England and Wales High Court (Chancery Division) Decisions

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URL: http://www.bailii.org/ew/cases/EWHC/Ch/2009/3193.html
Cite as: [2009] 49 EG 71, [2009] EWHC 3193 (Ch), [2010] 2 P & CR 3, [2010] L & TR 14

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		Neutral Citation Number: [2009] EWHC 3193 (Ch)
		Claim No :HC06C01758

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Claim No :HC06C01758
Royal Courts of Justice,
Strand, London, WC2A 2LL

4 December 2009

B e f o r e :

____________________

	EDF ENERGY NETWORKS (EPN) Plc	Claimant
	and
	(1) BOH LIMITED (2) LAYHAWK CONSULTANTS LIMITED (3) SALVATORE AVANZATO	Defendants

____________________

Mr Christopher Stoner (instructed by Eversheds LLP of Norwich) for the Claimant
Mr Jonathan Small QC (instructed by Ahmud & Co of Hendon) for the First and Second Defendants
Mr Avanzato in person

HEARING DATES: 15,16,17 and 20 July 2009 - Further written submissions 7 September 2009
____________________

HTML VERSION OF JUDGMENT
____________________

INTRODUCTION

The claimant in this Action ("EDF") is the well known electricity supplier. It operates an important sub-station on Plot 2 off Fourth Way on the Wembley Stadium Trading Estate ("the Estate"). Between Fourth Way (now a public highway) and Plot 2 lie Plots 20 and 26. The First Defendant ("BOH") is the freehold owner of Plot 20. The Second Defendant ("Layhawk") is the freehold owner of Plot 26. Both BOH and Layhawk say that, in the events which have happened, EDF now has no rights in or over Plots 20 and 26 either so as to access Plot 2 or so as to maintain in position a substantial number of underground cables which have been in place for many years. The reality of this Action, therefore, is that it is an attempt by BOH and Layhawk to establish that they are entitled to "ransom strips" as between Plot 2 and Fourth Way. Whether they are correct in that contention depends on whether a 1953 Lease of (inter alia) Plot 2 continues in existence by virtue of the provisions of Part II of the Landlord and Tenant Act 1954 ("the 1954 Act"). EDF is now the freehold owner of Plot 2 but the Action proceeded on the basis that no easements of access or cabling were appurtenant to the freehold of Plot 2 over Plots 20 and 26. All, therefore, depends on whether the 1953 Lease continues in existence.

The Third Defendant ("Mr Avanzato") appeared before me in person (although his Defence had been settled by counsel and he had formerly had solicitors acting for him). After the first day he left to attend to his business, leaving his wife to represent him. Both Mr Avanzato and his wife appeared bewildered, not merely by the complexity of the legal issues being aired but also by the very fact that Mr Avanzato was a defendant in this Action. It is quite clear that Mr Avanzato has no wish whatsoever to have a dispute with anyone. His only relevance to this dispute is that, as an adjunct to Plot 35 from which he operates his business, he occupies part of Plot 31. There are no cables under Plot 31 and there is no way whatsoever in which Plot 31 could be used to access Plot 2. It is very difficult, therefore, to understand why Mr Avanzato had to be a party to these very expensive High Court proceedings. I have the greatest possible sympathy for his predicament. Each of EDF, BOH and Layhawk should be aware that, on hand down, I will be anxious to give Mr Avanzato the maximum possible protection which I can in costs.

In order to understand the issues which arise it is necessary to understand the physical layout of the relevant parts of the Estate and to analyse the complex conveyancing history.

THE SITE

The Estate was, apparently, the site of the British Empire Exhibition in 1924. Thereafter the Estate was developed in a somewhat ramshackle way, with difficulties in identifying the true boundary line between various units. The fly parking and fly tipping which occurred on Plots 20 and 26 are illustrative of the locality - this was not a perfectly laid out Estate with clear boundaries. It was not an Estate maintained in pristine condition.

In 1953 EDF's predecessor in title (Eastern Electricity Board) took a lease of Plots 2, 26 and 31 for the purposes of erecting the sub-station. The lessor was The British Transport Commission which was the freeholder of a substantial area of land on the Estate, including not merely the demised plots but also Plot 20 and Fourth Way.

The physical layout of the plots demised can only properly be understood by reference to a plan. In giving a verbal description I shall, of necessity for ease of exposition, overly simplify and engage in inaccuracies. None of these simplifications, and none of these inaccuracies, affect the substantive issues in this Action.

Plot 2 can best be imagined as a rectangle with the short sides of the rectangle running north - south and the long sides of the rectangle running west - east. It is by far the largest part of the land demised by the 1953 lease. To the north of the rectangle lies Plot 31, a small sliver of land running the whole length of the long rectangular side of Plot 2. To the south of Plot 2, again running the whole length of the long rectangular side of Plot 2, is Plot 26. This is a somewhat wider area of land than Plot 31, the width being approximately 13 foot. Each of Plots 31 and 26 are long thin rectangles whose western and eastern boundaries form a straight line with the western and eastern boundaries of Plot 2. Between Fourth Way and Plot 26 is another thin area of land (Plot 20) widening at its eastern end, so that its shape, to the extent that it is coextensive with the southern boundary of Plot 26, is a rhomboid. In fact Plot 20 appears to extend to the west, beyond the western boundary of Plots 2 and 26.

To the north of Plot 31 are various other Plots which comprise industrial units (including Plot 35 - Mr Avanzato's plot) which abut the northern boundary of Plot 31.

THE LEASE

By Lease dated 20 February 1953 ("the Lease") The British Transport Commission demised to Eastern Electricity Board Plots 2, 26 and 31. They were described as comprising 2600 square yards (or thereabouts) and the term was 42 years from 24 June 1952. The rent reserved was £25 per annum, payable by equal quarterly instalments.

The Lease was granted, on its express terms, in consideration of the erection by Eastern Electricity Board of the sub-station. The parcels clause of the Lease granted the following rights to Eastern Electricity Board :-

"Together with a right of way (in common with the Commission and the occupiers of the adjoining and neighbouring premises) at all times and for all purposes necessary for the enjoyment of the demised premises with or without vehicles over and along the Commission's roads and on foot only over and along the Commission's paths as provided from time to time between Wembley Hill Road and the demised premises And Together Also with full right and liberty for the Lessees to lay maintain inspect renew use alter and remove electric cables and lines and conduits or pipes for containing the same where necessary under the Commission's said roads and paths along such route or routes between Wembley Hill Road and the demised premises as may be agreed between the Commission and the Lessees and to break up the surface thereof so far as necessary from time to time for the purpose of relaying repairing maintaining altering and removing the said electric cables and lines and conduits or pipes such right to be exercised on such terms and conditions as may from time to time be agreed between the Commission and the Lessees (all which rights are together hereinafter referred to as "the said rights ") Provided that the Commission may close any such road or path on substituting another similar road or path therefor".

The precise status of Plot 20 as at the date of the grant of the Lease is unclear - in that it is unclear whether, at that date, it formed part of the Commission's roads. Nevertheless, it is easy to see why the easements as granted by the Lease should have subsisted over Plot 20 - and the contrary was not argued before me.

The Lease also contained the following provisions :-

(1) a covenant by the lessee (clause 2(6)) not to erect anything upon the demised premises except an electricity sub-station ;

(2) a covenant by the lessee (clause 2(7)) not to use the demised premises for any purpose other than as an electricity substation; a standard form proviso for re-entry in the event of the yearly rent, or any part thereof, being in arrear for 21 days (whether legally demanded or not).

THE SUB-STATION

The sub-station was duly constructed following grant of the Lease. It was constructed entirely on Plot 2 and surrounded by security fencing. It is clear that this security fencing enclosed only Plot 2, so that Plots 26 and 31 were outside the security fencing. The sub-station functions as an enormous fuse box. Electricity enters at 33kV and is transformed down to 1 lkV. It is then placed into many different circuits to serve the local area (so that if there is a fault on one circuit then the other circuits continued to function). In 1987/88 major improvement works were carried out to the sub-station. A new switch- house was built (to supplement the existing building) and the existing security fencing was replaced with new palisade fencing. This new fencing still enclosed only Plot 2 so that Plots 26 and 31 were outside the security fencing.

I was shown various cable plans. It can easily be deduced from those plans that, from its initial construction, the primary route for cables to enter and leave Plot 2 was through and across Plots 26 and 20. No cables were laid on Plot 31. The new switch-house erected in 1987/88 has cables running to it which pass through and along Plots 26 and 20. That the British Transport Commission was content with this arrangement is undoubted. There are before me numerous wayleaves and other agreements whereunder the British Transport Commission consented to extensions of the cabling system (as emanating from the sub-station) across other parts of the Estate.

