by Mark Pawlowski
The machinery contained in Part II of the Landlord and Tenant Act 1954 comprises a complicated structure of notices and counternotices which must be served by either the landlord or the tenant in order to bring about the effective termination or renewal of a commercial lease in compliance with the Act. In addition, in the latter, it is incumbent upon the tenant to make the necessary application to the court, within the prescribed time-limits, for an order granting a new tenancy which, in turn, may or may not be the subject of successful opposition by the landlord upon the appropriate statutory grounds. This article discusses the various procedural requirements in relation to renewal notices and applications under the 1954 Act and attempts to highlight some of the pitfalls with particular reference to the growing body of case law in this field.
Requirements for effective section 25 notice of termination
In order to trigger the statutory machinery for termination under Part II of the 1954 Act, the landlord is obliged to serve a notice of termination upon his business tenant in accordance with section 25 and this must be in the prescribed form or “substantially to the like effect”. In Sun Alliance & London Assurance Co Ltd v Hayman [5] 1 WLR 177, the landlord served a section 25 notice on the tenant in the form prescribed by the 1954 regulations instead of the then current 1969 regulations. The material difference between the forms was that the time allowed the tenant for giving notice and applying for a new tenancy ran in the old form from the date of receiving the notice and in the new form from the giving of the notice. The Court of Appeal held that the notice was valid, since there was no material difference between the two forms of notice, as the times of giving and of receipt of such notices were the same, namely, the time of service.
The decision in Hayman was followed in British Railways Board v A J A Smith Transport Ltd (No 2) (1981) 259 EG 766, where the court upheld the validity of a section 25 notice which was in an out-of-date 1957 form (containing only one material difference from the new form as to the county court jurisdiction) as being “substantially to the like effect” as the prescribed form: see also Bond v Graham (1975) 236 EG 563; Snook v Schofield (1975) 234 EG 197 and Morris v Patel (1987) 281 EG 419.
The landlord’s notice must also specify the date at which the existing tenancy is to come to an end. The notice itself must be given not more than 12 months and not less than six months before the termination date specified in the notice, which date must not be earlier than the date at which the tenancy would expire or could be brought to an end by the landlord at common law. For this purpose, tenancies are divided into two broad categories, namely:
(a) periodic tenancies (including tenancies containing a break clause: see Scholl Manufacturing Co Ltd v Clifton (Slim-Line) Ltd [7] Ch 41), which, apart from the Act, could have been brought to an end by notice to quit, when the specified date must not be earlier than the earliest date on which the tenancy could have been so terminated and
(b) any other tenancy including a fixed term, where the specified date must not be earlier than the date when the tenancy would have come to an end by effluxion of time.
In Re Crowburst Park [4] 1 WLR 583, Goulding J held that it was permissible for the landlord to specify the last date of the tenancy as the date of termination (ie up to midnight of that day). In Lewis v MTC (Cars) Ltd [1975] 1 WLR 457, however, the Court of Appeal held that the “not earlier than” rule in section 25 was irrelevant where a fixed term had expired and the tenancy was being continued under Part II of the 1954 Act.
Moreover, a periodic tenancy can be effectively terminated by a section 25 notice even though the specified termination date does not fall on the first or last day of a period as would be required at common law: Commercial Properties Ltd v Wood [8] 1 QB 15. In that case, the Court of Appeal emphasised that, since the 1954 Act had substituted a statutory mode of termination of business tenancies, any contractual method of termination was not relevant and, there being nothing in Part II requiring a statutory notice of termination to expire on the anniversary of the tenancy, the landlord’s notice was valid despite specifying a date outside the anniversary date of the tenancy.
Finally, in relation to a tenancy with a break clause, it has been held that a notice complying with section 25 (by specifying a date not earlier than the date in the break clause) was effective even though it made no specific reference to the break clause: Scholl Manufacturing Co Ltd v Clifton (Slim-Line) Ltd (supra).
In addition to the above matters, the landlord’s notice under section 25 must require the tenant to notify the landlord in writing within two months whether or not the tenant will be willing to give up possession at the date specified in the notice and must state whether the landlord would oppose a tenant’s application to the court for a new tenancy and, if so, on which of the seven grounds specified in section 30(1) of the Act.
