Patel & Anor v Keles & Anor [2009] EWCA Civ 1187

[2009] EWCA Civ 1187

Case No B2/2009/0687

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM

HH JUDGE COWELL

CENTRAL LONDON CIVIL JUSTICE CENTRE

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 12/11/2009

Before

LORD JUSTICE WALLER

Vice President of the Court of Appeal Civil Division

LADY JUSTICE ARDEN

LORD JUSTICE THOMAS

Between

PATEL & ANRRespondents

KELES & ANRAppellants

(Transcript of the Handed Down Judgment of

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Mr Jamal Demachkie (instructed by Messrs S. Satha & Co.) for Respondents

Miss Tamsin Cox (instructed by Messrs Wright Son & Pepper) for Appellants

Hearing Hearing date : 28 October 2009

Judgment

Lady Justice Arden :

The Principal Issue

[1]The Landlord and Tenant Act 1954 (“the 1954 Act”) confers a number of important rights on business tenants, including the right to apply for a renewal of their tenancy. The landlord can object to renewal in certain circumstances, for example, where he intends to occupy the premises in order to carry on his own business (s 30(1)(g) of the 1954 Act). Suppose, however, that the landlord claims that he intends to occupy the premises for his own business but the court finds that the landlord is likely to sell the premises in due course although no purchaser has been identified and the premises are not on the market. Can the court properly conclude that the landlord has not shown the requisite intention to occupy the premises and, if so, was the court entitled so to conclude in the circumstances of this case?

[2]Those were the principal questions which faced HHJ Cowell, sitting in the Central London County Court, at the trial of a preliminary issue in these proceedings. He implicitly answered both questions in the affirmative, and dismissed the landlord's objection to the grant of a new tenancy.

[3]Section 30 of the 1954 Act provides, so far as material, as follows: “30. Opposition by landlord to application for a new tenancy(1) The grounds on which a landlord may oppose an application under [section 24(1) of this Act, or make an application under section 29(2) of this Act,] are such of the following grounds as may be stated in the landlord's notice under section twenty-five of this Act or, as the case may be, under subsection (6) of section twenty-six thereof, that is to say:— …. (g) subject as hereinafter provided, that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence. ….

(2) The landlord shall not be entitled to oppose an application [under section 24(1) of this Act, or make an application under section 29(2) of this Act,] on the ground specified in paragraph (g) of the last foregoing subsection if the interest of the landlord, or an interest which has merged in that interest and but for the merger would be the interest of the landlord, was purchased or created after the beginning of the period of five years which ends with the termination of the current tenancy, and at all times since the purchase or creation thereof the holding has been comprised in a tenancy or successive tenancies of the description specified in subsection (1) of section 23 of this Act.” (g) subject as hereinafter provided, that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence.

[4]I have set out s 30(2) because, although it does not directly apply in this case, the courts have had regard to it for the purpose of interpreting s 30(1)(g). I explain this further below.

Background

[5]The landlords are the appellants, Mr and Mrs Keles. They purchased their leasehold interest in the premises, 24 Tudor Street, London EC2, in 1997 and hold it pursuant to a lease dated 20 March 1997 for a period of 995 years from 25 December 1996. The respondents are Mr and Mrs Patel. Mr and Mrs Patel occupied the ground floor and basement of 24 Tudor Street, London EC2 pursuant to a sublease for five years from 25 March 2002 at an initial rent of £17,000. They carried on there a small business of selling principally newspapers and confectionary under the name of City Confection. In his judgment,

the judge described the premises and the business which the Patels carried on there as follows:

“2. This is an application made by the claimants, who are the tenants of the defendants, who have been running a business in a small shop which sells newspapers, confectionary, tobacco and the like, known as the "City Confection", and the claimants have been doing that since about 1991 or 1992. The most recent lease being a five year term which expired on 25 March 2007 but which has been continued by Part II of the Landlord and Tenant Act 1954. The landlords oppose the granting of a new lease by virtue of paragraph (g) of section 30(1) of the 1954 Act. … 3. …Most lawyers and judges are very familiar with Tudor Street because at the end of Tudor Street there is one of the main entrances through to the Inner and Middle Temples, and the premises in this case are in Tudor Street. 4. The reversion is clearly held by the two defendants in this case. They acquired the property at some stage in about 1997. It consists of a number of different businesses. There is this business, known as "City Confection", which is on the ground floor and in some part of the basement. It used to be what is called a "kiosk", but about eight or ten years ago the claimants in this case did some work, some reconstruction, as a result of which customers can actually come into the premises and choose things to buy, whereas when it was a kiosk the customers would be outside.”

[6]The judge noted that Mr Keles had been involved in businesses on two other parts of the premises covered by his leasehold interest. But that he had ceased to carry them on at the age of 60 in 2007. “5. On another part of this property, 24 Tudor Street, there was a property run in a similar way which became some years ago a barber's shop. The first defendant was some kind of partner of the barber, but when he left there was no way in which the defendant could carry on that particular business and so he let it on a 20 year lease in 2007, that being the year in which the first defendant attained the age of 60. 6. The third business carried on at 24 Tudor Street was a coffee shop which had a slightly more complicated business than the "City Confection" because coffees were served, and I think at some stage food of some kind was served so it needed slightly more skilled staff. But, similarly, in 2007 that property was let for 20 years.”

[7]At the trial, it was common ground between the parties that under s 30(1)(g) of the 1954 Act the landlords had to show: firstly, that there was a realistic prospect, as objectively judged, that Mr Keles would be able to give practical effect to his intention to occupy the business for the purpose of carrying on his business, and, secondly, that Mr Keles had a subjective intention to use the premises for the purposes of running his business. In his evidence, Mr Keles stated that he proposed to carry on a newsagent's business at the premises. Mrs Keles did not give evidence. Mr Keles’ case was that she would not be involved in the business, although she might help out.

THE JUDGMENT OF HHJ COWELL QC

[8]The judge held that the first requirement was satisfied. However, turning to the second requirement, he stated that he was “worried” about the intention of the defendants. He noted that Mr Keles had first suggested the idea of an undertaking to the court in his witness statement. In his witness statement, Mr Keles said this:

“… I am prepared to offer to the court an undertaking that the defendants will indeed take possession of the premises and run their business from it. This undertaking cannot of course, be open ended, as it will be dependent, amongst other things, upon my health, economic conditions and ultimately my wish to retire from business in four years time. However, I can confirm and undertake that my present intention is to occupy the premises for my own business for the foreseeable future, however, I must of course reserve my right to sell the business at some stage in the future if personal and economic conditions dictate. I am aware of the importance of an undertaking given to the court ..”

[9]In the course of submissions at the trial, counsel for Mr Keles informed the court that Mr Keles would give an undertaking as follows: “not to use the premises for two years for any purpose other than as a newsagents’ business carried on by [Mr and Mrs Keles]”.

[10]Mr Keles was 61 at the time of the trial. He intended to work until normal retirement age. In his oral evidence, he did not refer to the undertaking.

[11]It is well established that the court may give such weight to an undertaking in these circumstances as is appropriate. (see, for example, Lennox v Bell (1957) EG 753). The court is not bound in any way by such an undertaking. The judge was not impressed by the undertaking. He held that the undertaking in the witness statement of Mr Keles “did not mean very much”. He held:

“34. The undertaking which is offered and was mentioned for the first time today stems from a recommendation in the leading work on this subject, Reynolds and Clark, and that is how it comes to be made rather late in the day. It is in a negative form, not to use the premises for two years from 1 June 2009 or such later date being the date on which the period of one month shall have expired following recovery of possession of the premises by the defendants other than as a news agency business carried on by the defendants. It is said that that is a very strong indication of a positive intention and is enforceable by the court, though nobody at this court would in practice do so without prompting from the claimants. Then it is said that it could even be enforced by specific performance or more accurately a prohibitory injunction by the claimants, though they would gain absolutely no practical advantage of returning to the premises from such an expensive litigation exercise. It is said that it is put forward in response to the points made by Mr Demachkie in his skeleton argument about the unsatisfactory nature of undertakings. 36. [sic] I have to say that I am very disturbed about what I can only say is the temporary nature of the undertaking for a two year period. It does indicate to me that the intention is a temporary one, to run for two years and no more. It reflects in turn on the real nature of the intention for effectively there is an end date. It is not the foreseeable future, it has an end date to it; an end date which is clearly in contemplation. It does not stem from a positive need for the premises, or a positive requirement, which one might ordinarily expect there to be in the case, for example, of a landlord who was out of work but who owned premises which he could use for his own livelihood, perhaps his only premises. It is the limited nature of that undertaking which I find really very unsatisfactory. 37. There is no real need that this landlord has for business premises as his only way of making ends meet, or the only way of achieving some kind of income. One can readily see that it is highly likely that at the expiry of the two year period there will be either a sale or the grant of a lease of some kind.”

The judge, having cited the case of Willis, referred to below, continued as follows:

“40. So one has in the background of this case the fact that all the other businesses, even if they were more difficult to run than this one, have been sold (and clearly there was a problem about carrying on the barber’s shop in the absence of a barber); that the two sales of the properties in 24 Tudor Street in 2007 occurred when the first defendant was 60 years old or so. To some extent staffing problems contributed to the reasons for sale and it is undoubted that the first defendant himself does not intend to work in the property but to put managers and staff there, his sons being of no substantial practical help. He is at any rate a reasonably wealthy man living on the rents at the moment of six properties. 41. As against that background it seems to me that the limited undertaking throws real doubt upon his substantial intention, which ought to be a substantial and genuine intention of running a business for the foreseeable future at the premises. It is very likely not to survive the two years offered in the undertaking. It is even less likely to survive the defendant attaining the age of 65. By the undertaking business could cease altogether even within the two year period, the premises being left empty. It seems to me that the sort of intention in this case is not the kind that the Act is concerned with, which is a genuine intention to run a business for the foreseeable future, there ordinarily being no short-term limit or other of this event obstacle likely to end it in the short term. This undertaking really gives the lie to such an intention.”

[13]Thus the judge held that the undertaking threw doubt on Mr Keles’ intention, “which ought to be a substantial and genuine intention of running the business for the foreseeable future”. He referred a second time to “for the foreseeable future” in the penultimate sentence of paragraph 41. At the end of his judgment, the judge concluded that he was far from being satisfied that there was a real intention such as the 1954 Act required.

FOR HOW LONG MUST THE LANDLORD INTEND TO OCCUPY THE PREMISES?

[14]If the landlord succeeds in showing that the requirements of s 30(1)(g) are satisfied, the tenant will have no right to renew his tenancy and will have to vacate the premises. Any goodwill attaching to his business at those premises will then either be lost or be acquired by the landlord when he starts to trade from the premises. In those circumstances, the courts have set a high hurdle for establishing the necessary subjective intention. As was common ground before the judge, the landlord’s intention has to satisfy the test of intention laid down in Cunliffe v Goodman

[1950] 2 KB 237

with respect of a statutory predecessor of s 30(1)(f) of the 1954 Act, which provides the landlord may oppose the grant of a new tenancy if he intends to demolish or reconstruct the premises. In that case, Asquith LJ explored the requirement for an intention to be shown and, relevantly for the purpose of this appeal, held:

“An "intention" to my mind connotes a state of affairs which the party "intending" - I will call him X - does more than merely contemplate: it connotes a state of affairs which, on the contrary, he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition…Not merely is the term "intention" unsatisfied if the person professing it has too many hurdles to overcome, or too little control of events: it is equally inappropriate if at the material date that person is in effect not deciding to proceed but feeling his way and reserving his decision until he shall be in possession of financial data sufficient to enable him to determine whether the project will be commercially worth while.”