In 2003 EDF entered into arrangements (as a result of the disputes which have culminated in the present Action) enabling it to gain limited access to Plot 2 and limited cabling rights across the eastern boundary of Plot 2. I shall describe those arrangements in due course. Nevertheless, the cables remained in position on Plots 26 and 20 and Mr Thornhill, who was called on behalf of EDF, told me, arid I accept, that in 2007 it became necessary to repair and upgrade cables in position under Plot 26.

Until 2003 EDF (and all its predecessors in title) gained access to the substation from Fourth Way across Plots 20 and 26 to double-gates in the security fencing which enclosed Plot 2. Having acquired an alternative access in 2003 those double-gates were, for security reasons, welded shut by EDF. However, Mr Thornhill told me, and I again accept, that it was necessary for EDF to reopen these gates in order to effect the cabling works on Plot 26 which occurred in 2007. Thereafter EDF secured these gates again pending the outcome of the present Action.

As I have indicated, the sub-station is an important one. Mr Thornhill told me that without it there would be no power to a radius of 3 miles. Further, whilst at present the sub-station is merely the back up supplier of electricity to Wembley Stadium, EDF's future plans are that Wembley Stadium should be fully supplied with electricity from this particular sub-station. This will involve the installation of many more cables and, of course, require instantaneous guaranteed access. The arrangements entered into in 2003 for access and cabling through the eastern boundary of Plot 2 are simply not adequate for these purposes. The eastern access is very restricted and frequently blocked by parked vehicles. The original, southern, access is essential to allow large lorries and cranes onto the sub-station and Plots 26 and 20 are needed for any future cabling works.

THE CONVEYANCING HISTORY

This is convoluted and I shall seek to pare it down to its bare essentials.

The Lease is now, and has since 26 March 1953 been, registered under Title Number MX 269363. EDF is the registered proprietor, with Good Leasehold title. Despite the fact that the Lease would, on its face, have expired through effluxion of time on 24 June 1994 this Title remains open. However, what I shall refer to below as the "X" land has been excluded from this Title. Subject to this exclusion, the registered title includes the whole of Plots 2, 26 and 31.

On 30 March 1984 Fastiron Limited ("Fastiron") acquired the freehold of various parcels of land on the Estate from British Railways Board (the statutory successor of The British Transport Commission). The parcels of land so acquired included (1) the whole of the reversion immediately expectant on the determination of the Lease and (2) Plot 20.

On 22 November 1985 Fastiron transferred its freehold interest in Plot 2 to Racal Properties Limited and Racal ("Racal") which was registered as Proprietor with Title Absolute under Title Number NGL 541578.

Also on 22 November 1985 Fastiron transferred to Racal its freehold interest in Plot 26 and Racal became the registered Proprietor with Title Absolute under Title Number NGL 541577.

On 11 August 1987 Racal transferred its freehold interest in Plot 2 to Mr Leonard Douglas Dormer ("Mr Dormer"), He became registered as Proprietor with Title Absolute of Plot 2 under Title Number NGL 541578 on 22 September 1987.

On 14 March 1988 Electrical Distributing Company Limited became registered as Proprietor of the land in Title Number NGL 541577 (Plot 26). This was in succession to Racal and also, it would seem, an intermediate purchaser from Racal called Urbanside Properties Limited.

Thus the reversion immediately expectant on the determination of the Lease became severed. From 14 March 1988 to 23 December 1993 the revisioners on the Lease were (1) Mr Dormer (Plot 2 - NGL 541578), (2) Electrical Distributing Company Limited (Plot 26 - NGL 541577) and (3) Fastiron (Plot 31 - NGL 486497 - a title which also included the freehold interest in Plot 20).

In July 1992 EDF commenced negotiations with Mr Dormer for renewal of the Lease. By letter of 27 August 1993 Mr Dormer's agents served a notice under section 25 of the 1954 Act on EDF. That notice purported to relate to "BEE Primary Substation and land " and purported to terminate the tenancy on 24 June 1994. The notice indicated that any application to the court for the grant of a new tenancy would be opposed on the grounds mentioned in paragraphs (f) and (g) of section 30(1) of the 1954 Act On 3 September 1993 EDF gave counter-notice to Mr Dormer's agent that EDF was not willing to give up possession of the premises referred to in the section 25 notice.

Thereafter negotiations between Mr Dormer and EDF continued. On 23 December 1993 Mr Dormer transferred the freehold land in Title Number NGL 541578 (Plot 2) to EDF for £237,500. EDF then became registered as Proprietor of the freehold land comprised in Title Number NGL 541578 and has remained as such Proprietor ever since (albeit that the "X" land was taken out of this title and placed in Title Number NGL 823728 (registered Proprietor Masterdent Limited) following the events of 2003). No application to the court for the grant of a new tenancy was made by EDF prior to its purchase of the freehold of Plot 2. As from 23 December 1993 the severed reversion immediately expectant on the determination of the Lease was vested in (1) EDF (Plot 2), (2) Electrical Distributing Company Limited (Plot 26) and (3) Fastiron (Plot 31).

On 15 March 1999 The Containerised Storage Company Limited ("Containerised") acquired the freehold of (inter alia) Plots 20 and 31 from Fastiron. Containerised was registered as freehold Proprietor under Title Number NGL 770835 (a title derived out of NGL 486497) on 19 March 1999. Subsequently, on 30 June 2002, Containerised transferred its freehold interest in Plots 20 and 31 to BOH. A new title was created, derived out of NGL 770835, namely NGL 816821 with BOH becoming registered Proprietor on 24 December 2002. The Proprietorship Register records the price paid by BOH on 30 June 2002 as being £750.

As to Plot 26 Electrical Distributing Company Limited remained the registered proprietor until 15 March 2002. On that date the land in title NGL 514577 was transferred to Commercial Rentals Limited which was registered as proprietor on 24 March 2002. On 19 January 2005 the registered Proprietor of Plot 26 under Title Number NGL 541577 became Layhawk. EDF has suggested that this was simply as a result of a change of company name. But that cannot be correct because the Proprietorship Register show Commercial Rentals Limited and Layhawk as having wholly different company registration numbers.

Trouble first started for EDF with the purchase by Containerised of Plots 20 and 31 on 15 March 1999. Increasingly aggressive correspondence began to emanate from Containerised written on its behalf by a Mr Todd. Much of this correspondence is difficult to follow and Mr Todd is free with allegations of professional incompetence and impropriety, dishonesty and criminal conduct. Matters only got worse for EDF when Commercial Rentals Limited acquired the freehold of Plot 26 on 15 March 2002. Mr Todd was the only person to give evidence on behalf of BOH and Layhawk. In evidence he described Layhawk as a business belonging entirely to his brother and his brother's wife. He described BOH as also being a family business, although I was left unclear as to whether he had any interest therein. In his witness statement, however, he describes himself as having, formerly, been the property manager of BOH. He accepted that Commercial Rentals Limited was also a family business and, clearly, there was a close link with Containerised. Before me is a Lease dated 27 March 1999 whereunder Containerised demised to Commercial Rentals Limited Plots 20 and 31 - as acquired by Containerised from Fastiron on 15 March 1999. The term was for a period commencing 15 March 1999 and ending on 31 March 2009. The Lease is executed by a director and secretary of each of Containerised and Commercial Rentals Limited and it is quite clear that the signatures on behalf of Containerised are the same signatures as those on behalf of Commercial Rentals Limited. The present status of Commercial Rentals Limited is unclear. In evidence Mr Todd said that it had ceased trading and that he thought it may have been dissolved.

