S1 Ep4: Rude awakenings and the Landlord and Tenant Act 1954

Welcome to the Tanfield Talks podcast series which is brought to you by the baristas at Tanfield Chambers. We are a premier UK business and property set, and our podcasts aim to give you insight into recent developments in the law and our views on those. All the cases and legislation mentioned in a podcast are set out on our website in the listing for that particular recording. If you have any questions, please contact one of our staff team. Hello, welcome to Tanfield Talks. I'm Daniel Dover, and I'm joined by. Well, Beatson. We will be touching on the possible reform of the Land Northern Tanventakt in 1954 in the context of the consultation on reform, which is just close today, the 19th February 2025, and then we will be moving on to discuss what. Well, we're going to also have a look at some of the more recent-ish cases on landlord's grounds for opposition, both in relation to disrepair and also in tension to redeveloped. Today, we're talking about the Land Northern Tanventakt 1954, now in its 70th decade, governing the relationship between commercial landlords and tenants. We're going to briefly discuss reforms that are underway, consultation closes today, and then that's going to be dealt with more thoroughly in the next podcast by Ed Denham Lorenzo Gleone, but we're also going to look at three recent-ish cases. I'm Daniel Dover, I'm a barrister at Tanfield Chambers, called in 1997, and you might know me from such texts as Business Premises, Possession and Least Renewal, now in its seventh edition and available at all good bookshops, and I'm joined today by Will, I will. Hi, Dan, thank you very much. My name is Will Beatson. I was called for the bar in 2015. I did Pew Religion, Bedford Row, and joined Tanfield as a tenant in 2017. So, Dan, what's the breaking news on the 1954 act? As you said, there's a consultation which closes today. What do you think might come of it? As you said, it closes today. We'll have to wait and see what comes of it, but I think some of the issues that are floating about to do with the security of tenure, means of going through the court process, rents. Yes, I think they seem to be the ones that are hitting the news. And do you think the actors in desperate need of reform, or do you think it's worked pretty well over the last 70 years or so? I don't think it's in desperate need of reform. I think, as we'll see in some of the cases that we're going to discuss in a bit, there's an inherent flexibility in the act itself, which is kept it relevant and deals with the tension that's often there between landlords and tenant. In fact, I think one of the main problems is probably outside of the act is to do with the court service and the inability to get cases run efficiently. Personally, I think I'm a big fan of the act. I think the consequences of the landlord failing to serve account notice are a bit harsh, but other than that, I'd say it's my second favorite act. It really? What's your first favorite act? It's got to be the Access to the neighbouring land act. It's wonderfully drafted, very clear. Yeah, interesting. Anyway, moving on. So, possible reforms arising out of the consultation are going to be the subject of next month's podcast with Ed and Lorenzo. And I want to lay down a challenge to Ed and Lorenzo now because I'm going to introduce what I hope will be a new theme in Art Talks, which is the legal joke. Are you ready, Will? I think so, yes. You sure? Yes. Okay. Here we go. What's the difference between unlawful and illegal? I don't know, Dan. What is the difference between unlawful and illegal? Well, unlawful is something that's against the law, and illegal is a sick bird. Do we have any candle after all? We can probably put that in here, did we? So, getting back to the reforms after that interlude, which I really did enjoy, Dan. I really did. Your face tells it differently. Yes. Well, with the reforms, I think there are concerns having read the consultation documents about the contracting out provisions, and whether they act, which is from 1954 is suitable for the modern commercial world, particularly post-COVID, and the decline in brick and mortar retail. For example, the consultation asks is contracting out appropriate at all when the act first came into force. Contracting out wasn't possible. For example, is it still appropriate to have a requirement as well that a 54 at least must be of at least six months duration? There are increasing numbers of pop-up restaurants, etc. Should it be rent-based, which would be similar to a short, short, whole tenancies? Should there be a minimum rent, which should attract protection? Yeah. Well, it's not step on the toes of the next podcast, so maybe we'll move on to the cases now. So, the first case we're going to discuss is the case of Gillen Lee's, that's from last year. We have picked the most recent significant cases that we can, but they don't come up too frequently, which again, I'd say, is a testament to how well the act is drafted, but in the context of these cases, we'll discuss the approach of the court to section 30, subsection one of the act, which, of course, contains the landlord's grounds for refusing the grant or opposing, rather be a grant of a new tenancy. So, Gillen Lee is done. Why is it an important case? It gives some useful guidance as the approach to take as to whether a tenancy ought to be granted, an ought is the word that is used in the act. It also clarifies whether the court should adopt a compartmentalised approach to the landlord's grounds, so that means