England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM KINGSTON-UPON-THAMES COUNTY COURT
(HIS HONOUR JUDGE BISHOP)

		Royal Courts of Justice Strand London W2A 2LL
		27th March L998

This is the judgment of the Court on an appeal with the leave of a single Lord Justice from an order of Judge Bishop made in Kingston upon Thames County Court on 20 January l997. That order decided a preliminary issue on Part II of the Landlord and Tenant Act l954 ("the l954 Act") in favour of the landlord, the respondent to the original application and to this appeal. The landlord is Mr Keith Bruce-Smith, a solicitor who owns the land in question as a trustee; his co-trustee, Mr Edward Ram, died during the course of the proceedings. We shall for simplicity refer to a single landlord throughout.

The tenants (the applicants under the original application and the appellants in this court) are also trustees. They are the trustees of the Thames Ditton Lawn Tennis Club, and the application was for a new tenancy of the club's land and buildings at Weston Green Road, Thames Ditton. The land extends to about 2.4 acres and is largely bordered by the back gardens of detached houses in Weston Green Road and Embercourt Road. The site is roughly rectangular (though the long sides are rather pinched in at the centre) and its layout was described as follows by Mr Derek Horne, the landlord's expert witness :

"Within the site there are ten tennis courts on two levels. At the western end of the tennis club and on the higher ground are situated the hard courts and at the eastern end of the site on the lower ground are situated the grass courts. At the extreme eastern end of the site is situated a single-storey prefabricated timber-clad pavilion and an unsurfaced car park, providing parking for approximately 25 cars. In addition, there is a pre-fabricated concrete double garage."

The garage is used as a storeroom. The pavilion and the garage are at the eastern end of the site, which has access from Weston Green Road. Four of the ten tennis courts are hard courts and six are grass courts. They are surrounded by high wire mesh fencing of the type commonly used to enclose tennis courts.

The tennis club has been in existence and using this site since l882 - so that there is, as the Judge said, a certain amount of history attached to the land - but the lease under which the club's trustees were holding at the time of the application was granted on l0 September l974 for a term of 2l years from 2l March l974, so that it was due to expire on 24 March l995. The rent reserved during the last six years of the term was £650 a year.

On 22 September l994 the club's trustees made a formal request, under s.26 of the l954 Act, for a new tenancy and on ll November the landlord gave a counter-notice that he was unwilling to grant a new tenancy, and would oppose an application for the grant of a new tenancy on the grounds in s.30(l)(f) of the l954 Act. On ll January l995 the club's trustees issued in the Kingston upon Thames County Court an originating application for a new tenancy under Part II of the l954 Act; the landlord opposed the application on the stated grounds; and on l3 March l995 District Judge Coni ordered that there be heard as a preliminary issue the question -

"whether the [landlord] is able to show a firm and settled intention in accordance with s.30(l)(f) of the [l954 Act] that on the termination of the current tenancy, the landlord intends to demolish or reconstruct the premises comprised in the holding, or a substantial part of those premises, or to carry out substantial work of construction on the holding or part thereof, and that he could not reasonably do so without obtaining possession of the holding".

That statement of the issue includes one correction ("demolish or reconstruct" for "demolish to reconstruct") which was made under the slip rule and two further corrections which might have been made under the slip rule but were not ("comprised in" for "comprising" and "holding" for "whole") so as to conform to the language of s.30(l)(f) of the l954 Act.

It will be apparent from the dates mentioned above that nearly two years elapsed between the direction of the preliminary issue and the Judge's order. It is material to note the reasons for the delay because they are reflected in the course of the hearing before the Judge and in that part of the appeal which relates to the Judge's costs order. That part of the appeal will be dealt with together with the costs of the appeal.

Originally the hearing was fixed for August l995 but that hearing date was vacated. In the meantime the landlord was taking active steps towards redevelopment of the site. He negotiated with Scammell Homes Ltd ("Scammell") having been advised that the involvement of outside developers was compatible with s.30(l)(f). On l8 May l995 the landlord entered into an agreement with Scammell for the grant to it of a l50-year lease (with an option to acquire the freehold reversion for a nominal sum). The lease was to be granted at a premium of £900,000 to be increased by £275,000 if Scammell was not required (as a condition of planning consent) to provide the tennis club with an alternative site and premises. The agreement was however subject to two conditions precedent -

(i) "the grant in writing of an implementable detailed planning permission for the development of the property for the building of houses and usual garaging and outbuildings thereon" subject to conditions reasonably acceptable to Scammell; and

(ii) vacant possession being given by the tennis club.

