Landlord and Tenant Act 1954, Part II, section 23 — Local authority were tenants of a small piece of land used as a public open space — Whether tenancy was within section 23 of the 1954 Act — Construction and application of section 23(1) and (2) — Appeal by landlord from decision of county court judge holding that the council were entitled to a protected tenancy under the 1954 Act and could apply for the grant of a new tenancy — This decision was given on the trial of a preliminary issue — The main question on appeal was whether the facts supported the view that the council could show sufficient physical presence and control to constitute occupation for the purpose of section 23(1)
facts were as follows — The piece of land in question, measuring about 75 ft by
75 ft, had been used for at least 13 years by local inhabitants for leisure and
recreation — It had been leased to Wandsworth by the GLC in 1977 — The
reversion, after vesting briefly in the London Residuary Body, was purchased by
the present respondent, Dr Harbhajan Singh — He wished to obtain possession of
the site in order to develop it commercially — The lease had been expressed to
be granted under Part II of the 1954 Act at a rent of £150 pa and was
determinable by three months’ notice — Notice was given
site had a hard surface but there are trees and borders planted with shrubs and
roses — It is partly enclosed by a wall with gates, which are locked from time
to time, but not regularly, to demonstrate that control is being exercised —
The horticultural work is contracted out and there is regular attendance under
the contract in the summer — In addition there are visits to carry out work and
for inspection by the parks maintenance manager and his staff — It was
estimated that between the maintenance staff and the subcontractors there were
visits at least once a week in the summer and perhaps once a fortnight in the
winter
landlord’s submissions in the county court were that no activities had been
carried out by the council and that they did not occupy the premises within the
meaning of section 23 of the 1954 Act — The first submission, that there were
no activities, was not pursued on appeal and had clearly no substance — The
second submission, as to sufficiency of occupation, required more consideration
— The judge thought that the case was a borderline one but he decided that,
although the degree of presence and extent of control were not substantial,
there was sufficient to constitute occupation (the judge actually used the more
tendentious word ‘possession’ but it was accepted that he meant occupation
within the meaning of section 23) — In the course of his judgment the judge
referred to a number of authorities
Appeal rejected a submission by the landlord that the judge had misdirected
himself on a number of points — The landlord’s main argument was, however, that
there was not a sufficient degree of presence and manifestation of control to
constitute occupation by the council — The landlord relied on the decision in
Trans-Britannia Properties Ltd v Darby Properties Ltd, where the tenants, who were proprietors of
lock-up garages, failed to satisfy the occupation requirements of section 23(1)
— It was suggested that the council in the present case likewise did not have
the minimum sufficiency of physical presence or control to qualify — The
council, on the other hand, argued that the cases on which the landlord relied
were cases where the tenant had allowed into occupation or use of the premises
other persons such as subtenants or licensees — The council argued that the
present case was not a borderline case at all but a clear case where the
council at all times occupied the piece of land for the purpose of their
activities under section 23 — The physical presence and control required need
not be continuous, provided that the right to occupy continues
Appeal held that the case of Trans-Britannia Properties Ltd was distinguishable
from the present case — In that case the very nature of the tenants’ business
involved parting with the occupation of the land — The control they exercised
was of a very limited nature — In the present case the council were physically
present and exercised control over the land by their servants or agents — If an
ordinary man, knowing the facts, were asked ‘Who is in occupation of that open
space?’ he would answer ‘The council is’
— Appeal dismissed
The following cases are referred to in
this report.
Addiscombe Garden Estates Ltd v Crabbe [1958] 1 QB
513; [1957] 3 WLR 980; [1957] 3 All ER 563, CA
Bagettes Ltd v G P Estates Ltd [1956] Ch 290;
[1956] 2 WLR 773; [1956] 1 All ER 729; (1956) 167 EG 249, CA
Boyer (William) & Sons Ltd v Adams (1975) 32 P&CR 89
Bracey v Read [1963] Ch 88; [1962] 3 WLR
1194; [1962] 3 All ER 472
Groveside Properties Ltd v Westminster Medical
School (1983) 47 P&CR 507; 267 EG 593, [1983] 2 EGLR 68, CA
Hancock & Willis v GMS Syndicate Ltd
[1983] EGD 114; (1982) 265 EG 473, [1983] 1 EGLR 70, CA
Hillil Property & Investment Co Ltd v Naraine Pharmacy Ltd
(1979) 39 P&CR 67; 252 EG 1013, [1979] 2 EGLR 65, CA
Lee-Verhulst (Investments) Ltd v Harwood Trust [1973]
QB 204; [1972] 3 WLR 772; [1972] 3 All ER 619; (1972) 24 P&CR 346; [1973]
EGD 467; 225 EG 793, CA
Trans-Britannia Properties Ltd v Darby Properties Ltd
[1986] 1 EGLR 151; (1986) 278 EG 1254, CA
This was an appeal by the landlord, Dr
Harbhajan Singh, from the decision of Judge Sumner, at Wandsworth County Court,
whereby he granted the application of the tenants, Wandsworth London Borough
Council, for the grant of a new tenancy under Part II of the Landlord and
Tenant Act 1954 of land at St John’s Hill, Battersea, London SW11.
