
the planning authority to control changes of use from normal residential
occupation to temporary occupation by two groups most likely to be frequently
changing — short-term lets for rent and employees and their families visiting
London. It does not seem to me possible that parliament can have intended that
planning control should depend on fine distinctions in the terms of contracts
of employment, or that it was necessary for the planning authority to consider
in each case whether the provision of a flat was specifically linked to some
contractual obligation of the person using the flat so as to be ‘consideration’
for it in the strict contractual sense. Such a construction would defeat the
purpose of the legislation. It is sufficient that the provision of the flat
was, in a broad sense, by reason of or flowed from the existence of the
employment relationship. I therefore agree that, for the reasons Lord Clyde has
given, this appeal should be allowed.
LORD GOFF OF
CHIEVELEY: My lords, I have had the advantage of
reading in draft the speech that has been prepared by my noble and learned
friend Lord Clyde. I agree with it, and for the reasons that he has given, I
too would allow the appeal.
LORD HOPE OF
CRAIGHEAD: My lords, I have had the advantage of
reading in draft the speech that has been prepared by my noble and learned
friend Lord Clyde. I agree with it, and for the reasons that he has given, I
too would allow the appeal.
LORD CLYDE: My lords, on 2 April 1987 the appellants granted a conditional
planning permission for the conversion of property now known as Crown Lodge
into a block of 130 self-contained flats. Condition 11 of the grant provided:
‘The premises subject of this permission shall not be used at any time for any purpose
specified in section 25 of the Greater London Council (General Powers) Act
1973…’. The reason for the imposition of this condition was stated to be: ‘To
ensure the permanent retention of the accommodation for normal residential
purposes.’ The reference in condition 11 to any purpose specified in section 25
of the 1973 Act was, in terms of section 25(1) of that Act, a reference to ‘the
use as temporary sleeping accommodation of any residential premises in Greater
London’. What section 25(1) provided was that such use was to involve a
material change of use for the purpose of section 22(1) of the Town and Country
Planning Act 1971. Section 22(1) of that Act defined ‘development’ for the
purposes of planning control. Thus, the effect of section 25(1) was to enable
planning control to extend over the change of use from permanent residential
use to use as ‘temporary sleeping accommodation’.
Section 25(2)
comprised the following definitions:
In this section —
(a) ‘use as
temporary sleeping accommodation’ means use as sleeping accommodation which is
occupied by the same person for less than [ninety] consecutive nights and which
is provided (with or without other services) for a consideration arising either
—
(i) by way of trade
for money or money’s worth; or
(ii) by reason of
the employment of the occupant; whether or not the relationship of landlord and
tenant is thereby created;
(b)
‘residential premises’ means a building, or any part of a building, which was
previously used, or was designed or constructed for use, as one or more
permanent residences.
In 1989 and 1992
respectively the respondent acquired long leases of flats 8 and 9 in Crown
Lodge. It used the flats to provide accommodation for employees of the company
and, to a lesser extent, personal friends and acquaintances of directors of the
company. The vast majority of the occupiers were employees at a senior
managerial level of the companies in the respondent’s group, with or without
their partners and children. They came mostly from the Indian subcontinent and
generally on holiday. These various occupiers used the flats as sleeping
accommodation for periods of up to two weeks. It is agreed that no monetary
payment was required for the use of the accommodation and no tenancy agreements
were entered into.
The appellants took
the view that condition 11 had been breached and issued breach of condition
notices under section 187A of the Town and Country Planning Act 1990. The
respondent sought judicial review of the decision to issue the notices. Its application
was allowed and the notices were quashed by the High Court. That decision was
upheld by the Court of Appeal.