It is noteworthy that there is no provision in the Act (or elsewhere) for the amendment of a landlord’s notice and accordingly a landlord (and his successors) cannot depart from the grounds of opposition stated in the notice: Hutchinson v Lamberth (1984) 270 EG 545 and Nursey v P Currie (Dartford) Ltd [9] 1 WLR 273. Conversely, the landlord’s successors may adopt the grounds stated in the notice: Marks v British Waterways Board [1963] 1 WLR 1008. Furthermore, the withdrawal of a notice with a view to serving a fresh notice stating different grounds seems to be excluded by section 24(1) of the Act, although there is no direct authority on this point to date.
In the light of the foregoing, therefore, a careful statement of the grounds relied upon by the landlord is, clearly, advisable notwithstanding that minor slips are excusable by the courts provided that the tenant has a fair warning of the case he has to answer. For example, in Barclays Bank Ltd v Ascott [1] 1 WLR 717, the landlords’ notice stated that they would not oppose the tenant’s application to the court for a new tenancy provided that the tenant found a guarantor for the payment of rent and observance of the tenant’s covenants in relation to any such new tenancy. Barry J held that the notice was invalid, as no specified grounds for opposition under the 1954 Act had been stated. In the course of his judgment, he said:
It is clear from the authorities . . . that the construction of this notice should be a liberal one, and provided that the notice gives the real substance of the information required, then mere omission of certain details or the failure to embody in the notice the full provisions of the section of the Act referred to will not in fact invalidate the notice.
In Carradine Properties Ltd v Aslam [6] 1 WLR 442, a lease for a 21-year term from September 27 1968 provided for its earlier determination by either party at the end of the first seven or 14 years on 12 months’ previous notice in writing. A notice by the landlords, dated September 6 1974, served on the tenant gave notice to determine the term on September 27 1973. The date stated in the notice should have been September 27 1975. The Court of Appeal treated the giving of a date past for termination of the lease as a slip which would have been obvious to a reasonable tenant reading the notice and knowing the terms of the lease and, accordingly, the notice was held valid: see also Germax Securities Ltd v Spiegal (1978) 37 P&CR 204, where the Court of Appeal held valid a section 25 notice giving the year of termination as 1976 instead of 1977 on the basis that no reasonably minded tenant would have been misled.
The test established in Carradine was applied in Safeway Food Stores Ltd v Morris (1980) 254 EG 1091, where a landlord’s notice was held to be valid despite the absence of a reference to a garage included in the demise: see also Herongrove Ltd v Wates City of London Properties plc (1988) 24 EG 108, where the notice did not pass the test.
In Philipson-Stow v Trevor Square Ltd (1980) 257 EG 1262, the landlord served a section 25 notice on the tenant stating its intention to carry out substantial work of redecoration on the holding and thus opposing the grant of a new tenancy. The tenant argued that no ground within section 30(1) had been specified in the notice and asked for a declaration that the notice was bad. Goulding J held the notice good, since it was obviously intended to cite the ground in section 30(1)(f) as to demolition or reconstruction although the word “redecoration” did not appear in the statute. In the course of his judgment, the learned judge adopted the view taken by the Court of Appeal in Marks v British Waterways Board (supra), that the landlord’s notice was in the nature of a pleading which came for proof at the date of the hearing and was sufficient so long as it gave notice to the tenant of the case he had to meet, was not deceptive or otherwise misleading and let the tenant know on what grounds his application for a new tenancy, if made, would be resisted.
The reader is also referred to the following cases in this field: Tegerdine v Brooks (1977) 36 P&CR 261; Sevenarts Ltd v Busvine [8] 1 WLR 1929; Housleys Ltd v Bloomer-Holt Ltd [1966] 1 WLR 1244; Sunrose Ltd v Gould [1962] 1 WLR 20; McMullen v Great Southern Cemetery & Crematorium Co (1958) 172 EG 855; and Biles v Caesar [1957] 1 WLR 156.
In Stidolph v American School in London Educational Trust Ltd (1969) 20 P&CR 802, solicitors for the landlord sent a section 25 notice by post to the tenant, but they failed to sign the notice as required. They did, however, sign an accompanying letter, which was held to cure the defect in the notice. The relevant regulations require the name and address of the landlord to be stated on the prescribed form of notice and, if this is omitted, the notice will be invalid: Morrow v Nadeem (1986) 279 EG 1083, where the notice did not mention the name of the then landlord but implied that the landlord was one Alfred Danzing, as the notices were signed by a firm of solicitors described as solicitors and agents for Alfred Danzing. This person had at no time been the landlord but was the controlling shareholder in the company which was the landlord at the date of the notice.
