Landlord and Tenant Act 1954, Part II–Preliminary issue on point of law–Whether grant of a right-of-way for a term of years is a tenancy to which Part II applies–Whether a legal easement can be ‘occupied’ for purposes of a company’s business–Right-of-way can be ‘used’ but not ‘occupied’–Mere right-of-way, as distinct from the actual roadway, cannot be ‘occupied’ for purpose of business or any other purpose
This was a
preliminary issue in proceedings transferred by consent from the county court
to the High Court concerning the application by the Land Reclamation Co Ltd for
a new tenancy from Basildon District Council. The new tenancy claimed,
following a previous lease for seven years, was of a right-of-way over a
roadway vested in the council to land belonging to the company and used for the
company’s business of waste disposal. The council took the point that the
lease, being the grant of a term of years in an incorporeal hereditament, did
not qualify for the security of tenure given by Part II of the Landlord and
Tenant Act 1954.
A F B
Scrivener QC and N M Lowe (instructed by Ellison & Co, of Colchester)
appeared for the plaintiffs; R H Bernstein QC and C B Priday (instructed by J L
Knight, of Basildon District Council) for the defendants.
Giving
judgment, BRIGHTMAN J said: This is the trial of a preliminary issue arising on
an application under the Landlord and Tenant Act 1954. The issue is whether the
grant of a right-of-way for a term of years is a tenancy to which Part II of
the Act applies.
The District
Council of Basildon is the owner of a private roadway called Marsh Road, which
runs from the neighbourhood of Pitsea southwards towards the Thames estuary. On
each side of the roadway are areas of marshland, derelict farmland and
mudflats. The plaintiff, Land Reclamation Co Ltd, is the owner of a large part
of such land. The company uses the land for the disposal of waste and says that
this is the largest waste disposal site in the United Kingdom. I was told that
the site was particularly well suited to the disposal of waste, including toxic
waste, because the subsoil consists of a saucer of impermeable clay which acts
as a container for waste matter without polluting the surrounding land or the
estuary. I was told, but there was no sworn evidence to this effect, that the
site was of great importance to the country’s industry, because there are few
places so suitable for toxic waste disposal. The Basildon District Council,
however, is conscious of local opposition and does not wish to be a voluntary
party to the continued use of the site for this purpose.
The roadway
was formerly vested in the Crown, and the company at that time used the
roadway, which is the only existing access to the waste disposal site, under a
licence granted by the Secretary of State for Defence. The local authority
which was the predecessor of the present district council became the owner of
the roadway in 1969. On August 14 1970 this authority, which I will call the
urban district council, granted under seal the lease which is the
subject-matter of the application now before the court.
By clause I of
the lease the urban district council, in consideration of a yearly rent of
£1,000, demised to the company:
Full right
and liberty for them and their assigns, their agents, servants or licensees, to
pass and repass, with or without vehicles, along the private road in common
with the lessor, its servants, agents, tenants and licensees, and others having
a like right and liberty, between the hours of 6 am to 8 pm Mondays to Fridays,
and 6 am to 2.30 pm Saturdays (hereinafter called the permitted hours) for all
purposes in connection with the use of the company’s land for the dumping and
disposal of waste materials; subject nevertheless to, and reserving unto the
lessor, the right at all times hereafter, or at any times or time, to erect,
renew and maintain a gate or gates across the said roadway at the points marked
‘G’ on the said plan, with all necessary fittings and fixtures, but so that the
same shall not be locked or be so erected or maintained as to impede or
obstruct the free use and enjoyment of the right and liberty of way hereby
granted in accordance with the tenor hereof.
By clause II
the company entered into a number of covenants with the urban district council
dealing with the maintenance of the roadway. For this purpose, the roadway was
divided into four stretches, lettered from the south ‘A,’ ‘B,’ ‘C’ and
‘D.’ The company covenanted to make up
at its own expense the stretch from ‘A’ to ‘B.’
It covenanted to pay to the urban district council the cost of putting
‘B’ to ‘C’ into repair; it covenanted to pay a fair proportion, according to
user, of the cost of maintaining the stretch ‘C’ to ‘D,’ its proportion being
fixed for the first year at three-quarters. Clause III of the lease is a
covenant for quiet enjoyment. Clause IV contains power for the urban district
council to determine the lease in the event of breach of covenant by the
company.