Mr Avanzato

Mr Avanzato's evidence, which I accept, is that he purchased (together with his then partner a Mr Di Muro) Plot 35 from Mr Dormer in about 1987. (Mr Avanzato's evidence was that whilst his witness statement was correct in matters of substance he was a bit "iffy" about dates). Plot 35 included a paint store at the rear and an outside storage area. Mr Avanzato did not realise this at the time but the paint store and outside storage area were, in fact, situated on Plot31 (at the eastern end of Plot 31). What he purchased from Mr Dormer included this paint store and outside storage area and there was a wall separating what Mr Avanzato purchased from the remainder of Plot 31. Also, the southerly boundary of Plot 31 was a retaining wall (Plot 31 being, after construction of the sub-station, some 4 to 6 feet lower than Plot 2). Thus the land occupied by Mr Avanzato as part of Plot 31 was enclosed off against the remainder of Plot 31 and accessible only through Plot 35. I am satisfied that from 1987, and probably long before when the paint store was created by Mr Dormer, EDF never had any access to, and never entered upon, this particular part of Plot 31. And Mr Avanzato happily regarded this land as part of the property he had purchased from Mr Dormer in 1987 until he was disabused of that perception following Containerised's purchase of Plots 20 and 31 on 15 March 1999. The claim was then made, either by Containerised or Commercial Rentals Limited, that Mr Avanzato was trespassing on Plot 31. He thought that he would have acquired title by adverse possession but the riposte from Containerised/Commercial Rentals Limited was that this was not the case because of the existence of the Lease. Assuming that the Lease expired by effluxion of time on 24 June 1994 the title of Containerised/Commercial Rentals Limited could not be statute barred. Mr Avanzato felt extremely hard done by but was forced to enter into a lease dated 6 March 2001 with Commercial Rentals Limited whereby what appears to be the whole of Plot 31 was demised to him for a term commencing 1 April 1999 and ending on 31 March 2009. The rent payable was £1,040 per annum subject to review. It is simply because of his actual occupation of such part of Plot 31 as is contiguous to Plot 35 and because of the terms of this lease that Mr Avanzato fmds himself a party to this Action. As he says in evidence, he feels doubly hard done by. Not merely did he discover that he did not own part of what he thought he had purchased in 1987 so that he had to enter into, and pay rent under, the lease of 6 March 2001 but, also, now it has cost him thousands of pounds to be involved in this Action when as far as he can see this Action has nothing to do with him. He is more than happy to pay his rent under the lease and simply wants to get on with his own business.

The "X" Land

Faced with the difficulties which Mr Todd was raising in correspondence about access rights over Plot 20 (and from April 2002 Plot 26) EDF decided to obtain access to, and cabling rights to and from, Plot 2 over the eastern boundary of Plot 2. On 30 June 2003 EDF entered into a Deed of Grant of Easement with Fastiron whereby the appropriate easements were granted in favour of EDF (for a substantial premium of £30,000) over a piece of roadway to the east of Plot 2 which remained in the ownership of Fastiron. But still there was strip of land between Fastiron's roadway and Plot 2. That land was in the freehold ownership of a Mr Guerra. On 30 June 2003 Mr Guerra entered into a Deed of Grant of Easement with EDF to give EDF appropriate access and cabling rights over the relevant piece of land. Further, and as part of the deal, EDF transferred to Mr Guerra the freehold of a small square of land in the north eastern corner of Plot 2. The land so transferred is the "X" land (so named at trial because it is marked with an "X" on various plans). Further, Mr Guerra and EDF entered into an agreement on 30 June 2003 whereby, as soon as Mr Guerra had become the freehold owner of the "X" land, EDF would offer and Mr Guerra would accept a surrender of the Lease so far as it related to the "X" land. That agreement was carried into effect by a Deed of Surrender. Thereby the "X" land was freed from the terms of the Lease in Mr Guerra's hands and this is why the "X" land was, thereafter, taken out of Title Number MX 269363 and registered as freehold land, free from the Lease, under Title Number NGL 823728. Subsequently the proprietor of the "X" land became Masterdent Limited. This is a company in which Mr Avanzato and his present partner Mr Caruso are the shareholders. Planning permission for the development of an industrial unit on the "X" land has been granted - although Mr Avanzato's statement would suggest that it is yet to be built.

An industrial unit would, of course, be a breach of clauses 2(6) and 2(7) of the Lease if the Lease were to continue to subsist in respect of the "X" land. It is, therefore, worthy of note that EDF's 2003 scheme involves the proposition that a surrender as to part can be effected (assuming that the Lease had continued by virtue of Part II of the 1954 Act) without the consent of all the owners of the severed reversion on that Lease. This is a point to which I shall return.

THE ISSUES

EDF's statements of case were settled by Mr Kirk Reynolds QC. BOH's statement of case (slavishly adopted by Layhawk) was settled by Mr Paul Morgan QC (as he then was). Despite the statements of case having such a distinguished pedigree neither Mr Stoner (who appeared for EDF) nor Mr Small QC (who appeared for BOH and Layhawk) felt in the slightest way constrained by what appeared in the respective statements of case. Rather each (with the acquiescence of the other) wished to address what they now perceived to be the true issues. I was content with this approach because it seemed to me (if only granted the unfortunate correspondence which had emanated from Mr Todd since 1999) that it was important for the parties that the true issues between them be fully resolved. Equally during the forensic process of trial each of the parties' cases came to vary and, certainly, became more refined. I will therefore, in this judgment, address the parties' respective cases as they were developed, and refined, in closing submissions.

In concentrating on what Mr Stoner and Mr Small QC had to say I mean no disrespect to Mrs Avanzato. It is hardly surprising that she could not help me on the legal issues which arise. Her essential points, which I have well to the front of my mind, were that it was most unfair that her husband was a party to this Action, that her husband required some certainty as to what his status was on that part of Plot 31 which he had been occupying since 1987 and that Masterdent Limited's ability to develop and exploit the industrial unit or the "X" land should not be threatened. Her other essential submission was that someone should indemnify her and her husband for their costs.

As no easements of access or cabling are appurtenant to the freehold of Plot 2 the essential thrust of Mr Stoner's submissions was that the Lease continues in existence as a result of the operation of Part II of the 1954 Act. It did not, ultimately, really matter to him if the Lease had ceased to subsist in respect of Plot 31 (save if the reasons for the Lease ceasing so to subsist might adversely affect the continued existence of the Lease in respect of the remainder of the property demised). But he needed, ultimately, to establish that the Lease continued to exist in respect of Plot 2. If it continued to exist only in respect of Plot 26 then Mr Small prayed in aid the rule in Harris v. Flower (1904) 74 LJ Ch 127 (recently re-affirmed and explained by the Court of Appeal in Peacock v. Custins [2001] 2 All ER 827). If the Lease continued to subsist only in respect of Plot 26 the easements as granted by the Lease would subsist over Plot 20 - but they would only so subsist for the benefit of Plot 26 and could not "in substance" be used for the benefit of Plot 2 - which was not the dominant tenement (see, also, Macepark (Whittlebuy) Limited v. Sargant [2003] 1 WLR 2284). Accordingly it was Mr Small's primary aim to show that the Lease had ceased to subsist in respect of Plot 2. However, as an alternative line of attack, he sought to show that the Lease had ceased to subsist in respect of Plot 26 since, in these circumstances, he submitted a ransom strip existed between Plots 2 and 20 (Plot 2 having easements over Plot 20 but no easements over Plot 26).

THE SECTION 25 NOTICE

Mr Small's first submission was that the section 25 notice as served by Mr Dormer on 27 August 1993 was a valid section 25 notice in respect of Plot 2. No application to the court for the grant of a new tenancy having been made, it brought the Lease to an end so far as the Lease related to Plot 2 on the date specified in the section 25 notice (24 June 1994 - the date on which the Lease would have expired by effluxion of time absent any Part II considerations).

This submission came as something of a surprise to Mr Stoner. The first three days of the trial had proceeded on the basis that the section 25 notice was bad (it being served by only one of the three reversioners under the severed reversion). That the section 25 notice was bad and ineffective would seem to have been established by the decision of Goff J (as he then was) in Dodson Bull Carpet Co Ltd v City of London Corporation [1975] 1 WLR 781. Since that decision the orthodoxy has always been that all the owners of a severed reversion must join in to give a valid section 25 notice (see, for example, Woodfall's Landlord Tenant, Vol 2, paras 22.054 and 22.162 (Release 57)). This proposition formed the back drop to, and context for, the issues which arose in Southport Old Link Ltd v. Naylor [19851 1 EGLR 66 (the consequent inability to exercise a contractual break clause as to part of the land comprised in one Part II protected tenancy). The necessity for all owners of the severed reversion to join in the section 25 notice has now been confirmed by statute with effect from 1 June 2004 (section 44(1 A) of the 1954 Act as inserted by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003).

Nevertheless, Mr Small advanced two arguments before me. His primary argument was that the Dodson Bull principle did not apply in a case such as the present where the section 25 notice related to the only piece of land on which business activities (sufficient to attract Part II protection) were being carried out. More faintly, I think, he suggested that the decision in Dodson Bull was reached in ignorance of the earlier decision of His Honour Judge Edgar Fay Q.C. (sitting as a Deputy Judge of the High Court) in William Skelton & Son Ltd v. Harrison & Pinder Ltd [1975] 1 Q.B.361. Mr Small referred me to the judgment of the Court of Appeal in Nevill Long & Co (Boards) Ltd v. Firmenich & Co (1984) 47 P & CR 59 where Fox L.J. delivering the judgment of the court, said this

" Whether there are circumstances in which a person can in relation to a tenancy within Part II of the Landlord and Tenant 1954 (and contrary to the decision in Dodson Bull Carpet Co Ltd v. City of London Corporation) serve a notice under section 25 in respect of part only of the premises compromised in the tenancy (being a severed part of the reversion) we not need not decide ".

