Bracey v Read

[1962] 3 All ER 472

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(Judgment by: Cross J)

Between: Bracey
And: Read

Court:

Judge:
Cross J

Subject References:
Landlord and Tenant
Business premises
Premises
Tenancy of gallops for training racehorses
Whether gallops were "premises" within Landlord and Tenant Act, 1954 (2 & 3 Eliz 2 c 56), s 23(1)
Licence
Gallops for training racehorses
Agreement to let on lease the right to train racehorses
Whether tenancy or licence created

Case References:
Metropolitan Water Board v Paine - [1907] 1 KB 285; [1907] 76 LJKB 151; [1907] 96 LT 63; [1907] 71 JP 63; 43 Digest 1086, 198
Whitley v Stumbles - [1930] AC 544; [1930] 99 LJKB 518; [1930] 143 LT 441; 31 Digest (Repl) 632, 7411

Hearing date: 26, 27 July 1962
Judgment date: 30 July 1962

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Judgment by:
Cross J

CROSS J. having reviewed the licence of 15 May 1948, and the agreement of March, 1957, and having stated the facts, continued: The questions which arise in this action are, first, whether the defendant was in fact simply a licensee of the gallops or whether he had an annual tenancy of them at the time when the notice was served. If he was a mere licensee, then it is not in dispute that the notice was adequate in length; and that he would be wrong to continue to use the gallops after the end of the year. On the other hand, if the true view is that he was a yearly tenant of the gallops, then the question arises whether the tenancy is within the Landlord and Tenant Act, 1954, as being a business tenancy within that Act. If it is, then there is no doubt that the notice was bad; it was not in the proper form required by the Act. Then there is, or may be, a third question. Supposing that there is a tenancy, but that it is not a tenancy within the Landlord and Tenant Act, 1954, was the notice invalid at common law because it expired on 31 December 1961, and the tenancy was from 1 January 1957? That, of course, involves the question whether 1 January 1957, was or was not within the term granted.

To decide the first question, there are some further facts which, I think, one must bear in mind. First of all, it is clear that no part of the surface of the gallops has ever been used by the plaintiff for agricultural purposes. Indeed, it is quite clear that it would have been a breach of his agreement with the defendant to use any part of the surface of the gallops for agricultural purposes, whether it was a lease or a licence. On the other hand, it is equally clear that the plaintiff has always crossed the gallops on Farncombe Down freely, and wherever he wanted, with farming implements to get to his farmland on the other side. It would be very inconvenient, if not impossible, to carry on farming operations on the land between the gallops on Farncombe Down without crossing them. It is also quite clear that the defendant had a right to collect the rent from the owner of Lambourn House under his licence ^[F2] and to collect rent from any other persons to whom he chose to grant licenses to use the downs. The defendant, I think, plainly on any footing had the sole right to license user of the gallops, and the plaintiff would have committed a breach of his agreement if he had purported to grant to anybody else a license to use them. Then, finally, the defendant was under an obligation to keep the gallops in good condition, and in fact he has maintained them, mowing them, harrowing them occasionally, knocking back the turf, keeping down moles, and so on, and from time to time he has closed a gallop which needed a rest, putting up chains and discs to show that that gallop was not at that time in use. He has been in fact in complete control of the gallops.

The agreement was drawn up by a solicitor acting for both parties, and it is quite clear on the face of it that it was intended to be an agreement for the lease of a property right as opposed to a mere contractual licence. But it is, I think, equally clear that the lease was intended to be, or the solicitor conceived that the lease would be, not a lease of the gallops but a lease of the exclusive right to train and exercise racehorses on the gallops. It may be that a right of that sort could exist as an easement attached to some dominant tenement-I do not express any view one way or the other about that-but it is quite plain that it could not exist as a separate right to property on its own, as what in technical language one would call an incorporeal hereditament in gross. On the other hand, the defendant has undoubtedly enjoyed the benefit of the agreement and paid the rent.

The question, therefore, is whether the defendant ought to be considered, in the circumstances, as being, when the notice was given, a tenant of the gallops themselves on an annual tenancy or a mere contractual licensee for value under an annual licence. Even if he were only a licensee, his right to enjoyment of the benefit of the agreement while the licence lasted would be protected, if necessary, by injunction; and, therefore, this question becomes important only when one comes to consider the question of notice, and the question whether the defendant is entitled to protection under legislation which applies to tenancies, but does not apply to licences. In the case of a business transaction like this I think that the question whether a man ought to be considered as a licensee or a tenant depends principally, if not entirely, on whether he has exclusive possession of the property in question. Under arrangements which are not of an ordinary business character, one very often has a man in exclusive possession of the property in question, who is yet not a tenant but only a licensee; but no case was cited to me, and I do not know of any case, where a man who is in exclusive possession under an ordinary business agreement has been held not to be a tenant but only a licensee. So really, I think, the question comes down to this-Is the true view that the plaintiff was in possession of the whole of both the downs, including the gallops, subject simply to a contractual agreement that the defendant and no one else should be entitled to use the gallops for the training of horses? Or was the defendant in possession of the gallops on both downs subject to a right for the plaintiff to cross the gallops on Farncombe Down-it was not necessary on Crow Down-when and where reasonably necessary for the conduct of his farming operations?

That, to my mind, is not at all an easy question to answer. The parties, being laymen, never directed their minds to it at all, and I very much doubt whether even if the solicitor had drawn up a formal agreement, he would have directed his mind to it, because I think he was under a fundamental misconception as to the legal position with regard to incorporeal hereditaments in gross. I think, on the whole, that the proper conclusion from the facts is that the defendant was in possession of the gallops as tenant. There is really, as I see it, no ground for saying that the plaintiff remained in possession of the gallops on Crow Down, which, as I say, he never had to go on to at all in order to reach other land; and even as to Farncombe Down I think that it is a more natural conclusion that the plaintiff had only an easement to cross than that he remained in legal possession of the gallops though the defendant alone had any right to use them and was bound to keep them in repair.

