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TMI Blog1964 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... of the British Commonwealth to carry out administrative functions and to provide liaison between them. On June 17, 1963, the Association of Commonwealth Universities was incorporated by Royal Charter with the object, among others, of acquiring and taking over the properties and liabilities of the landlords and of continuing and developing their work. The objects of the association were stated in the charter to be : ". . . ( v ) To establish and maintain a central office in London which may serve inter alia as a secretariat for the Committee of Vice-Chancellors and Principals of the Universities of Our United Kingdom . . . ( xii ) To do all such other things as may be thought calculated to promote the interest and well-being of the universities of the Commonwealth or any of them ; ( xiii ) To do all such acts and things as are or may be deemed incidental or conducive to the attainment of any of the purposes of the association or the exercise of any of its said powers." On July 19, 1963, the landlords passed a resolution that "the company be wound up voluntarily and that Ronald Robert Coomper of the firm of Knox, Cropper, Gedge and Company be appointed the Liquidator", and a furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on by the new association. Section 281 of the Companies Act, 1948, prevents a liquidator from carrying on a business where no good would come from it. None of the cases on section 281 of the Act of 1948, such as In re Wreck Recovery Salvage Co. [1880] 15 Ch. D. 353. CA and In re Great Eastern Electric Co. Ltd. [1941] Ch. 241; 57 TLR 373 ; [1941] 1 All. ER 409; [1942] 12 Comp. Cas. 96 , were cited to the county court judge. If the whole object of the winding up is a reconstruction or amalgamation then it would be crazy for the activities of the company to be stopped. The liquidator had power to achieve the object of the winding up. Benefit does not mean, as the county court judge found that it did, financial benefit. Anyone who can say of himself "I am a landlord and intend to carry on the business" can take advantage of section 30(1)( g ) of the Act of 1954. If the landlord's successor would have been able to claim under the section, the old landlord can take advantage of the section also. Mere length of days is not the vital factor. The essential question is, why does the landlord want protection ? If it is, as here, because the activity of the association is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goodwill of the company. Here there is no saleable asset, such as a goodwill, to be realised. What is to be transferred is property. In the case of a charitable company, the decision to wind up is a decision not to carry on the objects of the company. It was not possible for this company to discharge the burden of proof of establishing that the company intended to occupy the premises for the purposes of its business. Moreover, it is impossible to say that the chartered company should be regarded as the alter ego of the landlord company. Whoever has heard of a phoenix arising from the ashes before the fire has been lit ? From June 17, 1963, the old company and the chartered company existed as separate legal personalities. What is involved in this transfer is a transfer to a different body with different members. The landlord has to show that he intends to carry on the business. The court has to look at the reality of the situation. The date of the hearing is the vital date. The landlord has to show a real intention. The trust concept does not assist the landlords, for any interest arising under the trust was created within "the period of five years which ends with the termi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried on by him therein, or as his residence." Section 23(2) of the Act of 1954, says "the expression 'business' includes a trade, profession or employment and includes any activity carried on by a body of persons, whether corporate or unincorporated." The first point in the case is this. The landlords say that they want the top floor for their own occupation. The tenants say that that is wrong. The landlords want it, say the tenants, not for themselves, but for a different body altogether, the Universities Central Council on Admissions. The Universities Central Council on Admissions had its origin in 1961. At that time the universities of the United Kingdom were faced with a pressing problem. Great numbers of students were seeking admission to the universities. 70,000 applied in October, 1953, 134,000 in October, 1959, 151,000 in October, 1960, and 190,000 in October, 1961. In those days a student might apply to six or seven universities. Each of the universities would consider his application. Several might be willing, to take him, or none. There was tremendous over-lapping and waste of effort. In consequence the committee of Vice-Chancellors decided that a central organisatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Sidgwick Lecture (Collected Papers III (1911), p. 306). This fact has now been recognised by the law. A trade union (which is a body unincorporate) is a separate entity : see Bonsor v. Musicians' Union [1956] AC 104; [1955] 3 WLR 788; [1955] 3 All. ER 518, HL. I think it would be right to recognise that this council is a separate entity. Accepting that the council is a separate entity, it seems to me that each of these bodies, the council and the landlords, carries on an activity at No. 29, Tavistock Square. The council carries on there the activity of a central organisation for admissions. The landlords carry on there the activity of providing accommodation, equipment and staff for all the detailed administration of the scheme. This activity of the landlords is, I think, an "activity" within section 23(2) of the Act of 1954. Each of them, the council and the landlords, occupies the lower floors of No. 29, Tavistock Square, for the purpose of its activity. Each of them wishes to occupy the top floor for its purpose. It is, I think, quite possible for two bodies to share accommodation in this way. As I said in Hills (Patent) Ltd. v. University College Hospital [1956] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y intended to carry on business in the premises for the simple reason that they had no power to carry on business at all. For this proposition the tenants relied on section 281 of the Companies Act, 1948, which says that : "In the case of a voluntary winding up, the company shall, from the commencement of the winding up, cease to carry on business except so far as may be required for the beneficial winding up thereof." The county court judge held that this section applied so as to prevent the landlords carrying on business. "Beneficial winding up" referred, he said, to financial benefit. I cannot take this view. Even in an ordinary commercial company the objective of a winding up need not be financial. It may be for reconstruction and the business can be carried on so as to facilitate the transfer. All the more so in this case where the company is not profit-making. The objective of the winding up need not be financial. It may be to ensure a smooth take-over by the new chartered company, and that is best achieved by keeping all the activities going until the transfer. Secondly, the tenants say that if the landlords had power to carry on business in the premises, it was not their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w lease. I would allow the appeal accordingly. Pearson L.J. I agree. One of the functions and activities of the landlord association is to provide the offices and do the office work of the University Central Council on Admissions and other university committees or bodies. The council is in some respects a separate entity. When the members of the council meet at No. 36, Gordon Square, or in a university to settle the policy for university admissions and to give instructions to those in the office, they are performing their own functions, and not functions of the landlords. The council has to have a separate account and be self-supporting because it is concerned with and benefits only the United Kingdom Universities, so that its expenses could not fairly be charged to the general funds of the landlords to which overseas universities contribute. But the office work of the council at No. 29, Tavistock Square, is a department of the business of the landlords, and carried on by them as one of their activities. The landlords are already using the lower floors of No. 29, Tavistock Square, for the purposes of that activity carried on by them therein, and they intend to occupy the top fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to its terms without implied limitation in any case where no sale is intended. Certainly it should be allowed to apply according to its terms in a case such as the present where there is no intended transaction even resembling a sale and there is to be complete continuity of operation, and the only transfer is to be a formal transfer to an alter ego of the transferor I agree that the appeal should be allowed. Salmon L.J. (read by Pearson L.J.) In my judgment the landlords, who are the leaseholders No. 29, Tavistock Square, are occupying the whole of these premises, expect the three rooms on the top floor, for the purpose of a business or activity carried on by them within the meaning of the Landlord and Tenant Act, 1954, ss. 30(1)( g ) and 23(2). Moreover, they intend to occupy the three rooms on the top floor for the same purpose. It has been argued on behalf of the tenants that the Universities Central Council on Admissions is a separate entity, and that it is that entity along that occupies No. 29, Tavistock Square, and carries on its business there. I am prepared to assume (and indeed I am inclined to agree) that the council is a separate entity, and in a se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 281 of the Companies Act, 1948, to carry on their business because this cannot be required for their beneficial winding up. It is suggested that the only legitimate benefit that carrying on a business can confer upon a winding up is a financial benefit ; that unless the carrying on of the business is requisite in order to collect a debt or realise an asset, IT is prohibited. This may generally be true in the case of an ordinary commercial company, but this is not such a case. What is or may be necessary for the beneficial winding up of an association such a s this has never been considered by the courts. In the winding up of ordinary commercial companies objections have not infrequently been taken on behalf of a body of some of the creditors, or some of the members, to the activities of the liquidator in carrying on the company s business. As far as I know there is nor reported case of such an objection having been taken on behalf of a stranger to the winding up, but I will assume that there is no bar to such an objection being entertained. The interest of the creditors and of the members of an ordinary commercial company is solely financial. Here there is no question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1954 could not, in my judgment, be defeated by showing that his expectation of life or of retaining his strength happened to be very short. The tenant could not successfully argue that the landlord's real intention was merely to transfer the premises to his heirs. If the landlord died before the termination of the tenancy, or indeed at any time before the hearing, his heirs would stand in his shoes and succeed to his rights. They could not be defeated because they had inherited only recently; Landlord and Tenant Act, 1954, ss. 30(2) and 41(2). So, too, if a landlord transferred otherwise than for money or money's worth at any time, his transferee would succeed to his rights against the tenant; H.L. Bolton Engineering Co. Ltd. v. T.J. Graham Co. Ltd. [1957] 1 QB 159 ; [1956] 3 WLR 804; [1956] 3 All. ER 624, CA; [1957] 1 WLR 454, HL. Here the circumstances are somewhat analogous. The landlord association will be dissolved, for all practical purposes, as soon as the transfer to the new chartered association is complete. It intends to carry on its activities, inter alia, in the three rooms on the top floor of No. 29, Tavistock Square, virtually for the rest of it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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