Edward Denehan (instructed by Conrathes)
appeared on behalf of the appellant landlord; Alistair Craig (instructed by Mrs
S G Smith, solicitor to London Borough of Wandsworth) represented the
respondent council.
Giving judgment, RALPH GIBSON LJ
said: This case raises questions upon the construction and application of
section 23(1) and (2) of the Landlord and Tenant Act 1954. His Honour Judge
Sumner, upon the trial of a preliminary issue, granted a declaration that the
tenancy of a piece of land long in use as a small public open space at St
John’s Hill, London SW11, and held by the London Borough of Wandsworth
(‘Wandsworth Council’) is a tenancy within section 23 of the Act in respect of
which Wandsworth Council are entitled to claim a new tenancy.
The freehold owner of the site, Dr
Harbhajan Singh, has appealed to this court. He contends that the judge was
wrong and that this court should declare that Wandsworth Council are not in
occupation of this land within the meaning of section 23 and that the application
for a new tenancy should be dismissed.
Judge Sumner, in a reserved judgment of
admirable clarity and completeness, described this as a borderline case, but
held that on the facts there was sufficient possession and control of the
premises by the council’s provision of services there and time spent upon the
provision of services so as to constitute occupation under the section for the
purposes of the activity of Wandsworth Council as a local authority.
The facts can be taken from his judgment
and substantially in his words. This piece of land in Wandsworth has been used
for at least 13 years by local inhabitants for leisure and recreation. At one
time the site had buildings on it, but by 1977 it was an open space owned by
the Greater London Council. It occupies a space of some 500 m2 or
about 75 ft x 75 ft. In 1977 the GLC leased the open space to the London
Borough of Wandsworth, who have improved and maintained the site ever since.
The lease was expressed to be made under
Part II of the Landlord and Tenanct Act 1954 at a rent of £150 per annum and
was determinable after a certain date by three months’ notice. Notice was in
due course given, and Wandsworth Council made application to the court for a
new lease by notice of December 14 1988. The GLC had by then become the London
Residuary Body. In January 1989 that body sold the site to the present
respondent, Dr Singh. He wishes to develop it commercially. He has applied for,
but has been refused, planning permission.
The plan of the site shows it to be at the
junction of St John’s Hill and Plough Road. It is in the shape of a square with
one side facing the junction, not straight but rising to a shallow peak. On two
sides its boundaries are substantially formed by adjoining buildings. On the
two road sides it is enclosed by a wall. There are gates in the wall which can
be and are from time to time locked. This is not a regular procedure but is
carried out by the parks police to show who is controlling it. There used to be
a system of locking the gates, but it is not an area that attracts the worst
elements, so this is regarded as no longer necessary to the same regular
extent. When the gates are locked that prevents the public from enjoying the
open space.
The site is laid out with a hard surface.
There are mature trees, park-type benches, and borders around nearly all the
boundaries occupying just over one-third of the area. These are planted with
shrubs and roses. In 1983 nearly £13,000 was spent on improving the site. It
was redesigned; work was done to the boundary walls where they meet or are
formed by adjoining properties, and holes were put in the walls facing the
street. It is now decorated every five years or so at a cost of about £600.
Wandsworth Council have subcontracted the
horticultural work. The contract provides for regular attendance in the summer.
In addition, the parks maintenance manager or one of his assistants inspects
when they are passing. This inspection is not on a regular basis but to ensure
that the necessary work has been done and to find out what is needed to be
done. Furthermore, they also see that the
that there are visits to the site either by him, his assistants or the
subcontractor at least once a week in the summer and may be once a fortnight in
the winter. The contractors visit the site 16 times in the summer or, in
practice, about once a fortnight for some 32 weeks.
The terms of section 23 must themselves
be noted. They provide:
(1)
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.
