Plaintiff entering into management agreement with company – Company being wound up – Second company replacing old company – Third company subsequently replacing second company – Plaintiff terminating management agreement – Defendants claiming protection as business tenant – Plaintiff serving article 25 notice and entering property – Whether defendants had an arguable case to be in possession – Whether section 25 notice was valid – Defendant entitled to possession
The plaintiff owned a property in which a company, controlled by the third defendant, managed a licensed members’ club. A management agreement existed between the plaintiff and the company under which the fees to be paid were calculated by reference to the turnover of the club. In 1994 the company was wound up and the third defendant acquired a second company which carried on the business of the club. Subsequently the second company was wound up and a third company ran the club, the fourth defendant, which employed the first and second defendants.
In March 1996 the plaintiff served notice on the first company terminating the management agreement. The defendants claimed the tenancy agreement was a sham, implemented at the plaintiff’s request for tax reasons, that in fact it had been intended that the first company was to be tenant of the property at a weekly rent , and therefore that it was entitled to protection as a business tenant. The plaintiff issued proceedings, served a section 25 notice and, on its expiry, entered the property and commenced works. The defendants obtained an ex parte injunction against the plaintiff who applied for an order for possession. The defendants contended that the notice was invalid because it failed to comply with regulations requiring the word ‘important’ to be in capitals and framed in a box , and that in addition notes 5, 6, 7 and 8 had been omitted. The plaintiff contended that the notice had contained the real substance of the information required to enable the defendants to deal in a proper way with ground (b) of the two grounds in the notice and that accordingly the omissions did not render the notice invalid.
Held The plaintiff’s application was dismissed.
1. It had been shown that there was an arguable case that the defendants had a tenancy. Each a time a company had died another had taken its place and it was possible that a lease had been transferred to the defendants by each dying company surrendering its leases and granting it to each new company.
2. The box on the face of the notice was an important requirement whichever ground of the section 25 notice the plaintiff was relying on. The other omissions were significant even in so far as they only related to ground (b). Although the omissions on their own would have been insignificant, together they rendered the notice invalid.
3. The defendants were entitled to be protected in occupation of the building pending the determination of their rights at a subsequent hearing. Therefore they were entitled to an injunction preventing the plaintiff from interfering with their occupation.
Christopher Lewsley (instructed by Gardner Weller & Co) appeared for the plaintiff; Jeffrey Burke QC and Leslie Wise (instructed by H Omar & Co) for the first, second and fourth defendants and (instructed by John Copland & Son) for the third defendant.
