Over Taylor Biggs

A Section 25 Notice served by a landlord to bring a business tenancy to an end may either to propose terms for a new lease or oppose the renewal of a lease entirely. Opposition to a new lease under the 1954 Act can be given for various reasons, including a continual delay in paying rent or the tenant's failure to maintain or repair the property. Another ground is the landlord's intention to demolish or reconstruct the property.

In this instance, the Landlord served a Section 25 Notice some 11 months in advance of the end of the Lease, as a warning that an application for renewal by the Tenant would be opposed. The Landlord enclosed, with the Notice, a covering letter in which he referred to previous discussions between the Tenant and the Landlord's Agent regarding the works that the Landlord had planned.

As a consequence, the Tenant sought new property to rent once the current Lease had expired. However, the Landlord had by then decided against carrying out the works and issued instructions to remarket the property, without informing the Tenant of this decision. The Tenant claimed compensation for the extra rent that he had to pay for his new premises. 

As the Tenant was claiming compensation due to misrepresentation, the Court had to determine whether the Landlord was under a duty to disclose the information regarding his change of plans. Generally there is no such requirement under English law. A Section 25 Notice is regarded as a warning before the tenant makes an application, as opposed to a representation in itself.

The Notice alone could therefore not constitute a continuing representation, needed to make disclosure necessary. Consequently, the Court of Appeal focused on the covering letter issued by the Landlord with the Notice.  This letter was found to amount to a continuing representation, as it did not replicate the Notice precisely but instead referred to previous conversations about the redevelopment and made it clear to the Tenant that it was the Landlord's intention to carry out works that had led to the Section 25 Notice being issued.

The Tenant was shown to have relied upon this letter when finding new accommodation. This therefore amounted to a misrepresentation on the part of the Landlord, who had a duty to disclose his decision to market the property again.     

Once the misrepresentation was shown to have induced the Tenant to enter into a lease for a different property and thereby caused him loss, through having to pay additional rent, the amount of compensation could be dealt with by the Court. The loss of rent was calculated as the difference between the rent that he had been prepared to pay to the Landlord of £45,000 a year and the rent which he was now paying of £53,000. As the Lease was for a six year period, the Tenant was awarded damages of £48,000.

The Landlord had divulged no details of the plans or the time period in which they would be carried out. In spite of this, it was held that the covering letter and previous discussions amounted to a continuing representation on which the Tenant had relied when making his decisions.

Landlords should therefore be wary of representations made to tenants that could be deemed either to be statements of intention, as opposed to warnings, or else continuing representations, both of which caused the Landlord difficulties in this case.

The Court of Appeal did state that the obligation to disclose information does not exist in all situations where a Section 25 Notice is used.  Consequently, landlords do not usually have any duty to inform tenants of their intentions when opposing the renewal of a lease.

Inclusive Technology v Williamson [2009]