Pointon York Group Plc v Poulton

An incorporeal hereditament may constitute premises capable of business occupation under section 23 of the Landlord and Tenant Act 1954. Whether particular property is occupied is a question of fact and degree, informed by the extent of the tenant’s presence and the exclusion of the landlord and others.

Business occupation does not invariably require continuous physical presence or actual trading. A short period in which premises are being prepared for the tenant’s business may qualify where there is no rival business occupier or non-business use. This practical approach applies at the beginning as well as the end of business occupation.

The appellant landlord granted the respondent financial services company a lease of offices and rights to use parking spaces during normal business hours. After an underlease of the offices expired, the respondent intended to resume business use. During the final three days of the headlease, carpeting was completed and the respondent’s chief executive inspected the work and planned the installation of telephone and computer equipment. The respondent continued to use the parking spaces for business purposes.

His Honour Judge Charles Harris QC held that the respondent occupied both the parking spaces and the offices for the purposes of section 23 of the Landlord and Tenant Act 1954. He declared that the tenancy continued under Part II and that the respondent’s statutory notice was valid.

The landlord appealed on two questions: whether the parking rights were premises capable of occupation, and whether the limited preparatory activity in the offices was legally capable of constituting business occupation.

1. Appeal dismissed. The parking rights were premises capable of occupation, and the respondent’s activity in the offices between 21 and 23 June 2005 constituted occupation for business purposes under section 23 of the Landlord and Tenant Act 1954. Hooper and Hughes LJJ agreed with Arden LJ.

2. An incorporeal hereditament may constitute premises for section 23. The meaning given to premises in Whitley v Stumbles [1930] AC 544 under the predecessor legislation remained applicable. Neither the language nor the policy of the 1954 Act indicated that Parliament intended to narrow the protection available to business tenants. Section 32(3), which provides for rights connected with the holding to be included in a renewed tenancy, did not require a contrary construction.

3. An incorporeal right must nevertheless be capable of occupation. The parking rights were exercisable during normal business hours to the exclusion of the landlord and others, unless the landlord substituted equivalent spaces. Occupation may exist for discontinuous periods. A parking right of this character differed materially from the non-exclusive right of way considered in Land Reclamation Co Ltd v Basildon District Council [1979] 1 WLR 767.

4. Occupation is not a legal term of art with one fixed meaning. Whether the owner is sufficiently excluded and the tenant sufficiently present is a question of fact and degree. The county court’s unchallenged finding that the parking spaces were occupied during business hours therefore stood.

5. The practical meaning of occupation adopted in Bacchiocchi v The Academic Agency [1998] 1 WLR 1313 for sections 37 and 38 also applied to section 23. Premises may remain in business occupation during a short absence from physical use where no rival business occupier or non-business use exists. The same common-sense approach applies when occupation is beginning.

6. The chief executive’s inspection of the carpeting and planning for telephone and computer installation were activities incidental and necessary to the intended business. The judge was also entitled to regard the carpet layer’s work as performed for that business purpose, although the contractor had been engaged by the former subtenant. Actual trading, a desk or business telephone calls were unnecessary. The tenancy therefore continued under Part II, and the respondent’s notice remained valid.

1. Court of Appeal (Civil Division): The landlord’s appeal was dismissed unanimously. The court affirmed that the respondent occupied the property for business purposes within section 23 of the Landlord and Tenant Act 1954.

2. Northampton County Court: His Honour Judge Charles Harris QC declared that the respondent occupied the property for section 23 purposes, that the tenancy continued under Part II of the Act, and that the respondent’s notice dated 8 July 2005 was valid.