These conditions had to be satisfied by 24 December l996 unless extended by agreement.

An application for planning permission for residential development of the site had already been made, in April l995, to the local planning authority, the Elmbridge Borough Council. It failed to give notice of its decision within due time and that led to the appointment by the Secretary of State of an Inspector who dealt with the matter on the basis of written representations and a site inspection held on 6 November l995. By a letter dated l4 February l996 the Inspector refused outline planning permission, reaching his decision on the ground of the loss of the recreational open space without any equivalent replacement. While the application was pending there were quite extensive discussions or negotiations between the parties as to a possible replacement site on which the landlord was willing to expend a substantial sum. There was another planning application relating to one particular site which was seen as a possible alternative. These matters are referred to at some length in the Judge's judgment but it is not necessary to go into the details here.

The refusal of the landlord's planning application led to a significant change in his approach to the preliminary issue. The Judge called it a change of strategy. The hearing date which the parties had been working to, 5 July l996, was vacated and a new hearing date fixed for 4 October. The change of strategy is reflected in the supplementary witness statement of Mr Ram signed on 27 June l996. In paragraph l5 of that statement Mr Ram referred to the landlord having always intended to develop the site when ripe for development and to the planning application (which he referred to as 'the further application') in respect of the alternative site. He said,

"The [trustees] are reluctant to await the outcome of the further application appeal. [Mr Bruce-Smith] and I have decided to proceed with our plans for the site and to demolish all structures on it in the hope and expectation that approval for redevelopment of the site will be obtained and the site's development potential realised in the interest of our beneficiaries".

In his judgment the Judge summarised this as,

"They had not obtained planning permission, so they would demolish rather than reconstruct at this stage" (his emphasis)

and a little further on in his judgment

"The landlords' new approach is that they want to demolish the tennis club and turn the site into what we have been calling a 'brown field' site. In that way, they say, it would cease to be a sporting or recreational facility, so that when they apply again for planning permission, probably some years ahead - it will be for them to decide when - there will not be an objection that a sporting facility has been lost."

The Judge added that the landlords had been open about their decisions and their motives, and Mr Bruce-Smith gave to the court a formal undertaking that (having obtained possession) he would procure the carrying out, within a reasonable time, of works identified in a specification annexed to Mr Ram's supplementary witness statement. Those works are, in brief summary, the demolition of the clubhouse and garage (described as a stores shelter), the breaking up of the six grass courts and four hard courts, and the removal of building material and building foundations and of the broken bases of the courts to depths of at least l00mm and 225mm respectively (that is about four inches and nine inches).

Mr Horne, the landlord's expert, gave evidence that all these works could be carried out without planning permission. Miss Sharon Bayton, the tenants' expert, did not disagree; there is a single sentence in her supplementary report which says, " I agree with Mr Horne that demolition of the tennis club is permissible under current planning law." However the tenants' counsel did not concede this point. On the contrary Mr Robert Read Q.C., who appeared below for the tenants, submitted that it was not a matter for evidence but a matter of law, and that some of the works would require planning permission. We shall have to come back to what the Judge said about that, and the process by which he concluded that the landlord would be able to carry out all the works without planning permission - a conclusion from which he went on to decide the preliminary issue in favour of the landlord. But before we go into those matters it is appropriate to make some general observations on the nature of the court's task in applying s.30(l)(f) of the l954 Act.

By s.30(l) of the l954 Act the grounds on which a landlord may oppose an application for a new tenancy include

" ... (f) that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding".

Section 3lA of the l954 Act (inserted by the Law of Property Act l969) qualifies the effect of s.30(l)(f) in two cases : where the tenant is willing to take a new tenancy on terms that give access to the landlord, and where the tenant is willing to accept a tenancy of an economically separable part of the holding. Section 3lA was relied on before the Judge but the leave to appeal does not cover that point and it is unnecessary to go further into s.3lA at this stage.

