Landlords should be mindful of not misrepresenting (or failing to fully disclose) their proposed development plans when issuing a section 25 notice. The recent case of Saturn Leisure v Havering London Borough Council serves as useful reminder.

Havering Council had entered into an agreement with Saturn to manage Romford Ice Arena on a profit-share basis and granted Saturn rights of occupation, but importantly not a tenancy. However, following Saturn becoming insolvent and ceasing to trade, Havering began talks with Morrisons supermarket group, agreeing to sell the site to them on the basis that Saturn did not have tenancy. As a protective measure, Havering served Saturn with a section 25 notice and specified that any application for lease renewal would be opposed. Saturn appealed but eventually agreed to settle the claim for £150,000 and vacated the site.

Saturn then appealed on the basis that their settlement agreement had been obtained on the grounds of a misrepresentation – claiming that Havering had told them that they intended to demolish the site within two months of regaining possession. The Court held that there had been no actionable misrepresentation on the part of Havering, as it was found that Havering had not represented an intention to demolish the site in any circumstance, only in the event that Saturn had succeeded in establishing a tenancy.

Although in the circumstances the Court found in favour of Havering, it is a stark reminder to landlords to be careful about what statements they make to tenants. It should be noted that the landlord in another recent case, Inclusive Technology v Wiliamson, was not so fortunate. Here, the landlord was held liable to compensate the tenant when they did not notify the tenant of the proposed development which was the ground for serving a section 25 notice.