Connaught Fur Trimmings Ltd v Cramas Properties Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Harman,LORD JUSTICE DANCKWERTS,LORD JUSTICE SALMON,Lord Justice Danckwerts |
| Judgment Date | 06 November 1964 |
| Judgment citation (vLex) | [1964] EWCA Civ J1106-2 |
| Court | Court of Appeal |
| Date | 06 November 1964 |
[1964] EWCA Civ J1106-2
In The Supreme Court of Judicature
Court of Appeal
From Mr. Justice Sachs
Lord Justice Harman
Lord Justice Danckwerts and
Lord Justice Salmon
Mr. G. Avgherinos (instructed by Messrs Aukin & Co.) appeared as Counsel for the Appellants. MR. E. H. SCAMELL (instructed by Messrs Philip Taylor & Co.) appeared as Counsel for the Respondents.
Mr. Justice Sachs, from whose decision this is an appeal, was in my judgment amply justified in characterising the problem it raises as the opposite of nice. It is, to put it bluntly, a nasty ticklish point on which my mind and those of my brethren have varied from side to side as the argument proceeded.
The facts are very simple and not in dispute. On the 16th January 1950 an under lease of certain warehouse property in the Parish of St. Marylebone was granted to a firm called W. Good kind & Sons Ltd., manufacturing furriers for a term of 14 years less three days from midsummer 1949 with a covenant by the under lessee to use the property far the purposes of a manufacturing furrier only. This indeed they did until 1961. when they contracted to sell the lease to the plaintiffs in this case. In pursuance of that contract the property was assigned on the 1st March 1961 to the plaintiffs for the residue of the term. Good-kind removed their business to other property in the vicinity and the plaintiffs took possession and carried on their similar but unrelated business in the demised premises. In the year 1962 the head lease was surrendered to the defendants, who thus became direct lessons of the plaintiffs. In December 1962 the defendants served notice on the plaintiffs under the Landlord and Tenant Act 1954 to terminate their tenancy at mid-summer 1965 and intimated that they would not be willing to (grant a new lease because they intended at the termination of the tenancy to demolish the whole of the property. This intention was not disputed by the plaintiffs 'who, conceding that they could not by service of a counter notice obtain a new lease, agreed to quit upon the footing that the defendants should pay them such compensation as the 1954 Act provided for the case. The plaintiff's nave demanded, and the learned Judge has awarded them, £1,300 compensation, being the agreed ratable value of the holding. The defendants deny that any compensation is payable having regard to paragraph 5 of the Ninth Schedule to theAct. Compensation to tenants at the expiration of their leases was first envisaged by the legislature in 1927. By the Landlord and Tenant Act of that year (Part I), compensation to tenants of business premises (or a new lease in lieu thereof) was provided in respect, first, of certain improvements done by the tenant and, secondly, by Section 4 for goodwill. The tenant, in order to entitle him to the latter, must show during net less than five years the carrying on by him or his predecessors in title of a trade or business and that goodwill had become attached to the premises which would therefore command a higher rent. There was an alternative proposal for a new lease at a rent to be fixed by a tribunal which was to disregard under Section 4(3) "the value of any goodwill which may have become attached to the premises by reason of the tenant or his predecessors in title having carried on thereat a particular trade or business".