(2)
In this Part of this Act the expression ‘business’ includes a trade,
protession or employment and includes any activity carried on by a body of
persons, whether corporate or unincorporate.
The learned judge, having noted the two
submissions made to him for the landlord, namely that no activity was carried
on at the premises by the council and that the council did not occupy the
premises for the purposes of that activity, first addressed the question
whether what he had described as to the conduct of the council by their
servants and agents at the premises could properly be called an activity within
the section. In summarising the submissions made for the council, he noted the
terms of section 10 of the Open Spaces Act 1906, which is applicable to London
borough councils. It provides, inter alia, that, if the local authority
acquire control of any open space, the local authority shall hold and
administer the open space in trust for and with a view to the enjoyment thereof
of the public and shall maintain and keep it in a good, decent state. After
reference to Addiscombe Garden Estates Ltd v Crabbe [1958] 1 QB
513 and to Hillil Property & Investment Co Ltd v Naraine Pharmacy
Ltd (1979) 39 P&CR 67, the learned judge pointed out that local authorities
provide a range of services for the benefit of local inhabitants. Part of their
functions can be described as leisure and recreation. He concluded by saying
that the council are holding this open space for, and with a view to, the
enjoyment of the public subject to proper control and regulation. Because of
the nature of the area, the degree of control is not substantial. But it is
cultivated and they maintain and keep it in a good and decent state. The
activity of users is a passive one, to enter and enjoy the plants and shrubs
and relax. The provision of that space, its maintenance, cultivation and its
regulation by visits are clearly, in his judgment, activities of the applicant
as a local authority.
On this appeal that point is not pursued
by the appellant landlord. The point was, I think, clearly of no substance. The
section requires that the premises be occupied by the tenant for the purposes
of a business, which word includes any activity carried on by a body of
persons, whether corporate or unincorporate, and not that the activity itself
be carried on at the premises. Megaw LJ dealt with the point in Hillil
Property & Investment Co Ltd v Naraine Pharmacy Ltd at p 73.
Judge Sumner then considered the question
whether the council occupied the premises. The case for the landlord was that
the tenancy of the premises involved such little activity and the resulting
degree of presence and control was so small that this case fell within the
principles applied by this court in Trans-Britannia Properties Ltd v Darby
Properties Ltd [1986] 1 EGLR 151, where Slade LJ held that a company, the
tenant of a number of lock-up garages which let the garages on subtenancies,
was not in occupation of the premises within section 23. After reference to a
string of authorities, including Lee-Verhulst (Investments) Ltd v Harwood
Trust [1973] QB 204, William Boyer & Sons Ltd v Adams
(1975) 32 P&CR 89, Hancock & Willis v GMS Syndicate Ltd
(1982) 265 EG 473, [1983] 1 EGLR 70, Groveside Properties Ltd v Westminster
Medical School (1983) 47 P&CR 507, and the Trans-Britannia case,
and after directing himself by reference to them, the learned judge listed
certain matters in the factual background which he regarded as important. He
then reached his conclusion by reference to them. This passage from the
judgment must be set out in the judge’s words. He listed the more relevant
factors as follows:
1
Having acquired this area as an open space, the activities carried out
by the [council] are statutory ones
— and he referred to the provisions of
section 10 of the 1906 Act —
2
For 13 years the council have carried out their statutory activities
which have involved:
(a) quite substantial capital expenditure in
1983;
(b) regular redecoration on a five-year cycle;
(c) the planting, maintenance, pruning and
replacement where necessary of trees, shrubs and plants;
(d) the provision and maintenance of seating;
(e) the pruning, hoeing and weeding of quite
extensive borders on a fortnightly basis for 16 visits in the summer with some
attendance in the winter. Though this is done by subcontractors it is to be
regarded as work done by the council;
(f) visits by the park maintenance manager or
his assistants to check that the work has been done, to plan the next work and
generally to ensure that all is well within the area;
(g) control is exercised by those visits and by
the occasional use of the gates to stop persons entering.
The judge continued thus:
I do not regard this as passive
management. It is a valuable open space in inner London requiring a degree of
attention, maintenance and control in the manner described. The degree of
presence and extent of the control are not substantial. But it is clear that
the use of this area is for the purposes and indeed the statutory purposes of
the council. While the purpose may make it more likely that the council is in
occupation (see the case of Groveside Ltd v Westminster Medical
School) that is not enough unless there is a sufficient degree of presence
and control. Is there here a ‘sufficient’ degree of presence and control?
