Zarvos v Pradhan & Anor

This is an appeal brought by Mr Kyriacos Zarvos with the permission of this court against the order made by His Hon. Judge Cowell sitting at the West London County Court on 9^th May 2002 when he determined that Mr Zarvos, the landlord of business premises at Lillie Road, London SW6, was not entitled by reason of paragraph (g) of section 30(1) of the Landlord & Tenant Act 1954 to oppose the grant of a new tenancy of those premises to the tenants, Soloman Pradhan and Abdul Hakim.

The background can be quite shortly stated. The appellant, whom I shall call the “landlord”, acquired the property some time in 1977 and until about 1994 ran a restaurant known as Bitter Lemons Taverna on the ground floor and basement of the property. He and his family lived, and continue to live, above the restaurant. In 1994, at a time when he may have intended to return to Cyprus, he entered into an arrangement with the respondents, whom I shall call the “tenants”, under which they began to conduct their own restaurant business, the Tandoori Garden Restaurant, in place of the Bitter Lemons. The deed was not put before us but we were told that it was agreed that the tenants would have the use of all furnishings, fittings and equipment in the restaurant, be responsible for the maintenance, service and upkeep of all these items and deliver them up to the landlord on the termination of the agreement in the same good order and condition as when let, fair wear and tear excepted. The court was later to find that this arrangement amounted to a tenancy.

The landlord changed his mind about going to Cyprus. He opened his own sandwich bar in the West End. Then in 1999 there appears to have been some dispute about the amount of the increase in rent to be charged following the five-year rent review provided for in the deed. On 2^nd October 1999 the landlord wrote to the tenant in these terms:-

“I am writing to you in regards to the review for the rent of the above premises, which I notified you as being £30,000 per annum. As our agreement shows, your deadline was the 28^th September 1999. We have had two meetings regarding this review. These took place on 23^rd July 1999, and on the 7^th August 1999. I have also given you five verbal warnings since these meetings. The deadline date has now come, and gone, and still I have heard nothing from you. This has left me with no choice but to demand you vacate my premises by the 28^th November 1999. These conditions are clearly laid out in our agreement, which you did sign. …”

It was a letter to which the judge was to attach some importance, the point being that the landlord made no mention then of his intending to resume occupation in order to carry on his own restaurant there.

On 17^th November 2000 the landlord sought a declaration that the agreement had been terminated and he gave notice that he would oppose an application for a new tenancy on the ground allowed under section 30(1)(g) of the Landlord & Tenant Act, 1954 namely 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 …”

A trial of the preliminary issue whether the landlord was so entitled was directed to be heard and it was that which came before His Hon. Judge Cowell.

Standard disclosure was given by both sides. The tenants were dissatisfied with the adequacy of the landlord’s disclosure. The landlord’s accountants had put in a letter dated 7^th February 2002 in which they wrote:-

“During the last few months we have been instructed by Mr K. Zarvos to assist him in starting up a new business as a restaurant and wine bar owner.

We have been asked to prepare cash flow forecast and profit and loss accounts as a guideline in his new venture. We have also been asked to find out about what kind of licences and other statutory requirements he needs in order to start the above business.”

The Manager of the Bank of Cyprus wrote to him on 22^nd February 2002:-

“I refer to our recent discussion and confirm, as previously discussed with you, that the bank would be interested in financing the refurbishments to the restaurant at Lillie Road for your use should it become vacant. In order for the matter to proceed I will require from you detailed costings together with projected profit and loss accounts and cash flow projections.”

On 16^th April 2002 the tenants’ solicitors asked for further disclosure including the following:-

“2.

Please disclose the cash flow forecast and profit and loss accounts mentioned in the last paragraph of the [accountant’s] letter …

4.

Please provide full detailed costings of the planned refurbishment mentioned in the letter from the Bank of Cyprus (London) Ltd. letter of 22^nd February 2002.”

The reply came on 24^th April to this effect:-

“As you are no doubt aware this information is commercially sensitive and we are reluctant to disclose this information at this stage. It is quite clear from our client’s approach to the bank and his accountants and their comments that he fully intends to carry out his plans, and further evidence of this will be given to you in our client’s witness statement within which his plans are further clarified.”