Where two premises are demised to a single tenant and, as a matter of construction, the lease creates a single tenancy and not two tenancies, the service of separate notices under section 25 in respect of each premises will be invalid: Dodson Bull Carpet Co Ltd v City of London Corporation [5] 1 WLR 781; Southport Old Links Ltd v Naylor (1984) 273 EG 767 and Tropis Shipping Co Ltd v Ibex Property Corporation Ltd (1967) EGD 433, but see Moss v Mobil Oil Co Ltd [1988] 06 EG 109 where, as a matter of construction, the lease created two separate demises and the notice was, accordingly, held valid.
Tenant’s counternotice
There is no prescribed form for the tenant’s counternotice under the 1954 Act and, accordingly, a simple letter notifying the landlord whether or not the tenant will be willing to give up possession at the date specified in the notice will suffice: see Smale v Meakers Ltd (1957) 169 EG 287, where a request for an extension of the lease was held sufficient. Moreover, a course of conduct can, in certain circumstances, amount to an effective counternotice under section 29(2) of the Act. For example, in Lewington v Trustees of the Society for the Protection of Ancient Buildings (1983) 266 EG 997, the tenant did not give a notice stating her unwillingness to give up possession but her solicitors and the landlords’ solicitors had for several months been in correspondence about the sale to her of the freehold of the property. A draft contract and conveyance had been approved by the tenant’s solicitors and her signed part of the contract and a cheque for the deposit had been sent to the landlords’ solicitors to be held to the former’s order. The Court of Appeal had no difficulty in holding that the correspondence had made it clear that the tenant was unwilling to give up possession. In the course of his judgment, Walker LJ said:
This particular section, unlike other sections of the Landlord and Tenant Act 1954, does not require a particular form of notice. Some of the provisions of the Act require strict compliance with form, but in this particular case the only thing which is required is that the tenant should, in writing, notify the landlords whether or not she is willing or unwilling to give up possession.
The case of Lewington was distinguished in Mehmet v Dawson (1983) 270 EG 139, where the tenant wrote a letter to the landlord indicating his willingness to discuss with him the purchase of the freehold of the demised premises. Subsequently, during a discussion between the parties, the landlord mentioned a price for the freehold and the tenant said it was too much. The Court of Appeal held that the tenant’s letter did not constitute a valid counternotice, since it was consistent with the tenant’s wishing to retain possession only if he could do so as a freeholder. As to the subsequent discussion between the parties, this could not be construed as a waiver by the landlord of the notice, since he had made it clear that he wanted the procedure under the 1954 Act to go ahead before discussing the purchase of the freehold.
In Taylor v Michel (1960) CLY 1739, the landlord served on the tenant a section 25 notice of termination in January 1960, which was formally acknowledged in writing. There was no further correspondence until March 1960, when the tenant’s solicitor wrote to the landlord’s solicitors informing them that his client “would like if possible to negotiate for a lease on the following terms . . .” and that “she would, if possible, like to settle this matter to avoid any further worry”. It was held that the letter of March was not a sufficiently certain notification of the tenant’s unwillingness to give up possession to satisfy the requirements of the 1954 Act.
The tenant’s counternotice must, of course, be served within two months of the landlord’s giving notice under section 25 as a condition precedent to the tenant’s application for a new tenancy under section 24: Chiswell v Griffon Land & Estates Ltd [5] 1 WLR 1181, where it was held that if the tenant could not prove service of the counternotice within two months of the receipt of the section 25 notice, he lost his right to apply for a new tenancy. Moreover, a counternotice that expresses willingness to give up possession once served is irrevocable: In re 14 Grafton Street, London W1 [1971] Ch 935.
Requirements for effective section 26 request for new tenancy
Not all business tenants are given the right to serve a request under the 1954 Act. Only those tenants whose current tenancy was granted for either a term of years certain exceeding one year (whether or not continued under section 24) or a term of years certain and thereafter from year to year are given this privilege: see In re Land and Premises at Liss, Hants [1] Ch 986, for the meaning of “term of years certain” in this context. It is evident, therefore, that yearly and other forms of periodic tenancies and fixed-term tenancies of less than one year fall outside section 26, although this does not mean that tenants falling within this category are without protection under Part II of the Act, since they continue to be entitled to serve a counternotice in response to a landlord’s notice of termination and to apply for a new tenancy in accordance with section 29. The Act, therefore, merely prohibits these categories of tenant from initiating the renewal machinery in the first instance.
