Business Tenancies

Russell Hewitson

• Publisher: Routledge-Cavendish
• Year: 2016
• Topic: Law
• eBook ISBN:
  9781135332440
• Subtopic: Civil Procedure
• Index: Law

A considerable amount of commercial property work is concerned with the renewal of business tenancies under Part II of the Landlord and Tenant Act 1954. Business Tenancies provides the busy practitioner with a detailed and practical guide to all aspects of the law and procedure involved in the renewal of business tenancies under the 1954 Act and the often complex issues which can arise. It offers practical answers to problems which commercial property professionals may encounter when dealing with renewals.

This new title will equip commercial property professionals with a thorough practical knowledge of the relevant statutory provisions and case law. The implications of the Civil Procedure Rules 1998 are considered in detail. It also deals with the right to compensation for improvements. The text takes into account recent case law as well as the reforms introduced by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003.

CHAPTER 1

WHAT IS A BUSINESS LEASE?

Under the provisions of Part II of the Landlord and Tenant Act 1954 (the 1954 Act), a tenant who has a business lease will be entitled to a new tenancy provided the landlord does not establish a statutory ground of opposition and the tenant takes certain procedural steps laid down in the 1954 Act. For a business lease to be protected in this way by the 1954 Act, it must comply with the requirements contained in s 23(1) of the 1954 Act. If it does not, then it will not be protected.

1.1 SECTION 23(1)

Section 23(1) of the 1954 Act provides that Part II of the 1954 Act:

… applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes.

Section 23 has been amended by the insertion of s 23(1A) and s 23(1B) as follows:

(1A) Occupation or the carrying on of a business –

(a) by a company in which the tenant has a controlling interest; or

(b) where the tenant is a company, by a person with a controlling interest in the company,

shall be treated for the purposes of this section as equivalent to occupation or, as the case may be, the carrying on of a business by the tenant.

(1B) Accordingly references (however expressed) in this Part of this Act to the business of, or to use, occupation or enjoyment by, the tenant shall be construed as including references to the business of, or to use, occupation or enjoyment by, a company falling within subsection (1A)(a) above or a person falling within subsection (1A)(b) above.

Thus, for the protection of the 1954 Act to apply:

(a) there must be a tenancy of premises;

(b) at least part of the premises must be occupied by the tenant; and

(c) the occupation must be for the tenant’s business purposes.

In addition, the tenancy must not be one of those types of tenancies which are excluded from protection (see Chapter 2).

1.2 A TENANCY

The first requirement under s 23(1) of the 1954 Act is that there must be a tenancy before the 1954 Act will apply. ‘Tenancy’ is defined in s 69(1) of the 1954 Act as being a:

… tenancy created either immediately or derivatively out of the freehold, whether by a lease or underlease, by an agreement for a lease or underlease or by a tenancy agreement or in pursuance of any enactment (including this Act), but does not include a mortgage term or any interest arising in favour of a mortgagor by his attorning tenant to his mortgagee …

This definition includes:

(a) tenancies;

(b) sub-tenancies (see 1.2.3);

(c) tenancies created by the 1954 Act;

(d) tenancies created by any other Act;

(e) agreements for tenancies;

(f) agreements for sub-tenancies; and

(g) tenancies by estoppel (see 1.2.5).

It does not include:

(a) mortgage terms;

(b) licences (see 1.2.1);

(c) tenancies at will (see 1.2.2);

(d) leases of rights of way (Land Reclamation Co Ltd v Basildon District Council [1979] 2 All ER 993, CA);

(e) occupation under a management agreement (see 1.2.4);

(f) leases of chattels (Mirabeau Ltd v Sheckman [1959] EGD 133);

(g) situations where the tenancy has ceased to exist, for example where the tenancy has been terminated by the tenant serving a notice to quit or where it has been forfeited by the landlord (but see 4.1 for the situation where the tenant seeks relief from forfeiture).

1.2.1 Licences

The 1954 Act does not apply to licences and it is therefore important to determine whether an agreement which calls itself a licence does in fact grant the occupier a licence, or whether, instead, it grants the occupier a tenancy. The leading authority on this point is the House of Lords’ decision in Street v Mountford [1985] AC 809, where it was held that there will be a tenancy if the agreement confers exclusive possession for a term at a rent. Whilst this decision related to residential premises, in practice it applies equally to commercial premises (London and Associated Investment Trust plc v Calow [1986] 2 EGLR 80; Dresden Estates Ltd v Collinson (1987) 55 P & CR 47, CA; Venus Investments Ltd v Stocktop Ltd [1996] EGCS 173; National Car Parks Ltd v Trinity Development Co (Banbury) Ltd [2001] EWCA Civ 1686; (2002) 2 P & CR 18, CA; Pankhania v Hackney London Borough Council [2002] EWHC 2441; [2002] NPC 123). It did not matter in Street v Mountford that the agreement called itself a licence and that the occupier had agreed not to have any protection under the Rent Act 1977. The key factor is whether the occupier had been granted exclusive possession.