The tenants protested that confidentiality did not justify the failure to give disclosure and that the cash flow forecasts and profit and loss accounts were clearly material. Under threat of an application, these were provided the next day. On 7^th May, the day before the hearing was due to begin, the tenants’ solicitors wrote asking for documents to be brought to court including up-to-date bank statements, details of the mortgage on Lillie Road and “a copy of your client’s application to the bank for a business loan in respect of his proposed new restaurant”.

At the trial the landlord’s daughter gave evidence and produced some menus she had prepared on her computer. The landlord himself gave evidence and was vigorously cross-examined. We were told by Mr Timothy Higginson, counsel for the tenants, that at first he refused to answer questions about his finances, gave inconsistent answers, was generally evasive and produced no new documents to support his case. At some point towards the end of the first day the judge made some comment about the inadequacy of the disclosure but precisely what happened is in dispute. There is no transcript of the proceedings to resolve that dispute, or, even more importantly, to enable us to form a view about the facts and the way the case was conducted. Whatever was said, some more documents were produced the next morning, cross-examination continued and evidence and submissions went on until late in the day.

The judge gave judgment at 5.30 p.m. and, conscious of the time, began by adopting the well-known rugby football tactic of getting his retaliation in first. He reminded the parties and he reminds us of what was said by the House of Lords in my favourite case, Piglowska v Piglowska [1999] 1 W.L.R. 1360, “about what is in the mind of the judge when he gives judgment”. Understandably enough, he wished to give judgment while the evidence was fresh in his mind and he said he hoped to mention everything of importance.

No complaint is made about the way he directed himself as to the law. He stated the principle in the words of Upjohn L.J. in Gregson v Cyril Lord Ltd. [1963] 1 W.L.R. 41, 45:-

“The question whether the landlords intend to occupy the premises is primarily one of fact, but the authorities establish that to prove such intention, the landlords must prove two things. First a genuine bona fide intention on the part of the landlords that they intend to occupy the premises for their own purposes. … Secondly, the landlords must prove that in point of possibility they have a reasonable prospect of being able to bring about this occupation by their own act of volition. This is established by Asquith L.J.’s well-known observations in Cunliffe v Goodman [1950] 2 K.B. 237, 253 when he said:

“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.””

Upjohn L.J. added at p. 47:-

“In my judgment [the test under the second heading] is essentially an objective test, that is to say, would a reasonable man, on the evidence before him, believe that he had a reasonable prospect of being able to bring about his occupation by his own act of volition? This, of course, is a question of fact to be determined on all the evidence that is before the court.”

Cunliffe v Goodman was before the judge and he referred to Asquith L.J.’s “well-known dictum”. Because there has been some discussion about the judicial gloss on “intention”, it is worth citing the lengthier passage from his judgment which followed:-

“X cannot, with any due regard to the English language, be said to “intend” a result which is wholly beyond the control of his will. He cannot “intend” that it shall be a fine day tomorrow: at most he can hope or desire or pray that it will. Nor, short of this, can X be said to “intend” a particular result if its occurrence, though it may not be wholly uninfluenced by X’s will, is dependent on so many other influences, accidents and cross-currents of circumstance that, not merely is it quite likely not to be achieved at all, but, if it is achieved, X’s volition will have been no more than a minor agency collaborating with, or not thwarted by, the factors which predominately determine its occurrence. If there is a sufficiently formidable succession of fences to be surmounted before the result at which X’s aims can be achieved, it may well be unmeaning to say that X “intended” that result.”

Later at p. 254 he added:-

“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.”

The judge reminded himself of Auld L.J.’s observation in Dolgellau Golf Club v Hett [1998] 2 EGLR 75, 79 that:-

“… the issue as to a landlord’s entitlement to rely, under section 30(1)(g) on his intention to occupy demised land on the termination of a tenancy for the purpose of establishing a business is one of intention, and its reasonable practicability, to start such a business, not of the probability of achieving its start or its likely success once established. It is not an incident of the statutory formula nor of the present judicial gloss on it that a landlord, in seeking to satisfy the court of the reality of his intention, should be subjected to minute examination of his finances with a view to determining the financial viability and durability of the business he intends to establish. The court is not there to police a landlord’s entitlement to recover possession of his own property by examining the financial wisdom of his genuinely held plans for it.”