Implicit in Mr Small's submissions was, I think, the proposition that I should chose not to follow Dodson Bull.
In order to consider Mr Small's submissions it is necessary to go back to certain basic principles. Part II protects tenancies where the property comprised in the tenancy is or includes (I stress the word "includes") premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes (section 23(1)). There is no necessity that the whole of the property comprised in the tenancy should be occupied for business purposes. If Part II protection applies then the whole of the tenancy is continued under section 24(1). True it is that the court has power to grant a new tenancy only of the "holding" (section 32(1)) but it is the whole of the tenancy which is statutorily continued. Even, therefore, if at any material time EDF was not in occupation of, say, Plots 31 and 26, still the Lease (granted the business occupation of Plot 2) would be protected under section 23(1) and subject to statutory continuation under section 24(1) in respect of the whole of the property as demised by the Lease.

It is well established that a section 25 notice must relate to the whole of the property comprised in the tenancy (Kaiser Engineers & Constructors Inc v. E R Squibb & Sons Ltd cited with approval by Oliver L.J. in Southport Old Links at p68).

Where a reversion is severed section 140 of the Law of Property Act 1925 does not bring two separate tenancies into existence. Notwithstanding severance of the reversion there remains but one tenancy (see the decision of the Court of Appeal in Jelly v. Buckman [1974] 1 Q.B.488)

Granted the fact that a section 25 notice has to relate to the whole of the land comprised in the relevant tenancy and the fact that on severance of the reversion there remains but one tenancy, it is difficult to see how a valid section 25 notice could be given by only one of the severed reversioners. In Dodson Bull Goff J started with the proposition that a section 25 notice cannot be served in respect of part only of the land comprised in the protected tenancy (785H). Nevertheless it was argued that this basic proposition was negated, where there was a severed reversion, by section 140(2) of the 1925 Act. The argument in Dodson Bull was that the words "or otherwise" in section 140(2) of the 1925 Act were apt to include a section 25 notice so that, as a result of the operation of section 140(2), one of the severed reversioners could serve a section 25 notice which related to only that part of the protected tenancy as was co-extensive with his severed reversion. The argument, therefore, was that section 140(2) had the effect of overriding, and mutating, the basic workings and structures of Part II. Goff J. rejected this argument. Partly he did so on the basis of the wording of the 1954 Act, which drew a sharp distinction between a notice to quit (as defined in Section 69) and a notice to terminate under section 25, pointing out that the section 25 notice had not been given under any provision contained in the lease. Further, the section 25 notice did not determine the contractual tenancy but only the statutory continuation of the tenancy (and then only subject to provisions of the 1954 Act which allowed for interim continuation). Whilst acknowledging that there could be potentially unfortunate consequences as a result of his decision, Goff J. did not see how he could do violence not only to the 1954 Act but, also, to the 1925 Act (passed years before the 1954 Act and passed without considerations of the 1954 Act in mind) - 786 A-E.

In Nevill Long, the Court of Appeal re-affirmed that severance of the reversion did not create separate tenancies co-extensive with each severed part of the reversion. The purpose of section 140(1) of the 1925 Act was not to create new rights or to remove the protected statutory rights of tenants. It was also re-emphasised that a section 25 notice had to be given in respect of the whole of the property comprised in the tenancy. Fox L.J. went to say this:-

"The defendants' argument, it seems to us, places too much weight upon the statutory fiction in section 140(1) of the 1925 Act. What we are primarily concerned with in the present case are the provisions of Part II of the 1954 Act. They are designed to protect business tenancies. That protection is a matter of much importance to the business community and we think that the proposition that there has been removed from the protection of the Act property which prima facie is within it needs to be approached with some caution. For the reasons which we have indicated, it seems to us clear that, despite the severance, a single tenancy remained in existence in respect of each lease. Prior to the severance, that tenancy was, in each case, plainly within the protection of the 1954 Act. We find it impossible to suppose that Parliament can have intended that the severance of the reversion could remove from the protection of the Act rights of access which might be a vital consequence to the business user of the demised property which itself at all times remained within the protection of the Act. The purpose of section 140 of the 1925 Act is to apportion conditions and rights of re-entry on severance and not to create new rights. It is not a general deeming provision that, where there has been a severance of the reversion, the severed part was the only property originally comprised in the lease. We see no reason to suppose that it was intended to have the effect of removing protective statutory rights of the tenant who would not normally even be a party to the severance ".

Granted that reasoning it is a little difficult to see why Fox L.J. went on to say:-

" Whether there are circumstances in which a person can in relation to a tenancy within Part II of the Landlord and Tenant Act 1954 (and contrary to the decision in Dodson Bull Carpet Co Ltd v. City of London Corporation) serve a notice under section 25 in respect of part only of the premises comprised in the tenancy (being a severed part of the reversion) we need not decide. But if he can, we think that for the reasons which we have indicated in relation to the intendment of the 1954 Act, that would in no way justify the conclusion that the rights of way in the present case are removed from the ambit of the 1954 Act by the severance of the reversion

It is clear to me that the Court of Appeal was saying in Nevill Long that the statutory scheme of Part II of the 1954 Act could not be overridden and negated through severance of the reversion (to which the tenant was not a party). Section 140 of the 1925 Act could not be utilised so as to warp, or mutate, the statutory scheme.

Mr Small places reliance on the decision in William Skelton. However, as the Court of Appeal pointed out in Nevill Long, that case was fundamentally different from Dodson Bull in that it concerned the operation of section 24(3)(a) the 1954 Act which, on its express terms, applies only where the tenancy to which Part II applies ceases to be such a tenancy. Section 24(3)(a) applies, therefore, to a tenancy which is no longer Part II protected and simply provides that cesser of Part II protection does not bring the tenancy to an end immediately. If it was granted for a term of years certain and has been continued by section 24(1) then (without prejudice to the termination thereof in accordance with any terms of the tenancy) it may be terminated by not less than three nor more than six months' notice in writing given by the landlord to the tenant. Section 24(3)(a) therefore regulates termination of a tenancy following cesser of Part II protection. The decision of His Honour Edgar Fay Q.C. in William Skelton that a section 24(3)(a) notice fell within the definition of the words "or otherwise" in section 140(2) of the 1925 Act is in no way inconsistent with, or contrary, to, the decision in Dodson Bull. That there was such a distinction between William Skelton and Dodson Bull was the clear view of the Court of Appeal in Nevill Long (pp67-68).

Against that background I return to Mr Small's submissions. It seems to me that his submission that a valid section 25 notice can be served which relates to only part of the land comprised in the tenancy (where the only business occupation is of that part of the land comprised in the tenancy which is the land the subject matter of the section 25 notice and there is a severed reversion) is entirely contrary to basic principles and the reasoning in the authorities to which I have referred above. The section 25 notice must be given in respect of the whole of the land comprised in the tenancy. If there were no severed reversion, then the landlord could not possibly give a section 25 notice in respect of part only of the land comprised in the tenancy (even if that part were the only land comprised in the tenancy which was being occupied by the tenant for business purposes). It is astounding to think that this basic position is altered by reason of severance of the reversion (an activity to which the tenant is not party). To suggest that the position is so altered is entirely to negate the effect of Jelly v. Buckman (which provides that severance does not create separate tenancies). More widely I, for my part, can see no flaw whatsoever in the reasoning in Dodson Bull and I do not think that it is in any way inconsistent with William Skelton. Further, it seems to me to be clear that I am bound by the decision in Dodson Bull granted what the Court of Appeal had to say in Nevill Long and Southport Old Links. Even if I were not so bound, I can see no grounds whatsoever for not following the decision in Dodson Bull.

Accordingly I reach the conclusion, easily and with confidence, that the section 25 notice as served by Mr Dormer on 27 August 1993 was entirely ineffective because (1) it related only to Plot 2 (since that was the only freehold property owned by Mr Dormer) and (2) it was given by only one of the three severed reversioners on the Lease.

ESTOPPEL/WAIVER

Virtually immediately following receipt of the section 25 notice EDF, by letter dated 3 September 1993, gave a counter-notice under the 1954 Act in the following terms >

"Re : Primary Substation at Fourth/Fifth Way Wembley

I am in receipt of your Notice under Section 25 of The Landlord and Tenant Act 1954 in respect of the above property.

I shall be obliged if you would accept this letter as Eastern Electricity's Couternotice under the said Section 25 that it is not willing to give up possession of the premises referred to in your Notice ".

The letter was signed by a Mrs Train, who describes herself as signing for Eastern Electricity's Solicitors.