In order to determine this I must step
back and look at the position as a whole and in I trust a common-sense way.
The judge then considered the various
sorts of open space controlled and used by local authorities, and continued:
Thus there is a range of open spaces
which local authorities have, some plainly outside the [1954] Act and at the
other end some equally plainly within it. As so often happens this space is
somewhere in-between. There is control here but it is restrained and the
presence is not extensive. It is, in my judgment, a borderline case. The
control is more reserved than in some of the cases I have cited, but there is
no parting with possession as with the tenancy cases of lock up garages such as
the Trans-Britannia case. It is a case where there are regular visits
and the power used from time to time, though less regularly than before, to
lock the gates to demonstrate who is in control of the area . . . I think this
case does just go over that borderline and there is sufficient possession,
control, provision of services and time in varying degrees but looked at as a
whole sufficient to constitute ‘possession.’
I will deal with that last concluding
phrase, and in particular with the use of the word ‘possession’. The judge
clearly meant ‘occupation’ within the meaning of section 23 of the Act. Mr
Denehan properly drew attention to the misuse of the word ‘possession’ in that
concluding phrase but did not dispute that the judge in the context of his
judgment as a whole must have been intending to refer to ‘occupation’.
Both the reasoning and the conclusion of
the learned judge are attacked in this appeal on behalf of the appellant. The
case for the appellant landlord was based upon two main propositions. First, it
was said that on the undisputed evidence, when correctly understood, it was not
open to the learned judge to hold that Wandsworth was in occupation of this
piece of land. Reliance was placed upon the Trans-Britannia case.
Second, it was contended that the judge was wrong in law to have regard to
certain aspects of the facts in considering whether the council were in
occupation for the purposes of section 23, namely (and I take these items
substantially as they were set out in the notice of appeal) the facts that
they:
(1)
exercised statutory powers when taking the grant of the lease and
thereafter with reference to the premises;
(2)
maintained and repaired the demised premises;
(3)
checked that the works of maintenance and repair had been carried out;
(4)
had expended capital sums;
(5)
could prevent members of the public from using the demised premises by
locking gates if they so wished;
(6)
had ‘not parted with possession’ of the demised premises.
It is necessary to consider first the
question whether the judge misdirected himself as submitted for the landlord.
As to the first point — the exercise of statutory powers — I agree that if a
tenant in all the circumstances, ignoring the source of the powers under which
the tenant acts, is not in occupation of premises for the purposes of an
activity carried on by a body of persons, whether corporate or unincorporate,
the mere fact that the activity is carried out pursuant to or is required to be
carried out by statutory powers or duties could not by itself cause there to be
occupation under section 23(1). As Mr Denehan pointed out, a local authority
are required to satisfy the ordinary requirements of Part II of the Act if they
are to claim a new lease, and cannot rely upon any special provision as in the
case of central government departments under section 56.
For my part, however, I do not accept
that the existence of statutory powers or duties is wholly irrelevant. It is
not in issue that premises may be occupied by a tenant under section 23
although the tenant’s presence or exercise of control is discontinuous and
occurs only as required by the nature of the activity for the purposes of which
the tenant goes on to the land. Thus in Bracey v Read [1963] Ch
88 the tenant of land used for gallops for racehorses was treated as in
occupation of the land under section 23(1). The point was in that case conceded
and, although as a result of that concession the facts are far from clear, the
concession appears to me to have been rightly made. Again in Hancock &
Willis v GMS Syndicate Ltd Eveleigh LJ at p 474 said:
The phrase ‘occupied for the purpose of a
business carried on by him’ in my opinion is not used in the Act as one with
any technical meaning. Furthermore, its meaning is not to be ascertained by
breaking it down into various parts and analysing each word in those parts. It
is a phrase which has to be construed as a whole and in a popular sense.
Then, later on the same page, he
continued:
The words with which we are concerned
import, in my judgment, an element of control and user and they involve the
notion of physical occupation. That does not mean physical occupation every
minute of the day, provided the right to occupy continues. But it is necessary
for the judge trying the case to assess the whole situation where the element
of control and use may exist in variable degrees. At the end of the day it is a
question of fact for the tribunal to decide, treating the words as ordinary
words in the way in which I have referred to them.
Thus if the physical occupation is not
continuous, the right to occupy must continue in order for the continuity of
occupation to be preserved for the purpose of section 23.