In his judgment he also referred to Gatwick Parking Services Ltd. v Sargent [2002] EGLR 45 and must have had in mind Laws L.J.’s observation that:-

“I emphasise that the hurdle to be surmounted by the appellant under section 30(1)(g), in the light of the authorities on the subject, is by no means a high one. It does not have to demonstrate a balance of probability that [planning] permission will be granted. He has to show that there is a real, not merely a fanciful, chance.”

After dealing with a number of facts which have been the focus of scrutiny in this appeal, the judge concluded in paragraph 29 of his judgment:-

“Although I am conscious of the fact that I have not mentioned everything that has been in debate upon the evidence in this case, I regard it as one where the reasonable prospect of putting the intention into effect does not exist, and that is against a background of the intention in 1994 to let out the property, and the suspicion that this is a change of heart motivated more by the desire to get rid of the tenant than a genuine wish to carry on a business is not entirely dispelled, despite the fact that Mr Zarvos is experienced in this kind of business and once carried it out on the property. I think this is a case in which the claimant’s statements of intent are sufficiently unrealistic as not to be genuine in all the circumstances of the case. There is simply too much money that will have to be borrowed in order to get the business up and running, and if not borrowed there are problems about raising it from the current assets because of the compensation that would have to be paid to the tenants.”

He refused permission to appeal stating in writing that:-

“I decided that the landlord did not genuinely intend because of the absence of reasonable prospects of bringing it about …”

Mr Ivan Clarke and his instructing solicitors played no part in the case below and they labour under the difficulty of not having a clear account of what happened there, a problem compounded by the lack of a transcript. Nevertheless, Mr Clarke has advanced his client’s case persuasively. He accepts that this is an appeal against findings of fact and that he has an onerous task in persuading the Court of Appeal to interfere in such circumstances. He submits, first, that it is implicit in the judgment read as a whole that the judge was finding as a fact that the landlord did have the necessary bona fide intention to occupy for the purposes of his own business and, secondly, that the judge was wrong to find that in point of possibility there was no reasonable prospect of carrying that intention, principally for two reasons:-

Mr Higginson submits that the judge found the landlord to be lacking bona fides, that conclusion following inevitably from the shifty way in which he gave evidence. Even if that finding cannot be spelt out in the judgment, there was abundant evidence compelling the clear conclusion the judge did reach that there was no reasonable prospect of carrying any intention to conduct a new business at Lillie Road into effect.

Mr Higginson’s primary submission that the landlord failed at the first fence was perhaps fuelled by the way the court dealt with the application for permission to appeal. Robert Walker L.J. had refused permission on the papers his reasons being:-

“The case on appeal is that the judge stated the law correctly, but then failed to apply to the facts which he found (or should have found). That is a possible but not an easy case, especially where (i) Mr Zarvos was very unwilling to disclose financial information both before and during the trial and (ii) the judge was as he emphasised giving an ex tempore judgment at a late hour. The judge saw and heard the witnesses and there is no real prospect of the full Court of Appeal being persuaded that he was wrong in his conclusion.”

The application for permission was renewed and Waller L.J. gave the judgment with which Pill L.J. agreed. He said:-

“10.

… one difficulty in my view with the judge’s judgment is that it is not absolutely clear whether he was finding that Mr Zarvos had a genuine intention but could not carry it out; or whether he was saying that because of the absence of material in relation to setting up the business, he was finding that Mr Zarvos had no genuine intention at all. If the latter was his finding, that is to say that he had no genuine intention at all, then, as it seems to me, it would be most unlikely that the Court of Appeal would interfere with that finding of fact. But if his finding was that Mr Zarvos did have a genuine intention to set up a business, then it seems to me that there is force in Mr Clarke’s submissions that, a finding that he could not carry it out was not a finding that he could properly reach.

