Town Investments Ltd v Department of the Environment
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LAWTON,LORD JUSTICE BUCKLEY,SIR JOHN PENNYCUICK |
| Judgment Date | 10 May 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J0510-4 |
| Date | 10 May 1976 |
| Court | Court of Appeal (Civil Division) |
[1976] EWCA Civ J0510-4
Lord Justice Buckley
Lord Justice Lawton and
Sir John Pennycuick
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Order of Mr Justice Foster.
Mr GORDON SLYNN, Q. C. and Mr PETER GIBSON (instructed by the Treasury Solicitor) appeared on behalf of the Appellant (Defendant).
Mr ROGER PARKER, Q. C. and Mr CHRISTOPHER PRIDAY (instructed by Messrs. Beachcroft, Hyman Isaccs) appeared on behalf of the Respondent (Plaintiff).
The issues
These consolidated appeals raise the following questions. When the Secretary of State for the Environment, acting "for and on behalf of Her Majesty", in September 1973 entered into as tenant two underleases of properties in the West End of London, was the rent payable that reserved thereunder or that which had been payable under tenancies of the same premises which the Secretary of State acting in the same capacity had held on November 5, 1972? The answer to this question depends upon the answers to two more. By whom were the premises occupied under each of these under-leases? Were each of the premises occupied for the purposes of a business carried on by either the Secretary of State or the Crown?
These questions arise under the counter-inflation legislation which first came into operation on November 30, 1972 and continued until March 19, 1975. The relevant statutes are the Counter-Inflation (Temporary Provisions) Act, 1972 and the Counter-Inflation Act, 1973. Both Acts empowered the appropriate Ministers to make Orders restricting increases in rent. Under the 1972 Act the counter-Inflation Order, 1972, (1972 1850) froze the rent reserved in respect of business tenancies as from December 1, 1972. Both the 1972 Act and the Order made under it expired on April 1, 1973 when the 1973 Act and the Counter-Inflation (Business Rents) Order, 1973 came into operation, continuing the freezing of business rents until the 1973 Act itself expired.
If these Acts and Orders applied to the underleases with which these appeals are concerned, then in respect of one set of premises, namely 17 North Audley Street, the annual rent payable was £17,500 instead of £190,000, being the annual rent agreed in September 1973: in respect of the other premises, Keysign House, Oxford Street, the annual rent was £39,690 instead of the agreed annual rent of £369,500. Mr Justice Foster held that they did not apply. He gave three reasons: first, because the Defendant Department could not take advantage of the counter inflation legislation; secondly, because the Defendant Department did not occupy either set of premises; and thirdly because even if it did, the premises were not occupied for the purposes of any business carried on by it. The Defendant Department has submitted that all these three reasons were wrong and that the counter-inflation legislation did apply and produced the results to which I have referred.
The facts
For the purposes of this Judgment I find it unnecessary to go into the facts in much detail. It suffices to mention that Keysign House had been under Government control, partly by lease, partly by requisitioning, since about 1940. By an underlease made on November 25, 1952, the Plaintiffs, the London County Freehold and Leasehold Properties Ltd., let to the Minister of Works "for and on behalf of Her Majesty" most of that building for a term of 21 years expiring on December 25, 1972 at an annual rent of £39,690. The underlease restricted use to offices and for display purposes. A part known asNo, 423 Oxford Street had, however, to be used as a retail shop. Until 1968 this part was used by the Stationery Office for the sale of its publications. From 1969 onwards it had been used as a "Job Centre" by the Ministry of Labour and its successors, the Department of Employment. For most of the period of this underlease the remainder of the building included in it was let to the United States Government. The United States Navy were in occupation at all material times until January, 1974. The Defendant Department, as the Minister of Works' successor, is now getting this accommodation ready for use by the Department of Health and Social Security. It has long maintained the shop part, providing furniture and fittings, paying for the supply of services, doing repairs, supplying and fixing lighting tubes and bulbs, making improvements and cleaning the windows. Although the superficial area of the shop part is only 1.69 per cent of the whole, the annual rental value of the shop is about 35,000, which is approximately 9 per cent of the annual rent reserved by the 1973 underlease. Towards the end of the term reserved by the 1952 lease, the Defendant Department after having applied to the High Court for the grant of a new tenancy under the Landlord and Tenant Act, 1954, negotiated with the lessors for the grant of a new underlease. As a result the September 1973 underlease was made. It was for a term of five years from December 25, 1972 at an annual rent of £369,500, the first paying being due on March 25, 1973. The Defendant Department has refused to pay it, claiming that it is not bound to do so because of the counter-inflation legislation. The terms as to theuser of Keysign House were substantially the same as under the 1952 underlease.