The request must be for a tenancy commencing (a) not more than 12 and not less than six months after making the request and (b) not earlier than the expiry date of the current tenancy or the earliest date on which the current tenancy could be brought to an end by notice to quit given by the tenant. Furthermore, the request must be in the prescribed form and set out the tenant’s proposals as to terms of the new tenancy, including the property comprised in the new tenancy, rent and duration of term: see Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd [6] 1 QB 529 on proposal as to the duration of the new tenancy asked for. Once a tenant has made a valid request for a new tenancy specifying the commencement date of the new tenancy, he cannot subsequently withdraw it and serve a fresh request: Polyviou v Seeley [1980] 1 WLR 55, where it was held that if a tenant who made a request for a new tenancy did not make an application to the court within the two-month time-limit, his existing tenancy automatically came to an end on the date specified in his request (as being the date for the commencement of the proposed new tenancy) and he could not withdraw the request and make another.
The machinery of Part II of the Act does not permit the making of a request after the landlord has served a section 25 notice of termination or after the tenant has served a notice to quit under section 27 of the Act. The effect of the request is essentially twofold, namely, (a) to give the landlord two months within which to serve a notice of opposition to any application for any new tenancy on one or more of the grounds specified in section 30(1) and (b) to give the tenant the right to apply for a new tenancy within the time-limit specified in section 29, failing which his tenancy terminates on the day before the date specified in the request.
Service of notices
For the purposes of Part II of the Act, the various notices referred to above are served between “the competent landlord” (being either the freeholder or, where there is a mesne landlord(s) and a subtenant(s), the first landlord up the ladder of tenancies whose interest will not expire within 14 months or less by effluxion of time) and the occupying business tenant. Complications arise where the holding is occupied by a subtenant. In that case, where the whole of the holding has been sublet and the subtenant meets the requirements of section 23, the competent landlord will serve his section 25 notice on the subtenant, bypassing the mesne landlord. Where, however, the mesne landlord is himself in possession and has sublet only part of the premises to a subtenant, the competent landlord may serve his section 25 notice on the mesne landlord so as to include the whole of the original demise in a new tenancy. In Cornish v Brook Green Laundry Ltd [9] 1 QB 394, the Court of Appeal held that a business tenant whose tenancy was statutorily continuing under Part II of the 1954 Act could be the competent landlord vis a vis his subtenant: see also Bowes-Lyon v Green [1963] AC 420.
Section 23 of the Landlord and Tenant Act 1927 provides that any notice or request under the 1954 Act is to be served either personally or by leaving it at the last known place of abode in England and Wales of the person to be served or by sending it through the post in a registered letter addressed to him there and, in the case of a notice to a landlord, his duly authorised agent. The phrase “place of abode” in section 23 is not confined to the residence of the person concerned but will include his business address: Price v West London Investment Building Society Ltd [4] 1 WLR 616 and Italica Holdings SA v Bayadea (1983) 273 EG 888. Notices can be sent by the ordinary post, but it is preferable to use the recorded delivery service, which can also be used as an alternative to the registered post: see the Recorded Delivery Service Act 1962. It should be noted also that if the registered or recorded delivery post is used, the presumption of delivery cannot be rebutted, whereas this is not the case if the ordinary post is used: Italica Holdings SA v Bayadea (supra) and Chiswell v Griffon Land & Estates Ltd (supra).
In Stylo Shoes Ltd v Prices Tailors Ltd [0] Ch 396, the tenants of business premises notified the landlords that their registered office and principal place of business had been transferred from Huddersfield to Leeds. Subsequently, the landlords served a section 25 notice on the tenants by sending it registered post to the tenants’ former address in Huddersfield. The letter was redirected to Leeds and there received by the tenants. It was held that there had been a valid service of the notice, since the requirements of the Act were satisfied if a letter containing the notice was delivered to and in fact received by the person to whom the notice was given. In Hogg Bullimore & Co v Co-operative Insurance Society Ltd (1984) 50 P&CR 105, the landlord served a section 25 notice on the tenant on April 2 1984 and purported to terminate the tenant’s tenancy on October 2 1984. Section 25(2) required that the notice should be given not less than six months before the date of termination specified therein. The court held that the notice was not required to be of clear six months’ length and the notice served by the landlord was valid.
Where the tenant is bankrupt or in liquidation, the section 25 notice should be served on the trustee in bankruptcy or liquidator respectively: Gatwick Investments v Radivojevc [8] CLY 1768.