The judge had first referred in his
judgment to the statutory provisions, powers and duties with reference to the
point, which was argued below but not in this court, to the effect that the
council did not even hold the possession of the premises apart from occupation
under the section for the purposes of an activity carried on by the council.
The learned judge referred again to the statutory provisions as the first of
the relevant factors listed by him in considering ‘occupation’. After noting
the fact that the possession was for the purposes of the activity of the
council as a local authority, he directed himself by reference to the decision
in Groveside Properties Ltd v Westminster Medical School, that
that fact might make it more likely that the tenant should be held to be in
occupation for the purposes of section 23(1). But it could not be enough unless
there was sufficient presence and control. When, as he put it, the learned
judge stepped back and looked at the position as a whole to decide on which
side of the line this case fell, he did not refer again to the statutory powers
and duties or treat their existence as decisive. It is clear that Groveside
Properties Ltd v Westminster Medical School is authority for the
proposition for which the judge cited it. The facts of that case, however, were
that the medical school as tenant of a residential flat put four students into
occupation and permitted them to use four study-bedrooms in the flat, and left
them to live there with the use of furniture, fittings etc supplied by the
school. Fox LJ at p 510, in two passages which I cite, said this:
I am left with the strong impression in
this case of the existence of a substantial degree of control by the medical
school. It was very restrained and very sensibly exercised, but I think it was
of dominant importance. The students were only there at all because they were
students of the medical school; it was not an ordinary relationship between
persons letting and persons taking the accommodation.
Then lower down on the same page:
It seems to me that, whatever the status
of the medical school is in relation to the flat, its use is simply for the
purposes of the school. If that is right, as to which I shall say more later,
it is the more likely that the school is in truth the occupier.
It is to be noted that the issue in that
case was complicated by the fact that occupation of the flat in one sense was
obviously by the students who lived there and were permitted to do so by the
medical school. It was thus seen as relevant that the physical use or
occupation by the students was not simply residential occupation in return for
a payment but occupation by and as students for the purposes of the school
under the control of the school. No such complication arises in this case,
since members of the public who use the open space to sit, stand and walk there
are clearly not in occupation of the open space in any sense. For my part,
therefore, I accept that the fact that the use of the open space is solely for
the purposes of the activity of Wandsworth Council as such is not of the force
or relevance which it had in the medical school case.
That fact, however, is not, in my
judgment, irrelevant. The statutory powers and duties lend some support to the
case made for the local authority that their presence on and control of the
piece of land, such as they were, had continued throughout the tenancy, were
continuing and would continue in future as the tenant described.
I would not, I think, have referred to Groveside
Properties Ltd v Westminster Medical School precisely as did the
learned judge. I reject, however, the submission that he is shown in this
regard to have misdirected himself. He referred, as I understand his judgment,
to the statutory source of the rights and duties of the council with reference
to the premises for the purpose for which Mr Craig tells us he cited them to
the judge, namely to explain why and in what circumstances the council came to
be tenant of the premises and to explain what their rights and duties were with
reference to the land, and as part of the judge’s grounds for rejecting the
submission that there was here no more than passive management of the site.
As to the other matters to which, it is
submitted, the judge wrongly had regard, I take the same view. The further
points can be summarised briefly. Capital expenditure by the council was said
to be irrelevant to the question of occupation, and the maintenance of the
premises and the checking of maintenance work were said also to be irrelevant
save to the extent that they involved the tenant being on the premises. The
ability to lock the gates was said to be irrelevant, and the only relevant fact
was whether and how often the gates were locked, as to which, it was said,
there was no evidence. The fact that the council did not part with possession
to members of the public was said to be irrelevant. The nature of the activity
carried on was consistent, said Mr Denehan, with no person being in occupation
as contrasted with having legal possession. The role of the council was, it was
said, entirely passive save for infrequent maintenance, and the council were
not in occupation in the natural and ordinary meaning of the phrase.
The judge, in my view, listed the factors
which he regarded as relevant having regard to the submission made to him for
the landlord that the council did nothing but passive management. I agree that
the expenditure of capital sums upon improvements upon regular redecoration,
upon the replacement of trees, shrubs and plants and upon the provision of seating
could not properly be taken into account as earning some merit in the eyes of
the court or as giving rise to some right to be more readily treated as being
in occupation as compared with a tenant who had not spent such sums. The judge
did not regard those facts in any such way. He listed them, as I understand his
judgment, in the process of his reasoning that led him to reject the contention
that there was here merely passive management and to observe that this valuable
open space required the degree of attention, maintenance and control which he
had described. His judgment shows that he realised clearly the necessity for
the tenant to prove such extent to presence and control of and by the servants
or agents of the council as can be held to amount to occupation under the
section. There was no misdirection on any of the grounds put forward.
