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[1958] 1 Q.B. 513
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Jenkins , Parker and Pearce L.JJ.
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1957 Nov. 14, 15.
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Landlord and Tenant\u8212\'3fBusiness premises (security of
tenure)\u8212\'3f\rdblquote Business\rdblquote \u8212\'3fMembers\rquote
club\u8212\'3f\rdblquote Any activity carried on by a body of persons, whether
corporate or unincorporate\rdblquote \u8212\'3fLawn tennis club occupying clubhouse
and tennis courts under agreement\u8212\'3fInterest of occupiers\u8212\'3fWhether
tenants or licensees\u8212\'3fClub registered under
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Industrial and Provident Societies Act, 1893
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, to carry on business of lawn tennis club\u8212\'3fWhether business tenancy
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Landlord and Tenant Act, 1954 (2 & 3 Eliz. 2, c. 56), Part II, s. 23 (2)
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.
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Licence or Tenancy\u8212\'3fExclusive occupation Members\rquote
club\u8212\'3fExclusive occupation\u8212\'3fMateriality.
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By
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section 23 (1) of Part II of the Landlord and Tenant Act, 1954
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, security of tenure is given (in certain circumstances) to any tenancy \ldblquote
where the property comprised in the tenancy is or
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*514
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includes premises which are occupied by the tenant and are so occupied for the
purposes of a business carried on by him. ...\rdblquote By
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section 23 (2)
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\ldblquote the expression \lquote business\rquote includes a trade, profession or
employment and includes any activity carried on by a body of persons, whether
corporate or unincorporate.\rdblquote
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The trustees of a members\rquote lawn tennis club registered under the
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Industrial and Provident Societies Act, 1893
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, and which, by its rules, carried on the business of a lawn tennis club, entered
into an agreement with the owners of tennis courts and clubhouse, whereby the
owners purported to license and authorize the trustees to use and enjoy the
premises for two years from May 1, 1954, in consideration of monthly payments of
\ldblquote court fees.\rdblquote
\par
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The agreement contained a number of clauses providing, inter alia, that the
trustees should repair and maintain the premises \ldblquote in good tenantable
repair and condition\rdblquote and render them up at the expiry of the \ldblquote
licence\rdblquote in such condition; permit the \ldblquote grantors\rdblquote and
their agents \ldblquote at all reasonable times to enter the premises to inspect
their condition and for all other reasonable purposes.\rdblquote The owners, on
their part, agreed, inter alia, that the \ldblquote grantees\rdblquote should
\ldblquote quietly enjoy\rdblquote the premises without interruption. The
agreement also contained a provision that the \ldblquote grantors\rdblquote
might \ldblquote re-enter and determine the licence in the event of non-payment of
any of the said payments of court fees ... or on any breach of the grantees\rquote
stipulations.\rdblquote
\par
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The agreement expired on May 1, 1956, but thereafter the trustees continued to
occupy and use the premises, asserting that the agreement granted them a tenancy
which was protected by Part II of the Act of 1954.
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In a claim by the owners for injunctions to restrain the trustees from trespassing
and ordering them to quit and yield up the premises:-
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(1)\u160\'3f that the agreement taken as a whole, although described as a licence,
on its true construction created the relationship of landlord and tenant and not
that of licensor and licensee for the relationship was determined by the law and
not by the label which the parties chose to put on it.
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Facchini v. Bryson[1952] 1 T.L.R. 1386
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applied.
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Observations of Denning L.J. in
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Errington v. Errington.[1952] 1 K.B. 290, 297; [1952] 1 T.L.R. 231; [1952] 1 All
E.R. 149
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explained.
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(2)\u160\'3f That the premises were occupied for the purpose of a \ldblquote
business\rdblquote as defined in section 23 (2) of the Act of 1954, as the
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*515
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activity of a lawn tennis club was there carried on, and therefore the tenancy
which the trustees held under the agreement was protected by Part II of the Act.
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Decision of Hilbery J.[1957] 2 Q.B. 615; [1957] 2 All E.R. 205 affirmed.
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\u160\'3f
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APPEAL from Hilbery J.
