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The Law
Lsmmission
(LAW COM. No. 17)
LANDLORD AND TENANT
REPORT ON
THE LANDLORD AND TENANT ACT 1954 PART II
Laid before Parliament by the Lord High Chancellor
pursuant to section 3(2) of the Law Commissions Act I
Ordered by The House of Commons to be printed
21st January 1969
L O N D O N
H E R M A J E S T Y ’ S S T A T I O N E R Y OFFICE
5s. 6d. net
The Law Commission was set up by section 1 of the Law Commissions Act
1965 for the purpose of promoting the reform of the law. The Commissioners
are-
The Honourable Mr. Justice Scarman, O.B.E., Chairman.
Mr. L. C. B. Gower, M.B.E.
Mr. Neil Lawson, Q.C.
Mr. N. S. Marsh, Q.C.
Mr. Andrew Martin, Q.C. Mr. Arthur Stapleton Cotton is a special consultant to the Commission. The
Secretary of the Commission is Mr. J. M. Cartwright Sharp, and its offices are
at Lacon House, Theobald's Road, London, W.C. 1.
11
LAW COMMISSION
Item VZZl
Codification of the Law of Landlord and Tenant
REPORT ON THE LANDLORD A N D TENANT ACT 1954 PART H
To the Right Honourable the Lord Gardiner,
the Lord High Chancellor of Great Britain
PART I-INTRODUCTION
1. In the course of our examination of the law of Landlord and Tenant
under Item VI11 of our First Programme, we have considered a number of
points on the operation of Part II of the Landlord and Tenant Act 1954,
in respect of which it has been suggested to us that the provisions of the
Aot are unsatisfactory. Part I1 gives security of tenure for business and
professional tenants by providing for the continuation and renewal of such
tenancies subject to certain conditions. It is, therefore, an important piece
of legislation which affects a considerable section of the c0mmunity.l On
the whole it has worked well, but in the fourteen years that have elapsed
since its enactment it has become apparent that in several respects the
provisions of the Act have given rise to uncertainty or are likely to cause
inconvenience and even injustice. Where this is so, we feel that the relevant
provisions should be clarifted or amended without delay, pending an
overall review of the law relating to leases of business premises. In this
Report, therefore, we examine the proposals that have been put to us for
clariiication and amendment of Part I1 of the 1954 Act and submit a Draft
Bill to give effect to our recommendations. Throughout the Report, references
to " the Act " and " the principal Act " are to the Landlord and Tenant Act
1954, and seotions cited refer to sections of that Act ; clauses cited refer to
clauses of the Draft Bill.
2. In February 1967 we published2 provisional proposals of the Law Com-
mission Working Party on Landlord and Tenant for amendments to the Act
in seven major respects. The paper was circulated widely and was given
considerable publicity in the legal press ; in all, more than 600 copies were
sent to government departments, professional bodies, practitioners, local
chambers of commerce and legal journals. With few exceptions, the
numerous replies3 we have received express agreement that the changes
1 See Appendix 111 for the number of applications for new tenancies lodged in the county courts in the years 1964-67 inclusive. 2 Published Working Paper No. 7. 3 See Appendix IV for a list of those who have replied to our Working Paper.
321230 A 2
proposed are needed and, subject to points of detail, favour the solutions
put forward in that paper. We have, however, been persuaded by some of
the comments to modify and add to our original proposals in certain respects.
- We draw attention here to the five additional proposals that we have con- sidered and adopted. Two of these are intended to meet the need for greater flexibility in permitting temporary lettings which do not attract the provisions
of Part I1 of the Act: they achieve this, first, by extending to six months
the period for which such tenancies may be granted and, secondly, by
empowering the court on the joint application of the parties to sanction such
tenancies for longer periods (paragraphs 32 and 33). Next we recommend
that the court should have power to include in the terms of a new tenancy
a rent review clause (paragraphs 20 and 21). We also recommend that the court should have power to order the grant of a new tenancy of part of the premises where the landlord opposes the tenant’s application on the ground that he intends to demolish or reconstruct the premises (section 30(l)(f)) but does not reasonably require possession of the holding to carry out the pro- posed work (paragraphs 34 and 35). Finally, we propose that where the landlord’s grounds of opposition to the grant of a new tenancy are limited to
those specified in paragraphs (e), (f) or (g) of section 30(1), the tenant should
be entitled to compensation under section 37 on quitting the holding without
having to make a formal application to the court for a new tenancy (para-
graphs 46 and 47).