The problem in this
case is one of the construction of the definition in section 25(2) of the Act
of 1973, and more particularly of the words ‘which is provided… for a
consideration arising… by reason of the employment of the occupant’. There is
no doubt but that the two flats in question were ‘residential premises’. The
facts disclose that they were occupied by the same person for less than 90
consecutive nights. They were not provided by way of trade, nor for money or
money’s worth, so as to be caught by section 25(2)(a)(i). The question
is whether they fall within the scope of section 25(2)(a)(ii). Some of
the occupiers came simply as friends or acquaintances of the directors, and,
not being employees of the respondent, would not fall within the scope of the
provision. But, as I have already indicated, that group of occupiers formed
only a very small minority of the total number, and, for practical purposes,
can be disregarded. The critical group was that which comprised the employees
from the senior management, coming with or without their families, and
generally on holiday. That group formed the overwhelming majority of the
occupiers of the flats and it is in relation to that group that the case must
stand or fall.
The deputy judge and
the judges in the Court of Appeal adopted a strict construction of the word
‘consideration’. On that approach, the appellants require to find something
that will constitute a sufficient consideration moving from the occupier to the
respondent in return for which the accommodation was provided. But, on the
facts, the appellants were unable to show that the occupiers were entitled to
the occupation in return for services that they had performed, and the hope or
expectation by the employer of goodwill or improved performance from his senior
employees was not sufficient to constitute a valuable consideration in the
strict sense of contract law.
The argument both before
the deputy judge and before the Court of Appeal appears to have proceeded
wholly, or at least principally, upon the basis that a strict construction was
appropriate. The deputy judge records that both parties accepted that
‘consideration’ should be taken as valuable consideration in a legal sense. As
Nourse LJ noted, both sides adopted in the Court of Appeal and below the same
understanding of the substance of a valuable consideration in the correct legal
sense. Before this House, however, the appellants’ challenge proceeded
primarily on the basis that, in the context of section 25(2), the word should
not be given the strict meaning that it bears in the context of English
contract law, but a wider meaning that would encompass the purpose of the provision
and meet the mischief that the section sought to counter. Certainly, the
difficulties in the construction of the section cannot be overcome by simply
rejecting the critical words ‘for a consideration arising’ as otiose. Some
meaning should be given to them. But it is not necessary to read them as
embodying the precise requirements of enforceability under English contract
law. The word may refer to the motive or intention of the provider of the
accommodation, the reason why the provision is made, what prompted the
provision of the accommodation or what he had in mind when he provided it,
without entailing any legal right on the part of the
accommodation may have been made in return for some service without any
obligation to make it or, more generally, in recognition of a past period of
service. In such circumstances, the use of the phrase ‘for a consideration’
seems to me perfectly appropriate. In the context of strict contract law, a
past consideration may well be said to be no consideration. But in the
construction of planning legislation, the use of the word may readily admit of
a wider construction. The dispute in the present case thus comes to be a
dispute between the narrower and the broader construction.
The purpose of the
provision, plainly, was to control the extent to which residential property
could be put to use for certain forms of short-term transitory occupation. That
was achieved by requiring the obtaining of planning permission where
residential property was going to be used for such purposes. The point is
stressed in the explanation that I have already quoted in the grant of planning
permission in the present case for the imposition of the condition in question.
What the planning authority were seeking to do was to preserve a sufficiency of
permanent accommodation in their area, no doubt on social, economic and
environmental grounds, and to control the extent to which the character of the
area and the amenity of particular residential premises might be affected by a
constantly changing population of transitory residents.
If that was the kind
of mischief that parliament was seeking to counter, it is easy to understand
the selection of the two categories of case that parliament sought to identify.
One obvious situation where short-term occupations could arise would be through
commercial lettings. So, it is understandable that subsection (2)(a)(i)
seeks to cover that kind of case. The other reasonably obvious category is
where a company or business organisation purchases a flat for the use of its
employees, perhaps when they require to stay in particular places in connection
with the company’s affairs or as a convenience for any of the purposes of the
business. In that kind of case it may well be that no rent or consideration, in
the narrow sense, would be paid. A wide construction of the second category
would seem to meet the purpose of the legislation better than a restriction of
it to such cases where a consideration was paid and a right to the occupation
obtained. In the construction of planning legislation dealing with the use of
land, it is particularly desirable to find a construction that satisfies the
purpose of the legislation, and the relative obscurity of the language of the
subsection in the present case makes it all the more appropriate to find a
solution that will prove reasonable and workable. But it is necessary at this
stage to turn more particularly to the language used in the subsection.
