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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Town Investments Ltd v Department of the Environment [1977] UKHL 2 (02 March 1977)
URL: http://www.bailii.org/uk/cases/UKHL/1977/2.html
Cite as: 121 SJ 203, [1977] 2 WLR 450, [1978] AC 359, [1977] UKHL 2, 34 P & CR 48, [1977] 1 All ER 813

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JISCBAILII_CASE_CONSTITUTIONAL

    Die Mercurii, 2° Martii 1977

    Parliamentary Archives,
    HL/PO/JU/4/3/1312



    HOUSE OF LORDS

    TOWN INVESTMENTS LIMITED AND OTHERS
    (RESPONDENTS)

    v.

    DEPARTMENT OF THE ENVIRONMENT
    (APPELLANT)

    Lord Diplock
    Lord Morris of Borth-y-Gest
    Lord Simon of Glaisdale
    Lord Kilbrandon
    Lord Edmund-Davies


    Lord Diplock

    MY LORDS,

    On 6th November, 1972, and at all material times thereafter, two buildings
    known as Keysign House, Oxford Street, and No. 17 North Audley Street,
    in London, were occupied as Government offices. 6th November 1972 was
    the starting date of the rent freeze imposed by the Counter-Inflation
    (Business Rents) Order 1972, made under Section 2(4) of the Counter-
    Inflation (Temporary Provisions) Act 1972, and continued by the
    Counter-Inflation (Business Rents) Order 1973, made under Part II of the
    Counter-Inflation Act 1973, which replaced the earlier statute.

    These orders, as their names indicate, dealt with rents payable under
    " business tenancies " and their effect was to prohibit a landlord during a
    standstill period which ultimately expired in March 1975 from recovering
    rent at a rate in excess of the rent payable on 6th November 1972.

    Each of the orders contained a definition of " business tenancy " and a
    statement of what was included in the expression " business" in terms that
    are identical so far as they are relevant to the facts of these appeals: —

    " ' Business tenancy' means 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 . . ."

    " ' Business ' includes a trade, profession or employment and includes
    " any activity carried on by a body of persons, whether corporate or
    " unincorporate."

    The only issue before this House has been whether during the standstill
    period the premises to which these appeals relate were the subject of
    " business tenancies " within the meaning of the order. This in turn depends
    upon the answer to three questions:— (1) Who was the tenant of the
    premises? (2) Were the premises or any part of them occupied by the
    tenant? And, if so, (3) was the tenant's occupation for the purposes of
    a business carried on by him or for those and other purposes?

    The leasehold title under which Keysign House was held on 6th
    November 1972 was an underlease entered into in 1952. The landlord was
    the predecessor in title of the respondents, the London County Freehold
    and Leasehold Properties Limited; the tenant was described as follows: —

    " The Minister of Works (hereinafter called ' the Lessee' which
    " expression where the context so admits includes his successors and
    " assigns) for and on behalf of Her Majesty."

    In the case of No. 17 North Audley Street, the landlord was the predecessor
    in title of the respondent, MEPC (Mayfair Properties) Limited. The tenant
    was described as follows: —

    " The Minister of Works (hereinafter called 'the Tenant' which
    " expression shall where the context so admits include his assigns) for
    " and on behalf of Her Majesty ".

    Both of these leases expired upon 25th December 1972. Fresh leases for
    a term of 5 years from 25th December 1972 were entered into in substantially
    the same terms as those which they replaced. The description of the
    lessee/tenant in the new leases was the same as in the former leases of 1952
    except that the description " Secretary of State for the Environment" was
    substituted for that of " Minister of Works ".

    2

    This change in title was a consequence of the Secretary of State for the
    Environment Order 1970, made under the Ministers of the Crown (Transfer
    of Functions) Act 1946. By this order the former Ministry of Works, whose
    title had in 1962 been changed to that of Ministry of Public Buildings and
    Works, was dissolved and all the functions of the Minister of Public Build-
    ings and Works were transferred to the Secretary of State for the Environ-
    ment, to whom were also transferred all property, rights and liabilities to
    which that Minister was entitled or subject to before the coming into opera-
    tion of the order.

    Included in the functions of the Minister of Public Buildings and Works
    transferred to the Secretary of State for the Environment, was the provision
    of accommodation for civil servants employed in departments of government
    other than the Ministry of which that Minister was head. At all material
    times the buildings that are the subject of these appeals were used to
    accommodate civil servants who were not engaged in the work of the Ministry
    of Public Buildings and Works or the Department of the Environment, but
    were engaged in the work of other government departments.

    The rents reserved under the 1952 leases and current on 6th November
    1972 had been in the case of Keysign House £39,690, and in the case of
    No. 17 North Audley Street £17,500. Under the new leases the rents reserved
    from 25th December 1972 were in the case of Keysign House £369,500, and
    in the case of No. 17 North Audley Street £19,000, viz. more than ten times
    as much as previously. If the Counter-Inflation Orders of 1972 and 1973
    applied to the premises, only the former rents were payable in respect of the
    standstill period.

    The landlord's claim that these orders did not apply to either of the
    premises. They took out an originating summons for a declaration to this
    effect and for a declaration that the rents payable after 25th December 1972
    were the rents payable under the new leases and not the lower rents payable
    under the 1952 leases.

    The summonses were heard together before Foster J. The main ground on
    which he found in favour of the landlords was that the Crown was not
    entitled to avail itself of the provisions of either of the Acts or Orders in Coun-
    cil made thereunder, because it is expressly stated in each of the Acts that
    it does not bind the Crown. This ground of decision was not accepted by
    the Court of Appeal as correct in law, and has not been relied upon in your
    Lordships' House. In view of the provisions of section 31(1) of the Crown
    Proceedings Act 1947, I need say no more about it.

    The appeal by the Department of the Environment from the judgment of
    Foster J. was dismissed by the Court of Appeal upon another ground. They
    held that neither of the premises was the subject of a " business tenancy "
    within the meaning of the Counter-Inflation Orders. Their answers to the
    three questions that are posed by this appeal were (1) The tenant is the
    Secretary of State for the Environment and not the Crown ; (2) No part of the
    premises were occupied by the tenant, and (3) No part of the premises were
    occupied for the purposes of a " business ".

    Accordingly, I turn to these three questions: —

    1. Who was the tenant of the premises?

    In the Court of Appeal this was treated as a pure question of construction
    of the leases themselves, as if Her Majesty, the Minister of Works, and the
    Secretary of State for the Environment were all persons to whose relationships
    to one another and to third parties the ordinary principles and concepts of
    private law applied. If this were right, it would involve a conflict between,
    on the one hand, the statement in the lease that the Minister or the Secre-
    tary of State is party thereto " for and on behalf of Her Majesty " and,
    on the other hand, the inclusion in the definition of " the lessee " in the case
    of Keysign House, of " his successors and assigns " and, in the definition of
    " the tenant" in the case of No. 17 North Audley Street, of " his assigns ".
    This conflict was pointed out by Buckley L.J. and Sir John Pennycuick and
    resolved by them by holding that the tenant was the Minister or Secretary of
    State and not the Crown, and that the words " for and on behalf of Her

    Town Investments Limited

    3

    " Majesty " were either a mere indication that he was acting in his corporate
    capacity as Minister or Secretary of State (Buckley LJ, and Sir John
    Pennycuick) or that he took the leasehold interest as trustee for the Crown
    (Buckley LJ. and Lawton L.J.).

    My Lords, the fallacy in this argument is that it is not private law but
    public law that governs the relationships between Her Majesty acting in her
    political capacity, the government departments among which the work of Her
    Majesty's Government is distributed, the Ministers of the Crown in charge
    of the various departments and civil servants of all grades who are employed
    in those departments. These relationships have in the course of centuries
    been transformed with the continuous evolution of the constitution of this
    country from that of personal rule by a feudal land-owning monarch to the
    constitutional monarchy of to-day ; but the vocabulary used by lawyers in the
    field of public law has not kept pace with this evolution and remains more
    apt to the constitutional realities of the Tudor or even the Norman monarchy
    than to the constitutional realities of the twentieth century. To use as a meta-
    phor the symbol of royalty, " the Crown ", was no doubt a convenient way of
    denoting and distinguishing the monarch when doing acts of government in
    his political capacity from the monarch when doing private acts in his
    personal capacity, at a period when legislative and executive powers were
    exercised by him in accordance with his own will. But to continue nowadays
    to speak of " the Crown " as doing legislative or executive acts of govern-
    ment, which, in reality as distinct from legal fiction, are decided on and done
    by human beings other than the Queen herself involves risk of confusion. We
    very sensibly speak to-day of legislation being made by act of parliament—
    though the preamble to every statute still maintains the fiction that the maker
    was Her Majesty and that the participation of the members of the two
    Houses of Parliament had been restricted to advice and acquiescence.
    Where, as in the instant case, we are concerned with the legal nature of the
    exercise of executive powers of government, I believe that some of the more
    Athanasian-like features of the debate in your Lordships House could have
    been eliminated if instead of speaking of " the Crown " we were to speak
    of " the Government " —a term appropriate to embrace both collectively and
    individually all of the Ministers of the Crown and Parliamentary Secretaries
    under whose direction the administrative work of government is carried on
    by the civil servants employed in the various government departments. It is
    through them that the executive powers of Her Majesty's Government in the
    United Kingdom are exercised, sometimes in the more important administra-
    tive matters in Her Majesty's name, but most often under their own official
    designation. Executive acts of government that are done by any of them
    are acts done by " the Crown " in the fictional sense in which that expression
    is now used in English public law.

