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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Frozen Value Ltd v Heron Foods Ltd [2012] EWCA Civ 473 (24 April 2012)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2012/473.html
Cite as: [2013] QB 47, [2012] EWCA Civ 473, [2012] 2 EGLR 127, [2012] 18 EG 102, [2012] 3 WLR 437, [2012] 3 All ER 1328, [2012] L&TR 26
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ON APPEAL FROM SHEFFIELD COUNTY COURT
MR. RECORDER MURPHY
0BY00384
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE RIMER
and
LORD JUSTICE JACKSON
____________________
| FROZEN VALUE LIMITED |
Claimant/ Appellant |
|
| - and - |
||
| HERON FOODS LIMITED |
Defendant/Respondent |
____________________
Mr. Edward Cole (instructed by Andrew Jackson) for the Defendant/Respondent
Hearing date: 24th January 2012
____________________
Crown Copyright ©
- This judgment is in six parts, namely,
- This is an appeal by a tenant, who claims a new tenancy of business premises under Part II of the Landlord and Tenant Act 1954, against a decision of the county court dismissing the claim on the ground that the landlord intends to occupy the relevant premises for the purposes of its own business. The issue in this appeal is whether the landlord is precluded from relying upon that ground by section 30 (2) of the Act.
- In this judgment I shall refer to Frozen Value Limited, which is the tenant and also the claimant in the action and the appellant in the Court of Appeal, as "Frozen". I shall refer to Heron Foods Limited, which is the landlord and the defendant in the action and respondent in the appeal, as "Heron". I shall refer to the Landlord and Tenant Act 1954 as "the 1954 Act" or "the Act".
- The following provisions of the 1954 Act are relevant:
- 'the competent landlord' means the person who in relation to the tenancy is for the time being the landlord (as defined by section 44 of this Act) for the purposes of Part II of this Act;
- 'mesne landlord' means a tenant whose interest is intermediate between the relevant tenancy and the interest of the competent landlord; and
- 'superior landlord' means a person (whether the owner of the fee simple or a tenant) whose interest is superior to the interest of the competent landlord.
- In this judgment I shall use the term "competent landlord" in accordance with the definition in paragraph one of schedule six. I shall refer to a landlord who is not the competent landlord as the "immediate landlord". That is the term used in the heading of schedule six.
- I shall refer to the ground set out in section 30 (1) (g) of the Act as "ground (g)". I shall refer to the exclusionary rule set out in section 30 (2) of the Act as "the five year rule".
- The following phrase in section 30 (2) was the subject of some debate during the appeal:
- After these introductory remarks I must now turn to the facts.
- On the 8th May 1981 a lease was granted of 7-9 Kings Street, Hoyland, Barnsley. The original parties to that lease have passed out of the picture and are not relevant to this litigation. The terms which they agreed, however, are highly relevant. The lease was for a term of thirty five years expiring on 17th July 2010. The demised premises comprised a ground floor supermarket and first floor residential accommodation. I shall refer to this lease as "the head lease".
- In 2001 the tenant under the head lease was Your More Store Ltd ("YMS"). On 1st October 2001 YMS granted an underlease of part of 9 King Street (namely the ground floor) to Frozen for a term of eight years, two and a half months, expiring on 14th July 2010, which was three days before the expiry of the head lease. The permitted use of this property was the sale of frozen food and ancillary products. I shall refer to the property of which Frozen was underlessee as "the frozen food shop".
- In 2005 the landlord under the head lease was Kwikfine Ltd ("Kwikfine"). Unfortunately by this time YMS was in financial difficulties. On 7th June 2005 the administrators of YMS transferred the head lease to Heron. Thus Heron became the lessee from Kwikfine under the head lease and the landlord of Frozen under the underlease.
- On 29th September 2006 Heron let part of 7-9 King Street, namely a property adjacent to the frozen food shop, to Ladbrokes Betting and Gaming Ltd ("Ladbrokes"). Ladbrokes used this property as a betting shop. Ladbrokes' underlease was for a term of just under four years, expiring on 14th July 2010.
- On 27th January 2010 Frozen served on Kwikfine (which was the competent landlord, but not the immediate landlord) a request pursuant to section 26 of the 1954 Act for a new tenancy of the frozen food shop. Frozen sought a new term commencing on 29th July 2010.
- On 16th February 2010 Frozen applied to the Sheffield County Court pursuant to section 24 of the 1954 Act for the grant of a new tenancy. That application was premature, because under section 29A (3) Frozen should have waited until after 27th March 2010 before issuing proceedings. However, nothing turns upon this point. In order to avoid the additional costs of commencing a second action, the parties in due course agreed that the prematurity should be waived.
- On 24th February 2010 Kwikfine granted a new head lease of 7-9 Kings Street to Heron for a term of fifteen years commencing on 18th July 2010. Thus Heron became Frozen's competent landlord as defined in section 44 of the 1954 Act and in schedule six. Later that day Heron served a counter-notice on Frozen under section 26 (6) of the 1954 Act, relying on ground (g). Heron asserted that it intended to carry on its business at the premises after the expiry of the underlease.
- Frozen did not accept that Heron was entitled to oppose the grant of a new tenancy on ground (g). Accordingly Frozen pursued the present proceedings.
- As previously mentioned, Frozen applied to the county court prematurely on 16th February 2010, when Kwikfine was still the competent landlord. Following Kwikfine's grant of a new head lease to Heron, Frozen applied to the court for Heron to be substituted as defendant.
- On 19th April 2004 District Judge Corkill made an order that Heron be substituted as defendant in place of Kwikfine. The district judge also recorded Heron's agreement that the proceedings could continue despite prematurity of issue.
- In due course Heron served a defence opposing the grant of a new tenancy on ground (g). On 27th August 2010 the district judge ordered that the validity of Heron's defence based upon ground (g) be determined as a preliminary issue.
- The trial of the preliminary issue took place before Mr. Recorder Murphy in Sheffield County Court in March 2011. The parties adduced oral evidence on the question of whether Heron intended to occupy the premises for its own business. There was also legal argument as to whether Heron's defence based on ground (g) was barred by the five year rule set out in section 30 (2) of the 1954 Act.
- The Recorder delivered judgment on 10th March 2011. He held that Heron genuinely intended to operate a retail business at the property after July 2010. Therefore Heron succeeded on the issue of fact. In relation to the issue of law, the Recorder held that Heron was not barred by the five year rule. Accordingly, Heron succeeded on its defence based upon ground (g). The Recorder dismissed Frozen's claim.
- Frozen was aggrieved by the Recorder's decision that Heron was entitled to rely upon ground (g). Accordingly Frozen appealed to the Court of Appeal.
- By an appellant's notice dated 16th April 2011 Frozen appealed to the Court of Appeal on three grounds, one of which it subsequently abandoned. Frozen's two surviving grounds of appeal are as follows:
- This appeal was argued on 24th January 2012. Mr. Stephen Jourdan QC represented Frozen. Mr. Edward Cole represented Heron. I am grateful to counsel for the excellence of the submissions on both sides.
- Before I address the two grounds of appeal it is first necessary to review the law.
- No authority unearthed by counsel on either side is determinative of the point which arises for decision in this appeal. Nevertheless counsel have drawn to our attention a number of authorities which give helpful guidance on related issues and to which we must have regard.
- I shall now review the authorities cited by counsel. Diploma Laundry Ltd v Surrey Timber Co. Ltd [1955] 2 QB 604 concerned a commercial property in Deptford. The original owner let the property to Metal Box Co. Ltd ("Metal Box"). In 1934 Metal Box granted a sub-lease of the property to Fleetwing Oil Co. Ltd ("Fleetwing") expiring on 25th March 1955. In 1935 Fleetwing granted a sub-sub-lease of the property to Diploma Laundry Ltd. ("Diploma") expiring on 24th March 1955. In 1948 Metal Box surrendered its lease and thus the original owner of the property became Fleetwing's landlord. In 1949 Surrey Timber Co. Ltd ("Surrey Timber") acquired the freehold reversion from the original owner. Thus Surrey Timber became Fleetwing's landlord.
- On 25th March 1953 Fleetwing surrendered its lease of the property to Surrey Timber for valuable consideration. Thus Surrey Timber became Diploma's landlord. On 23rd September 1954 pursuant to section 26 (1) of the 1954 Act (which had recently come into force) Diploma made a request to Surrey Timber for a new tenancy. On 19th October 1954 Surrey Timber served a counter-notice pursuant to section 26 (6) stating that they would oppose the grant of a new tenancy on ground (g).
- Diploma applied to the county court for the grant of a new tenancy pursuant to section 24 of the 1954 Act. Diploma contended that Surrey Timber was precluded from relying on ground (g) by reason of the five year rule. Both the county court judge and, albeit on different grounds, the Court of Appeal rejected that submission.
- In the Court of Appeal there was a single judgment delivered by Lord Evershed MR, with which Jenkins and Parker L.JJ. agreed. The precise reasoning of the Court of Appeal does not readily yield itself up to the reader. Nevertheless, having read and re-read the judgment carefully many times, I am quite satisfied that the court's chain of reasoning is as follows:
- As can be seen from propositions (iv) to (vi) above, the interest of Fleetwing was ignored because of the operation of section 44 (1) of the 1954 Act. Lord Evershed M.R. explained the purpose of this section at 610 to 611 as follows:
- In H.L. Bolton (Engineering) Co Limited v T.J. Graham & Sons Ltd [1957] 1 QB 159 the facts were as follows. In 1941 a limited company A purchased the freehold of certain land and buildings and leased them to company B, which in turn sublet part of the premises to company C. In July 1954 company A as landlords served notice to quit on company B in accordance with the terms of the lease: but that notice was rendered ineffective by the coming into force of the 1954 Act. Company B, however, moved out in February 1955, surrendering their tenancy to the freehold landlord, company A. Company A then served notice in accordance with the 1954 Act on company C. Company C as tenants of business premises claimed the protection of the Act and applied for a new tenancy. The landlord company opposed the grant of a new tenancy on ground (g).
