GILL V LEE NEWS LTD [2023] EWCA CIV 1178
Summary
State of repair should be considered at the date of hearing, as well as the date of notice for an application for the grant of a new tenancy under the Landlord and Tenant Act 1954.
Facts
The appellant Landlord appealed against the grant of a new tenancy to the Tenant. The Tenant had failed to comply with its obligations to keep the premises in a state of repair. The Tenant also persistently delayed in paying rent and had breached other covenants under the lease.
The Tenant remedied the disrepair by the date of the hearing in 2021. The Judge found this to be significant. Taking a holistic approach, the Tenant's other breaches were considered to be of minor importance. In the context that the Tenant's premises were its livelihood, the Judge granted the tenancy. The decision was appealed.
Decision
Appeal dismissed. The court held that what happened between the date of the notice and the date of the hearing was relevant, and it should be given substantial weight. A breach should not be ignored even if it is remedied before the hearing date. However, the wording of s.30(1)(a) does not refer to a set point in time. The material time may be the date of the hearing. The court is also entitled to consider future promises. The particular context of each case must also be taken into account. This can be done so holistically.
Comment
Landlords may face difficulties in opposing applications for lease renewal. Even where there are clear breaches of repair covenants, if the Tenant rectifies those breaches before the hearing, they may be successful. The particular circumstances of the case must be considered.
UNSDORFER V OCTAGON OVERSEAS LTD [2024] UKUT 59 (LC)
Summary
The Upper Tribunal (Lands Chamber) held that a manager of a higher-risk building appointed by an order of the Tribunal could not be an "accountable person" for the purposes of the BSA s.72.
Facts
The management of building safety risks in higher-risk buildings is the responsibility of an "accountable person." An "accountable person" owns or has obligations to repair any of the common parts of a higher-risk building. This obligation may exist under a lease or by virtue of enactment.
The appellant had been appointed by an order of the First-Tier Tribunal to be manager of an estate which included "higher-risk" buildings. This order was made under the Landlord and Tenant Act 1987 s.24. When asked, the First-Tier Tribunal determined that the manager was not an "accountable person" for the purposes of the BSA 2022. The point was appealed for determination to the Upper Tribunal.
Decision
Appeal was dismissed. The manager was not an "accountable person" for the purposes of the BSA. The First-Tier Tribunal correctly construed the legislation. However, there may be an overlap whilst orders made by the First-Tier Tribunal before the commencement of the BSA 2022 subsist. This would occur where the responsibilities now given to the "accountable person" are already those of the manager. Once the original order expires, all responsibilities revert to the "accountable person."
Comment
Responsibility for the management of building safety risks in higher-risk buildings will typically fall on the Landlord as the "accountable person." However, whilst pre-2022 First-Tier Tribunal orders continue, there may be an overlap.
B&M RETAIL LTD V HSBC BANK PENSION TRUST (UK) LTD [2023] EWHC 2495 (CH)
Summary
An immediately exercisable break clause may be incorporated into a lease granted under the Landlord and Tenant Act 1954.
Facts
The Tenant served on the Landlord a s.26 notice requesting a new tenancy. Due to an internal error, no counter-notice was served. The Landlord then entered into an agreement for lease (AFL) of the property with a third party that involved redevelopment of the site. The AFL was agreed as conditional upon vacant possession and the obtaining of relevant planning permission. The Tenant applied for the grant of a new tenancy, and the Landlord applied for planning permission.
22 | K&L Gates: Overriding Interest Summer 2024 The Judge at first instance favoured the Landlord's request that an immediately exercisable break clause may be incorporated into the lease. This was appealed by the Tenant, who claimed the Judge had not sufficiently considered the Tenant's claim to security of tenure.
Decision
Appeal dismissed. The court opined that there may be circumstances where it would be reasonable to delay the operation of a break clause. However, the court has discretion over when it may use those powers. The Landlord's development plans and the effects of delay were persuasive. The approach taken of balancing competing interests was considered to be consistent with the original purpose of the Act.
Comment
The court has reaffirmed that whilst the Landlord and Tenant Act 1954 is designed to give security of tenure, protection is balanced against Landlord interests. The court may find the inclusion of immediately exercisable break clauses reasonable, especially with well-progressed redevelopment plans.
ADRIATIC LAND 5 LTD V LONG LEASEHOLDERS AT HIPPERSLEY POINT [2023] UKUT 271 (LC)
Summary
The costs of a Landlord application to dispense with the consultation requirements under the Landlord and Tenant Act 1985 s.20 cannot be recovered via the service charge.
