Landlord and Tenant Act 1954, section 25 — Lease of land used as a golf course, the tenants carrying on the business of a golf club — Lease contained a resumption clause which provided that the landlords could resume possession of the greater part of the land, being in effect the actual golf links, but not the clubhouse — Landlords gave notice in accordance with this clause and at the same time served a notice expressed to be under section 25 of the 1954 Act purporting to terminate the tenancy of the same land for the purposes of the Act — County court judge held, despite some authority to the contrary, that the notice under section 25 was valid and effective although it applied to part only of the land comprised in the tenancy — Tenants appealed and the Court of Appeal reversed this decision — They rejected an argument that it was possible to spell out of the lease two separate tenancies, so that the notice could be regarded as applying to the whole of the land other than the clubhouse — They also rejected an argument that two separate tenancies arose either on the giving of the notice under the resumption clause or on its expiry — They held that a notice under section 25 must relate to the whole of the land comprised in the relevant tenancy — The notice in the present case, which related only to a part, was therefore ineffective — The result, which clearly frustrated the parties’ intentions, was that the tenancy of the whole of the land continued and would continue until it was possible to determine it by a section 25 notice relating to the whole of the land — It might well be that the Act was defective in not making provision for the kind of situation which arose in this case — Appeal by tenants allowed ‘with some regret and some reluctance’ — Dodson Bull Carpet Co Ltd v City of London Corporation and Kaiser Engineers & Constructors Inc v E R Squibb & Sons Ltd considered
This was an
appeal by Southport Old Links Ltd, tenants of land used as a golf club, against
a decision of Judge Jones at Southport County Court in favour of the landlords,
Ian Christopher Naylor and Peter Ewald Scarisbrick, the trustees of the
Scarisbrick Estate, the present respondents.
John S Colyer
QC and E Bartley Jones (instructed by Adrian L Bromiley, of St Anne’s-on-Sea,
Lancs) appeared on behalf of the appellants; J P Whittaker (instructed by
Bowcock & Pursaill, of Leek, Staffs) represented the respondents.
Giving
judgment, OLIVER LJ said: This is an appeal from an order of His Honour Judge
Edward Jones in the Southport County Court on July 5 of this year in
proceedings for a new tenancy under Part II of the Landlord and Tenant Act
1954.
The case was
one in which the landlords, who were the respondents to the present appeal, had
given a notice purporting to terminate the tenants’ tenancy of certain land
which was comprised in their lease pursuant to a break clause in the lease and
also a notice under section 25 of the Act where their right to give that notice
was being challenged. The question is whether the section 25 notice can be
operative in the circumstances of this case. It is accepted to be otherwise a
proper notice under section 25 of the Act, and it is not in dispute that the
tenants gave a proper counternotice and made their application to the court for
a new tenancy in due time.
What they did
was to issue an originating application, claiming declarations that the notice
was invalid and that the landlords could not serve a notice under section 25 in
relation to the particular land in respect of which it was served and, without
prejudice to all that, an order for a new tenancy. An order was made for the
points raised as to the validity and availability of the notice to be tried as
a preliminary issue, and it is against the learned judge’s dismissal of the
tenants’ claim to declarations on this issue that the present appeal is
pursued, with the leave of the learned judge.
To explain the
point at issue, I will begin by referring to some of the familiar provisions of
the Landlord and Tenant Act 1954. Section 23(1) provides:
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.
— and it is not
in issue that the tenants’ tenancy is a business tenancy within that section.
The only other
provision in section 23 to which I need refer is subsection (3), which contains
an important definition. It provides:
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 . . .
and then there
is a reference to an exclusion which I need not read because it has no
application in this case.
I then go to
section 24 (1), which is the section which has brought about the main
controversy in the instant case. That provides:
A tenancy to
which this Part of this Act applies shall not come to an end unless terminated
in accordance with the provisions of this Part of this Act; and, subject to the
provisions of section twenty-nine of this Act, the tenant under such a tenancy
may apply to the court for a new tenancy — (a) if the landlord
(b) if the tenant has made a request for a new tenancy in accordance with
section twenty-six of this Act.