The terms in which the preliminary issue was directed do therefore closely (though with a few errors which we have noted) follow the wording of s.30(l)(f). The reference to a "firm and settled intention" is no doubt something of a gloss but it adequately reflects the construction put on the section by the House of Lords in Bettys Cafes v Phillips Furnishing Stores [l959] A.C. 20, 34, citing with approval the well-known judgment of Asquith LJ in Cunliffe v Goodman [l950] 2 K.B. 237, 253

"An intention to my mind connotes a state of affairs which the party 'intending' does more than contemplate ; it connotes a state of affairs which, on the contrary, he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition".

In a recent decision of this court, Cadogan v McCarthy & Stone Developments (l6 May l997) Saville LJ (with whom Butler-Sloss LJ and Douglas Brown J agreed) said that in this context "reasonable prospect" means

"a real chance, a prospect that is strong enough to be acted on by a reasonable landlord minded to go ahead with plans which require permission, as opposed to a prospect that should be treated as merely fanciful or as one that should sensibly be ignored by a reasonable landlord. A reasonable prospect does not entail that it is more likely than not that permission will be obtained."

In a situation where there is any uncertainty as to whether the landlord's plans require planning permission in order to be carried out, the court need not and normally should not try to resolve that question. What is necessary (as was said in the judgment of Upjohn LJ in Gregson v Cyril Lord [l963] 1 W.L.R. 4l, 48, which was read by Diplock LJ and with which Diplock LJ agreed) is to an apply an objective test, that is

"an inquiry whether the landlords on the evidence have established a reasonable prospect either that planning permission is not required or, if it is, that they would obtain it. That does not necessitate the determination by the court of any of the questions which may one day be submitted to the planning authority or to the Minister; it is the practical appraisal upon the evidence before the court as to whether the landlords, upon whom, let me stress, the onus lies, have established a reasonable prospect of success".

Gregson v Cyril Lord was a case on s.30(l)(g) - landlord's intention to occupy - and was very different on the facts, as it turned on a change of use of premises in Harley Street, London, W.l from an osteopath's practice to offices. The passage which we have read was cited and approved by the House of Lords in Westminster Council v British Waterways Board [l985] l A.C. 676, 680. That was also a case on s.30(l)(g) and it was rather an unusual one since the tenant was itself the local planning authority.

It will be observed that s.30(l)(f) refers to "the premises comprised in the holding". Section 23(l), by contrast (in defining tenancies to which Part II of the l954 Act applies) uses the words

"where the property comprised in the tenancy is or includes premises which are occupied by the tenant ..."

It has been held at first instance that "premises" in s.23(l) is not confined to buildings but can include bare land: see Bracey v Read [l963] Ch. 88, a case concerned with downland gallops at Lambourn in Berkshire. In that case (at page 93) Cross J. recorded (with apparent approval) the submission that "premises" in s.30(l)(f) cannot mean bare land with no building on it. That that submission was correct is shown by the decision of this court in Housleys v Bloomer-Holt Ltd [l966] 1 W.L.R. l244. That was a case on s.30(l)(f); the landlord, which was a timber merchant and owned the adjacent site, wanted possession of property let to motor engineers, the property consisting of a wooden garage occupying occupied about one-third of a site which (apart from a wall) was otherwise bare and covered in cinders. The landlord wanted to demolish the garage and turn the whole site into concrete hard standing for its lorries. The county court judge ordered a new tenancy on the basis that there would be no demolition of a substantial part of the premises; that the landlord's real intention was to obtain possession in order to improve its own premises (its recent acquisition disabled it from relying on s.30(l)(g)); and that its case under s.30(l)(f) was "merely colourable". This court reversed that decision. Sellers LJ said at page l250,

"The fact is that what was to be demolished was all that there was to demolish on the site, the garage and the wall, and that seems to be demolishing the whole of the premises so far as any structure was to be demolished. It seems to me that that fulfils the requirements sufficiently. I am not concerned at the moment to consider what would be the position if the structure to be demolished had been some very small dog-kennel or very small hut on a very large area."

