It is a rare occurrence that we are treated to a High Court decision regarding a lease renewal under the Landlord & Tenant Act 1954. In fact, you would have to go back to 2013 for the decision of Iceland Foods Limited v Castlebrook Holdings Limited  for the last time a lease renewal decision hit the headlines in the legal press. Nevertheless, earlier this year the case of Flanders Community Centre Limited v Newham London Borough Council  placed lease renewals back in the spotlight in providing a clear warning to parties engaged in lease renewal proceedings to ensure you are armed with well prepared, comprehensive and robust expert evidence at an early stage.
This case concerned the letting of a Community Centre from the London Borough of Newham. When initially let in 2001, the rent demanded under the Lease was just £1 per annum. This was to account for the fact that the tenant had agreed to carry out and fund works to the property, which was in a poor state of repair, estimated to be worth circa £14,000. Further, the tenant agreed to uncommon and onerous terms in the lease involving the tenant being obliged to monitor the membership of the Community Centre entitling the Council to take action if the use or membership of the centre was seen in any way as being discriminatory. In the event that the tenant failed to carry out the necessary works, the rent would increase to £1,200.
Upon expiry of the lease in 2008, the parties were unable to agree a new rental figure. The Landlord argued for a market rent of £16,000 per annum whilst the tenant maintained that the annual rent of £1 should remain. The matter proceeded to trial.
The Court’s approach in such circumstances is to assess the new rent at the figure at which the premises can be let in the open market. The basis of this assessment is often based on the parties’ expert evidence. In this instance, the trial judge felt that the expert evidence put forward by both parties’ experts was inadequate and unreliable. In particular, the Landlord’s expert, in putting forward his comparable evidence, failed to provide details of the terms of the comparable leases. As such, the trial judge was unable to assess whether those rents held any onerous terms such as those included in the Lease for the Community Centre.
The judge held that, in the absence of reliable expert evidence, she would be forced to give regard to the current passing rent of £1 per annum. Accordingly, the Court ordered that the new rent should be £1 per annum.
The London Borough of Newham appealed the decision. The High Court upheld the Courts original decision stating that the Judge was under no obligation to carry out his or her own analysis of market rent, but to make a decision on the basis of the evidence presented. Equally, if the evidence presented is thought to be inadequate and unreliable, a decision has to be made as to how much weight to be given to such evidence.
The outcome of this case serves as a stark warning of the importance of good preparation and strong, reliable and comprehensive expert evidence. Simply put, the Court can only make a decision based on the information placed before it. As such, it is imperative that you put yourself in as strong a position as possible so as to try and obtain a positive outcome.