In accordance
with the provisions ‘of this Act’ in section 24(1), so far as the landlord is
concerned, is a reference to section 25 — which regulates the landlord’s
notice, and requires it to be given within a certain time-limit and in a
prescribed form. The only subsection in that section to which I need refer is
subsection (5), which provides:
A notice
under this section shall not have effect unless it requires the tenant, within
two months after the giving of the notice, to notify the landlord in writing
whether or not, at the date of termination, the tenant will be willing to give
up possession of the property comprised in the tenancy.
That is echoed
again in subsection 29 (2) of the Act, which provides, in relation to
applications to the court for new tenancies:
Where such an
application is made in consequence of a notice given by the landlord under
section twenty-five of this Act, it shall not be entertained unless the tenant
has duly notified the landlord that he will not be willing at the date of
termination to give up possession of the property comprised in the tenancy.
A new tenancy
to be granted under the Act is described in section 32 (1), which provides:
. . . an
order under section twenty-nine of this Act for the grant of a new tenancy
shall be an order for the grant of a new tenancy of the holding; and in the
absence of agreement between the landlord and the tenant as to the property
which constitutes the holding the court shall in the order designate that
property by reference to the circumstances existing at the date of the order.
It should
perhaps be mentioned that section 31A, which was inserted by amendment in 1969,
makes some special provision for the grant of a new tenancy of what is
described as an ‘economically separable part of the holding’ where the landlord
resists the tenant’s application for a new tenancy on ground (f) in section 30
of the Act.
The rent under
a new tenancy is dealt with in section 34, being such a rent as ‘the holding’
might reasonably be expected to realise. I have not quoted the precise words of
the section.
In the context
of the instant appeal, the importance of these provisions is that they clearly
contemplate that what is terminated by the notice under section 25 is ‘the
tenancy of the holding’, and there is no provision in the Act for the
termination of the tenancy of ‘part of a holding’. The Act thus reflects the
common law rule that, in the absence of express agreement to the contrary,
notice to quit must relate to the whole of the land comprised in the relevant
tenancy.
It is, I
think, worth noting in this context that it was found necessary in the
Agricultural Holdings Act 1948 to insert a special provision in section 31*
validating a notice to quit as to part of the land comprised in the
agricultural holding in certain circumstances.
* Editor’s
note section 31 was replaced by section 8 of the Agricultural Holdings (Notices
to Quit) Act 1977.
There is
simply no machinery in the Act for determining a business tenant’s tenancy of a
part, or separate parts, of a holding, leaving the tenancy of the remainder to
continue and putting the tenant in the position of seeking a new lease — or, I
suppose, new leases — of the part or parts of the holding in respect of which
his tenancy has been terminated.
The problem in
the instant case arises because of the terms of the tenants’ lease. As their
name suggests, the tenants carry on the business of a golf club. They do so
under the terms of a lease dated September 21 1973, which was granted to them
by the then trustees of the Scarisbrick Estate — the respondents being the
present trustees. That lease provides, so far as material, as follows — and I
read first of all the habendum:
In
consideration of the rent covenants and agreements hereinafter reserved and
contained and on the part of the Tenants to be respectively paid observed and
performed the Landlords HEREBY GRANT AND DEMISE unto the Tenants FIRST ALL THAT
piece or parcel of land . . .
and then it
describes it by reference to a plan on which it is edged blue
AND SECONDLY
ALL THOSE pieces or parcels of land situate near Southport aforesaid and
adjoining the land first above described containing in area fifty-seven point
five seventy-two acres or thereabouts as the same are delineated as aforesaid
on the said plan and thereon edged with red . . .
and one refers
to the plan and one can see the land edged red is a very substantial area which
comprises the actual golf links.
The blue land
is, as I understand it, about half an acre — perhaps a little more — but it
contains nothing more than the clubhouse.
