Suppose you want to terminate a commercial lease as you intend to occupy the premises yourself for a specific purpose. Do you have to follow through on that intent?
This is a question that was recently considered by the High Court.
Background
The Tenant occupied restaurant premises near County Hall in London and requested a new tenancy under the Landlord and Tenant Act 1954.
The Landlord opposed this claiming that it intended to occupy the premises for its own business, namely a Zen Bento restaurant. This would be a legitimate reason for terminating a tenancy.
At trial, the Landlord gave an undertaking to the Court that it would begin trading as Zen Bento within a reasonable time following termination of the Tenant’s lease. The Court ordered that the lease be terminated on this basis. However, the Landlord did not open a Zen Bento. Instead, it opened an entirely different restaurant on the premises.
The Tenant claimed deceit by the Landlord, with the termination order obtained by misrepresentation, and sought damages.
Judgment
The High Court had sight of emails sent after its original judgment that evidenced the Landlord had not, in fact, decided which business it intended to operate from the premises. This was contrary to the Landlord’s representations and undertakings to the Court.
Mr Justice Edwin Johnson found for the Tenant and ordered the Landlord to pay compensation. The deceit element of the claim was not upheld on the basis that the Landlord misled the Court, rather than the Tenant.
“In these circumstances it seems to me that the claim in deceit can only succeed if the required elements of deceit… are broad enough to accommodate a situation where;
(1) The defendant makes a false representation to the court.
(2) The defendant knows that the representation is false, alternatively he is reckless as to whether it is true or false.
(3) The defendant intends that the court should act in reliance on it.
(4) The court does act in reliance on the representation and in consequence the claimant suffers loss.”
The level of compensation is to be decided at a later date.
Comment
This decision is a stark reminder of the (costly) consequences of misleading the Court and the importance for landlords of ensuring that intentions are truly ‘settled’ at trial when opposing lease renewals.
For more information about this article or any other aspect of commercial litigation and dispute resolution, contact your Napthens Solicitors in Preston, Liverpool, Kendal, and across the North West today.
