Business tenancy – Lease of small plot of waste land for electricity substation – No other purpose permitted – Trial judge fixing rent under 1954 Act Part II at low level advocated by tenant – Whether account should have been taken of expense of relocation – Landlord’s appeal dismissed
In September 1969 a predecessor of the appellant landlord granted a lease to a predecessor of the respondent electricity company (the tenant) of a small piece of waste land bounded by a minor road but otherwise surrounded by allotments in the Gateshead green belt. The lease was for a term of six years at a yearly rent of £10 and thereafter from year to year at the same rent until terminated by either party on giving six-months’ notice. The lease, which contained no provision for rent review, prohibited the tenant from using the land otherwise than for operating an electricity substation. In or about 1994 the landlord served a notice under section 25 of the Landlord and Tenant Act 1954 (the Act) informing the tenant that he would not oppose an application for a new tenancy. Agreement having been reached for a new 14-year term subject to the same restriction on use, the only issue between the parties in the county court was the level of rent, the landlord contending for £1,000 pa and the tenant proposing £15 pa. In view of the disparity, the judge considered that he could only make minor adjustments to whichever figure was correct in principle. He concluded that, since he was bound by section 34 of the Act to take account of the restrictive user clause and to disregard the tenant’s prior occupation, the tenant’s figure was more appropriate as it was supported by rent payable under similar agreements as well as agreements (based on rent per pylon) for the grant of wayleaves. In determining an annual rent of £40 the judge took into account his refusal to insert a rent review clause. The landlord appealed, contending, inter alia, that the judge had wrongly excluded from consideration the expense and inconvenience to which the tenant would be put if obliged to relocate.
Held The appeal was dismissed.
1. The landlord’s argument was ruled out by the terms of section 34 which postulated a rent at which the land might reasonably be expected to be let by a willing lessor. Such a hypothetical lessor would not hold the tenant to ransom in the manner described by the appellant. Nor could such a lessor offer to relax the user clause for the sole purpose of obtaining a higher rent: see Charles Clements (London) Ltd v Rank City Wall Ltd [1978] 1 EGLR 47.
2. Since there was no realistic possibility of rental value rising to a level which would justify the cost of a rent review, the judge had correctly refused to insert such a provision and had appropriately adjusted the rent so as reflect the accelerated receipt of any increase which might otherwise have been obtained on review.
Philip Walling (instructed by Patterson Wolf & Co, of Whickham) appeared for the appellant landlord; Robin Horner (instructed by Watson Burton, of Newcastle-upon-Tyne) appeared for the respondent tenant.