England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MANCHESTER COUNTY COURT
(His Honour Judge Howarth)

		Royal Courts of Justice Strand London WC2 Thursday, 14th June 2001

1. LORD JUSTICE HENRY:I will ask Lord Justice Longmore to give the first judgment.
2. LORD JUSTICE LONGMORE:This is an application for permission to appeal (renewed after refusal by Lord Justice Potter) by the tenant of the Arena Cafe, a cafe near Victoria Railway Station in Manchester with the double address of 2 Todd Street and 67 Corporation Street. The cafe is on the ground floor. The basement is also leased by the applicant, Mrs Shade. There are offices on the first, second and third floors.
3. The premises were subject to a lease which expired on 28th September 1999. The landlord opposed the grant of a new business tenancy by relying on ground (f) of section 30(1) of the Landlord and Tenant Act and asserted that on termination of the tenancy he intended:

"... 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;"

4. His Honour Judge Howarth decided that the landlord did intend to demolish a substantial part of the premises comprised in the holding and intended to carry out substantial works of construction. He held that part of the internal north to south wall was going to be demolished; that two pillars and three old steel joists were to be removed; that the shop front and lavatory cubicle were to go; that a false and an existing ceiling were to go; and that floor boards were to be removed. He held also that the intention was to insert a new single span rolled steel joist in the north to south wall; that the insulation in the ceiling between the ground and first floors and the fitting of a new ceiling was to be done; and that the intention was to put plasterboard on that ceiling and also to plaster the plasterboard itself.
5. In coming to his conclusion that that was the intention of the landlord, the judge accepted the bona fides of the landlord's intention and decided, in accordance with the authorities (and I particularly have in mind Gordon Bewlay (Tobacconists Ltd v British Barter Shoe Co Ltd [1959] 1 WLR 45, per Lord Evershed MR), that one looks at it as a matter of fact and common sense.
6. The application for permission to appeal begins with a long section explaining how the judge was wrong about both the matter of demolition and construction. But the truth is that they are matters of fact. The argument is, apparently, that these matters do not go to the structure of the building. But the learned judge clearly thought that they did, and he held that the intended works were more than refurbishments and improvements. On this application, Mr Foster, on behalf of Mrs Shade, has sensibly realised the difficulty that lies in his way and has concentrated his submissions on the final bit of subparagraph (f) of section 30(1): that the landlord "could not reasonably do so without obtaining possession of the holding".
7. Mr Foster has referred us to a decision of the House of Lords, Heath v Drown [1973] AC 498, for the proposition that that does not mean physically having to go in and take physical possession, but addresses itself to the need to acquire legal possession as a matter of law. In that case, it was conceded that the landlord could do all he wanted to do by exercising his rights of entry under the lease for the purposes of repair. Here, no such concession is made.
8. The relevant clause of the lease on which Mr Foster relies is clause 3.12.3. That clause concerns the tenant's obligation to permit the landlord and authorised persons:

"To enter the Demised Premises for all or any of the purposes mentioned in the Third Schedule [i.e. for the purposes of alterations and repairs] the person or persons exercising such rights causing as little damage to the Demised Premises as may be and making good all damage to the Demised Premises occasioned by any such entry without unreasonable delay but without payment of compensation for any annoyance nuisance damage noise vibration or inconvenience caused to the Tenant."

9. This clause was relied upon below, and the learned judge held that there was no intention on the part of the landlord to make good all damage (to use the phrase in sub-clause 3.12.3) and therefore it was not open to the landlord to exercise his legal rights under this clause to enter and do the works. That finding by the learned judge is attacked by Mr Foster. Mr Foster submits that it would be easy enough for the landlord to repair all the damage, and a mere assertion by the landlord that he does not wish to do so cannot be enough to avoid the consequences of this clause.
10. But the truth of the matter is that, whereas that might be true in a case where small alterations were going to be made, here the intention of the landlord (which, as I have said, was accepted as being bona fide) is that, even after the demolition and reconstruction work, he intends to leave three gaps in the north wall and he does not intend to renew the shop front or the toilet and its cubicle, nor even to restore the electrical and gas mains services in the present position. He is not going to be able to make good the damage, within sub-clause 3.12.3, and cannot, therefore, invoke the provisions in order to obtain possession.
11. Mr Foster submits that what the landlord is not intending to make good is not structural work at all and that for that reason the clause can be used. That would be, in my judgment, to bring in by the back door the concept of structural work necessary for the earlier part of the clause in Mr Foster's submission. Whether that be a proper legal concept in relation to the earlier part of the sub-section, it cannot be true for the later part of the sub-section, which must be interpreted in accordance with its terms, namely that the landlord could not reasonably do the work without obtaining possession of the holding.
12. The learned judge had a further string to his bow on this matter, because the sub-clause requires the work to be done without unreasonable delay. The work will take 20 to 30 weeks and the judge thought that, for a cafe in the centre of Manchester, that would be a matter of unreasonable delay. Mr Foster points out that in the House of Lords case to which I have referred the delay contemplated was one of nine months. That case, however, concerned a management consultancy business, and it seems to me entirely open to the judge to have formed the view that running a cafe near Victoria Station in Manchester is a very different operation from a management consultancy business; so that the requirement of "without unreasonable delay" in sub-clause 3.12.3 would not be fulfilled either.
13. There was a final point raised in the application for permission, not pursued in oral argument, based on section 31A(1). That required the tenant to make a positive proposal, which was not done in this case, and therefore it seems to me also that any permission pursuant to that ground should not be granted.
14. Overall, I cannot see that there is any reasonable prospect of success in this case and, for reasons which, although more elaborate, are much the same as Lord Justice Potter's, I would refuse this renewed application.
15. LORD JUSTICE HENRY:I agree. Permission will therefore be refused.
Order: application for permission to appeal refused.