This case depends, therefore, in my
opinion, upon the answer to the first issue raised. Did the council on the
evidence before the judge, which evidence was not in dispute, prove that the
council at all times occupied the premises for the purposes of their activity
as a local authority? Mr Denehan’s
submissions were careful, accurate and persuasively presented. He acknowledged
that Judge Sumner had accurately expressed the principles to be found in
decisions of this court, and he summarised those which were seen as more
important to his case as follows:
(i)
‘Occupier’ is not a term of art, nor does it have a precise legal or
technical meaning.
(ii)
The word must be given its natural and ordinary meaning in the context
of the 1954 Act.
(iii)
To occupy premises necessarily involves physical occupation of, or
presence in, the premises by the tenant.
(iv)
It is not possible to determine whether a tenant is in occupation of
premises for section 23 by itemising the circumstances found to be present in
individual cases where a tenant was held in fact to be in occupation for that
purpose and by then determining how many or how few of those circumstances are
present in the instant case. Nevertheless the authorities show that certain
elements have been treated as capable of amounting to ‘occupation’, namely
(a)
physical presence by the tenant;
(b)
the exercise of control over those using the premises;
(c)
the provision of services by the tenant which require him to be
physically on the premises;
(d)
the time and attention devoted by the tenant to the activity carried on.
Mr Denehan then propounded the test which
this court should apply which, on the evidence, he said must result in the
landlord’s appeal being allowed as follows:
Whether in all the circumstances of the
case there is a sufficient degree of presence and manifestation of control to
constitute occupation by the tenant.
Finally, Mr Denehan referred to the facts
and pointed to the judge’s acknowledgment that the degree of presence and
extent of control are not substantial, and submitted that whatever might be in
another case sufficient, here they were not. Mr Craig’s submission for the council
was that the judge was correct in his reasoning and in his conclusion save for
one matter only. Mr Craig contended that this was not a borderline case at all
but that the council plainly at all times occupied this piece of land for the
purposes of their activity within section 23. The physical presence and control
necessary for occupation under the section was not required to be continuous
provided that the right to occupy continued. The cases upon which the appellant
relied and which showed the concept of ‘sufficiency’ of physical presence were,
he submitted, all cases where the tenant had let into occupation or use of all
or part of the premises other persons as subtenants or licensees. In those
cases it was necessary for the tenant to prove that, notwithstanding the fact
that he had let other persons into occupation or use of the premises or a large
part of them, he was nevertheless in occupation of the premises to such an
extent, demonstrated by presence and control, that the court could properly
hold him to be in occupation for the purposes of section 23.
For my part, I would accept the substance
of Mr Craig’s submission. The judge was, in my judgment, entitled to hold that
the council had proved their case on the preliminary issue, and I reach that
conclusion for the following reasons. Where a tenant’s business consists in
letting parts of the premises to subtenants, even if he occupies part of the
premises for the purposes of caring for and rendering services to the occupiers
of the parts sublet, his tenancy is not one to which section 23 applies if he
is not in any sense in occupation of the parts sublet: see Bagettes Ltd
v GP Estates Ltd [1956] Ch 290 per Jenkins LJ at p 301 where he
said:
I think it is implicit [within Part II of
the Act of 1954], and in particular sections 23 and 32, that the business for
the purposes of which a tenant occupies premises of which he claims a new
tenancy must not be of such a character that it is necessarily brought to an
end by the very process of the ascertainment of the holding and the ordering
and granting of a new tenancy of the holding as ascertained, with the result
that the tenant is presented with a holding which, though occupied by him, is
not so occupied for the purposes of any business whatever.
Applying this principle to the present
case, I find that the ascertainment of the holding must involve the subtraction
from the property comprised in the tenancy of the 10 sublet flats, for these
are occupied neither by the tenant nor by any person employed by him.