Facts
The Landlord was the freehold owner of a 10-storey mixed-use building. The First-Tier Tribunal granted at first instance an unconditional dispensation. However, the tribunal prevented the Landlord from recovering its costs for the application. These costs would otherwise have been recovered via the service charge.
Upon review, the First-Tier Tribunal removed the order. However, the Tribunal imposed a condition that had the same effect. The Landlord was still unable to recover its costs of the dispensation application.
The Landlord appealed on two grounds: (i) that the tribunal had erred in law by imposing the costs sanction, and (ii) that the costs were irrecoverable in any case under BSA Sch.8, para.9.
Decision
Appeal was allowed in part. The costs for the application were assumed to be reasonable. Being so, they could be legitimately described as promoting the safety of the Leaseholders. They were therefore an essential expenditure. However, those same costs were caught by the scope of BSA Sch.8, para.9. As they arose from a relevant defect, they could not be recovered through the service charge. The schedule was capable of applying to costs incurred before 28 June 2022.
Comment
Landlords should be aware of the BSA 2022's retrospective effects on recovery of costs via the service charge.
MERTON LBC V NUFFIELD HEALTH [2023] UKSC 18
Summary
The assessment of a charity's entitlement to mandatory relief from business rates is against its purposes and activities overall, not a specific site.
Facts
The Respondent was a registered charity with a members-only gym located in the Appellant local authority's borough. Outside of the gym, the Respondent operated a variety of health-oriented premises and hospitals. The gym itself charged fees at a rate that excluded some from participating. The local council took the view that the public benefit requirement was therefore not met by the gym. It argued that mandatory relief from business rates under Local Government Finance Act 1988 Pt III, s.43(6) should not apply.
The Judge at first instance found in favour of the Respondent. The public benefit requirement is a prerequisite of charitable status. It requires the charity's purpose to be beneficial and its benefits to be for the public in general or a sufficient section of the public. It was undisputed that the purpose of the Respondent was beneficial. The Judge found that the "public aspect" must be considered in the wider context of the charity's activities. The wording of s.43(6) did not restrict analysis to the particular hereditament (i.e., building) in question. As such, the "public aspect" was met.
Decision
Appeal dismissed. The public benefit requirement is to be assessed in the charity's wider context, not on a site-by-site basis. The wording of s.43(6) does not require any deviation. The charity fulfilled its essential charitable purposes, and the gym was used as part of the fulfillment of those purposes. The "public aspect" was met by considering the charity's overall activities, of which the gym's operation was one part.
Comment
The Court has affirmed in charities' favour the business rates tax relief position. However, each charity must consider whether its overall activities meet the "public aspect" of the public benefit requirement.
SAINSBURY'S SUPERMARKETS LIMITED V MEDLEY ASSETS LIMITED CENTRAL LONDON COUNTY COURT CASE NO. H00MK414, 25 MARCH 2024
Summary
Where a Landlord opposes the grant of a new lease under the Landlord and Tenant Act 1954 on ground (f), the Tenant may overcome this by moving its business to an unaffected part of the demised premises.
Facts
The Tenant was a local supermarket. At the time of the hearing, the Landlord's stated intention was to implement basement planning consent in conjunction with a refurbishment of the upper floors. The Tenant only occupied the ground floor, and the refurbishment would convert the disused space above the Tenant into offices.
The Landlord asserted that a widening of the ground floor staircase was required as part of its plans. The Landlord therefore attempted to rely on ground (f) to oppose the grant of a new tenancy. Instead, the Tenant restricted its use of the demised premises, boxing off the affected area with stud walls.
Ground (f) is used where the Landlord "intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises...[and] could not reasonably do so without obtaining possession of the holding."
Decision
Opposition to the grant of a new lease was unsuccessful. The Judge explained that, following the Supreme Court, the legal test that the Landlord must overcome is threefold: (i) at the date of the hearing, the Landlord must have a genuine and settled intention to carry out the works; (ii) the Landlord must be practically able to carry out those works; and (iii) the purpose of those works is not just to successfully oppose an application for a new tenancy. The Landlord failed on the first two parts of the test.
In obiter comments, the Judge concluded that if the Tenant moves its business to an unaffected part of the demised premises prior to trial, that unaffected part comprises the "holding" for the purpose of ground (f).
Comment
The Judge's obiter comments clarify what is to be understood as the "holding" for the purposes of the Landlord and Tenant Act 1954. If both the Tenant's business and the Landlord's construction plans can be accommodated, then the Landlord cannot rely on those plans to deny the grant of a new lease.
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