Over Taylor Biggs

Hutchison owned an industrial estate. A number of units were let to B&DF, an industrial caterer supplying airline food.  Their three Leases were due to expire in 2006.

B&DF suffered complaints that its food preparation from the Units caused significant smells, so much so that the Environmental Health Department had intervened.  B&DF were advised to build a 25 metre tall chimney, which required planning permission. Local residents objected to the planning application. Local meetings convened by B&DF indicated that there was substantial opposition to their proposals.   B&DF therefore began to consider alternative premises.  In May 2006, they agreed to take a Lease elsewhere, which was eventually entered into in September 2006.

Meanwhile, B&DF's planning application for the Hutchison estate was refused. B&DF remained in possession of the three Units until 31 December 2006, purportedly having served three months' notice to terminate their occupation.

Hutchison did not accept this version of events.  It alleged that between 2005 and 2006, B&DF had instead verbally agreed to take a three year Lease on the existing units.   B&DF rejected this and argued that it had effectively terminated its occupation and was simply remaining in occupation by virtue of its rights as a business tenant.  B&DF stated that no new agreement had been entered into.

B&DF contended that whilst it may have wanted to remain on the Hutchison estate, it could only do so if planning permission had been obtained for an odour-free operation.  B&DF therefore claimed that it was simply a tenant at will.

Hutchison applied to the Court, seeking an Order for B&DF to enter into the three year Leases and demanding payments of arrears of rent and interest.

Without any written agreements to assist determination, the Court was left to assess the credibility of the witnesses, alongside correspondence and other documentation.

Hutchison's evidence was preferred and supported the contention that the parties' discussions had led to verbal agreement to take Leases of the Units for a three year term at £8,000 per annum.      There was no need for a written Agreement, as agreement had been reflected by B&DF taking of possession of the Units.  In law, these were therefore legal Leases.  Had the Lease been for more than three years, a written Lease or tenancy would be required.

In the case of the separate Unit 15, where Hutchison alleged B&DF has agreed to accept a Lease for five years, the Court held that such an agreement would need to be in writing.  In the absence of that, B&DF had taken possession under a void Lease and were paying rent yearly. 

The Lease of Unit 15 had, therefore, become a yearly periodic tenancy (requiring, therefore, notice to determine it expiring on a quarter day, which B&DF's notice did not achieve).  An argument, following an earlier High Court decision this year based upon estoppel, was rejected. This probably follows a slightly later House of Lords' decision where it was said that estoppel cannot be used to make enforceable an Agreement that would otherwise require to be in writing.

B&DF were therefore ordered to sign the Leases for the three Units that, incidentally, Hutchison had not in the meantime been able to re-let. 

This decision highlights the need for care in negotiations leading to Leases,  particular if a duration of three years or fewer is under discussion, to ensure that all negotiations are conducted clearly on a without prejudice basis and that no binding commitments are to be regarded as made until all the terms have been recorded in writing.

Hutchison v B&DF Limited (2008)