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\u160\'3f
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The Shirley Park Lawn Tennis Club Ltd. was a society registered under the
}
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Industrial and Provident Societies Act, 1893
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. Rule 1 of this tennis club provided that \ldblquote The society (hereinafter
called \lquote the club\rquote ) shall be called the Shirley Park Lawn Tennis Club
Ltd.; and its objects are to carry on the business of a lawn tennis club.\rdblquote
\par
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}
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\u160\'3f
\par
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\u160\'3f
\par
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Under an agreement in writing made on April 12, 1954, the plaintiff company,
Addiscombe Garden Estates Ltd., owners of the Shirley Park Hotel and tennis courts
and clubhouse situated in the hotel grounds, purported to \ldblquote license and
authorize\rdblquote the defendants, Stuart Brooksby Crabbe, Leonard Oswald Crake
and Ronald Walter Arthur Fowler, trustees of the Shirley Park Lawn Tennis Club, to
enter upon, use and enjoy the clubhouse and tennis courts and to use certain
chattels, including nets and equipment, in consideration of court fees of
\u163\'3f37 10s. to be paid monthly \ldblquote to the hotel.\rdblquote The
agreement was in these terms: \ldblquote Whereas the grantors inter alia carry on
business as hotel proprietors and are the owners of the Shirley Park Hotel
(hereinafter called \lquote the hotel\rquote ) and the gardens and pleasure grounds
appurtenant thereto including the premises situate and known as the Shirley Park
Lawn Tennis Club whereby it is agreed as follows: (1) The grantors hereby license
and authorize the grantees to enter upon use and enjoy the following: (a) the club
house with the dressing rooms and other appurtenances (including the
groundsman\rquote s sheds) enjoyed therewith in Shirley Park Addiscombe Road
Croydon aforesaid (b) the tennis courts (ten hard courts three grass courts and the
practice court) as now laid down in Shirley Park Croydon aforesaid (c) the use of
all articles of household use and ornament at present in and upon the said club
house and also the use of all nets machines tools and equipment in and about the
said premises and now used for the equipment and maintenance of the said club house
and tennis courts all of which are hereinafter referred to as the said chattels ...
(2) This licence shall extend for the fixed period of two years from the first day
of May 1954 (3) The grantees shall have the use and enjoyment of the said premises
in consideration of their paying to the
}
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*516
}
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hotel court fees amounting to \u163\'3f37 10s. per month in advance on the first
day of each and every month the first payment to become due and payable on the
first day of May 1954
\par
}
}
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\u160\'3f
\par
}
}
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\u160\'3f
\par
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\rdblquote (4) The grantees jointly and severally agree with the grantors as
follows: (i) to make the said monthly payment of court fees to the hotel at the
times and in the manner aforesaid (ii) to pay for all gas and electricity supplied
to and/or consumed in or upon the said premises including all standing charges
(iii) to repair and maintain the said club house with the dressing rooms the said
hard and grass tennis courts and the practice court in good tenantable repair and
condition (fair wear and tear excepted) and to render the same up upon the
expiration or sooner determination of the licence in such good tenantable repair
and condition and to repair and maintain the said chattels (fair wear and tear
excepted) and to replace or renew at the end of the licence any of the same as may
have become destroyed or rendered defective otherwise than by fair wear and tear
\par
}
}
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\u160\'3f
\par
}
}
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\u160\'3f
\par
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\rdblquote (iv) to manage and manure the said hard and grass courts in a good and
husbandlike manner so as to keep the same constantly in good service and playable
condition (v) not without the grantors previously written consent to cut down or
injure any plants trees bushes or hedges or remove from the said property any soil
clay sand or other materials and not to make any excavations thereon except for the
purpose of maintaining the said hard and grass tennis courts and the practice court
in accordance with the agreement and conditions hereinbefore contained (vi) not to
erect any building or other structures upon the said property except such as shall
be approved by the grantors
\par
}
}
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\u160\'3f
\par
}
}
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\u160\'3f
\par
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\rdblquote (vii) to use the said premises as a private lawn tennis club and club
house for the convenience of members of the club their guests and their staff only
but this clause shall not prevent the club from holding tournaments exhibition
matches and social functions on the said premises (viii) not to allow any persons
except members guests and servants of the club to use the said premises for any
purpose but this clause shall not prevent the club inviting or allowing a
reasonable number of members of the general public to enter thereon for the purpose
of attending functions specially organized for those interested in the game of lawn
tennis (ix) that the grantees will cause the chairman for the time being of the
grantors or his nominee to be an ex-officio member of the
}
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*517
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
general committee of the club and that as such he or his nominee shall be entitled
to receive notice of and attend all meetings of the general committee (x) that the
grantees will cause residents of the Shirley Park Hotel aforesaid who shall make
application to be elected honorary members of the club save nevertheless that the
club may charge them court fees or house fees for the use and enjoyment of the said
premises (xi) to permit the grantors and their agents at all reasonable times to
enter the said premises to inspect the condition thereof and for all other
reasonable purposes
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\rdblquote (xii) to deliver up the said premises at the termination of this licence
in a condition consistent with the foregoing provisions (xiii) during the
continuance of this licence to insure against loss or damage by fire in the joint
names of the grantors and the grantees the said club house the said chattels and
any other items of an insurable nature in or about the said premises to their full
insurable value in some insurance office to be approved of by the grantors and
forthwith to rebuild or reinstate any of the said buildings or said chattels if and
so far as the same may be destroyed or damaged by fire.