- The Court of Appeal held that company A was not precluded by section 30 (2) from relying on ground (g). Company A had not "purchased" the interest of company B. Company B's interest had merged in company A's interest. Denning LJ, with whom Morris and Hodgson L.JJ. agreed, described the mischief against which section 30 (2) was directed as follows:
- Denning LJ went on to explain that "purchase" meant "buy for money". The surrender of company B's lease did not amount to a purchase by company A or the creation of a new interest for company A. Therefore section 30 (2) of the 1954 Act did not apply.
- In Artemiou v Procopiou [1966] 1 QB 878 Procopiou became lessee of business premises in March 1960. On 7th April 1961 his lease was renewed for seven years from 25th March 1961. On 1st November 1963 Procopiou sublet the premises to Artemiou for a term of one year from 13th October 1963 with an option to renew for a second year. Artemiou exercised that option. On 29th October 1964 Procopiou gave notice to Artemiou terminating the tenancy in October 1965. On 23rd February 1965 Artemiou served a counter-notice requesting a new tenancy. Procopiou opposed the grant of a new tenancy on ground (g). The county court judge found in favour of the tenant and against the landlord on two bases. First, the landlord, Procopiou, did not intend to carry on business at the premises; secondly, Procopiou was barred from relying upon ground (g) by section 30 (2), namely the five year rule. The Court of Appeal reversed the judge's decision on both issues. In relation to the second issue, the court held that Procopiou was entitled to rely upon ground (g) and that he was not barred by the five year rule.
- In relation to the second issue, there were two bases for the Court of Appeal's decision. First, all three members of the court held that Artemiou could not rely upon section 30 (2) of the Act, because his tenancy did not commence until 1st November 1963. Thus he was not a sitting tenant who was entitled to benefit from that provision. In addition, two members of the court, namely Danckwerts and Salmon L.JJ., held that the landlord, Procopiou, was not caught by the prohibition contained in section 30 (2). They reasoned as follows: Procopiou's interest in the property was comprised in two successive leases. The first of those two leases commenced on a date before the five year period began. Therefore taken together, those two leases constituted an "interest" which satisfied the requirements of section 30 (2).
- In the course of his judgment Danckwerts LJ characterised the mischief against which the five year rule was directed as:
- The facts of VCS Car Park Management Limited v Regional Railways North East Limited [2001] Ch 121 are complex and do not need to be set out in full. The landlord's interest in this case had been the subject of a series of inter-company transfers involving British Railways Board, Railtrack and related companies. The Court of Appeal held that the landlord was not caught by the five year rule. Robert Walker LJ set out his conclusions pithily at page 180 as follows:
- I draw the following conclusions from the above citation of authority:
- The authorities cited above are helpful, but none directly address the problem in the present case. The problem in the present concerns a landlord who ceases to be the competent landlord for a number of months during the relevant five year period.
- After this review of authority, I must now address the issue in the present appeal.
- Frozen places heavy reliance on section 44 of the 1954 Act. Frozen points out, quite correctly, that between 17th May 2009 and 24th February 2010 Heron was the immediate landlord but not the competent landlord. Therefore, submits Mr. Jourdan, for the purposes of calculating the five year period under section 30 (2) time started to run all over again on 24th February 2010.
- Mr. Jourdan submits that the temporary interruption of Heron's status as competent landlord makes it impossible to aggregate Heron's successive interests. On this basis he seeks to distinguish the Court of Appeal's decisions in Artemiou and VCS.
- Mr. Jourdan argues that section 30 (2) of the 1954 Act is transaction-based. It is necessary to see whether there was a transaction of purchase or creation during the five year period. In this case there was, namely on 24th February 2010.
- Mr. Jourdan places reliance on the Court of Appeal's decision in Diploma. He points out that in the application of section 30 (2) to the facts of Diploma the interest of Fleetwing was ignored in respect of the period when it was immediate landlord but not competent landlord.
- Mr. Cole for Heron, on the other hand, submits that the status of competent landlord must be distinguished from the property interest of the landlord. He places reliance on Artemiou and VCS. He submits that Heron's successive interests in the present case should be aggregated in the same way that the landlord's successive interests were aggregated in those cases. Mr. Cole relies upon the mischief against which section 30 (2) is directed as set out in a number of the authorities. He points out that Heron is not a newcomer on the scene and therefore should not be shut out by section 30 (2) of the 1954 Act.
- Mr. Cole submits that Diploma is not relevant to the present problem. The central issue in Diploma concerned the interpretation of the bracketed words. The present case, however, is not a case in which either merger or the meaning of the bracketed words is in issue.
- Mr. Cole further submits that the status of competent landlord under section 44 is merely a mechanism. He points out that "the torch can change hands" more than once, as happened here. The fact that Heron ceased to be competent landlord between 17th May 2009 and 24th February 2010 does not prevent Heron's successive interests from being aggregated and treated as a single interest for the purposes of section 30 (2). Heron has always had a close connection with the property.
- Both counsel put forward a number of hypothetical situations in which the construction for which they are arguing would avoid anomalies and the opposing construction of the Act would give rise to anomalies. So far as the battle of anomalies is concerned, it seems to me that both sides have come out about equal.
- I must confess to seeing force in the general arguments advanced on both sides in this appeal. In the end, however, I have come to conclusion that Mr. Jourdan is correct. Heron is precluded from relying on ground (g) by the operation of section 30 (2).
- My reasons for reaching this conclusion are as follows. Section 44 of the 1954 Act does not provide a mere mechanism, as argued by Mr. Cole. The effect of section 44 is that for almost all purposes under Part II of the 1954 Act someone who is not the competent landlord is not the landlord at all. This is illustrated by the reasoning of the Court of Appeal in Diploma. In considering the effect of the bracketed words the court disregarded the interest of Fleetwing altogether, because Fleetwing was not a competent landlord.
- Section 44 says that in Part II of the 1954 Act the expression "the landlord" in relation to a tenancy means the competent landlord as defined in section 44 (1). Therefore the word "landlord" must have that meaning in each of the three places where it is occurs in section 30 (2) of the Act. I am fortified in this conclusion by the following observation of Lord Evershed M.R. in Diploma at page 609:
- In the present case Heron was not the landlord at all, for the purposes of section 30 (2) of the 1954 Act, between 17th May 2009 and 24th February 2010. Thus Heron did not possess any "interest of the landlord" between those two dates. It follows from this analysis that when a new lease was granted to Heron on 24th February 2010, Heron became (for the first time since 17th May 2009) a competent landlord. Thus, in my view, the "interest of the landlord" was created on that date.
- In my view the decisions in Artemiou and VCS should be distinguished. In neither of those cases did the landlord's interest suffer an interruption during the relevant five year period of the kind that occurred in the present case. It is quite true that in Artemiou the landlord's first leasehold interest did not satisfy the requirements of section 44 (1) (b) of the 1954 Act. Lloyd and Rimer L.JJ. differ in their view as to whether that circumstance leads to the conclusion that Artemiou is an authority which compels us to dismiss the tenant's appeal in the present case. In agreement with Lloyd LJ and essentially for the reasons which he gives, I do not regard Artemiou as an authority which compels us to dismiss Frozen's appeal in the present case.
- There is force in Mr. Cole's point that Heron was not a newcomer on the scene. Heron had been the immediate landlord of Frozen since 7th June 2005. Thus Heron was immediate landlord for just over five years before the expiry of Frozen's sub-lease. It may therefore be said that Heron does not fall within the mischief at which section 30 (2) is aimed, as described in Bolton and Artemiou. On the other hand, one must also consider the mischief at which section 44 is aimed. This was described as follows by Lord Evershed M.R. in Diploma at the end of the passage which I have set out in paragraph 29 above:
- In this case Heron's interest was a reversionary interest which had "but very little time to run". It was therefore both the policy of the Act and the effect of the Act that Heron's interest should be disregarded at the time when Frozen served its request under section 26. In the period after the service of that notice Heron took rapid steps to improve its position under the Act. This resulted in the grant of the new tenancy by Kwikfine and the service of a counter-notice by Heron under section 26 (6), all within a short space of time. It may be thought to be contrary to the purpose at which section 44 is directed if a landlord can act in this manner so as to sidestep the effect of the provision.
- Ultimately the question for this court is what the words of section 30 (2) and section 44 (1) mean and how those provisions should be applied to a person who is the immediate landlord, but not the competent landlord, during an intermediate part of the five year period. Considerations of the mischief at which the Act is aimed are helpful aids to construction, but not determinative. In this case, aided by the authorities cited in Part 5 above, I have come to conclusion that the nine month break in Heron's status as competent landlord is fatal to its case.
- In my view, therefore, Heron is not entitled to oppose Frozen's application for a tenancy on ground (g). Since Lloyd LJ agrees, although Rimer LJ does not, Frozen's appeal must be allowed. Heron has pleaded no grounds of opposition to the grant of a new tenancy other than ground (g). Accordingly this case should be remitted to the Sheffield County Court, so that the court can determine the terms of Frozen's new tenancy. Although that is the formal order which this court must make, I have little doubt that the parties will agree sensible terms for the new tenancy without needing the further assistance of the court.
- I have had the advantage of reading Jackson LJ's judgment in draft and gratefully adopt his account of the facts and his exposition of the relevant provisions of Part II of the Landlord and Tenant Act 1954 ('Part II'). In respectful disagreement with Jackson LJ, I have, however, come to the conclusion that the appeal should be dismissed.
- Approaching section 30(2) first apart from authority, I would regard its meaning as clear. First, its three references to 'the landlord' are exclusively to 'the landlord' whose interest in the property satisfies the conditions of section 44(1): that is, the person described in the Sixth Schedule as 'the competent landlord', as I shall also call him. Second, it is focused upon the competent landlord's 'interest' as such at the time of his opposition on the section 30(1)(g) ground to the grant of a new tenancy. Third, subject to any relevant merger, the competent landlord will be barred from raising such opposition if his 'interest' as such was 'purchased or created' after the beginning of the five-year period. Fourth, if there has been a merger in his interest of an interest that, but for such merger, would have been the interest of the competent landlord at the relevant time, he will be barred if the merged interest was 'purchased or created' after the beginning of the five-year period. Fifth, the four references to the 'interest' of the competent landlord can, in the context, refer only to that estate or other interest in the property that qualifies him as the competent landlord or (merger apart) would have been such a qualifying estate or interest. Sixth, if the relevant interest was purchased or created within the five-year period, the competent landlord will only be barred if at all times since its creation or purchase the holding was the subject of a business tenancy or successive such tenancies.