    The executive acts of government with which the instant case is con-
    cerned are the acceptance of grants from lessors who are private subjects of
    the Queen of leasehold interests in premises for use as government offices and
    the occupation of the premises by civil servants employed in the work of
    various government departments. The leases were executed under his
    official designation by the Minister of the Crown in charge of the
    government department to which, for administrative and accounting
    purposes, there is entrusted the responsibility for acquiring and managing
    accommodation for civil servants employed in other government
    departments as well as that of which the Minister himself is the official
    head. In my opinion, the tenant was the government acting through its
    appropriate member or, expressed in the term of art in public law, the
    tenant was the Crown.

    I do not find it necessary for disposing of the instant appeals to trace the
    history of the practice of taking grants of freehold or leasehold interests of
    land required for government purposes in the names of commissioners or
    heads of government departments whether corporate or unincorporated.
    With the increase of government business in the early part of the nineteenth
    century the technicalities of conveyancing made it inconvenient for the
    King himself to be an executing party to conveyances and his direct

    4

    acceptance of a leasehold tenure with its implication of service due to a
    feudal superior was regarded as incompatible with his supremacy.
    Accordingly, one finds from the beginning of the nineteenth century onwards
    a whole variety of statutes providing for the acquisition of land required
    for the purposes of a particular government department or of the
    government generally, in the name and under the seal of designated
    Commissioners or Ministerial heads of departments. In these nineteenth
    century statutes there is no consistency in the description of the capacity
    in which the persons so designated are to be executing parties to
    conveyances of the freehold and leasehold interests which they are authorised
    to acquire. Sometimes the interest is referred to as being held " on behalf
    "of His/Her Majesty", occasionally as being held "in trust for His/Her
    " Majesty ". The use of the expression " in trust" though it does not appear
    in any of the statutes under which the Secretary of State for the Environment,
    the Minister of Works, or any of their predecessors obtained the power to
    acquire land for government purposes, has nevertheless been relied upon by
    the respondents as showing that whenever an interest in land to be used for
    government purposes is conveyed to an officer of state in his official capacity,
    the interest so conveyed becomes subject to all the incidents of a trust in
    private law ; the legal estate is vested in the officer of state who executes the
    conveyance, only an equitable interest is vested in the Crown and the
    relationship between him and the Crown is subject to the equitable
    jurisdiction of the courts.

    My Lords, I would not exclude the possibility that an officer of state,
    even though acting in his official capacity, may in some circumstances hold
    property subject to a trust in private law for the benefit of a subject; but
    clear words would be required to do this and, even where the person to be
    benefited is a subject, the use of the expression " in trust" to describe the
    capacity in which the property is granted to an officer of state is not
    conclusive that a trust in private law was intended ; for " trust" is not a
    term of art in public law and when used in relation to matters which lie
    within the field of public law the words " in trust" may do no more than
    indicate the existence of a duty owed to the Crown by the officer of state,
    as servant of the Crown, to deal with the property for the benefit of the
    subject for whom it is expressed to be held in trust, such duty being
    enforceable administratively by disciplinary sanctions and not otherwise.
    (Kinloch v. Secretary of State for India (1882) 7 App. Cas. 619 per Lord
    Selborne L.C. at pp.625/6.) But even if the legal relationship of trustee and
    cestui qui trust under a trust in private law is capable of existing between
    an officer of state in his official capacity and a subject, the concept of such
    relationship being capable of existing between him as trustee and the Crown
    as cestui qui trust is in my view wholly irreconcilable with the legal nature
    in public law of the relationship between the Crown and its servants or, in
    more modern parlance, the government and the Ministers who form part
    of it.

    In leases such as those that are the subject of the instant appeal where the
    person designated as grantee is a Minister of the Crown in charge of a
    government department, the references to " successors and assigns" or
    " assigns" simpliciter as being included in the definition of " lessee " or
    " tenant" are explicable as referring to any other Minister to whom the
    functions of the designated Minister may be transferred under the Ministers
    of the Crown (Transfer of Functions) Act 1946, or otherwise, and, in the
    case of " assigns," also to subjects to whom the leasehold interest may be
    assigned. Even if they were not, I would not treat their presence in the
    parentheses as sufficient to displace the ordinary concepts of public law as
    to the relationship between the government and the Ministers who form part
    of it.

    2. Were the premises or any part of them occupied by the tenant?

    At all relevant times the persons physically present on the premises were
    government servants. Expressed in the terms of art used in public law their

    5

    status was that of " servants of the Crown " and of no one else. The rela-
    tionship of master and servant does not exist between a Minister in charge
    of a government department, and any other government servant employed in
    that department in whatever grade of the civil service he may be. They are
    both fellow servants of the Crown. The use of the premises by government
    servants for government purposes thus constituted occupation of the premises
    by the Crown. Holding as I do that the Crown was the tenant of the pre-
    mises, I would accordingly answer this question " Yes ".

    3. Was the tenant's occupation for the purposes of a business carried on by

    him or for those and other purposes?

    The answer to this question depends upon how broad a meaning is to be
    ascribed to the word " business " in the definition of " business tenancy " in
    the two Counter-Inflation Orders. The word " business " is an etymological
    chameleon; its suits its meaning to the context in which it is found. It is not
    a term of legal art and its dictionary meanings as Lindley L.J. pointed out in
    Rolls v. Miller (1884) 27 Ch. D. 71 at p. 88 embrace

    " almost anything which is an occupation as distinguished from a plea-
    " sure—anything which is an occupation or a duty which requires
    " attention is a business ".

    That was said by the Lord Justice in connection with the construction of a
    covenant in a lease against the carrying on of any trade or business on the
    demised premises; and ever since there has been a consistent line of cases
    in which this broad meaning has been ascribed to the word " business " in
    the context of covenants in leases restricting the permitted user of the demised
    premises. It appears to me to be clear beyond argument that the use made
    of the premises that are the subject of the instant appeals to accomodate
    civil servants engaged in what consistently with common usage could be quite
    properly descirbed as " Government business ", would constitute a breach of
    a covenant in a lease against permitting any business to be carried on upon
    the premises. The Crown or government through its servants is carrying
    out there a duty which requires attention.

    The wide interpretation to be put upon the word " business " in restrictive
    covenants of this kind is dictated by the evident object of the covenants. The
    evident object for which powers were conferred by the Counter-Inflation Acts
    1972 and 1973 to make orders restricting increases of prices, dividends and
    rents, was to curb inflation by preventing more money coming into circula-
    tion without any corresponding increase in production of goods or services.
    Separate Counter-Inflation Orders were made under the Acts, dealing respec-
    tively with business rents, agricultural rents and the rents of dwelling houses.
    The mischief against which these orders were directed did not depend upon
    who the tenant was or the use made of the premises by him but upon the
    receipt by his landlord of a greater sum of money in return for what produced
    no greater contribution to the national wealth that it had produced before.
    This would suggest that the evident object of the two Counter-Inflation (Busi-
    ness Rents) orders called for a broad construction of the word " business " in
    the definition of the tenancies to which they applied, so as to embrace all
    tenancies save those which fell within the scope of one of the two other
    orders dealing respectively with the rents of agricultural and residential tenan-
    cies or were excluded from the definition of " business tenancies " by express
    words—as were " building leases " under the 1973 order. I would therefore
    hold it to be legitimate to give to the word " business " in the definition of
    " business tenancy " in the two orders a meaning no less wide than that which
    it has been interpreted as hearing in covenants in leases restricting the user
    of demised premises. This meaning is, in my view, wide enough to include
    the purposes for which Keysign House and 17, North Audley Street were
    occupied by the Crown.