Then there is
this important exception and reservation which, as Mr Colyer has pointed out,
is not really an ‘exception and reservation’ at all, but a proviso, and it is
in these terms:
EXCEPT AND
RESERVING unto the Landlords full liberty of giving to the Tenants twelve
months previous notice in writing to expire on the second day of June One
thousand nine hundred and seventy-seven and on that date or any subsequent date
on which the said notice shall expire to resume possession of the whole or any
part of the land edged with red for the purpose of erecting constructing or
making thereon any dwellings or other buildings drains watercourses roads or
plantations or for any public purpose or other improvements making to the
Tenants compensation by a reduction from the rent reserved bearing the same
relative proportion to such rent as the area of land of which possession shall
be resumed shall bear to the entire area of the demised premises BUT SUBJECT to
the right of the Tenants to determine the Lease as hereinafter contained . . .
Then there are
various reservations concerning sporting and shooting and so on, and then it
continues:
TO HOLD the
same (except and reserved as aforesaid) unto the Tenants for the term of
twenty-one years from the second day of June One thousand nine hundred and
seventy-two subject to the provisos for determination herein contained YIELDING
AND PAYING therefor yearly during the said term unto the Landlords the yearly
rent of FIVE HUNDRED POUNDS . . .
and then
provisions follow which vary that rent in accordance with the cost of living
index, and I do not think I need read those provisions.
Coming on to
the tenants’ covenants, one finds that they are in the normal form; Clause 2(i)
covenants ‘that the Tenants will during the said term pay the said rent hereby
reserved (varied if necessary as aforesaid) at the times and in manner
aforesaid; (ii) that the Tenants will pay all rates taxes duties and
assessments other than Land Tax . . .’ and so on, which may be charged or taxed
or assessed upon the demised premises. (iii) is a covenant to ‘. . . clean out
and keep in good order and at a proper depth and fall all the ditches,
watercourses, drains, pipes and sewers in or upon the demised premises . . .’
in good order, with a particular exception in relation to an area marked on the
plan. (iv) is a covenant ‘at all times during the said term to keep and
maintain all the fences marked ‘T’ on the said plan in good order repair and
condition to the satisfaction of the Landlords or their Agent’ — and I should
mention that the fences marked ‘T’ appear both on the red and blue land.
(v), (vi) and
(vii) I do not think I need refer to — they are simply not to fill up ditches,
not to fell timber and not to erect buildings except with the landlords’
approval.
(viii) is of
some significance:
not at any
time to use or permit to be used the demised premises otherwise than for the
purpose of a golf course except that in the event of the Landlords resuming
possession of the land edged with red under the powers of determination herein
contained the Tenants may use the land edged with blue for such sporting
recreational or club purposes as the Landlords may in writing approve such
approval not to be unreasonably withheld.
and then there
is the usual covenant, (ix) ‘not at any time to assign or underlet or part with
the possession of the demised premises or any part thereof’ and then a covenant
to permit the landlords to enter upon the demised premises to carry out repairs
and so on.
Clause 3 is
the landlords’ covenant for quiet enjoyment — again, I think, nothing turns on
that except that it refers, as one would expect, to the ‘demised premises
during the said term’.
Clause 4 is of
some significance, and that is divided into three sub-clauses. It reads, so far
as material:
PROVIDED
ALWAYS AND IT IS HEREBY AGREED AND DECLARED: — (i) in the event of the
Landlords giving the Tenants twelve months notice to resume possession of the
land edged with red on the said plan in accordance with the provisions
hereinbefore contained the Tenants shall thereupon have the right to give
notice in writing to the Landlords within one month of the receipt of the
Landlords’ notice to determine the tenancy of the remainder of the demised land
and premises on the same date as is contained in the Landlords’ notice but up
to such date the Tenants shall observe and perform the covenants and conditions
and pay the rent hereinbefore reserved and contained.
(ii) is in the
following terms:
in the event
of the Landlords resuming possession of the said land edged with red on the
said plan and the Tenants electing to retain the land edged with blue under the
terms of this Lease there shall be reserved unto the Landlords from the date of
such resumption of possession all rights of drainage through the length of the
pool situate on the land edged with blue together with the right to lay pipes
below the bed of the pool for the purpose of carrying either foul sewage or
surface water.