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\rdblquote (5) The grantors agree with the grantees as follows: (i) to pay all
general rates and taxes including water rates and charges for water arising in
respect of the said premises Provided however that if the water rates and charges
for water exceed the sum of \u163\'3f24 per annum the grantees shall be liable for
the excess of water rates and charges for water over that figure (ii) that the
grantees making the said payment of court fees and observing the stipulations on
their part herein contained shall during the licence quietly enjoy the said
premises without interruption by the grantors or any person claiming under or in
trust for them.
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\rdblquote (6) It is mutually agreed as follows: (i) that the grantors may re-enter
and determine the licence in the event of nonpayment of any of the said payments of
court fees for fourteen days (whether formally demanded or not) or on breach of any
of the grantees\rquote stipulations (ii) in the event of the said premises
becoming separately assessed for rating purposes then the grantors shall have the
right forthwith to determine this licence.\rdblquote
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After the expiry of the agreement the defendants and members of the club continued
to use the premises although no further agreement was concluded between the
parties.
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The plaintiff company and the second-named plaintiff, Alan Percy Smith, who had
bought the property from the plaintiff company on August 1, 1956, brought an action
in which they alleged that the defendants and those members of the club who had
used the premises after May 1, 1956, had done so without any licence and authority
and were trespassers; and that their failure to remove from the premises amounted
to a wrongful dispossession of the plaintiff company from May 1, 1956, and of the
second-named plaintiff from August 1, 1956.
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They accordingly sought (1) injunctions restraining the defendants from trespassing
in or upon the premises; (2) ordering them to quit and yield up the premises to the
second-named plaintiff; (3) an order for delivery up of the premises; and (4)
damages.
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The defendants contended that the agreement of April 12, 1954, on its proper
construction, granted them a tenancy which was subject to
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Part II of the Landlord and Tenant Act, 1954
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; that no notice to terminate the tenancy had been served in accordance with that
Act, and that accordingly the tenancy continued in force. By an amendment to the
defence made at the trial, which was nob objected to by the plaintiffs, it was
stated that the club was a society registered under the
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Industrial and Provident Societies Act, 1893
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, under the name of the Shirley Park Lawn Tennis Club Ltd., and that the
defendants were trustees of that society.
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Hilbery J. held that the agreement of April 12, 1954, must be construed as a
tenancy agreement and not as a licence, and that this tenancy was protected by
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The plaintiffs appealed.
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Lionel Blundell
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for the plaintiffs. Hilbery J. was wrong in holding that the document of April 12,
1954, constituted a tenancy agreement. It expresses plainly an intention that the
grantees shall have a right to enter, use and enjoy the premises in the capacity of
licensees, and it is plain on reading the document as a whole that that was the
right which it was intended to give. That right is a permissive control and not a
grant of any state in the premises, and the subject-matter of the contract makes
that a rational and business transaction for the parties to enter into, inasmuch as
these tennis courts are in the grounds of and close to the hotel and are not
bounded by a ring fence.
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The test laid down by the Court of Appeal in
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Facchini v. Bryson
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to determine whether an agreement is to be construed as a licence or a tenancy is
not disputed. But applying that principle to the present case the court should
reach the contrary conclusion to that of the
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Reliance is placed on the observations therein of Denning L.J.
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as to the subject-matter of the document. The subject-matter of the present
agreement is entirely different from that of an ordinary retail shop or dwelling-
house. Further, the surrounding circumstances are quito different from those of
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Facchini v. Bryson.
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As to the provisions of the document of April 12, 1954, it will be observed that by
clause 1 the grantees are given the right to enter upon and use and enjoy the
premises in question. There is nothing in clause 1 indicative of the grant of any
right or interest in the land. Further, the grantees\rquote use and enjoyment of
the premises is strictly limited in character. There is no intention that any other
club but the Shirley Park Lawn Tennis Club shall use the premises. There is no
clause concerning assignment of rights, and no covenant against assignment or
underletting. This fact alone is enough to differentiate the present case from the
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It is true that clause 4 (iii) contains a covenant by the grantees \ldblquote to
repair and maintain\rdblquote the premises \ldblquote in good tenantable
repair,\rdblquote which might be said to negative the contention that this
document should be construed as a licence, but it is submitted that the draftsman
has only used that phrase because it lays down a standard of repair known to the
courts and thus serves the useful purpose of being the measure of the
grantees\rquote repairing obligation.