As a result of the service of this counter-notice Mr Small submits that EDF is now estopped (either by representation or convention) from denying the invalidity of the section 25 notice as served by Mr Dormer.

I accept, of course, that there are numerous decided cases where a tenant, by service of a counter-notice (and normally by, thereafter, going further and commencing proceedings for the grant of a new tenancy), has been held either to have waived defects in the section 25 notice or has estopped himself from, subsequently, raising those defects. But these are normally cases where the landlord was fully entitled to serve the section 25 notice and all that has gone wrong is that there is some defect in the notice, normally apparent on its face. Had the tenant drawn the landlord's attention to those defects in the notice then, normally, the landlord would have been perfectly entitled to start again and serve a valid section 25 notice. It is important to note that what Mr Small is contending for in this case is qualitatively different from this. Mr Dormer was never entitled, under the statutory scheme, to serve the section 25 notice (whether it be said to relate to the whole of the land demised by the Lease or only Plot 2). The estoppel if it exists, therefore, will have the effect of conferring on Mr Dormer a substantive right - one not conferred upon him by Part II and, indeed, one directly contrary to the way in which the statutory scheme actually works. Section 38(1) of the 1954 Act prohibits the parties from "contracting out" of the protection afforded by Part II. My instinctive reaction is that what Mr Small is contending for, conferring as it would on Mr Dormer a substantive right which he did not enjoy under Part II and which was directly contrary to the statutory scheme of Part II, amounts to an arrangement which would deprive EDF of its Part II protection and which could not be effected by contract (granted the terms of section 38(1)). If so, then that which cannot be effected by contract cannot, either, be effected by estoppel (see, e.g. Keen v. Holland H9841 1 WLR 251 at 261C). For this reason alone, therefore, I would dismiss the estoppel/waiver claim.

However, lest I be wrong in this I must consider the estoppel claim on its merits. As Nicolls L.J. pointed out in Morrow v. Nadeem [1986] 1 WLR 1381 every claim of this nature must be carefully examined by reference to its own particular facts (a proposition which is graphically emphasised by the actual decision of the Court of Appeal, on the particular facts of that case, in Wroe v. Exmos Cover Ltd [20001 1 EGLR 66).

The estoppel for which Mr Small is contending would require a strong and clear representation from EDF. It would require a representation not merely that EDF was accepting that the section 25 notice was not defective on its face but, more than that, a representation that EDF was accepting that Mr Dormer could serve a section 25 notice only in respect of Plot 2 and could do despite the fact that he had no right under Part II so to act. I find it impossible to construe the counter- notice as containing any such representation. Nowhere does the letter of 3 September 1993 say expressly, or by implication, that EDF accepts that the section 25 notice was valid even if Mr Dormer did not have the substantive right to serve the same under the provisions of Part II.

Further, I am not satisfied on the balance of probabilities that as at the date of service of the counter-notice EDF appreciated that Mr Dormer was not, as a matter of law, entitled to serve the section 25 notice. As is clear from Morrow v. Nadeem (1390C-E) estoppel/waiver cannot arise where the steps which are said to accept the validity of the notice take place at a time when the tenant is unaware of some latent or concealed defect therein. Such a proposition appears also from the decision upon which Mr Small relied - Keepers and Governors of the Possessions Revenues and Goods of the Free Grammar School of John Lyon v. Mayhem 119971 1 EGLR 88 (where the Court of Appeal emphasised that the defect in the section 25 notice was known to the appellant at the relevant time).

I reach my conclusion in paragraph 53 above for the following reasons. I accept that EDF knew that the sub-station was built on only part of the land demised by the Lease and that the security fencing around the sub-station did not enclose the whole of the land demised by the Lease. Such is clear from correspondence between EDF and the British Rail Property Board which commenced in October 1980. EDF referred to security problems at the site (including fly parking of vehicles outside the inner security fence and fly tipping). EDF indicated its wish to erect a farther outer fence enclosing, on the southern side, a further 6 Vz feet (that is enclosing roughly one half of Plot 26). The correspondence shows that EDF intended that this new outer fence would be on land demised by the Lease. At this time, therefore, EDF fully appreciated that there was land outside the existing security fence (Plot 26 - although it is not specifically named) which was comprised within the Lease but not enclosed as part of the sub-station.

On 25 April 1992 Fastiron approached EDF, referring to the surplus lands which Fastiron then owned on the Estate and enquiring whether EDF might wish to purchase part of the same. The relevant part of the surplus lands was shown edged black on the plan to a letter of 25 April 1992 from Fastiron's agents to EDF. The surplus land which was being so offered to EDF does appear from such plan to be Plot 20, and Plot 20 only. Indeed, at this time Fastiron was not the owner of Plot 26 - that being in the freehold ownership of Electrical Distributing Company Limited. I refer to the letter of 25 April 1992 because Mr Small places reliance upon it but - properly analysed - it seems to me to be of no relevance. Desultory discussions then took place with Fastiron's agents, but they were in the context of Plot 20 only. In about June 1992 a Land Registry search was commissioned which showed that Plots 2, 26 and 20 were registered under separate freehold titles. Whether this information was ever properly analysed by EDF seems questionable. I am, however, satisfied that by the time Mr Dormer came to serve his section 25 notice no one within EDF properly appreciated (indeed appreciated at all) that he was not the freehold owner of the whole of the land demised by the Lease. The realisation that such was the case only came to EDF on or about 11 November 1993, following further analysis of Land Registry plans. On that date EDF's agents wrote to Mr Dormer's agents pointing out that EDF's Lease extended into adjoining land and that Mr Dormer's land was confined to the area within the security fences of the sub-station. Therefore, when the counter-notice was served, EDF had no appreciation that Mr Dormer was not the landlord of the whole of the land demised by the Lease. Further, and in any event, I am satisfied that EDF had no appreciation, at the date of the counter-notice, of the Dodson Bull point (in other words if I were wrong in my previous finding and EDF did appreciate, at the date of the service of the counter-notice, that Mr Dormer owned only part of the land demised by the Lease nevertheless I am more than satisfied (and there is no evidence whatsoever to suggest the contrary) that EDF did not appreciate that this fact rendered the section 25 notice invalid).

Further, there is not the slightest evidence before me of any detriment reliance by Mr Dormer on the counter-notice. There is no evidence whatsoever before me of any expenditure which he incurred as a result of service of the counter- notice and it cannot be said that he suffered detriment because he lost the opportunity of serving a second, and valid, section 25 notice (as he never had the substantive right to serve a valid section 25 notice at all). On the contrary, it would appear that Mr Dormer enjoyed substantial benefit from EDF not appreciating that the section 25 notice was invalid. Mr Dormer's plan was simple. He had obtained planning permission for redevelopment of Plot 2. He, therefore, intended to oppose the grant of a new tenancy on the grounds set out in section 30(1 )(f) and (g). If no new tenancy were granted, EDF would be forced to exercise statutory powers to acquire Plot 2. If there were no subsisting lease then the price payable on exercise of such statutory powers would be that much greater, Mr Dormer's inability to serve a valid section 25 notice would, therefore, substantially weaken his negotiating position. Failure by EDF to appreciate this only strengthened Mr Dormer's negotiating position on sale of the freehold of Plot 2.

For all these reasons, therefore, the claim to an estoppel by representation fails. Mr Small also relies on an estoppel by convention. He refers me to the decision of Briggs J in Revenue v. Benchdollar Ltd [2009] EWHC 1310 (Ch) - especially at para 52. He says that there was a shared common assumption that the section 25 notice was valid and that Mr Dormer had been entitled to serve the same. Even assuming, in Mr Small's favour, that there were such a common assumption and that it was shared between the parties, I find it impossible to see how EDF conveyed to Mr Dormer responsibility for that shared assumption, in the sense of conveying to Mr Dormer an understanding the EDF expected Mr Dormer to rely upon the common assumption. Nor do I see, for reasons already given, how Mr Dormer relied upon the shared common assumption to his detriment. What occurred is perfectly consistent with Mr Dormer having formed his own independent view that he was entitled to serve the section 25 notice. That, of itself, is sufficient to negate reliance. But, in addition, I do not see what detriment Mr Dormer suffered as a result of the alleged reliance.

In any event, as Benchdollar makes clear, when the true position becomes known to the parties it may not be "unjust or unconscionable " for one to assert the true legal (or factual) position to the other. In this case I do not see why it would be unjust or unconscionable for EDF (when it became aware of it) to assert the true legal and factual position to Mr Dormer because Mr Dormer never had the substantive right to serve a valid section 25 notice.

