Court of Appeal gives useful guidance on grounds for opposing new business tenancies

The Court of Appeal has recently passed a rare judgment which offers useful guidance on grounds for opposing new business tenancies.

The case of Gill v Lees News Ltd [2023], involved a local newsagent and convenience store as the tenant of a premises in London.

The tenant’s request for a new tenancy was opposed by the landlord on the lesser used, and rarely litigated, grounds (a)-(c) of Section 30(1) of the Landlord and Tenant Act 1954, being that the tenant ought not to be granted a new tenancy by reason of:

• The tenant’s failure to comply with its repairing obligations (ground (a));
• The tenant’s persistent delay in paying the rent when it becomes due (ground (b)); and
• Other substantial breaches of the tenant’s obligations under the current tenancy (ground (c)).

The trial judge decided to grant the tenant a new tenancy on the basis that the disrepair had been remedied by the date of the hearing and the other breaches were relatively minor.

On appeal by the landlord, the court was asked to consider two issues, the first of which being the date on which the grounds to oppose a new tenancy needing to be established.

The court disagreed with the tenant’s argument that the judge should only consider the state of repair of the property as at the date of the hearing. The judge can take account of the tenant’s conduct throughout the tenancy and will be wise to a tenant who has a ‘lamentable record of performance and only puts things right at the last minute.’

However, tenants are still advised to make every effort to remedy the breaches before the date of the hearing as this will inevitably play an important part in the judge’s decision.

The second issue was the interpretation of the phrase ‘ought not to be granted a new tenancy’.

It was held that the court should not be confined to considering only those matters related to the particular ground of opposition being relied upon. Instead, the court will take a more holistic approach and will look at the various breaches as a whole as well as individually.

The court will also consider the positions of both the landlord and the tenant, and how they might each be impacted by the court’s decision. For example, whether it would be fair to require the landlord to enter into a new tenancy, and whether any hardship would be caused to the tenant if a new tenancy was not granted.

In extreme circumstances, the tenant’s conduct in the litigation itself may also factor in the court’s decision to refuse a new tenancy.

Despite rejecting the tenant’s argument in respect of the first issue, the Court of Appeal nevertheless upheld the trial judge’s decision to grant the tenant a new tenancy.

Laura Robbetts, a property litigation partner in the retail and leisure team at national law firm Clarke Willmott LLP, said: “The Court of Appeal found that the judge was entitled to consider the impact that this decision would have on the tenant’s business, which was also its livelihood. The judge had also looked at the tenant’s conduct in relation to both the repairs and the litigation and decided they were not serious enough to warrant refusing a new tenancy.

“This is a positive outcome for the newsagent who is able to continue running its business and serving the local community and it is a useful precedent in terms of legal proceedings to understand the grounds for granting or denying new business tenancies.”

Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton and is this year celebrating its 135^th anniversary.