Bolton (H L) (Engineering) Company Ltd v T J Graham & Sons Ltd

JurisdictionEngland & Wales
Judgment Date1956
CourtCourt of Appeal
[COURT OF APPEAL.] H. L. BOLTON (ENGINEERING) CO. LTD. v. T. J. GRAHAM & SONS LTD. [Matter No. M. 1678. OA. 18.] 1956 Oct. 8, 9. Denning, Hodson and Morris L.JJ.

Landlord and Tenant - Act of 1954 - Business premises (Security of Tenure) - Landlord's intention to occupy for own purposes - Purchase within five years - Meaning of “purchased” - Interest of landlord merged in freehold landlord's interest within five years of end of current lease - Whether landlord's interest “purchased” - Intention of company - How shown - Landlord and Tenant Act, 1954 (2 & 3 Eliz. 2, c. 56), s. 30 (1) (g), (2). - Company - Psyche - Intention - Landlord and tenant - Intention to occupy - State of mind of managers is state of mind of company - Landlord and Tenant Act, 1954, s. 30 (1) (g).

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 Landlord and Tenant Act, 1954.F1 Company B, however, moved out in February, 1955, surrendering their tenancy to the freehold landlord company A, which thereupon served notice in accordance with the Act on company C. Company C as tenants of business premises claimed the protection of the Act of 1954 and applied for a new tenancy. The landlord company opposed the grant of a new tenancy on the ground, inter alia, that they intended to occupy the holding for their own business within section 30 (1) (g).

Previously to the hearing of that application in the county court there had been no board meeting or other collective decision showing the intention of the landlords to occupy the premises in question. The business of the landlords was customarily managed by their directors, who held only one board meeting a year, but who had in their managerial capacity affirmed such an intention and had taken practical steps to that end.

On the contentions of the applicant company C, (1) that the surrender by company B of its tenancy constituted a “purchase” of the interest by the landlords within the meaning of section 30 (2) of the Act of 1954 such as to debar the landlords from relying on paragraph (g); and (2) that the landlords had not proved the necessary intention to occupy:—

Held, (1) that the word “purchased” in the Act of 1954 was to be construed in the same way as it had been construed in the Rent Restriction Acts to mean “bought for money”; and, accordingly, the interest which had merged in the landlords' freehold interest by operation of law on the surrender of the tenancy by company B was not “purchased” so as to debar the landlords from relying on paragraph (g).

Per curiam. The introduction of the word “created” in section 30 (2) indicated that the decision in Powell v. Cleland [1948] 1 K.B. 262; 63 T.L.R. 626; [1947] 2 All E.R. 672 did not apply under the Landlord and Tenant Act, 1954.

(2) That the intention of this company could properly be inferred from the intention of its officers and agents, having regard to the nature of the matter under consideration, the relative position of the directors, and the other relevant acts and circumstances of the case.

Per curiam. The state of mind of directors and managers who represent the directing mind and will of a company and control what it does is the state of mind of the company and is treated by the law as such.

APPEAL from Judge Forbes, sitting at Birmingham County Court.

In 1941, a limited company, T. J. Graham & Sons Ltd., builders' merchants, purchased with vacant possession an area of some six acres of land and the buildings thereon in Queen's Head Road, Handsworth, Birmingham, as a new depot for their business. Owing to war conditions, they were unable to develop it at that date, and, accordingly, let the whole of the land and buildings to another company, Tubes Ltd., under a lease which enabled either side after the war to determine it by three months' notice. Tubes Ltd. used a good deal of the land themselves; but they sublet some of the buildings to a Mr. Bolton, precision engineer, as from 1941, under a lease which, in turn, was determinable by three months' notice. In 1946 Mr. Bolton turned his business into a limited company, H. L. Bolton (Engineering) Co. Ltd., and his sub-tenancy was taken over by the limited company. The position, therefore, from 1946 to 1954, was that the superior landlord of the whole six acres was T. J. Graham & Sons Ltd.; the tenant of the whole was Tubes Ltd.; the sub-tenant of part, namely, the buildings, was H. L. Bolton (Engineering) Co. Ltd.

On July 22, 1954, T. J. Graham & Sons Ltd., by their secretary, gave notice to Tubes Ltd. to determine the tenancy on December 25, 1954. Their letter stated:

“It is our intention to commence developing the above site at the early part of next year, and in these circumstances it is necessary for us to give you formal notice to determine your tenancy on December 25 next.”

That notice would have been effective at common law to have determined the tenancy of Tubes Ltd., but before that notice expired, on October 1, 1954, the Landlord and Tenant Act, 1954,F1 came into operation. The effect of that Act was to render the notice to quit of no effect. The tenancy of Tubes Ltd. was varied by statute so that it could no longer be determined by three months' notice but only by a six-months' notice of termination. A similar statutory variation was imported into the sub-tenancy between Tubes Ltd. and H. L. Bolton (Engineering) Co. Ltd.

Tubes Ltd., however, did not take advantage of this new statutory variation. They thought that they were bound to go by reason of the existing notice to quit, and they went — not on December 25, 1954, when the notice to quit would expire, but a few weeks later, in January or February, 1955. They gave up the land which they occupied and they handed over everything, so far as they could, to the superior landlords, T. J. Graham & Sons Ltd. As a result of that surrender the intermediate tenancy dropped out. The sub-tenants, H. L. Bolton (Engineering) Co. Ltd., became direct tenants of the superior landlords, T. J. Graham & Sons Ltd., and claimed that they were entitled to the protection of the Landlord and Tenant Act, 1954, in respect of the buildings which they occupied for their business.

The superior landlords still wished to get possession of the premises, because they wanted to develop the whole site as a depot for their business. Accordingly, on October 25, 1955, T. J. Graham & Sons Ltd., by their secretary, served a notice on H. L. Bolton (Engineering) Co. Ltd. to terminate their tenancy on April 26, 1956. That notice of termination complied with the Act of 1954. At the same time, and in accordance with the Act, they gave notice to the tenants, H. L. Bolton (Engineering) Co. Ltd., that they would oppose an application to the court for grant of a new tenancy, on the ground

“that on termination of the tenancy we intend to demolish certain parts of the premises and recontruct them and to occupy the whole of the premises for our own purposes.”

On receipt of that notice, H. L. Bolton (Engineering) Co. Ltd. took the necessary steps to bring the matter to the court, claiming that they were entitled to a new tenancy. In answer, the landlords relied on two provisions of the Act to resist any new tenancy: (1) section 30 (1) (f), on the ground that they intended “to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction”; and (2) section 30 (1) (g), which enables a landlord to resist a new tenancy on the ground:

“that on the termination of the current tenancy the landlord intends...

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