Supreme Court held 'at any time' in Landlord and Tenant Act 1980 means lease expiry date, not application date.

THE SUPREME COURT

Record No: 290/00

Murphy J

Murray J

Fennelly J

The Circuit Court Dublin Circuit County of the City of Dublin

Between:

Twil Limited

Applicant

AND

John F Kearney

Respondent

Judgment of Mr Justice Francis D Murphy delivered the 28th day of June, 2001

By an indenture of lease dated the 12th day of March, 1970, P Donnelly & Sons Ltd demised the premises known as 76, Sir John

Rogerson’s Quay, in the City of Dublin to Transport and Warehousing (Ireland) Limited (whose name was subsequently changed to Twil

Limited) for the term of 28 years from the 1st day of February, 1970. The interest of the lessor subsequently became, and is now,

vested in the above named John F Kearney (the Lessor).

The right of Twil to a new tenancy in the said premises or any part thereof pursuant to s.16 of the Landlord and Tenant (Amendment)

Act, 1980, was disputed by the Lessor and that matter came before Judge John F Buckley of the Circuit Court on the 16th day of

March, 2000. Having regard to the questions of law which arose on the interpretation of the Landlord and Tenant (Amendment) Act,

1980, Judge Buckley stated a case dated the 31st October, 2000, for the consideration of this Court.

The facts as established or admitted before the trial Judge included the following:-

1 The demised premises comprised a warehouse and yard consisting of the building with ancillary yard space comprising a total of

approximately 38,000 square feet. Twil carried on the business of transportation and warehousing. In particular the premises and yard

were used for the storage of goods for the customers of Twil. The customer was charged an appropriate rate depending upon size or

weight of the goods stored and the length of time for which they were retained.

2 The demised premises were divided into six divisions. In the case of two of them (those numbered 2 and 6) Twil had made subleases

with the consent of the Lessor. Unit number 6 had been sublet to Abbey Transport Ltd (Abbey) for a term of two years and nine

months from the 1st April, 1993, but the sublease was surrendered in or about April, 1994. Unit number 2 was likewise sublet to Abbey

(presumably as a replacement for unit number 6) for a period of one year and nine months from the 1st day of April 1994 to the 1st

day of January, 1996. On the expiration of that subletting, Unit number 2 likewise reverted to Twil.

3 It seems that the following dates are material to the issues arising herein:-

(a) 1st April, 1994: surrender of the sublease of unit 6.

(b) 1st January, 1996: the termination of the sublease of unit number 2.

(c) 31st January, 1998: termination of the Lease dated 12th March, 1970, by effluxion of time.

(d) 5th August, 1999: the date of the notice by the Lessor to Twil of the expiration of the Lease.

(e) 19th August, 1999: the date of the notice of intention by Twil to claim relief under s.20 of the Act of 1980.

(f) 31st January, 2000: the date of the application to the Circuit Court to determine the right of Twil to relief.

(g) 22nd March, 2000, and 6th April, 2000, the dates on which the application was heard by the Circuit Court Judge.

The fundamental issue which arises on the case stated derives from an apparently modest variation of the terms in which are

expressed the right to a new tenancy deriving from business user in s.13 (1)(a) of the Act of 1980 in comparison to the terms in

which the same or a similar right had been expressed in s.19(1)(a) of the Landlord and Tenant Act, 1931. The Act of 1931 had

provided as follows:-

“19(1) On the termination within the meaning of this section of a tenancy in a tenement, this Part of this Act shall apply to such

tenement if such tenement complies with any one of the following conditions, that is to say:-

(a) Such tenement was, during the whole of the three years next proceeding the termination of such tenancy, bona fide used

by the tenant for the time being thereof wholly or partly for the purpose of carrying on a business and, immediately before

such termination, either was held by the tenant thereof under a tenancy from year to year or under a lease or other contract

of tenancy for a term of not less than one year or a lease for a life or lives or had been for not less than seven years

continuously in the occupation of the person who was the tenant thereof immediately before such termination or of his

predecessors in title ...”