Then in (iii)
there is the ordinary form of proviso for re-entry. I will not read the whole
of that, but the material part of it is in the usual form:
if the rent
hereby reserved or any part thereof shall at any time be in arrear for the
space of twenty-one days (whether the same shall have been legally demanded or
not) or if and whenever there shall be any breach of any of the covenants or
conditions by the Tenants hereinbefore contained . . . then and in any of the
said cases it shall be lawful for the Landlords notwithstanding any waiver of
the right of re-entry hereby provided into and upon the demised premises or any
part thereof in the name of the whole to re-enter and the same to have again as
in their former estate but without prejudice to the right of action of the
Landlords in respect of any breach of the Tenants’ covenants herein contained.
What occurred
in fact was that, on October 20 1983, the landlords gave a notice under the
exception and reservation or — as Mr Colyer would prefer it, and I think I
prefer it — the proviso, but I will refer to it conveniently as the break
clause. For relevant purposes para 2 is the only one which I need read:
For and on
behalf of Ian Christopher Naylor and Peter Ewald Scarisbrick, the present
Landlords under the Lease, we give you notice that the Landlords desire and
intend to resume possession of the whole of the land shown edged with red on
the plan attached to the Lease on November 1 1984. The purpose of such
resumption of possession is to make plantations upon the said land
and then there
is notification of compensation by a reduction in rent in accordance with
clause 1 of the lease.
That was
accompanied by a notice under section 25, and that again related to the whole
of the land shown edged red on the plan attached to the lease. It was also
accompanied by a letter, which was in the following terms:
Dear Sirs, On
behalf of your Landlords, we enclose a Notice of their intention to resume
possession under the provisions of the Lease dated September 21 1973, together
also with a Notice to terminate your tenancy under the Landlord and Tenant Act
1954.
I have already
referred to the statutory provisions, and it is accepted by Mr Whittaker that a
section 25 notice must, if it is to be effective, relate to the whole of the
land in whatever is the relevant tenancy. It cannot relate to part only of that
land — and this emerges, in fact, from a number of authorities, in particular
the decision of Goff J (as he then was) in Dodson Bull Carpet Co Ltd v City
of London Corporation [1975] 1 WLR 781, and at p 785 letters G to H the
learned judge said:
The
plaintiffs submit that there is nothing in the Landlord and Tenant Act 1954 to
authorise a landlord to serve a notice of determination under section 25 as to
part only of the premises comprised in the relevant tenancy, and indeed, quite
the reverse, to allow him to do so would cut across and jeopardise the
protection afforded by the Act. Defendants’ counsel states that he cannot
dispute that proposition and in my judgment he is plainly right in so doing.
This was also
treated, I think, as beyond serious argument in this court in Kaiser Engineers
& Constructors Inc v E R Squibb & Sons Ltd** and I need only
refer to a very brief passage from the judgment of Russell LJ (as he then was)
where he said:
It is common
ground that for the notice to be effective to operate the break clause in the 1965
lease it must on its true construction be a determination of the whole
relationship of landlord and tenant under that lease. Equally if the notice is
to be effective as a notice of determination under section 25 of the 1954 Act
it must on its true construction be a determination of the whole of such
relationship under that lease.
**Editor’s
note: Unreported. The Court of Appeal by a majority (Russell and Phillimore
LJJ, Cairns LJ dissenting) on November 12 1971 upheld the decision of
Ungoed-Thomas J reported at (1971) 218 EG 1731; [1971] EGD 553.
Since the
section 25 notice in this case relates, and could only relate, to the red land,
the argument before the learned judge was based, as it had to be, on the
contention that it was possible to spell out of the demise two separate and
distinct tenancies — one of the blue land and one of the red land, and thus to
validate the notice given only in relation to the red land as a notice given in
respect of the whole of the land comprised in a relevant tenancy.