That case was distinguished in Lee-Verhulst
(Investments) Ltd v Harwood Trust [1973] QB 204. There also the
tenant carried on the business of letting furnished rooms with service, but
this court held that the word ‘occupied’ in section 23 is to be given its natural
and ordinary meaning in the context of the Act, and on the facts of that case,
having regard to the degree of control exercised by the tenant over the
premises as a whole and the extent of the services provided to the occupiers of
the rooms, the tenant occupied the entire premises for the purposes of his
business. Stamp LJ at p 217 said:
In the context of statutory provisions to
give security of tenure to business tenants the occupation referred to in
section 23(3) must as a matter of construction be given the same meaning as the
occupation referred to in subsection (1), and what in my judgment is
contemplated by both subsections is occupation ‘for the purposes of’ the
business carried on by the tenant; and if you find the business — here that
part of the business which consists of what can conveniently be summarised as
‘room service’ — being carried on in each room in the way this tenant carries
it on in this case, I conclude that the whole house and each room in it is
within the meaning of the section ‘occupied’ by the tenant ‘for the purposes
of’ its business and that no part is excluded from ‘the holding’ by the effect
of subsection (3).
It is to be noted that, in that case, the
services supplied included daily visits to each room by chambermaids to clean
the room and change the linen when required under a right to do so as against
the occupier of the room. Sachs LJ at p 213 stated the basis of the decision as
follows:
By Mr Lee and the staff the tenant
company were present in the premises for the purpose of the business day and
night; in the course of their services to the occupants they pervaded every
room there; control was exercised by Mr Lee over the manner in which the
occupancies were conducted . . .
Is there anything in the Act of 1954
which precludes the court from giving to the word ‘occupied’ in section 23 its
natural and ordinary meaning in the context of the subject-matter of that Act —
a meaning which would in the set of circumstances above described clearly lead
to it being held that the tenant did occupy the premises for the purpose of the
business? Being unable to find anything
in the Act which so precludes the court, I have come to the conclusion that
this tenant did so occupy the whole of the premises.
For reaching that conclusion it is
neither necessary nor desirable to provide a definition of that word which
would deal with all the greatly varying sets of circumstances that can exist.
As a number of elements have been taken into account, each of a physical nature
and each involving a degree of presence on the part of the tenant personally or
by goods under his ownership, it is however as well to observe that it could be
proper in some other case to reach the same conclusion even if one or more of
those elements were subtracted. For instance if the furniture was that of the
occupants or if some of the services were not rendered or if the occupancies
were not so much controlled, there could still be an occupation by the tenant
of the premises as a whole. Much depends on questions of degree.
After reference to those leading cases,
it seems to me that when the question of sufficiency of physical presence and
of use was raised and answered in that case, as in Bagettes’ case, the
concept of sufficiency was clearly not based upon any idea that daily entry
into parts sublet was sufficient, or that weekly entry only (for example) would
not suffice, or upon any other process of quantification. The concept was
whether the occupation of the premises by the tenant was shown to be such as
Parliament intended to be covered by the words used in section 23(1) and (2).
Thus in Bagettes Ltd Jenkins LJ at p 301 said that the manifest
intention of Part II of the Act was to ‘enable tenants occupying property for
business purposes to obtain new tenancies in certain cases’. If there was no
occupation by the tenant of the parts necessary for the carrying out of the
business by him, the tenancy could not be held to be within the provisions of
section 23. In Lee-Verhulst (Investments) Ltd v Harwood Trust,
since ‘occupation’ for this purpose was used in the popular sense and on the
facts the tenant was in that sense in occupation of the furnished rooms let to
the occupiers of them as well as the parts used for providing services, there
was occupation in the sense intended by Parliament.
It was conceded by Mr Denehan that the
sufficiency of physical presence and control has not been considered in any
case in which the only occupation of premises is that of the tenant or his
servants or agents and without the presence in part of the premises of
subtenants or licensees of the tenant. In Bracey v Read the
possession and use of gallops for racehorses was conceded to be occupation for
the purposes of section 23. If it is shown that the tenant, having possession
of the premises and having given to no person the right to exclude the tenant
from any part of the premises or to limit the tenant’s access thereto, is by
himself, his servants or agents physically present on the premises to such
extent and exercising control of them to such extent as would reasonably be
expected having regard to the nature of the premises and the terms of the
tenancy, and is so present and exercising control for the purposes of the
business or activity carried on by the tenant, then for my part it would seem
likely at least that an observer, knowing the facts and applying the ordinary
and popular meaning of the phrase ‘occupation for the purposes of a business or
activity’, would hold that tenant to be in occupation.
I accept, of course, that a tenant who
has a right to possession may choose not to go into actual occupation, and, as
set out above, the authorities show that ‘occupation’ for the purposes of
section 23 means actual occupation in the popular sense of that word. But if,
as is clear from Eveleigh LJ’s judgment in Hancock & Willis v GMS
Syndicate, the physical occupation need not be continuous provided the
right to occupy continues, then the sort of occupation to which I have referred
should in most cases qualify.