4. Some proposals made to us, however, lie outside the scope of this Report,
which is confined to the purposes indicated in paragraph 1 above. Thus,
we do not think it would be appropriate, as has been suggested to us, to
deal in this limited context with the general question of when a notice is
“ given ” or a request “ made ” (as for example in sections 25(5) and 26(6)
of the Act). Similarly, we do not think it would be appropriate at this stage
to reconsider the definition of “ business ” in section 23(2) of the Act, which
has been criticised as being too wide. In particular, it has been suggested
that it should not be capable of including a “business ’’ such as a tennis
club.‘ This question should, we think, await a general examination of the Landlord and Tenant Acts 1927 and 1954 in their application to business premises.
5. Part II of the Act contains detailed provisions for regulating, in the
area to which the Act applies, the rights of “ the landlord ” and “ the tenant ”
respectively. When a business is carried on either by a “ oneman ” company
or by a partnership certain problems can arise, which are illustrated by three
recent cases :
(i) In TunstaZZ v. Steigmand the landlord wished to oppose her tenant’s
application for a new tenancy on the ground specified in section
30(l)(g), namely that she (the landlord) intended to occupy the
holding for the purposes of a business to be carried on by her ;
but in fact the business was to be carried on by a company of which
she owned beneficially the whole of the share capital. The Court
-- 4 See Addiscoinbe Garden Estates Ltd. v. Crabbe [1958] 1 Q.B. 513. 5 [1962] 2 Q.B. 593. 2
notices ; its provisions will, therefore, be of significantly greater importance
if our recommendation DIO is adopted. We feel, however, that it would be
inappropriate to introduce in isolation sanctions in this limited field before
our Working Party has considered the general question of notices between
landlord and tenant. Consequently, we make no recommendation on this
8. At the end of this Report we have appended a Draft Bill'' to give effect
to our recommendations, together with explanatory notes on the draft clauses.
We stress here the importance we attach to the form which the necessary
amendments should take. Part I1 of the Act represents a closely-woven piece
of legislation and any amendments to it have to be considered most carefully
so as not to disturb its interlocking pattern. It is also a statute which affects
a wide section of the public and their legal advisers, for whom clarity and
ease of access are of paramount importance. Our cardinal aim, thereiore, has been to preserve as far as possible the unity of structure of Part II, notwiih- standing our proposed amendments, and to make it possible for the principal
Act in due course to be reprinted as amended. We think that this will be
convenient for practitioners. In Appendix I1 we set out the relevant sections
of the Act incorporating our proposed amendments.
point.
9. Clause 13 of our Draft Bill cannot be incorporated into the earlier Act in
this way since its provisions, with one exception, relate exclusively to the
amending Act itself and not to the parent Act. The exception is subsection (4)
of the clause which provides that clause 11 (extending the period for which a
short tenancy may be granted without attracting the provision of Part I1 of
the Act) shall not apply to tenancies granted before the commencement of the amending Act. The fact that the former provisions of the Act on this point may still apply to some tenancies will need to be explained, perhaps by a footnote, in the reprint of the Act as amended.
10. In the next Part of this Report we explain and consider the various
proposals that have been made for clarifying and amending the Act. They are treated as far as possible under the main subject headings (lettered A-K)
and in the order of the clauses in the Draft Bill. A number of miscellaneous
points unrelated to those headings are discussed in paragraphs 50-57. Our
recommendations are summarised in Part III?
