Business tenancies

Citation

Waterson, G. and Lee, R. (2000), "Business tenancies", Property Management, Vol. 18 No. 5. https://doi.org/10.1108/pm.2000.11318eab.010

Business tenancies

Business tenancies

Wallis Fashion Group Ltd v. CGU Life Assurance Ltd (2000) EG 145

The question at issue for the court in this case was the relationship between the renewal provisions for business leases contained in Part II of the Landlord and Tenant Act 1954 (as amended) and the more recent provisions of the Landlord and Tenant (Covenants) Act 1995 which while going some way towards relieving the original lessee from the burden of continuing liability under the covenants contained in the original lease also enabled the landlord, in certain circumstances, at least partially to protect himself by requiring the assignor to enter into an "authorised guarantee agreement" (or "AGA") as a condition of consent being granted for a proposed assignment.

The specific question in this case was whether the landlord could now insist as of right upon the tenant undertaking such an obligation as an express term of the new lease where that lease was in the course of being renewed under the terms of the 1954 Act.

The facts, briefly, were as follows: the landlord had the reversion of some 18 shop units, presumably (though the law report does not say so) in a terrace or perhaps in a shopping precinct; the leases of each of the shop units fell in on the same day, 23 June 1999; the tenants commenced negotiations under the 1954 Act for renewal of the leases, and 14 out of the 18 agreed to accept a term in the new leases stating that if the lease were to be assigned the tenant would on assignment enter into an AGA; of the others, two had withdrawn from negotiations and given up their leases, one had somehow successfully managed in spite of the landlord's wishes to the contrary to have inserted the words "where reasonable" before the requirement on assignment to enter into an AGA (apparently due to an oversight on the part of the landlord or its solicitors) and the tenant in the instant case was now contending for the same form of words in its own new lease. Among the points raised by counsel on behalf of the landlord was the suggestion that this state of affairs suggested strongly that what the landlord was seeking accorded with general practice in the market and that to have different conditions inserted in the various leases would be contrary to good estate management practice.

In deciding against the landlord and in favour of the tenant the court made a number of points, notably that the new lease was required by the terms of the 1954 Act to "have regard to" the terms of the existing lease (as per the decision of the House of Lords in O'May v. City of London Real Property Co. Ltd (1983) AC 726 and that the existing lease was therefore the appropriate starting point at least for considering the terms of the proposed new lease; that as had been stated in by the Court of Appeal in Cairnplace Ltd v. CBL (Property Investment) Co. Ltd (1984) 1 WLR 696, "where Parliament has enacted a later Act designed to relieve tenants of a specific obligation, it is not … a correct exercise of judicial discretion to use the wide powers conferred upon the court by the [1954 Act] to deprive the tenant of the protection conferred upon him by [the] later Act …" (see also Lewis & Peat Ltd v. Regis Property Co. Ltd (1970) EGD 481); and that the mere fact that other tenants might or might not have agreed to particular terms in their own leases was of little significance in itself as a pointer to what might or might not be reasonable in another case. In short, the landlord was not entitled to insist "as of right" that the new lease should include an obligation on the part of the tenant to enter into an AGA if that new lease were to be assigned at some time in the future.

Gatwick Parking Services Ltd v. Sargent (2000) 25 EG 141

This case concerned the question of whether the landlord was entitled to object to the renewal of the tenant's application for a new lease of car park premises on the ground that the landlord himself intended to operate a car park business on the site, pursuant to the provisions of s.30(1) (g) of the Landlord and Tenant Act 1954. Without going into the unusually complicated planning issues which lay at the root of the matter, which involved application by the landlord for removal of a named occupier condition which had originally been imposed in favour of the existing tenant and which the landlord was seeking to have removed, as well as two separate applications for judicial review, one of which was still pending when the matter came before the Court of Appeal, the gist of the decision was that the landlord in such circumstances had to have a real and not merely a fanciful expectation of obtaining any necessary plannning permissions; that in this case regardless of the outcome of the second and pending application for judicial review he did indeed have such a realistic prospect of obtaining the necessary planning permission; and that in consequence he was indeed entitled to object to the renewal of the tenant's lease.

Geoffrey WatersonRosalind Lee

The law is stated as it is understood to be up to 1 August 2000.