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It must also be conceded that by clause 4 (xi) the grantors and their agents have
the right to enter and inspect the premises, a provision which might be thought was
peculiar to a lease. It is submitted, however, (a) that it is a purely declaratory
provision, and (b) that it must be borne in mind that the club-house was licensed
for the sale of alcoholic liquor and therefore it would be locked and the keys
would be in the possession of the grantees when not in use, and, accordingly, it
was necessary to make some provision for entry and inspection by the grantors.
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Errington v. Errington
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shows that the fact that an occupier has exclusive possession is no longer
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view that he holds as a tenant and not as a licensee: see
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Denning L.J.
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It is now a principle of law that in special circumstances there can be a licence
which grants exclusive possession. If it be held in the present case that the
document of April 12, 1954, granted exclusive possession, then it is submitted that
there existed special circumstances which accounted for exclusive possession being
so granted. [Reference was made to Foa\rquote s General Law of Landlord and Tenant,
8th ed., p. 399.]
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In the alternative it is submitted that even if the document is held to constitute
a tenancy, it is not a tenancy to which the
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Landlord and Tenant Act, 1954
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, applies. A lawn tennis club is not a \ldblquote business\rdblquote within the
meaning of
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section 23 (2)
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and the defendants are not entitled to the protection of Part II of the Act. The
word \ldblquote business\rdblquote is not defined in the Act and therefore it must
be assumed that the legislature is using the word in the sense in which it is
generally understood. The interpretation given to the word \ldblquote
business\rdblquote by common usage and in decided cases is something which
occupies a man\rquote s time by way of occupation or calling.
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Hills (Patents) Ltd. v. University College Hospital Board of Governors
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is not of assistance, because no argument was there addressed to the court on the
question whether the activity carried on was a business or not. It was assumed that
it was, the whole argument being whether the premises were required for the
occupation of the Hospital Board or the Minister of Health. Even had the question
been raised, it would have been difficult to argue that the purposes for which the
premises were required was not a business.
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On the question of construction, it may be that the words of section 23 (2) are
wide enough to cover any activity whatsoever if carried on by a body of persons,
but such a construction would lead to absurdities. It is submitted that the key to
the proper construction of the subsection are the words \ldblquote includes a
trade, profession or employment,\rdblquote which are intended to remove doubts, if
there be any, as to the kind of activities contemplated by the subsection. The
words of the subsection do not strictly admit of the ejusdem generis rule, but the
principle of the rule should be applied and the word \ldblquote activity\rdblquote
should be construed as \ldblquote such activity\rdblquote in order to avoid the
absurdities which would otherwise result. If the meaning of the word \ldblquote
activity\rdblquote is not so limited, it means that all sorts of strange
activities would, if carried on by a group of persons, become protected by Part II
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of the Act. whereas the intention of that part of the Act is to deal with business
activities. The section is not applicable to an ordinary members\rquote club which
carries out only recreational and social activities. Parliament could not have
intended the section to be so widely interpreted as to include a lawn tennis club,
and the defendants should not be entitled to protection.
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[Reference was also made to Smith v. Anderson
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and
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Inland Revenue Commissioners v. Eccentric Club Ltd.
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Charles Fletcher-Cooke,
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for the defendants, was not called upon to argue.
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JENKINS L.J.
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stated the facts and continued: It is vital to the plaintiffs\rquote claim for
possession of the premises that they should be able to establish that this document
described as a licence is in truth a licence, as opposed to a tenancy agreement. If
it is a mere licence, then the plaintiffs\rquote claim to possession must follow,
for the rights granted by it have some time since expired. If, on the other hand,
although described as a licence, it has the effect of a tenancy agreement, then
prima facie the plaintiffs must be faced, before they can get possession, with the
task of compliance with the provisions of the
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. But Mr. Blundell has an alternative basis of claim, which is that even though
the document in question created a tenancy as distinct from a mere licence,
nevertheless the protection of the
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, can avail the defendants nothing inasmuch as
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section 23
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of the Act, which describes the premises to which the Act applies, applies only to
premises used for business purposes.
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By section 23 of the Act it is provided: \ldblquote (1) 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. (2) In this Part of this Act the expression \lquote
business\rquote includes a trade, profession or employment and includes any
activity carried on by a body of persons, whether corporate or
unincorporate.\rdblquote Mr. Blundell says that, even if this was a tenancy, it
was not a tenancy of premises \ldblquote occupied for the purposes of a
business\rdblquote within the meaning of those provisions.