[15]Asquith LJ went on to hold that there must be a “settled intention to proceed”. A landlord would not have a settled intention if the project did not move “out of the zone of contemplation - out of the sphere of the tentative, the provisional and the exploratory - into the valley of decision” (page 254). The other members of this court made observations to similar effect (per Cohen LJ at 249 and 252, and per Singleton LJ 255 to 256).

[16]It is trite law that the courts must not fill in gaps in legislation, but that is not the case where Parliament has made it clear that a particular matter is to be determined by the courts. In that case, the courts must determine that matter, but taking into account any indications in the statute as to the way in which the gap is to be filled.

[17]There are a number of gaps in s 30(1)(g). In particular, Parliament has not laid down any rule as to how long the landlord must intend to occupy the premises for the purposes of his business. In addition, s 30(2) appears to give the tenant retrospective protection, that is, protection against the landlord selling the reversion shortly before the business tenancy expires to a purchaser who wishes to occupy the premises for the purposes of his business, but not prospectively, so that the tenant is protected against the risk that the landlord takes possession of the premises for the purposes of his own business but then quickly sells them. There is no doubt that the 1954 Act was enacted in the knowledge that Cunliffe had established the law in relation to what had to be shown to prove an intention.

[18]The problem in this case is at one and the same time made better and worse by the holding in Cunliffe that intention requires a decision to do something. That means that for the purposes of successful opposition under s 30(1)(g) the landlord's intention to occupy the premises must be a fixed and settled one. But does it also mean that, unless his intention to sell the premises is also a fixed and settled intention, the prospect of a later sale is to be disregarded? If so then provided, as regards any sale, that the landlord remains in “the zone of contemplation” and does not move into “the valley of decision”, he will still be able to bring himself within s 30(1)(g).

[19]This dilemma was addressed by this court in Willis v Association of Universities of the British Commonwealth

[1965] 1 QB 140

, and that is no doubt why the judge referred to it. The circumstances of that case were very different from these. The question which arose was whether the landlord could show the necessary intention under section 30(1)(g) where it intended to occupy the premises for the purposes of its business, but had passed a resolution to enter liquidation for the purposes of reconstruction and to transfer its assets to a successor company in order to convert from a limited company into a chartered company. The landlord would, therefore, only be in occupation for a short period.

[20]The critical passage from Lord Denning’s judgment is as follows:

“The answer to [the point that the landlord did not intend to occupy the premises itself] is, I think, that the landlords did in fact intend to occupy the premises themselves even if only for the short time that should ensue before the transfer. Section 30 (1) (g) of the Act of 1954 does not say for how long the landlord must intend to occupy himself, and the courts must fill the gap. It seems to me that in some cases even a short time may suffice. Take the case where the landlord intends to occupy the premises and to carry on business himself there for six months, and then transfer the business to his son as a family arrangement. I should have thought that the father would have sufficient intention to satisfy section 30 (1) (g). But suppose the intention was after six months to transfer to a purchaser for cash, I should not expect that intention to suffice. Just as a purchaser within the previous five years cannot defeat the tenant (see section 30 (2)), so also a purchaser shortly afterwards should not be able to defeat him. The matters that influence me are these. It is open to the landlord to complete the transfer before the day of hearing, in which case it is the successor's intention which counts - see section 30 (1) (g) - save only that if that successor falls foul of section 30 (2) his intention does not count. Hence I would say that if the landlord intends to occupy the premises and carry on business himself there for a time, and then to transfer to a successor, his intention is sufficient to satisfy section 30 (1) (g), unless the intended transfer is one which, if it had been made before the hearing, would have fallen within section 30 (2) so as to render section 30 (1) (g) unavailable. Applying those principles to this case it seems to me that the intent of the landlords is sufficient to satisfy section 30 (1) (g). They intend to occupy the premises and to carry on their activities therein (by providing the detailed administration for the Universities Central Council on Admissions) and then to transfer their activities to their successors, the chartered company, without any payment in money or anything in the nature of sale or purchase. The landlords have established, therefore, the statutory ground of opposition. The tenants are not entitled to a new lease.”