This part of the Act admittedly worked badly because of the many limitations imposed it became settled law that the predecessor in title to whom the Act referred was a predecessor in title of the property and not a predecessor in the business and this too was a source of grievance. In 1954, by the Landlord and Tenant Act of that year, a different scheme was propounded. In general, business tenants were to be entitled to security of tenure but there were exceptions of various kinds, including that which is relevant here, the intended demolition of the property by the landlord. In that event under Section 37, "then subject to the provisions of this Act the tenant shall be entitled to recover compensation". This, in the general case, did not depend upon goodwill but was mere compensation for disturbance and was limited to one year's rate able value as here claimed. If, however, the outgoing tenant could prove that he came within the terms of sub-section (3), he could obtain two years rate able value. Sub-section (3) is in these terms: "The said conditions are (a) that, during thewhole of the fourteen years immediately preceding the termination of the current tenancy; premises being or comprised in the holding have been occupied for the purposes of a business carried on by the occupier or for those and other purposes; (b) that, if during those fourteen years there was a change in the occupier of the premises, the person who was the occupier immediately after the change was the successor to the business carried on by the person who was the occupier immediately before the change". Notice that here you find the words "successor to the business". This formula is in substance repeated in Section 38 with the substitution of five for fourteen years. That section limited the right of contracting out of the Act and seems to re-introduce to some extent a ration of compensation for goodwill. In oases outside Section 38 (l) and (2) contracting out was allowed by Section 38(3) and this was a difference from the Act of 1927. Thus a person who during the whole fourteen years had carried on a business was entitled to two years compensation, but if there had been a change in the occupier during the fourteen years, the last occupier must prove that he had succeeded to his predecessor's business in order to get two years.
There are other references in the Act which nay be relevant. Thus under Section 34(b) I find these words: "any goodwill attached to the holding by reason of the carrying on thereat of the business of The tenant (whether by him or by a predecessor of his in that business)".
So far, therefore, there have boon covered the two cases of a tenant vacating before the 1954 Act who was entitled to compensation based on creation of goodwill and a tenant whose tenancy arose after the 1954 Act who (in the absence of contracting out) was entitled to one year's, and in certain circumstances to two years', compensation. By the Ninth Schedule the legislature turned to what were called "transitional provisions", that is to say, broadly speaking cases of tenancies current atthe coming into force of the Act. Paragraph 4 of this schedule is very obscure and only relevant because of these words in Paragraph 4(c) "that the tenant is either the tenant under the tenancy at the coming to an end of which it took effect or a successor to his business". The crux of this case is Paragraph 5, which is in these terms: "A tenant under a tenancy which was current at the commencement of this Act shall not in any case be entitled to compensation under Section 37 or 59 of this Act unless at the date on which he is to quit the holding the holding or part thereof has continuously been occupied for the purposes of the carrying on the tenant's business (whether by him or by any other person) for at least five years". The reference to a five-year period here is an echo of the like period chosen in Section 3 of the Act and I think too in Section 4 of the Act of 1927. Thus, a tenant who has lost the right to compensation under the 1927 Act will nevertheless only obtain the compensation under the 1954 Act if he satisfies the conditions in paragraph 5. On the other hand, if he is a tenant whose tenancy is current at the coming into force of the 1954 Act, the landlord will not have had a chance to exclude him from the compensation by contracting cut.
What is the meaning of the words "the tenant's business? If they stood alone, I should certainly say they meant - the business of the tenant", and I compare Section 34(b), that is to say, it would be necessary to prove that he had carried on the business continuously for five years, but the section adds the words "whether by him or by any other person", and this is a phrase nowhere else found. It is not suggested that this means carrying on the business by an agent or manager, for qui facet per alum facet per se. On the one hand it is said to mean "by himself or as successor in the business", that is to say, there must be one particular business carried on. throughout. On the other hand, it is said that it means one type of business by whomever carried on. In the formercase the plaintiffs fail, for they are rot successors in business to Good kinds. In latter they succeed, for the same type of business has been continuously carried on upon the property. The learned judge has decided in favour of the plaintiffs, and on the whole I agree with him. I cannot bring myself to believe that the legislature, after referring in Paragraph 4 of this very schedule, not to speak of Section 37(2)(b) and Section 38(2)(b) and elsewhere in the Act, to the successor in the business where that was meant, would deliberately change the phrase to "any other person" in. Paragraph 5 unless a different meaning was intended. The words are patient of Meaning that where a particular type of business has been carried on over five years compensation will be payable, equally with the other meaning that the tenant has carried on one particular business over the period by himself or as successor. The former meaning harks back to the ideas behind the 1927 Act which gave compensation for inherent goodwill, and it is said that this is illogical because the 1954 Act has swept away the goodwill concept in favour of that of compensation for disturbance. But thin, in my judgment, is only true of the one-year compensation and not the two-year, and I do not find it illogical...
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