\par
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As to the first question - whether the so-called licence of April 12, 1954, in fact
amounted to a tenancy agreement under which the premises were let to the trustees -
the principles applicable in resolving a question of this sort are, I apprehend,
these. It does not necessarily follow that a document described as a licence is,
merely on that account, to be regarded as amounting only to a licence in law. The
whole of the document must be looked at; and if, after it has been examined, the
right conclusion appears to be that, whatever label may have been attached to it,
it in fact conferred and imposed on the grantee in substance the rights and
obligations of a tenant, and on the grantor in substance the rights and obligations
of a landlord, then it must be given the appropriate effect, that is to say, it
must be treated as a tenancy agreement as distinct from a mere licence.
\par
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[His Lordship read the agreement of April 12, 1954, and continued:] First, one must
observe that the document is described by the parties as a licence. Secondly, one
must observe that the draftsman has studiously and successfully avoided the use
either of the word \ldblquote landlord\rdblquote or the word \ldblquote
tenant\rdblquote throughout the document. The nearest to the use of the word
\ldblquote tenant\rdblquote is the reference to \ldblquote tenantable
repair\rdblquote in clause 4, subclause (iii); so that if the question depended on
the label attached to the document, one would be constrained to say that this, in
accordance with its label, was a licence. But if it is right (as I have no doubt it
is) to look at the substance of the matter, I think that a different conclusion
inevitably ensues.
\par
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I might mention, as regards the character of the premises, that we have been
supplied with an agreed plan which shows that, although the whole of the premises
are not completely enclosed, as it were, in a ring fence, the greater part of them
appear to occupy a particular enclave in the extensive grounds of the Shirley Park
Hotel, though there are two outlying rectangular portions, one, I think, consisting
of tennis courts, and the other containing some other appurtenances. There is
nothing in the character of the premises as shown on the plan to make them an unfit
subject of a tenancy agreement as distinct from a licence.
\par
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Looking at the substance of the matter, what do the grantees get? By clause 1 they
are licensed and authorized \ldblquote to enter upon use and enjoy\rdblquote the
items mentioned; and it seems to me that those words, taken together, are apt to
give to the tenant something in the nature of an interest in the land. I would next
observe that in clause a provision is made for the
}
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*523
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licence, as it is called, extending for the fixed period of two years from May 1,
1954. There is thus a term certain which would be appropriate to the grant of a
tenancy. Then in clause 3 it is provided that: \ldblquote The grantees shall have
the use and enjoyment of the premises in consideration\rdblquote of a payment. The
payment is described as a payment of \ldblquote court fees\rdblquote ; it is fixed
at the sum of \u163\'3f37 10s. per month, and it has to be paid in advance on the
first day of each month. In all but name, that appears to me to be a rent or
reddendum in consideration of the right to \ldblquote enter upon use and
enjoy\rdblquote the premises which is granted by clause 1.
\par
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So far, it seems to me that the rights expressed to be conferred on the grantees
are, in substance, the rights of a tenant as distinct from the rights of a mere
licensee; and, as I have said, there is the correlative obligation of making
monthly payments which, although not so called, are in fact, as it seems to me, in
the nature of rent. Then there are the various agreements by the grantees with the
grantors in clause 4, beginning with the agreement to make the monthly payment of
the court fees very much like the agreement to pay the rent which is always to be
found in a tenancy agreement. There is a significant provision in subclause (iii)
under which the grantees agree \ldblquote to repair and maintain the club
house.\rdblquote It seems inappropriate that a mere licensee should be saddled
with an obligation to repair. Then one finds as to repairs that the items mentioned
are to be maintained \ldblquote in good tenantable repair,\rdblquote an expression
to which I have already called attention. That, one cannot help thinking, to some
extent supports the view that the grantees are tenants, although I do not attach
very much weight to it, as I am impressed by the argument of Mr. Blundell that
\ldblquote good tenantable repair\rdblquote is a phrase which might have been
adopted as giving a standard of repair to serve as the measure of the
grantees\rquote repairing obligation. But, for what it is worth, that is, I think.
if anything, an indication in favour of tenancy rather than licence.
\par
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Then under subclause (iv) there is the obligation to maintain the tennis courts. In
subclause (v) there is a provision which, I think, is not without significance.