    I do not therefore find it necessary to rely upon any extension of the or-
    dinary meaning of the word that may be the result of the express inclusion
    of " a trade, profession or employment" or of " any activity carried on by a
    " body of persons, whether corporate or unincorporate ". Nevertheless these
    express inclusions serve not only to underline the breadth of meaning to be

    6

    given to the word " business " in the orders but also to involve anomalies
    which cannot have been intended, if that word is not wide enough with or
    without the words of inclusion to embrace the exercise of functions of govern-
    ment by servants of the Crown. Functions of government in the United
    Kingdom are distributed, on no very consistent pattern, between the central
    government and local governmental and other statutory authorities comprised
    of bodies of persons, either corporate or unincorporate. The second part of
    the words of inclusion clearly embrace the activities of these authorities but
    not those of the Crown which is in law a corporation sole. It would be
    remarkable were it intended in the order to exclude from the expression
    " business " an activity which would fall within it when carried on by servants
    of a corporation aggregate but not if carried on by servants of the Crown
    simply because it is a corporation sole. It may be that the reconciliation of
    the different phraseology used in the two parts of the inclusion clause to
    describe things done by or on behalf of bodies of persons and things done
    by or on behalf of one, is to be found in the presence in the first part of the
    clause of the expression " employment "—a word hardly slightly less protean
    than " business " itself. When used in relation to a natural person " employ-
    " ment" seems to me to be broad enough to include anything which, in Lord
    Justice Lindley's phrase, is an occupation as distinguished from a pleasure,
    and to be understood in the same meaning as the word " activities " used in
    relation to bodies of persons in the second part of the inclusion clause.

    It remains to mention two further arguments which have been advanced
    for excluding the business of government from the meaning of the word
    " business " as it is used in the Counter-Inflation Order. The first can be
    disposed of shortly for only minor importance was atteached to it by the
    Court of Appeal. It is that the definition of " business tenancy " and the in-
    clusion clause referring to " business " were lifted by the draftsmen of the
    orders from section 23(1) and (2) of the Landlord and Tenant Act 1954 ; and
    that section 56(3) of the same Act contains specific provisions applying it to
    tenancies " held by or on behalf of a Government department" and
    " occupied for any purposes of a Government department". In an Act which
    contained provisions for dealing with security of tenure of tenants of business
    premises by the grant of new leases and rights to compensation when
    a new lease could not be granted, the fact that the draftsman of the
    Act has thought it prudent to make specific provision as to its application to
    premises occupied for government purposes is a frail support for the conten-
    tion that but for those specific provisions the Act would not have applied to
    such premises at all and therefore tenancies of them cannot have fallen within
    the definition of " business tenancy " in the Act, even though in the ordinary
    meaning of the words of the definition, they would have been apt to include
    such tenancies. But any force that there might be in this contention is wholly
    lost when it is sought to use it to cut down the ordinary meaning of those
    words when used in other legislation passed with an entirely different object.

    However, a matter to which all three members of the Court of Appeal
    appear to have attached importance was the presence of the indefinite
    article " a " in the reference in the definition of business tenancy to " a
    " business carried on by him " [sc. the tenant]. Both Buckley and Lawton
    L.JJ. were I think influenced by the conclusion they had already reached that
    the relevant tenant was the Secretary of State and not the Crown. They
    appear to have accepted that the activities of government through the
    various government departments might properly be described as " business ",
    but they considered that neither that part of those activities that was carried
    on through a particular government department nor, it would seem, those
    activities as a whole, could properly be described as " a business ".

    My Lords, it has been said that Roger Casement was hanged by a comma
    and (as Mr. Browne-Wilkinson has reminded us) that John Keat's mind was
    " snuffed out by an article ". I think that in exercising the functions of
    government the civil servants of the Crown are all engaged in carrying on
    a single business on behalf of the Crown, i.e. Her Majesty's Government in
    the United Kingdom. I do not see why the presence of an indefinite article
    affects the matter. I do not see why this is not a business carried on by

    7

    the Crown on whatever premises may be used by it to accommodate civil
    servants employed in the various government departments, or why it is not a
    business for the purposes of which each of these premises is occupied by
    the Crown.

    For these reasons I would allow these appeals.

    Lord Morris of Borth-y-Gest
    my lords,

    Two questions are involved in this appeal. The first concerns the identity
    of the tenant of certain properties which were the subjects of underleases.
    The second raises an enquiry whether certain Statutory Instruments applied
    to the underleases. In particular a question arises whether the properties
    or whether premises included in the properties were occupied by the tenant
    for the purposes of a business carried on by him. The facts concerning the
    actual occupancy of the premises are not in dispute.

    The appeal relates to two properties: there were separate underleases in
    reference to each: one property is known as " Keysign House ": the other
    as "17 North Audley Street". Substantially the same questions arise in
    regard to each. I will first consider " Keysign House ".

    It was the subject of an underlease under seal made on the 24th November
    1952. It was made between The London County Freehold & Leasehold
    Properties Limited (" the lessors ") of the one part and " The Minister of
    " Works (hereinafter called ' the Lessee ' which expression where the context
    " so admits includes his successors and assigns for and on behalf of Her
    " Majesty) of the other part". The term was one of 21 years from the
    25th December 1951. The annual rent in all the later period of the term
    was £39,690. There were various elaborate covenants. The lessee undertook
    many obligations—one of which was to supply heat to some parts of the
    lessors' premises. Certain provisions clearly recognised that the lessee could
    provide accommodation for a government department.

    Keysign House is the name given to a building at Nos. 421, 423, 425, 427
    and 429 Oxford Street. Certain parts of the building however were not
    demised. The demise included one shop and there were certain special
    provisions in the underlease in regard to it. There was a covenant against
    assigning, subletting or parting with possession (unless with consent). There
    was however an important proviso. It was as follows: —

    " Provided that the occupation of the demised premises or of some
    " part or parts thereof by the Lessees or any Department body or
    " person for whom the Lessee accepts responsibility for providing
    " accommodation or by Departments of Governments friendly to Great
    " Britain shall not be deemed to be a breach of this covenant".

    There was a further rather significant addition to the proviso in the terms:
    " In this proviso ' the Lessee' shall mean only the Minister of
    " Works and not his successors or assigns ".

    On the 12th November 1970 the property of the Minister of Works became
    vested in the Secretary of State for the Environment. That was as a result
    of the Secretary of State for the Environment Order 1970 (S.I. 1970—No.
    1681) made pursuant to statutory powers. There was a transfer to the
    Secretary of State of all property, rights and liabilities to which the Minister
    of Public Building and Works was entitled or subject. The Secretary of
    State for the Environment was to be and his successors were by that name
    to be a corporation sole (with a corporate seal). So the Secretary of State
    for the Environment became by operation of law " the Lessee " under the
    underlease of the 24th November 1952.

    One of the functions of the Secretary of State for the Environment is to
    provide accommodation and other services ancillary thereto for government
    departments and other organisations and persons in the public service. That

    8

    function of the Secretary of State is carried out by an agency within the
    Department of the Environment: it is called the Property Services Agency.

    The premises known as Keysign House were not occupied by the Minister
    of Works nor, after the 12th November 1970, were they occupied by the
    Secretary of State for the Environment. The provision in the underlease
    already noted made it possible that the right to occupy which the Secretary
    of State had by contract acquired could in fact be enjoyed by government
    departments or bodies or persons for whom the Secretary of State accepted
    responsibility for providing accommodation or furthermore for departments
    of friendly governments.

    For the period of the underlease nearly all parts of the premises (all save
    the one shop above referred to) were in fact occupied by agencies of the
    Government of the United States of America. They paid to the Department
    of the Environment a proportion of the rent payable pursuant to the
    underlease. The occupation was occupation by the United States Navy.
    The shop above referred to which was known as 423 Oxford Street (which had
    a superficial area that was very small in proportion to that of the demised
    premises) had until 1968 been occupied by the Stationery Office for the sale
    of its publications but after 1969 had been occupied as a " Job Centre " by
    the Ministry of Labour and its successor the Department of Employment. The
    Department of the Environment provided the furniture and furnishings for
    the shop and looked after its decoration and repair and maintenance. As to
    the United States Navy they remained in occupation after the 1952
    underlease expired in December 1972. They were in occupation for a period
    of more than a year of the term granted by a later underlease to which I
    will refer. They remained in fact until the beginning of 1974 . The premises
    were then prepared as accommodation for the Department of Health and
    Social Security.