The history of the letting of 17 North Audley Street is much the same. Between 1952 and 1973 the lessors of these premises changed. By September 1973 they were the Plaintiffs, M. E. P. C. (Mayfair Properties) Limited, The original lessee had been the Minister of Works "for and on behalf of Her Majesty". The original term of 21 years expired on December 25, 1972. The annual rent reserved was £17,500. The user was to be for office and ancillary purposes. During the period of this underlease the premises had been used by Government Departments and one statutory body. A new underlease was negotiated with the Plaintiffs, M. E. P. C. (Mayfair Properties) Limited., for a term of five years at an annual rent of £190,000. The covenants as to user were substantially the same as in the 1952 underlease. At all material times after November 5, 1972 the ground, first and second floors of 17 North Audley Street had been occupied by the Registrar of Friendly Societies, the third floor by the Commissioners of Inland Revenue and the fourth and fifth floors by the Commissioners of Customs and Excise for V. A. T. Tribunals. The Defendant Department itself used two rooms in the basement for its own staff of electricians and carpenters. They kept their tools and materials there. The superficial area of these two rooms was 1.94 per cent of the whole. The Defendant Department provided all services: its staff visited the building daily.
The counter inflation legislation
On November 30, 1972 Parliament passed the Counter-Inflation (Temporary Provisions) Act, 1972. Its long title was "An Act to authorise measures to counter inflation." Counsel for the Defendant Department told us that it had passed through all its stages to the Statute Book in one day. It was a piece or crisis legislation. The Act was to apply for a limited period: see Section 1. Section 2 enabled the appropriate Ministers to freeze prices, pay, dividends and rents. Sub-section (4) provided as follows:
"The approrriate Minister may by Order provide for preventing increases of rent over rent payable before 6th November 1972".
Section 3 enacted that existing Contracts of Employment should be modified while Section 2 was in force. Section 8, the interpretation section, contained this provision:
"'business' includes any trade, profession or vocation, and the expression 'in the course of business' shall be construed accordingly".
This definition is different from that in Section 23(2) of the Landlord and Tenant Act, 1954. Paragraph 8 of the Schedule to the Act has two sub-paragraphs which are of some relevance in deciding whether the Defendant Department is entitled to take advantage of the Act by paying the old rents rather than the new ones. They read as follows:
"(1) Although this Act does not bind the Crown, an Order may be made under this Act so as, withoutimposing any obligation on the Crown as an employer or otherwise, to apply (either expressly or impliedly) to persons employed by or under the Crown, and Section 5(2) of this Act shall apply accordingly.
(2) Section 3 of this Act shall apply, where a person employed by or under the Crown has any enforceable claim to remuneration for that employment, as it applies in the case of an employee of a private person".
The next day, December 1, 1972, the appropriate Minister, being the Secretary of State for the Environment, made the Counter-Inflation (Business Rents) Order, 1972 (No. 1850). On the same day he made the Counter-Inflation (Rents) (England and Wales) Order 1972 (No. 1851) which froze the rents of dwellinghouses; and the Minister of Agriculture, Fisheries and Food made the Counter-Inflation (Agricultural Rents) Order 1972 (No. 1949) which did the same for the rents of agricultural holdings. Article 2(2) of the Business Rents Order contained the following definitions: "'business tenancy' means any tenancy where the property comprised in the tenancy is or 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 but does not include a tenancy of or a right to occupy land used for agriculture; 'business' includes a trade, profession or employment and includes any activity carried on by a body of persons, whether corporate or unincorporate;"
Article 3 froze business rents at the rates and for the period specified in the Order, Article 9 provided that, subject to Article 8 (which created offences) any...
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