- The five-year period is calculated backwards from the date of the termination of the current tenancy specified in the competent landlord's section 25(1) notice or from the day preceding that of the commencement of the new tenancy specified in the tenant's section 26(2) notice (see Frederick Lawrence Ltd v. Freeman, Hardy & Willis Ltd. [1959] 1 Ch. 731). In this case the period commenced on 29 July 2010. The facts of this case show that the competent landlord at the time of the service of the tenant's section 26 request may not still be the competent landlord at the time of the service of the section 26(6) counter notice. No point is made that there cannot be such a personnel change. The only point made is that the newcomer cannot rely on the section 30(1)(g) ground if he is barred by section 30(2) from doing so.
- The competent landlord at the date of the service of Frozen's section 26 request was Kwikfine. Heron had by then dropped out of the story for the purposes of the scheme of Part II. Whilst it remained Frozen's immediate landlord at common law, its status as such was irrelevant to the Part II machinery engaged by the section 26 request: it had ceased to be the competent landlord on 17 May 2009 and so was not 'the landlord' for the purposes either of Part II generally or section 30(2) in particular. If it had remained so irrelevant, it could not have opposed, or had any voice in, Frozen's bid for a new tenancy. It was however, or became, aware of that and took steps to obtain from Kwikfine the grant to it on 24 February 2010 of its new 15 year reversionary lease running from 18 July 2010 and thus in immediate succession to the term of its current lease that was destined to expire on 17 July 2010.
- The creation of that new lease gave Heron the status of competent landlord. Heron on the same day served a counter notice on Frozen asserting its opposition to any new tenancy on the section 30(1)(g) ground; and in April 2010 it was substituted as a defendant to the proceedings for the new tenancy that Frozen had commenced. Since, however, its 'interest' as the competent landlord was crucially dependent upon the grant of the new lease of 24 February 2010, why was that 'interest' not 'created' after the beginning of the five-year period so as to bar Heron from being allowed to rely on section 30(1)(g)? On the ordinary reading of what I would regard as the clear language of section 30(2), I can see no answer to that. How, though, does the matter stand on the authorities?
- First, as to the meaning of 'purchased or created' in section 30(2), authority is provided by the Court of Appeal's decision in H.L. Bolton (Engineering) Co. Ltd. v. T.J. Graham & Sons Ltd. [1957] 1 QB 159. The word 'purchased' means bought for money (per Denning LJ, at 170, with whose judgment Hodson and Morris LJJ agreed); and 'created' includes the grant of a lease otherwise than at a premium and was, as Denning LJ explained (at 170):
- Diploma Laundry Ld. v. Surrey Timber Co. Ld. [1955] 2 QB 604 is a slightly earlier decision of the Court of Appeal. Shorn to their essentials, the facts were these. In 1949 S acquired the freehold of the premises, subject to (i) a lease in favour of F for a term expiring on 25 March 1955, and (ii) a sublease in favour of D for a term expiring on 24 March 1955. F surrendered its lease to S for value on 25 March 1953 in consequence of which S became D's immediate landlord. On 23 September 1954 D made a request of S under section 26 for a new tenancy. S served a counter notice indicating its opposition to the grant of a new tenancy in reliance upon section 30(1)(g). The issue before the county court judge was whether section 30(2) precluded such opposition. He held that it did not. The Court of Appeal agreed with him and dismissed the appeal.
- In considering the meaning of section 30(2), Sir Raymond Evershed MR (with whose judgment Jenkins and Parker LJJ agreed) said that he had no doubt ([1955] 2 QB 604, at 609):
- It is, I consider, obvious that what Sir Raymond Evershed was there saying was that it is necessary to identify what 'the interest of the landlord' was at the relevant time he identified in order to consider whether or not that interest had been purchased or created within the five-year period: the case was, after all, about D's contention that S was barred by section 30(2) from opposing its application. The inquiry in such a case must be as to when and how the landlord acquired the interest that qualified him as the competent landlord at the relevant time.
- D's point on the particular facts was that, but for F's surrender to S of its intermediate lease in March 1953, F would have been D's landlord; F's interest would, but for the merger that took effect upon the surrender, have been 'the interest of the landlord'; the merger occurred after the beginning of the five-year period; and therefore section 30(2) barred S's opposition. D's argument failed for the reason that, had there been no such merger, F's interest would at the relevant date anyway not have been 'the interest of the landlord' within the meaning of section 30(2). That is because by then, F's lease, if still unmerged, would have expired within the following five or six months and so F would not have been the competent landlord. By the relevant date, it was S who was the competent landlord – and therefore 'the landlord' within the meaning of section 30(2) - and that would have been the position even if there had been no surrender in 1953. F's interest was therefore irrelevant for Part II purposes; and S, as the competent landlord, had obtained its interest as such well before the commencement of the five-year period.
- Artemiou v. Procopiou [1966] 1 QB 878 is a decision of the Court of Appeal, upon which Mr Cole placed primary reliance. P was in occupation of the premises as from 5 January 1960. In March 1960 he took an assignment of a lease of the premises for a term expiring in March 1961 (see [1966] 1 QB 878, at 890D, for the expiry date). On 7 April 1961 the freeholder granted him a lease for a further term of seven years running from March 1961. He occupied the premises for the purposes of his own business from 1960 to 1963. He then gave up that business and granted an underlease to A on 1 November 1963 for a one year term from 13 October 1963, also giving A an option to take the premises for a further year. A exercised the option but on 29 October 1964 P served him with a section 25 notice terminating the tenancy in October 1965 and stating that he opposed the grant of a new tenancy on the section 30(1)(g) ground. A served a counter-notice and applied for a new tenancy. The judge held that P did not have the intention to occupy the premises himself and was anyway barred by section 30(2) from relying on section 30(1)(g). He ordered a new tenancy. The Court of Appeal allowed P's appeal.
- The court was unanimously agreed that the judge's finding as to P's intention must be reversed. The critical question was whether, as A argued, P was precluded by section 30(2) from relying on section 30(1)(g). That raised the question of whether he acquired his interest as landlord after the beginning of the five-year period that started in October 1960 (a date arrived at by counting back from October 1965). P had admittedly had an interest in the premises since early 1960, which was before the beginning of that period; but, it was said, his interest as competent landlord as at the date of his opposition on the section 30(1)(g) ground was created by the lease granted in April 1961, which was after such beginning.
- As it seems to me, the simple answer to A's case was that section 30(2) had no possible application. Assuming that P's interest as the competent landlord was to be regarded for section 30(2) purposes as having been created within the five-year period, the premises had not at all times since then been the subject of a tenancy or successive tenancies for business purposes because A did not enter the scene until October 1963. A's case on section 30(2) was therefore knocked out by the non-fulfilment of its final condition. P duly argued that point. Danckwerts LJ, giving the first judgment, appears to have accepted it (see [1966] 1 QB 878, at 886B to D).
- Danckwerts LJ nevertheless regarded it as necessary also to deal with A's point that P was barred by section 30(2) because P's interest as the competent landlord had only been created in March or April 1961, within the five-year period. His conclusion ([1966] 1 QB 878, at 888) was that 'the interest of the landlord' in section 30(2) could not bear such a meaning as it would produce 'plain injustice' to a landlord who had held the holding under successive tenancies for a long period of years; and P had had an interest in the premises since early 1960, before the five-year period. An unreasonable result was not to be imputed to a statute if some other construction is available. Danckwerts LJ said ([1966] 1 QB 878, at 888E to F):
- Salmon LJ agreed. He said ([1966] 1 QB 878, at 890C to F) that he inclined to the view that 'the interest of the landlord' in section 30(2) meant the interest of the landlord in the property. He said that P's interest in the property was under two successive leases (the first assigned to him in March 1960 and the second granted to him in March 1961). He said that 'the interest of the landlord' should not be given the narrow meaning for which A had contended, namely as meaning only the right or interest under which the landlord held at the termination of the current tenancy. The word must be considered in context and having regard to the mischief at which section 30(2) was aimed. Jackson LJ has, at [37], set out the summary of such mischief as explained by Salmon LJ, whose conclusion was that, in considering the application of section 30(2), 'it is quite irrelevant whether the landlord's interest in the premises stems from one lease or from successive leases'. He therefore agreed with Danckwerts LJ as to the meaning of 'the interest of the landlord' in section 30(2). If he was wrong on that, and the only relevant interest was that created by the 1961 lease, he held that section 30(2) anyway had no application since the premises had not at all times since then been the subject of a business tenancy.
- Willmer LJ was also sympathetic to that interpretation of 'the interest of the landlord' but regarded it as precluded by the Court of Appeal's decision in Cornish v. Brook Green Laundry Ltd [1959] 1 QB 394. There the landlord's original interest had been created before the five-year period. The tenant, however, asserted that a new interest had been granted to the landlord within that period and that it was that interest alone that was relevant for section 30(2) purposes. The landlord's response was that (i) contrary to the judge's holding, it had not been granted such a new interest and its original interest was continuing; (ii) if that was wrong, the 'interest of the landlord' was not just its new interest but also its previous interest. Argument (ii) was the 'successive interests' point favoured by Danckwerts and Salmon LJJ.
- The reserved judgment of the court (Jenkins, Romer and Pearce LJJ) was devoted solely to whether a new interest had been granted to the landlord within the five year period. The court held that it had not and that the original interest was still continuing. That was sufficient to resolve the section 30(2) debate, the court saying ([1959] 1 QB 394, at 410) that it was therefore 'unnecessary to consider certain other arguments which were addressed to us on the footing that the judge was right in holding' that a new interest had been granted. Those arguments included the 'successive interests' point.