10 See page 19 below. 11 Appendix I. 12 See pages 37 to 39. 13 See pages 19 to 21.
PART 11-PROPOSALS FOR AMENDMENTS
A. Improvements to be disregarded in fixing rent
11. In fixing the rent for a new tenancy granted under Part 11 of the
Act on the basis of the open market value the court must, under section 34,
disregard certain matters, including improvements carried out by the tenant
otherwise than in accordance with the obligations of his tenancy (section
34(c)). The object of this provision was presumably to give the tenant
the bendit of improvements for which he or his predecessors in title
were responsible; but it has recently been held that para-
graph (c) of section 34 applies only to improvements carried out by the
tenant or his predecessors in title during the current tenancy, and not to
improvements carried^ out^ during^ earlier^ tenancies.14^ The^ result^ is^ that
improvements carried out by a tenant during his first tenancy will not of
themselves cause his rent to be increased in respect of a second tenancy
but may result in an increase in the rent payable under a third or sub-
sequent tenancy.
12. Where the tenant has been in occupation of the premises under
successive tenancies we see no reason to draw any distinction between
improvements carried out during earlier tenancies and those carried out during the current tenancy. Subject to the question of a time-limit, which
we shall consider in paragraph 15 below, we think it right in principle
that he should be entitled to the benefit of any improvements which satisfy
two basic requirements : first, that they were carried out of his own accord
(not under an obligation in the tenancy) and, secondly, that, where under the terms of the tenancy the landlord’s consent was required, such consent was obtained.
- Nor does it seem appropriate to distinguish improvements carried out by the tenant himself under an earlier tenancy from those carried out by a predecessor in title under an earlier tenancy. Where the relevant tenancies have been continuous in time and the landlord has not paid compensation
for them under Part I of the Landlord and Tenant Act 1927 (because
no tenant has quitted the holding at the end of his tenancy) we think that
the tenant should be entitled to have improvements disregarded even though
carried out by a predecessor in title under a previous tenancy. No hard-
ship would be caused to the landlord by such an extension of the present
provisions because the increased letting value is not due to anything
which he has clone, nor to any expense which he has incurred. The tenant,
on the other hand, where he has not carried out improvements himself,
is likely to have paid something for them on taking an assignment of the
tenancy.
14. We have considered whether the right of a tenant applying for a new
tenancy to have the benefit of improvements under section 34(c) should be
14 In re “Wonderland ”, Cleethorpes [1962] Ch. 696 (C.A.): a f f i e d by the House of Lords under the name East Coast Amusement Co. Ltd. v. British Transport Board [1965] A.C. 58.
5
it was suggested that at the end of the kase the landlord should have an
option to pay for any improvements carried out by the tenant during the
currency of the lease and to have the rent fixed for the premises as they
stand. Each of these suggestions seems to us to upset the basic machinery
of the Act in relation to improvements. We should be reluctant to do this,
for we believe that in essence the machinery works well. Nor do we think
that there is any need to put expressly on^ the tenant the burden^ of^ proving
what improvements are to be disregarded, since in determining the market rent the court can only disregard improvements if the relevant conditions
of section 34 aTe satisfied.
19. Our attention has also been drawn to the possible impact of the Land
Commission Act 1967 where improvements are carried out by the tenant.
Under that Act a project of material development will prima facie create a
liability to betterment levy under Case C both on the landlord and on the
tenant. In theo!ry, therefore, the landlord might have to pay levy in respect
of an improvement which will bring him no benefit for many years to come.
Section 45(2) of that Act does, however, allow the Land Commission, if it thinks fit, to postpone collection of the levy until such future time as it may
determine. It seems that in the case of a reversionary interest this time is
likely to be the date when the development value is realised by a sale of that interest or by the lessor obtaining pos~ession.~~Where realisation of the
value is delayed by the operation of the Landlord and Tenant Acts we
understand that the period of postponement will be extended accordingly.
B. Determination of a variable rent
20. There appears to be some doubt as to the court’s power to include a
rent review clause in the terns of a new tenancy. Such a clause was included
in the order made by the High Court in Re 58 High Road, KiZburn,16 but
it is arguable that the court’s duty under section 34 is to fix the actual
rent for the whole period of the term granted. The result is that the courts
often renew tenancies for short periods only, on account of the continual
rise in rents and the consequent hardship that would be caused to the land-
lord if the rent were to be fixed for a longer period. On the other hand,
where the parties agree to the inclusion of a rent review clause, longer terms
are sometimes granted.