    By reason of the above facts it is common ground that the premises were
    not occupied by the Secretary of State or by the Department of the Environ-
    ment.

    The underlease was due to expire on the 25th December 1972. Before that
    date arrived the Secretary of State took steps to obtain a new tenancy. The
    Landlord and Tenant Act 1954 was in operation and Part II of that Act con-
    tained provisions which gave security of tenure for business, professional
    and other tenants. The provisions in Part II applied to any tenancy where
    the property comprised in the tenancy included premises occupied by the
    tenant for the purposes of a business carried on by him. Subject to the
    various provisions of the Act a tenant under such a tenancy could apply to
    the court for a new tenancy (see section 24). There was however in the Act
    a section (section 56) which made Part II of the Act applicable (inter alia)
    where there was an interest belonging to a government department or held on
    behalf of Her Majesty for the purposes of a government department. If a
    tenancy was held by or on behalf of a government department and the pro-
    perty comprised in it included premises occupied for any purposes of a
    government department the tenancy was (see section 56(3)) to be one to which
    Part II of the Act applied: for the purposes of any provision of Part II which
    was applicable only if certain conditions were satisfied (including the condi-
    tion that premises had been occupied for the purposes of the tenants' busi-
    ness) such conditions were to be " deemed to be satisfied " if the premises
    were occupied for the purposes of a government department.

    Taking advantage of that section (section 56) the Secretary of State made
    in 1972 an application to the court for the grant of a new tenancy pursuant
    to the Act. The Secretary of State did not assert that the provisions of sec-
    tion 23 applied to the situation or that on behalf of the Crown he could avail
    himself of that section. He proceeded under section 56 which contained the
    deeming provisions. Negotiations between the parties then ensued.

    At that time the problems of inflation were becoming acute and on the
    30th November 1972 Parliament passed an Act to authorise measures to


    9

    counter inflation. It was the Counter-Inflation (Temporary Provisions) Act
    1972. That its provisions (as the title suggests) were to be temporary was
    doubtless for the reason that a later measure was soon to be introduced.

    The Act being one to " authorise " measures the plan of the Act was that
    power was given to " the appropriate Minister " to make orders under the
    Act or to apply provisions of the Act. The Act had reference to prices, pay.
    dividends and rents. So far as rents were concerned the power given to make
    orders was about as wide as it could be.

    " The appropriate Minister may by order provide for preventing in-
    " creases of rent over rent payable before 6th November 1972 ". (See
    section 2, sub-section (4)).

    An order could be framed " in any way whatsoever " and could prescribe
    any method of comparing rents (see the Schedule). The Act did not bind the
    Crown.

    It is to be observed that the Schedule to the Act further provided that an
    order might define any expression used in section 2 other than an expression
    defined by section 8. In section 8 it was provided that " ' business ' " (which
    was an expression used in section 2) " includes any trade, profession or
    " vocation, and the expression ' in the course of business' shall be construed
    " accordingly."

    Armed with these extensive powers the appropriate Minister made certain
    orders. Each order was a limited one. The only one having suggested rele-
    vance in this case was The Counter-Inflation (Business Rents) Order 1972
    (S.I. 1972—No. 1850). It came into operation on the 1st December 1972.
    If there was a tenancy which was a " business tenancy " within a definition
    laid down, and if it was subsisting on the 5th November 1972, then during
    the period while section 2 of the Counter-Inflation (Temporary Provisions)
    Act 1972 remained in force (the standstill period) rent under a " business
    tenancy " was not to be payable at any rate exceeding the rate payable on
    the 5th November. Furthermore if a " business tenancy " came to an end
    after the 5th November and if the premises were then re-let, no higher rent
    (during the above-mentioned period) was payable than that which was
    payable on the 5th November 1972.

    As applied to the dates which are relevant in this appeal the result was that
    if the order was binding and if there was a " business tenancy " which came
    to an end on the 25th December 1972 no higher rent could be payable there-
    after (during the standstill period above mentioned) than the rent payable on
    the 5th November 1972.

    Though possessing such wide and ample powers to make orders as to
    rents the Secretary of State decided to use his powers in a limited way. It is
    not suggested that consideration has to be given in this appeal to any other
    order than that made by S.I. 1972 No. 1850. The fact that wider powers
    could have been exercised clearly cannot endow the powers actually exercised
    with an amplitude going beyond that which is yielded on a fair and reasonable
    reading of the words of the order: this must be so however deeply one may
    regret it if the attack on inflation was inadequately mounted.

    Whatever were the reasons for making only a limited use of the wide
    powers which were given it is manifest that in their exercise it was decided
    to follow the pattern and much of the language of section 23 of the
    Landlord and Tenant Act 1954, which section applies to a tenancy where the
    property comprised in it is occupied by the tenant and furthermore is
    occupied for the purposes of a business carried on by him: and business for
    that purpose includes a trade, profession or employment and includes any
    activity carried on by a body of persons.

    As already noted there were provisions in the 1954 Act which made Part
    II applicable in cases where a tenancy was held by or on behalf of a
    government department and where the property comprised therein included
    premises occupied for any purposes of a government department: occupancy
    for the purposes of a government department could be " deemed " to be

    10

    occupancy for the purposes of the tenants' business. In the order now being
    considered there were no such provisions in reference to a government
    tenancy or to government occupancy. There was no provision for any such
    extended application.

    The result is that the question which now arises is whether it can be said
    that the tenancy entered into in 1952 came within the operation of the
    Counter-Inflation Order of 1972. If so the rate of rent payable on the 5th
    November 1972 became the standard rate.

    What then is a " business tenancy " for the purposes of the order? There
    is a definition in paragraph 2, the interpretation paragraph of the order. It
    is as follows:

    "' business tenancy' means 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 but does not include a tenancy
    " of or a right to occupy land used for agriculture."

    There is no definition of the word " business " save that it " includes a trade,
    " profession or employment and includes any activity carried on by a body
    " of persons, whether corporate or unincorporate". The variation as
    compared with what was contained in section 8 of the Act may be noted,
    but for present purposes the validity of the order may be accepted. It was
    not suggested on behalf of the appellants that the last words could be of any
    avail to them in their contentions. Nor was it suggested that either the
    Minister or the Crown occupied for the purpose of carrying on a trade. Nor
    was it suggested that either of them occupied for the purpose of carrying on
    a profession. Nor in my view is there any reality or rational meaning in any
    attempt to say that either the Minister or the Crown occupied for the
    purpose of carrying on an employment. The issue remains—was there
    occupation for the purposes of carrying on " a business "?

    Under the definition two questions arise. As applied to the present case
    the first question (leaving aside any question as to whether the order was
    applicable) is whether the Secretary of State was the tenant of the premises
    in question. If he was—then it is common ground that he did not occupy
    the premises. The order would not apply. The second question only arises
    if there was some other tenant who was actually in occupation: the question
    which in that event arises is whether any such tenant occupied for the
    purposes of a business carried on by him.

    It is suggested by the appellant that " the Crown " was the tenant. Even
    if that were accepted (and I will revert to this matter) and even if
    " the Crown " could be said to have occupied any part of the premises I find
    it quite impossible for reasons which I will set out to accept that there was
    occupation " for the purposes of a business carried on " by the Crown.

    When the above quoted definition of " business tenancy " is studied it will
    be seen that there is such a tenancy if (a) the property comprised in
    the tenancy is occupied by the tenant, or (b) if the property comprised in the
    tenancy " includes premises" which are occupied by the tenant and,
    furthermore, in reference either to (a) or to (b), if either is applicable, if
    (c) the occupation by the tenant is for the purposes of a business carried on
    by him or for those and other purposes.

    As to the greater part of Keysign House it could not on the facts be
    asserted that there was occupation either by the Secretary of State or by
    the Crown. The occupation was by agencies of the United States of
    America who made payment to the British Government. The premises were
    used for the purposes of the American Navy. Nor could it possibly
    be asserted that the administration of the American Navy was " a business "
    carried on either by the Secretary of State for the Environment or by the
    British Crown. The shop at 423 Oxford Street must however be regarded
    as " premises " which are " included " within the properly demised. Though
    forming but a very small part (said to be less than two per cent.) of the

    11

    superficial area of the totality of what was demised under the tenancy I do
    not think that it can be disregarded on any " de minimis " principle. So
    the strange result follows that the whole issue in the appeal concerning
    Keysign House depends upon deciding whether the one shop was occupied
    by whoever was the tenant of the tenancy and was so occupied for
    the purposes of a business carried on by such tenant or for those and other
    purposes.

