Neale was Witney’s landlord of nightclub premises. In 2006, following the expiry of Witney’s lease, Neale served a notice under s.25 of the Landlord and Tenant Act 1954 to determine the lease on 25 June 2007. Whitney applied for a new tenancy under s.24, which Neale opposed. Whitney remained in occupation of the premises until 2010 when the Court dismissed Whitney’s application and the interim tenancy expired on 14 June 2010. The Court was then asked to determine the level of interim rent payable between 25 June 2007 and 14 June 2010.

The passing rent for the premises was £43,000 pa. The judge at trial found, on the basis of expert evidence, that the market rent would be £47,650 pa on a floor area basis but £41,552 pa if based upon the profitability of the business. Where, as in this case, the tenancy was not renewed, section 24D of the Landlord and Tenant Act 1954 provides that the interim rent payable is to be the rent which it is “reasonable” for the tenant to pay. In particular, the Court is to have regard to the rent payable under the old tenancy and the rent payable under any sub-tenancy of part. The Court must also assume that the market rent is that which would be payable under a tenancy from year to year.  

The trial judge considered that, if the tenancy were from year to year, the tenant would have no security of tenure and no incentive to build up his business. Therefore the market rent should be discounted by a substantial amount, perhaps as much as 25%. Notwithstanding this finding, the judge found that a “reasonable” interim rent would be £43,000 pa (the same as the passing rent). Witney appealed.  

The Court of Appeal upheld the trial judge’s decision. It was clear from the judge’s reasoning that he had given consideration to both the passing rent and the rent which would have been payable under a tenancy from year to year, as directed by the Landlord and Tenant Act 1954. Beyond that, it was a matter for the judge’s discretion to determine the weight to be apportioned to these factors and arrive at a “reasonable” rent. The judge was entitled to reach the conclusion he did and the Court of Appeal was not prepared to interfere with that discretion of his discretion.