Business Lease Renewals - Competent Landlords

 
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Introduction

In Frozen Value Ltd v Heron Foods Ltd [2012] EWCA Civ 473, the tenant succeeded in defeating the landlord's ground (g) possession claim because the landlord had not been the competent landlord (within the meaning of section 44 of the Landlord and Tenant Act 1954) throughout the whole of the preceding five year period.

Section 44 of the 1954 Act defines the competent landlord as the person who holds the reversion expectant on termination of the tenant's tenancy and that reversion must be either a freehold or a tenancy with more than 14 months to run.

The facts

On 27 January 2010, the tenant, Frozen Value Ltd ("Frozen"), served a section 26 request for a new tenancy on Kwikfine Ltd, its competent landlord. At that time, Heron Foods Limited ("Heron") was the immediate landlord of Frozen but, as its head lease from Kwikfine Ltd expired 3 days after Frozen's lease and Heron was not in occupation of the premises, Heron was not the competent landlord. On 24 February 2010, Kwikfine Ltd granted a new headlease to Heron, at which point Heron regained its position as Frozen's competent landlord. Heron served a counter-notice to Frozen's section 26 request, opposing the renewal on the basis that it wanted to occupy the premises for the purposes of carrying on its own business, i.e. ground (g) of Section 30(1) of the 1954 Act.

Opposed Lease Renewals: ground (g)

Section 30(2) of the 1954 Act prevents a landlord from opposing a tenant's renewal application under ground (g) of section 30(1) of the 1954 Act if the interest of the landlord was "purchased or created after the beginning of the period of five years which ends with the termination of the current tenancy".

Decision

At first instance, the Court found in favour of Heron. It held that Heron intended to operate its business from the premises and that Heron was not barred by the five year rule.

The Court of Appeal upheld Frozen's appeal by a 2:1 majority. The Court held that, although a succession of interests could be aggregated to meet the five...

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