- That being how Cornish was disposed of, I have respectful difficulty in understanding why Willmer LJ regarded the case as decisive against A on the 'successive interests' point in Artemiou. His view was that as a decision on that point in Cornish would have provided a short answer to the case, it would then have been unnecessary for the court to decide the difficult 'new interest' issue. He inferred that the court must, therefore, have silently rejected the 'successive interests' argument. With respect, there appears to me to be no warrant for that inference, which was anyway inconsistent with the court's statement that it regarded it as unnecessary to decide the other points that had been argued. The 'successive interests' point would only have been decisive of the case if the court had decided it in favour of the landlord. If it had not so decided it, the court would still have had to decide the 'new interest' point. On the other hand, a decision on the 'new interest' point in favour of the landlord would make it unnecessary to decide the successive interests point. There was in my view no basis for inferring from the judgment in Cornish that the court had silently decided the successive interests point. The court may perhaps have simply taken the view that it was inappropriate to grapple with a difficult point of general importance in a case in which it was unnecessary to do so. Willmer LJ nevertheless regarded himself as bound by Cornish to reject the P's 'successive interests' argument. He held, however, that section 30(2) anyway had no application since, accepting that P's interest was created within the five-year period, the property had not at all times since then been the subject of business tenancies.
- I come finally to the decision of the Court of Appeal in VCS Car Park Management Ltd v. Regional Railways North East Ltd [2001] Ch 121. It would be unfair to inflict upon any reader even a summary of the conveyancing history that the court there had to consider. It is anyway unnecessary to say more than it was a case in which, subject to a slight extension of the principle applied in Artemiou (one of no present materiality), the court applied the 'successive interests' principle favoured by the majority in Artemiou in similarly holding that the landlord was not precluded by section 30(2) from relying on the section 30(1)(g) ground. Jackson LJ has, at [38], cited from Robert Walker LJ's judgment.
- At the beginning of this judgment, I summarised how I would interpret section 30(2) apart from authority. That summary did not recognise that 'the interest of the landlord' within the meaning of section 30(2) could (in effect) mean an interest in the premises acquired by the landlord before the five-year period such that the creation during that period of a successor interest could be ignored. I respectfully recognise, however, that Artemiou's case is binding authority for a 'successive interests' interpretation of section 30(2). Artemiou decided that if the 'interest of the landlord' at the time of the section 30(1)(g) opposition is an interest created by successive interests, including one created before the beginning of the five-year period, the right to advance such opposition will not be barred if the most recent interest was created within that period. VCS applied that principle with the modest extension that it makes no difference if one of the links in the chain of successive interests was an interest as a freeholder rather than as an intermediate lessee. The theory of the Artemiou principle appears to be that, for the purposes of section 30(2), the landlord's successive interests are to be regarded as coalesced into a single interest created before the beginning of the five-year period.
- The question for us is whether the 'successive interests' interpretation that Artemiou applied to section 30(2) enables Heron to maintain its section 30(1)(g) opposition to the grant of a new tenancy. Had Heron taken its new reversionary lease before 17 May 2009, I consider that there could have been no doubt that it would. Immediately before that date, Heron was the competent landlord; and the creation of its successor interest would seamlessly have extended its interest as such for the relevant foreseeable future.
- That is not, however, what happened. On 17 May 2009 Heron ceased to be the competent landlord and so was no longer the landlord of the premises for the purposes of Part II. That is not to say that Part II does not recognise that, at any particular time, the tenant may have an immediate landlord who is not the competent landlord. Of course it does. But the status of such an immediate landlord is irrelevant for the purposes of the Part II machinery. By the creation of its new lease on 24 February 2010, Heron then re-acquired an interest as competent landlord. That new lease therefore gave Heron an 'interest of the landlord' for the purposes of section 30(2) that, immediately before its creation, it did not have. Was that interest, combined with Heron's prior interest merely as an immediate landlord at common law, enough to enable it to escape the section 30(2) bar?
- Mr Jourdan's submission was that it was not. He said that the 'successive interests' principle requires each material successive interest to be of a relevantly like kind, namely an interest that until extended, replaced or superseded by the succeeding interest, qualified the landlord as 'the competent landlord'. It is only such an interest that gives a reversioner a voice in the operation of the Part II scheme. It must follow that a competent landlord claiming to escape the impact of section 30(2) cannot do so if all that he can show is that his interest as such created during the five-year period has been bolted on to a prior interest that did not qualify him as the competent landlord.
- That interpretation of section 30(2) appears to me to find support in Robert Walker LJ's carefully chosen words in his judgment in VCS. Why did he note that the reversioners were at all times landlords 'for the purposes of Part II of the Landlord and Tenant Act 1954' (see [2001] Ch. 121, at 130E) if he was not recognising that the successive interests principle in Artemiou can, or ought to, apply only in a case in which under each material successive interest the reversioner had the status of competent landlord? On the other hand, whatever Robert Walker LJ's views on this may have been, no support for it is to be found either in the lead judgment of Sir Richard Scott V-C or in the judgment of Swinton Thomas LJ, who simply agreed with him. Sir Richard Scott described Artemiou's case as being ([2001] Ch. 121, at 127H):
- That Sir Richard Scott did not do so is not in my view surprising because no such principle can be derived from Artemiou's case. I have indicated my view that the case was not perhaps the ideal one for the court to engage with the 'successive interests' argument, since it did not need to: section 30(2) was anyway ruled out by the non-fulfilment of its final condition. The court did, however, engage with it and it was not suggested to us that the decision of the majority on it was other than the (or a) ratio of the decision, as was apparently accepted by this court in VCS. A consideration of the facts of Artemiou satisfies me that the principle for which Mr Jourdan contends was not one that can have played any part in the court's reasoning.
- The successive interests that the court in Artemiou regarded P as having enjoyed that took him outside the section 30(2) bar were (1) the one-year term he acquired by the assignment of March 1960, destined to expire in March 1961, and (2) the seven-year term granted to him in succession to that term in April 1961. P granted the underlease to A in November 1963, and there is no doubt that he was thereafter the competent landlord of A. During the currency of his prior interest he was not, however, a landlord of anyone. Nor was he the freeholder. He was a lessee in occupation. If at the times that he respectively took his March 1960 assignment and April 1961 lease he had taken them subject to an already existing tenancy in favour of A, he would not have been A's competent landlord until he acquired the latter interest. The April 1961 grant was therefore a grant of an interest in succession to a prior interest that could not have qualified P as the competent landlord. Yet that prior interest was one that, in considering the impact of section 30(2), the court held could be aggregated with the interest as competent landlord that P acquired under the April 1961 lease. The court held that those combined interests meant that P had acquired his 'interest of the landlord' within the meaning of section 30(2) prior to the beginning of the five-year period.
- The court in Artemiou engaged in no discussion to the effect that the landlord's prior interest must also be one that gave him (or, if he had in fact been a landlord, would have given him) the status of competent landlord. If that had been its view, the court could not, as it did, have decided the case in favour of P on the 'successive interests' ground. Its decision can be rationalised as one to the effect that the creation during the five-year period of an interest that qualifies the competent landlord as such can, for the purposes of section 30(2), be regarded as the creation of such interest prior to such period if it was an interest created in immediate succession to the landlord's prior interest in the premises, whether or not that prior interest conferred, or could have conferred, upon the landlord the status of competent landlord. For myself, having regard to the factual basis for the decision, I find it impossible to extract from it anything to the effect that the 'successive interests' principle works only in a case in which the later interest conferring the status of competent landlord is aggregated with a prior interest that, until superseded, conferred a like interest. In my judgment, the present case is, in its material respects, therefore not relevantly distinguishable from Artemiou.
- For these reasons, whilst I follow the logic of Mr Jourdan's argument and would, apart from authority, be disposed to accept it, I consider that the decision in Artemiou prevents this court from doing so. Nor is VCS authority showing otherwise. Since writing this judgment, I have had the advantage of reading in draft Lloyd LJ's judgment, which has caused me to re-consider my own. Having done so, I remain of the view that the appeal should be dismissed.
- I am grateful for Jackson LJ for his summary of the relevant facts in this case. He and Rimer LJ have both dealt fully with the law. Since they differ as to their view of the effect of the decision of this court in Artemiou v Procopiou, and for that reason as to the correct outcome of the appeal, I must express my own view. For that purpose, I propose to start from the statutory provisions, and I can limit my review to the points which seem to me to be the most directly relevant. Before doing so I too would like to acknowledge the high quality of the submissions of Mr Jourdan for the tenant and Mr Cole for the landlord on a point which has proved more difficult than might have been expected. It is something of a surprise that a point such as this should arise for decision now for the first time (directly, at least) on provisions of this much litigated legislation which have been in place for nearly sixty years. The difficulty of the point has caused a delay which I regret before we could deliver our judgments.
- The five year rule, set out in section 30(2), requires that "the interest of the landlord" must not have been purchased or created within the defined five year period, if the ground of opposition in section 30(1)(g) is to be relied on. For this purpose, the landlord is the person who is the statutory landlord, under section 44(1), or in other words the "competent landlord" under the Sixth Schedule, who may or may not be the tenant's immediate landlord at any relevant moment. (Like Jackson LJ, I will use the phrase "competent landlord", where necessary, to refer to the person who satisfies the statutory requirements under section 44.) The five year rule is to be applied as at the time when the relevant ground is sought to be relied on, whether it be the service of a notice under section 25 by the landlord, or of a counternotice under section 26(6). The period itself runs to the end of the current tenancy, ignoring any statutory continuation under section 64. In the present case it ran to 29 July 2010, so the starting date is 29 July 2005.
- To judge from the words of the statute alone, the reader might suppose that the five year test is to be applied by asking what the "interest of the landlord" was at the material time, and whether that interest had been purchased or created within the relevant five year period. If that were all, then the test would not be satisfied in the present case.