11.

As it seems to me it really would be wrong for this court to attempt to analyse the judgment and decide for itself exactly what the judge was finding, all I would say is that there are indications that he was simply concentrating on the second limb, if one looks at paragraphs 21 and 24 of his judgment, and that when one comes to paragraph 29 which is the only paragraph which can be relied on for suggesting that the judge is finding no bona fide intention at all, it is not, in my view, expressed in clear language.

12.

As it seems to me, that being so, it would be right to allow the full court to consider this matter and I would grant permission to appeal. I say straight away not without some hesitation, but I would grant permission to appeal.”

Before analysing the judgment, it is useful to clarify whether one must start with the first limb – genuine not colourable commitment to carry on business at the premises – or whether it is sufficient first to examine the real possibility for the landlord’s doing so. There was some discussion as to whether the first and second limbs have to be dealt with sequentially. In my judgment there is nothing in principle or in practice which demands such sequential treatment. Ultimately there is a single question for the judge to decide, namely the question posed by section 30(1)(g) itself: does the landlord on the termination of the current tenancy intend to occupy the holding for the purposes of a business to be carried on by him therein? The judicial gloss put on those ordinary words arises out of Asquith L.J.’s explanation of the connotation of the word “intends”. Hence the first element of the subjective intention, the genuine settled commitment to the project, and the second, a check on reality which is demonstrated by showing, objectively, that there is the real possibility of carrying it into fruition. Pie in the sky will not be enough for this restaurateur’s business plans.

It seems to me to be plain enough that if a judge found that there was no genuine intention to run the business and that the expression of that intent was a colourable device to obtain possession and then do something different with the premises, then that is the end of the matter. The landlord falls at the first fence. One need not investigate the reality or the fantasy of his business plan. That inquiry is to be undertaken if it appears to be a case where, with the best will in the world, the landlord has no real prospect of succeeding in his aim of starting a business. There may, therefore, be cases where his subjective intent can be taken as read and where the case will, therefore, stand or fall on this second limb.

Thus, applying that approach here, if the judge was treating the second limb as crucial and was correct to find on the facts against the landlord, then the landlord’s appeal fails and there is no need to investigate his bona fides. If, on the other hand, the correct finding is that he did have real prospects of setting up in business again at his old premises, then it was necessary for the judge to find whether his intention to do so was genuine or not. If the judge was finding that he was not genuine, the landlord fails again. If the judge found that the landlord was genuine and had real prospects, then the appeal will be allowed. If the landlord establishes the second limb, but we are uncertain what his finding on the first limb was, then we would have to remit the matter to the judge for further hearing.

Accordingly in my judgment it is appropriate in this appeal to start with the second limb and ask first what did the judge decide, and secondly, was he right to do so?

I am satisfied the judge concentrated on the second limb. That appears from various passages in his judgment. In paragraph 21 he said:-

“… What is important in this case is whether there is a reasonable prospect of Mr Zarvos running the new business on the premises.”

In paragraph 24 he observed:-

“What troubles me in this case is just this matter of practicality.”

Later in that paragraph he observed that:-

“The crucial point in this case is” [in essence, his ability to raise finance from the bank].

He concluded in paragraph 28:-

“I am left with this, that I have no reliable evidence at all that the bank is going to lend the £40,000 that Mr Zarvos says he is needed, or some sum approximating to that, and without that I cannot say that I am satisfied that Mr Zarvos has a reasonable prospect of putting into effect what he tells me is his intention in running a business at the property.”

I have already set out paragraph 29 where the relevant passage is:-

“I regard [the case] as one where the reasonable prospect of putting the intention into effect does not exist …”

So I am satisfied he was finding, as he summarily said in the reasons he gave for refusing permission to appeal:-

“I decided that the landlord did not genuinely intend because of the absence of reasonable prospects of bringing it about.” (Emphasis added by me).

Although that is a judgment about possibilities, prospects or chances, it is nonetheless treated as a finding of fact as the cited authorities have made clear. Mr Clarke, therefore, has the extremely difficult task of persuading us that the conclusion was against the weight of the evidence.