[21]Pearson LJ agreed. He thought that the landlord and the successor company were in substance one and the same. He too held that an intention to carry out a sale after taking possession would mean that the landlord had not shown the necessary intention:

“This case falls within the literal meaning of section 30 (1) (g) as the landlords do intend to occupy the premises for the purposes of a business to be carried on by them therein, though only for a short time until transfer of the occupation and the business to the chartered corporation. The transfer will not be by way of sale. and there will be only a formal change of identity. In form the landlords are a limited company which is being wound up, and a new chartered corporation has been created. In substance, however, there is continuity. The phrase alter ego undoubtedly lacks precision for most purposes, but for the present purpose it is a fair description of the landlords in their new guise of the chartered corporation as successors of the landlords in their old guise of the limited company. There must, however, be some qualification of the literal meaning of section 30 (1) (g) of the Act of 1954. A landlord should not be allowed to succeed under section 30 (1) (g) in a case where his intention is only to start a business at the premises and carry it on for a few weeks and then sell his interest in the premises and the business. If the sale took place before the hearing the purchaser would be precluded by section 30 (2) from relying on section 30 (1) (g). It should not be possible to evade section 30 (2) by postponing the intended sale until after the hearing. There is, therefore, an implied limitation on the operation of section 30 (1) (g); it is not applicable if the landlord's intention is to occupy for only a short time and then make a sale. The implied limitation should not be any greater than is necessary to secure consistency between section 30 (1) (g) and section 30 (2). Probably section 30 (1) (g) can be allowed to apply according to its terms without implied limitation in any case where no sale is intended. Certainly it should be allowed to apply according to its terms in a case such as the present where there is no intended transaction even resembling a sale and there is to be complete continuity of operation, and the only transfer is to be a formal transfer to an alter ego of the transferor.”

[22]Salmon LJ held: “The argument runs that, at best, the period during which the landlords will carry on business there before the transfer is so short that the landlords' real purpose in occupying the premises is to effect the transfer. It is pointed out that in the ordinary case a landlord could not defeat the tenant's right to a new lease if he intended to occupy the premises and carry on business there for only a few days or weeks before selling them. In such circumstances his real purpose would be to sell the premises, not to carry on business there. No doubt that is so. If, however, a landlord not being a company, intended to occupy the premises and carry on business there as long as he lived or was physically capable of doing so, his rights under the Act of 1954 could not, in my judgment, be defeated by showing that his expectation of life or of retaining his strength happened to be very short. The tenant could not successfully argue that the landlord's real intention was merely to transfer the premises to his heirs. If the landlord died before the termination of the tenancy, or indeed at any time before the hearing, his heirs would stand in his shoes and succeed to his rights. They could not be defeated because they had inherited only recently; Landlord and Tenant Act, 1954, ss. 30 (2) and 41 (2). So, too, if a landlord transferred otherwise than for money or money's worth at any time, his transferee would succeed to his rights against the tenant; H. L. Bolton Engineering Co. Ltd. v. T. J. Graham & Co. Ltd. Here the circumstances are somewhat analogous. The landlord association will be dissolved, for all practical purposes, as soon as the transfer to the new chartered association is complete. It intends to carry on its activities, inter alia, in the three rooms on the top floor of No. 29, Tavistock Square, virtually for the rest of its life, short as that may be. Moreover (and this is of crucial importance), it is quite plain that the transfer to the new chartered association will be by way of gift, and not for any financial consideration. In these circumstances there seems to me to be no reason on principle or authority why the probable brevity of the landlords' occupation of the three top rooms should confer any benefit upon the tenants, and in my view it does not do so. If the transfer to the chartered association had been completed before the county court hearing, the tenants would clearly have had no right to a new lease. I am glad to think that the law does not make the rights of the parties depend upon the fortuitous circumstance as to whether the transfer is executed sooner rather than later.”(page 154-5)