That is the provision under which the grantees shall not \ldblquote without the
grantors\rquote previously written consent cut down or injure any plants trees
bushes or hedges or remove from the said property any soil clay sand or other
materials and not make any excavations thereon except for the purpose of
maintaining the [tennis courts] in accordance with the agreement and conditions
hereinbefore
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*524
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contained.\rdblquote The significance of that is that it should have been thought
necessary expressly to prohibit the grantees from doing certain things which quite
plainly, if they were mere licensees, they would have no right or power to do. What
business could a licensee have to cut down or injure plants, trees, bushes or
hedges, or to do any other of these things, including the removal of \ldblquote
soil clay sand or other materials\rdblquote ? In a similar sense one may note the
provision in subclause (vi): \ldblquote not to erect any building or other
structures upon the said property except such as shall be approved by the
grantors.\rdblquote
\par
}
}
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\par
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Then there is the provision which Mr. Blundell called in aid, which is the
restrictive provision in subclause (vii): \ldblquote to use the said premises as a
private lawn tennis club and club house for the convenience of members of the club
their guests and their staff only,\rdblquote and so on; and in subclause
(viii): \ldblquote not to allow any persons except members guests and servants of
the club to use the said premises for any purpose but this clause shall not prevent
the club inviting or allowing a reasonable number of members of the general public
to enter thereon for the pu-pose of attending functions specially organized for
those interested in the game of lawn tennis.\rdblquote In my view, those
provisions afford no real assistance to Mr. Blundell, for they are just what one
would expect to find in a tenancy agreement of premises intended for use as a lawn
tennis club. I do not think that anything turns on subclause (ix), which is the one
by which the grantees were to \ldblquote cause the chairman for the time being of
the grantors or his nominee to be an ex-officio member of the general
committee.\rdblquote That does not seem to me to carry the matter further one way
or the other, though it appears to be a provision to which it was difficult to give
effect having regard to the rules of the incorporated body, Shirley Park Lawn
Tennis Club Ltd. Subclause (x), under which residents of the hotel who should make
application were to be elected honorary members of the club, in my view, is simply
a privilege reserved to the grantors, and I do not think that it really throws any
light on the character or the grantees\rquote interest.
\par
}
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The next provision of importance is the agreement to permit \ldblquote the grantors
and their agents at all reasonable times to enter the said premises to inspect the
condition thereof and for all other reasonable purposes.\rdblquote The importance
of that is that it shows that the right to occupy the premises conferred on the
grantees was intended as an exclusive right of occupation, in that it was thought
necessary to give a special and express power
}
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*525
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to the grantors to enter. The exclusive character of the occupation granted by a
document such as this has always been regarded, if not as a decisive indication, at
all events as a very important indication to the effect that a tenancy, as distinct
from a licence, is the real subject-matter of a document such as this.
\par
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In subclause (xii) there is provision \ldblquote to deliver up the said premises at
the termination of this licence in a condition consistent with the foregoing
provisions.\rdblquote \ldblquote To deliver up\rdblquote seems to me to be an
expression more appropriate to a tenant with an interest in the land than to a
person who has a mere contractual right to be on the land; it is an expression
universally used, I think, in all tenancy agreements and leases. The provision as
to insurance points in the same direction; it would, I think, be curious if a mere
licensee, with no interest in the premises, was made liable for insurance.
}
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Then in clause 5, subclause (ii), there is what is practically a common form
covenant for quiet enjoyment such as is found in every tenancy agreement or lease;
and it seems to me that this clause points strongly in the direction of a tenancy
agreement here. In clause 6, subclause (i), there is the provision: \ldblquote that
the grantors may re-enter and determine the licence in the event of non-payment of
any of the said payments of court fees for fourteen days (whether formally demanded
or not) or on breach of any of the grantees\rquote stipulations.\rdblquote Those
references to re-entry and \ldblquote non-payment of any of the said payments of
court fees for fourteen days (whether formally demanded or not)\rdblquote are
provisions wholly appropriate to a tenancy agreement; and I should have thought
that a reference to re-entry was really inappropriate to the case of a licence; the
conception of re-entry is the resumption of possession by the landlord, and the
determination of the interest of the tenant.
\par
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Taking all those considerations together, I am of opinion that the judge was
perfectly right in holding, as he did, that this was a tenancy. Te was particularly
impressed by the express provision entitling the grantors to enter the premises
\ldblquote to inspect the condition thereof and for all other reasonable
purposes\rdblquote ; and he held that to be an indication that the right to occupy
the premises granted to the grantees was intended to be an exclusive right of
occupation, that circumstance, as I have said, being at lowest a strong
circumstance in favour of the view that there is a tenancy as opposed to a licence.
\par
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But that is by no means the only ground for the judge\rquote s decision It is amply
justified also by the other matters to which
}
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*526
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I have referred. The judge cited a useful authority in the shape of the decision
of this court in
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Facchini v. Bryson.
