A racehorse trainer got a rough ride at the High Court in a bid to renew his business tenancy. Allyson Colby outlines why his case was a non-starter.
Key point
- A recent High Court decision provides useful guidance on the correct approach when considering issues arising under section 30(1)(a), (b) and (c) of the Landlord and Tenant Act 1954
The grounds on which landlords are entitled to oppose the renewal of business tenancies protected by the Landlord and Tenant Act 1954 are set out in section 30(1). The first three grounds of opposition relate, principally, to the tenant’s behaviour.
The court can refuse to order the renewal of a lease if “the tenant ought not to be granted a new tenancy” because they have failed to keep the premises in repair (ground (a)), or have persistently delayed in paying rent (ground (b)). In addition, the court can refuse a tenant’s application to renew their lease if they ought not to be granted a new tenancy owing to “other substantial breaches” of the tenant’s obligations, or for any other reason connected with their use or management of the holding (ground (c)).
Landlords need not confine themselves to a single ground of opposition and sometimes cite grounds (a) and/or (b), as well as ground (c), when opposing the grant of a new business tenancy. Consequently, it is important to know whether the legislation requires the court to compartmentalise its approach to these grounds. Should the court ignore breaches of covenant relevant to grounds (a) and (b) when considering whether ground (c) applies? Or can it consider the breaches collectively?
Be my guest
The point arose in Kent v Guest [2021] EWHC 51 (Ch); [2021] PLSCS 9, which concerned a training yard and stables for racehorses in Ingmanthorpe in North Yorkshire. The land was once attached to The Manor House, but changed hands in 2016. The new owners planned to build a new house and to manage the stables themselves. But they granted the racehorse trainer, who lived in a large static caravan on the site, a one-year lease, which was excluded from the protection of the 1954 Act, so that he could continue training at the stables until their new home was ready and they could move in.
When the tenancy expired, the buyers renewed it for another year – without taking legal advice and without complying with the notice requirements in the 1954 Act. As a result, the trainer acquired security of tenure and, when asked to vacate, refused to do so. Worse still, he claimed that, if he was entitled to a new business tenancy, he was also entitled to occupy the newly constructed house on the land because it formed part of the demise.
At the starting gate
The county court rejected the trainer’s application for a new business tenancy on grounds (a) and (c). The judge observed that the property was “a mess”. It had been allowed to deteriorate and was covered in plastic waste, which would require specialist removal at a cost of “thousands of pounds”. In addition, it had been structurally altered and added to, without the landlord’s permission.
The trainer had also allowed his wife to carry on her own business at the property in breach of the alienation and user provisions in the lease, and had burned trade waste there, even though the local authority had warned him not to do so. He had also failed to insure the property and had rectified his omission belatedly, when challenged on the subject. However, he told the county court – untruthfully – that he had insured throughout. And, to cap it all, he had accepted work in Newmarket for financial reasons, thereby reducing the time that he could spend at Ingmanthorpe, which would exacerbate the problems there.
Into the straight
On appeal, the trainer pointed to Lady Justice Gloster’s remarks in Youssefi v Musselwhite [2014] 3 EGLR 22 that, when considering ground (c), the court is entitled to focus not merely on “other substantial breaches” but also, or alternatively, on any other reason connected with the tenant’s use or management of the holding. He claimed that the legislative reference to “other” breaches mandated a separate approach to each subsection, and argued that the county court had erred by considering points relevant to ground (a) while considering whether section 30(1)(c) applied.
Snowden J had serious doubts about this approach. The landlord and tenant relationship is a unitary one and, if the court were required to compartmentalise in this way, there could be breaches of covenants that, viewed separately, might not be sufficiently serious to prevent the renewal of a tenancy. Whereas, taken collectively – as would reflect the parties’ situation in practice – the totality of such breaches could be so significant that it would be unfair to foist the tenant on the landlord for another term.
However, the judge did not need to decide the point. He was satisfied that the breaches of covenant were so serious and extensive that they justified the county court’s decision on ground (a), and also on ground (c) no matter which approach was taken. Consequently, it would be unfair to compel the landlord to renew its legal relationship with the tenant.
The home stretch
Therefore, there was no need to consider whether the trainer would have been entitled to occupy the new house. However, in the absence of a claim for rectification of the lease, or some argument based on estoppel, or some discretion as to the extent of the property to be subjected to a new lease under the 1954 Act, the judge indicated that he would have found it extremely difficult to reject the trainer’s claim.
Allyson Colby is a property law consultant
