JUDGMENT

LORD TEMPLEMAN

My Lords.

[1] By a Lease dated 15 July 1977 the appellant landlords, the Corporation of the City of London, granted to the respondent partners in Wilde Sapte & Co premises in New Broad Street "to hold the premises . . . from 25 March 1976 for the term of ten years . . . (hereinafter called 'the term')". The Lease contained 23 covenants by the tenant firm including a covenant to pay the rent. Those covenants were of course limited to the ten year period which constituted the term.

[2] In 1979 Wilde Sapte with the consent of the landlords assigned the Lease to Grovebell Group Ltd. By privity of contract and pursuant to the covenants contained in the Lease, Wilde Sapte remained liable to the landlords to pay the rent and perform and observe the tenant's covenants contained in the Lease during the remainder of the term. By privity of estate, Grovebell became liable to the landlords to pay the rent and to perform such of the other tenant's covenants contained in the Lease as touched and concerned the land. The contractual liability of Wilde Sapte was due to end on 24 March 1986 upon the expiration by effluxion of time of the term granted by the Lease. However, Part II of the Landlord and Tenant Act 1954 then applied:

"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:" see section 23(1) of the Act of 1954.

By section 69(1) of the Act of 1954 a tenancy is:

"a tenancy created either immediately or derivatively out of the freehold, whether by lease or underlease, by an agreement for a lease or underlease or by a tenancy agreement ..."

[3] In the circumstances of the present case, the Act of 1954 operated to protect the occupying tenant, Grovebell Group Ltd, in respect of the tenancy, that is to say the term granted by the 1977 Lease. This was effected by section 24 of the Act of 1954 which, so far as material, provided as follows:

"(1) A tenancy to which this part of this Act applies shall not come to an end unless terminated in accordance with the provisions of this Part of this Act: and, ... the tenant under such a tenancy may apply to the court for a new tenancy -

if the landlord has given notice under section 25 of this Act to terminate the tenancy, or

if the tenant has made a request for a new tenancy in accordance with section twenty-six of this Act.

(2) The last foregoing subsection shall not prevent the coming to an end of a tenancy by notice to quit given by the tenant, by surrender or forfeiture, or by the forfeiture of a superior tenancy, ..."

[4] The term granted by the 1977 Lease did not come to an end on 24 March 1986 under the Lease but was continued under the Act. The term continued until 23 January 1987 when the liquidator of an insolvent Grovebell surrendered the term. There was then owing rent and outgoings amounting to £33,460.64 in respect of the period between 25 March 1986 and 22 January 1987.

[5] In these proceedings the landlords seek to recover the sum of £33,460 from Wilde Sapte. The Deputy High court judge Desmond Perrett QC and the court of Appeal (Nourse and Evans LJJ and Sir Michael Kerr) held that the landlords were not entitled to recover and the landlords now appeal.

[6] Wilde Sapte are not contractually bound to pay the landlords any rent for the period after 24 March 1986 because Wilde Sapte only contracted to pay rent until that date. If Wilde Sapte are liable to the landlords after that date, that liability must have been imposed by the Act of 1954. That Act does not expressly impose any liability on anybody except the landlords and the occupying tenant. There is no reason why any liability on Wilde Sapte should be implied. The Act was intended and expressed to protect occupying tenants against their landlords not to impose liability on former tenants who ceased to have any interest in the property before or after the Act of 1954. Mr Arden