The parties in Humber Oil Terminals Trustee Ltd v Associated British Ports [2012] EWCA Civ 36; [2012] PLSCS 16 have been back to court again. Their dispute concerns the renewal of business leases at an oil terminal, which the tenant took in order to service its oil refineries. When the leases expired, the landlord opposed the tenant’s applications for renewal under s30(1)(g) of the Landlord and Tenant Act 1954, on the ground that it was intending to assume operational control itself to make the oil terminal available to additional customers.
The dispute has been complicated by competition issues. European and English law prohibit undertakings from engaging in conduct that affects trade and constitutes an abuse of a dominant position. In relation to land, abusive conduct can include discriminating between tenants, charging excessive rents, imposing unfair trading conditions or limiting access to an essential facility, such as an air or sea port.
The parties in Humber Oil Terminals Trustee Ltd v Associated British Ports [2012] EWCA Civ 36; [2012] PLSCS 16 have been back to court again. Their dispute concerns the renewal of business leases at an oil terminal, which the tenant took in order to service its oil refineries. When the leases expired, the landlord opposed the tenant’s applications for renewal under s30(1)(g) of the Landlord and Tenant Act 1954, on the ground that it was intending to assume operational control itself to make the oil terminal available to additional customers. The dispute has been complicated by competition issues. European and English law prohibit undertakings from engaging in conduct that affects trade and constitutes an abuse of a dominant position. In relation to land, abusive conduct can include discriminating between tenants, charging excessive rents, imposing unfair trading conditions or limiting access to an essential facility, such as an air or sea port. The tenant claimed that the landlord was abusing its dominant position in breach of s18 of the Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union. It maintained that the landlord was trying to use section 30(1)(g) of the 1954 Act to extract excessive rents from the tenant. By way of example, it cited the landlord’s proposal to increase the rent for a jetty from £2.85m on to £23m pa. The landlord accepted that it occupied a dominant position in the relevant marketplace, and that its conduct could affect trade within the United Kingdom and the wider European Union – but applied for the tenant’s claims to be struck out. The Court of Appeal ruled in favour of the landlord. It could see no legal justification for refusing to allow the landlord to rely on section 30(1)(g), even though it may have negotiated for new leases at excessive rents – and decided to rely on section 30(1)(g) only when it failed to secure such rents. If the tenant were to succeed in its claim for new leases and the parties were unable to agree new rents, the court would have to determine them. Sevtion 34 of the 1954 Act requires the court to fix the rent at which a holding might reasonably be expected to be let in the open market by a willing landlord to a willing tenant. The landlord could not hold the tenant to ransom and there was no cause for concern that the court would fix rents that would be abusive in competition terms. If the tenant’s applications for new business leases were to fail and the landlord were to allow the tenant access to the port on terms that constituted an abuse of its dominant position, the tenant could bring separate competition proceedings against the landlord. Consequently, the court did not accept that the potential for abuse would suffice to prevent the landlord from relying on section 30(1)(g). However, it was careful not to close the door to valid competition claims in 1954 Act proceedings. The decision highlights the growing influence of competition law in the real estate sector and provides valuable guidance to a previously uncharted area of the law. Allyson Colby is a property law consultant