21. Renewal of the tenancy for a short period will often be unsatisfactory
for the tenant, in spite of the fact that he will be protected by the Act,
because he is left with uncertainty as to the future and the possible expense
of making another application to the couTt in a few years’ time. It is in
any case undesirable that the court should be prevented from granting the
term that it would otherwise think apprqriate because it cannot fix a rent
which would be fair to the landlord. To dispel any doubt on the matter we
recommend that the court should be givm express power, where it thinks fit,
to include a rent review clause in the terns of the new tenancy.
15 See Land Conmission Practice Note No. 9, issued in November 1968 and published in e.g., The New Law Journal (vol. 118, p. 1073), The Solicitors’ Journal (vol. 112, p. 896) and The Estates Gazette (vol. 208, p. 764). 16 [1959] 1 All E.R. 527.
_ -
C. Rent while tenancy continues by virtue of section 24
22. The scheme of Part I1 of the Act is to entitle tenants occupying premises
for business or professional purposes, upon taking certain procedural steps within given time-limits, to obtain new tenancies as of right unless the land-
lord can establish one or more specific grounds of opposition. Until the
tenant's application is determined by the court, the Act preserves the existing
p i t i o n by continuing the current tenancy. By virtue of section 24 the
tenancy is automatically continued upon the same terms, and, therefore, at
the same rent, until it is terminated in accordance with the provisions of the
Act. If proceedings are commenced under the Act, the tenancy will not
terminate until three months after the application is disposed of and any
time for appealing and further appealing has expired (section 64). As was
pointed out by Harman L.J. in Espresso CoffeeMachine Co. Ltd. v. Guardian
Assurance Co. Ltd." there are various methods available to a tenant whereby
he can postpone a final order for a considerable time ; and it may well be
worth his while to do so if, as is not unusual, the rent reserved under the
original tenancy has fallen substantially below the current market value for
such premises. In R e 88 High Road, Kilburn,'s for example, the yearly rent
fixed for a new tenancy under the Act was E3,000, whereas under the
current tenancy it had been only 2250. Wynn-Parry J. ackn~wledged~~that
the Act in this respect produces or is liable to produce injustice to l a d l o d s.
Such an inducement to cause delay may clearly exist not only when the I d -
lord opposes an application for a new tenancy, even though the tenant knows
that the landlord will ultimately succeed, but equally so when the landlord
offers to grant a new tenancy. And in the latter case a tenant, who is not
prepared to accept a new tenancy at a market rent, may nevertheless play
for time by opposing the landlord's proposed terms and then apply to the
court under section 36(2) to revoke the order for a new tenancy when it is finally made.
- We consider that the tenant should not stand to gain financially at the
landlord's expense by protracting litigation for as long as pmsible. To
prevent this we propose that the landlord should be entitled, where appro-
priate, to apply to the Court to determine an interim rent. This should be
payable from the date on which the landlord's application for this purpose
is made or the date specified in the landlord's notice to terminate the tenancy
or in the tenant's request for a new tenancy (whichever is the later) until
the current tenancy comes to an end.
24. It has been suggested to us that the rent payable during this interim
period should be the market rent and should be fixed by the court in the
substantive proceedings so as to be payable retrospectively from the beginning
of the period. For two reasons we disagree with this suggestion. First, a
" market rent " has no real meaning unless it is related to a tenancy of a
definite period, whereas the interim period is necessarily a temporary situa-
tion of inideteminate duration. This consideration is of particular import-
ance where the business concerned is of a seasonal nature and the premises,
17 [1958] 1 W.L.R. 900 at p. 903. 18 [1959] 1 All E.R. 527. 19 Zbid at p. 529.
14 months or less to run he cannot, in spite of the definition in section
44(l)(b), also serve similar notices upon any sub-tenant who is occupying
part of the premises. He must rely on the intermediate landlord serving
section 25 notices on the sub-tenant. This may give rise to two daculties.
