Landlord and tenant – New tenancy – Rent – Claimant taking lease of property for use as community centre – Negotiations with defendant local authority landlord for new tenancy upon expiry of lease failing – Claimant issuing proceedings for grant of new tenancy – Dispute arising as to rent payable – Court determining new lease at rent of £1 per year (if demanded) – Defendants appealing – Whether judge erring in law – Appeal dismissed
The defendant local authority owned a plot of land and a building at 100-116, Napier Road, East Ham, London. The claimant tenant leased the property to use as a community centre. The grant was for the term of seven years at an annual rent, subject to a particular provision in the lease, of £1 (if demanded) payable by four equal instalments in advance. The qualification to the rent concerned the claimant’s obligation to carry out physical works to the satisfaction of the defendants within one year of the grant. If such works were not carried out within that timescale, the rent would be £1,200 per annum.
When the lease expired, negotiations about the grant of a new lease failed because, among other things, the parties were unable to agree on the rent payable. The tenant issued proceedings for the grant of a new tenancy. The judge concluded that she could not make a finding on the issue of rent, as there was no evidence before her as to current market rent. In those circumstances, she found that the rent should not change.
The defendants appealed on five grounds: (i) the judge had been wrong to find that there was no evidence as to current market value; (ii) the judge had been wrong, in fact and in law, to reject evidence as to comparables and, in particular, finding that the defendants’ expert had not discounted for any onerous terms of the lease; (iii) the judge had erred, in law and in fact, because she had not picked up on the expert’s mistake in his report about the existence of target obligations; (iv) the judge had failed to consider whether, in fact, there had been any onerous terms and/or had failed to give reasons for any finding that the lease included such terms; and (v) if the judge had thought the correct approach was not to change the rent, she had wrongly taken that the rent under the old lease to be £1 when it was actually £1,200.
Held: The appeal was dismissed.
(1) The appeal court should not interfere with the judge’s findings of fact unless compelled to do so. The trial was not a dress rehearsal. In making decisions, the judge would have had regard to the whole sea of evidence presented to her whereas an appellate court would only be island-hopping. The primary function of the judge was to find facts and identify crucial legal points and advance reasons for deciding them in a particular way. Her duty was to give reasons in sufficient detail to show the parties and, if need be, the applicable court the principles on which she acted and the reasons that led to her decision. She was not obliged to give elaborate reasons and she could not have been expected to deal in detail with matters that were not in dispute before her. Furthermore, the judge was only obliged to address the arguments deployed by each side. It was not her task to think up different arguments that might have been advanced by one side or the other: Fage v Chobani [2014] EWCA Civ 5 applied.
In the present case, once the judge took the view that there was no reliable evidence capable of analysis as to current market rent and concluded that the passing rent should continue, it was for her to give such weight to it as she had thought fit. It was not for the appeal court to re-weigh that evidence. The judge found that the evidence of neither expert was satisfactory and there had been no reliable comparables to start with. The points of difference had not been pleaded and the significance of those points had not been valued. The judge could not have guessed how much more of a discount there should be and had been entitled to take what she had thought had been the most reliable evidence: Rombus Materials Ltd v WT Lamb Properties Ltd [1999] PLSCS 40 considered.
(2) As regards the judge’s rejection of the evidence as to comparables, there was no ground to set aside the judge’s findings of fact as disclosing an error of law. The reliability of a comparable was deeply undermined by an acknowledgement that the terms of the lease and the nature of the property were crucial to understanding the value of the comparable and the defendants’ expert had neither.
(3) If a mistake had been made about the terms of the new lease, it had been made by the expert and all counsel in the case, none of whom had drawn that “mistake” to the judge’s attention. She could hardly be held to have erred in law by failing to address a point which nobody made. The judge had not made any error of law in determining the rent on the basis of the evidence which each side had adduced, even though part of the evidence not drawn to her attention might have contained a version of the lease which differed in one small respect from that on which the experts had prepared their reports.
(4) There had been ample scope for regarding many terms of the lease as onerous. If the judge’s expression of view had been thought too succinct, counsel were obliged to say so and afford her the opportunity, if she thought it appropriate, to spell out what particular terms she thought were onerous. However, that course had not been taken.
(5) The judge had not been wrong in law to take the passing rent as only £1. That was what had been actually passing and nobody had argued that it should be a higher sum. The economic reason for that rent still existed, in that there still appeared to be a liability to spend the money on the property. It was for the judge to weigh the significance of the passing rent, having regard to the arguments actually addressed. It had not been her function to think of points that might have been made and it was not for an appeal judge to entertain a point which ought to have been raised at trial if material.
Edward Hewitt (instructed by VT Law, of Harrow) appeared for the claimant; Catherine Roberts (instructed by London Borough of Newham Legal Services) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read a transcript of Flanders Community Centre v Newham London Borough Council