Diplock LJ (at page l25l) referred (in relation to the "colourable" point) to what he called the "short-lived fallacy" in Atkinson v Bettison [l955] 1 W.L.R. ll27. Russell LJ said (at page l253),

"It has escaped the notice of the county court judge that the proposal involves demolition, not of a part, let alone an insubstantial part, of the premises, but of the whole of the premises."

On that basis it might in this case have been sufficient - subject to Sellers LJ's "dog-kennel" point - for the landlords to have asserted that they intended to demolish the clubhouse and the garage, and to have taken their stand on that alone. In fact their case has been that they intend not only to have that done but also to have the grass courts and hard courts broken up and left, in effect, as shallow pits. That is the extent of the works covered by Mr Bruce-Smith's undertaking.

Mr Michael Barnes Q.C. and Mr Paul Randolph (for the appellant tenants) in their helpful skeleton argument note a number of matters which are not in issue, either as being common ground or as being irrelevant. These are -

(a) the meaning of "holding" and "premises" in s.30(l)(f);

(b) the genuineness (subject to the "vital question" of planning permission) of the landlord's intention to carry out the proposed works, backed as that intention is by an undertaking;

(c) the withdrawal in this court of an argument based on mere disuse of land as a change of use;

(d) s.3lA (except indirectly in connection with an application for leave for a late respondent's notice)

(e) the background of negotiations as to possible relocation, to which we have already referred; and

(f) the motives behind the landlord's intention (that is what Diplock LJ called "the short-lived fallacy in Atkinson v Bettison").

The skeleton argument adds a further point under the heading of 'Irrelevant Matters', that is the fact that the Judge heard evidence from the landlord's expert, Mr Horne, about planning law, and voiced some measure of complaint that those matters were not also dealt with by the tenants' expert, Miss Bayton, so that her view could be put to Mr Horne. The court does not, it is said, receive expert evidence as to the law of England : see Greeson v Wippell & Co [l977] 3 All ER 54. However that point is to some extent in issue, and we must now turn to how the matter was dealt with by the Judge.

The Judge heard a great deal about the position under the Town and Country Planning Act l990 ("the l990 Act") and he set out various conclusions in his judgment. Leaving aside for the moment that he did so on the basis of expert evidence, rather than legal submissions as to the correct construction of the relevant statutes and statutory instruments, and enlarging a little on some uncontroversial points, we can summarise the Judge's conclusions as follows :-

(a) The general principle (in s.57 of the l990 Act) is that planning permission is needed for development.

(b) "Development" is defined in s.55(l) as "the carrying out of building, engineering, mining or other operations in, on over and under land, or the making of any material change in the use of any buildings or other land" but s.55(2) takes out of that general definition certain specified works and uses.

(c) s.55(lA) of the l990 Act, added by the Planning and Compensation Act l99l ("the l99l Act") deals specifically with demolition. It provides that "building operations" for the purposes of the l990 Act include

"(a) demolition of buildings;

(b) rebuilding;

(c) structural alterations of or additions to buildings; and

(d) other operations normally undertaken by a person carrying on business as a builder".

(d) The l99l Act also adds to s.55(2) (which is, it will be remembered, a list of exclusions) a new paragraph (g) covering demolition of any description of buildings specified in a direction given by the Secretary of State.

(e) There is a direction, the Town and Country Planning (Demolition - Descriptions of Development) Direction l995 ("the l995 Direction") which came into effect on 3 June l995 under which it is not development to demolish (among other things)

"any buildings other than a dwellinghouse or building adjoining a dwellinghouse"

or

"the whole or any part of any gate, fence, wall, or other means of enclosure".

(f) Finally it is to be noted that by s.336(l) of the l990 Act "building" (except where the context otherwise requires) includes any structure or erection. That provision also applies to the interpretation of the l995 Direction but it refers specifically to any gate, fence, wall or other means of enclosure and that seems to be quite a strong context for not giving "building" its widest possible meaning.

This summary is in line with the very clear summary by Glidewell LJ in Cambridge City Council v Secretary of State for the Environment (l992) 64 P.& C.R. 257, 269-70, subject to the important qualification (noted by Glidewell LJ at page 270) that the l99l Act was then not yet in force.