First, by virtue of the provision in the Act as to time, the intermediate land-
lord may no longer be able to serve the notices in time for the sub-tenancies
to terminate simultaneously with his own. Secondly, irrespective of the time
factor, the landlord cannot rely on his tenant being able to serve a like
notice on the sub+tenants, for the intermediate landlord may not be able to
establish the necessary grounds of opposition to the grant of a new tenancy
under section 30(1) of the Act, e.g., an intention to demolish or reconstruct
the premises.
28. The Act recognises that in certain circumstances a landlord should be
able to terminate the tenancies of sub-tenants. It seems to us inconsistent
with that policy that the landlord's rights in this respect should be restricted
merely because the intermediate tenant is protected by the Act. To avoid
this, we consider that the landlord should be able to by-pass an intermediate
landlord who himself is a protected tenant, once he has served the latter
with a notice to terminate, by serving a similar notice on any sub-tenant or
any person further down the chain of tenancies. This should not of course enable him to terminate a sub-tenancy prematurely. Once served, the sub- tenant should be able to contest such a notice. This would protect the sub-tenant against the possibility of losing his right to claim a new tenancy because the intermediate landlord failed to contest the notice which his
landlord served on him.
E. Restriction on termination of tenancy by agreement
29. Section 38(1) renders void any agreement between a landlord and a
tenant whereby the tenant undertakes to perform any future act which will
have the effect of disqualifying him from applying for a new lease.2l It has
been suggested that if^ there is an agreement whereby the prospective tenant
gives the llandlord a notice to quit or a nobice under aeution 27 in blank
before the tenancy is granted, this section invalidates the agreement but not
necessarily the notice given in blank, since only when the tenancy is granted
does the relationship of landlord and tenant come into existence.
30. It may be that such devices would be held void under section 38(1),
but we consider them so undesirable that the position should be clarified.
To avoid any possibility of doubt we think it desirable to provide that
a notice shall be ineffective if given by the tenant before he has been in
occupation under the tenancy for one month.
31. We do not consider it practioal or necessary to deal with what might
be oalled inducements to the tenant to give up possession before the tenancy has or could have been validly teminated (for example by agree-
ment that a market rent shall 'be payable for the period for which the
landlord intends the tenant to occupy the premises and a penal rent there-
after). It seems to us that the line between agreements of this nature and
genuine agreements to fix^ periodic rent increases would^ be^ difiicult to draw.
21 See Joseph v. Joseph 119671 1 Ch. 78 at p. 90. 10
It also seems probable that resort is had to such devices in order, in effect,
to create temporary lettings outside Part 11 of the Act for longer periods
than would be permitted under section 43(3). This leads us to consider
two pmposals that are aimed at modifying the effect of that subsection.
F. Exclusion of provisions of Part II by authorised agreement and duration
of short tenancies excluded from Part II of principal Act
32. Many of those whom we have consulted feel that the Aot makes in-
suflicient provision for excluding short-term tenancies from the operation
of Part 11. There are many cases where the landlord would (be willing
to let on a temporary basis and a tenant would be willing to accept such a
tenancy. This may happen, for example, when the landlord has obtained
possession and intends to sell, demolish or reconstruct the property but is
not ready to do so immediately. He will, however, understandably, be
reluctant to effect a temporary letting if he thereby risks having to oppose
a tenant’s claim for a new tenancy under the Act when the time comes.
In many cases, therefore, he may prefer, having got possession, to leave the
premises unoccupied. We agree that section 43(3) does not meet such cases satisfactorily, and we appreciate that our proposal to invalidate notices
to terminate given in advance (see paragraph 30 above) would of itself
remove a method sometimes used to overcome this difficulty.