- That, however, is not the law, and it is possible to see why it should not be. If the competent landlord's current interest was created (or purchased) within the last five years, but immediately before that transaction the same person was the competent landlord, with a prior interest which went back beyond the five year period, it is understandable that the five year test should be regarded as satisfied, despite the transaction having taken place within the five year period. That was the case in VCS Car Park Management Ltd v Regional Railways North East Ltd [2001] Ch 121.
- When the defendant landlord in that case served its notice under section 25 on the claimant tenant in October 1996, stating its intention to rely on section 30(1)(g) as a ground of opposition to the grant of a new tenancy, its interest was under a lease dated December 1995, created well within the five year period. However, that lease had been created in favour of the British Railways Board (holding company of the defendant) upon a surrender and regrant, and both immediately before and after the new grant BRB had been the competent landlord. The lease which it held before the new grant had been created in September 1995, but that in turn was upon a surrender and regrant, the earlier lease having itself been created in 1994 simultaneously with the transfer of the freehold by BRB to Railtrack, the transaction being a transfer and leaseback taking effect as part of the process of rail privatisation. At all times during the five year period (ignoring as irrelevant the change within the BRB group, because of section 42 of the Act) the competent landlord was the same person, albeit that the interest which BRB (and later its subsidiary) held in the property varied from time to time, being first the freehold and then a succession of three different leases in turn.
- On a literal reading of the Act (as was submitted in that case for the tenant) the defendant's interest had clearly been created (on the grant of the latest lease) within the five year period. The Court of Appeal did not accept that this prevented the landlord from relying on ground (g). They referred to the decision in Artemiou v Procopiou, to which I will come shortly.
- Sir Richard Scott V-C said this at [2001] Ch, 127H to 128B:
- I will come back to the passage which Sir Richard then quoted from the judgment of Danckwerts LJ in Artemiou. Robert Walker LJ said this at [2001] Ch, 130E-F:
- Robert Walker LJ thus relied in terms on the fact that at all times throughout the five year period BRB (or its subsidiary) was the competent landlord of the defendant in respect of the holding to which the Act applied. Sir Richard Scott V-C did not make that point in his judgment. Swinton Thomas LJ did no more than agree. Since, so far as appears, the judgment was not reserved, he is to be taken (presumably) as agreeing with what Sir Richard Scott had just said and not with what Robert Walker LJ had not yet said.
- So I turn to Artemiou v Procopiou, in which the judgments were also given extempore. (This is shown by words of Danckwerts LJ which I quote at paragraph [97] below, referring to a point as having been made in argument "this morning".) The court in that case was undoubtedly right to reverse the county court judge's decision in favour of the tenant. Section 30(2) could not apply to preclude the landlord from relying on section 30(1)(g) because the holding had only been subject to a tenancy to which the Act applied from 1 November 1963, that tenancy being granted by the landlord who then had vacant possession of the premises, which he held under a lease created in 1961. Thus, the last words of section 30(2) precluded that section from applying; they might be called the sitting tenant provision. They are as follows:
- Because Mr Artemiou was not a sitting tenant when Mr Procopiou acquired his interest in the property, no issue could arise under section 30(2). Danckwerts LJ said as much at [1966] 1 QB, page 886C:
- Salmon LJ dealt with the point similarly at [1966] 1 QB, page 891F-G:
- In turn Willmer LJ agreed, at [1966] 1 QB, page 894:
- On that point all members of the court agreed. That is clearly part of the ratio decidendi of the decision. It was unnecessary for them to say anything more about the other part of section 30(2). However, they did devote time to it, to the point of disagreeing between themselves about it. Here the point was that the landlord's interest, held at the relevant time, was less than five years old, having been created by the grant of a lease in 1961, but that he had been the tenant of the same premises immediately beforehand under an earlier lease, since March 1960, which was before the beginning of the five year period.
- I have already quoted at paragraph [93] above what Sir Richard Scott V-C in VCS took from Danckwerts LJ at [1966] 1 QB page 885 of Artemiou as to the object of the provision. At page 888 Danckwerts LJ said this (which includes the passage which Sir Richard Scott went on to quote):
- Salmon LJ, having held that the issue was not covered by previous authority, said this on the point, at [1966] 1 QB, page 891:
- Then he went on to say what I have quoted at paragraph [98] above about the concluding words of section 30(2).
- Willmer LJ disagreed on this point, as Rimer LJ has explained.
- In VCS the successive interests of the landlord had been such that BRB or its subsidiary was at all relevant times the competent landlord. In Artemiou that point did not arise because for the first three years of the five year period there had been no tenancy, and therefore there could have been no landlord, competent or otherwise. In the present case, Heron was at all material times the actual landlord of Frozen Foods, but for about nine months up to 24 February 2010 it was not the competent landlord, since the interest which it then held had less than fourteen months to run. So far as I am aware this point has never arisen before in a decided case; I have no doubt that, if it had, the combined knowledge and researches of Counsel would have revealed it.
- I accept, from the decision in VCS, that if the competent landlord's interest, as it is at the end of the five year period, was created or purchased within the period, but immediately before that transaction the same person held another interest as competent landlord, the aggregation of those interests can be sufficient to enable the five year test to be satisfied. The issue is whether that is legitimate if (as was not the case in VCS) for some part of the five year period the person in question, though the landlord, was not the competent landlord. The answer to that depends first on the view to be taken as to the ratio of Artemiou and of VCS.
- If Mr Artemiou's tenancy had existed throughout the five year period, then the point which is now in issue would have arisen for decision, because for the first six months of the five year period Mr Procopiou, as landlord, would have had a reversion with less than 14 months to run. Salmon LJ said at [1966] 1 QB, page 890D that the leasehold interest which he acquired by assignment in March 1960 was to expire on 25 March 1961; that was the date as from which he was granted a new lease. However, the point did not arise because at that stage, and for more than two years afterwards, he was not a landlord at all. That is the point made by Danckwerts LJ in the second of the two paragraphs which I quoted at paragraph [97] above. That passage contains the only reference in the judgments of the Court of Appeal to section 44.
- Mr Cole submitted that this case decided that, so long as the landlord has had an interest in the property continuously throughout the five year period, it matters not that for some part of that time it was not the competent landlord, because its reversion had less than 14 months to run. Although the point did not arise on the facts, Mr Cole is entitled to point out that the language of the judges on this point is in general terms and does not distinguish between hypothetical situations according to whether the landlord was or was not the competent landlord throughout the five year period: see the formulation of the point in the second of the two paragraphs which I quoted from Danckwerts LJ at paragraph [101] above. That is not surprising since the point did not arise on the facts, and sine there is no allusion in the judgments to section 44(1)(b), under which this point arises. It can be said that Salmon LJ's hypothetical example at the end of the passage quoted at paragraph [102] above could well have been one in which, for some period before the grant of the new lease, the landlord may have had a reversion of less than 14 months, but the point was not addressed.
- Despite the reference to section 44 in the judgment of Danckwerts LJ, mentioned above, and despite the section having been referred to in argument, there is no indication from the judgments that the members of the court addressed their minds to the possibility that, if the landlord's interest had been subject to a tenancy of the holding for the whole of the five years, and had itself been under a succession of leases, the relevant reversion might have been affected by section 44(1)(b), and that this might have affected the issue as to how section 30(2) applied.
- In the passage quoted at paragraph [102] above, Salmon LJ referred to the Act as recognising that "if the landlord had been the landlord for upwards of five years" he should be able to rely on ground (g), and said that it should not make a difference whether the landlord's interest, if leasehold, had been held under one lease or under a succession of leases. If there had only ever been one lease during the five years, then the person who was the competent landlord at the end of the five years must have been the competent landlord throughout. Salmon LJ did not refer to the fact that, if there had been a succession of leases, the person who was the competent landlord at the end of the period may not have been so before the grant of the latest lease. Nor did Danckwerts LJ refer to this point, in the passage quoted at paragraph [101] above or elsewhere in his judgment.
- It is clear that the majority considered themselves to be deciding that a sequence of successive leasehold interests held by the landlord could qualify for the purposes of section 30(2), and it is also clear that they were treated as deciding that by the Court of Appeal in VCS.
- In VCS there were two minor differentiating factors: first, that there were several successive creations of a new leasehold interest in the landlord, and secondly that the relevant interest started off as a freehold. These points were held not to make a difference. The major distinction was that the point did arise on the facts, because the premises were tenanted throughout, and that the facts were such that throughout the sequence of interests BRB (and later its subsidiary) was the competent landlord. It was therefore necessary for the court to decide that, on those facts, a sequence of interests either did or did not qualify to satisfy the five year test. It was not necessary for the court to decide whether such a sequence of interests would or would not qualify if, for part of the five year period, the relevant interest was a reversion to the tenancy with less than 14 months to go, so that, for part of the time, the person holding that interest was not the competent landlord. Sir Richard Scott V-C quoted section 44(1) and Robert Walker LJ referred to the point specifically, as I have shown at paragraph [94] above.
- In those circumstances, is either of these cases authority for the proposition that an uninterrupted succession of interests qualifies so as to satisfy the five year test even if, for part of that period, the person holding the relevant interest, although the landlord, was not the competent landlord?
- If that were the effect of these decisions, as Mr Cole submitted and as Rimer LJ would accept, the position would seem to me to be remarkable. The point has never arisen before the present case, so far as we know. Jackson LJ, Rimer LJ and I all read the statute (apart from the effect of Artemiou) as requiring that the "interest of the landlord" should have been the interest of the competent landlord throughout the five year period (disregarding as irrelevant to the facts of this case the special case of merger). No member of the court in Artemiou appears to have given any thought to this point. However, the width of their language is such that, if it is binding on this point, it would constrain us to decide the case on a basis which we all consider is not the right reading of the legislation, despite the point not having arisen for decision on the facts of Artemiou and, no doubt for that reason, not having been referred to in argument or in the judgments.
- In VCS Robert Walker LJ gave judgment in terms which limited his conclusion to the case where (as was the case there) the landlord's interest had been that of the competent landlord throughout the five years. Sir Richard Scott V-C did not qualify his judgment in that way but, as in Artemiou, there seems to have been no argument about the point, no doubt because it would not have availed the tenant on the facts.