Where is it said the judge went wrong? Mr Clarke’s first submission is that the judge erred in concentrating on the need to raise £40,000 more or less to finance the venture. This diverted him from considering the ease with which the landlord could return to his old premises, make use of his old equipment and run his restaurant business as easily as the tenants and could do so with minimal expense. There is not a hint of that having been considered by the judge in his judgment. That is no surprise, retorts Mr Higginson, because that is not the way the case was being advanced. That was not the sort of business the landlord said he was intending to operate. His intention, as appears from his witness statement, was to open a new restaurant, “Boby’s Restaurant and Wine Bar”, which would have a Mediterranean theme menu, dancing every night of the week, combining excellent service with a relaxed and comfortable atmosphere. He contemplated some restoration work and said:-

“I estimate that following the defendant’s occupation I will have to carry out major works and spend a great deal of money in enabling this venture to begin.”

I have already adverted to the lack of a transcript to establish exactly how the case was conducted. We are informed by Mr Higginson that the case advanced was for Boby’s Restaurant, not for the resurrection of the Bitter Lemons Taverna. There is, however, I note, a hint of the alternative case in counsel’s exchanges with the judge when seeking permission to appeal when counsel said:-

“Your Honour hasn’t considered the possibility that Mr Zarvos starting – if I may put it – with the idea of Boby’s Restaurant fully fitted, comes to the conclusion “Well, I can’t do Boby’s but I can do Bitter Lemon because I have all the assets that I had, or substantially all the assets that I had, being given back to me. I have the lease, I have the chairs, tables, bar equipment, kitchen equipment and so on”. So it’s not a start-up business; he’s getting back his own property and business at the end of it. So that’s all – with respect – that seems to me to be important matters in relation to the question of practicability.”

The judge makes no relevant comment. Speaking for myself I believe it would be a difficult case to run where the landlord has to say, “I have a fixed and settled intention to run this posh new restaurant, alternatively I have a fixed and settled intention to make do with the old taverna”. In my judgment the judge had to judge the case on the principal basis upon which it was put to him and that required the raising of money to make it a practical proposition. So he rightly concentrated on the landlord’s finances.

As to that, evidence was given that the sandwich bar had been sold a month before the hearing and the net proceeds of sale amounted to about £30,000, £10,000 of which was held by his solicitors against the costs of this litigation and the balance used to discharge an overdraft with the result that the landlord had an account at the bank with about £100 in it. There was other evidence, though it was not clear to what extent it was vouched for by the documents, suggesting that the landlord had about £10,000 in another bank account in London, about £10,000 in Cyprus and at least one joint account with his wife or possibly two with either nearly £17,000 or only £7,000 in those accounts. His wife had about £10,000 of her own. If he succeeded in obtaining possession he would have had to have paid compensation to the tenants of £13,750. He apparently had no income apart from the rental from the property or the income he could derive as a restaurateur.

The important fact in this case is that he owned Lillie Road and suggested that it was worth about £750,000. He produced no evidence to support his valuation. Armed with a copy of the land charges register, the tenants were able to establish that the property was subject to three charges and his total borrowing was nearly £80,000. It was not information which had been volunteered. The judge said:-

“22.

… so there would appear to be a fairly large equity, but it seems to me that more to the point is whether a bank would be willing to lend more.”

That was the “matter of practicality” which troubled the judge. The figure of £40,000 which the landlord said he needed to borrow came from him alone. His accountant had, as I have set out, produced cash flow forecasts and projections of a profit and loss account of which the judge said this:-

“I have to say, to put it shortly, that I think that the vast number of criticisms of [the projections] made by Mr Higginson, which I will not set out in detail, are well founded. There is nothing to indicate that [the accountant] is an expert in restaurant businesses. In particular the takings are really guessed at, to some extent on the basis of the daughter, whose evidence to me was that people would be ready to pay for a three course dinner at £30, without wine, and the figures go up in such a way as to double every now and then over the period up to May of next year, whereas the purchasers do not move in quite the same way.”