The learned
judge in his judgment did not in fact deal directly with this point. The ratio
for his decision is I think to be found in the following passage from his
judgment, when he said:
The result of
the arguments is that there seems to be no direct authority on the point which
faces me. A tenancy of part of the property or a right appurtenant thereto
granted by a lease cannot be terminated. But does it make any difference that
the parties have agreed at the outset of the grant that the grantor should have
such a right. My view is that neither the general law nor the 1954 Act prevents
the courts from giving effect to a provision such as that contained in the
lease between the Estate and the Club. To find otherwise would frustrate the
clear intention of the lease. It would give the Club a right of great value
freely surrendered by them at the outset. There is no reason to try to
speculate what the outcome would have been had the Club attempted in 1973 to seek
to exclude the break clause which was a feature of the preceding, indeed of
each previous, lease. I come the easier to such a decision in the knowledge
that the Club may well have substantial rights to continuance under the 1954
Act. I therefore answer the preliminary points by declaring: (1) That the
notice given under section 25 of the 1954 Act by the Estate is valid. (2) That
the landlords under the lease of September 21 1973 are entitled to serve a
section 25 notice relating only to the land edged red in the plan annexed to
that lease — that is in respect of the links apart from the Club House.
With respect
to the learned judge, that does not, in my view, really meet the point, which
is that even if the contractual tenancy over the red land had been properly
determined (as it clearly had) the Act provides that ‘the tenancy’, that is the
tenancy of the holding, shall continue unless determined in accordance with the
provisions of the Act. So that unless one can find some separate tenancy of the
red land to which, as a whole, a section 25 notice can relate, one is up
against the difficulty that it is, on its face, a notice purporting to
terminate the tenancy only of part of the holding.
Before this
court Mr Whittaker, for the landlords, put his case in two ways. First he
argued that, as a matter of construction, the lease creates ab initio
two separate tenancies — one of the blue land and one of the red land. I say
‘first’ because it was in fact put first in Mr Whittaker’s skeleton argument.
But I ought to make it clear that it was very much his subsidiary or fall-back
submission.
I am bound to
say I find it is an argument impossible to accept. All the provisions of the
lease to which I have already referred seem to me to be only consistent with a
single tenancy — there is a single rent, a single process of indexation; the
break clause itself refers to the whole of the red land or any part thereof;
the provisos in clause 4 relate only to the resumption of possession of the
whole of the red land, so quite clearly what is contemplated by the exception
in the habendum is that there may be a continuing single tenancy of the blue,
and a part or parts of the red land. One then immediately asks: if there are
two demises initially, what land does each demise relate to? Because it is
clear throughout that there is only going to be one rent. Moreover, I find it
quite impossible to relate the proviso for re-entry to two separate and
distinct tenancies of different parcels. It seems to me that it is a clause
which is indivisible, and relates generally to the demised premises, or any
part thereof.
I think it is
worth quoting again from the judgment of Goff J in the Dodson Bull case
at p 785 between letters C and E, where he said:
The fact that
there are different terms and different rents of course tends in his
(the tenant’s)
favour; and
he also relies on the fact that there are different repairing covenants for the
two parts of the demised property, one much more onerous than the other and one
tied to a special arbitration provision . . .
which does not
arise in the instant case.
This also
supports him, but in my judgment much less strongly. Then he points out that
there are some inapposite references to ‘the said rent’ and ‘the said term’,
but I do not think they help either way. On the other hand, in my judgment,
there are two very strong indications in favour of the plaintiffs’
construction. The first of these is that the two rents are clearly correlated,
because on the expiration of the shorter term, the rent of no 6 was increased
to an amount exactly equal to the aggregate of the original two rents. The
second indication which is to my mind irresistible is that by clause 6(i) there
is a single indivisible proviso for re-entry.
I turn
therefore to Mr Whittaker’s alternative and preferred form of argument, which
is that either upon the giving of the notice under the break clause or,
alternatively, upon the expiry of that notice, there spring into being two
separate tenancies. As to the first, the way in which he puts it is that the
principal basis for the suggestion is that since the notice has to be a
12-month notice the effect immediately the notice is given is that you have two
different terms in respect of two pieces of land — the red and the blue. The
first is, of course, the blue land which continues until 1993 — that covers the
blue land and of course it would cover any red land which had not been
comprised in the notice — a circumstance which does not arise in the instant case.
The other term is a term for 12 months in the land to which the notice relates.