Lord Hoffmann, in Bruton v London & Quadrant Housing Trust [1999] 3 All ER 481, HL, said (at 485):

The decision of this House in Street v Mountford [1985] AC 809 is authority for the proposition that a ‘lease’ or ‘tenancy’ is a contractually binding agreement, not referable to any other relationship between the parties, by which one person gives another the right to exclusive occupation of land for a fixed or renewable period or periods of time, usually in return for a periodic payment in money. An agreement having these characteristics creates a relationship of landlord and tenant to which the common law or statute may then attach various incidents. The fact that the parties use language more appropriate to a different kind of agreement, such as a licence, is irrelevant if upon its true construction it has the identifying characteristics of a lease. The meaning of the agreement, for example, as to the extent of the possession which it grants, depend upon the intention of the parties, objectively ascertained by reference to the language and relevant background. The decision of your Lordships’ House in Westminster City Council v Clarke [1992] 2 AC 288 is a good example of the importance of background in deciding whether the agreement grants exclusive possession or not. However, the classification of the agreement as a lease does not depend upon any intention additional to that expressed in the choice of terms. It is simply a question of characterising the terms which the parties have agreed. This is a question of law.

Whilst the presence of rent is not essential to the creation of a tenancy (see Ashburn Anstalt v Arnold [1988] 2 All ER 147, CA; and s 205(1)(xxvii) of the Law of Property Act 1925), in Onyx (UK) Ltd v Beard [1996] EGCS 55 it was held that the absence of a provision for the payment of a rent indicated that the arrangement was not a commercial one and raised the question of whether it might be construed as a licence, rather than as a lease.

It may be possible for an owner of premises to avoid granting an occupier exclusive possession by reserving itself rights in the agreement. The effect of this will depend on the construction of the reservations in all the circumstances of each case and it is clear that to deny exclusive possession the reservations must be extensive. In Dresden Estates Ltd v Collinson, the agreement which was described as a ‘licence’ provided that the owner of the property (‘the licensor’) could move the occupier (‘the licensee’) to any other part of its property. It was held by the Court of Appeal that the occupier was not granted exclusive possession and there was a licence. In Shell-Mex and BP Ltd v Manchester Garage Ltd [1971] 1 All ER 841, CA and Esso Petroleum Ltd v Fumegrange Ltd [1994] 2 EGLR 90, CA, two cases relating to agreements to occupy petrol stations, it was held that exclusive possession had not been granted because the agreements provided that the occupiers w...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Table of Cases
• Table of Statutes
• Table of Statutory Instruments
• Introduction
• 1 What is a Business Lease?
• 2 Particular Exceptions where the 1954 Act does not Apply
• 3 Continuation of Tenancies
• 4 Termination by the Landlord
• 5 Termination and Renewal by a Tenant
• 6 Service of Notices and Obtaining Information
• 7 The Application to the Court for a New Tenancy
• 8 The Grounds of Opposition
• 9 The Terms of the New Tenancy
• 10 Compensation for Disturbance
• 11 Compensation for Improvements
• 12 Crown Tenancies
• Appendix 1 Law of Property Act 1925
• Appendix 2 Landlord and Tenant Act 1927
• Appendix 3 Landlord and Tenant Act 1954
• Appendix 4 Costs of Leases Act 1958
• Appendix 5 Recorderd Delivery Service Act 1962
• Appendix 6 Civil Evidence Act 1972
• Appendix 7 County Courts Act 1984
• Appendix 8 Companies Act 1985
• Appendix 9 Agricultural Holdings Act 1986
• Appendix 10 Courts and Legal Services Act 1990
• Appendix 11 Landlord and Tenant (Licenced Premises) Act 1990
• Appendix 12 Agricultural Tenancies Act 1995
• Appendix 13 Civil Evidence Act 1995
• Appendix 14 Landlord and Tenant Act 1954 (Determination of Rateable Value Procedure) Rules 1954
• Appendix 15 Landlord and Tenant Act 1954 (Appropriate Multiplier) Order 1990
• Appendix 16 Landlord and Tenant Act 1954, Part 2 (Notices) Regulations 2004 371
• Appendix 17 Regulatory Reform (Business Tenancies) (England and Wales) Order 2003
• Appendix 18 CPR Part 56
• Appendix 19 CPR PD 56
• Appendix 20 Landlord’s Counternotice
• Appendix 21 Joint Application to the Court to Accompany a Consent Order
• Appendix 22 Referral of All Outstanding Issues to Arbitration
• Appendix 23 Expert Determination on Rent and, If Necessary, Arbitration on Interim Rent
• Appendix 24 Arbitration on Terms Followed, If Necessary, by Expert Determination on Initial Rent and Arbitration on Interim Rent
• Appendix 25 Expert Determination on Text of Lease
• Appendix 26 Forms under the Landlord and Tenant Act 1927
• Index