    If the Secretary of State was the tenant of the tenancy then it is common
    ground that he did not occupy the shop. If it could be said that the
    " Crown " was the tenant and if the Crown was in occupation then the ques-
    tion arises whether such occupation was for the purposes of " a business "
    carried on by the Crown. In my view it was not.

    In holding this view I find myself in accord with the views expressed by
    " Buckley and Lawton LJJ and by Sir John Pennycuick, Buckley LJ said
    that " to carry on some part of the business of government is something
    " different from carrying on ' a business'". I agree. He also said—" I do
    " not think that in any ordinary sense of the English language the Admiralty
    " or the Treasury or the Home Office or the Foreign Office can be said to
    " carry on a business ". I agree. The approach of Lawton L.J. was also
    founded upon a consideration of the words of the order and " the ordinary
    " usage of the English language ". Sir John Pennycuick said that the pur-
    pose of the 1972 Act was to curb inflation and that anyone would expect it
    to have a far-reaching and pervasive operation. He approached the construc-
    tion of the Act and of the order from that angle. He found it impos-
    sible however to hold that the Crown carried on " a business ". " The ex-
    " pression ' a business' conveys upon its ordinary meaning the notion of a
    " distinct enterprise (not necessarily for profit) having distinct objects, distinct
    " management and distinct assets and liabilities. It seems to me that only
    " upon an impermissibly loose use of the words can one say that the vast and
    " amorphous operations of the Crown or of a single government department
    " constitute ' a business ' upon the ordinary meaning of that expression ". I
    agree. I cannot think that either the Secretary of State or the Crown carried
    on " a business " within the spirit and intendment or upon a reasonable read-
    ing of the governing words which it is our duty to apply. It is not for us to
    consider what could have been the result had other words been used. We
    must look at the words used in their ordinary sense, (see the words of Lindley
    L.J. in Rolls v. Miller 27 Ch. D. 71, in which case it was held that a covenant
    in the lease of a dwelling-house against using the premises for or carrying on
    upon the premises any trade or business of any description whatsoever had
    been broken by using the premises as a lodging house for working girls—there
    was the business of a lodging-house keeper even though such business had
    been carried on by the trustees of a charity for the purposes of the charity and
    on the basis of not receiving any payment from the girls who lodged.)

    It had been intended that the Counter-Inflation (Temporary Provisions)
    Act 1972 would soon be supplanted. In the result the Counter-Inflation Act
    1973 was passed. It was passed on the 22nd March 1973. One of its pur-
    poses was to afford powers of control over prices, pay, dividends and rent.
    Part II of the Act which came into force on the 1st April 1973 related to
    Prices, Pay, dividends and Rents. Once again very wide powers were given
    to the Minister to restrict or prevent increases of rent. Once again there was
    only a limited exercise of the powers. On the 29th April 1973 there came
    into operation The Counter-Inflation (Business Rents) Order 1973 (S.I. 1973
    —No. 741): the period for which section 2, subsection (4) of the previous
    1972 Act had effect then terminated.

    The new order only differed from the previous order in one or two minor
    respects which for present purposes are immaterial. The result was that if
    the tenancy that subsisted on the 5th November 1972 was within the defini-
    tion of a " business tenancy " then the rent as at that date was the standard
    rate. Article 5 of the new order was in these terms: —

    " Subject to the provisions of this order, where in relation to any
    " premises there is a standard rate, rent under a business tenancy

    12


    "(Whether granted before or after the coming into forice of this order)
    "of those premises shall not be payable in respect of any part of the
    " time during which this order is in force at a rate exceeding the stan-
    " dard rate".

    That being the position which the law has superimposed upon the negotia_
    tions which had ensued after the application made in 1972 under section 56
    of the Landlord and Tenant Act 1954 the negotiations continued. No ques-
    tion is before us in regard to them. They would presumably relate inter
    alia
    to such matters at the period of the new tenancy and the rent payable.
    They eventually resulted in a new agreement. A new underlease was made
    on the 14th September 1973 between The London County Freehold and
    Leasehold Properties Limited of the one part and "The Secretary of State
    " for the Environment thereinafter called 'the Lessee" which expression
    " Where the context so admits include his successors and assigns for and on
    " behalf of Her Majesty of the other part ". The underlease following very
    much the lines of the previous underlease made on the 24th November 1952
    and related to the same demised premises. The period of the demise was
    only one of five years. That period ran from the 25th December 1972, If
    this new underlease followed upon the previous one, was as the appellant
    contends a "business tenancy" within the meaning of the two orders, it
    follow that no rent exceeding £39,690 could by law be payable. The rent
    contracted to be paid under the terms of the new underlease to which the
    parties affixed their seals was £369,500. No reservation of any kind was
    expressed but we were told that in letters the contention was kept open
    that during the pendency of the order only £39,690 need be paid. Any ap-
    licable law would of course govern the situation no matter what wording
    was used. The present proceedings were later instituted by the lessor (the)
    respondents to this appeal). That was in November 1978. Declarations of
    the court were sought that the Counter-Inflation (Business Rents) Orders of
    1972 and 1978 did not apply to the tenancy created by the new underlease
    and also declarations to the effect that as from the 25th December 1972 rent
    at the rate of £369,500 per annum was payable.

    The claim that neither order applied to "the tenancy created by "the
    underlease made on the 14th September 1978 calls for examination. There
    are two parties to a tenancy, the landlord and the tenant. The two Counter-
    Inflation Acts did not bind the Crown. If the tenant under the underlease
    was "The Crown" it was perfectly lawful for the Secretary of State to con-
    tract to pay £369,500. The Acts and the orders. If by their wording they
    applied did however bind the respondent company. It is here that section
    ?????? of the Crown Proceedings Act 1947 becomes relevant. "The subsection
    is in these terms;

    " 31 (1) This Act shall not prejudice the right of the Crown to take
    " advantage of the provisions of an Act of Parliament although not
    " named therein; and it is herby declared that in any civil proceedings
    " against the Crown the provisions of any Act of Parliament which
    " could, if the proceedings were between subjects, be relied upon by
    " the defendant as a defence to the proceedings, whether in whole or in
    " part, or otherwise, may, subject to any express provision to the con-
    " trary, be so relied upon by the Crown."

    Both sides have accepted that when the present proceedings were taken the
    department could by way of defence take advantage of the provisions of the
    two Acts and the two orders. That however they of course could only do if
    the facts of the case fall within the terms of the two orders so that the
    particular circumstances of the case fit the provisions of the legislation
    I have already given one reason why, in agreement with the Court of
    Appeal ,I do not consider that the facts and circumstances fall within the
    terms of the two orders. There is in my opinion a further separate reason.
    Again in agreement with the Court of Appeal. I consider that the Secretary
    of State was the tenant of the property.

    The contention of the appellantsis that "the Crown" was the tenant. This
    contention has to be considered in the light of the law and principles concern-
    ing the position of "the Crown" and of a Minister of "the Crown".

    13

    The expression " the Crown " may sometimes be used to designate Her
    Majesty in a purely personal capacity. It may sometimes be used to desig-
    nate Her Majesty in her capacity as Head of the Commonwealth. It may
    sometimes be used to designate Her Majesty in her capacity as the constitu-
    tional Monarch of the United Kingdom. Thus laws are enacted by Her
    Majesty in Parliament. They are so enacted by Her Majesty by and with
    the advice and consent of the Lords and Commons assembled in Parliament
    and by the authority of the same. The expression may sometimes be used in
    a somewhat broad sense in reference to the functions of government and the
    public administration. It may sometimes be used in reference to the rule of
    law. The prosecution of a citizen alleging that he has committed an offence
    may be at the instance of and in the name of Her Majesty. The case for the
    prosecution is the case for " the Crown ".