It may be that some of the authorities on defective section 25 notices can best be analysed in terms of waiver by election. The principles applicable to waiver were considered by the Court of Appeal in Bolton MBC v. Municipal Mutual Insurance [2006] 1 WLR 1492 at paras 31 to 34. It is quite clear that waiver by election cannot occur without "knowledge of the relevant facts". As Lord Goff of Chieveley said in Motor Oil Hellas (Corinth) Refineries SA v. Shipping Corporation of India (The Kancheniunga) [1990] 1 Lloyd's Rep 391 at 398

where with knowledge of the relevant facts a party has acted in a manner which is consistent only with his having chosen one of the two alternative and inconsistent courses of action then open to him - for

example, to determine a contract or alternatively to affirm it - he is held to have made his election accordingly .. "

I have already found that at the date of service of the counter- notice EDF did not appreciate that Mr Dormer was not entitled, under the scheme of Part II, to serve the section 25 notice. Further, I do not regard the terms of the counter- notice as constituting a choice between two alternative, and wholly inconsistent, courses of action. The counter-notice can easily be read, and in my view should be read, as a counter-notice if Mr Dormer were entitled to serve a valid section 25 notice. It does not go further and say that the validity of the section 25 notice is accepted, irrespective of whether or not Mr Dormer had the substantive right under Part II to serve the same. I do not regard the service of the counter-notice as inconsistent with, or mutually exclusive to, the subsequent raising of the argument that Mr Dormer never had the substantive right under Part II to serve a section 25 notice.

Accordingly, whether Mr Small's submissions be analysed as issues of estoppel (as he put it) or on the basis of the principles relating to waiver, I reject the same. There was, for the reasons as set out above, no estoppel or waiver as a result of the service of the counter-notice.

There is one further point I should make on estoppel/waiver. EDF had until, at the least, 27 December 1993 to commence proceedings under Part II for the grant of a new lease. EDF acquired the freehold interest in Plot 2 on 23 December 1993. Presumably, therefore, EDF acquired the benefit of the estoppel. EDF could not, if the alleged estoppel/waiver arose, engage in the absurdity of commencing proceedings against itself under Part II for the grant of a new tenancy. Why, therefore, should the estoppel survive the acquisition by EDF of the freehold reversion or, to put the matter another way, why should EDF not be entitled to say (as the owner of the freehold reversion) that it did not wish to rely on the estoppel and that the estoppel was at an end ? This underlines a further fundamental problem faced by Mr Small - which is that BOH and Layhawk seek to take the benefit of the estoppel/waiver when they were not parties to it and have adduced no evidence whatsoever that they have any independent estoppel/waiver of their own (they having adduced no evidence whatsoever that they themselves relied, to their detriment, on anything which had actually occurred in respect of the section 25 notice and the counter-notice). Indeed, Mr Small expressly disclaimed, in submissions, any estoppel/waiver case based upon detrimental reliance by either BOH or Layhawk.

MERGER

At common law merger occurred automatically, reflecting the principle that a person cannot be both landlord and tenant of the same premises, nor might a person covenant with himself, for such a covenant is senseless. However, courts of equity mitigated the rigours of the common law and "had regard to the intention of the parties, and, in the absence of any direct evidence of intention, they presumed that merger was not intended, if it was to the interest of the party, or only consistent with the duty of the party that merger should not take place'' ...see per Cozens-Hardy L.J. in Capital and Counties Bank Ltd v. Rhodes f 19031 1 Ch.631 at 652). Ingle v. Vaughan Jenkins fl900] 2 Ch.368 is a case where the court looked to the effect of the transaction and held that, if keeping the two interests separate would benefit the party, concerned, that was a good ground for concluding that no merger was intended.

The equitable rules now prevail. By section 185 of the Law of Property Act 1925 (replacing section 25(4) of the Judicature Act 1873) there is no merger by operation of law only of any estate the beneficial interest in which would not be deemed to be merged or extinguished in equity.

Mr Small's submission is that on acquisition of the freehold reversion in Plot 2 the leasehold interest in Plot 2 merged and became extinguished in that freehold interest so that, following such merger, the Lease comprised only Plots 26 and 31. It does not really matter to Mr Small whether this occurred before, or after, 24 June 1994 (the date of expiry of the Lease by effluxion of time). If before 24 June 1994 the only parts of the Lease capable of Part II continuation would be Plots 26 and 31. If merger took place after 24 June 1994 then, subsequently, Plot 2 has been removed from the tenancy of the whole of the land demised by the Lease (which continued under Part II). Either way, the rule in Harris v. Flower is engaged in respect of Plot 2.

Mr Stoner's starting point was the bold assertion that merger as to part is not possible as a matter of law or equity. Mr Stoner was able to cite no authority in support of this proposition and it seems to me to be contrary to basic principle. If merger is a matter of intention I can see no reason why there should not be an intent to merge at to part. Forfeiture as to part is, of course, possible (see Woodfall Vol 1 17.062) and it has never been doubted but that a surrender can occur as to part (indeed that is exactly what EDF did in respect of the "X" land).

Out of this submission developed, however, a more sophisticated argument. Is it possible to merge as to part where the reversion is severed ? The Lease might contain covenants which benefit ("touch and concern") other parts of the land comprised within the Lease. A lease may be granted of Plots 1, 2 and 3 (all of which are dwellinghouses) and contain a covenant, say, against keeping pigs on any part of the demised premises. The reversion then becomes severed so that there are individual reversions to Plots 1, 2 and 3. Following acquisition of the freehold reversion on Plot 1 by the tenant of Plot 1, the freehold reversioners to Plots 2 and 3 might well be concerned by merger on Plot 1 for, thereby, Plot 1 would be freed from the restraint against keeping pigs (to the detriment of the reversions on Plots 2 and 3). Equally the right to distrain for rent might be adversely affected. Thus, and taking the above example, if there be merger as to part in respect of Plot 1 the right of the severed reversioners of Plots 2 and 3 to distrain over Plot 1 would appear to be lost on merger in respect of Plot 1. And rent (absent formal apportionment on severance of the reversion) issues out of each and every part of the demised land. Ultimately, however, I could detect no rule of law or rule of equity that the existence of a severed reversion of itself prevents merger as to part. Rather it seems to me that if the other severed reversioners do have a genuine interest in the issue of merger then their interest has to be taken into account in ascertaining whether the equitable presumption against merger is rebutted. It may, perhaps, be that in an appropriate case the absence of the actual consent of the other severed reversioners to the merger as to part will be sufficient so as to conclusively prevent rebuttal of the presumption against merger. In other cases, perhaps, the absence of such consent may (because the interest of the other severed reversioners in opposing merger is, effectively, de minimis) not inform at all the issue as to whether the presumption against merger is rebutted. That there should be no absolute rule of law or equity that absence of the express or implied consent of the other severed reversioners prevents merger as to part seems to me to be in accord with the equitable principles which apply to merger (namely that the same is a matter of intent).

I must, at this stage, comment on surrender as to part where there is severed reversion. Can surrender as to part occur without the consent (express or implied) of all the severed reversioners ? And does the answer to this question inform the issues which arise on merger as to part where there is a severed reversion ? If, as EDF contend, the Lease has continued under Part II there has been a surrender of the "X" land without the consent of all the severed reversioners. By such surrender the severed reversioners lost the right both to distrain upon the "X" land and, perhaps more importantly, to enforce as to the "X" land the user restriction contained in clause 2(7) of the Lease. Although this issue was raised in submissions, no authority was cited to me which would assist on this question. As far as I am aware it is not considered in any textbook, indeed it may never have been considered at all. It may have no practical relevance on the facts of this case. Masterdent Ltd has the benefit of being registered under Title Number NGL 8273728 as Proprietor with TitleAbsolute of the freehold estate in the "X" land (entirely free of the Lease). It is difficult to see how the user covenant in clause 2(7) of the Lease confers any meaningful benefit on either Plot 31 or 26. The annual rent due under the Lease which should be apportionable to Plots 31 and 26 cannot be a matter of, at the most, a few pence or pounds and, in any event, the sub-station offers the ideal subject matter for distraint. But I do incline to the view that where there is a severed reversion a surrender as to part requires the consent (express or implied) of all the severed reversioners (save, perhaps, in a case where there has both been a formal apportionment of the rent and none of the covenants in the lease "touch and concern" the reversion of the other severed reversioners). To this extent, therefore, there may be a subtle difference between the principles applying on merger (as I have analysed them above) and surrender.

Against this background I turn to consider whether, in respect of Plot 2, the presumption against merger is rebutted. I do not intend to deal with this matter simply on the basis of the location of the burden of proof but it does seem to me that the burden of proof on this point is borne by Mr Small. Were it relevant I would have held that BOH and Layhawk had failed to discharge that burden (since, quite understandably, they were unable to advance any evidence whatsoever of any positive intent on the part of EDF to effect merger).