It was not disputed
that the phrase ‘whether or not the relationship of landlord and tenant is
thereby created’ applies to subpara (i) as well as to subpara (ii). So the
transactions that the earlier subparagraph are intended to cover extend beyond
a tenancy to any situation where the sleeping accommodation is enjoyed in
return for the payment of money or money’s worth. But it is to be noticed that
subpara (i) comprises two elements, both of which require to be satisfied
before the provision can apply. First, there must be the element of trade. The
provision of the accommodation must
intended to cover private or personal transactions where accommodation is made
available and money or money’s worth is paid but the transaction is not one by
way of trade. It is designed to catch the letting of premises that is carried
out as a commercial enterprise. The second element is the necessity for money
or money’s worth. Even if the arrangement does not constitute a tenancy, there
must be a valuable consideration in money or money’s worth paid for the use of
the accommodation. But, since mention is made of what is clearly valuable
consideration in relation to subpara (i), it becomes difficult to read the
earlier reference to ‘consideration’ as meaning a valuable consideration in the
strict sense. If it were merely a duplication of the same concept, it would be
adding nothing to subpara (i) and would be unnecessary. But some distinct
content must be given to the critical phrase ‘for a consideration arising’. The
particular reference to money or money’s worth in subpara (i) points, in my
view, to the adoption of the broader construction of the critical phrase.
When one turns to
subpara (ii), one finds that there is no phrase corresponding to the express
words ‘for money or money’s worth’ that appeared in subpara (i). So far as the
second provision is concerned, it seems to be sufficient that the accommodation
is provided for a consideration arising by reason of the employment of the
occupant, even if there is not money or money’s worth involved. Only by
construing the word ‘consideration’ in the strict sense can one import the
element of a rent or suchlike into subpara (ii). But, undoubtedly, the critical
phrase must bear the same meaning in relation to both subparas (i) and (ii). If
the broader construction is apt for the former, it may certainly fit with the
latter. Furthermore, in relation particularly to the latter provision, that
conclusion is born out by the language used. While the word ‘for’ might seem to
be meaning ‘in return for’, the word can be readily understood as equivalent to
some such phrase as ‘on account of’. More important, however, is the use of the
word ‘arising’, which sits uneasily with the idea of a consideration such as a
rent, and invites a wider construction than would be involved in the making of
some obligatory return for the accommodation. Finally, the words ‘by reason of’
imply a degree of latitude. They require the existence of some causal relationship
between the employment and the provision of the accommodation. But they do not
prescribe more precisely the conditions, if any, under which the provision is
made. It may or may not be by contractual right. It may or may not be for the
direct purposes of carrying out the business of the employer. So long as it can
be reasonably held that it is because of the employment of the recipient of the
accommodation that he comes to occupy it, that should suffice for the case to
qualify under subpara (ii).
The broader
construction of the section, which I favour, seems to me to give a coherent
meaning to it and to serve the intention of the legislation. It does not extend
to many of the cases where accommodation is made available for friends or
relations, whether on a formal or informal basis, whether for any return or
not. What the section strikes at are the cases where the person providing the
accommodation does so with his mind on
of money or money’s worth, or where the accommodation is made available for
some purpose or other for an employee by reason of his employment. Whether a
given case falls into one or other of the two subparagraphs should be readily
established without the need for too detailed an inquiry. In particular, it
should not be necessary to examine the precise terms of an employee’s contract
in order to discover whether or not he has an entitlement to the accommodation.
Indeed, it would be a curious reading of the statute and an unsatisfactory
result from the practical point of view if the decision as to whether a case
qualified or not under subpara (ii) was found to rest upon the particular terms
or conditions of each particular contract.
Applying the
construction that I favour to the facts in the present case, I have no
difficulty in holding that the condition in the grant of planning permission
was breached. I would accordingly allow the appeal.
LORD MILLETT: My lords, I have had the advantage of reading in draft the speech
prepared by my noble and learned friend Lord Clyde. I agree with it, and for
the reasons he gives I too would allow the appeal.
Appeal allowed.
