Possession — Landlord and Tenant Act, 1954 — Premises occupied for benefit of club members
This was a claim by Teba Fabrics, Ltd, owners of premises in Princes Street, Hanover Square, London, W, for possession of two rooms leased to the defendants, Mr and Mrs Nathan Conn, under an agreement which expired on November 1, 1956.
Mr LA Blundell (instructed by Messrs Reid Sharman & Co) appeared for the plaintiffs, and Mr John Davies (instructed by Mr Samuel Coleman) represented the defendants.
Mr Blundell said that the lease to the defendants was dated January 24, 1952, and it covenanted that they were to use the premises only as a members’ licensed club. The lease had expired and the plaintiffs claimed possession. The defendants contended that theirs was a protected business tenancy under Part II of the Landlord and Tenant Act, 1954. The Court of Appeal had decided in the Addiscombe Gardens Estate case that a members’ club was a business within the meaning of the Act, and he (counsel) was bound by that decision. The issue before his Lordship narrowed itself as to whether, this being a lease to two individuals, it could be said that they occupied the premises for the purpose of carrying on a business as defined in section 23 of the Act. He submitted that they did not.
Mr Davies submitted that section 23 must be read in conjunction with section 41, which provided:
Where a tenancy is held on trust, occupation by all or any of the beneficiaries under the trust, and the carrying on of a business by all or any of the beneficiaries, shall be treated for the purposes of section 23 of this Act as equivalent to occupation or the carrying on of a business by the tenant.
There were two possibilities — that the lease was vested in the defendants as trustees for the club, or that it was a proprietary club.
Mr Blundell objected, as there was no plea in the defence that the premises were held by defendants in trust for the members of the club.
Mr Davies submitted that the lease was held for the benefit of the club.
Lord Goddard: Why didn’t you allege that in your defence?
Mr Davies: It was not necessary to do so because section 41 is enough for me.
Lord Goddard: What is your real case?
Mr Davies: My clients hold a legal lease and were carrying on a business by virtue of section 23 taken in conjunction with section 41. There is no formal document of trust, but I hope to satisfy your Lordship that on the facts there was a trusteeship within section 41.
Mrs Conn then gave evidence that the club, which had 250 members, was formed by a committee and called ‘Princes Club.’ She was the secretary and her husband was on the committee. They were instructed to negotiate for a lease of the premises. The club was run by the members through a committee of five.
Lord Goddard: It seems a perfectly genuine club carried on by a committee and it is quite obvious that the premises were let for the purpose of a members’ club.
Mr Blundell said that it was not until the hearing of the action that the defendants disclosed facts which would bring them within section 41.
LORD GODDARD CJ: The plaintiffs in this case seek to recover possession of two rooms in a building, 2, Princes Street, Hanover Square, which were demised to Mr and Mrs Conn, the defendants, on January 24, 1952, for a period which expired on November 1, 1956. The premises were let for the purpose of a club; a covenant was inserted under which, as is pleaded within the statement of claim, the defendants were required to use the premises for the purposes only of a members’ licensed club.
Of course, if it is a members’ club, the club belongs to the members, but the lease would not be granted, naturally, to the members, because they are not a corporate body, but an unincorporate body and a fluctuating body; it is granted to some persons for the benefit of the members, as it must be.
If there is a clause in the lease, that the lessees are to use the premises for the purpose of a members’ club, it seems to me that it is quite clear that the lease was granted to Mr and Mrs Conn for the benefit of the members, and therefore Mr and Mrs Conn were in the position of trustees for the club.
That being so, I think it is quite clear that section 41 of the Landlord and Tenant Act, 1954, gives the protection which is sought.
I may say at once that I have seen the minutes and I am satisfied that this is a genuine members’ club, in so far that there is evidence before me to show that there are regular meetings of the committee. The committee obviously deal with the matters and do not leave it to some nebulous proprietor, but obviously they manage the affairs of the club. There seem to be perfectly regular accounts kept, and the club is in the fortunate position, which a great many London clubs are not, that it is running at a small profit. The small profit is being used, as I can see from expenditure which is authorised from time to time, for the benefit of the members.
Mrs Conn, who is acting as secretary, is getting a fair salary — certainly not an extravagant salary — and I cannot find any ground on which I could come to the conclusion that it is being used as a proprietary club. Mrs Conn is obviously running the club, in the sense that she is secretary and the secretary has to run the club. I think she is running it for the benefit of the members. The beneficiaries are the club, and the lease was granted for their benefit. For these reasons, I think section 41 applies, and therefore they are entitled to the benefit of the Act. Therefore, this action fails and must be dismissed with costs.
Mr Blundell: May I make an application on costs?
The Lord Chief Justice: I think you knew all about this. As I say, you let these premises to these people for the purposes of a club and they used it for the purposes of a club.
Mr Blundell: One does not doubt that for one moment, my Lord. My submission is that the defendants here are only able to succeed by relying on facts which they have not pleaded. They rely on the facts that the lease was held on trust for the members of the club, the members were the beneficiaries and those beneficiaries carry on the business of a members’ club. Those facts, if pleaded, would have put this case in an entirely different complexion. There was nothing on the pleadings to show whether the defendants were going to rely on the facts to bring them within section 41 or not.
The Lord Chief Justice: Having heard the whole case, I am quite certain that you knew all about it; you had the documents; you had discovery. It is not as though the defendants tried to keep back anything on discovery. No, I do not think it would be fair on them to give costs. Costs will follow the event.
Mr Blundell: As your Lordship pleases.
