VCS Car Parl Management Ltd v Regional Railways North East Ltd

JurisdictionEngland & Wales
JudgeTHE VICE-CHANCELLOR,LORD JUSTICE SWINTON THOMAS,LORD JUSTICE ROBERT WALKER
Judgment Date16 November 1999
Judgment citation (vLex)[1999] EWCA Civ J1116-11
CourtCourt of Appeal (Civil Division)
Date16 November 1999
Docket NumberCCRTF 99/0004/B2

[1999] EWCA Civ J1116-11

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM SCARBOROUGH COUNTY COURT

(His Honour Judge Gullick)

Royal Courts of Justice

The Strand

London WC2

Before:

The Vice-Chancellor

(Sir Richard Scott)

Lord Justice Swinton Thomas

Lord Justice Robert Walker

CCRTF 99/0004/B2

VCS Car Park Management Limited
Applicant/Appellant
and
Regional Railways North East Limited
Respondent

MISS S RICHARDSON (Instructed by Messrs Irwin Mitchell, Sheffield) appeared on behalf of the Appellant

MISS Z BHALOO (Instructed by Messrs Vizards, London WC1R 4JL) appeared on behalf of the Respondent

1

Tuesday 16th November, 1999

THE VICE-CHANCELLOR
2

This is an appeal from the judgment delivered on 12th October 1998 of His Honour Judge Steven Gullick. The appeal raises a point as to the operation of Part II of the Landlord and Tenant Act 1954. The premises to which the point relates consist of a car park at Whitby Station in North Yorkshire. A lease of the car park was granted on 18th December 1992 by British Railways Board, which at that date ran the British Rail system under the provisions of the Transport Act 1962. The lease was granted to the appellant before us, VCS Car Park Management Ltd (to whom I shall refer for convenience as "VCS"). The lease that was granted to VCS was a six-year term running from 24th August 1991 to 23rd August 1997. As is perhaps obvious, VCS intended to use and did use the demised premises, purposes, for its business purposes, namely, as a car park serving those who used Whitby Station.

3

The tenancy which VCS held was a tenancy to which the provisions of Part II of the Landlord and Tenant Act 1954 applied. By 2nd October 1996, the landlord under the 18th December 1992 lease had become Regional Railways North East Ltd (to whom I shall refer for convenience as "Regional Railways"). The manner in which Regional Railways had become the landlord in respect of the lease is a somewhat convoluted one, and I shall have to devote a little time to explain it. Be that as it may, on 2nd October 1996 Regional Railways served notice on VCS under section 25 of the Landlord and Tenant Act 1954 terminating the tenancy on 23rd August 1997. It was stated in the notice that if VCS should apply to the court under Part II of the Act for the grant of a new tenancy, Regional Railways would oppose it on ground (g) of section 30(1) of the Act. Let me turn to that section and that ground because it is central to the issues that arise in this appeal.

4

Section 30(1) of the 1954 Act sets out the grounds on which a landlord may oppose an application by a business tenant for a new tenancy. Ground (g) says this:

"subject as hereinafter provided, that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence."

5

In the present case, the point about residence clearly does not apply. The stated intention was that Regional Railways wanted to occupy the car park for the purposes of a business to be carried on by Regional Railways.

6

Subsection (2) of section 30 provides that:

"The landlord shall not be entitled to oppose an application on the ground specified in paragraph (g) of the last foregoing subsection if the interest of the landlord, or an interest which has merged in that interest and but for the merger would be the interest of the landlord, was purchased or created after the beginning of the period of five years which ends with the termination of the current tenancy, and at all times since the purchase or creation thereof the holding has been comprised in a tenancy or successive tenancies of the description specified in sub-section (1) of section twenty-three of this Act."

7

The five-year period runs back to 23rd August 1992. In order to rely on ground (g), Regional Railways had to show that its interest in the premises was not one which had been, for the purposes of sub-section (2), purchased or created after the beginning of the period of five years ending with the termination of the current tenancy, namely 23rd August 1992.

8

I should refer also to section 42 of the 1954 Act, which deals with the position where members of the same group of companies are involved in the creation or purchase of the interest of the landlord. Subsection (1) says that:

"(1) For the purposes of this section two bodies corporate shall be taken to be members of a group if and only if one is a subsidiary of the other or both are subsidiaries of a third body corporate.