That being the statutory framework as regards planning permission the Judge (in deciding the preliminary issue) had to make a "practical appraisal on the evidence before the court" (in the words of Upjohn LJ and Diplock LJ in Gregson v Cyril Lord [l963] 1 W.L.R. 4l, 48) of the landlord having a reasonable prospect (as that expression was explained in Cadogan v McCarthy & Stone Developments) of successfully achieving his aim - that is, the rather unattractive aim of turning the tennis club land into a derelict "brown field" site. That appraisal involved some questions of law (that is, of construction of statutes and statutory instruments). It also involved issues of fact and degree. Mr Lionel Read Q.C. (appearing with Mr Martin Rodger for the landlord) submitted that all the relevant issues were issues of fact and degree, but we cannot accept that submission. Its unsoundness is demonstrated by the observations of Lord Hailsham L.C. in Heron Service Stations v Coupe [l973] 1 W.L.R. 502, 508-9,

"The third contention on the part of the appellants was that what was or was not a building was a question of fact and degree, and that even if your Lordships heartily disagreed with the Justices this House would be bound by the findings in the case which reads: "3. We found" (sic) "that - (a) the whole service station was a building and (b) none of the advertisements was displayed on the curtilage of a building". In support of this contention our attention was drawn to, amongst other cases, Cooper v Bailey (l956) 6P & C.R. 26l, where the question was clearly treated in the context of particular circumstances as one of fact.

In my view, however, the, to me wholly inappropriate, use of the verb "to find" at the beginning of paragraph 3 quoted above is quite insufficient to turn a decision which is basically an application of the answer to a question of construction, and therefore of pure law, to a given set of facts into a question of fact".

It is moreover necessary to bear in mind that this is an appeal from the county court in a case where there is (subject to leave) a general right of appeal, not merely a limited right of appeal on a point of law. There would have been only a limited right of appeal if Judge Bishop had been a decision-maker for the purposes of the l990 Act and the only appeal from him had been under Part XII of that Act. But the Judge was not such a decision-maker and it was not necessary for him (nor is it appropriate for us) to proceed on the hypothetical basis that he was. That seems to have been the cause of some confusion both on the hearing of the preliminary issue and in this court.

The crucial part of the judgment below is at pp. l9-24 of the transcript. The Judge (at p.l9) recorded the tenants' counsel's submission that the digging out and removal of the tennis courts were "engineering ... or other operations" but he did not at that point express any view on it. Instead (at p.20) he recorded the competing submissions as to the meaning of demolition and as to whether that was an issue of law or fact. In our judgment it is clear (in line with what Lord Hailsham said in the Heron case) that the issue is neither pure law nor pure fact. The meaning of a statute is an issue of law, but its application (and especially the application of a single ordinary word) to a particular set of primary facts requires the tribunal to come to a conclusion on what is a question of fact and degree. But that is a task which an appellate tribunal may be as able to perform as the tribunal of first instance ; as Lord Hailsham trenchantly put it in Heron (at page 508),

"But, if I am right in my belief that the draftsman of these regulations drew a distinction between the 'buildings' which constitute business premises and their 'forecourts', no amount of argumentation will turn a perfectly flat piece of concrete or tarmac into a building ..."

Mr Read drew attention to Romulus Trading Co v Henry Smith's Charity Trustees [l990] 2 EGLR 75, a case of s.30(l)(f) in which Farquharson LJ said (at page 76) that the Court of Appeal should

"be careful not review the findings of the trial judge as to what constitutes work of construction or reconstruction unless he is plainly wrong".

That view (which does not seem to have been shared by the other members of the court) may have been correct in relation to fairly complicated facts on which the county court judge had heard expert evidence in that case. We do not, with respect, consider it to be of general application.

The Judge (at pp. 20-22) expressed regret that he had not had more help from the experts, and referred to the point on change of use which is not relied on in this court. Then at p.22 he said,

"I find too that for the purposes of planning law the "demolition" work will include demolition of the tennis courts as well as the clubhouse and other structures.