33. There appears to be two possible solutions ; first, to extend the period
in section 43(3), for which tempomry lettings can be made without attracting
the rights of renewal under Part Il of the Act, to six months ; and secondly.
to permit lettings outside the Aut for longer periods, provided that they are sanctioned by the court. We feel that the two solutions are not in-
compatible and that both should be adopted. The permissible period of
three months as the maximum for tenancies outside the Act will often be
too short to be of practical use. We think it would be reasonable to
extend the period to six months. We also accept that there may be cases
where a tenant is willing, for good reasons, to accept a tenancy for more than six months without rights under the Act. We believe that this should be possible, but only where there is the safeguard that the court has sanctioned the agreement in advance. This safeguard would be similar to
that contained in section 33(6) of the Housing Act 1961 whereby the court
can authorise terms in a lease which exclude the repairing obligations
normally implied by^ section 32^ of^ that Act.
G. Grant of a new $enancy in some cases where section 30(l)(f) applies
- We have considered the proposal that the court should, with the agree-
ment of the tenant, be empowered to grant a new tenancy of part of the
premises, if the landlord’s grounds of opposition under section 30(l)(f) relate
only to part of the holding. In Fernandez v. Kalding2’, the Court of Appeal
recently held that the court had no such power, since the word “ holding ”
in section 30(l)(f) cannot be read to mean “part of the holding” and since
section 32 expressly provides that an order for the grant of a new tenancy
under section 29 can only be made in respect of the ‘‘ holding ”. It was
decided that, for the purposes of Part I1 of the Act, “ the holding ” means
22 [1968] 2 W.L.R. 583.
321230 A 5
carry out the intentions on the basis of which he had obtained possession)%
did not give the tenant a right to a new tenancy.
39. The alternative suggestion of awarding full compensation to the tenant
where the landlord fails to carry out his intentions seems to us to run counter
to the policy of the Act. Section 37 gives the tenant a certain, but limited,
right to compensation where he has to give up possession because the land- lord has established one of the grounds specified in section 30(1)(e), (0 or (g).
Apart from cases of misrepresentation or concealment of material facts
(which are dealt with in section 55 of the Act) we do not think it would be justifiable to make a distinction between a tenant whose landlord has carried out his intentions, and who, therefore, is entitled only to compensation under section 37, and the tenant whose landlord for one reason or another has failed
to carry out his intentions and who, under the proposal, would receive more
generous compensation. We cannot, therefore, adopt this proposal in either of its forms.
H. Power to exclude rights enjoyed with holding
40. Section 32 provides for the designation of the property to be comprised
in a new tenancy granted under section 29. Subsection (3) provides that any
rights enjoyed in connection with the holding under the current tenancy
shall be included in the new tenancy. This is in contrast with the provisions
of section 35 which, in general, give the court a discretion to fix the terms
of the new tenancy in default of agreement between the parties.
41. “ Rights ” in section 32(3) presumably means incorporeal rights such as easements and quasi-easements of the kind which pass under section 62
of the Law of Property Act 1925.% It is possible that rights granted at
the beginning of the current tenancy may no longer be necessary or
appropriate when the order for a new tenancy is made. Where this is so
the court should, we think, have power to exclude or modify them having regard to all the relevant circumstances. We recommend, therefore, that
section 32(3) should be amended so as to give the court a discretion, as
under section 35, in determining, in default of agreement between the parties, what “rights” enjoyed under the current tenancy should be included in the new tenancy granted under section 29.
42. It has been pointed out that the exclusion or limitation of rights as proposed above may significantly affect the valuation evidence to be brought
by the parties; and that only if a claim to have such rights limited or
excluded were made at an early stage in the proceedings could satisfactory
valuation evidence be given on alternative bases without unduly protracting
the proceedings. This factor is, we feel, equally important in respect of other
terms of the letting. We make no recommendation, however, since this is a
procedural matter which might, if necessary, be dealt with by regulations
under section 66 governing the form of notices.
