Wagle v Trustees of Henry Smith's Charity Kensington Estate
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE TAYLOR,SIR JOHN MEGAW |
| Judgment Date | 23 November 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J1123-3 |
| Docket Number | 88/0988 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 November 1988 |
[1988] EWCA Civ J1123-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WEST LONDON COUNTY COURT
MR. RECORDER RUSSELL
Royal Courts of Justice
Lord Jusice Dillon
Lord Justice Taylor
and
Sir John Megaw
88/0988
and
MR. DEREK WOOD Q.C and MR. TIMOTHY FANCOURT (instructed by Messrs Bailey Shaw & Gillett) appeared on behalf of the Appellants (Respondents).
MR. DAVID NEUBERGER Q.C., MR. JOHN FURBER, and MR. ROGER MULLIS (instructed by Messrs Denton Hall Bergin & Warrens) appeared on behalf of the Respondents (Applicants).
LORD JUSTICE DILLON: At the outset of this appeal, I anticipated that the court would wish to reserve judgment because a case on a very similar point has been recently argued before another division of the Court of Appeal which has reserved judgment on that point. Having heard, however, Mr. Wood's careful and very helpful exposition of the successive Rent Acts and of the principal authorities, I have reached the firm conclusion that this court is bound by previous Court of Appeal decisions to dismiss this appeal. Accordingly, no useful purpose would be served by reserving judgment, and we have not felt it necessary to call on Mr. Neuberger for the respondents.
The appeal is from an order dated 23rd March 1988 of Mr. Recorder Russell, sitting in the West London County Court. By that order he declared that a lease dated 2nd May 1972 of certain premises known as 8 Sydney Close, in South Kensington, London SW7, was not a protected tenancy within the meaning of the Rent Act 1977. The present appellants, Miss Wagle and Mr. Tippett, are the current assigns of that lease. The Trustees of Henry Smith's Charity are the landlords. They are the respondents to this appeal, and they had applied in the county court for a declaration that the lease was not a protected tenancy within the meaning of the Rent Act 1977, that is to say the declaration which the Recorder made.
The lease was originally granted by the then trustees to a Miss Barbara Ann Nichols. The demised premises are described as:
" ALL THAT Studio known as Number 8 Sydney Close, South Kensington London S.W.7. (hereinafter called 'the Premises')…"
as delineated on a plan. The premises were granted with certain rights of access exercisable by the tenant only in connection with the user of the premises as a studio. The lease was granted for a term of seventeen and a quarter years from 25th March 1972 at a rent payable quarterly. There was provision for rent review at the end of the seventh or the fourteenth year of the term, and there was a user covenant, which is the only covenant I need mention by the tenant in covenant 14(a) as follows:
"Not at any time during the said term without the previous consent in writing of the Landlords use the premises or any part thereof nor permit the same to be used by any other person or persons for any other purpose than that of a Sculptors or Artists Residential Studio and particularly not for any illegal or immoral purpose".
It appears that the premises and adjoining premises had been built or converted at the time of the Great Exhibition in 1851 to form two blocks of studios separated by a covered corridor to provide artists or sculptors with studio space and living accommodation.
The application by the landlords for the declaration that the tenancy was not a protected tenancy had immediate relevance to the rent review at the end of the fourteenth year of the term as the appellants, claiming that the tenancy was a protected tenancy as a result of circumstances which I shall mention, had referred the rent to a rent officer who had registered a fair rent under the Rent Act 1977. That would be irrelevant if the tenancy was not a protected tenancy. There is the further important aspect which lies slightly in the future that if the tenancy is not a protected tenancy the appellants will have no security of tenure at all at the expiration of the seventeen and a quarter years contractual term of the lease.
There were various assignments of the term which are noted by memoranda endorsed on the lease. There was in September 1977 an assignment by the then assignee, a Mr. Millward, to Miss Wagle, who is one of the appellants. Subsequently, on 9th November 1982, with the landlords' consent, she assigned the premises to herself and Mr. Tippett, the other appellant, jointly.