Dealing with “the crucial point” in this case, namely the bank’s reaction to the request for finance, the judge referred to the bank’s letter of 22^nd February and then said this:-

“The projections that were produced a week ago have not been sent to the bank, and so what the bank had required has not been seen by the bank. There was nothing to show that the bank knows how much is needed. There is nothing to indicate what sum the bank has asked for. It is very easy, but wrong, to assume that because the figure of £40,000 is now mentioned, that figure was the figure actually mentioned to the bank. There is nothing to indicate that the bank had any particular sum in mind when they said they would be interested in financing the refurbishments to the restaurant.

The point is that all the criticisms, which I say are well founded, made of the projects have not even been considered by the bank manager. The evidence of Mr Zarvos was that it was essential to borrow something like £40,000. He said, “May be less, may be more”, but what is definite is that something like that figure has to be borrowed. Whether the manage who wrote the letter had in mind at the time the fact that his bank had already got two loans on the security of the property, and whether he had in mind the fact that the TSB-Lloyds have a third mortgage security of £56,000 simply does not appear. So I have no idea what the bank manager would make of all the objections to the projections, and the bank manager lending on security would have to be lending on the basis of a fourth mortgage, whatever the sum was.”

So he concluded in paragraph 28:-

“It seems to me that it would be speculating to say that the bank would lend something on that figure because of the large equity, or that banks need only be satisfied of the ability to pay loans, and I have no idea what reaction they would have to the projected figures.

29.

… I think this is a case in which the claimant’s statements of intent are sufficiently unrealistic as not to be genuine in all the circumstances of this case. There is simply too much money that will have to be borrowed in order to get the business up and running, and if not borrowed there are problems about raising it from the current assets because of the compensation that would have to be paid to the tenants.”

Mr Clarke’s submission is simple. His best point, and being a good point he virtually makes it his only point, is that the judge was plainly wrong to ignore the very considerable equity in Lillie Road. All the landlord had to show was a reasonable chance, a real prospect rather than a fanciful prospect, of raising £40,000 out of an equity well over £600,000. Against an apparently proven track record as a restaurateur it is he submits, fanciful to suggest that the prospects of raising the money are only fanciful. I am bound to say it is a compelling argument but I have to remind myself that the judge had the inestimable advantage over us of hearing the whole case unfold before him and he had to decide whether the prospects of borrowing were real or, as he put it, speculative. He had ample justification, given the effective cross-examination by Mr Higginson of the projections, for finding that a prudent bank manager would be sceptical about the business plan. The judge was entitled to bear in mind that banks may not be willing to lend if they cannot see a prospect of the loan being repaid. A fourth mortgagee may not relish possession proceedings as the only means of recovering its debts.

Not without a degree of hesitation, I have come to the conclusion that I cannot possibly say that the judge was not entitled to decide as he did on the evidence before him. His decision is not so outside the ambit within which reasonable views may have been taken about the prospects of raising capital that I can say he was wrong and that his finding was against the weight of the evidence. It follows that the landlord fails on this ground of his appeal.

In the course of my reading into the authorities I chanced upon this observation, which appears apposite, from Lord Evershed M.R. in Fleet Electrics Ltd. v Jacey Investments Ltd. [1956] 1 W.L.R. 1027, 1036:-

“I have said, and I repeat, that the landlords may have been less than fortunate here and that had their case been worked out and put forward somewhat otherwise (and by saying that I am not, of course, making any criticism of the counsel who was then appearing for them) and had the evidence adduced been somewhat different in character, it may be that the judge would have tipped the balance in the other direction. But if the landlords were unfortunate, there is no reason why that should be visited on the tenants.”

My sympathy for the landlord is made more acute by learning from the application to adduce fresh evidence that on 22^nd May 2002, a fortnight after the hearing, the Bank of Cyprus wrote to the landlord offering a fixed term loan facility of £60,000 “to fund works to convert the ground floor at 98 Lillie Road, Fulham, SW6 into a Greek restaurant, to pay compensation to existing ground floor tenant of Lillie Road and to settle costs”, repayable at £554.61 per month over 15 years, the bank continuing to hold the first charge over the property. The bank was also willing to grant an overdraft facility of £5,000 on the current account as working capital.