- I am unwilling to decide that Artemiou is a binding precedent on a point which was not argued in that case, which did not arise on the facts of the case, and which was not referred to in the judgments as being even potentially relevant. I accept, of course, that the fact that two reasons were given (by the majority) for their decision of the case does not deprive what the majority said about successive interests of its status as ratio: c.f. Jacobs v London County Council [1950] AC 361 at 369. The question is what that ratio amounts to, and whether it governs the situation arising in the present case. It could be thought to be unfortunate that the majority expressed themselves as deciding the case on the successive interests point at all, rather than only on the sitting tenant provision (on which all members of the court were agreed), since the question did not arise on the facts because of the sitting tenant provision. However, the majority said what they did, and we have to decide whether it binds us on the point now at issue.
- It is often said that identifying the ratio decidendi of a case depends on ascertaining the material facts of the particular case. Lord Halsbury LC uttered words of caution in Quinn v Leathem [1901] AC 495 at 506, which have been much quoted in this context, for example in Cross and Harris, Precedent in English Law, 4th ed. (1991) at page 43. These were as follows:
- A.L. Goodhart expounded the importance for these purposes of determining what were the material facts on which the judge based his conclusion in his essay Determining the Ratio Decidendi of a Case, (1930) which can be found in his collection Essays in Jurisprudence and the Common Law (1931). That essay gave rise to much debate among academic writers, which is usefully discussed in Cross and Harris, at pages 63 to 71, and also in Duxbury, The Nature and Authority of Precedent (2008), at pages 80 to 87.
- One contribution to the debate which seems to me to be particularly valuable is A.W.B. Simpson's essay The Ratio Decidendi of a Case and the Doctrine of Binding Precedent, in Oxford Essays in Jurisprudence (first series) ed. A.G. Guest (1961), at page 148. Professor Simpson (as he later became) focussed on the importance of limits on the powers of courts to establish a binding rule of law by virtue of the doctrine of precedent, and on the need, for that purpose, for a criterion of relevance. On this theme he said this at pages 165-6:
- That seems to me to be a sound approach, consistent with what courts have often said, for example about not construing a previous judgment as if it were a statutory text, as well as with the emphasis given by (among other judges) Lord Halsbury to the relevance of the particular facts of a case.
- There was no reason for the Court of Appeal in VCS to address the question whether the landlord would have been affected by the section 30(2) prohibition if, during the five year period, under one of the earlier leases, the party who was eventually the competent landlord had not had that status, having had a reversion of less than 14 months. That question did not arise. Accordingly, it seems to me that that decision is authority for the proposition that successive leases (or a sequence of interests including the freehold as well as leasehold interests) will suffice to enable the competent landlord to satisfy the five year test if those interests were at all times during the five year period those of the competent landlord, but that it is not authority (either way) as to the position if, for part of the five year period, the relevant interest was not that of the competent landlord, because it was a reversion with less than 14 months unexpired. The point did not arise, it was not argued, and the court did not purport to decide it, unless the unqualified terms of the judgment of Sir Richard Scott V-C are to be taken as doing so. Given that it was not necessary or relevant to the decision, it seems to me that the judgment should not be read as ruling on this point. To take it as deciding the point which did not arise on the facts and was not argued would give the decision a wider effect than was intended or than is appropriate in the light of observations such as those of Lord Halsbury and Professor Simpson which I have quoted above.
- There was no reason for the Court of Appeal to address this point in Artemiou either, because of the unanswerable point based on the sitting tenant provision, on which all members of the court agreed. I accept, as indicated above, that, despite this, all members of the court did address the point about a succession of leasehold interests, and that the majority decided that the landlord's interest could satisfy the five year test by virtue of the landlord having held a succession of leasehold interests. I also accept that if the facts of that case had been such that, throughout the five years, the holding was the subject of a tenancy (or a succession of tenancies) protected by the Act, then the point under section 44(1)(b) would have arisen on the facts, because from the start of the period until 25 March 1961 the landlord's reversion would have been of less than 14 months. However, in fact the property had not been tenanted for the whole of the five year period, and the particular point under section 44(1(b) was not addressed in the judgments. The only reference to section 44 in the judgments is that which I have quoted from Danckwerts LJ at paragraph [97] above, in which he dismisses the point as irrelevant for the very reason that "there was no reversion" to the tenancy to Mr Artemiou before 1963. If the point had arisen on the facts, the point would have been argued and Danckwerts LJ would not have dismissed section 44 as irrelevant in the way that he did as mentioned above. In those circumstances it seems to me that it cannot be right to construe this decision as governing the application of the Act in the present case where (unlike in that case) the point does arise and it has been argued as to whether or not it is necessary, if a landlord relies on a succession of interests, that throughout the five year period the interest must have been that of the competent landlord.
- I do accept that, if the court in Artemiou had addressed (and had been addressed about) the relevance or otherwise of the need for the landlord to qualify as the competent landlord throughout the five year period if he is to be able to satisfy the test under section 30(2), and if they had taken the same view as I do on that point as a matter of the construction of the Act, then, on the one hand, the case would have been decided in the same way, because of the effect of the sitting tenant provision, but on the other hand the majority would not have based their decision on the successive interests point as well, as they did. They would have said (if they had chosen to say anything on the point) that, if the property had been tenanted throughout the five year period on a tenancy or a series of tenancies to which the Act applied, then Mr Procopiou would not have been able to rely on ground (g) because he could not satisfy the five year test, having had too short a reversion for the period up to 25 March 1961.
- I also accept that, if the point does arise on the facts of a case, it may not be a sufficient answer to say that it was not addressed in argument or expressly in the judgment, although the omission of reference to relevant legislation may provide the basis for a submission that the decision was not binding because it was reached per incuriam. Alternatively, it may come within the exception recognised by the Court of Appeal in R (Kadhim) v Brent London Borough Council Housing Benefit Review Board [2001] QB 955. This is that a proposition which is necessary for the court's decision but is assumed as correct, without having been the subject of argument before or consideration by the court, is not binding as part of the ratio decidendi of the case: see paragraph 33 at [2001] QB 965.
- In our present case, however, the absence of reference in the judgment in Artemiou is fully explained by the circumstance that the point did not arise on the facts of that case. That being so, I respectfully differ from Rimer LJ on this point and would hold that that decision does not constitute a binding precedent as to whether or not, under section 30(2), if a landlord relies on a succession of leasehold interests, he must show that, at all times within the five years, he was the competent landlord. In my judgment, to hold that Artemiou does bind us in the way that Mr Cole submitted and Rimer LJ would accept would give the decision a law-making effect of greater scope and ambit than can be justified, contrary to warnings such as those of Lord Halsbury and to the observations of Professor Simpson mentioned above. Artemiou should be held to have decided no more than that a landlord may rely on a succession of continuous leasehold interests to satisfy the five year rule, the earliest starting at or before the beginning of the five year period; it left open and undecided the effect of an earlier leasehold interest having had less than 14 months to run during the five year period so that, at that time, the landlord was not the competent landlord.
- For those reasons I would hold that we are not constrained in our decision on this point by either Artemiou or VCS, beyond the proposition that the landlord can rely on a succession of leasehold interests, with or without the freehold as well, owned continuously for the five year period, to satisfy the five year test. It seems to me to be right to read the ratio decidendi of Artemiou as limited in this way. To do so does, of course, introduce an exception which Danckwerts and Salmon LJJ did not mention. Going back to Professor Simpson's words quoted above, it is probable that the need for the exception did not occur to them, delivering extempore judgments in a case in which the point did not arise, and Danckwerts LJ having expressly dismissed as irrelevant the applicable provision, namely section 44(1)(b), for the very reason that it did not arise on the facts. That seems to me to be the legitimate and correct treatment of that decision.
- On that basis we are left with the observations of the majority in Artemiou on this point as persuasive, but not binding. In that respect, it seems to me that the cogency of their comments is less than it would otherwise have been if the provision about short reversions in section 44(1)(b) had been addressed in the same context.
- The most pertinent observations are in the passages quoted above. Danckwerts LJ regarded it as unobjectionable for the landlord to rely on the renewal of an interest within the past five years, if it had previously been held for a long period: see paragraph [101] above. Salmon LJ described as absurd the idea that a landlord who had held a lease of premises for 50 years and had had this extended by a new grant within the five year period should be deprived of his ability to rely on ground (g): see paragraph [102] above.
- We were shown the treatment of "the interest of the landlord" at paragraph 22.132 of Woodfall, Law of Landlord and Tenant. A footnote to that paragraph mentions a county court decision, Geo. Atkin v. Ward, which appears to be on the point, but it is summarised so briefly at [1981] C.L.Y. 1510 (the only available source) that it is not easy to understand the basis of the decision. The text then has this proposition:
- For my part I would agree that, in such a case, the acquisition of the new lease would not prevent the landlord from satisfying the five year rule, so long as he was the competent landlord immediately before the grant of the new lease.
- It can fairly be said that, if it is necessary for the landlord to have been the competent landlord throughout the relevant five year period in order to be able to rely on a succession of interests, this could produce some rather arbitrary distinctions and results. A landlord aware of the relevant issues, who has a tenant protected by the Act but whose own interest is a leasehold approaching its expiry, can maintain his status as competent landlord by ensuring that he obtains the grant of a new lease (or acquires the reversion, if it is itself the freehold or a lease with long enough to run) before the day on which his lease has less than 14 months to run. A landlord who is less aware or less alert, or is unable to agree a suitable transaction with the reversioner within that time, will not be able to rely on ground (g) until five years have elapsed since the acquisition of the new lease or the reversion. That sort of difference of outcome is inherent in a rule which draws a distinction in its effect according to whether something happens or is done (or not) by a hard and fast cut-off date.
- While I recognise the thinking behind the observations of the majority of the Court of Appeal in Artemiou to which I have referred, it seems to me that the more powerful consideration is that to allow the landlord to rely on a succession of interests in order to satisfy the five year test is itself a liberal reading of section 30(2). On the face of it, in VCS, for example, the interest of the landlord, as it was at the critical date, had plainly been created within the five years. I accept that it is the law that a succession of interests can enable the landlord to overcome the apparent effect of the section. However, it seems to me that the reading of the section which enables this to be done ought not to be wider than is justified according to the policy of the Act.
