Assignment of protected tenancy — Premium — Expenditure on alterations — Assignors incurred expenditure before grant of tenancy — Whether premium recoverable — Appeal by assignees dismissed
By an agreement made in August 1983 between the trustees of the Gerald Palmer Trust and the defendants, the defendants agreed to do certain works to Wellhouse Farmhouse, Hermitage, Newbury, Berkshire and for that purpose had a licence to enter and take possession as tenants at will on the terms of a draft lease. On November 22 1985 a lease for a term of 20 years 11 months from the date of the agreement was granted to the defendants. On March 20 1987 the defendants assigned the lease to the plaintiffs for a premium of £115,000. The plaintiffs claimed repayment of the premium on the ground that it had been demanded in breach of section 120 of the Rent Act 1977; the defendants repaid £42,000 but their contention that the balance was not repayable was accepted by His Honour Judge Kenny in the Newbury County Court (September 6 1989). The plaintiffs appealed.
Held The appeal was dismissed.
The balance of the premium did fall within one of the exceptions to section 120 of the 1977 Act. The exception concerned any expenditure incurred by the assignor in carrying out alterations or providing fixtures in the demised premises. The plaintiffs’ contention that the expenditure was incurred before the assignors became tenants by the grant of the lease and therefore the exception did not apply was wrong. It was not necessary that the expenditure had to have been incurred by the assignors only after they became tenants.
Brett v Brett Essex Golf Club Ltd
[1986] 1 EGLR 154 distinguished.
David Neuberger QC and Alexander Nissen (instructed by Lewis Silkin) appeared for the appellants; and Stephen Lloyd (instructed by Heald Nickinson, of Camberley) appeared for the respondents.
