The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 requires landlords to serve warning notices on prospective tenants explaining the implications of agreeing to give up statutory renewal rights, before excluding business leases from the protection of the Landlord and Tenant Act 1954. And, before committing themselves, tenants must sign declarations confirming that they accept the consequences of so doing.
The prescribed form of declaration contains spaces for the insertion of the name of the declarant, his address, the address of the premises and the date on which the term will commence. And the issue in TFS Stores Ltd v Designer Retail Outlet Centres [2021] EWCA Civ 688 was whether the way in which the entry – “for a term commencing on [ ]” – had been completed meant that the declarations relating to six leases were not “in the form, or substantially in the form” prescribed by the legislation.
Had the court concluded that the information provided in the declarations did not satisfy the requirements, the purported exclusion of the 1954 Act would have been void. But, in a decision reflecting the approach adopted in Receiver for the Metropolitan Police District v Palacegate Properties Ltd [2001] Ch 131, the Court of Appeal has upheld the first instance decision that the declarations were valid.
The declarations described terms commencing “on a date to be agreed between the parties”, “on the Access Date under the Agreement for Lease pursuant to which the tenancy of the premises will be entered into”, and “on the date on which the tenancy is granted”. And the tenant had argued that the information provided did not satisfy the requirements because there is a difference between the commencement of a term for the purposes of “computation” and the commencement of a term “in point of interest”. The proprietary interest created by a lease cannot commence earlier than the date of the lease itself. So the declarations were invalid because the parties had identified commencement dates that were not the dates on which the leases actually commenced “in point of interest”.
But the Court of Appeal ruled that there was no good reason to treat the completion of a declaration as an examination question. Despite the use of apparently mandatory language, parliament was not to be taken to have insisted on an interpretation that is contrary to commercial sense. So a declaration will be “in the form or substantially in the form” prescribed if the declaration as a whole fulfils all the essential purposes of the prescribed form.
Paragraph 1 of the prescribed forms serves to identify the lease that is about to be granted by stating the name of the tenant, the address of the premises and the date on which the term will commence. And, if the way in which paragraph 1 as a whole is completed leaves no room for doubt about the lease in question, the essential purpose of the declaration – that the tenant has read the warning notice and accepts that the lease will not have the protection of the 1954 Act – will be fulfilled.
The words “for a term commencing on [ ]” were capable of referring to the date from which a term is calculated as well as the date on which the interest actually commences. And, given the vicissitudes of conveyancing, formulae such as the ones used may well be necessary if the date of a lease is not known in advance.
Allyson Colby is a property law consultant