The application to admit that fresh evidence is strongly opposed by Mr Higginson. He no doubt recognises that the evidence was such that, if given, it would probably have had an important influence on the result of the case and in the circumstances of the case may even have been decisive and that, moreover, the evidence was apparently credible. He submits, however, that Ladd v Marshall [1954] 1 W.L.R. 1489 is still a useful starting point for the Court of Appeal in considering under CPR.52.11 whether this court should receive evidence which was not before the lower court. In that regard he is undoubtedly right. There is now abundant authority to that effect: see for example Hertfordshire Investments Ltd. v Bubb [2000] 1 W.L.R. 2318. Mr Clarke’s submissions to the contrary are misplaced. So the question is whether this evidence could not have been obtained with reasonable diligence for use at the trial.

I am satisfied it could have been obtained and refrain from expressing a view as to whether or not it should have been obtained. I set out at the beginning of this judgment the tenants’ protests about the lack of documentary evidence and their request on the day before the hearing was due to start for a copy of the application to the bank for this business loan. The only letter produced from the bank was written on 22^nd February, nearly three months before the trial and so there was ample opportunity to make a precise application to the bank and obtain a firm response from the bank. I am satisfied that the landlord cannot establish the first ground of the Ladd v Marshall test.

It now does not end there. That may be the starting point. The overriding objective is always the end point. The court has to deal with the case justly. That includes ensuring that the matter is dealt with expeditiously and fairly, saving expense and recognising in the interests of broad justice that there should be finality to litigation. This may be harsh on the landlord but it would be more harsh on the tenants to give the landlord a chance to put his house in order and subject them to a retrial. I would, therefore, refuse the application to admit this fresh evidence.

Having regard to my analysis of the issues in this appeal, the upholding of the judge’s finding that the tenant did not genuinely intend to carry on his business because he had not shown a reasonable prospect of bringing it about is the end of the matter. It makes it, strictly speaking, unnecessary to venture an opinion as to what the judge found on the first limb. Given the way the case has been presented, I think it right and fair to say a few words about it.

First, if a judge is to make a finding that a landlord does not genuinely intend that which he says he intends, then the judge, in those circumstances, is finding that he does not believe what the landlord says. If that is his finding, then he should make it plain that he does not believe him and wherever possible should explain why he does not believe him. Judge Cowell would know that and would not flinch from dealing directly with critical matters of that kind. It is, of course, a harsh finding to make. There may be many cases where the judge need not go so far. If he hangs his judgment on the second limb he does not have to disbelieve the landlord when he sets out his stall. Indeed, the second limb is there precisely to cater for the case where the landlord does genuinely believe in what he says he intends to do.

With those introductory words, what did Judge Cowell find in this regard? I confess I find it very difficult to be sure about that. Mr Higginson did mount a full-frontal attack on the landlord’s credibility and in several passages the judge voiced his suspicions about the genuineness of the landlord’s plans. He also doubted his motive. If a landlord has a genuine intention to set up his own business, his motive becomes irrelevant. An ulterior motive may lead to a conclusion that the expression of intent is not genuine but I see no error in the judge’s reference to the landlord’s motive since he immediately moved from motive to the proper test of whether he intended to occupy the holding for the purposes of a business to be carried on by him therein and he concentrated on that. The documents produced on the second day, far from denting credibility supported the evidence that had been given. All in all, I read the judgment as a whole to be one where the judge concentrated on the practicalities and focused his attention on the second limb, not on the first. My reading of his judgment leads me to conclude that he did not make any positive finding, yea or nay, about the subjective element of the landlord’s intention. Given the earlier finding which I have upheld, he did not need to do so.

Let me end where the judge began – with Piglowska. This was an extemporaneous judgment. Judge Cowell “knew how he should perform his functions and which matters he should take into account”. No doubt he could have better expressed his conclusions but the judgment is sufficiently reasoned at least on the second limb of the appropriate test. Making due allowance for “the exigencies of daily courtroom life”, I conclude that it would be wrong for us to interfere. I would, therefore, dismiss the appeal.