24 By section 5(3) (now repealed). 25 See In re No. 1 Albemurle St. 119591 Ch. 531 at p. 539, and Woodfall on Landlord and Tenant 27th Ed. $2538. 13 321230 A 6
I. Saving for tenant temporarily out of occupation
43. Where a tenant's application for a new tenancy is refused, his existing
tenancy as continued under the Act will end only three months afker the
final disposal of his application (section 64). Under present-day conditions
this is normally too short a time for a tenant to find satisfactory alternative
accommodation. In practice, therefore, to guard against the consequences
of such a possibility he may well start looking for new premises whilst
proceedings for a new tenancy are pending. And if meanwhile he fmds
suitable new premises, he may be obliged to enter into binding obligations
to secure them, and may even start carrying on business there in order to
attract to them as much of his goodwill as possible.
44. A tenant who applies for a new tenancy must satisfy the condition that
he is occupying the premises concerned for the purpose of his business.
Whilst Part 11 of the Act makes it clear that this condition must be satisfied
at the time when (the tenant makes his application for a new tenancy, it does not expressly provide for the operation of this condition either during the time when proceedings are pending or at the date when the order for
a new tenancy is made. In Caplan v. Caplan No. lZ6 the House of Lords
left these questions open. However, in Caplan v. Caplan No. 2. Cross J.
decided" that it was a continuing condition of a tenant's rights to a new
tenancy that he should throughout the proceedings and upon Itheir deter-
mination continue to occupy the premises for the purpose of hh business.
45. We consider that the position should be clarified by specifying what is
required to satisfy the condiltion of occupation. It is unreasonable, we think,
to expect a business tenant to wait in effect until the last three months of his current tenancy before he looks for other premises, and unrealistic to
suppose that he will necessarily find suitable accommodation in that time.
On the other hand, if at the date of the hearing, he has in reality moved
his business to new premises, he should not be entitled to a new tenancy
which in all probability he would assign immediately. We do not think,
however, that it would be appropriate^ to^ introduce a^ subjective test^ in
respect of the tenant's intentions in the event of a new tenancy being granted.
Nor do we think it would be a satisfactory solution of the difficulty if, as
has been suggested, the current tenancy were to be continued for six months
insjtead of three months after final disposal of the application; for where
there is no difficulty in finding new premises, the tenant would normally
wish to move as soon as possible, and it would be onerous upon him if
the tenancy were continued for another six months. Alternatively, it has been suggested, the court could be given power to extend the period in
section 64 ; but we think it inadvisable to introduce into the provisions
of the Act relating to time any element of uncertainty. We consider that
the Act should specify what conditions must be satisfied in respect of
occupation : and those conditions should be that the tenant is in occupation
of the premises for the purpose of his business at the time of the order
as well as at the time of the application, the intermediate period being irrelevant.
26 [1962] 1 W.L.R. 5 5 : see Lord Reid at p. 60 with whom the other Law Lords concurred. 27 [1963] 1 W.L.R. 1247 at p. 1255. 14
and had become the landlord. It would seem that a purchaser of the reversion who wishes to demolish or reconstruct the premises cannot
serve such notices until he has completed his purchase. Similarly it would
seem that the vendor cannot oppose a tenant’s application on the ground
that he intends to demolish or reconstruct the premises as the intention is that of the purchaser and not of the vendor. Thus, it is argued that if by the time he has completed his purchase the new landlord has missed an opportunity to determine the tenancy he might have to wait for a con-
siderable period before he can validly do so, and that this might hold up
his proposed development. However, if the purchaser were to be given the
right to serve a notice before he had completed his purchase uncertaipty
and possibly hardship might arise in the event of a failure to complete. Moreover, a purchaser can in many cases arrange for a completion date which will enable him to serve the appropriate notice in time. We, there-
fore, make no recommendation concerning this suggestion.
- It has also been suggested that the judgments of the Court 01 Appeal
in Frish v. Barclays Bank Ltd.29 leave room for some uncertainty regarding
the effect of section 41 of the Act ; and that the court should be given express
power to refuse an order for a new tenancy if, having regard to the interest
of the beneficiary and all the circumstances, it thinks fit to do so. We are,
however, satisfied that under section 41 the court can and, as that case shows,
will in practice take into account the nature of the beneficiary’s interest;
and we make no recommendation, therefore, on this point.
