17 October 2023

How To Rent Guide 2023

Gatehouse Chambers


Gatehouse Chambers (formerly Hardwicke) is a leading commercial chambers which specialises in arbitration and all forms of ADR, commercial dispute resolution, construction, insolvency, restructuring and company, insurance, professional liability and property disputes. It also has niche specialisms in clinical negligence and personal injury as well as private client work.
1954 Act opposed lease renewal – breach of covenant- material time – whether a tenant "ought not" to be granted a new lease.
UK Real Estate and Construction
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The 'how to rent guide' was updated 2 October 2023.

Gill v Lees News Ltd[2023] EWCA Civ 1178

1954 Act opposed lease renewal – breach of covenant- material time – whether a tenant "ought not" to be granted a new lease.

The facts

The appellant landlord (T) appealed against the grant of a new tenancy to the respondent tenant (T) pursuant to the Landlord and Tenant Act 1954 Pt II.

In 2018, T made a request for new tenancies under s.26 of the Act. L served counter-notices opposing the grant relying on grounds (a), (b) and (c) on the basis that T had failed to comply with its obligations to keep the premises in a state of repair, had persistently delayed paying rent and that it ought not to be granted new tenancies in view of other substantial breaches.

T claimed that it had remedied the defects in 2017. In fact, the defected had not been remedied until 2021. The judge found at the date when the counter-notices were served, the premises were in substantial disrepair as a result of T's breach of its repairing covenant. T had however remedied the disrepair by the date of the hearing in 2021, although the judge expressed concern at T's conduct. Further, although T had persistently delayed in paying rent, the delays were minor and would not recur. Other breaches were too minor. The judge held that L had not established that T ought not to be granted new tenancies and ordered new tenancies to be granted.

The issues raised on appeal were the material time at which the court should assess the state of repair of the holding and the approach that the court should adopt to the question whether a tenant "ought not" to be granted a new tenancy.

The Appeal

The Court of Appeal dismissed the appeal. The Court confirmed that the wording of s.30(1)(a) did not specifically refer to any particular point in time when the factual precondition should be established. The court should consider the position both at the date of notice and at the date of the hearing. A tenant had a clear incentive to remedy any breaches of the repairing obligations by the date of the hearing but it was too prescriptive to say that breaches at the date of the notice should be ignored if they had been remedied by the date of the hearing.What happened between the date of the notice and the date of the hearing was plainly relevant and in many cases it would be given considerable weight.

When considering the question whether a tenant "ought not" to be granted a new tenancy the court was entitled to take into account future promises. A compartmentalised approach should not be followed and the judge's broad approach was an entirely correct approach in considering the grounds of opposition both singly and cumulatively. The judge appreciated that the overall question was whether it was fair to L to require him to re-enter a legal relationship with T, having regard to T's past behaviour. The judge had correctly treated it as an overall question. The judge was entitled to take into account matters relating to the particular landlord andtenant and the fact that the premises was T's livelihood. A tenant's conduct in litigation could, in an extreme case, be a reason for refusing a new tenancy but it would be rare. In the premises the judge had been entitled to come to his decision.

Lesson learnt

The decision emphasise how extremely fact sensitive the outcome of these type of cases is. The key question is, having head all the evidence and taking into account T's past and assumed future conduct – would it be unfair to L to require him to re-let the premises to T? Fair-minded and rational people can certainly disagree on this point, rendering appeals very difficult.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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