[23]In drawing a distinction between a transfer between a person and his successors and a transfer by way of a sale, this court was following the policy in s. 30(2), which does not extend to the former transactions. The landlord did not have to show that his occupation would be for any particular period (indeed that would be to write words into the statute) unless he intended to sell the premises. In that event, the court took its cue from s 30(2) and held that an intention to sell the premises would mean that an intention for the purposes of s 30(1)(g) had not been established. Thus, to take Lord Denning’s example, the intention to transfer the premises by way of gift to the son would not have prevented the landlord from showing that he had an intention to occupy the premises for the purpose of carrying on his own business even if the landlord intended to transfer the business to the son within a shorter period than six months. But, if he had intended to sell it to his son, s 30(2) would apply by analogy.

[24]I do not read the judgments of this court in Willis as meaning that there must be no intention to sell at any time in the five years following the taking of possession by the landlord. Rather this court uses s 30(2) as an indication that Parliament cannot have intended s 30(1)(g) to be available to a landlord if he had already formed the intention to sell at the date of the application or hearing because that would be a way of driving a coach and horses through the protection given by s 30(2).

[25]Suppose that the evidence on intention is sketchy and the court is not satisfied that the landlord has an intention to sell the premises within five years after retaking possession. However, the tenant has raised issues which make it probable that there will be such a sale. What then is the position? Mr Jamal Demachkie, for Mr and Mrs Keles, submits that one possible interpretation of s 30(1)(g) is that the landlord must show that he does not intend to sell within five years. He submits that is the effect of s 30(2) and the decision of this court in Willis.

[26]In my judgment, this is not correct. The central idea of s 30(1)(g) is that there must be an intention on the part of the landlord to occupy the premises for the purposes of carrying on his business: the landlord bears the onus of proof on this issue but that is all that he must prove. The intention must, of course, be genuine. Whether the landlord has this intention is a question of fact to be decided upon consideration of all the circumstances. There is no separate and additional and independent requirement to show that the premises will not be sold within five years. However, as with any factual question, if there is other evidence which throws doubt on his case, then unless he rebuts that evidence with further evidence of his own, then he may fail to prove his case. It is not necessary to analyse this process in terms of the evidential burden on any issue passing to him because he has the burden of proof throughout. But he does need to rebut or provide an explanation for any matter which the tenant raises and which throws doubt on his case.

CRITICISMS OF THE JUDGE’S JUDGMENT AND MY CONCLUSIONS ON THIS APPEAL

[27]Miss Tamsin Cox, for Mr and Mrs Keles, makes two fundamental criticisms of the judgment. Firstly, she submits that that the judge held that there had to be an intention to occupy the premises “for the foreseeable future” and that he was wrong in law to do so. She submits that there is no requirement in the 1954 Act to carry on business at the premises for the foreseeable future. Miss Cox submits that the necessary intention is sufficiently shown if the landlord shows that he intends to occupy the premises for the purposes of his business for a reasonable period. She also submits that, determining that period, the court can take into account the personal circumstances of the landlord, such as his age and state of health. She submits that the passage from the speech of Asquith LJ already cited supports this submission. If there were evidence that the landlord had made a decision to sell within five years, then he would not show that he had the necessary intention: see Willis, considered above. However, for that purpose there has to be a decision by the landlord to sell, which was not shown in this case. She submits that in this case a reasonable period would be two years – the period covered by the undertaking.

