When does a lease fail to make satisfactory provision such that it should be varied under section 35 of the Landlord and Tenant Act 1987? This was something that Judge Elizabeth Cooke was asked to consider in London Borough of Camden v Morath and others [2019] UKUT 193 (LC).
The brief facts were that Camden held a lease of part of the Brunswick Centre, a development comprising a mixture of flats, shops and a cinema. It wished to vary the terms of some of its residential sub-leases because some did not contain a provision for it to be reimbursed for all that it paid to the freeholder under the terms of its own lease (whereas others did). It argued that the material leases failed “to make satisfactory provision” with respect to the recovery by one party of the lease from another party to it of the expenditure incurred or to be incurred by it. Consequently, it maintained that the variation should therefore be made under section 35 of the Act. The council’s argument was rejected by the First-tier Tribunal and Camden appealed.
The Upper Tribunal (UT) summarised that the application to vary would not succeed unless it could be shown that the lease “fails to make satisfactory provision” for the various matters in section 35(2) (a)-(g) of the 1987 Act. It noted that “satisfactory provision” was not defined in the statute and considered the cases of Triplerose Ltd v Stride [2019] UKUT 99 (LC) and Cleary v Lakeside Developments Ltd [2011] UKUT 264 (LC) where the meaning of “satisfactory provision” had been explored.
Judge Cooke observed: “What I take from those decisions is that the tribunal will consider whether the wording of the lease as it stands is clear, and whether the term sought to be varied is workable. If it is clear and workable then it is not unsatisfactory. Obviously, the question whether the bargain as it stands works in practice has to be considered on the basis of the evidence in each case. But section 35 does not enable the tribunal to vary a lease on the basis that it imposes unequal burdens, or is expensive or inconvenient.”
The UT accepted that there was a perceived inequity in the bargain made between the parties but found that it was clearly made and workable. There was no evidence to show that the sub-leases were not workable or that the appellant could not meet its contributions. It dismissed the appeal. This case reinforces the limited statutory powers to vary a lease under section 35. It also illustrates the importance of adducing evidence to show that wording which is sought to be varied is unworkable.
Elizabeth Haggerty is a barrister at Lamb Chambers