    Every citizen is a subject of Her Majesty and as such owes loyalty to "the
    Crown ". The Government of the day is Her Majesty's Government A
    Minister of " the Crown " is and is constantly referred to as a servant of the
    Crown. But it cannot be suggested that the Minister is or becomes "the
    Crown". Even if the grandiloquent description of being as "emanation"
    of the Crown is applied to him he remains separate from the Crown and is not
    and does not become the Grown. When acting on behalf of for for the
    purposes of " the Crown " some of the well recognised immunities of "the

    "Crown" may cover what he does. But he does not become absolved from
    liability tor a personal tortious act even though "the Queen can do no
    wrong "

    In his capacity as a servant of the Crown and head of a department or as
    a Secretary of State a Minister may have some duty to fulfil or some
    function to perform. He still does not become " the Crown ". It
    may be necessary to acquire the use of some premises which are in
    private ownership for the purpose of providing accommodation for
    various servants of the Crown so that they may carry out their
    administrative duties as members of a department and servants of "the
    " Crown ". It will be very convenient therefore if a contract can be nego-
    tiated with the owner of some suitable property and it will be very convenient
    if it is the function of some minister to acquire the right to use such property.
    The private owner of property will (unless it can by law be requisitioned from
    him) be free to make or not to make a contract. If he makes one he will be
    free (subject to any governing laws) to lay down his terms. He will be free
    to decide as to the identity of the other contracting party. He will be free
    to decide as to whom he will accept as his tenant or lessee. So in the present
    instance a property owner became willing to grant it on terms freely nego-
    tiated and reduced to specific written form. The terms of the document
    under seal call therefore for consideration while always remembering that
    the Minister who entered into a contract did so as a Minister or servant of
    "the Crown" and for the purposes of " the Crown "

    The question as to who was the contracting party is entirely different from
    the question as to who was to be the occupier, The contract in terms
    recognised that the lessee could without breach of covenant allow various
    bodies to enter into occupation. The lessors were not obliged to contract
    in such terms. They could have stipulated as to occupancy in any way that
    they wished. It was provided that occupancy might be by government
    departments. Such occupancy if and when it occurred could properly be
    refferred to as occupancy by "the Crown". So if during a period of
    occupany by the Crown there was some levy imposed by statute upon the
    occupiers of property there would be no liability to pay if " the Crown"
    was not named in and so was bound by the statue (see Hornsey
    Urban District Council v Hennell [1902] 2 K.B. 73). But this does not
    mean that "the Crown" was free to depart from the terms of the contract
    made. So also the fact that the lessee was a servant of "the Crown" and
    undoubtedly entered into the contract for the purpose of "the Crown"
    cannot produce the result that the terms of the contract are to be varied
    or ignored or are not to be binding. The contract has to be interpreted.

    14

    having regard to the language used and in the light of the fact that the lessee
    was a Minister who was acting as such and acting on behalf of the Crown.
    But this cannot mean that the lessors must have imposed upon them a
    contract which differed from that which they made. Of course if by what
    they did and by the operation of a branch of constitutional law they in fact
    contracted with the Crown as tenant but had not appreciated that they were
    so doing their misunderstanding would be immaterial.

    If on the making of the contract " the Crown " or, speaking colloquially,
    the public administration or the government became the tenant, there could
    be no possible reason for a provision that occupation by departments for
    whom the lessee accepted responsibility for providing accommodation should
    not be a breach of the covenant not to assign, sublet or part with possession.

    If a Minister though acting on behalf of the Crown does not become the
    Crown but remains a separate legal person (such as a corporation sole) then
    it becomes necessary to see what contract the lessors made in this case. They
    contracted with someone whom both parties agreed was to be the lessee.
    The Minister might have contracted simply in terms that he was acting for
    and on behalf of Her Majesty. In that event either on principles of
    constitutional or public law or on the principles of the law of agency he
    would not himself have been the tenant. The lessors and the Minister did
    not contract in such terms. They contracted in the terms which I have set
    out. The lessors did not agree in any other terms. In my view they
    deliberately contracted in terms which made the Minister the tenant or lessee
    subject only to the fact that his successors or assigns could be substituted
    as the lessee. That was probably a very satisfactory arrangement. It
    avoided a situation (perhaps thought to be an undesirable one) in which Her
    Majesty (or " the Crown ") became the lessee of and undertook liabilities
    towards a limited company having a status comparable to that of a subject.
    The lessors might find it unwelcome from their point of view to have " the
    " Crown " as their lessee.

    If at the time of the making of the contract the Minister was merely the
    person who negotiated it the parties to the tenancy would at once and from
    the start have been the limited company and Her Majesty (or " the Crown ").
    In that event there would be no future role for successors or assigns of the
    Minister. No later transfer of the Minister's particular functions to another
    Minister would be of any consequence or be in any way material. If the
    Crown was from the start the " lessee " the Crown could employ any of its
    servants to perform any of the Crown's functions as lessee, but there could
    be no room for the Minister to assign a status that he did not possess and
    never had possessed. The contract that was in fact made and which cannot
    be varied on some unilateral basis without the lessor's concurrence was that
    the Minister was the lessee and that the expression lessee (where the context
    so admitted) included his successors and assigns. As Buckley L.J. said:

    " If by the operation of the underlease the term created by it were
    " vested in the Crown, to what could any successor of the Secretary of
    " State for the Environment succeed or what could the Secretary of
    " State assign? It is his successors and assigns who are referred to
    " within the brackets, not Her Majesty's. It seems to me to be
    " inescapable that the demise is to the Secretary of State for the
    " Environment and his successors and assigns and that the term must
    " have become vested in him in his corporate capacity."

    The Minister was in my view the person chosen by or, so to speak,
    deputed by the organisation which may conveniently and colloquially
    be called the government to be the tenant or lessee of premises the use of
    which was needed. He was of course acting as part of his duty and not in
    a private capacity. He was entitled to the protection that there could be
    a drawing upon the public funds to meet any liability that he had
    undertaken. He and his successors or assigns were functioning " for and
    " on behalf of Her Majesty ". But though so functioning it is not suggested
    that any of the obligations undertaken (such as the obligation to pay rent

    15

    for a period of years) could be avoided or could at will just be overthrown
    or at pleasure disregarded. The words that I have just quoted may have
    been used to indicate and make clear that all obligations were undertaken
    in an official capacity and for the public service: they may have been used
    to denote that the Minister was in the position of a trustee (there being
    ample precedents and copious illustrations of statutory provisions showing
    that property may be held in the capacity of a trustee for the Crown: thus
    in the Crown Lessees (Protection of Sub-Tenants) Act 1952 there is a
    reference to an interest held in trust for Her Majesty for the purposes of a
    government department). In either event, and it matters not which, the
    Minister was the tenant: the lessors contracted on the basis that he was: it
    was a term of contract that he was the " lessee ": though the Minister was
    acting officially and in the performance of his duty to Her Majesty it
    became a part of that duty and a part of the authority delegated to him by
    Her Majesty that he should agree with a limited company that he would be
    their lessee and be himself in contractual relationship with them.

    The issues which arise in regard to the other property (17 North Audley
    Street are substantially the same as those in regard to Keysign House. The
    first lease was dated the 13th March 1952. " The Landlord " of the one part
    was Gliksten Properties Ltd. The party of the other part was " The Minister
    " of Works (hereinafter called ' the tenant' which expression shall where the
    " context so admits include his assigns) for and on behalf of Her Majesty."
    The term was one of 21 years from the 25th December 1951. The rent was
    £17,500 per annum. The premises demised formed part of the basement
    and ground floor together with the five upper floors of 17 North Audley
    Street. By September 1973 the reversion immediately expectant on the term
    created by the lease of the 13th March 1952 became vested in M.E.P.C.
    (Mayfair Properties) Limited and on the 28th September 1973 following the
    negotiations to which I have referred an underlease was made between that
    company (called " the Landlord ") and " The Secretary of State for the En-
    " vironment (hereinafter called ' the Tenant' which expression shall where the
    " context so admits include his assigns) for and on behalf of Her Majesty ".
    The demise related to the same premises as were covered by the previous
    lease and was on similar terms save that the term was one of five years from
    the 25th December 1972 and the rent was to be £190,000 per annum.

    The accommodation was put to various uses. The department paid the
    rent for the whole premises and the gas, water and electricity charges. The
    department furnished and maintained the premises: two rooms on the base-
    ment floor were used by electricians, carpenters and plumbers, and tools and
    materials were kept there. Such persons were in the public service but as
    such were not servants of the Secretary of State. The department provided
    the ground, first and second floors for use by the Registrar of Friendly
    Societies: the third floor for use by the Commissioners of Inland Revenue:
    the fourth and fifth floors for a time for use by the National Ports Council
    and afterwards by the Commissioners of Customs and Excise and for use by
    Value Added Tax Tribunals.

    Though the facts in regard to 17 North Audley Street are different, the same
    questions arise as those in reference to Keysign House.

    For the reasons which I have given I consider that in regard to each pro-
    perty the Secretary of State was the tenant: he did not occupy the premises :
    in respect of them there was no " business tenancy " so as to make the provi-
    sions of the counter-inflation orders applicable.

    In my view the Court of Appeal came to the correct conclusion and I would
    dismiss the appeal.

    Lord Simon of Glaisdale

    MY LORDS,

    I have had the privilege of reading in draft the speech delivered by my
    noble and learned friend on the Woolsack. I agree with it, and 1 would
    therefore allow the appeal.