should it just focus on the specific breaches that the landlord relies on for resisting a new tenancy, or should it take a wider view of the overall landlord and tenant relationship? I think it also clarified the date on which the court should assess the state of the building for the purposes of the, um, the lapidation's ground. Are you ground there? Yes, it did. It clarified that. It had been argued that you just look at the date of the hearing at the state of the premises, but consistent with that wider approaches to the wider view of the landlord and tenant relationship, it held that it wasn't constrained just to that date, but it could look at the condition of the tenancy throughout the period of the lease. So, it can look at the whole course of dealings as it were, which I suppose is distinct from the situation in ground death in Betty's Café's limited. Yes, um, we'll come on to the distinction a bit later, but essentially, Betty's Café ground death is dealing with the landlord's intention to do something in the premises, something the tenant doesn't have much control over. Whereas, in Gilles, we were talking about a ground that the landlord's relying on because of default by the tenant, such as for disrepair, so that's why there's a difference there. And I think the approach that it recommended with, with ground A, B and C is that the ground should be considered individually and then cumulatively, or so it could look at all the circumstances such as likely future compliance with, with covenants. Do you, do you think that was the right approach? Yes, I do. I think that wider view really is the court making the inquiry as to whether or not it's fair to impose upon the landlord a further term with this particular tenant. So, in the Gilles case, the tenant had what the judge called around the rude awakening as to the necessity to comply with its repairing covenants. It seems as if the tenant hadn't really taken it that seriously to begin with, but the judge was satisfied that the tenant now realise that it ought to do that and would do that. That coupled with other factors, such as that the fact that the landlord was seen as an absentee landlord, meant that the court thought, well, there should be no reason not to impose a new term on these parties, but it might be different otherwise, particularly where you have evidence that the tenant isn't going to comply with its covenants or pay rent in the future. If you're interested, can I recommend an interesting article in the latest landlord and tenant review on this case entitled a rather rude awakening? And if you want a wider and may I say practical approach to this area law, then there's also, as I've mentioned, the business premises book possession and lease review on now in its seventh edition of the Good Book Shops. Apparently it's ranked 20,096 in the law books from one popular online retailer. Competing with Harry Potter, I'm sure. Right, so that's kind of these. Let's move on to Asfrancis, which is an important case referring to Ground F, which we've just referred to, the redevelopment ground. I think it's also equally applicable to Ground G, which is where the landlord intends to use the premises for its own purposes. Could you tell us a bit more about that case? As I mentioned, this is a different type of case. This is a ground where it's the landlord's intention that's all important, not the tenant's default. In this case, in what I think was a rather bold move, the landlord openly admitted to carry out works of no utility with just the sole aim of getting possession. The county court found that that constituted a genuine intention at the date of the hearing to carry out the works and refused to order a new tenancy on that basis. So it was argued that the motivation for the carrying out of the works themselves were not relevant, as long as the intention in or of itself was genuine. Yes, that's right, and the high court agreed. But ultimately, the Supreme Court said otherwise, finding that Section 31A of the Act showed that the intention must exist independently of the tenant's occupation, the acid test being whether the landlord would do the works, regardless of whether the tenant wished to remain in occupation. And Lord Sumpch and JSC at the time in that decision said, "Although the statutory test does not depend upon the objective utility of the works, a lack of utility may be evidence from which the conditional character of the landlord's intention may be inferred." I think that could be the subject of a podcast in itself. This is Tanfield Talks. I'm joined by Will Beatson. I'm Daniel Dova. We're discussing the landlord in tenant act 1954. We've just done a review of a couple of the more recent-ish leading cases. And Will, where are we going to next? Following on from S. Frances, which, as you pointed out, involves some refreshing candor on the park, the landlords. We're going to move on to a case where such candor regressively wasn't present. And that's the case of McDonald's restaurants, limited and shuriyama. It's a case from last year in which the landlord's intention to occupy the premises were found to be genuine at trial. So in this case, it was ground G that was relied upon in opposing the granted new tenancy. But the landlord's subsequent conducts was found to show that the landlord had in fact misled the court. Yes, isn't this where the landlord had said that it intended to occupy the premises itself for the purposes of operating a Japanese restaurant that would begin pretty shortly after it got possession. And on that basis, the trial judge terminated