- The issue is posed by a person who, though at one stage the competent landlord, ceased to be so (within the five year period) because of the running of an earlier leasehold interest to within 14 months of its expiry. Mr Cole submitted that it ought not to matter whether the person who is the competent landlord at the critical time, in particular when seeking to oppose the grant of a new tenancy, would have been the competent landlord at some earlier time during the five years when no question arose of doing anything for which the status of competent landlord was necessary. I do not accept that submission. It seems to me that it should only be legitimate to have regard to an earlier interest, as well as the current interest, in order to satisfy the five year rule if it was an "interest of the landlord", that is to say of the competent landlord, at all relevant earlier stages. The policy of the Act to disregard very short reversions under section 44(1)(b) was explained by Sir Raymond Evershed MR in Diploma Laundry Ltd v Surrey Timber Ltd [1955] 2 QB 604 at 610-1, in the passage quoted by Jackson LJ at paragraph [31] above. Given that policy, it seems to me that for someone who was a landlord, but not the competent landlord, to gain the status of competent landlord during the five years by the acquisition of a new lease, or otherwise, is in much the same position, as regards the statutory mischief, as the acquisition of such an interest by someone who had never had the position of competent landlord at all.
- In my judgment, to allow such a person to obtain a new lease and then to rely on the succession of interests in order to get over the problem apparently created by section 30(2) would not be consistent with the policy of the Act. That is not a factor which was addressed or considered in Artemiou. If it is right (as I think) that we are not constrained by that case as a matter of decision, then I would hold that it is necessary, if a succession of interests is to be used to satisfy the five year test, that the landlord should have been the competent landlord at all times throughout the five years, disregarding as irrelevant for present purposes the special case of merger. Thus I would qualify, but I would not reject, the comments of the majority in Artemiou on this aspect of the effect of the legislation. I would accept Mr Jourdan's submission that a requirement of continuity as competent landlord under all successive interests is a proper and principled basis for allowing the relevance of earlier interests in order to see whether the five year rule is satisfied, despite the competent landlord's current interest having been purchased or created within the five year period.
- For those reasons, in agreement with Jackson LJ, I consider that the landlord did not satisfy the five year rule in this case, because although it can show that it held a continuous succession of leasehold interests for all of the five year period, nevertheless during part of that period, while it held the earlier leasehold, it was not the competent landlord. I would therefore allow the tenant's appeal.
Lord Justice Jackson:
Part 1 Introduction,
Part 2 The Facts,
Part 3 The Present Proceedings,
Part 4 The Appeal to the Court of Appeal,
Part 5 The Law,
Part 6 Decision.
"24(1) A tenancy to which this Part of this Act applies shall not come to an end unless terminated in accordance with the provisions of this Part of this Act; and, subject to the following provisions of this Act either the tenant or the landlord under such a tenancy may apply to the court for an order for the grant of a new tenancy –
(a) if the landlord has given notice under section 25 of this Act to terminate the tenancy, or
(b) if the tenant has made a request for a new tenancy in accordance with section twenty-six of this Act.
…
26(1) A tenant's request for a new tenancy may be made where the current tenancy is a tenancy granted for a term of years exceeding one year, whether or not continued by section 24 of this Act, or granted for a term of years certain and thereafter from year to year.
(2) A tenant's request for a new tenancy shall be for a tenancy beginning with such date, not more than twelve nor less than six months after the making of the request, as may be specified therein.
…
(6) Within two months of the making of a tenant's request for a new tenancy the landlord may give notice to the tenant that he will oppose an application to the court for the grant of a new tenancy, and any such notice shall state on which of the grounds mentioned in section thirty of this Act the landlord will oppose the application.
…
30(1) The grounds on which a landlord may oppose an application under section 24 (1) of this Act, or make an application under section 29 (2) of this Act, are such of the following grounds as may be stated in the landlord's notice under section 25 of this Act or, as the case may be, under subsection (6) of section 26 thereof, that is to say:
…
(g) subject as hereinafter provided, that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence.
…
(2) The landlord shall not be entitled to oppose an application under section 24 (1) of this Act, or make an application under section 29 (2) of this Act, on the ground specified in paragraph (g) of the last foregoing subsection if the interest of the landlord, or an interest which has merged in that interest and but for the merger would be the interest of the landlord, was purchased or created after the beginning of the period of five years which ends with the termination of the current tenancy, and at all times since the purchase or creation thereof the holding has been comprised in a tenancy or successive tenancies of the description specified in subsection (1) of section 23 of this Act.
…
44(1) Subject to subsections (1A) and (2) below, in this Part of this Act the expression "the landlord", in relation to a tenancy (in this section referred to as "the relevant tenancy"), means the person (whether or not he is the immediate landlord) who is the owner of that interest in the property comprised in the relevant tenancy which for the time being fulfils the following conditions, that is to say—
(a) that it is an interest in reversion expectant (whether immediately or not) on the termination of the relevant tenancy, and
(b) that it is either the fee simple or a tenancy which will not come to an end within fourteen months by effluxion of time and, if it is such a tenancy, that no notice has been given by virtue of which it will come to an end within fourteen months or any further time by which it may be continued under section 36(2) or section 64 of this Act,
and is not itself in reversion expectant (whether immediately or not) on an interest which fulfils those conditions.
…
(3) The provisions of the Sixth Schedule to this Act shall have effect for the application of this Part of this Act to cases where the immediate landlord of the tenant is not the owner of the fee simple in respect of the holding
…
SIXTH SCHEDULE
Provisions for Purposes of Part II where Immediate Landlord is not the Freeholder
In this Schedule the following expressions have the meanings hereby assigned to them in relation to a tenancy (in this Schedule referred to as "the relevant tenancy"), that is to say:—
…
3(1) Any notice given by the competent landlord under Part II of this Act to terminate the relevant tenancy, and any agreement made between that landlord and the tenant as to the granting, duration, or terms of a future tenancy, being an agreement made for the purposes of the said Part II, shall bind the interest of any mesne landlord notwithstanding that he has not consented to the giving of the notice or was not a party to the agreement.
(2) The competent landlord shall have power for the purposes of Part II of this Act to give effect to any agreement with the tenant for the grant of a new tenancy beginning with the coming to an end of the relevant tenancy, notwithstanding that the competent landlord will not be the immediate landlord at the commencement of the new tenancy, and any instrument made in the exercise of the power conferred by this sub-paragraph shall have effect as if the mesne landlord had been a party thereto."
"or an interest which has merged in that interest and but for the merger would be the interest of the landlord".
For ease of identification only, during the hearing I put square brackets around those words. For ease of reference those words were referred to during argument as "the bracketed words". I shall use that term in the course of this judgment for the sake of brevity. It must be understood, however, that there are in reality no brackets around those words.
i) The judge erred in concluding that the period of time between 17th May 2009 and 24th February 2010 when the defendant was not the competent landlord pursuant to section 44 of the 1954 Act did not have to be taken into account when calculating the qualifying period of five years pursuant to section 30 (2) of the Act.
ii) The judge erred in concluding that the new head lease entered into by Heron on 24th February 2010 should be considered a 'successive lease' and that accordingly Heron's time for complying with section 30 (2) did not start to run again until 24th February 2010.
i) The relevant period for the purpose of the five year rule was 25th March 1950 to 24th March 1955. Surrey Timber's freehold interest in the property was purchased before the start of that period. (Pages 608-9).
ii) The court assumed without deciding that Fleetwing's leasehold interest merged in Surrey Timber's freehold interest on 25th March 1953, which date fell within the relevant period. (Page 609, first main paragraph.)
iii) Nevertheless that assumed fact did not cause Surrey Timber to be caught by the five year rule. This is because of the matters set out in propositions (iv) to (vi).
iv) If Fleetwing had not surrendered its leasehold interest, then in September and October 1954 it would have been the immediate landlord of Diploma but not the competent landlord. (Lower half of page 611.)
v) The bracketed words represent a composite concept. They denote an interest which has two separate characteristics. First, it has previously merged in the interest of the landlord serving a counter-notice under section 26 (6) relying upon ground (g). Secondly, if it had not so merged, it would be the interest of a competent landlord, in other words a landlord whose interest in the property would last for more than fourteen months. (Page 609, second main paragraph.)
vi) The interest of Fleetwing which merged in Surrey Timber's interest in 1953 does not have the second characteristic set out in the previous sub-paragraph. Therefore the bracketed words collectively do not describe Fleetwing's interest. Therefore Fleetwing's interest must be ignored. (Bottom of page 611 to top of page 612.)
vii) Surrey Timber's interest as freeholder satisfies the first limb of section 44 (1) (b). That is the only relevant interest for present purposes. Therefore Surrey Timber is entitled to rely on upon ground (g).
"The extraordinary elaboration of that definition is, at first sight, surprising. It inevitably contemplates that there may, in relation to any relevant tenancy, be more than one landlord. But that is, no doubt, in order to secure that a tenant is not to be deprived of his claim to a new tenancy, or limited in the effect to be given to his application, by the circumstance that the interest immediately expectant on his existing interest is one which has but a very short time to run. In other words, the Act, as I understand it, contemplates the grant of a new tenancy which will bind not only the immediate and limited reversion, but a more remote interest as well; and so in this definition the words "whether immediately or not" are used. At the same time it is made clear that for the purposes of this section – and, therefore, for the purposes of Part II – certain reversionary interests which have but very little time to run are excluded from relevant consideration."
"The object of subsection (2) is to prevent an incoming landlord, within the last year or two of a tenancy, from buying up the premises over the head of the tenant and then ejecting the tenant on the ground that he requires it for his own purposes. In order to prevent this, the Act says that the landlord cannot rely on paragraph (g) unless he has bought the relevant interest more than five years before the end of the tenancy."
"the prevention of exploitation of tenants by speculators".