The term of
the lease was due to end on March 25 1977. On April 20 1976 the company served
notice on the Basildon District Council requesting the grant of a new tenancy,
to which the district council responded with a counternotice. The company then
applied to the Brentwood County Court. The Basildon District Council took the
point that the lease, being a grant of a term of years in an incorporeal
hereditament, was outside the protection afforded by Part II of the Landlord
and Tenant Act 1954. By consent, an order was made removing the application to the
High Court. The only question before me is the preliminary issue.
The case
depends principally on section 23(1) of the Act. This provides as follows:
Subject to
the provisions of this Act, this Part of this Act applies to any tenancy where
the property comprised in the tenancy is or includes premises which are
occupied by the tenant and are so occupied for the purposes of a business
carried on by him or for those and other purposes.
Subsection
(3):
In the
following provisions of this Part of this Act the expression ‘the holding’ in
relation to a tenancy to which this Part of this Act applies, means the
property comprised in the tenancy, there being excluded any part thereof which
is occupied neither by the tenant nor by a person employed by the tenant and so
employed for the purposes of a business by reason of which the tenancy is one
to which this Part of this Act applies.
‘Tenancy’ is
defined by section 69(1), but not in a manner which indicates whether Part II
of the Act was intended to apply to an easement held for an interest equivalent
to a term of years.
To come within
Part II there are, shortly stated, two conditions which must be satisfied by
the applicant. (1) The applicant must have a tenancy and not a mere licence or
contractual permission which falls short of an interest in the land. (2) The
applicant must establish that the property comprised in the tenancy is or
includes premises which are occupied by him for the purposes of a business
carried on by him.
The Basildon
District Council first submitted that the legal relationship between it and the
company was that of licensor and licensee, and not that of landlord and tenant.
In support of this submission counsel, while recognising that the wording of
the document was wholly appropriate to a lease, relied upon two factors. First,
the absence of a specific description of the company’s land to which the
right-of-way could be appurtenant. Secondly, the fact that the grant was only
for a
owners. There is no substance in either of these points.
The Law of
Property Act 1925, section 1, recognises that a legal easement may be created
for an interest equivalent to a term of years absolute, and it does not matter
whether the term is seven years or 700 years. It is also well established that
a right-of-way can exist as a legal interest notwithstanding that the dominant
tenement is not precisely identified in the deed of grant. The general reference
to the company’s land in the lease is sufficient for this purpose, extrinsic
evidence being admissible. Neither of these propositions of law was disputed by
the Basildon District Council; the factors mentioned were only relied upon as a
pointer to the true construction of the deed. However, it seems to me clear
that the urban district council granted to the company a legal easement for a
term of years and not a mere licence.
This does not
conclude the matter, because it is necessary for the company to establish that
it is an occupier for business purposes of the property comprised in the lease.
The property comprised in the lease is the right-of-way and not the roadway
itself. There is no doubt that the right-of-way is exercised by the company for
the purposes of its business. The company’s lorries pass along the roadway at
the rate of about one every four minutes. It is equally true that the roadway
is used for the purposes of the company’s business. But is it possible to say
that the property comprised in the lease, ie the right-of-way, is, or includes,
premises which are occupied by the company?
In ordinary speech, a right-of-way is not a possible subject-matter of
occupation as distinct from user, not is it easy in normal circumstances to say
that a roadway is occupied by a person who has a mere right-of-way thereover.
The first case
to which the company referred was Whitley v Stumbles [1930] 1 KB
393. This arose under the Landlord and Tenant Act 1927. The plaintiff was the
assignee of a lease which included an hotel and the exclusive right of fishing
certain adjacent waters. The county court judge held that the fishing rights
were not premises within the meaning of section 17(1) of the 1927 Act, and that
accordingly the plaintiff, when applying for a new lease of the hotel, could
not require the fishing rights to be included therein. This decision was
reversed by the Divisional Court and the Divisional Court was upheld by the
Court of Appeal [and House of Lords–see below].
Section 17(1)
of the 1927 Act was worded as follows:
The holdings
to which this Part of this Act applies are any premises held under a lease,
other than a mining lease, made whether before or after the commencement of
this Act, and used wholly or partly for carrying on thereat any trade or
business and not being agricultural holdings within the meaning of the
Agricultural Holdings Act 1923.
There is a
significant difference between that Act and the 1954 Act. In the 1927 Act the
formula is ‘premises used for carrying on thereat any trade or business.’ In the 1954 Act the formula is ‘premises
occupied for the purposes of a business carried on by him.’
