Commercial Property Focus - November 2009

What is your intention?

One of the grounds that a Landlord can object to the renewal of a business lease is if they can show that they intend to demolish or reconstruct the premises or carry out substantial work.  In the recent case of Inclusive Technology v. Williamson the Landlord had served a Section 25 Notice termination the tenancy and advising that it would be relying on the demolition or reconstruction ground.  The Landlord advised the tenant in writing that they intended to carry out refurbishment work. 

It came out in evidence that the landlord certainly had a genuine intention to refurbish the premises at the time the Notice was served.  Some three months later it appeared that the Landlord had some concerns about the costs of the work and decided to do nothing at that stage although he still intended to carry out the work in the future. This meant that the Landlord no longer has an intention to carry out the works at the end of the tenancy.  However, the Landlord did not advise the tenant of his change of mind and five months after the Notice was served the tenant moved out and signed a new lease at a  separate premises at a higher rent.

The tenant subsequently made a claim for compensation under Section 37A of the Landlord and Tenant Act 1954 for failure of the Landlord to tell the tenant about changes in his decision amounted to a misrepresentation and the court awarded compensation to the tenant based on the different of the rent it was paying for its new premises and the old rent.  Whilst the court confirmed that although there was no duty on the Landlord to give updates as to the progress of any financial applications or planning applications if in fact the Landlord no longer intends to carry out but at the end of the lease they must inform the tenant of any changed circumstances or decisions.

Sian Evans, Partner, Weightmans LLP
Property Litigation Team
Sian.evans@weightmans.com