I cannot accept Mr Reid's restrictive definition of the word "demolish". Commonsense must play a part. In my view, the dictionary definition allows a wider meaning and I find it unacceptable to say that digging up tennis courts, even though they lay flat in the nature of hard-standing, does not amount to destroying them and the dictionary at least accepts that destroying is the same as demolishing. I have seen nothing to show that structures such as tennis courts should be treated differently from standing structures such as buildings. I include grass tennis courts as structures".

He concluded at page 24,

"I have decided the planning point against the tenants. In my view the landlords will not require planning permission for any of their proposed demolition work" (the emphasis is the Judge's).

In our judgment that conclusion was wrong (if necessary, we would say plainly wrong). By deciding that all the works amounted to demolition, the Judge must have been implicitly deciding that some of them were not more aptly described as "engineering ... or other operations" which constituted development but did not get the benefit of the exception under s.55(2)(g) of the l990 Act. He must also have been deciding that both the hard tennis courts and the grass tennis courts were a "building" within the meaning of the l995 Direction, despite the context provided by the specific reference to "any gate, fence, wall or other means of enclosure" ( which is apt language in which to describe wire mesh fencing surrounding the courts).

Neither of these views can be sustained. The legislation now embodied in the l990 Act is (as Lord Wilberforce said in Coleshill & District Investment Co v Minister of Housing and Local Government [l969] 1 W.L.R. 746, 764) drafted empirically rather than logically, and the position has hardly been improved, at least in this respect, by the amendment made by the l99l Act. The proposed breaking-up and digging-out of the tennis courts might without much violence to language be described as demolition, if no other expression were in competition as a more apt description. But here other expressions are in competition ("engineering ... or other works" and "other operations normally undertaken by a person carrying on business as a builder") and they are in our judgment much apter. It is not a question of giving demolition a restrictive meaning, but of it being unnecessary and inappropriate to give it a wider meaning. That point is greatly reinforced by the reference in s.55(lA) to demolition of buildings and by the context of the l995 Direction.

The ground on which the Judge decided what he called "the planning point" against the tenants is therefore unsound. As we have already noted, in the light of Gregson v Cyril Lord it was not necessary, and it may have been inexpedient, for the Judge to decide this point at all. We have anxiously considered whether we should, in these circumstances, remit the matter to the Kingston upon Thames County Court for further findings. We are however most reluctant to take that course, in a case which has already taken up so much time and been so expensive, unless it is unavoidable. Mr Read realistically and helpfully conceded that if he was wrong as to the need for planning permission in respect of the tennis courts, he could not argue that there was a reasonable prospect of obtaining permission. The Inspector rejected the earlier application because of the loss of recreational facilities, and just the same loss would occur if the land were turned into a derelict 'brown field' site. Therefore we can and do conclude that the landlord does not have a reasonable prospect of being able to carry out the proposed works and so (subject to the point on a respondent's notice) cannot show a firm and settled intention to demolish the premises within the meaning of s.30(l)(f).

Mr Read applied for leave to serve a late respondent's notice under RSC O.59 r. 6(2)(b) relying on the additional or alternative ground that if only the buildings are capable of being demolished, then the landlord's intention to demolish them would be sufficient. Mr Barnes opposed the grant of leave, not on the ground of lateness (reasonable notice of the application had been given) but on the ground that it would open up a whole new field of inquiry raising issues as to s.3lA of the l954 Act (on which the tenants were not given leave to appeal).

We have considered the respondent's notice on a provisional basis but we have concluded that we should not allow it, basically for the reasons urged on us by Mr Barnes. This is a case where the landlord, with the benefit of expert legal and planning advice, decided (in or about June l996) on a change of strategy, and since then the landlord has single-mindedly pursued that strategy (and has given a formal undertaking to carry out the works which it involves). It would not be right to decide the case on the basis of a significantly different strategy which the landlord has not been pursuing ( and which was not therefore considered by the Judge).

The tenants' appeal will therefore be allowed and the preliminary issue will be answered by a declaration in the opposite sense to that made by the Judge. The terms of the new tenancy will be a matter for his discretion, but we think it right to express the view that a tenancy for a relatively short term, enabling the position to be reviewed again within the next ten years, would be appropriate in all the circumstances.

Order: Appeal allowed with costs here and below


save costs of application below to adduce
further evidence; application for leave
to appeal to the House of Lords refused.