Part II of Landlord and Tenant Act 1954–Application for new tenancy–Tenants operating a coach transport business in contravention of an effective enforcement notice–Refusal of new tenancy by county court judge on ground mentioned in section 30(1)(c) of 1954 Act, namely "reason connected with the tenant’s use or management of the holding," and also because tenants proposed to continue illegal use–Refusal upheld by Court of Appeal
This was an
appeal by Turner & Bell, trading as "Avro Luxury Coaches," from
the refusal of Judge Buckee at Grays Thurrock County Court to order the grant
to them by the respondents of a new tenancy of Haven Service Station at
Corringham in Essex. The facts are fully stated in the judgment of Bridge LJ.
W Gage
(instructed by Parker, Garrett & Co, agents for H Victor Cooper &
Lingard, of Southend-on-Sea) appeared on behalf of the appellants; H Picarda
(instructed by Shaen, Roscoe & Bracewell), who represented the respondents,
was not called on.
Giving the
first judgment at the invitation of Cairns LJ, BRIDGE LJ said: This is an
appeal from a decision of His Honour Judge Buckee given on December 16 1975 at
Grays Thurrock County Court refusing to order the grant by the respondents to the
appellants of a new tenancy of business premises under Part II of the Landlord
and Tenant Act 1954. The appellants were granted an oral monthly tenancy of
premises known as Haven Service Station at Corringham in Essex in about 1967.
The premises are about one-sixth of an acre in extent, and the appellants used
them as a depot in connection with their coach transport business. On March 30
1972 the Thurrock Urban District Council, the body then exercising the powers
of the local planning authority; served on the appellants an enforcement notice
requiring them inter alia to discontinue the use of the premises which
are the subject of this appeal for the purpose of the operation of a coach
transport business. The appellants duly appealed, as they were entitled to do
under the relevant provisions of the Town and Country Planning Act 1971, to the
Secretary of State for the Environment against the enforcement notice on
various grounds, including, of course, the ground that if they required
planning permission for the use it ought to be granted.
The appeal was
unsuccessful, and it was dismissed by letter from the Department of the
Environment dated February 20 1973. The enforcement notice thereupon became
effective, but the Secretary of State extended the time for compliance with its
requirements from one month, which had been the original time allowed, to six
months. The effect of that was that on July 20 1973 the continued use of the
premises in question for the purpose of operating a coach transport business became,
as it has remained ever since, a criminal offence in contravention of the
provisions of section 89(5) of the Town and Country Planning Act 1971 which
would attract on a first summary conviction a fine of £400, on a second or
subsequent summary conviction fines at a daily rate up to a maximum of £50 a
day, and on any conviction on indictment an unlimited fine. In fact there has
been no prosecution, and the explanation for that may be that the appellants in
the course of their business perform certain schools’ contracts for the local
authority, and it appears
out of business and are actively seeking new premises where they could operate
the business lawfully, but so far without success.
On July 29
1974 the landlords of the premises served a notice under section 25 of the
Landlord and Tenant Act 1954 to terminate the tenancy on February 1 1975. The
appellants duly served a counternotice and applied to the court for a new
tenancy. In answer to the application the respondents set up inter alia
the use in contravention of the enforcement notice as a ground on which the
court should refuse to order a new tenancy, and they relied upon that as a
ground coming within the provisions of section 30(1)(c) of the Act, which
reads: "that the tenant ought not to be granted a new tenancy in view of
other substantial breaches by him of his obligations under the current tenancy,
or for any other reason connected with the tenant’s use or management of the
holding." The learned judge refused
to grant a new tenancy, as I read his judgment, both on the ground that the
unlawful use of the premises in contravention of the provisions of the
enforcement notice was a matter falling within the second limb of section
30(1)(c), and on the wider ground that, in any event, it would be wholly
inappropriate for a court to order the grant of a lease in circumstances in
which it was apparent that the proposed use to which the premises would be put
by the tenant would be an illegal use. It is right to point out that in the
course of the evidence the witness called on behalf of the appellants made it
clear that the appellants’ intention, if granted a new lease, was to continue
the illegal use, and nothing else.
Mr Gage, for
the appellants, has said everything that could possibly be said. He puts his
argument in two ways. He submits, first, that the Act by section 29(1) leaves
the court no discretion, that the court must grant a new tenancy unless the
case0 can be brought within one of the provisions of sub-section (1) of section
30, and that this case does not come within paragraph (c) of that subsection.
It is correct that section 29(1) of the Act provides, so far as material:
"Subject to the provisions of this Act, on an application under subsection
(1) of section 24 of this Act for a new tenancy the court shall make an order
for the grant of a tenancy. . . ."