Waiver of notices
It is clear that a party may be estopped from denying the validity of a notice. For example, in Bristol Cars Ltd v RKH (Hotels) Ltd (1979) 38 P&CR 411, the tenant gave a notice requesting a new tenancy under section 26 of the Act, but the notice was defective because the date of commencement was too early to be capable of inclusion in the notice. Neither party noticed the mistake. The landlords indicated that they would not oppose the new tenancy but later were advised that the tenant’s request was bad and they applied for the tenant’s application to be struck out. The Court of Appeal held that the landlords were estopped by their conduct from denying the validity of the tenant’s request and, alternatively, their application for an interim rent (which was ultimately not pursued) amounted to a waiver of any defence in the tenant’s notice. The Bristol Cars case was followed in British Railways Board v A J A Smith (No 2) (supra), where a tenant was held to be estopped from disputing the validity of a landlord’s section 25 notice which was defective in point of form.
Tenant’s application for new tenancy
The tenant’s right to apply for a new tenancy depends on the fulfilment of certain conditions. First, the service of a section 25 notice or section 26 request on the part of the landlord or tenant, respectively. Second, where the application is consequent upon a section 25 notice, the tenant must have served a counternotice notifying the landlord within two months that he was not willing to give up possession. Third, the application itself must be made not less than two months and not more than four months after the giving of the section 25 notice or section 26 request, respectively: see section 29(3). A business tenant who, having requested a new tenancy, fails to apply to the court for such new tenancy within the time-limits provided by the Act cannot later make such an application out of time: Meah v Sector Properties Ltd [4] 1 WLR 547. The court, however, does have power to enlarge the time available for service of a tenant’s application: Ali v Knight (1984) 272 EG 1165 relating to the procedure in the county court. In the High Court, the position appears to be that, although a discretion to extend the time-limit does exist under RSC Ord 97, r6, nevertheless it will be exercised only in exceptional circumstances: Joan Barrie v G U S Property Management Ltd (1981) 259 EG 628. An application for a new tenancy made out of time is, nevertheless, “an application” within the meaning of the 1954 Act, so that the tenancy will continue until three months after proceedings on it are finally disposed of: Zenith Investments (Torquay) Ltd v Kammins Ballrooms Co Ltd (No 2) [1971] 1 WLR 1751.
The word “month” in section 29(3) of the Act means calendar month, so that the period of a month or months ends upon the corresponding date in the appropriate subsequent month. In Dodds v Walker [1] 1 WLR 1027, the landlord gave notice to the tenant to determine his tenancy on September 30 1978. The tenant applied on January 31 1979 (four months after the giving of the landlord’s notice) to the court and the question in issue was whether the application was made one day too late. The House of Lords held that the “corresponding date” rule applied, so that in calculating the period which had elapsed after the giving of the landlord’s notice and excluding that day, the relevant period was the specified number of months thereafter which ended on the corresponding day of the appropriate subsequent month. Accordingly, the tenant had made his application out of time. The phrase “not less than two months” in section 29(3) has also been subject to judicial scrutiny in E J Riley Investments Ltd v Eurostile Holdings Ltd (1985) 275 EG 716, where the landlord had given notice under section 25 on March 23 1983 and the tenant applied for a new tenancy by a notice dated May 22 1983 but served on the landlord on May 23 1983. The Court of Appeal held that the tenant had made his application exactly two months after the service of the landlord’s notice. Since the phrase “not less than two months” was not to be construed as meaning “more than two months”, a date which was simply two months exactly could not be said to be more than two months and, therefore, the tenant’s application was not premature.
As with notices and requests, the time-limit imposed under the Act in respect of the tenant’s application to the court is capable of waiver by the landlord: see Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1] AC 850, where on the facts the landlords were held not to have waived their right to object that the application was bad by merely filing a reply to a premature application, and Stevens & Cutting Ltd v Anderson [1989] EGCS 114.
Where there are joint business tenants, the general rule is that all the tenants must be parties to the application and notice must be served by them jointly: Jacobs v Chaudburi [8] 2 QB 470. However, there are statutory exceptions to this general rule contained in section 41A of the 1954 Act in relation to joint tenants carrying on the business in partnership. In Harris v Black (1983) 46 P&CR 366, the Court of Appeal held that the court had jurisdiction to make an order compelling a co-tenant to serve a counternotice and join in an application for a new tenancy: see also Leckhampton Dairies Ltd v Artus Whitfield Ltd (1986) 130 SJ 225 in relation to a section 25 notice served by only one co-owner, who was held not to be in breach of trust for so doing.