The judge made certain findings of fact which are not challenged on this appeal. Firstly, he found that when the lease was originally granted it was granted to an artist, that is to say Miss Nichols who, on the balance of probabilities, used the premises for her professional work. Secondly, he found that the landlords' representative who interviewed Miss Wagle in 1977 at no time by what he did or said had any intention to vary the terms of the original lease. He was concerned that Miss Wagle understood that she was taking the premises as a business letting, and the judge found that Miss Wagle did understand that. Miss Wagle herself was not a professional sculptor or artist. She had a job as a financial adviser, though she had been an amateur painter in her spare time at one stage. There was apparently in 1977 a contemplation that she would marry a professional artist, but that did not happen. When the premises were assigned by Miss Wagle to herself and Mr. Tippett, the position was that Mr. Tippett was indeed a professional artist. But he has his studio elsewhere, and the finding of fact of the judge was that since 1977 the premises have not been used for business purposes at all, but merely as a residence originally by Miss Wagle and subsequently by Miss Wagle and Mr. Tippett.
The judge referred (and the reason why he referred to it will become apparent when I come to some authorities) to the position that the respondents had to satisfy him that a consensual variation in the original purpose had taken place. He found as a fact that there had been no evidence to show any consensual change; that also is not challenged.
The relevant statute is the Rent Act 1977. That provides by section 1 that, subject to provisions in that part of the Act:
"…a tenancy under which a dwelling-house…is let as a separate dwelling is a protected tenancy for the purposes of [the] Act".
Sections 17 and 18 divided protected tenancies into two categories: controlled tenancies, being those created by leases coming into operation before 6th July 1957 and satisfying certain requirements as to rateable value; and regulated tenancies, which were those protected tenancies which were not controlled tenancies.
For present purposes it is unnecessary to go through the full history through which Mr. Wood has carefully taken us of the earlier Rent Acts. There was decontrol under the Rent Act 1957, and that is the explanation of the date in the definition of controlled tenancies. This tenancy created by the lease of 1972 was, of course, not a controlled tenancy at all. If it is a protected tenancy, it is because it is a regulated tenancy.
Section 24 of the Rent Act 1977 is crucial. It provides by subsection (1) that:
"…the fact that part of the premises comprised in a dwelling-house is used as a shop or office or for business, trade or professional purposes shall not prevent the dwelling-house from being let on or subject to a controlled tenancy".
Then it provides by subsection (2) that:
"Part II of the Landlord and Tenant Act 1954 (which gives security of tenure to business tenants) shall not apply to a tenancy where the property comprised therein is let under a tenancy which either is a controlled tenancy or would be such a tenancy if it were not a tenancy at a low rent."
Those two subsections, being only concerned with controlled tenancies, do not apply to the present case. The controlled tenancy remains subject to the Rent Acts, as it was before 1957 and is consequently not subject to Part II of the Landlord and Tenant Act 1954.
By contrast, subsection (3) of section 24 of the Rent Act 1977 provides that:
"A tenancy shall not be a regulated tenancy if it is a tenancy to which Part II of the Landlord and Tenant Act 1954 applies…"
There is a saver in respect of sub-tenancies which is not relevant.
Section 23 of the Landlord and Tenant Act 1954 provides that Part II of that Act applies to 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. It is not in dispute that if premises are granted on a tenancy which is a tenancy to which Part II applies, Part II will cease to apply if the premises cease to be occupied by the tenant for the purposes of a business carried on by him or for those and other purposes. In other words, if the business is discontinued (and whether it has been discontinued or not is a question of fact) the protection of Part II will be lost.
Conversely, if a tenancy is let as a dwelling-house for residential purposes without any business user but during the continuance of the contractual tenancy significant business user of the premises begins and is continued, that tenancy will cease to qualify for Rent Act protection and will acquire the protection of Part II of the 1954 Act. That was decided by this court in the case of Cheryl Investments v. Saldanha [1978] 1 W.L.R.1329. The particular case was given by Lord Denning M.R. in his judgment as the third instance at the foot of page 1333, where he said...
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