Mr Whittaker relates this in particular to a passage from the judgment of
Diplock LJ in Scholl Manufacturing Co Ltd v Clifton (Slim-Line) Ltd
[1967] Ch 41. At p 51 of the report, between letters F and G Diplock LJ said:
A tenancy
with a break clause is a tenancy for a term of years certain within the meaning
of the Act but, until the latest date at which notice may be given subject to
the break clause, it is also one which, apart from the Act, could be brought to
an end by a notice to quit given by the landlords. By serving a notice in
accordance with the provisions of the break clause, but not in the prescribed
form, the landlords converted it into a tenancy for a term of years certain
expiring upon the earlier date specified in the break clause, but the Act
itself prevents such a notice from bringing the tenancy to an end.
Mr Whittaker
points out that in clause 4(i) of the lease there is contained words giving the
tenant the option to determine the tenancy of the remainder of the demised land
and premises. It is perhaps pertinent to observe that it goes on to speak of
the tenant continuing to pay rent in these words: ‘up to such date the tenants
shall observe and perform the covenants and conditions and pay the rent
hereinbefore reserved and contained’, there being of course, up to that point,
only one rent payable in respect of the whole of the premises. But Mr Whittaker
suggests that the reference to the remainder of ‘the demised land and premises’
is consistent, at least, with the creation of a separate and distinct tenancy
of that remainder, after the notice has been given.
The point is
not one which is susceptible of a great deal of elaboration, and Mr Whittaker
has to admit that the consequence for which he contends is one which will arise
in every case of a break clause which relates only to part of the land
comprised in the demise.
It is,
however, worth noting that by section 60 of the Agricultural Holdings Act 1948,
which deals with compensation when part of an agricultural holding has been
resumed under inter alia contractual provisions of a lease, the
compensation provisions apply — and I quote the statutory words — ‘as if that
part were a separate holding’. That is a deeming provision which could hardly,
it must be supposed, be necessary if Mr Whittaker’s proposition were
universally correct. But, as he points out, the parliamentary draftsman may
have been under a misapprehension, but that I think is a straw in the wind.
In the end I
find myself wholly unpersuaded that it is possible to treat the giving of a
notice for contractual termination of a tenancy of part of the land demised as
creating a separate and distinct tenancy of that part.
Mr Whittaker’s
alternative way of putting the case is one which, I am bound to say, I found
more attractive. He submits that the lease has to be construed against the
background that this was a business tenancy — a business tenancy which the
parties knew full well fell within the Act, and one therefore has to assume
they must have had in mind the statutory consequences. Once the contractual
notice expires, he submits, the Act, as it were, takes over and that which, had
it not been for the Act, would not have been a tenancy at all is now statutorily
prolonged. It is not therefore difficult, Mr Whittaker submits, to envisage
this as a different ‘animal’ from the original contractual terminated tenancy
and therefore as a separate and distinct tenancy of the red land.
If that is not
so, he submits — and this was a point which obviously appealed to the learned
judge and I think is a point which appeals to me as a matter of merit — the
notice solemnly agreed upon between the parties is really substantially
deprived of any practical effect at all.
Mr Colyer has
argued that it would at least enable the landlord, if the tenant ceased to
carry on business, to obtain possession under section 24(3) of the Act — that
is a section which I have not previously read, but I read it now — and it has
to be borne in mind that it comes in in the context of the provisions of
section 24(1) which provide: ‘A tenancy to which this Part of this Act applies
shall not come to an end unless terminated in accordance with the provisions of
this Part of this Act’. Section 24(3) is in these terms:
Notwithstanding
anything in subsection (1) of this section — (a) where a tenancy to which this
Part of this Act applies ceases to be such a tenancy, it shall not come to an
end by reason only of the cesser, but if it was granted for a term of years
certain and has been continued by subsection (1) of this section then (without
prejudice to the termination thereof in accordance with any terms of the
tenancy) it may be terminated by not less than three nor more than six months’
notice in writing given by the landlord to the tenant.