(emphasis added)

The comparable provision in the Act of 1980 is as follows:-

“13(1) This Part applies to a tenement at any time if -

(a) the tenement was, during the whole of the period of three years ending at that time, continuously in the occupation

of the person who was the tenant immediately before that time or of his predecessors in title and bona fide used wholly

or partly for the purpose of carrying on a business.”

(emphasis added)

The operation of the Act of 1931 had been complicated by the fact that s.19(2) thereof gave an artificial meaning to the expression

“the termination of a tenancy”. In the case of a tenancy terminating by the expiration of a term of years the termination was deemed

to occur on the day which was three months before the actual expiration of the term. In the case of a tenancy terminated by notice

to quit the tenancy was deemed to terminate on the date of the service of the notice. Further problems had been identified in the

application of the Act of 1931 by the decision of Circuit Court Judge Davitt (as he then was) in Farrell .v. Barron. In that case it was

held that a lessee who held over on the expiration of a lease and paid rent having served a notice of intention to claim a new tenancy

was precluded from obtaining relief under the Act of 1931 because the subsisting lease, which arose by implication as a result of the

payment and acceptance of the rent, had not been terminated.

In identifying the tenements to which the right of a new tenancy attached, the Act of 1980 not only abandoned the concept of an

artificial termination of the tenancy but any reference to “termination” at all. It substituted for that word the phrase “at any time”.

The essential problem raised by the case stated is the meaning and effect to be given to the words “at any time” in s.13 of the Act

of 1980 in relation to the right of a tenant to a new tenancy.

Before turning to the arguments recorded in the case stated and addressed to this Court it is important to advert to certain

undisputed provisions of the Act of 1980, namely,

“1 Where a new tenancy is granted to the tenant of a tenement it commences “on the termination of his previous tenancy”

(see section 16).

2 A notice of intention to claim relief - which is the condition precedent to enforcing any such claims - may be served in the

case of a tenancy terminating by the expiration of the term of years either:-

(1) before the termination of the tenancy or

(2) at any time thereafter but before the expiration of three months after the service (not earlier than three months

before the termination of the tenancy) on the claimant by the landlord of notice in the prescribed form of the expiration of

the term (see section 20) and

3 An application to the Court to determine the right of a tenant to relief “may be made, heard and determined either

before and in anticipation of or after termination of the tenancy” (see section 21).

The legislative attempt to remedy the defects in the Act of 1931, which had been recognised by a generation of practitioners and

more particularly by the Landlord and Tenant Commission over which the late Judge John C Conroy presided, does give rise to a

number of problems which are clearly identified by the questions posed at paragraph 9(b) of the case stated in the following terms:-

“In section 13(1)(a), does the expression “at any time”, when applied to the facts of this case, refer to:-

1 The date on which the Applicant first achieved occupation of the premises for business purposes for a period of three

years, prior or subsequent to the commencement of the 1980 Act,

2 The date of the expiry of the Lease, 31st January 1998,

3 The date of service by the Respondent of the Notice of Termination, 5th August 1999,

4 The date of service by the Applicant of the Notice of Intention to Claim Relief, 19th August 1999,

5 The date of issue by the Applicant of the Notice of Application, 31st January 2000,

6 The date of the hearing before me, or

7 Any other relevant date.”

Most, if not all, of the foregoing candidates held significant attractions but also serious shortcomings in their bid to fill the position as

the operative or relevant date by reference to which the performance of the tenant’s conditions precedent to the grant of a new

tenancy must be determined.

To say that a tenant has achieved a statutory right to a new tenancy as soon as he has completed three years occupation for

business purposes would seem to fall within the literal meaning of the phrase “at any time”. On the other hand it is argued with

considerable force that this would lead to an absurd result. If a lease were granted for a term of twenty-five years and the tenant

could and did apply for a new lease after, say, five years it would seem inconceivable that the Court could or would fix the terms of,

and in particular determine the rent to be payable under, a reverionary lease which would not commence for a further twenty years.

If the purpose of the “business equity” to a new tenancy is the need to protect the goodwill which a tenant has established in the

business carried on by him or his predecessors in the tenement that purpose might be defeated or abused by the determination of the

tenant’s rights several years before the expiration of the lease.

