Business lease – Application for new tenancy – Claimant landlord making application under section 24(1) of Landlord and Tenant Act 1954 – Defendant tenant notifying court that not requiring new tenancy — Section 29(5) of 1954 Act – Whether claimant’s application dismissed as at date of defendant’s notification – Whether further application for dismissal required – Whether defendant liable for rent for period between notification of court and dismissal of application – Declaration given for defendant
The claimant was the landlord and the defendant bank was the tenant of business premises let at a rent of £1m pa for a term expiring in March 2008. The claimant served a notice, under section 25 of the Landlord and Tenant Act 1954, not opposing the grant of a new tenancy and, in September 2007, applied to the court for the grant of such a tenancy pursuant to section 24(1). The defendant acknowledged service of that claim and applied for the determination of an interim rent. However, in April 2009 it informed the claimant that it no longer wanted to take a new tenancy and that it was filing a notice of discontinuance to terminate the proceedings for a new tenancy. On the same day, it filed the notice at court, enclosing its letter to the claimant and stating its reliance on section 29(5) of the 1954 Act, by which the court was required to dismiss an application by a landlord under section 24(1) if the tenant informed the court that it did not want a new tenancy.
The defendant considered that, as a result of its April notice, the tenancy would determine in July 2009, that being three months after the final disposal of the application as provided by section 64. The claimant disagreed; it considered that the defendant was obliged to obtain an order of the court dismissing the proceedings and that the tenancy would determine only after that was done, with the defendant remaining liable for rent in the meantime.
The defendant applied to the court for a declaration that the claim for a new tenancy had been dismissed in April 2009. An order dismissing the claim was made by agreement in June 2009, without prejudice to the defendant’s contentions. The question of the dismissal date was then heard by a judge of the Chancery List.
Held: The declaration was given for the defendant.
(1) Under section 29(5) of the 1954 Act, it was entirely a matter for the tenant, if it wished, to inform the court that it did not want a new tenancy. If it did so, the landlord’s application for a new tenancy was automatically dismissed; the court had no discretion to refuse to dismiss the application. The court was under a positive statutory obligation to dismiss the application for a new tenancy forthwith on receipt of the notification and neither party had to make any further application to obtain such an order. Nor was the making of an order dependent on the tenant having notified the landlord of its decision. However, it did not do so and the landlord continued to prepare for trial and instruct expensive experts, the tenant could be liable to pay any costs arising from those instructions.
(2) The statute presupposed that the court should dismiss the application for a new tenancy immediately on receipt of the tenant’s notice. The relevant date for that purpose was the date on which the tenant’s letter was received at court. However, there would usually be a delay between the receipt of the tenant’s letter by court staff and the matter coming before a judge for dismissal. It would be unjust if the tenant’s liability for rent continued during that period of delay. Accordingly, when considering the matter, the judge should declare that the application was dismissed as of the date of receipt of the letter, so far as it sought the grant of a new tenancy. He should proceed to make the necessary orders or directions concerning costs and interim rent. In the instant case, the defendant was entitled to the declaration sought.
(3) It was not appropriate for a tenant to serve a notice of discontinuance in respect of the landlord’s proceedings. The costs consequences of litigation following a notice of discontinuance were automatic in the absence of a court order, otherwise, as in the case of section 29(5), the automatic dismissal would be confined to the application for the new tenancy and any question of costs or interim rent would remain to be decided by the judge: Lay v Drexler [2007] EWCA Civ 464; [2007] 2 EGLR 46; [2007] 31 EG 82 distinguished. However, it was likely that the tenant would be ordered to pay the landlord’s costs since the proceedings, although commenced by the landlord, were those in which the tenant sought a new tenancy; if it did not want require a new tenancy, it could have said so earlier.
Nicholas Taggart (instructed by Maxwell Windward) appeared for the claimant; Katharine Holland (instructed by Eversheds LLP, of Birmingham) appeared for the defendant.
Sally Dobson, barrister