Mr Whittaker
prays this in aid as demonstrating that there is in fact a separate tenancy
created of that part of the holding which has been continued under the Act —
otherwise, he says, the section cannot have any operation at all in the
circumstances. On Mr Colyer’s construction, the ‘it’ referred to in the
section, being that which the landlord can terminate by three months’ notice,
is the tenancy of the whole, as a whole; and there is, on the facts of this case,
an outstanding contractual term until 1993, so that the provision for the three
months’ termination is not applicable. So, despite the continuation of the
tenancy under section 24(1), section 24(3) — save in so far as one can bring
oneself within the parenthesis, that is, the words ‘without prejudice to the
termination thereof in accordance with the terms of the tenancy’ — is deprived
of any significance in this case. The only way the landlord has of terminating
the tenancy of the red land in the events envisaged by the section — that is,
the tenant ceases to carry on business — would be by giving a fresh 12-month
notice under the break clause.
In the end I
think Mr Colyer was driven to concede this must be right, and that the
contractual notice given is, therefore, totally ineffective except in the very
unlikely event of the blue land being taken totally out of the tenancy, for
instance by a compulsory purchase notice for a roadwidening scheme or something
of that sort, and that seems to be such an unlikely contingency that for
practical purposes one can ignore it.
On the other
hand, Mr Colyer argued it would be a very odd result if the expiry of the
notice led to the creation of a new and separate tenancy, and he points
particularly to the opening words of section 24(1), where one finds: ‘A tenancy
to which this Part of this Act applies shall not come to an end unless
terminated in accordance with the provisions of this Part of this Act’. Those
words demonstrate, he submits (and I am bound to say I find this very difficult
to quarrel with), an intention not to create something new but to continue
something which is already in existence. If Mr Whittaker is right, he submits
that what we really have is the same tenancy of the red land continuing, and a
different or separate and distinct tenancy of the blue land arising — and that,
he submits, is really an impossible contention on the construction of the
lease.
Impressed as I
am by the considerations which weighed with the learned judge, and the
consequences to which Mr Whittaker has pointed, and to which Mr Colyer was
driven, I cannot nevertheless, for my part, construe the statutory provisions
in the way in which Mr Whittaker seeks to support — whether they stand alone or
are conjoined with the provisions of the lease. I think Mr Colyer must be right
in his submission that after the expiry of the notice, the tenancy as a whole
continues. It may perhaps be described as a sort of ‘hybrid’, but I am driven
to the conclusion that the tenancy which does not come to an end under section
24 is the tenancy of the holding and if part of it is contractually determined,
the tenancy continues, as it seems to me, as a whole and as the same tenancy
unless and until it is determined under section 25 — which it can only be by a
notice under section 25 relating to the whole of the land comprised in the
relevant tenancy.
Mr Whittaker
relies (and he is entitled to rely) upon the point which impressed the learned
judge, namely, to hold the section 25 notice ineffective and incapable of being
given by reason of the statutory timetable for many years has the curious and
very unattractive result of totally frustrating the parties’ intentions at the
time of the grant of the lease, and he relies on this for the submission that
this ought therefore to be construed ut res magis valeat quam pereat.
I see the
force of that, but there are two points. First of all, this was not an
inevitable result; if the lease had been drafted in a different way, the
parties could have achieved the result which they were endeavouring to achieve.
But second, even a construction ut res magis valeat has to be a possible
construction, and I find it impossible, as a matter of construction, to say
that the notice under the break clause creates, or was intended to create, two
separate tenancies. In particular it seems to me to be entirely clear that the
rent apportioned under the clause does not operate until possession is resumed,
so that after the giving of the notice there remains a single tenancy at one
single and unapportioned rent — and that, as statutorily prolonged by the Act,
still continues after the expiry of the notice at one single and unapportioned
rent.
It may well be
(and indeed I think it is) that the Act is defective in not making provisions
for this rather unusual situation, but we have to take the Act as it stands,
and I for my part am unable to fit the terms of this lease to the statutory
provision so as to enable the landlords to do what the Act itself does not
provide for, namely, to give a section 25 notice which relates not to the
tenancy as a whole but to part only of the holding comprised in the tenancy.
For these
reasons, I for my part would allow this appeal — albeit with some regret and
some reluctance.
PURCHAS LJ and
NEILL J agreed and did not add anything.
The appeal
was allowed with costs in the Court of Appeal and below. Leave to appeal to the
House of Lords was refused.