The date on which the lease actually expires - as opposed to some date on which it may be deemed to expire - would appear to be

the most logical date by reference to which the performance of the conditions precedent should be tested. On the other hand it must

be observed that not only did the draftsman refrain from using the word “termination” in this context but the express power conferred

upon the Court by s.21 of the Act of 1980 to determine the applicant “before and in anticipation of” the termination of the tenancy

suggests that this was not the date which was intended.

Whilst it does not seem the date of service by the Lessor of a notice pursuant to s.20(A)(ii) could have any relevance Twil argued,

with considerable force, that the date of the service of the notice of intention to claim relief is the operative date. It is pointed out

that relief is claimed on the footing that the tenant is at that stage entitled to the statutory relief and that any subsequent hearing is

simply determinative of that claim. However, this proposal is subject to the criticism already noted: it would enable a tenant to bring

an application at an early date and establish his rights on a basis which might not be valid on the termination of his tenancy.

Both parties would dismiss, rightly in my view, the suggestion that the date of the hearing by the Court could be material in

determining the rights of the parties. It is inconceivable that the Legislature would have intended that the right of the tenant to a

new lease should be dependant upon his conduct or activities at and immediately prior to a date which was wholly fortuitous and

dependant upon the volume of business to be dealt with in a particular Circuit Court at any given period of time.

The researches of distinguished Counsel did not produce any fully convincing interpretation of the relevant statutory provisions

whether on a literal analysis or on a purposive approach..

It seems to me that the words “at any time” and “at that time” when used in s.13 of the Act of 1980 were neither authorising nor

directing an application to be brought at a particular time. The particular phrase was neutral and permitted parties relying on the Act

to ascertain their rights by inserting an appropriate date which fell to be identified by other provisions of the Act and the

circumstances of the case. This flexible interpretation would permit the appropriate date to be determined by different methods in

different circumstances. Whilst the Act does not expressly so provide, it seems to me that the general thrust of the Act and some of

its provisions indicate that where the tenancy has expired the “appropriate date” to insert in s.13(1) would be the date of the

expiration of the lease. That approach would be consistent with preserving the continuing right of the tenant to carry on his business

in the tenement and certainly would afford the Court a realistic possibility of determining the rent to be payable under the new lease

which is required to commence from that date. Most of all it would accord with the policy of the Legislature in abolishing - as it

manifestly did - the artificial, or deemed, date of termination by substituting therefor the actual date of termination.

That solution leaves unresolved the problem of ascertaining an appropriate date where the application for the new tenancy is made,

heard and determined before the termination of the tenancy in accordance with s.21(3) of the Act. In my view - as Counsel for the

Respondents contended - the most probable explanation is that the appropriate date in that case is the date of service of the notice

of intention to claim relief. However, having said that I think it is unlikely that the Legislature intended the Courts to determine an

application for relief - or indeed that the Courts would be willing to attempt to make such a determination - at any time significantly in

advance of the termination of an existing tenancy. Certainly I believe that any Court would be justified in disclaiming the competence

to fix the commercial rent for a new lease of commercial premises which would not commence for some years after the decision of the

Court and perhaps in very different economic circumstances.

In my view the crucial question raised by the case stated in the present case, namely, whether the expression “at any time” in

s.13(1)(a) of the Act of 1980 when applied to the facts of the present case is the date of the expiry of the lease, namely, the 31st

January, 1998, should be answered in the affirmative.

Whilst the case stated did raise a question as to the nature and effect of occupation of premises by a licensee, the Court was

informed that there was no issue between the parties in relation to that matter. The remaining question concerned the consequences

for Twil of the occupation of unit number 2 by Abbey Transport Ltd under a subletting which expired on the 1st day of January, 1996,

that is to say, within the period of three years next preceding the 31st January, 1998. The question posed in that regard was in the

following terms:-

“Does the occupation of a subtenant for a period of time constitute occupation by the person who was the tenant immediately

before that time in section 13(1)(a).”

I agree that this question should be answered in the negative for the reasons set out in the judgment of Mr Justice Fennelly.

I believe that the attention of the appropriate authorities should be drawn to the fact that doubts have arisen in relation to a

proposition which is fundamental to the operation of legislation which is of great practical and commercial importance so that the

legislation could be reviewed and any necessary amendments made to it.