[28]Miss Cox’s second criticism of the judge’s judgment is that there was no evidential basis for his finding that it was “highly likely” that the premises would be sold or leased at the end of two years. Mr Keles’ witness statement stated that it was his present intention to occupy the premises for his own business for the foreseeable future. Miss Cox couples this submission with a further submission that if the judge rejected Mr Keles’ evidence he gave no reasons for doing so. His duty was to make it plain if he was rejecting the landlord’s evidence: Zarvos v Pradhan [2003] 2 R & CR 122, CA at [45]. He did not expressly conclude that Mr Keles was not a credible witness. There was no evidence of an intention to sell. He denied any intention to sell it when he came to give evidence. There was, moreover, evidence to support this from Mr Patel as he gave evidence that Mr Keles intended to give the premises to his son. The judge drew the wrong inferences from the fact that two businesses at 24 Tudor Street had been closed down. There were good explanations as to why they could not be carried on.

[29]Miss Cox contends that the judge effectively turned the undertaking round against Mr Keles. Mr Keles candidly accepted that he could not give an undertaking to use the premises indefinitely because, among other things, of his ultimate wish to retire. On Miss Cox’s submission, the undertaking provided compelling evidence that Mr Keles did intend to use the premises for the purposes of a business run by him, as stated in his witness statement. He could not give an undertaking for the foreseeable future. The judge could not infer from the offering of the undertaking that Mr Keles’ evidence was not believable.

[30]Mr Demachkie submits that for the purpose of s 30(1)(g) the intention must be more than fleeting or transitory, and that the court should be wary of finding intention where it believes the landlord intends to sell his interest. Mr Demachkie submits that the judge's formulation of the test is no more than to apply the law as laid down in Willis. In any event, the effect of any misdirection is negligible. It is apparent that the judge had come to the view that Mr Keles did not intend to occupy for any meaningful length of time. The judge was entitled to reject the undertaking and to disbelieve Mr Keles. He also found that it was highly likely that there would be a sale of the premises at the end of two years.

[31]If the sole issue were whether in law the landlord must show that he has an intention to occupy the premises for the foreseeable future, objectively ascertained, I would have agreed with Miss Cox. S 30(1)(g) does not so provide, and the qualification added in Willis is that that the necessary intention is not shown if it is shown that the landlord intends to sell within five years.

[32]However, even if there is no intention to sell, the landlord must still show that he genuinely intends to occupy the premises for the purposes of his business. To this end, Mr Keles offered an undertaking limited to two years that did not impose on him any positive obligation to occupy the premises at all; he merely undertook not to use the premises save for the purpose of his newsagents’ business. The judge observed in paragraph 36 of his judgment (set out above) that he was “very disturbed” by “the temporary nature” of the undertaking. Mr Keles’ oral evidence about his intended occupation was imprecise and unsatisfactory. There is no rule of law that requires the judge to accept an undertaking, still less to prevent him from examining it critically. If the judge was of the view that the undertaking was plainly defective and that Mr Keles’ explanations did not provide a sufficient answer for the defects, there was no reason in logic or law why he should not treat the undertaking as undermining rather than strengthening the evidence of the intention expressed by Mr Keles in his evidence. There was thus no reason why the undertaking should not in the event work against Mr Keles. The reasons he gave for the weak form of undertaking were not, in reality, of substance. If he was worried that his health might not permit him to carry on in business, why was he prepared to give an unqualified undertaking for two years? Moreover, some of the objections could have been addressed in the drafting, for example, by providing for the undertaking to come to an end in certain events.

[33]The form of the undertaking did not stand on its own. It is apparent from paragraphs 36 and 40 of the judge’s judgment set out above that the judge considered that there were several strands of evidence which were adverse to Mr Keles. He did not need to carry on business as he had other sources of income. There was the fact that the undertaking was only given for two years when Mr Keles expected to have a further working life of three to four years and there was no evidence of any ill-health. In addition, Mr Keles never himself said in his evidence to the court that he would pass on the premises to his son even though Mr Patel had given evidence recalling him as having said that. There was evidence that the businesses on the other parts of the premises had closed down and new tenants found. It was open to Mr Keles to lay these matters to rest. He provided some explanations but it is apparent that the judge was not satisfied that the explanations were sufficient. He thought that Mr Keles would dispose of the premises when his two-year undertaking expired. In the judge’s view, that threw doubt on the genuineness of his intention to occupy the premises for the purpose of carrying on a business.