It is possible under Ord 20 r 5 of the Rules of the Supreme Court to correct a mistake in the name of the landlord in a tenant’s application for a new tenancy where the mistake has not been misleading or caused injustice: Evans Constructions Co Ltd v Charrington & Co Ltd [3] QB 810, where the tenant mistakenly named as landlord Charrington & Co Ltd, which had assigned the reversion under the lease in question to Bass Holdings Ltd, a company within the same group: but see Beardmore Motors Ltd v Birch Bros (Proprietors) Ltd [1959] Ch 298, where an amendment was not allowed. The Court also has jurisdiction to allow a tenant to amend, after expiry of the four-month period, the proposals contained in his application for a new tenancy made within that period: G Orlik (Meat Products) Ltd v Hastings & Thanet Building Society (1974) 29 P&CR 126 and Bar v Pathwood Investments Ltd (1987) 282 EG 1538. Leave to amend is usually given subject to there being no prejudice to the other party and to the party seeking the amendment bearing the costs.
In Williams v Hillcroft Garage Ltd (1971) 22 P&CR 402, the tenant made an application to the court for a new tenancy in the prescribed form but failed to state specifically the rent, length of term and other conditions proposed. It was held that the defect was formal only and did not render the application a nullity. The landlord’s proper course in such circumstances would have been to ask for the particulars and then apply for the tenant’s application to be struck out in default.
In Curtis v Galgary Investments Ltd (1983) 268 EG 1199, the tenant leased the ground floors and basement of two adjoining premises for business purposes from the landlord. One business was carried on there. The two leases were identical and the two premises were rated as one hereditament. The landlord served two notices determining the tenancies and the tenant served two counternotices. However, the tenant made only one application to the court to renew both tenancies. The Court of Appeal held that there was nothing in the 1954 Act or in the rules to prohibit a tenant’s application from containing applications in respect of more than one separate tenancy provided the application was clearly framed in respect of each of its parts.
The tenant must, of course, commence his application against the person who is the “competent landlord” for the time being (see earlier) and, therefore, if the respondent to the tenant’s application ceases to be the competent landlord after proceedings are commenced, the new competent landlord must be joined as a party: Rene Claro (Haute Coiffure) Ltd v Halle Concerts Society [9] 1 WLR 909 and Meah v Mouskos [1964] 2 QB 23. In some cases, it may not be possible to substitute the new competent landlord for the respondent: Shelley v United Artists Corp Ltd [1989] 08 EG 115.
It is common practice for the validity of the landlord’s grounds of opposition to a new tenancy to be determined as a preliminary issue in order to save time and expense: Dutch Oven Ltd v Egham Estates & Investment Co Ltd [8] 1 WLR 1483. The reader is referred to the County Court Rules Ord 43 and the Rules of Supreme Court Ord 97 for details as to the method of proceeding in the county court and High Court, respectively, on an application for a new tenancy under the 1954 Act.
Costs
In Decca Navigator Co Ltd v Greater London Council [4] 1 WLR 748, the Court of Appeal intimated that, on an application for a new tenancy under the 1954 Act, the court had a discretion to make such order as to costs as it thought just in the circumstances and that the former practice of making no order as to costs was no longer appropriate. The usual rule is for costs to “follow the event”, although it is also common for each party to bear its own costs. In Demag Industrial Equipment Ltd v Canada Dry (UK) Ltd [1969] 1 WLR 985, Pennycuick J held that a landlord who withdraws opposition to a new tenancy of business premises after the tenant’s application must pay the costs of the tenant.
Moreover, a covenant in a business tenancy for the tenant to pay the landlord’s legal costs and expenses on an application by the tenant for a new tenancy is void as being the imposition of a penalty under section 38(1) of the 1954 Act: Stevenson & Rush (Holdings) Ltd v Langdon (1979) 38 P&CR 208. For a detailed discussion of the exercise of the court’s discretion as to costs, the reader is referred to Woodfall Landlord and Tenant (28th ed) para 2-0742.
Mark Pawlowski LLB (Hons) BCL (Oxon), barrister, is senior lecturer in law, School of Surveying, Thames Polytechnic. He is indebted to his colleagues, Michael James and Susan Lloyd, who were kind enough to read a draft of this article and provide helpful comments.