    16

    It has been learnedly and elaborately argued. But in the end it depends on
    the answer to three short questions, of which the answer to the second de-
    pends on the answer to the first. (1) Who was the tenant of the demised pre-
    mises? (2) Were the premises or any part of them occupied by the tenant?
    (3) If so, was the tenant's occupation for the purpose of a business carried
    on by him?

    The answer to the second question depends on the answer to the first be-
    cause, if the Minister of Works or the Secretary of State for the Environ-
    ment, in contradistinction to the Crown, was the tenant, he did not occupy
    a material part of the premises; whereas if the Crown was the tenant, the
    Crown was also undoubtedly in occupation.

    The first two questions cannot be answered without bearing in mind that
    your Lordships are here concerned, not with private law, but with public,
    and within that with constitutional, law. In private law a phrase like " for
    " and on behalf of " would be apt to signify agency at least, and possibly trust.
    Not so in public law. The distinction appears clearly from Dunn v.
    Macdonald
    [1897] 1 Q.B. 555. The question there was whether a public
    servant acting on behalf of the Crown was liable to the other contracting
    party for a breach of an implied warranty of his authority to enter into the
    contract. It was held in the Court of Appeal that he was not. Lopes L.J.
    said (p.557) :

    "... an agent acting on behalf of a government is not liable for
    " breach of a contract made in his public capacity, even though he
    " would by the terms of the contract be bound if it were an agency
    " of a private nature."

    In public law even a phrase like " in trust for " may not betoken at all the
    relationship of trustee and cestui que trust, but rather the imposition of a
    constitutional duty the sanction for which is political or administrative not
    legal (cf. Lord Selborne L.C. in Kinloch v. Secretary of State for India
    (1882) 7 App.Cas. 619, 625, 626.)

    Nor can the first two questions be answered without also bearing in mind
    that your Lordships are concerned with symbolic language which cannot be
    understood without regard to constitutional history. The crown as an
    object is a piece of jewelled headgear under guard at the Tower of London.
    But it symbolizes the powers of government which were formerly wielded
    by the wearer of the crown ; so that by the 13th century crimes were
    committed not only against the king's peace but also against " his crown and
    dignity" (Pollock and Maitland, History of English Law, 2nd ed. 1911, vol.
    1, p.525). The term "the Crown" is therefore used in constitutional law
    to denote the collection of such of those powers as remain extant (the royal
    prerogative), together with such other powers as have been expressly
    conferred by statute on " the Crown ".

    So too " The Queen " indicates the person who by right of succession is
    entitled to wear the crown. But " Her Majesty " is evidently a symbolic
    phrase, betokening the power, the " mana ", which is embodied in the person
    entitled to wear the crown—as " His Holiness ", " His Beatitude " or " Mr.
    " Justice " are descriptive of the power believed to inspire and characterise
    the person so entitled. " Her Majesty " in constitutional legal usage thus
    generally personifies the powers of " the Crown "—powers the nucleus of
    which legally and historically are those of The Queen, but which by
    constitutional convention (i.e., in political reality) are exercised in the name
    of The Queen by those who are nominally and legally her servants or
    agents.

    The same conclusion can be reached historically. Once central govern-
    ment was firmly established in England, power—what in modern political
    science would be known as executive, judicial and legislative power—was
    concentrated in the King. No line was drawn at first between the private
    and the public business of the King. But as the latter grew administrative
    convenience called for some devolution. Offices were hived off from the
    King's household. There was the Chancery presided over by the Chancellor.

    17

    Then there was the Privy Seal office under a Keeper of the Privy Seal, and
    the Exchequer with a Treasurer and a Chancellor of its own. And so on.
    All these officials holding offices of ancient origin had their action:

    " confined within rigid limits, expressed by the commissions by which
    " they were appointed and the procedure which their acts must follow ".

    The motive force behind their departments:

    " was the King's command. They all existed to give effect to his will.
    " The officials who presided over them were appointed and dismissable
    " by him. Each was charged with the fulfilment of the royal pleasure
    " within his own appropriate sphere."

    However, for centuries thereafter the King's secretary remained within the
    royal household. Unlike the officials holding offices of ancient origin, the
    King's secretary was therefore " free to enter into every new branch of royal
    administration as it developed ". So it was that with the increase in the
    powers of the Crown in the 16th century the Secretary rose to the first rank
    among the King's servants. But under the Restoration the Secretaries (for
    their office was now duplicated) too became heads of Departments of State,
    charged like the holders of the ancient offices with executing the royal will.
    (For the foregoing historical development, see D.L. Keir The Constitutional
    History of Modern Britain
    (3rd ed. 1947, pp.16, 17, 113, 245-6, whence also
    came the quotations).

    With the development of modern government fresh departments were
    formed to be headed by Ministers or by Secretaries of State. Just as all
    were originally appointed to carry out departmentally the royal will, so
    today all Ministers are appointed to exercise the powers of the Crown,
    together with such other powers as have been statutorily conferred upon
    them directly.

    My Lords, it will, I hope, be apparent from the foregoing that " the
    " Crown " and " Her Majesty " are terms of art in constitutional law. They
    correspond, though not exactly, with terms of political science like " the
    Executive " or " the Administration " or " the Government ", barely known
    to the law, which has retained the historical terminology. So it comes about
    that Wade and Phillips, Constitutional Law, discussing proceedings by and
    against the Crown before the passing of the Crown Proceedings Act 1947,
    stated:

    " ' Crown ' includes all the departments of the Central Government"

    (3rd ed. 1946, p.264). The Minister at the head of a department of Central
    Government is, of course, part of that department. The very term
    " Minister" is, indeed, again symbolic, denoting an origin as the King's
    servant, and continued status as servant or agent of the Crown.

    It is this history and the resulting legal use of symbolic language that
    enables the authorities to be understood. I cite some only out of the many
    available.

    " All the great officers of state are ... emanations from the Crown.
    " They are delegations by the Crown of its own authority to particular
    " individuals."

    (Day J. in Gilbert v. Corporation of Trinity House (1886) 17 Q.B.D. 795,
    801). Later on the same page he speaks of " a participant of ... royal
    "authority". In Hornsey U.D.C. v. Hennell [1902] 2 K.B. 73 Colonel
    Hennell as commanding officer of a Volunteer battalion purchased in his own
    name certain land in Hornsey for the purposes of its being transferred to and
    used by the battalion. The question was whether the Colonel was liable for
    expenses of sewering, paving, etc., under section 150 of the Public Health
    Act 1875, in which the Crown was not named and by which it in conse-
    quence was not bound. So the issue was whether the land was occupied by
    the Colonel or by the Crown. Lord Alverstone C.J., delivering the reserved
    judgment of the King's Bench Divisional Court said (p. 79):

    " It was contended on behalf of the Attorney-General that, the land
    " being in fact purchased, owned and occupied solely for the purpose of

    18

    " the volunteer corps, it must be taken to be owned and occupied for
    " Crown purposes . . .
    " We are of opinion that the contention of the Crown is right . . ."

    and at p. 80:

    " This is, in our opinion, an ownership and occupation for and on be-
    " half of the Crown."

    In Territorial and Auxiliary Forces Association of the County of London v.
    Nichols
    [1949] 1 K.B. 35, Scott L.J., giving the judgment of the Court of
    Appeal, spoke (p. 47) of " a Minister or organ of the Central Government " as
    being " a direct emanation from the Crown ". The facts in Bank voor
    Handel en Scheepvaart N.V.
    v. Administrator of Hungarian Property [1954]
    A.C. 584 were complicated and unnecessary to rehearse. One of the issues
    was whether the Administrator was a servant or agent of the Crown. On
    this there was a difference of opinion. I content myself with citing short pas-
    sages from speeches respectively from the majority and the minority. Lord
    Reid at p. 612 quoted from the speech of Lord Westbury L.C. in Mersey
    Docks and Harbour Board
    v. Cameron (1865) II H.L.C. 443, 501-2, com-
    menting himself (p. 613):

    "... by ' the direct and immediate servants of the Crown, whose occu-
    ' pation is the occupation of the Crown itself' he appears to me simply
    " to have meant those whose position under the Crown is such that their
    " occupation is the Crown's occupation."

    and at p. 616, " Ministers are pre-eminently Her Majesty's servants ". At p.
    635 Lork Keith of Avonholme said:

    " In all this there is little that throws light on what constitutes a per-
    " son "a servant of the Crown. Obvious cases like a Minister of State
    "... need hardly be considered."

