Landlord and tenant – Business tenancy – Lease renewal – Respondent tenant seeking renewal of business tenancy under Part II of Landlord and Tenant Act 1954 – Judge determining preliminary issues in favour of respondent – Appellant freeholder appealing – Whether respondent occupying residential flat for business purposes as well as dwelling – Whether appellant intending to occupy holding for business purposes under section 30(1)(g) of 1954 Act – Appeal dismissed
The appellant local authority was the freehold owner of premises on the first and second floors at 269 Portobello Road, London W11 (the flat). In 2009, M (the sole director of the respondent company) applied for a lease of the property, saying that the intended use was “mixed use”.
In 2012, the appellant granted a lease of the flat to the respondent for five years as “a single tenancy dwelling”. Following refurbishment works, the flat was occupied by M and his family as their main residence.
In 2013, the appellant granted a lease of the ground floor of the property to a company, of which M was also the director, for use as a coffee shop.
In 2017, the appellant served a notice on the respondent under section 25 of the Landlord and Tenant Act 1954 Act. The respondent claimed a new lease of the flat pursuant to Part II of the 1954 Act.
The appellant opposed the claim on the ground that, on termination of the current tenancy it intended to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by it therein: section 30(1)(g) of the 1954 Act.
The court determined, as preliminary issues, that: (i) the respondent occupied the property for the purposes, or partly for the purposes, of its business under section 23(1) of the 1954 Act; and (ii) the appellant had failed to satisfy the requirements of section 30(1)(g). The appellant appealed.
Held: The appeal was dismissed.
(1) Appellate courts had been warned not to interfere with findings of fact by trial judges, unless compelled to do so. That also applied to the evaluation of those facts and to inferences to be drawn from them. Such interference would only be justified where a critical finding of fact was unsupported by the evidence, or no reasonable judge could have reached that decision: Piglowska v Piglowski [1999] 1 WLR 1360 and Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 considered.
Cheryl Investments Ltd v Saldanha [1978] 2 EGLR 54 provided a useful guide to the question whether use of residential premises for a business purpose was sufficient to bring the tenancy within the 1954 Act. The business use had to be not merely incidental to the residential use of the relevant premises.
In the present case, the judge directed himself, correctly, by reference to the guidance in Cheryl Investments which made it clear that a lease of residential premises such as a flat or a house could be brought within the terms of the Act, if there was sufficient business use, notwithstanding the residential character of the relevant flat or house.
He found that the respondent was carrying on a business (the management of five leases of other premises) from the flat which was sufficient to make it a business tenancy within section 23(1) of the 1954 Act. The evaluation of the evidence was pre-eminently a matter for the judge and there was no basis here on which an appeal court could interfere. There was no error of law in the judge’s conclusion that the respondent occupied the flat for the purposes of its business or partly for those purposes at the contractual term date of the lease.
(2) The respondent had corporate personality. As such, it had no ability directly to conduct business or to occupy premises. It could only act by its officers and agents, which essentially meant M, as its sole director. It followed that, if M was occupying the flat for the purposes of transacting the business of the respondent, that was capable of qualifying as the business occupation of the flat by the respondent.
The judge was entitled to find that, despite the paucity of evidence in relation to precisely what work the respondent was in fact doing, it was carrying on business for the purposes of section 23(1) of the 1954 Act: A company could occupy a property through a manager: Pegler v Craven [1952] 2 QB 69 considered.
The judge found that the relevant business which the respondent operated from the flat was the business of the respondent which was also the tenant of the flat pursuant to the lease. There was therefore an identity between the person operating the relevant business and the person who was the tenant of the flat. As such, the respondent was capable of satisfying section 23(1) if its business occupation of the flat was, on the evidence, sufficient to meet the requirements of section 23(1).
(3) The “holding”, for the purposes of section 30(1)(g) of the Act, was defined by section 23(3) to mean the premises demised by the relevant tenancy, except any part of the demised premises not occupied by the tenant or its employees.
When a landowner permitted another to use their property for business purposes, the question whether they were sufficiently excluded for the latter to be regarded as the occupier was a question of degree.
The degree of presence and exclusion required to constitute occupation always depended upon the nature of the premises, the use to which they were put, and the rights enjoyed or exercised by the persons in question.
The question whether the appellant would be in occupation for the purposes of section 30(1)(g) was essentially one of control. A tenant would not normally be able to claim that it was in business occupation of premises which it had sublet: Graysim Holdings Ltd v P&O Property Holdings Ltd [1996] 1 EGLR 109 considered.
(4) The appellant intended to let the flat on a standard tenancy granted pursuant to its homelessness function under Part VII of the Housing Act 1996 (which was not a secure tenancy: see paragraph 4 of schedule 1 to the Housing Act 1985), under which the tenants would be the exclusive occupiers. The flat would not therefore be occupied by the appellant.
On the evidence, the judge was entitled to decide that the intended letting of the flat, by way of temporary accommodation for homeless persons, would not qualify as occupation of the flat by the appellant for the purposes of section 30(1)(g).
Gerard van Tonder (instructed by Bi-Borough Shared Legal Services) appeared for the appellant; Daniel Gatty (instructed by Pittalis LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Royal Borough of Kensington and Chelsea v Mellcraft Ltd