- Under section 30(2), a landlord whose interest was purchased or
created within the previous five years cannot oppose an application for a
new tenancy under section 30(l)(g) on the grounds that he wants the
premises for his own purposes. The purpose of that provision is clearly to
prevent a person from buying premises with a sitting tenant and then,
within a short time, obtaining possession for his own use. It was suggested
to us that the subsection might also prevent a landlord from recovering
possession on the grounds stated in section 30(l)(g) at the end of the term
of a tenancy which he had himself granted for five years or less. A recent
decision has, however, made it clear that section 30(2) does not preclude a
landlord from opposing an application for a new tenancy in such circum-
stances, since it only applies if the current tenancy has existed and has been a business tenancy “ a t all times” since the landlord’s interest was
acquired?’ Anothtx possible doubt on the effect of section 30 ( 2 )-as to
whether the five-year period would begin to run again in the tenant’s
favour on a renewal of the landlord’s own lease-was settled by the Court
of Appeal in Artemiou v. Proc~piou.~‘ There it was held that the duration
of the landlord‘s interest in^ the holding must be calculated^ from^ the time
when it originally arose by purchase or creation ; and it was immaterial
whether his interest during the period had been enjoyed under one lease
or under a succession of leases. It seems to us, therefore, that no amendment
of section 30(2) is required.
29 [1955] 2 Q.B. 541. 30 Northcote Laundry Ltd. v. Frederick Donnelly Ltd. [1968] 1 W.L.R. 562. 31 [1966] 1 Q.B. 878. 16
53. Unlike a tenant for a term of years certain exceeding one year, or
for a term of years certain and thereafter from year to year, a tenant under
a short periodic tenancy (such as a weekly or monthly letting) has no right
under section 26(1) to request a new tenancy ; and it has been suggested
that he should have such a right. We can see no merit in this proposal
since a periodic tenancy of its nature continues indefinitely until it is
terminated. If the landlord serves notice under section 25 to terminate the
tenancy, a weekly or monthly tenant has the same right as other tenants under section 24(l)(a) to apply for a new tenancy.
54. A number of proposals have been submitted in connection with the
provisions of the Act which lay down the time-limits within which each stage of an application must be completed. There are two distinct aspects of this problem. First, the preliminary stage of any proceeding is the service as between landlord and tenant of notices and counter-notices within the rigid time-limits under sections 25 and 26. Failure to act within the specified time will lose the tenant his right to apply for a new tenancy. We consider the timing of the preliminary stages in any application to be of great importance, for upon it depend all the later stages ; and any departure from it would, we think, upset the balance and destroy the certainty established by the Act.
55. The next stage normally starts with negotiations based upon the
tenant’s intention to apply for a new tenancy, which emerges from the notices and counter-notices. Section 29(3), however, often affords too little time for these negotiations to be completed before the time expires for
making application to the court. A tenant will in such a case be obliged
to go through the formality of instituting proceedings in order simply to preserve his rights, notwithstanding that agreement might virtually have been reached and all that remained to be done was the drafting, approval,
engrossment and execution of the lease. In many cases, therefore, an
application is made to the court followed by a joint request of the parties
to adjourn the proceedings. Proceedings under Part I1 of the Act may
thus be instituted in consequence of legislative compulsion rather than of
any real dispute between landlord and tenant. This, it is felt, causes
inconvenience and expense rather than injustice, and it has been suggested
that by agreement of the parties or, p s i b l y , at the direction of the court
it should be possible to extend the time-limits within which an application
may be made. We fear, however, that any possibility of extending time at
this stage might serve only to lengthen the period of negotiations out of court rather than hasten it, and possibly open the door to delaying tactics.
We make, therefore, no recommendation in respect of the time-limits laid
down by the Act.
56. Under seotion 33 the court has, in the absence of agreement between
the parties, a discretion in fixing the length of the term under a new
tenancy. It has been suggested that the term should be limited to a maximum
of three years or the length of the current tenancy, whichever is the longer.
We do not think it right to introduce such a limitation. We have no
evidence to suggest that the terms granted by the courts are too long; on