That which is a minimum sufficiency of
physical presence or control cannot, in my view, be determined by the court
independently of the facts of a particular case by reference to the number of
visits per day or per week or per month. When the facts of a particular case
are regarded, as they must be, I can see no standard for the judgment of the
minimum sufficiency of physical presence or control in a case where there are
no subtenants or licensees competing for the role of occupier other than that
established by the nature of the premises in question regarded in the light of
the statutory purpose, which is to enable tenants occupying property for
business purposes to obtain new tenancies in certain cases, as enlarged by the
provision to include an activity carried on by a body of persons.
On that basis I agree with Mr Craig’s
submission that this was not a borderline case but a clear case. The council
were physically present upon and exercised control over the piece of land by
their servants or
parties to the lease when it was made. If the ordinary man, knowing the facts,
were asked: ‘Who is in occupation of this open space?’, I have no doubt
whatever that, applying the ordinary and popular meaning of the word, he would
answer ‘The council is’. No one else is. The council is there, as necessary, to
do all that is required to maintain the place in decent order for use by the
public.
Mr Denehan, however, submitted that that
approach, which I have described and which I think is correct, is not open to
the court having regard to the decision of this court in Trans-Britannia
Properties Ltd v Darby Properties Ltd. In that case the original
tenants under the lease for 21 years had erected 46 garages for letting. The
applicants for a new lease were assignees of the lease. The county court judge
held that the applicants were in occupation for the purposes of section 23 of
the whole of the premises. Slade LJ, however, held that the judge was wrong and
that the tenants were not in occupation of the land and garages within the
meaning of the Act. At p 154 Slade LJ said:
Against these facts, which are said to
support Trans-Britannia’s case, have to be set (inter alia) the
following. There is no living accommodation on the site. So far as the evidence
shows, there is no office, no water and no electricity. There is no security
guard. Regular visits to the premises occur no more than once a fortnight. Mr
Geddes stressed that Trans-Britannia provide all the services for their subtenants
which it is reasonable for them to provide, having regard to the nature of
their business. This may well be so. However, respectfully differing from his
submissions and the views of the learned judge on this point, I do not think it
lends much assistance to Trans-Britannia’s case to say, in the judge’s words,
‘they do what is required by the nature of their business’. The very nature of
some businesses involves the owner parting with the occupation of his land (see
the Bagettes case at p 302, per Jenkins LJ). Though the learned judge
referred to Trans-Britannia as maintaining ‘active control’ of the premises, I
think that the very nature of their business and the manner in which they
conducted it meant that this control was of a very limited nature.
I have referred above to the facts of the
Lee-Verhulst and William Boyer cases in some detail if only, in
the end, to show how far removed they were from those of the present case.
Without thinking it necessary to list the many points of distinction, I merely
say that in both cases the physical presence of the tenants on the premises,
the services they rendered to their subtenants or licensees, the degree of
control which they exercised over their occupancies and the time which they
spent in connection with the relevant premises were each incomparably more
extensive than the equivalent factors in the present case. In both those cases,
the tenants were regularly and frequently entering upon every part of the
premises in question. In the present case, as I have already indicated, there
is no clear evidence that Trans-Britannia ever enter lock-up garages during the
substance of subtenancies, save with the consent of the subtenants. For by far
the greater part of any year, they themselves maintained no physical presence
on the premises at all.
This case is not, in my judgment, to be
decided by noting that here also there was no office, no water, and no
electricity or living accommodation on the site or that there is no security
guard, or that regular visits to the premises occur no more than once a week in
the summer and once a fortnight in the winter if we ignore the intermittent
occasions when more extended work is done. Slade LJ, as the passage cited
shows, was dealing with the case where the tenant had let subtenants into
occupation of the garages, where the tenant was not shown even to enter the
garages when let, and where there was little other physical presence at the
premises. It was for those reasons that that tenant could not show that, in the
ordinary use of the phrase, he was in occupation of the premises, and it was
clear that the garages were occupied only by the subtenants of them. The
decision in Trans-Britannia Properties does not, in my judgment, compel
this court to hold that Wandsworth Council are not in occupation of this open
space for the purposes of section 23 of the Act. In my judgment, the council
are in such occupation, and I would dismiss this appeal.
SCOTT-BAKER J agreed and did not add anything.
The appeal was dismissed with costs; an
application for leave to appeal to the House of Lords was refused.