Then, so runs the argument, when one gets to the second limb of section
30(1)(c) one should construe the words "for any other reason connected
with the tenant’s use or management of the holding" as confined to matters
which are directly connected with the relationship of the parties qua landlord
and tenant. Alternatively, so Mr Gage submits, if the case does fall within
section 30(1)(c), the court has a discretion, and in the circumstances of this
case ought in its discretion to order the grant of a new tenancy, first, on the
ground that the local authority stayed their hands and did not prosecute,
notwithstanding that this criminal conduct has been going on now for more than
three years, and secondly, on the ground that one cannot exclude the
possibility that at some unspecified date in the future, notwithstanding the
clear decision of the Secretary of State in 1973, the relevant authorities
concerned with planning matters might change their mind and grant permission
for the use of these premises as a coach transport depot.
It seems to me
that the short answer to this appeal is that, quite independently of the
express provisions of the statute, this is a case where the court would be
bound to refuse the relief claimed on the simple ground that if the court were
to order a new tenancy in the circumstances indicated it would be ordering the
parties to enter into an illegal contract which the court could not enforce
because the illegal purpose of the tenant was clearly known to both parties.
That would be an absurdity. I would add that I see no reason at all to give to
the second limb of section 30(1)(c) the limited construction urged upon us by
Mr Gage. I cannot think of a clearer case for saying that there was an
"other reason connected with the tenants’ use" of the premises why he
should not be granted a new tenancy than the reason that the premises are being
used, and are intended to be used, for an unlawful purpose. Having reached that
conclusion, I cannot think of a clearer case where it would be wholly wrong for
the court in its discretion to decide that a new tenancy should be granted.
For those
reasons, I would dismiss this appeal.
Agreeing,
ROSKILL LJ said: Mr Gage has argued the appeal, which, with all respect, is in
my judgment hopeless, with great skill, but it seems to me, for the reasons
which my Lord has given, that it must be dismissed. I can state my views quite
shortly. Mr Gage sought to argue that the court in exercising its powers under
section 30 of the 1954 Act only has to have regard to matters arising between
landlord and tenant. He invited us to construe the words "or for any other
reason connected with the tenant’s use or management of the holding" in
section 30(1)(c) of the Act as relating to matters only so arising between
landlord and tenant. He also submitted that those words only looked to what had
happened in the past and did not embrace what was likely to happen in the
future. I am afraid that I am unable to agree with either of those submissions.
The latter words in paragraph (c) are quite wide. I do not think they require
the court to look only at alleged breaches of any tenancy agreement or lease
that may have taken place in the past. I think they entitle the court to look
at everything which the court thinks is relevant in connection with the
tenant’s use or management of the holding, past, present or future, which may
enable the court fairly to exercise its discretion under that section.
Even if I were
wrong in taking that view, I should, like Bridge LJ, take the view most
emphatically that where the purpose of a new lease or a tenancy is to enable a
business or activity of one kind or another to be carried on, obviously
contrary to the law, it would be quite wrong for the court to close its eyes to
that fact. It is the duty of the court, whether or not the point is taken by
the parties, to raise of its own motion any question of illegality or immorality.
Here there is an outstanding enforcement notice against the appellants, yet we
are being asked to enable them to obtain a further tenancy which would
facilitate their disregard of that enforcement notice, which is a criminal
offence. I put to Mr Gage during the argument what the position would be if,
after we ordered that a new tenancy be granted, the landlords sued for the rent
which the tenants failed to pay, and the tenants then turned round on the
landlords and said, "We will not pay, and we will invite the court not to
enforce the covenant for payment of rent on the ground that you, the landlords,
knew that we were entering into this new agreement for an illegal purpose,
namely, carrying on a business there in defiance of the enforcement notice." Mr Gage was unable satisfactorily to answer
that question.
In my view,
for the reasons which my Lord has given, to which I have ventured to add one or
two of my own, the appeal must be dismissed.
Also agreeing,
CAIRNS LJ said: I agree that the words in the latter part of section 30(1)(c)
of the Landlord and Tenant Act 1954 cannot be confined to matters connected
with the relations between landlord and tenant. I have no doubt whatever that
an illegal use of the premises is a use to which the court can direct its
attention in deciding whether to grant a new lease. For my part, I do not feel
certain that under the latter part of the paragraph it is intended to comprise
future use as well as past use. I think that if there were a case where there
had been an illegal use in the past it would be possible, if, for instance, the
court was assured that there was no intention of continuing that use, for the
court to exercise its discretion and to make an order for a new lease. But, to
my mind, the answer to this appeal is contained in the first answer which the
applicant for a new lease gave in cross-
purpose." Whatever may be the
correct construction of paragraph (c), I agree with both my Lords that once
that becomes apparent, quite apart from the express provisions of the Act, the
court would not be doing its duty if it granted a new lease when it has been
told that the intention of the applicant is to use the premises for an illegal
purpose.
For those
reasons, in addition to the reasons given by my Lords, I too would dismiss the
appeal.
The appeal
was dismissed with costs.
