Landlord and tenant – Business premises – Security of tenure – Waiver – Appellant tenant making statutory declarations excluding statutory security of tenure provisions for leases – Declarations failing correctly to specify commencement date of proposed tenancies – Appellant claiming tenancies not validly excluded from protection of Landlord and Tenant Act 1954 – High Court dismissing claims – Appellant appealing – Whether statutory declarations valid – Whether valid agreements excluding tenancies of business premises from protection of Part II of 1954 Act – Appeal dismissed
The appellant was the tenant, either the original tenant or by assignment, of six leases at certain retail outlet premises of which the respondents were the current registered landlords. In each case, before entering into the lease agreement, the landlord served a warning notice and the appellant executed a statutory declaration under section 38A of the Landlord and Tenant Act 1954, so as to exclude the security of tenure protections contained in sections 24-28 of Part II of the 1954 Act. Two different formulae were used. One in respect of two of the tenancies and one in respect of four of the tenancies. They included phrases such as “for a term commencing on a date to be agreed between the parties” and “for a term commencing on the date on which the tenancy is granted”. The respondent landlords demanded possession of the premises following the expiry of the leases.
The appellant brought proceedings claiming that the tenancies were not validly excluded from the protection of the 1954 Act. It contended, amongst other things, that in respect of two of the leases, the statutory declarations had not been in the prescribed form of the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, thereby rendering the exclusion agreements void. Further, the statutory declarations regarding each of the six tenancies were defective and did not comply with the prescribed procedure because they failed to specify correctly the commencement date of the term of the proposed tenancy.
The High Court held that the leases had been successfully contracted out of the security of tenure provisions of the 1954 Act: [2019] EWHC 1363 (Ch); [2019] EGLR 32. The appellant appealed.
Held: The appeal was dismissed.
(1) A declaration would be in the form, or substantially in the form, prescribed if the declaration as a whole fulfilled all the essential purposes of the prescribed form. Despite the use of apparently mandatory language, parliament was not to be taken to have insisted on an interpretation which was contrary to commercial sense. It was relevant that the declaration was to be completed by the tenant, who was therefore responsible for deciding how to fill in the form. No doubt the landlord would in practice wish to satisfy itself that the declaration has been properly completed, and might sometimes produce a draft for the tenant’s signature, but it was the tenant’s responsibility to read the warning notice and, if necessary with professional advice, to ensure that it understood and accepted the consequences of entering into an agreement without the statutory protection of security of tenure. When the landlord had done all that it was required to do by serving a warning notice in proper form, it was an unattractive submission for a tenant to say that it had filled in the blanks in the declaration in a way which invalidated the parties’ agreement. What mattered was whether the declaration fulfilled the statutory purposes: Pollen Estate Trustee Co Ltd v Revenue & Customs Commissioners [2013] EWCA Civ 753, [2013] PLSCS 146 and Chiltern Railway Co v Patel [2008] EWCA Civ 178; [2008] 2 EGLR 33 followed.
(2) The essential purposes of the declaration as a whole were clear. The tenant should acknowledge that: (i) the proposed lease excluded the security of tenure provisions of the 1954 Act; (ii) the landlord had served a warning notice in proper form; and (iii) the tenant had read the warning notice and accepted the consequences of entering into the lease. Those matters, which were the substance of the declaration, were dealt with in paras 2 to 4. Paragraph 1 of the declaration served to identify the lease by stating the name of the tenant, the address of the premises and the date on which the term would commence. If in the circumstances the way in which para 1 as a whole was completed left no room for doubt as to the lease which was the subject of the declaration, its essential purpose had been fulfilled.
The words “for a term commencing on…” were capable of referring to the date from which the term was calculated as well as the date when the interest under the lease commenced. To interpret those words as referring only to the latter date would introduce undue technicality as well as leading to practical problems which parliament could not have intended; either date would do. Further, the purpose of stating the commencement date could not have been to ensure that the declaration was made before the lease was entered into or before the tenant became contractually bound to enter into the lease. It would be obvious from comparing the date on the declaration with the date on the lease (or agreement for lease) whether it had been entered into before that occurred. There was no reason that the declaration should not be completed by inserting a formula (such as “from the access date…”) or even by words such as “from a date to be agreed”, provided that the declaration read as a whole was sufficient to identify the lease in question. Some such formula might be necessary if the date of the lease (or agreement for lease) was not known in advance. On the other hand, the date (or event) from which the term was to be calculated might well be known.
(3) The judge was right to conclude that the declarations in issue in this case were in the form or substantially in the form prescribed by the legislation. There was no doubt which leases they referred to and in each case the declaration made clear that the tenant had received a warning notice and understood and accepted that the lease would have no security of tenure. Accordingly, the declarations made by the appellant in the present case were in the form or substantially in the form prescribed and the parties validly contracted out of the security of tenure provisions of Part II of the 1954 Act.
Joanne Wicks QC and Mark Galtrey (instructed by DLA Piper UK LLP) appeared for the appellant; Wayne Clark and Joseph Ollech (instructed by Shoosmiths LLP) appeared for the respondents.
Eileen O’Grady, barrister
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