In this subsection 'subsidiary' has [the meaning given by section 736 of the Companies Act 1985].

(3) Where the landlord's interest is held by a member of a group—

(a) …

(b) the reference in subsection (2) of [section 30] to the purchase or creation of any interest shall be construed as a reference to a purchase from or creation by a person other than a member of the group."

9

Finally, I think I should refer to section 44 of the Act which defines the meaning of landlord. It says that in the Act the expression "the landlord":

"… means the person (whether or not he is the immediate landlord) who is the owner of that interest in the property comprised in the relevant tenancy which for the time being fulfils the following conditions, that is to say—

(a) that is an interest in reversion expectant (whether immediately or not) on the termination of the relevant tenancy, and

(b) that it is either the fee simple or a tenancy which will not come to an end within fourteen months by effluxion of time, and if it is such a tenancy, that no notice has been given by virtue of which it will come to an end within fourteen months or any further time by which it may be continued by section 36(2) or section 64 of this Act,

and is not itself in reversion expectant (whether immediately or not) on an interest which fulfils those conditions."

10

I must now turn to the manner in which Regional Railways became the landlord under 18th December 1992 lease. These arrangements were part of the consequence of the privatisation of the railways for which provision was made by the Railways Act 1993. A number of steps were taken in pursuance of the object of that Act. If, as I mention them one by one in their chronological order, they seem convoluted and without explanation, I can offer no excuse. I have no doubt that they were all intended to promote the object of the Act, but I do not wish to be asked to explain how that was so.

11

On 30th March 1994 the Secretary of State, in exercise of his power under the Act, directed British Railways Board ("the Board") to transfer to a new company, Railtrack, the undertaking of the Board. Railtrack was a company incorporated by statute. All the shares in Railtrack were initially held by the Secretary of State but later after the preliminary arrangements had been made, were sold to the public. So, on 30th March 1994 the Secretary of State gave the direction to which I have in broad terms referred. On the same day a transfer scheme was signed by the Board and by Railtrack. The transfer scheme effected, as from a date to be fixed by the Secretary of State, the transfer of the Board's undertaking to Railtrack. The property transferred included the Whitby Station car park.

12

Under clause 14 of the transfer scheme, the Board and Railtrack agreed to enter into a lease which became known as "the global lease". The date fixed by the Secretary of State for the transfer scheme to take effect was 1st April 1994. So, on 1st April 1994 the transfer to Railtrack of the car park, along with all the Board's other property, took place. On the same date the global lease was granted by Railtrack to the Board. The global lease was a lease back to the Board of all the property comprised in the transfer, including Whitby Station and the car park, for a term of five years from 1st April 1994 to 1st April 1999. The effect, therefore, of the transfer followed by the lease back was, vis-à-vis the car park and I am concerned with nothing else, that the Board had gone from being a freeholder to being a leaseholder under a five-year lease. Vis-à-vis the car park, the global lease was a reversionary lease. The Board, lessee under the global lease became, as it had been as freeholder, the landlord under the 18th December 1992 lease to VCS.

13

On 14th September 1995 the Secretary of State made another direction under section 85 of the Railways Act 1993. This time he directed the Board to transfer to Railtrack the property comprised in the global lease which had been granted some 18 months previously. Again, the transfer was to take effect on a date to be specified by the Secretary of State. On the same day, 14th September, there was a transfer from the Board to Railtrack of the premises comprised in the global lease. But at the same time, under a clause in the transfer, the Board and Railtrack agreed to enter into another lease (called for convenience "the global station lease"). The Secretary of State specified 17th September for this new scheme to take effect. So, on that date the global lease was transferred by the Board to Railtrack. The effect was a surrender. And on the same day Railtrack granted the Board the global station lease. The premises comprised in the global station lease included Whitby Station and the car park. This lease granted a term which ran from 17th September 1995 to 1st April 1999. So, vis-à-vis the car park, this was a second reversionary lease, the first reversionary lease having been surrendered. Under the global station lease the Board remained the landlord under the 18th December 1992 lease.

14

On 8th December 1995 the...

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