Now I have to consider the second question, which turns on the construction of s 23(1) of the Landlord and Tenant Act, 1954, which reads as follows:

"Subject to the provisions of this Act, this Part of this 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 conceded by the plaintiff that the defendant occupied the gallops for the purpose of a business carried on by him, but it is said that the gallops are not "premises" within the meaning of the Act. The word "premises" is not defined in the Act. Its strict legal meaning is the subject-matter of the habendum in a lease, and it would cover any sort of property of which a lease is granted; but no doubt the word is used sometimes in a popular sense which is considerably more restricted, in the sense of buildings, or buildings with land immediately adjoining them, and I do not think that in the popular sense anybody would call some gallops on a downland, with no building on or near them, "premises".

Undoubtedly sometimes in legislation "premises" has been construed in a popular rather than in a legal sense. An example of that was Metropolitan Water Board v Paine. It is said here that I ought to construe "premises" in a popular sense, because the subsection appears to draw a distinction between "property" and "premises". It says:

"... this Part of this Act applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant."

It is said that that shows that "premises" cannot have the wider, legal meaning. That argument is fortified by reference to other sections, particularly s 30(1)(f), where, it is said, "premises" must mean simply buildings. Section 30(1)(f) says:

"that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding ... ",

and it is said that that is quite inapt for a case where there are no buildings at all.

On the other hand, it is said against that, first of all, that there appears to be no reason in logic or common sense why one should make a distinction for the purpoes of this Act between a piece of land used for business purposes which has no building on it and a piece of land used for business purposes which has a building on it. That would lead to the absurd result, for example, that a private car park used for business purposes would be outside the Act if it had no building on it, whereas if it had a hut in which the attendant sheltered from the rain or sat when he had no work to do, it would be within the Act. It is said that it is perfectly true that in s 30(1)(f) "premises" cannot mean a piece of land with no building on it, but that that does not show that nowhere in the Act can it include such a piece of land. In that connexion reference is made to Whitley v Stumbles, which turned on the construction of s 17 of the Landlord and Tenant Act, 1927. Section 17(1) said:

"The holdings to which this Part of this Act applies are any premises held under a lease, other than a mining lease, made whether before or after the commencement of this Act, and used wholly or partly for carrying on thereat any trade or business, and not being agricultural holdings ... "

The question in that case was whether an incorporeal right, a profit à prendre, a right of fishing which was let together with a hotel, fell within the Act, and it was held that it did. Viscount Hailsham, giving the leading speech in the House of Lords, said as follows ([1930] AC at p 546):

"It is, of course, conceded that in strict conveyancing language the word 'premises' is used as meaning the subject-matter of the habendum in a lease; but it is said that if you look at earlier sections of the Landlord and Tenant Act you find that in this Act the word is used in what is described as a colloquial sense and as meaning merely the physical buildings and land which are included in the lease, and that the word is restricted so as to exclude such rights as are here in question. My Lords, I think it is fair to say that in some of the earlier sections of the Act it is plain that the legislature is considering primarily physical premises such as buildings. We find, for instance, in s. 4(1)(a), a reference to the possibility of 'the premises' being demolished; and we find in s. 5(3)(b)(ii), that the landlord can prove that he intends to pull down or remodel 'the premises', and it was argued on behalf of the appellant that this phrase and other similar instances showed that the legislature, when it used the word 'premises', meant only buildings. That contention proves too much. It is conceded-indeed it must be conceded-that the word 'premises' does not mean only buildings; it means also at least the land on which the buildings are erected and the land immediately surrounding the buildings, and yet the expression 'pull down or remodel the premises' would be wholly inept for such a purpose. It was conceded in argument also that it must include some incorporeal hereditaments such as, for instance, easements. When one gets that concession, which I think was quite properly and necessarily made, then it is manifest that although the word 'premises' is being used in a narrow sense to this extent that the legislature is at times contemplating rather the buildings in which the trade is carried on than the whole of the subject-matter of the lease, yet it does not intend to exclude other things which are properly described as premises in the strict legal sense when it is appropriate that they should be included."

That case was on a section in the Act of 1927 and not on the Act of 1954, but to my mind everything that Lord Hailsham said there is very applicable to this case. It would indeed be a very astonishing thing if in the Act of 1927 "premises" had a different meaning from what they have in the Act of 1954. I might also, perhaps, refer to s 43(1)(d) of the Act of 1954, which seems to contemplate ^[F3] that public gardens (which might or might not have buildings on them) are or may be premises within the Act.

It is perfectly true-and this is really what the argument for the plaintiff turned on-that the word "property" is used as well as the word "premises" in s 23(1), but I think that the draftsman changed the language because he thought it would be inelegant to use the word "property" twice over. If he had said "where the property comprised in the the tenancy is or includes property which is occupied by the tenant", it would be a little cumbrous, and I think that he thought it would sound better to say "where the property comprised in the tenancy is or includes premises which are occupied by the tenant". I do not think that he contemplated that "premises" would have the restricted meaning which it is argued on behalf of the plaintiff that it does have. Therefore, I reach the conclusion that the tenancy which I have held the defendant had of the gallops was within the Landlord and Tenant Act, 1954, and on that footing there is no doubt that the notice was bad.

[His Lordship held that the third question (stated at p 474, letter e, ante) accordingly did not arise. His Lordship continued:] The result of that is that the action fails. There is no counterclaim.

Judgment for the defendant.