[34]Did the judge misdirect himself with respect to intention? He used the expression “for the foreseeable future” twice in paragraph 41 of his judgment. On the first occasion, he said that the limited undertaking “threw doubt upon [Mr Keles’] intention, which ought to be a substantial and genuine intention of running a business for the foreseeable future at the premises”. In my judgment, when the judge uses the phrase “for the foreseeable future” he is in my judgment simply using the words that Mr Keles had used in his witness statement to describe his intention and that the sentence should be read as if a comma appeared after the second “intention”. Moreover, it should be noted that what the judge is saying in the first sentence is that he was not satisfied that such intention had been shown: he was not persuaded by Mr Keles’ evidence on that point, and Mr Keles had the onus of proof. On the second occasion when the judge uses the words "for the foreseeable future" he refined what he was saying to limit his observations to the short term. His point was that he was not persuaded that Mr Keles would carry on a business for any significant period of time. He is not there talking about the indefinite future and so that sentence contains no misdirection.

[35]The reasons why Mr Keles did not persuade the judge are thus contained in the judgment. The judge did not say in terms that these were the reasons why the objection failed, but that is implicit in the judgment read as a whole. I also bear in mind that the judge had not reserved his judgment. He gave it immediately and in those circumstances not every “i” is necessarily dotted nor every “t” crossed. This court allows greater leeway in those circumstances; otherwise many more judgments would have to be reserved and the best -a judgment with reasons fully articulated - would become the enemy of the good – a judgment that is available to the parties without the delay and extra costs involved when judgment is reserved. In a case such as this, where some or all of the parties were present in court, and the case clearly meant a great deal to all the parties personally, as they were all involved in the premises, and case management directions are likely to be needed, it is clearly preferable for the court, if it is able to do so, to give judgment immediately.

[36]At the end of paragraph 1 of this judgment I posed two questions: can the court properly conclude that the landlord has not shown the requisite intention to occupy premises where it has found that a sale is merely likely as opposed to intended, and was the court entitled so to conclude in the circumstances of this case? I would answer the first question: in an appropriate case, yes. Section 30(1)(g) does not require that the landlord should intend to occupy the premises for any particular length of time. Clearly, as Mr Demachkie submits, his intended occupation must not be fleeting or illusory, but this is a minimum requirement which might be an appropriate test to apply where the business is to be continued through successors in title. In other circumstances, in my judgment there must be some substance in the intended occupation for the purpose of carrying on the landlord's business and thus I agree with the judge that the occupation must be more than short-term. Parliament could hardly have intended that the landlord should be able to prevent the renewal of business tenancy if that were not so. What is short-term must depend on the facts of the particular case. In any event, if the landlord has a sufficient intention for the purposes of Cunliffe to sell the premises within five years, he will be treated as not having the requisite intention to occupy: see Willis. However, if the judge, as here, finds that he is likely (indeed "highly likely") to sell, that likelihood is a factor which the court must take into account in deciding whether the landlord has discharged the burden of proving that he has a genuine intention to occupy premises for the relevant purpose at all. This is a multifactorial question to be decided on all the relevant evidence.

[37]I turn to the second question posed in paragraph 1 above. Was the judge entitled to conclude that the landlord had not shown the requisite intention to occupy the premises in the circumstances of this case? One of the functions of this court on an appeal on a question of fact is to see whether the trial judge drew the wrong inferences from the facts but in doing so this court will make due allowance for the fact that the judge heard oral evidence. Applying that test, I consider that the judge was entitled to conclude that Mr Keles had not shown the necessary intention to occupy the premises for the purposes of his business. He had heard the witnesses and the evidence had covered many issues of fact. This is not one of those cases when this court can interfere with the trial judge's inferences from the evidence.

[38]For these reasons, I would dismiss this appeal.

Lord Justice Thomas:

[39]I agree.

Lord Justice Waller:

[40]I also agree.