    The mere fact of incorporation, which is only for administrative conveni-
    ence, does not make a Secretary of State or a Minister or a Ministry an entity
    separate from the Crown: see Bankes L.J. in Commissioners of H.M.'s
    Works and Public Buildings v. Pontypridd Masonic Hall Co., Ltd.
    [1920] 2
    K.B. 233. 234-5; Parker L.J. in Buccus S. R. L. v. Servicio Naciona! del
    Trigo
    [1957] I Q.B. 438. 472 (part of his ratio decidendi).

    Moreover.

    " So long as the Crown occupies premises by its servants, those
    " servants do not themselves occupy."

    (Scott L.J. in Territorial and Auxiliary Forces Association of the County of
    London v. Nichols
    [1949] 1 K.B. 48). Hence the non-liability of Colonel
    Hennell for paving and sewerage charges (Hornsey v. Hennell).

    Before drawing a conclusion it only remains to note also the fundamental
    constitutional doctrine that the Crown in the United Kingdom is one and
    indivisible.

    If such terms as " aspects of the Crown " or " emanations of (or from) the
    "Crown" or "participants on royal authority" are considered to be too
    cloudy for legal usage, the legal concept which seems to me to fit best the
    contemporary situation is to consider the Crown as a corporation aggregate
    headed by The Queen. The departments of State including the Ministers at
    their head (whether or not either the department or the Minister has been
    incorporated) are then themselves members of the corporation aggregate of
    the Crown. But on this approach two riders must be added. First, the legal
    concept still does not correspond to the political reality. The legal substra-
    tum is overlaid by constitutional convention. The Queen does not now
    command those legally her servants who are heads or subordinate members or
    subject to the control of the departments of State. On the contrary She acts
    on the formally tendered collective advice of those Ministers who constitute
    the Cabinet. Secondly, when The Queen is referred to by the symbolic
    title of " Her Majesty ", it is the whole corporation aggregate, the Crown,
    which is generally indicated. This distinction between " The Queen " and
    " Her Majesty " reflects the ancient distinction between " the King's two

    19

    ''bodies" "natural" and the "politic": see The Case of the Duchy of
    Lancaster
    (1567) 1 Plowden 212, 213.

    It follows that prima facie in public law a Minister or a Secretary of State
    is an aspect or member of the Crown. Except in application of the doctrine
    of precedent analogies are to be regarded warily in legal reasoning. But in
    view of all the foregoing the analogy of the human body and its members is,
    I think, an apt one in relation to the problem facing your Lordships. It is
    true to say, " My hand is holding this pen." But it is equally true to say—
    it is another way of saying, " I am holding this pen ". What is nonsensical
    is to say, " My hand is holding this pen as my agent, or as trustee for
    " me ".

    The Minister of Works and the Secretary of State for the Environment
    are aspects or members of the Crown, incorporated and charged for
    administrative convenience with holding and administering property required
    by other Crown servants, who are also aspects or members of the Crown.
    A demise to the Minister of Works or to the Secretary of State for the
    Environment for and on behalf of Her Majesty is a demise to the Crown.
    Therefore the Crown was the tenant in the case of each of the premises with
    which your Lordships are concerned, and the Crown as tenant occupied
    them.

    I believe that the Court of Appeal might well have arrived at this
    conclusion had it not been for the words " successors and assigns" and
    " assigns " in the respective leases. But the reference to " successors " is
    perfectly natural in a conveyance to a corporation sole; and the reference to
    " assigns" is easily explicable bearing in mind the numerous statutory
    instruments made under the Ministers of the Crown (Transfer of Functions)
    Act 1946 which amount in public law to statutory assignments.

    For the third question—was the Crown's occupation for the purpose of
    a business carried on by the Crown?—your Lordships enter the field of
    statutory interpretation. I think that the primary sense of " carrying on
    " a business " in ordinary speech is commercial. But it was rightly common
    ground that this was not the appropriate linguistic register, and that
    " carrying on a business " extended to the office activities of, say, professional
    men. Statutory construction here imperatively demands consideration of the
    object of the legislation ; and a construction is suspect which produces the
    fantastic anomaly that those landlords alone fortunate enough to have the
    Crown as tenant were immune from the required rigours of the counter-
    inflation legislation. So the only question is whether the words " a business
    " carried on by him ", in its context and bearing in mind the object of the
    legislation, can extend to the business of government carried on by the
    Crown. In my view they can and must.

    Lord Kilbrandon

    MY LORDS,

    During the currency of the Counter-Inflation (Business Rents) Orders
    1972 and 1973 underleases were made between the predecessor in title to the
    appellant and the respondents at rents which, if the premises were business
    premises to which the orders apply, were not payable in respect of the
    standstill period as provided for by the Counter-Inflation (Temporary
    Provisions) Act, under the powers conferred by which the orders were made.
    The substantive questions are, whether the concerned premises were occupied
    by the tenant thereof, and whether they were occupied by him for the
    purposes of a business carried on by him.

    I will take as an example—all the premises are on the same footing—the
    lease of Keysign House. The lessee, or tenant, was the Minister of Works,
    including his successors and assigns, for and on behalf of Her Majesty. The
    premises were occupied by various government departments for the purpose
    of carrying on the business of the departments. I have to use a word which
    seems to pre-judge the second of the questions which was argued because
    I do not have at my command language which may more unambiguously

    20

    describe what goes on in the premises. As for successors and assigns,
    ministers succeed one another in their offices, and functions are from time
    to time transferred between ministries or to new ministries. So here, the
    Ministry of Works has been dissolved, and the property to which the minister
    was entitled (see Secretary of State for the Environment Order 1970 para. 2)
    has changed hands by what may be regarded as a statutory assignment to
    another Minister of the Crown, whose Department is the appellant in these
    appeals.

    My Lords, I have had the advantage of reading the speech prepared by
    my noble and learned friend, Lord Diplock, and since I am in entire
    agreement with his conclusions I do not think it would serve a useful
    purpose if I were to attempt my own analysis of the status under our
    constitution of Ministers in their relationship with the Crown. I put the
    matter in this way because I am satisfied that it is this status which must be
    determinative of the first question. I do not find the concepts of agency or
    trust, even as analogues, relevant in this context. The situation in outline is
    this. It is notorious that the greater part of the buildings used for
    governmental functions have been and are held in the name and under the
    care of a particular minister, now the appellant. Some are occupied by him
    and his department, most of them by other departments. There can be no
    rational distinction between the incidents of the two classes of occupier. He
    is property-holder for the Crown in the executive sense of that word. When
    he takes a lease for and on behalf of Her Majesty he is taking it as the
    Crown: it is the only way in which the Crown can act in this aspect of its
    function. When he puts a department into occupation he puts in the Crown
    in another aspect. If there is a reference to successors and assigns in the
    lease, that is for the reason I have given. But the result is that the Crown is
    the tenant and the Crown is the occupier. I think this is the way ordinary
    people would look at it, and that they would be right. In my opinion,
    accordingly, the first question, that is whether the premises are occupied by
    the tenant, must, for reasons of constitutional practice, be answered in
    favour of the appellant.

    On the second question, it was not in the end argued that " for the
    " purposes of a business " should mean something different from " for the
    " purposes of business ". I would have found that very difficult to accept.
    Business, is moreover, a simple word of common currency, and it is seldom
    helpful in such a case to look around for other words which may explain
    it. The orders have given an extended meaning by way of " interpretation "
    to the word, but I do not find it necessary to rely on the extending elements.
    " Business" is defined by way of interpretation in sec. 8 of the 1972
    Act: and by sec. 1 (1) of the Schedule the power of the order under
    discussion to define expressions is given in a rather confused way. " An
    " order or notice under section 2 of this Act . . . may define any expression
    used in those sections (other than an expression defined by section 8 of this
    Act)." There are not antecedents to which the words " in those sections "
    can be made to refer; it seems that the definition of " business " contained
    in the order may be ultra vires. The appeal can, however, be decided upon
    the terms of the statutory definition, so that the standing of the definition
    in the order is not relevant. As to the scope of the word " business " as
    defined in the Statute I would be content to accept the submission for the
    appellant, namely that it denotes the carrying on of a serious occupation,
    not necessarily confined to commercial or profit-making undertakings.
    Clearly the administrative functions of Her Majesty's Government fall within
    that description.

    For these reasons I would allow this appeal.

    Lord Edmund-Davies

    MY LORDS,

    For the reasons appearing in the speech of my noble and learned friend,.
    Lord Diplock, I too would allow this appeal.

    Printed in England by Her Majesty's Stationery Office at St Stephen's Parliamentary Press
    307823 Dd 896296 160 2/77


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