There is no direct evidence (either way) of the intent of EDF (or of the other two severed reversioners) in respect of merger following the acquisition of the freehold of Plot 2 by EDF on 23 December 1993. The reality, on the balance of probabilities, is that neither EDF (nor the other two severed reversioners who in all probability knew nothing whatsoever about the acquisition of the freehold of Plot 2) ever directed their minds to the question of merger. Whilst it is true that following the acquisition of the freehold of Plot 2 EDF stopped paying any of the rent due under the Lease I do not think that this evidences any intent to merge. On the contrary, it seems to me to be entirely neutral since EDF (absent any formal apportionment of the rent due under the Lease following initial severance of the reversion) could have paid the whole £25 rent as reserved by the Lease to itself (a pointless circular transaction). But if any evidence of intent to merge could be derived from the non-payment of rent this is more than balanced out by the fact that no application to merge was made by EDF when it became registered as proprietor of the freehold land comprised in Title Number NGL 541578. Thus Title Number MX 269363 continued in existence (without Plot 2 being taken out). This could not have occurred if there had been an express application for merger to HM Land Registry. On 6 November 2000 HM Land Registry wrote to EDF's solicitors indicating that, having inspected their files, HM Land Registry could not find any clear evidence as to merger one way or the other. This would clearly indicate that these files do not disclose any express application by EDF for merger. Over and above this, there is no further evidence on the issue of merger but merger was clearly to EDF's detriment granted the fact that the freehold carried no easements over Plot 20 whatsoever and that merger in respect of Plot 2 would give rise to the Harris v. Flower problem over Plot 26 (so far as use of Plot 26 for access to Plot 2 was concerned). That of itself, on the authorities, is sufficient to support the presumption against merger. Indeed it seems astounding, objectively analysed, that EDF should have paid £237,500 to Mr Dormer to acquire the freehold of Plot 2 if, thereby, it was going to lose its access and cabling rights over Plot 26 and Plot 20. To impute such an intention (absent direct evidence of intention) to EDF is absurd. When there is added into the equation the fact that the other severed reversioners in all probability knew nothing about what had occurred and, most certainly, did not give express or implied consent to merger the presumption against merger is only strengthened.

I can, therefore, find nothing which rebuts the presumption against merger and, so, merger did not occur.

PART XI CONTINUATION

As there was no merger then when the Lease came to an end by effluxion of time on 24 June 1994 there was statutory continuation thereof under section 24(1) of the 1954 Act (since, as at that date, the premises demised by the Lease undoubtedly included (Plot 2) premises which were occupied by EDF for the purposes of its business (section 23(1))). Subject to any issues of forfeiture or surrender (to which I shall turn below) that statutory continuation remains in existence. Indeed, it can never be ended without the consent of EDF - granted the decision in Dodson Bull.

Lest, however, this matter were to proceed further I should consider, briefly, what the position would have been had there been a merger in respect of Plot 2 prior to 24 June 1994. Mr Small accepts that the Lease would have continued, in accordance with its contractual term up to 24 June 1994 in respect of Plots 26 and 31. His submission, however, is that what was occurring on Plots 26 and 31 as at the date of expiry of the contractual term created by the Lease was not sufficient to constitute "business occupation" by EDF sufficient to satisfy the requirements of section 23(1) of the 1954 Act. Hence there would be no statutory continuation of the Lease under section 24(1) in respect of Plots 26 and 31 alone.

As to Plot 31 I find it easy to accept Mr Small's submission. Part of Plot 31 had been enclosed within Unit 35 and enjoyed as part of Unit 35 by Mr Avanzato since 1987. As to the remainder of Plot 31, this was a thin strip of land, some 4 to 6 foot below the retaining wall of Plot 2. At some point it had been possible to gain access from Plot 2 to the remainder of Plot 31 but, subsequently, Plot 2 became entirely fenced off from the remainder of Plot 31 so that there was no means of accessing the remainder of Plot 31 from Plot 2 (save by climbing the security fence around Plot 2). I think it more likely than not that Plot 31 became entirely fenced off from Plot 2 at the time when the works were effected to the sub-station in 1987/1988. That was when, according to Mr ThornhilFs evidence on behalf of EDF, a new security fence was erected on the northern boundary of Plot 2. So, by 24 June 1994, Plot 31 was entirely fenced off from Plot 2. In these circumstances, I find it easy to say that EDF was not in occupation, yet alone in "business occupation", of Plot 31. No cables ran under Plot 31 and the most that EDF's evidence established was that weeds on Plot 31 would be sprayed by EDF (through the security fence) after Plot 31 became entirely inaccessible from Plot 2.

Plot 26 is somewhat more difficult. Mr Small referred me to the speech of Lord Nicolls in Graysim Holdings v. P & O Property Holdings Ltd [T996] AC 329 at 334F to 336F. To attract Part II protection there must be "physical use of the property by the tenant for the purposes of his business". This is a good starting point but it is not a test which will provide an answer in all cases. Ultimately the question is, as Mr Small submitted, one of fact and degree, dependant on the nature of the premises, the use to which they are being put and the rights enjoyed or exercised by the persons in question. Now, at 24 June 1994,1 am satisfied that Plot 26 was the subject matter of fly tipping, fly parking and generally overgrown and unkempt. There may have been an external fence but no one on behalf of EDF could say that such fence enclosed Plot 26 as opposed to being somewhere on, or at the extremities of the southern boundaries of, Plot 20. In any event such fence did not in any meaningful way prevent access to Plots 20 and 26. It was run down and broken. There was, however, an access way across Plots 20 and 26 to the double gates in the security fence on the southerly boundary of Plot 2. As a matter of fact and degree it seems to me that (subject to the cables) EDF was not in occupation, let alone business occupation, of Plot 26. But underground were a large number of vital cables on which the whole sub-station depended. EDF had no need to occupy the surface of Plot 26 (save for the access way) - EDF's interest lay in what was underground. Does this make a difference ? I find this a difficult question but, ultimately, it seems to me that Mr Small is right in saying that the use of Plot 26 has, to use his words, the whole flavour of being an easement rather than occupation (both in respect of the access way and the cables). In Re Pitsea Access Road, Basildon f 1979] 1 WLR 767 it was held that a right of way was not property which could be described as "occupied" by a tenant and if it were the only property demised to the tenant it was outside the 1954 Act. The issue in Re Pitsea Access Road was different from the present but it does support the proposition that user in the nature of an easement is not the same thing as business occupation for the purposes of attracting Part II protection. Accordingly, I would accept Mr Small's submission that as 24 June 1994 Plot 26 (if considered in isolation from Plot 2) was not being occupied by EDF for the purposes of its business within the meaning of section 23(1) of the 1954 Act.

FORFEITURE

Mr Small submits that the Lease has been forfeited for non-payment of rent in respect of both Plots 26 and 31. It is necessary to note that the severed reversioner in respect of Plot 26, up to 15 March 2002, was Electrical Distributing Company Limited (which appears to be independent of Mr Todd's group of family companies). Only as from 15 March 2002 did Commercial Rentals Limited become the registered proprietor (with the registered proprietor now being Layhawk). In its Defence in this Action Layhawk adopts the Defence of BOH. In paragraph 47 of BOH's Defence it is averred that there had been forfeiture of the Lease, insofar as it related to Plot 26, for non-payment of rent. The act of forfeiture relied upon is the erection of a fence which separated both Plots 26 and 20 from the highway. Since the erection of such fence EDF has, it is said, been excluded from possession of both Plots 26 and Plot 20.

In his Skeleton Argument for trial Mr Small put matters somewhat differently. So far as forfeiture of Plot 26 was concerned he did not rely on erection of the fence but, rather, said that the Lease was forfeited through the grant, on 27 March 1999, of the lease by Containerised to Commercial Rentals Limited. I find this argument impossible to understand. That Lease did not (and could not) include Plot 26. Even if the grant of the Lease of 27 March 1999 could have constituted an act of forfeiture for Plot 31 it could not possibly have effected a forfeiture so far as Plot 26 was concerned since Electrical Distributing Company Limited was the severed freehold reversioner on Plot 26 until 15 March 2002. Mr Small's closing submissions again made no reference to the alleged fence but suggested that forfeiture as to Plot 31 by the grant of the lease of 27 March 1999 equalled forfeiture as to the whole (i.e. Plot 26 and, presumably, Plot 2 as well). Again I find that impossible to accept. I do not see how anything in section 140 of the 1925 Act would allow a severed reversioner to forfeit in respect of land comprised in the tenancy of which he was not the severed reversioner.