the tenancy or refused to order a new tenancy underground G. Yeah, I think it was called Zenbento. And importantly, there was actually a recital in the order terminating the tenancy that the landlord would open a restaurant called Zenbento and commence trading as soon as possible. But over a year later, a different restaurant opened and then it became a bakery. Yes, I mean, I must say I was very disappointed. I was waiting outside, eagerly waiting for Zenbento to open. I think this was down at the old London County Council buildings on the River Thames, quite a hotspot. Yeah, the county hall. County hall, that's right. When the tenant McDonald's obviously keeping an eye on the premises, realises that in fact Zenbento equally disappointed as I was was never going to open, it claimed though that the landlord had terminated the tenancy by misrepresentation and brought also a claim in deceit. The misrepresentation claim is a specific claim under section 37A of the act. It's important to bear in mind though, a landlord can change its mind after the hearing, but the real issue is whether at the time when it expressed its intention at the date of the hearing, whether that was true or not. And the landlord was very clear, according to McDonald's, that it did intend to open Zenbento and it even gave an undertaking to that effect. And that was the basis that the tenancy was terminated on. Somehow the tenant got hold of some emails, or nevertheless some emails were disclosed, which showed that the landlord didn't intend to open Zenbento. None of the emails referred to Zenbento, which is all quite embarrassing. Not very Zen. But yeah, so if found essentially the landlord had claimed it intended to open Zenbento app trial in order to then decide what it actually wanted to do with the premises. A lack of candle that as you said before, we didn't see in the Esperance case. But that meant that the tenant was entitled to compensation under section 37A of the act, which expressly deals with the situation where a tenancy is terminated because of the misrepresentation. And the call order's compensation for losses suffered is a result of the tenant leaving the premises. So presumably those damages could be quite substantial if there's a successful business. Yes, look at this one. This was a successfully trading McDonald's restaurant on the banks of the River Thames. It's going to claim loss of profits for 15 years. I imagine that was quite a lot of money. Obviously there are serious risks in trying to persuade the court to terminate that, say, on basis X and then receiving to be Y, even if the change of mind is genuine. Obviously solicitors would be well advised if their clients do change their minds to ensure that the thought process is adequately evidence. Interestingly as well, the tenant brought a claim against the landlord in the sorts of deceit alleging that the landlord had deceived it into believing that they were going to open Zenbento, but that claim failed. Why was that done? Well, claiming deceit requires the claimant to have acted in reliance on the deceit. But of course, in this case, the tenant didn't rely on the deceit. In fact, they challenged it and fought it all the way through the hearing, the original hearing. They said that the intention wasn't there. So in fact, that's one of the reasons why section 37A was felt to be necessary in order to safeguard against landlords making up intentions in order to defeat the tenant's application for a new lease or in order to get a termination. So it recognizes that risk because again, when dealing with grounds F and G, it's entirely in the landlord's gift in order to be able to make out those grounds and the tenant can't really do much about it. So this sort of balances against that. And again, if you're interested in digging a little deeper on this topic, our colleague Carl Fein has written an amusingly entitled article on it, taking the big Mick a unhappy meal also published in the landlord and tenant review. So what sort of conclusions do you think we can draw down from them run over the most recent cases? Well, it's a helpful way of distilling the distinction between those cases where the landlord's relying on the tenant's default, disrepair, rentaries, etc. In which case the court is going to take a more holistic view of the relationship between the landlord and the tenant. So we can draw that certainly from guilt and lease. And then we look at the other cases which are to do with landlord's intention cases and there the landlord has to be careful about how they set out their intention. And I think, as you've said, they've just got to be genuine and not motivated by a desire to get a possession. It's a snapshot in time, I suppose, rather than. In that time, I think you're right. And what do you think about giving undertakings to court? Well, I think you should take them seriously because if you don't do the thing, it's in writing forever and you will likely be found out. And you will also disappoint people who are looking forward to ZenBenter. Yes, that's not a disappoint. You've been listening to Tenfield Talks with Will Beatson and me Daniel Dover. Thank you for listening to this Tenfield Talks podcast. We hope you found an informative. If you would like us to cover any other topics or have any other comments, please get in touch with one of our staff team. Please note that this content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary in this podcast or for any consequences of relying on it is assumed or accepted by any member of Tenfield or by Tenfield as a whole.