Greer LJ
expressed strong doubts whether the word ‘premises’ would cover a separate and
distinct lease of an incorporeal hereditament. Slessor LJ perhaps leaned the
other way. The doubt did not need to be resolved, because the fishing rights
were demised along with corporeal hereditaments. The subject-matter of the
lease was the hotel with certain rights attached thereto, and the Act applied
to the entirety. This view was accepted by the House of Lords at [1930] AC 544,
leaving unresolved the doubts expressed by Greer LJ.
The company
also sought at one time to rely on Bracey v Read [1963] Cha 88,
but more fully reported in [1962] 3 All ER 472. In that case a lease had been
granted of the right to train and exercise racehorses on certain gallops on the
Berkshire Downs. The 1954 Act was held to apply to that lease. On a closer
examination of the case, and particularly of the facts as set out in the report
in the All England series, it became clear that the lease was construed
as a demise of the actual strips of land and not merely as a grant of a right
to train and exercise horses. The decision accordingly is not an authority that
a grant of a term of years in an incorporeal hereditament is by itself within
the Act.
Counsel also
relied on Lee-Verhulst (Investments) Ltd v Harwood Trust [1972] 3
All ER 619, where Sachs LJ compared the wording of the 1927 Act with the
wording of the 1954 Act, and observed at p 624:
On being
asked what was the relevant distinction between ‘used’ and ‘occupied,’ neither
counsel–both very experienced in this branch of the law–could after full and
helpful consideration suggest such a distinction; on the other hand, we were
referred by them to statutes in which the word ‘used’ seemed to have the same
meaning as ‘occupied.’
This
observation has to be read in the context of the case then under consideration,
namely a tenancy of premises consisting of 20 separate apartments in full
occupancy. As occupation is a kind of user, it is difficult to envisage an
occupation of land or buildings which is not also a user. The reverse does not
apply; not every use is an occupation, and obviously many things capable of
being used are incapable of being occupied. The words are not fully
interchangeable, only interchangeable in some contexts.
I am not
justified in reading section 23(1) of the 1954 Act as if it said ‘premises
which are used by the tenant and are so used for the purposes of a business.’ So rewritten, a right-of-way for a term might
well be within the Act, for I see no reason why a right-of-way should not be
premises. Subsection (3), which defines ‘the holding’ as the property comprised
in the tenancy ‘there being excluded any part thereof which is occupied neither
by the tenant nor by a person employed by the tenant,’ also suggests to my mind
that occupation is not employed in the Act in the sense of user. There are, in
fact, a number of sections of the Act which are to some extent inappropriate if
occupation is equated with use, and if the Act is interpreted as including
within its scope an incorporeal hereditament, such as an easement of way. It
would be tedious to refer to them all Notable examples can be found in section
30, and it will be noticed that subsections (1) and (7) of section 57, and
section 58, contain the expression ‘the use or occupation of the property.’
It was also
submitted on behalf of the Basildon District Council that parts of the 1954 Act
are geared to the rateable value of the holding: see section 63 which allocates
jurisdiction to the High Court or the county court according to the rateable
value of the holding, and section 37 which measures compensation for
disturbance by reference to the rateable value. A right-of-way is not per se
rateable; it would only be rateable if on the facts of the case it involved the
exclusive occupation of the roadway, or something approaching exclusive
occupation. The Act does not seem to envisage as within its compass a property right
which is not rateable.
In Jones
v Christie decided on April 30 1963 (Bar Library Transcript No 119) the
Court of Appeal were concerned with the application of the 1954 Act to the
lease of a house and fishing rights. The tenant was not able to claim that he
occupied the house for business purposes, but he did claim to carry on the
business of letting the fishing rights. The claim failed for a reason which is
not material to be explained, but the learned Master of the Rolls doubted
whether the Act could apply to a mere incorporeal hereditament on its own. He
said, ‘If the letting were solely of an incorporeal hereditament, such as the
right to fish, I doubt whether the Act would apply to it. When the Act speaks
of ‘premises’ being
hereditaments.’
Counsel for
the company sought to say that, although the property comprised in the tenancy
consisted only of the right-of-way, the exercise of such right necessarily
involved the occupation, although not the exclusive occupation, of the roadway;
therefore, to that extent, the property comprised in the lease, namely the
easement, included premises, namely the roadway, which were in the occupation
of the company for the purposes of its business; in other words, occupation of
the roadway resulted from the easement. I do not feel able to accept that
submission. In my judgment, the company uses the roadway for the purposes of
its business, but it does not occupy either the easement or the roadway. I take
the view that Part II of the 1954 Act has no application to a mere right-of-way
standing by itself, because such a right is not property or premises capable of
being occupied for the purposes of a business, or indeed for any other purpose.
I will make a declaration accordingly.