There are further problems with the claim to forfeiture :-

(1) it is not necessarily the case, even though no rent was physically paid by EDF, that EDF was in breach of the covenant contained in the Lease to pay the £25 annual rent. On severance of the freehold reversion on the Lease there was no formal apportionment of rent (i.e. no apportionment agreed by EDF, made under statutory powers or under court order). In these circumstances, absent formal apportionment, EDF could pay the whole of the £25 to any of the severed freehold reversioners. It could, therefore, pay the £25 to itself. It did not actually do so but why should it not be treated as if it had, in fact, done so ? If so, there would be no breach of covenant in any event;

(2) where forfeiture takes place by physical re-entry the acts relied upon must be unequivocal. At best the grant of the lease of 27 March 1999 is an equivocal act, since there is no indication that Commercial Rentals Limited ever entered into occupation of any part of Plot 31. The act of forfeiture must manifest an intent to forfeit and the act must be communicated to the tenant. None of these conditions are satisfied in respect of the grant of the lease of 27 March 1999. Indeed, I am more than satisfied that as at the date of the grant of this lease Containerised had no intention, whatsoever, to forfeit the Lease (whether in respect of Plot 31 or Plot 26). Containerised had just purchased Plots 20 and 31 and Mr Todd's initial correspondence with EDF (starting 25 March 1999) is concerned with what is said to be unlawful trespass by EDF across Plot 20. I am more than satisfied that the suggestion that the lease of 27 March 1999 was granted with a view to effecting forfeiture of Plot 31 (and even more so Plot 26) is nothing but a figment of retrospective historical imagination. The lease of 27 March 1999 was entered into for whatever good commercial reasons existed as between Containerised and Commercial Rentals Limited. It had nothing to do with forfeiture at all;

(3) reliance has, also, been placed in the past, although I am not sure how much reliance is placed thereon now, on the lease which Commercial Rentals Limited entered into with Mr Avanzato on 6 March 2001. I am satisfied that this was entered into simply to regulate dealings between Commercial Rentals Limited and Mr Avanzato in respect of the part of Plot 31 which Mr Avanzato was occupying. It most certainly was not an unequivocal act manifesting an intent to forfeit. In any event, neither Containerised nor Commercial Rentals Limited were the freehold owners of Plot 26 at this stage (so the 2001 lease cannot effect a forfeiture of Plot 26).

As to the fence, I shall deal with this very briefly as it did not feature in Mr Small's submissions. EDF says that the fence is not, in fact, on the boundary of Plot 26 but, rather, on the southerly boundary of Plot 20. But, wherever the fence is, it did not enclose Plot 26 against EDF. As occurred in 2007, EDF could easily enter upon Plot 26 by unwelding the gates on the southern boundary of Plot 2. It was EDF's choice to have those gates welded. And, until 2003, the gates were not even welded at all. Nor were any steps taken by Commercial Rentals Limited or Layhawk (from March 2002) to remove or disconnect any of the cables on Plot 26. So EDF continued to pass electricity through the large number of cables on Plot 26. Again, therefore, no unequivocal act has occurred which manifests any intention to forfeit.

I therefore reject the contention that there has been forfeiture of the Lease so far as it relates to either Plots 26 or 31.

SURRENDER

There has been no express surrender by deed in this case but, nevertheless, Mr Small submits that the tenancies of Plots 31 and 26 have been surrendered by operation of law. The principles applicable were recently considered by the Court of Appeal in Bellcourt Estates Ltd v. Adesina [2005] 2 EGLR 33. Mere abandonment is not enough. The relevant principles can be found in paragraphs 19 and 20 of the judgment of Longmore L.J. :-

"The conduct of the parties must unequivocally amount to an acceptance that the tenancy has ended. There must either be relinquishment of possession and its acceptance by the landlord, or other conduct consistent only with the cesser of the tenancy, and the circumstances must be such to render it inequitable for the tenant to dispute that the tenancy has ceased or such as to render it inequitable for the landlord to dispute that the tenancy has ceased".

Peter Gibson L.J. said (paragraph 30):-

"The doctrine of surrender by operation of law is founded upon the principle of estoppel, in that the parties must have acted towards each other in a way that is inconsistent with the continuation of the tenancy. That imposes a high threshold, which must be crossed if the tenant is to be held to have surrendered and the landlord is to be held to have accepted the surrender".

As to Plot 26 I have no difficulties whatsoever. EDF's cables have remained on Plot 26 throughout (being maintained and serviced in 2007). Since the dispute started EDF's wish has been to maintain both its access rights and cabling rights through Plot 26. EDF has done nothing unequivocally to amount to an acceptance that the Lease so far as it concerned Plot 26 was ended. On the contrary, its position throughout has been that it wishes to establish, and vindicate, its rights over Plot 26. There can be no question of surrender by operation of law in respect of Plot 26.

Plot 31 I find to be more difficult. Part of Plot 31 has been occupied since at least 1987 by Mr Avanzato as part of Unit 35. The remainder of it has been fenced off from Plot 2 (with no means of access to it from Plot 2 since, on my findings, 1987/1988). The most that EDF has done is to spray weeds on Plot 31 through the security fencing on Plot 2.1 have no difficulties in finding that it did this not to protect Plot 31 but to prevent the weeds from entering on to Plot 2. On balance, therefore, I hold that EDF has abandoned Plot 31 and, with the passage of time, that abandonment has been accepted by the reversioner in circumstances where it would now be inequitable for both EDF and the reversioner to assert the continued existence of the Lease. The acceptance of abandonment is only confirmed by Mr Avanzato entering into his lease on 6 March 2001 with Commercial Rental Limited Accordingly, in my view the correct analysis of the facts which have occurred in respect of Plot 31 is that there has been a surrender thereof by operation of law.

The issue which I identified in paragraph 67 above does not, on the facts of this case, arise. If (as I have found) there were a surrender by operation of law in respect of Plot 31 then all the severed reversioners will, expressly or impliedly, have consented thereto (EDF because it abandoned possession of Plot 31 and BOH and Layhawk because it is their contention in this Action that there was, indeed, such a surrender by operation of law).

PLOT 20 AGAIN

The Lease is not noted on the freehold titles to Plot 20 (NGL 770835 and, subsequently, NGL 816821). This led to a large part of the Skeleton Arguments and, indeed, Mr Stoner's opening and closing submissions being devoted to the question whether the easements as granted by the Lease were binding on, and exercisable against, Plot 20. Eventually, however, during the course of his closing submissions a revelation of Pauline proportions came to Mr Stoner namely that if the title of The British Transport Commission to Plot 20 was unregistered as at the date of the grant of the Lease (20 February 1953) then the easements granted by the Lease would be legal easements within the meaning of section 70(l)(a) of the Land Registration Act 1925 and, hence, overriding interests binding the freehold of Plot 20. Faced with this argument Mr Small, very properly, accepted that he could not see any answer to it and accepted that if Plot 20 was unregistered land in 1953 then the easements as created by the Lease were legal easements and, hence, overriding interests enforceable against BOH as freehold owner of Plot 20. Subsequent enquiry has established that Plot 20 was, indeed, unregistered land as at the date of the grant of the Lease. The complex arguments which I heard, therefore, as to whether, and how, the easements as contained in the Lease could be enforced as against Plot 20 have become, by common ground, irrelevant.

CONCLUSION

My conclusion, therefore, is that the Lease was statutorily continued (under Part II of the 1954 Act) in respect of the whole of the land demised thereby (Plots 2, 26 and 31) when it expired by effluxion of time on 24 June 1994. The Lease has continued, by virtue of Part II, since that date. However, Plot 31 has been the subject of a surrender by operation of law (such a surrender being valid by virtue of section 24(2) of the 1954 Act). Accordingly, the Lease now continues only in respect of Plots 2 and Plot 26.

I will hear submission on hand down as to what Orders I should make in the light of my findings as set out above.

TWO POSTSCRIPTS

I wish to pay the greatest tribute to the assistance which I have received from Mr Small QC and Mr Stoner. Their detailed and careful arguments, both on the facts and the law, have been invaluable. If Mr Small QC features rather more in this judgment than Mr Stoner it is simply because the logical way in which to approach the issues which arose was to follow the structure of Mr Small's submissions.

I would also like to apologise to the parties for the fact that I was unable to hand down this judgment until 4 December 2009. The hearing concluded on 20 July but as a result of the issues raised in Mr Small's closing submissions I allowed a round of written submissions which were to be lodged with me by 7 September 2009. Knowing that (because of other commitments) I had no time whatsoever available in November to write or to hand down my judgment I arranged a date for hand down in October and set aside time to write the judgment. Unfortunately, I was then taken ill during the very time I had set aside to write this judgment. Accordingly the original date for hand down had to be vacated and my November commitments prevented me from writing and handing down this judgment until 4 December 2009.