Council’s predecessor purporting to grant lease with option to renew – Tenant seeking to exercise option – Council refusing to renew lease – Whether council’s predecessor’s grant of option to renew was ultra vires – Sections 164 and 172 of Local Government Act 1933 – High Court holding grant of option ultra vires – Court of appeal dismissing tenant’s appeal
By a lease dated November 27 1969 West Dorset Council’s predecessor granted for a term of 22 years from September 29 1969 industrial premises at Poundbury West Camp Estate, Poundbury Road, Dorchester (the site), to the plaintiff lessee. Clause 5(1) of the lease contained an option for renewal entitling the lessee to take a lease for a further term of 21 years, subject to conditions. The lease also contained repairing covenants. The lessee built six units on the site and sublet five whose subleases were expressed to continue beyond the expiry of the lease.
On October 4 1990 the lessee sought to exercise the option to renew under clause 5(1) by issuing a notice. The council contended that he was not entitled to do so. The lessee issued proceedings and sought a declaration that he had validly exercised his option to renew. The High Court held, inter alia, that the purported grant of the option to renew was ultra vires. The lessee appealed. It was contended that although the land in which the site lay had been bought in pursuance of powers conferred by the Housing Act 1957, the site lay in a central area which had subsequently been appropriated for highway depot purposes and, accordingly, it became corporate land as defined by section 305 of the Local Government Act 1933 and was no longer land which had been acquired for an express statutory purpose. It was submitted that therefore section 172(3) of the Act applied and the council’s predecessor had been entitled to grant the option to renew. It was further contended that, in any event, the council’s predecessor had been entitled to grant the option by virtue of section 164 of the 1933 Act allowing it “to let any land which they may possess”, which it was submitted included a power to grant an option to renew.
Held The lessee’s appeal was dismissed.
1. It was not necessary where land was acquired for an express statutory purpose for the express statutory purpose to be stated; there only had to be a statutory purpose. The highway depot had been a statutory purpose and therefore it did not matter whether the land was in the central area or not. In either event it was not corporate land and, accordingly, the council’s predecessor had not been entitled to grant the option to renew under section 172(3) of the 1933 Act.
2. The option to renew was not an exercise of a power to let within the terms of section 164 of the 1933 Act. The fact that many council leases contained options to renew could not import into the statutory power to let a power to grant an option: Trustees of the Chippenham Golf Club v North Wiltshire District Council (1991) 64 P&CR 527 considered.
Peter Birts QC and Stephen Rubin (instructed by Berrymans, of Southampton) appeared for the appellant; Kirk Reynolds QC (instructed by Sharpe Pritchard) appeared for the respondents.