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The headnote reads: \ldblquote Where an employer let his employee into occupation
of a house, in consequence of his employment, at a weekly sum payable by him and
the occupation had all the features of a service tenancy, the agreement was so
construed, notwithstanding a clause that \lquote nothing in this agreement shall be
construed to create a tenancy\rquote ; the agreement must be construed as a whole,
and their relationship was determined by the law and not by the label which they
chose to put on it. The agreement accordingly operated as a tenancy agreement, not
a mere licence to occupy, and the employer was not entitled to an order for
possession except in accordance with the provisions of the Rent Restriction
Acts.\rdblquote
\par
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At the beginning of his judgment Somervell L.J. said
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: \ldblquote This appeal turns on the construction of an agreement, and it
involves one of those problems which parties sometimes set the court when they use
words in some of the paragraphs of an agreement indicating one relationship, and
use words in other paragraphs of the agreement which would indicate another. The
court has to construe the agreement as a whole. The question is whether the
document here is a lease or a licence to occupy the premises.\rdblquote
\par
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The Lord Justice then referred to the decision in Three D\rquote s Co. Ltd. v.
Barrow
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and said
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: \ldblquote I agree with Mr. Megarry that that agreement was not this agreement,
and that there are material differences between the two, but what I said about the
similar clause in that agreement is, I think, applicable here. I said: \lquote That
provision is one which is only appropriate and relevant if the document is giving
to the party who is going to live in the house exclusive possession.
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I should have thought that it was quite unnecessary if a servant was merely
occupying the house that the landlord should stipulate that he should be allowed to
go in and see the condition of it\rquote \rdblquote - the reference there being to
a provision comparable to the provision in the present case in clause 4, subclause
(xi), as to permitting the grantors to enter for certain purposes.
\par
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Then continuing his reference to Three D\rquote s Co. Ltd. v. Barrow
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he went on
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: \ldblquote I think that that is equally applicable
}
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*527
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in the present dispute whether this was a lease or a licence. Mr. Megarry asked us
to treat it like a declaratory section in an Act of Parliament, that is to say,
merely declaring a right and not giving one. I do not think that the words are apt
to be considered in that way, but are apt in the sense in which I thought that they
were apt in the other case, namely, they assume a right to keep the landlord out,
if I may so put it, and state the circumstances and conditions on which he may
enter.\rdblquote Then, after referring to a prohibition of underletting, which has
no counterpart here, Somervell L.J. proceeded: \ldblquote Those seem to me to be
the main and operative clauses in which one would seek to find what the rights as
between the two parties are. It is true that the clause with reference to the
payment does not use the word \lquote rent,\rquote and that the earlier part of
clause 2 refers to occupation and use. But, taking the agreement as a whole for the
moment, apart from the last two lines of clause 2, I would have come to the
conclusion that this was a lease.\rdblquote
\par
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\par
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Denning L.J. agreed, and said
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: \ldblquote We have had many cases lately where an occupier has been held to be a
licensee and not a tenant. In addition to those which I mentioned in
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Errington v. Errington.
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we have recently had three more,
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Gorham (Contractors) Ltd. v. Field,
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Forman v. Rudd,
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and
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Cobb v. Lane.
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In all the cases where an occupier has been held to be a licensee there has been
something in the circumstances, such as a family arrangement, an act of friendship
or generosity, or suchlike, to negative any intention to create a tenancy. In such
circumstances it would be obviously unjust to saddle the owner with a tenancy, with
all the momentous consequences that that entails nowadays, when there was no
intention to create a tenancy at all. In the present case, however, there are no
special circumstances. It is a simple case where the employer let a man into
occupation of a house in consequence of his employment at a weekly sum payable by
him. The occupation has all the features of a service tenancy, and the parties
cannot by the mere words of their contract turn it into something else. Their
relationship is determined by the law and not by the label which they choose to put
on it,\rdblquote and he cites Customs and Excise Commissioners v. Pools Finance
}
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*528
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(1937) Ltd.
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\ldblquote It is not necessary to go so far as to find the document a sham. It is
simply a matter of finding the true relationship of the parties. It is most
important that we should adhere to this principle, or else we might find all
landlords granting licences and not tenancies, and we should make a hole in the
Rent Acts through which could be driven - I will not in these days say a coach and
four, but an articulated vehicle.\rdblquote
\par
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\u160\'3f
\par
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The present case, of course, has nothing to do with the Rent Acts, but the
important statement of principle is that the relationship is determined by the law,
and not by the label which parties choose to put on it, and that it is not
necessary to go so far as to find the document a sham.
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It is simply a matter of ascertaining the true relationship of the parties.
\par
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\par
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\u160\'3f
\par
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We were also referred by Mr. Blundell to
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Errington v. Errington.
