Commercial underlease — Determination of lease — Defendant vacating premises — Business user ceasing before contractual expiry date — Whether lease validly subsisting under 1954 Act — Whether tenant needing to give landlord formal notice under the Act of notice to quit — High Court holding that lease caught by Act — Tenant needing to give formal notice to quit under its provisions notwithstanding cessation of business use — Judgment for landlord
The first plaintiff and landlord in the present action (“E”) was the tenant of Guild House, Oundle Road, Peterborough, by a headlease. In 1980 part of Guild House was demised to the second plaintiff (“S”) and that interest subsisted. In 1989, E granted the defendant (“Pearl”) an underlease of Guild House for five years from February 15 1988 due to expire February 14 1993, subject to S’s leasehold interest. Pearl started to vacate Guild House in November 1992 and a management company on their behalf purported to terminate the underlease from February 16 1993 by a letter of November 16 1992 to E. E refused to accept the letter as sufficient valid notice to terminate. The management company wrote again on December 24 1992 purporting to give formal notice and that letter was also not accepted.
On January 15, a letter was sent enclosing a notice pursuant to the Landlord and Tenant Act 1954 terminating the underlease on June 24 1993. The notice was expressed as to without prejudice to Pearl’s contention that the tenancy was no longer a tenancy to which Part II of the 1954 Act applied and was accepted as a valid termination of the tenancy. E issued a writ for the rent up to and including June 24 1993. Pearl contended, inter alia, that a tenancy of a tenant who was not in occupation for the purposes of a business (within the meaning of section 23 of the 1954 Act) came to an end on the contractual expiry date, ie February 14 1993; and that it was not necessary for that tenant to serve notice under section 27 to bring the tenancy to an end. E contended that the tenancy had continued to exist notwithstanding that the business user had ceased. Under section 23(1), the provisions of the Act apply “to any tenancy where the property comprised in the tenancy is … premises which are occupied by the tenant …for the purposes of a business …”.
Held Judgment for the landlord.
1. Under section 24(1) a tenancy “to which this part of the Act applies shall not come to an end unless terminated in accordance with the provisions of … this Act”. A tenancy could only thus be terminated in accordance with the Act’s provisions, even during its fixed term.
2. In Long Acre Securities Ltd v Electro Acoustic Industries Ltd [1990] 1 EGLR 91, it was held that it was open to a tenant to serve a section 27(1) notice. However, “a tenant was not entitled to bring its liability to pay rent to an immediate end just by quitting the premises on the original contractual term date. That term date is subject to the provisions of section 24(1)”.
3. That case was not approached on a narrow issue. Rather the general propositions of law were brought to bear on the particular issue and that case could not be distinguished from the present one.
4. Thus, once a tenancy had been caught by the Act as a business tenancy, thereafter for some purposes, the Act will “continue” the tenancy unless the tenant or landlord took competent steps to terminate it. The mere cessation of use would not bring to an end a “continuation” tenancy.
Jonathan Brock (instructed by Theodore Goddard) appeared for the landlord; Wayne Clark (instructed by Geoffrey Delany, of Peterborough) appeared for the tenant.
