Business tenancies

Citation

Waterson, G. and Lee, R. (2000), "Business tenancies", Property Management, Vol. 18 No. 4. https://doi.org/10.1108/pm.2000.11318dab.008

Business tenancies

Business tenancies

Wroe v. Exmos Cover Ltd (2000), The Times, 14 March; (2000) 15 EG 155

Briefly, in this case the landlords had granted the appellants a licence for the shared occupation of business premises, which licence was subsequently renewed and (as extended) was due to expire on the last day of September 1997. On the day before the licence was due to expire the landlord wrote to the appellants seeking confirmation that they were actually intending to vacate. In reply to this letter the landlord received a letter from the appellants' solicitors saying that they were claiming to be business tenants protected by Part II of the Landlord and Tenant Act 1954. There was further inconclusive correspondence, offers and refusals of rent and so on, until apparently believing that it was the only way in which they might recover possession of the premises the landlords served an S.25 notice on the appellants purporting to terminate their "tenancy" on 31 May 1998 and objecting to the grant of a new lease on the ground that the landlords would require possession of the premises for occupation for the purposes of a business carried on by themselves. When the matter came before the court, the judge at first instance apparently took the view that before deciding the substantive issue she ought first to be sure that she was indeed dealing with a tenancy falling under Part II of the 1954 Act. When the issue was subsequently argued before the judge at first instance she came to the conclusion that there was only a licence to occupy the premises and that consequently the appellants had no rights under the Act of 1954; after hearing further argument she held that she was also satisfied that the landlord was not estopped by his conduct from contending that the appellants did not have a business tenancy covered by the 1954 Act. The Court of Appeal agreed: the landlord might have made a procedural error in serving the S.25 notice but it was not sufficient to debar him from subsequently being able to argue that the occupational arrangements fell outside the 1954 Act altogether.

VCS Car Park Management Ltd v. Regional Railways North East Ltd (2000) 05 EG 145

In this case the issue to be decided was whether the landlord had owned the reversionary interest in the property for five years prior to the end of the lease for the purpose of being entitled to object to the grant of a new lease under S.30(1)(g) of the 1954 Act. Without going into all of what Sir Richard Scott V-C referred to as the convoluted details of the transactions involved, and what Colin Robert Walker LJ referred to as a scheme of Byzantine complexity: prior to railway privatisation the freehold of the property concerned was owned by the British Railways Board (BRB); in December 1992 BRB had granted a lease of the property to VCS for a term expiring some five and a half years later, in August 1997; on privatisation, in March 1994, BRB was required to transfer the freehold to Railtrack which then entered into some sort of statutory leaseback arrangement with Regional Railways North East Ltd (RRNE). In this way RRNE became the competent landlord of the tenants VCS. The latter argued that in consequence RRNE had not owned its reversionary interest for five years by August 1997, when its lease term expired. The Court of Appeal disagreed, applying the principle in Artemiou v. Procopiou (1966) 1 QB 878 where it was held that the renewal of the landlord's lease had not broken the continuity of the landlord's ownership. By analogy, RRNE being a member of the same group of companies as BRB it was entitled to the same statutory protection that BRB would have been entitled to rely upon if all the detailed changes entailed by the privatisation of the railway network had never taken place.

Receiver for the Metropolitan Police District v. Palacegate Properties Ltd (2000) 13 EG 187

In this case the question at issue was whether the lease executed by the parties was sufficiently similar in its terms to the draft lease which had earlier been approved by the court as being subject to an order under S.38 of the 1954 Act excluding it from the terms of the Act. The draft lease approved by the court in 1993 had been for a term of five years, and by implication the rent was to be payable in arrear. Subsequent to the approval of the draft by the court the parties had agreed that the rent should be payable in advance. The court held that the change in the proposed terms of the lease was not material. In the words of Pill LJ:

… the court giving authority (to the exclusion of the protection of the 1954 Act) is not concerned with the fairness of the bargain … The court is concerned only with whether there is informed consent to the exclusion of protection. As long as a tenant knows that he is giving up protection with regard to the proposed tenancy, the parties may thereafter agree such terms as they see fit.

The court also gave fairly short shrift to the argument that because the lease contained a break clause, it could not be regarded as a "term certain" and so fell outside the scope of the relevant statutory provisions in any event; likewise to the argument based on the submission that the lease should be construed as a term of five years in the first instance and thereafter from year to year. Game, set and match to the landlord.