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In that case it was held that in very unusual circumstances a lady was a licensee,
and entitled to remain in occupation of premises so long as she paid the
instalments on a certain mortgage; and in the course of his judgment, Denning L.J.
said
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: \ldblquote The test of exclusive possession by no means \ldblquote
decisive.\rdblquote I think that wide statement must be treated as qualified by
his observations in
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Facchini v. Bryson
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; and it seems to me that, save in exceptional cases of the kind mentioned by
Denning L.J. in that case, the law remains that the fact of exclusive possession,
if not decisive against the view that there is a mere licence, as distinct from a
tenancy, is at all events a consideration of the first importance. In the present
case there is not only the indication afforded by the provision which shows that
exclusive occupation was intended, but there are all the various other matters
which I have mentioned, which appear to me to show that the actual interest taken
by the grantees under the document was the interest of tenants, and not the
interest of mere licensees.
\par
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For these reasons, I hold that the judge came to a perfectly right conclusion when
he decided that this must be treated as a tenancy agreement.
\par
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There remains the second branch of Mr. Blundell\rquote s argument, which is, as I
have said, that although this may be a tenancy agreement, the tenancy is not one to
which the
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, applies, because the premises were not \ldblquote occupied for the purposes of a
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*529
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said all that possibly could be said in favour of the view that the premises here
in question were not occupied for the purposes of a business carried on by the
tenants. But, in my view, the plain language of the Act is too strong for him. I
read again
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subsection (2) of section 23
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: \ldblquote In this Part of this Act the expression \lquote business\rquote
includes a trade, profession or employment and includes any activity carried on by
a body of persons, whether corporate or unincorporate.\rdblquote Here the premises
were used for the activities of a body of persons called the Shirley Park Lawn
Tennis Club, and activities were there carried on, whether one should look at the
individual members, or at the incorporated body. \ldblquote A body of persons,
whether corporate or unincorporate\rdblquote - it matters not which - was carrying
on on the premises an activity in the shape of a lawn tennis club. The premises
were, therefore, in my judgment, the subject of a tenancy to which the Act applies.
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Accordingly, for the reasons that I have endeavoured to express, I think that this
appeal fails, and should be dismissed.
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PARKER L.J.
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I agree, and there is very little that I can usefully add. The position, as I see
it, is that though the agreement in question is labelled a licence, almost all, if
not all the clauses in it are appropriate, and more appropriate, to a tenancy
agreement. Not only that, but three, in my view, are completely inconsistent with
the document being a licence, those being clause 4, subclause (xi), permitting the
grantors to enter the premises and inspect; clause 5, subclause (ii), the ordinary
covenant for quiet enjoyment - enjoyment of the premises, and not of any rights
granted - and clause 6, subclause (i), the right to enter and determine upon non-
payment of fees, whether formally demanded or not.
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Mr. Blundell, who has said everything that can be said for the plaintiffs, draws
our attention to the plan of the premises in question; and he stresses that the
subject-matter here is not the ordinary private dwelling-house, which has been
considered so often in connexion with the Rent Acts, but parcels of land not in a
ring fence, some of them separated from each other, and all in and close to the
hotel.
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It seems to me, however (and, indeed, Mr. Blundell admits this), that all the
parcels referred to in the agreement and set out on the plan are precise enough to
constitute parcels to a tenancy agreement; and, accordingly, I do not think that
the nature of the subject-matter affects the plain intention as expressed in the
agreement itself. Nor do I think,
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for the reasons given by my Lord, that Mr. Blundell can derive any comfort from
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Errington v. Errington.
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As regards the second part of the case, it appears to me that it is quite
impossible to argue that there is any real limitation on the words \ldblquote any
activity.\rdblquote Those words must, I think, be read as enlarging the scope of
what goes before, otherwise the subsection would have read: \ldblquote The
expression \lquote business\rquote includes a trade, profession or employment
carried on by any person,\rdblquote thus covering \ldblquote individuals\rdblquote
in the singular and plural, and \ldblquote persons whether corporate or
unincorporate.\rdblquote It seems to me here that \ldblquote any
activity\rdblquote means what it says, and that this registered society, through
their trustees, were carrying on an \ldblquote activity.\rdblquote
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For those reasons I would dismiss the appeal.
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PEARCE L.J.
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I agree.
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Solicitors: Summer & Co. ; Currey & Co .
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Appeal dismissed. Leave to appeal to the House of Lords refused. (J. A. G. )
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. \ldblquote Security of Tenure for Business, Professional and other
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: \ldblquote (1) 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. (2) In this Part of
this Act the expression \lquote business\rquote includes a trade, profession or
employment and includes any activity carried on by a body of persons, whether
corporate or unincorporate.\rdblquote
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[1952] C.P.L. 266; 159 E.G. 342
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[1952] 1 T.L.R. 1037; [1952] 1 All E.R. 1199
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[1952] 1 T.L.R. 792; [1952] 1 All E.R. 775 .
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[1952] 1 K.B. 290
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Ibid. 297.
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[1952] 1 T.L.R. 1386
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(c) Incorporated Council of Law Reporting for England & Wales
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