Salmon LJ characterised the mischief as follows:
"The mischief surely was that of a landlord buying up the tail end of a lease and depriving the sitting tenant of the security of tenure which the Act was designed to give him. The landlord might in such circumstances have only the shortest association with the premises, whilst the tenant might have been there for years. It would be manifestly unfair that such a landlord could step in and prevent the tenant from obtaining a new lease. On the other hand, the Act recognised that if the landlord had been the landlord for upwards of five years, he should be able to gain possession if he intended to use the premises for his own business purposes, or as a residence. On that basis it is quite irrelevant whether the landlord's interest in the premises stems from one lease or from successive leases."
"It is clear that at all times since 23 August 1992 (the beginning of the relevant five-year period) either the British Railways Board or Regional Railways, which were members of the same group, was the landlord for the purposes of Part II of the Landlord and Tenant Act 1954, by virtue of owning either the freehold or some reversionary leasehold interest (as described by Sir Richard Scott V-C) in the case park. The acquisition of the leasehold interest in December 1995 was not therefore within the mischief of section 30 (2) of the 1954 Act as identified by this court in Artemiou v Procopiou [1966] 1 QB 878. The decision in this case involves a modest extension of that case. But in my judgment the judge was right in making that extension."
(i) The mischief against which section 30 (2) is directed is that of a new landlord who comes onto the scene towards the end of a lease and then asserts a right to occupy the demised premises for his own purposes.
(ii) The mischief against which section 44 (1) is directed is that of a landlord whose interest in the property is soon to expire, but who nevertheless seeks to assert substantive statutory rights against the tenant.
(iii) A landlord ("L") who is otherwise entitled to rely upon ground (g) is not precluded from doing so by section 30 (2) if the interest of an inferior landlord, who is not a competent landlord, is merged into L's interest during the relevant five year period.
(iv) If the competent landlord has held a series of leasehold interests, or possibly freehold and leasehold interests, these interests are aggregated for the purpose of seeing whether the five year rule is satisfied.
"What is meant by "the interest of the landlord"? I shall have presently to refer to section 44, which defines the word "landlord," but I confess that I have no doubt as a matter of construction of this subsection that the words "the interest of the landlord" mean the relevant interest of the landlord for the purpose in hand, namely, that of considering whether the landlord is or is not on a particular date entitled to oppose, on the ground of paragraph (g) of subsection (1), the tenant's request."
"At the same time it is made clear that for the purposes of this section – and, therefore, for the purposes of Part II – certain reversionary interests which have but very little time to run are excluded from relevant consideration."
Lord Justice Rimer
'… inserted so as to deal with such a case as Powell v. Cleland [1948] 1 KB 262. An incoming landlord ought not to be able to avoid the provisions of the Act simply by taking a long lease in his own favour instead of buying the premises. If he takes a newly created interest within the specified time and acquires the position of landlord in that way, then he is barred from relying on paragraph (g).'
There appears, therefore, to be no doubt that Heron's interest as the competent landlord on 24 February 2010 was 'created' for the purposes of section 30(2).
'… as a matter of construction of this subsection that the words "the interest of the landlord" mean the relevant interest of the landlord for the purpose in hand, namely, that of considering whether the landlord is or is not on a particular date entitled to oppose, on the ground of paragraph (g) of subsection (1), the tenant's request. The court is, therefore, required to consider what was the interest of [S] when the request was made, or when the opposition was put in – and for present purposes it matters not which is the more correct date. That such is the sense of the words, seems to me to follow from the language which I have also read – "or an interest which has merged in that interest and but for the merger would be the interest of the landlord." Those are words which, as it seems to me, point inevitably to the date when the landlord is saying: "I wish to oppose this application".'
'In my view, "the interest of the landlord" means the interest of the landlord in the holding from the time when it originally arose by purchase or creation. This construction covers equally an interest of a landlord under one long period by one lease or under a series of leases. In my opinion this construction makes sense and the other construction does not.'
'… authority for the proposition that the interest of a landlord which consists of a series of successive leases, the earliest of which is outside the requisite five-year period, enables the landlord to claim an interest qualifying under section 30(2).'
He did not suggest that the interests under the prior leases had to be interests that, for the time being, qualified the landlord as the competent landlord.
Lord Justice Lloyd:
"There is Court of Appeal authority for the proposition that the interest of a landlord which consists of a series of successive leases, the earliest of which is outside the requisite five-year period, enables the landlord to claim an interest qualifying under section 30(2). The case is Artemiou v Procopiou [1966] 1 QB 878. Danckwerts LJ referred to the object of section 30(2). He said, at page 885: "The object of the subsection is clearly to prevent exploitation of tenants by landlords who acquire the reversion with the object of forthwith evicting a tenant on the expiration of his tenancy." He then observed that in a case where the landlord had obtained successive tenancies going back over a period exceeding the requisite five years there was no mischief at which the subsection was aimed."
"It is clear that at all times since 23 August 1992 (the beginning of the relevant five-year period) either the British Railways Board or Regional Railways, which were members of the same group, was the landlord for the purposes of Part II of the Landlord and Tenant Act 1954, by virtue of owning either the freehold or some reversionary leasehold interest (as described by Sir Richard Scott V-C) in the car park. The acquisition of the leasehold interest in December 1995 was not therefore within the mischief of section 30(2) of the 1954 Act as identified by this court in Artemiou v Procopiou [1966] 1 QB 878. The decision in this case involves a modest extension of that case. But in my judgment the judge was right in making that extension."
"and at all times since the purchase or creation thereof [i.e. of the landlord's interest] the holding has been comprised in a tenancy or successive tenancies of the description specified in subsection (1) of section twenty-three of this Act."
"The idea appears to be that the subsection is intended to apply only to a purchase by the landlord while there is a sitting tenant. In the present case there was no sitting tenant (that is, sub-tenant) from the time of the landlord's acquisition of his interest in the holding until the sub-lease of November 1, 1963. If this is the right conclusion, then subsection (2) has no application, and the landlord is entitled to succeed on this ground.
We were referred by Mr Field-Fisher this morning to section 44, and that section is obviously dealing with the position between the landlord and the tenant for the purposes of the proceedings in respect of the acquisition by the tenant of a further lease; that must be the explanation, because it refers to the existence of a reversion, and of course, as I have pointed out, in this case there was no reversion of the sub-lease until the sub-lease was granted."
"Even if I am wrong in this view, and the landlord's interest was not created until March, 1961 (that is, within the five years' period), it would, in my judgment, be impossible to hold that at all times since the creation of that interest the holding had been comprised in a tenancy or successive tenancies of the description specified in subsection (1) of section 23 of the Act. One could do so only by counting the landlord's tenancy as one of the successive tenancies referred to in the subsection, which seems to me to be self-evidently absurd."
"Here, the tenant has been a tenant only since November, 1963. One would have thought, therefore, that, prima facie, the second condition was not satisfied. It has been argued, however, that, in construing the phrase "tenancy or successive tenancies," we are not confined to the tenancy or tenancies of the tenant, but that we can take into consideration the landlord's own tenancy under which he held the property.
I do not propose to enlarge on this point, for I wholly agree with what has been said by my brethren. In my judgment, the only relevant tenancy to which those words in section 30(2) can be intended to apply is the tenancy of the tenant, which it is the object of Part II of the Act to protect. I do not think that the argument that the tenancy under which the landlord himself holds may be taken into consideration is one which can be sustained.
In those circumstances, it appears to me that the second of the two conditions specified in section 30(2) has not been satisfied, and there is, therefore, no obstacle in the way of the landlord opposing the tenant's application on the ground specified in section 30(1)(g)."
"In the present subsection the result contended for would be quite irrelevant to the mischief which the statutory provision was intended to meet, namely the prevention of exploitation of tenants by speculators. The provision cannot have been intended to defeat landlords who have been landlords of the holding for a long period, even if their title has been renewed within the last five years. There is a perfectly reasonable construction available which avoids such an unfortunate result.
In my view, "the interest of the landlord" means the interest of the landlord in the holding from the time when it originally arose by purchase or creation. This construction covers equally an interest of a landlord under one long period by one lease or under a series of leases. In my opinion this construction makes sense and the other construction does not."
"I do not think that the word "interest" should be given the narrow meaning for which the tenant contends, namely, that it connotes only the right or interest under which the landlord held at the termination of the current tenancy. In my view, one must consider the word in its context, and also having regard to the mischief at which the section in which it appears was aimed. The mischief surely was that of a landlord buying up the tail end of a lease and depriving the sitting tenant of the security of tenure which the Act was designed to give him. The landlord might in such circumstances have only the shortest association with the premises, whilst the tenant might have been there for years. It would be manifestly unfair that such a landlord could step in and prevent the tenant from obtaining a new lease. On the other hand, the Act recognised that if the landlord had been the landlord for upwards of five years, he should be able to gain possession if he intended to use the premises for his own business purposes, or as a residence. On that basis it is quite irrelevant whether the landlord's interest in the premises stems from one lease or from successive leases. Indeed, it would be absurd if, for example, a landlord who has held under a lease for, say, 50 years and had obtained an extension by the grant of a new lease within the five years' period should be deprived of the benefit of section 30(1)(g)."
"Now, before discussing the case of Allen v. Flood and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found."
"When the courts handle precedents they do not treat the formulations of law in earlier cases as exhaustive formulations but as formulations which were sufficiently exhaustive in the context in which they were made, and sufficiently precisely framed. It is not that a judge by convention should state a rule as narrowly as he can when he delivers judgment, but rather that he is not expected to state a rule with the completeness of a statutory draftsman, and thus it is always open to later courts to introduce exceptions which he did not mention – either because such exceptions did not occur to him, or because he deliberately abstained from stating an exception which, as matter of fact, he would have stated and acted upon if the facts of the case before him had been different from what they were."
"It is thought, however, that once a person is qualified as competent landlord by reason of having retained a sufficient reversion, the obtaining by him of a longer interest during the last five years of the relevant tenancy ought not to prejudice his right to rely on paragraph (g), since he does not become the landlord by that acquisition."